10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2023

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

For the transition period from: to

Commission File Number: 001-33723

Main Street Capital Corporation

(Exact name of registrant as specified in its charter)

Maryland	41-2230745
(State or other jurisdiction of<br><br>incorporation or organization)	(I.R.S. Employer<br><br>Identification No.)
1300 Post Oak Boulevard, 8th Floor<br><br>Houston, TX	77056
(Address of principal executive offices)	(Zip Code)

(713) 350-6000

(Registrant’s telephone number including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

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

Title of Each Class	Trading Symbol	Name of Each Exchange on Which<br><br>Registered
Common Stock, par value $0.01 per share	MAIN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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	x	Accelerated filer	o	Non-accelerated filer	o	Smaller reporting company	o
						Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares outstanding of the issuer’s common stock as of May 4, 2023 was 80,466,696.

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	PART I
	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets—March 31, 2023(unaudited) and December 31, 2022	1
	Consolidated Statements of Operations (unaudited)—Threemonths endedMarch 31, 2023and 2022	2
	Consolidated Statements of Changes in Net Assets (unaudited)—Threemonths endedMarch 31, 2023and 2022	3
	Consolidated Statements of Cash Flows (unaudited)—Threemonths endedMarch 31, 2023and 2022	4
	Consolidated Schedule of Investments (unaudited)—March 31, 2023	5
	Consolidated Schedule of Investments—December 31, 2022	36
	Notes to Consolidated Financial Statements (unaudited)	67
	Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Threemonths endedMarch 31, 2023and 2022	108
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	124
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	139
Item 4.	Controls and Procedures	140
	PART II
	OTHER INFORMATION
Item 1.	Legal Proceedings	141
Item 1A.	Risk Factors	141
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	141
Item 6	Exhibits	142
	Signatures	143

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MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(in thousands, except shares and per share amounts)

	March 31,<br>2023		December 31, 2022
	(Unaudited)
ASSETS
Investments at fair value:
Control investments (cost: $1,315,277 and $1,270,802 as of March 31, 2023 and December 31, 2022, respectively)	$	1,746,003	$	1,703,172
Affiliate investments (cost: $591,458 and $635,536 as of March 31, 2023 and December 31, 2022, respectively)	626,227		618,359
Non‑Control/Non‑Affiliate investments (cost: $1,890,979 and $1,867,414 as of March 31, 2023 and December 31, 2022, respectively)	1,788,687		1,780,646
Total investments (cost: $3,797,714 and $3,773,752 as of March 31, 2023 and December 31, 2022, respectively)	4,160,917		4,102,177
Cash and cash equivalents	39,752		49,121
Interest and dividend receivable and other assets	84,597		82,731
Receivable for securities sold	505		381
Deferred financing costs (net of accumulated amortization of $11,003 and $10,603 as of March 31, 2023 and December 31, 2022, respectively)	7,484		7,475
Total assets	$	4,293,255	$	4,241,885
LIABILITIES
Credit Facilities	$	564,000	$	607,000
July 2026 Notes (par: $500,000 as of both March 31, 2023 and December 31, 2022)	498,267		498,136
May 2024 Notes (par: $450,000 as of both March 31, 2023 and December 31, 2022)	450,590		450,727
SBIC debentures (par: $334,000 ($63,800 due within one year) and $350,000 as of March 31, 2023 and December 31, 2022, respectively)	328,206		343,914
December 2025 Notes (par: $150,000 and $100,000 as of March 31, 2023 and December 31, 2022, respectively)	148,578		99,325
Accounts payable and other liabilities	39,759		52,092
Interest payable	18,671		16,580
Dividend payable	18,036		17,676
Deferred tax liability, net	54,226		47,849
Total liabilities	2,120,333		2,133,299
Commitments and contingencies (Note K)
NET ASSETS
Common stock, $0.01 par value per share (150,000,000 shares authorized; 79,766,002 and 78,463,599 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively)	797		784
Additional paid‑in capital	2,083,175		2,030,531
Total undistributed earnings	88,950		77,271
Total net assets	2,172,922		2,108,586
Total liabilities and net assets	$	4,293,255	$	4,241,885
NET ASSET VALUE PER SHARE	$	27.23	$	26.86

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

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(in thousands, except shares and per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments	$	48,862	$	32,577
Affiliate investments	17,456		13,917
Non‑Control/Non‑Affiliate investments	53,936		32,901
Total investment income	120,254		79,395
EXPENSES:
Interest	(24,997)		(16,687)
Compensation	(11,111)		(7,269)
General and administrative	(4,077)		(3,226)
Share‑based compensation	(4,100)		(2,818)
Expenses allocated to the External Investment Manager	4,998		2,817
Total expenses	(39,287)		(27,183)
NET INVESTMENT INCOME	80,967		52,212
NET REALIZED GAIN (LOSS):
Control investments	(2,966)		—
Affiliate investments	(26,264)		692
Non‑Control/Non‑Affiliate investments	851		2,644
Total net realized gain (loss)	(28,379)		3,336
NET UNREALIZED APPRECIATION (DEPRECIATION):
Control investments	17,161		8,279
Affiliate investments	33,141		3,041
Non‑Control/Non‑Affiliate investments	(15,184)		3,432
Total net unrealized appreciation	35,118		14,752
INCOME TAXES:
Federal and state income, excise and other taxes	(1,737)		(1,309)
Deferred taxes	(6,377)		(3,788)
Income tax provision	(8,114)		(5,097)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	79,592	$	65,203
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED	$	1.02	$	0.73
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED	$	1.00	$	0.91
WEIGHTED AVERAGE SHARES <br>OUTSTANDING—BASIC AND DILUTED	79,552,200		71,708,326

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

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(in thousands, except shares)

(Unaudited)

	Common Stock			Additional<br>Paid-In<br>Capital		Total<br>Undistributed<br>(Overdistributed)<br>Earnings		Total Net<br>Asset Value
	Number of<br>Shares	Par<br>Value
Balances at December 31, 2021	70,737,021	$	707	$	1,736,346	$	51,793	$	1,788,846
Public offering of common stock, net of offering costs	1,502,430	15		63,507		—		63,522
Share‑based compensation	—	—		2,818		—		2,818
Dividend reinvestment	114,043	1		4,812		—		4,813
Amortization of directors’ deferred compensation	—	—		147		—		147
Issuance of restricted stock, net of forfeited shares	16,913	—		—		—		—
Dividends to stockholders	—	—		109		(51,804)		(51,695)
Net increase resulting from operations	—	—		—		65,203		65,203
Balances at March 31, 2022	72,370,407	$	723	$	1,807,739	$	65,192	$	1,873,654
Balances at December 31, 2022	78,506,816	$	784	$	2,030,531	$	77,271	$	2,108,586
Public offering of common stock, net of offering costs	1,058,914	11		40,885		—		40,896
Share‑based compensation	—	—		4,100		—		4,100
Purchase of vested stock for employee payroll tax withholding	(10,489)	—		(404)		—		(404)
Dividend reinvestment	199,282	2		7,806		—		7,808
Amortization of directors’ deferred compensation	—	—		121		—		121
Issuance of restricted stock, net of forfeited shares	39,566	—		—		—		—
Dividends to stockholders	—	—		136		(67,913)		(67,777)
Net increase resulting from operations	—	—		—		79,592		79,592
Balances at March 31, 2023	79,794,089	$	797	$	2,083,175	$	88,950	$	2,172,922

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

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three Months Ended<br>March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	79,592	$	65,203
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Investments in portfolio companies	(109,036)		(315,369)
Proceeds from sales and repayments of debt investments in portfolio companies	56,644		218,781
Proceeds from sales and return of capital of equity investments in portfolio companies	6,817		19,963
Net unrealized appreciation	(35,118)		(14,752)
Net realized (gain) loss	28,379		(3,336)
Accretion of unearned income	(4,673)		(2,834)
Payment-in-kind interest	(2,895)		(937)
Cumulative dividends	(417)		(887)
Share-based compensation expense	4,100		2,818
Amortization of deferred financing costs	753		686
Deferred tax provision	6,377		3,788
Changes in other assets and liabilities:
Interest and dividend receivable and other assets	(1,357)		(11,731)
Interest payable	2,091		2,219
Accounts payable and other liabilities	(12,212)		(13,667)
Deferred fees and other	925		378
Net cash provided by (used in) operating activities	19,970		(49,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of offering costs	40,896		63,522
Proceeds from public offering of December 2025 Notes	50,000		—
Dividends paid	(59,609)		(46,522)
Repayments of SBIC debentures	(16,000)		—
Proceeds from credit facilities	97,000		185,000
Repayments on credit facilities	(140,000)		(167,000)
Debt issuance costs, net	(1,222)		—
Purchases of vested stock for employee payroll tax withholding	(404)		—
Net cash provided by (used in) financing activities	(29,339)		35,000
Net decrease in cash and cash equivalents	(9,369)		(14,677)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	49,121		32,629
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	39,752	$	17,952
Supplemental cash flow disclosures:
Interest paid	$	22,122	$	13,751
Taxes paid	$	2,726	$	2,874
Non-cash financing activities:
Value of shares issued pursuant to the DRIP	$	7,808	$	4,813

___________________

(1)All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Corporate Facility or SPV Facility (each as defined in Note B.5. — Deferred Financing Costs, and together the “Credit Facilities”) or in support of the SBA-guaranteed debentures issued by the Funds.

(2)Debt investments are income producing, unless otherwise noted by footnote (14), as described below. Equity and warrants are non-income producing, unless otherwise noted by footnote (8), as described below.

(3)See Note C—Fair Value Hierarchy for Investments—Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies.

(4)Principal is net of repayments. Cost is net of repayments and accumulated unearned income. Negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

(5)Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.

(7)Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)Income producing through dividends or distributions.

(9)Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 92% of the loans (based on the par amount) contain LIBOR or Term SOFR (“SOFR”) floors which range between 0.50% and 2.00%, with a weighted-average floor of 1.08%.

(10)Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments.

(11)Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments.

(12)Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Other Portfolio investments.

(13)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.

(14)Non-accrual and non-income producing investment.

(15)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

(16)External Investment Manager. Investment is not encumbered as security for the Company's Credit Facilities or in support of the SBA-guaranteed debentures issued by the Funds.

(17)Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for further discussion. Negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(19)Investments may have a portion, or all, of their income received from Paid-in-Kind (“PIK”) interest or dividends. PIK interest income and cumulative dividend income represent income not paid currently in cash. The difference between the Total Rate and PIK Rate represents the cash rate as of March 31, 2023.

(20)All portfolio company headquarters are based in the United States, unless otherwise noted.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

(dollars in thousands)

(Unaudited)

(21)Portfolio company headquarters are located outside of the United States.

(22)In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company’s investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $16.2 million Canadian Dollars and receive $12.5 million U.S. Dollars with a settlement date of September 14, 2023. The unrealized appreciation on the forward foreign currency contract was $0.5 million as of March 31, 2023.

(23)The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of Prime+5.10% (Floor 2.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)Investment date represents the date of initial investment in the security position.

(25)The position is unfunded and no interest income is being earned as of March 31, 2023. The position may earn a nominal unused facility fee on committed amounts.

(26)Warrants are presented in equivalent units with a strike price of $14.28 per unit.

(27)Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

(28)A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR (“L”), SOFR (“SF”) or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate (“P”)), which typically resets every one, three, or six months at the borrower’s option. SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of March 31, 2023, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.35%.

(29)Shares/Units represent ownership in a related Real Estate or HoldCo entity.

(30)Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

(31)Short-term portfolio investments. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of short-term portfolio investments.

(32)As of March 31, 2023, borrowings under the loan facility bore interest at SOFR+6.00% (Floor 1.00%). Each new draw or funding on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(33)As of March 31, 2023, borrowings under the loan facility bore interest at SOFR+6.25% (Floor 1.00%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(34)As of March 31, 2023, borrowings under the loan facility bore interest at LIBOR+7.50% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(35)As of March 31, 2023, borrowings under the loan facility bore interest at SOFR+7.50% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(36)As of March 31, 2023, borrowings under the loan facility bore interest at SOFR+6.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

(dollars in thousands)

(Unaudited)

(37)As of March 31, 2023, borrowings under the loan facility bore interest at LIBOR+6.50% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(38)As of March 31, 2023, borrowings under the loan facility bear interest at SOFR+7.25% (Floor 1.00%). Each new draw or funding on the facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(39)As of March 31, 2023, borrowings under the loan facility bore interest at SOFR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(40)As of March 31, 2023, borrowings under the loan facility bore interest at LIBOR+6.25% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of March 31, 2023.

(41)Index based floating interest rate is subject to contractual maximum base rate of 3.00%.

(42)Index based floating interest rate is subject to contractual maximum base rate of 2.00%.

(43)Index based floating interest rate is subject to contractual maximum base rate of 3.50%.

(44)Index based floating interest rate is subject to contractual maximum base rate of 2.50%.

(45)Warrants are presented in equivalent shares/units with a strike price of $1.00 per share/unit.

(dollars in thousands)

Portfolio Company (1) (20)		Business Description	Type of Investment (2) (3) (15)		Investment Date<br>(24)	Total Rate	Reference Rate and Spread (29)		Maturity<br>Date	Principal (4)	Cost (4)		Fair Value (18)
			Secured Debt	(25)	12/17/2021		L+	5.25%	12/17/2026	—	(218)		(218)
			Secured Debt		12/17/2021	10.84%	L+	5.25%	12/17/2027	24,300	23,864		24,135
			Secured Debt		12/17/2021	8.63%	L+	5.25%	12/17/2027	38,311	37,691		38,051
											61,337		61,968
YS Garments, LLC	(11)	Designer and Provider of Branded Activewear
			Secured Debt	(9)	8/22/2018	9.51%	L+	5.50%	8/9/2024	12,659	12,619		12,127
Zips Car Wash, LLC	(10)	Express Car Wash Operator
			Secured Debt	(9) (29)	2/11/2022	11.67%	SF+	7.25%	3/1/2024	17,512	17,279		17,512
			Secured Debt	(9) (29) (33)	2/11/2022	11.67%	SF+	7.25%	3/1/2024	4,389	4,360		4,379
											21,639		21,891
Subtotal Non-Control/Non-Affiliate Investments (84.4%% of net assets at fair value)											$	1,867,414	$	1,780,646
Total Portfolio Investments, December 31, 2022 (194.5%% of net assets at fair value)											$	3,773,752	$	4,102,177

____________________

(1)All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facilities or in support of the SBA-guaranteed debentures issued by the Funds.

(3)See Note C — Fair Value Hierarchy for Investments — Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies.

(7)Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)Income producing through dividends or distributions.

(9)Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 66% of these floating rate loans (based on the par amount) contain LIBOR or Term SOFR (“SOFR”) floors which range between 0.50% and 2.00%, with a weighted-average floor of 1.04%.

(10)Private Loan portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Private Loan portfolio investments.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2022

(dollars in thousands)

(11)Middle Market portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Middle Market portfolio investments.

(12)Other Portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Other Portfolio investments.

(14)Non-accrual and non-income producing investment.

(15)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

(16)External Investment Manager. Investment is not encumbered as security for the Company’s Credit Facilities or in support of the SBA-guaranteed debentures issued by the Funds.

(17)Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for further discussion. Negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par.

(20)All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)Portfolio company headquarters are located outside of the United States.

(22)In connection with the Company’s debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company’s investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $16.9 million Canadian Dollars and receive $13.1 million U.S. Dollars with a settlement date of September 14, 2023. The unrealized appreciation on the forward foreign currency contract was $0.6 million as of December 31, 2022.

(23)The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of SOFR+6.00% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)Investment date represents the date of initial investment in the security position.

(25)The position is unfunded and no interest income is being earned as of December 31, 2022. The position may earn a nominal unused facility fee on committed amounts.

(26)Warrants are presented in equivalent units with a strike price of $14.28 per unit.

(27)Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

(28)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+6.25% (Floor 1.00%). Due to an amendment and subsequent funding during the quarter, the term loan facility has different floating rate reset dates. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(29)A majority of the variable rate loans in the Company’s Investment Portfolio bear interest at a rate that may be determined by reference to either LIBOR (“L”), SOFR (“SF”) or an alternate Base rate (commonly based on the Federal Funds Rate or the Prime rate (“P”)), which typically resets every one, three, or six months at the borrower’s option. SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of December 31, 2022, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.35%.

(30)Shares/Units represent ownership in a related Real Estate or HoldCo entity.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2022

(dollars in thousands)

(31)Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

(32)Short-term portfolio investments. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of short-term portfolio investments.

(33)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+7.25% (Floor 1.00%). Each new draw on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(34)The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.

(35)As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+6.50% PIK or Prime+5.50% PIK. Revolving facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(36)Index based floating interest rate is subject to contractual maximum base rate of 2.50%.

(37)Index based floating interest rate is subject to contractual maximum base rate of 1.50%.

(38)Warrants are presented in equivalent shares/units with a strike price of $1.00 per share/unit.

(39)Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.

(40)The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of SOFR+8.00% (Floor 1.50%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(41)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+5.75% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(42)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+6.25% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(43)As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(44)As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+10.00%. RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(45)As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+7.25% (Floor 0.75%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(46)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2022

(dollars in thousands)

(47)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+5.75% (Floor 1.00%). Delayed draw term loan facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

(48)As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+7.75% (Floor 1.25%). RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31, 2022.

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE A — ORGANIZATION AND BASIS OF PRESENTATION

1.Organization

Main Street Capital Corporation (“MSCC”, or together with its consolidated subsidiaries, “Main Street” or the “Company”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market (“Middle Market”) companies. Main Street’s portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides “one-stop” financing alternatives within its LMM investment strategy. Main Street invests primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

MSCC was formed in March 2007 to operate as an internally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. The Funds are each licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration (“SBA”).

MSC Adviser I, LLC (the “External Investment Manager”) was formed in November 2013 as a wholly-owned subsidiary of Main Street to provide investment management and other services to parties other than Main Street (“External Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission (“SEC”) to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of Main Street and is not included as a consolidated subsidiary in Main Street’s consolidated financial statements.

MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSCC generally does not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

Main Street has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes. MSCC also has certain direct and indirect wholly-owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”).

Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “Main Street” refer to MSCC and its consolidated subsidiaries, which include the Funds, the Taxable Subsidiaries and the Structured Subsidiaries.

2.Basis of Presentation

Main Street’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of the periods presented herein, Main Street’s consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Portfolio, as used herein, refers to all of Main Street’s investments in LMM portfolio companies, investments in Private Loan portfolio companies, investments in Middle Market portfolio companies, Other Portfolio investments and the investment in the External Investment Manager (see Note C — Fair Value Hierarchy for Investments — Portfolio Composition — Investment Portfolio Composition for additional discussion of Main Street’s Investment Portfolio and definitions for the defined terms Private Loan and Other Portfolio). Main Street’s results of operations for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and financial position as of March 31, 2023 and December 31, 2022, are presented on a consolidated basis. The effects of all intercompany transactions between MSCC and its consolidated subsidiaries have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements of Main Street are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. The unaudited consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2022. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results to be expected for the full year. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

Principles of Consolidation

Under ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC’s consolidated financial statements include the financial position and operating results for the Funds, the Taxable Subsidiaries and the Structured Subsidiaries. Main Street has determined that none of its portfolio investments qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street’s Investment Portfolio is carried on the Consolidated Balance Sheets at fair value, as discussed further in Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio, with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss),” in both cases on the Consolidated Statements of Operations.

Portfolio Investment Classification

For valuation purposes, all of Main Street’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with the Financial Advisory Firm. The Financial Advisory Firm analyzes and provides observations and recommendations and an assurance certification regarding Main Street’s determinations of the fair value of its Private Loan portfolio company investments. The Financial Advisory Firm is generally consulted relative to Main Street’s investments in each Private Loan portfolio company at least once every calendar year, and for Main Street’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the Financial Advisory Firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from the Financial Advisory Firm in arriving at its determination of fair value on its investments in a total of 19 Private Loan portfolio companies for the three months ended March 31, 2023, representing 25% of the total Private Loan portfolio at fair value as of March 31, 2023, and on a total of 18 Private Loan portfolio companies for the three months ended March 31, 2022, representing 26% of the total Private Loan portfolio at fair value as of March 31, 2022. Excluding its investments in Private Loan portfolio companies that, as of March 31, 2023 and 2022, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by the Financial Advisory Firm for the three months ended March 31, 2023 and 2022 was 28% and 42% of the total Private Loan portfolio at fair value, respectively.

For valuation purposes, all of Main Street’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Main Street generally consults on a limited basis with the Financial Advisory Firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these investments. The vast majority (90% and 89% as of March 31, 2023 and December 31, 2022, respectively) of the Middle Market portfolio investments (i) are valued using third-party quotes or other independent pricing services, (ii) Main Street has consulted with and received an assurance certification from the Financial Advisory Firm within the last twelve months or (iii) are new investments that have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment.

For valuation purposes, all of Main Street’s short-term portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. Because all of the short-term portfolio investments are typically valued using third-party quotes or other independent pricing services, Main Street generally does not consult with any financial advisory services firms in connection with determining the fair value of its short-term portfolio investments.

For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments. Main Street’s Other Portfolio investments comprised 2.8% of Main Street’s Investment Portfolio at fair value as of both March 31, 2023 and December 31, 2022, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of these investments using the NAV valuation method.

For valuation purposes, Main Street’s investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity’s historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager. Main Street consults with and receives an assurance certification from the Financial Advisory Firm in arriving at its determination of fair value for its investment in the External Investment Adviser on a quarterly rotation basis similar to its practice for other investment portfolio assets without third party quotes or other independent pricing.

Due to the inherent uncertainty in the valuation process, Main Street’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM, Private Loan and Middle Market portfolio companies. This system takes into account both quantitative and qualitative factors of each LMM, Private Loan and Middle Market portfolio company.

In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Main Street’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of its executive officers to serve as the Board of Directors’ valuation designee. Main Street believes its Investment Portfolio as of March 31, 2023 and December 31, 2022 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates.

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

2.Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio, the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street, pursuant to valuation policies and procedures approved and overseen by Main Street’s Board of Directors, in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.

Macroeconomic factors, including the COVID-19 pandemic, risk of recession, inflation, supply chain constraints or disruptions, geopolitical disruptions and rising interest rates, and the related effect on the U.S. and global economies, have impacted, and may continue to impact, the businesses and operating results of certain of Main Street’s portfolio companies, as well as market interest rate spreads. As a result of these and other current effects of macroeconomic factors, as well as the uncertainty regarding the extent and duration of their impact, the valuation of Main Street’s Investment Portfolio has and may continue to experience increased volatility.

3.Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

At March 31, 2023, cash balances totaling $35.2 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash deposits are held at large established high credit quality financial institutions, and management believes that the risk of loss associated with any uninsured balances is remote.

4.Interest, Dividend and Fee Income

Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded when dividends are declared by the portfolio company or at such other time that an obligation exists for the portfolio company to make a distribution. Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service its debt obligation, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.

As of March 31, 2023, Main Street’s total Investment Portfolio had 13 investments on non-accrual status, which comprised 0.6% of its fair value and 3.2% of its cost. As of December 31, 2022, Main Street’s total Investment Portfolio had 12 investments on non-accrual status, which comprised 0.6% of its fair value and 3.7% of its cost.

Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind (“PIK”) interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies — Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2023 and 2022, (i) 2.4% and 1.2%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.3% and 1.1%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash.

Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are generally deferred and accreted into income over the life of the financing.

A presentation of total investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

	Three Months Ended<br>March 31,
	2023		2022
	(dollars in thousands)
Interest, fee and dividend income:
Interest income	$	93,392	$	59,441
Dividend income	24,222		16,622
Fee income	2,640		3,332
Total interest, fee and dividend income	$	120,254	$	79,395

5.Deferred Financing Costs

Deferred financing costs include commitment fees and other direct costs related to Main Street’s multi-year revolving credit facility (the “Corporate Facility”) and special purpose vehicle revolving credit facility (the “SPV Facility” and, together with the Corporate Facility, the “Credit Facilities”) and its unsecured notes, as well as the commitment fees and leverage fees (3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures. See further discussion of Main Street’s debt in Note E — Debt. Deferred financing costs in connection with the Credit Facilities are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the principal amount outstanding.

6.Equity Offering Costs

The Company’s offering costs are charged against the proceeds from equity offerings when the proceeds are received.

7.Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value

Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income over the life of the financing.

In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income over the life of the debt investment.

To maintain RIC tax treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies — Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the three months ended March 31, 2023 and 2022, 1.8% and 2.0%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.Share-Based Compensation

Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

Main Street has also adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. Accordingly, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Additionally, Main Street has elected to account for forfeitures as they occur.

9.Income Taxes

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds and Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

The Taxable Subsidiaries primarily hold certain equity investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.

The External Investment Manager is an indirect wholly-owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager’s separate financial statements.

The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Main Street’s net assets as included on the Consolidated Balance Sheets and Consolidated Statements of Changes in Net Assets include an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

To estimate the fair value of Main Street’s multiple tranches of unsecured debt instruments as disclosed in Note E — Debt, Main Street uses quoted market prices. For the estimated fair value of Main Street’s SBIC debentures, Main Street uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for the debt security.

12.Earnings per Share

Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street’s equity compensation plans are participating securities and, therefore, are included in the

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basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.Recently Issued or Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference rate reform (Topic 848) — Facilitation of the effects of reference rate reform on financial reporting. The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The Company adopted this amendment in March 2020 and plans to apply the amendments in this update to account for contract modifications due to changes in reference rates when LIBOR reference is no longer used. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2023 and the year ended December 31, 2022, the effect of which was not material to the consolidated financial statements and the notes thereto.

In December 2021, the SEC published Staff Accounting Bulletin No. 120 (“SAB 120”) to provide accounting and disclosure guidance for stock compensation awards made to executives and conforming amendments to the Staff Accounting Bulletin Series to align with the current authoritative accounting guidance in ASC 718, Compensation — Stock Compensation. In part, SAB 120 requires that an entity disclose how it determines the current price of underlying shares for grant-date fair value, the policy for when an adjustment to the share price is required, how it determines the amount of an adjustment to the share price and any significant assumptions used in determining an adjustment to the share price. SAB 120 is effective for all stock compensation awards issued after December 1, 2021. Main Street is in compliance with the guidance pursuant to SAB 120 for any share-based compensation disclosures. See Note J — Share-Based Compensation for further discussion of Main Street’s policies and procedures regarding share-based compensation. The impact of SAB 120 was not material to the consolidated financial statements and the notes thereto.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update provide that a contractual restriction on the sale of

an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update also require additional disclosures for equity securities subject to contractual sales restrictions. ASU 2022-03 is effective for years beginning after December 15, 2023, though early adoption is permitted. The Company elected to early adopt ASU 2022-03 as of December 31, 2022 and it did not have a material impact on the consolidated financial statements and the notes thereto.

In November 2022, the FASB issued ASU 2022-06, Reference rate reform (Topic 848) — Deferral of the Sunset Date of Topic 848. The amendments in this update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company utilized the optional expedients provided by ASU 2020-04 during the three months ended March 31, 2023 and the year ended December 31, 2022, the effect of which was not material to the consolidated financial statements and the notes thereto. The Company will continue to utilize the optional expedients provided by ASU 2020-04 and extended by ASU 2022-06 through the year end December 31, 2024. The Company does not expect ASU 2022-06 to have a material impact to the consolidated financial statements and the notes thereto.

From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

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NOTE C — FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION

ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

Fair Value Hierarchy

In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

Investments recorded on Main Street’s Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1—Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

Level 2—Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:

•Quoted prices for similar assets in active markets (for example, investments in restricted stock);

•Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);

•Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and

•Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

Level 3—Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment.

As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

As of March 31, 2023 and December 31, 2022, all of Main Street’s LMM portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s LMM portfolio investments were categorized as Level 3 as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, Main Street’s Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not

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available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Private Loan portfolio investments were categorized as Level 3 as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, Main Street’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Middle Market portfolio investments were categorized as Level 3 as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, Main Street’s Other Portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s Other Portfolio investments were categorized as Level 3 as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of March 31, 2023 and December 31, 2022.

The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

•Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;

•Current and projected financial condition of the portfolio company;

•Current and projected ability of the portfolio company to service its debt obligations;

•Type and amount of collateral, if any, underlying the investment;

•Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment;

•Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);

•Pending debt or capital restructuring of the portfolio company;

•Projected operating results of the portfolio company;

•Current information regarding any offers to purchase the investment;

•Current ability of the portfolio company to raise any additional financing as needed;

•Changes in the economic environment which may have a material impact on the operating results of the portfolio company;

•Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;

•Qualitative assessment of key management;

•Contractual rights, obligations or restrictions associated with the investment; and

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•Other factors deemed relevant.

The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the 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. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM, Private Loan and Middle Market securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 portfolio investments as of March 31, 2023 and December 31, 2022:

Type of <br>Investment	Fair Value as of<br><br>March 31, 2023<br><br>(in thousands)		Valuation Technique	Significant Unobservable Inputs	Range(3)	Weighted Average(3)		Median(3)
Equity investments	$	1,217,243	Discounted cash flow	WACC	9.3% - 22.3%	14.4	%	15.2	%
			Market comparable / Enterprise value	EBITDA multiple (1)	4.5x - 8.5x (2)	6.8x		6.2x
Debt investments	$	2,696,096	Discounted cash flow	Risk adjusted discount factor	6.0% - 16.4% (2)	10.2	%	10.5	%
				Expected principal recovery percentage	0.0% - 100.0%	99.5	%	100.0	%
Debt investments	$	245,636	Market approach	Third-party quote	3.0 - 97.5	87.3		93.9
Total Level 3 investments	$	4,158,975

____________________

(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 15.7x and the range for risk adjusted discount factor is 3.4% - 35.0%.

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(3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

Type of Investment	Fair Value as of December 31, 2022<br><br>(in thousands)		Valuation Technique	Significant Unobservable Inputs	Range(3)	Weighted Average(3)		Median(3)
Equity investments	$	1,172,077	Discounted cash flow	WACC	9.4% - 22.5%	14.5	%	15.4	%
			Market comparable / Enterprise value	EBITDA multiple (1)	4.3x - 8.3x (2)	6.7x		6.0x
Debt investments	$	2,663,958	Discounted cash flow	Risk adjusted discount factor	5.7% - 15.7% (2)	10.0	%	10.3	%
				Expected principal recovery percentage	0.0% - 100.0%	99.4	%	100.0	%
Debt investments	$	264,238	Market approach	Third-party quote	5.6 - 98.5	87.0		91.4
Total Level 3 investments	$	4,100,273

____________________

(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

The following tables provide a summary of changes in fair value of Main Street’s Level 3 portfolio investments for the three-month periods ended March 31, 2023 and 2022 (amounts in thousands):

Type of Investment	Fair Value<br><br>as of<br><br>December 31, 2022		Transfers Into Level 3 Hierarchy		Redemptions/ Repayments		New Investments		Net Changes from Unrealized to Realized		Net Unrealized Appreciation (Depreciation)		Other(1)		Fair Value<br><br>as of<br><br>March 31, 2023
Debt	$	2,928,196	$	—	$	(88,300)	$	106,658	$	33,064	$	(26,440)	$	(11,446)	$	2,941,732
Equity	1,166,643		—		(2,871)		8,476		(3,946)		29,890		14,022		1,212,214
Equity Warrant	5,434		—		—		—		—		2,171		(2,576)		5,029
	$	4,100,273	$	—	$	(91,171)	$	115,134	$	29,118	$	5,621	$	—	$	4,158,975

____________________

(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.

Type of Investment	Fair Value<br><br>as of<br><br>December 31, 2021		Transfers Into Level 3 Hierarchy		Redemptions/ Repayments		New Investments		Net Changes from Unrealized to Realized		Net Unrealized Appreciation (Depreciation)		Other(1)		Fair Value<br><br>as of<br><br>March 31, 2022
Debt	$	2,509,568	$	—	$	(183,699)	$	287,044	$	2,123	$	(6,807)	$	—	$	2,608,229
Equity	1,043,709		—		(17,569)		24,711		418		22,512		—		1,073,781
Equity Warrant	6,560		—		—		—		—		200		—		6,760
	$	3,559,837	$	—	$	(201,268)	$	311,755	$	2,541	$	15,905	$	—	$	3,688,770

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(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.

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At March 31, 2023 and December 31, 2022, Main Street’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

			Fair Value Measurements
			(in thousands)
At March 31, 2023	Fair Value		Quoted Prices in<br>Active Markets for<br>Identical Assets<br>(Level 1)		Significant Other<br>Observable Inputs<br>(Level 2)		Significant<br>Unobservable<br>Inputs<br>(Level 3)
LMM portfolio investments	$	2,112,619	$	—	$	—	$	2,112,619
Private Loan portfolio investments	1,491,395		—		—		1,491,395
Middle Market portfolio investments	306,244		—		—		306,244
Other Portfolio investments	116,067		—		—		116,067
External Investment Manager	132,650		—		—		132,650
Short-term portfolio investments	1,942		—		1,942		—
Total investments	$	4,160,917	$	—	$	1,942	$	4,158,975	Fair Value Measurements
---	---	---	---	---	---	---	---	---
			(in thousands)
At December 31, 2022	Fair Value		Quoted Prices in<br>Active Markets for<br>Identical Assets<br>(Level 1)		Significant Other<br>Observable Inputs<br>(Level 2)		Significant<br>Unobservable<br>Inputs<br>(Level 3)
LMM portfolio investments	$	2,060,459	$	—	$	—	$	2,060,459
Private Loan portfolio investments	1,471,466		—		—		1,471,466
Middle Market portfolio investments	329,119		—		—		329,119
Other Portfolio investments	116,299		—		—		116,299
External Investment Manager	122,930		—		—		122,930
Short-term portfolio investments	1,904		—		1,904		—
Total investments	$	4,102,177	$	—	$	1,904	$	4,100,273

Investment Portfolio Composition

Main Street’s principal investment objective is to maximize its portfolio’s total return by generating current income from its debt investments and current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Main Street seeks to achieve its investment objective through its LMM, Private Loan and Middle Market investment strategies.

Main Street’s LMM investment strategy is focused on investments in secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $75 million. The LMM debt investments are typically secured by a first priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

Main Street’s private loan (“Private Loan”) investment strategy is focused on investments in privately held companies that are generally consistent with the size of its LMM portfolio companies or Middle Market portfolio companies, and its Private Loan investments generally range in size from $10 million to $75 million. Main Street’s Private Loan investments primarily consist of debt securities that have primarily been originated directly by Main Street or, to a

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lesser extent, through its strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. In both cases, our Private Loan investments are typically made to support a company owned by or in the process of being acquired by a private equity sponsor. Main Street’s Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. Main Street may have the option to invest alongside the sponsor in the equity securities of its Private Loan portfolio companies.

Main Street’s Middle Market investment strategy is focused on investments in syndicated loans to or debt securities in Middle Market companies, which Main Street defines as companies with annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $25 million. Main Street’s Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

Main Street’s other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Private Loan or Middle Market portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.

Based upon Main Street’s liquidity and capital structure management activities, Main Street’s Investment Portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be liquidated in one year or less. These short-term portfolio investments are not expected to be a significant portion of the overall Investment Portfolio.

Main Street’s external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets under management for external parties and may earn incentive fees, or a carried interest, based on the performance of the assets managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”). Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street’s total expenses for the three months ended March 31, 2023 and 2022 are net of expenses allocated to the External Investment Manager of $5.0 million and $2.8 million, respectively.

Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three months ended March 31, 2023 and 2022, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

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(Unaudited)

The following tables provide a summary of Main Street’s investments in the LMM, Private Loan and Middle Market portfolios as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager, which are discussed further below):

	As of March 31, 2023
	LMM (a)			Private Loan			Middle Market
	(dollars in millions)
Number of portfolio companies	79			86			30
Fair value	$	2,112.6		$	1,491.4		$	306.2
Cost	$	1,727.9		$	1,527.6		$	391.0
Debt investments as a % of portfolio (at cost)	72.9		%	97.1		%	93.6		%
Equity investments as a % of portfolio (at cost)	27.1		%	2.9		%	6.4		%
% of debt investments at cost secured by first priority lien	99.2		%	99.5		%	99.3		%
Weighted-average annual effective yield (b)	12.6		%	12.4		%	11.8		%
Average EBITDA (c)	$	8.3		$	38.1		$	65.4

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(a)At March 31, 2023, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2023, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of March 31, 2023 including debt investments on non-accrual status was 12.2% for its LMM portfolio, 12.0% for its Private Loan portfolio and 10.4% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including four LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

	As of December 31, 2022
	LMM (a)			Private Loan			Middle Market
	(dollars in millions)
Number of portfolio companies	78			85			31
Fair value	$	2,060.5		$	1,471.5		$	329.1
Cost	$	1,719.9		$	1,500.3		$	401.7
Debt investments as a % of portfolio (at cost)	73.7		%	97.1		%	93.8		%
Equity investments as a % of portfolio (at cost)	26.3		%	2.9		%	6.2		%
% of debt investments at cost secured by first priority lien	99.1		%	99.6		%	98.8		%
Weighted-average annual effective yield (b)	12.3		%	11.6		%	11.0		%
Average EBITDA (c)	$	8.0		$	38.1		$	68.7

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(a)At December 31, 2022, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2022, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of December 31, 2022 including debt investments on non-accrual status was 11.6% for its LMM portfolio, 11.2% for its Private Loan portfolio and 10.3% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

For the three months ended March 31, 2023 and 2022, Main Street achieved an annualized total return on investments of 13.4% and 11.8%, respectively. For the year ended December 31, 2022, Main Street achieved a total return on investments of 11.1%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Main Street’s total return on investments is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.

As of March 31, 2023, Main Street had Other Portfolio investments in 14 companies, collectively totaling $116.1 million in fair value and $119.7 million in cost basis and which comprised 2.8% and 3.2% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2022, Main Street had Other Portfolio investments in 14 companies, collectively totaling $116.3 million in fair value and $120.4 million in cost basis and which comprised 2.8% and 3.2% of Main Street’s Investment Portfolio at fair value and cost, respectively.

As discussed further in Note A.1. — Organization and Basis of Presentation—Organization, Main Street holds an investment in the External Investment Manager, a wholly-owned subsidiary that is treated as a portfolio investment. As of March 31, 2023, this investment had a fair value of $132.7 million and a cost basis of $29.5 million, which comprised 3.2% and 0.8% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2022, this investment had a fair value of $122.9 million and a cost basis of $29.5 million, which comprised 3.0% and 0.8% of Main Street’s Investment Portfolio at fair value and cost, respectively.

The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM, Private Loan and Middle Market portfolio investments, as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager, which are discussed above).

Cost:	March 31, 2023		December 31, 2022
First lien debt	84.7	%	85.0	%
Equity	14.6		14.2
Second lien debt	0.3		0.3
Equity warrants	0.2		0.2
Other	0.2		0.3
	100.0	%	100.0	%

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Fair Value:	March 31, 2023		December 31, 2022
First lien debt	74.6	%	75.2	%
Equity	24.7		24.1
Second lien debt	0.4		0.3
Equity warrants	0.1		0.1
Other	0.2		0.3
	100.0	%	100.0	%

The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM, Private Loan and Middle Market portfolio investments, as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:	March 31, 2023		December 31, 2022
West	28.8	%	28.5	%
Northeast	19.5		19.0
Southwest	19.1		20.1
Midwest	16.7		16.3
Southeast	13.9		14.0
Canada	0.4		0.6
Other Non-United States	1.6		1.5
	100.0	%	100.0	%	Fair Value:	March 31, 2023	December 31, 2022
---	---	---	---	---
West	28.4	%	28.7	%
Southwest	21.4		21.4
Northeast	19.1		18.8
Midwest	17.1		16.6
Southeast	12.2		12.4
Canada	0.3		0.6
Other Non-United States	1.5		1.5
	100.0	%	100.0	%

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Main Street’s LMM, Private Loan and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments by industry at cost and fair value as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager).

Cost:	March 31, 2023		December 31, 2022
Internet Software & Services	8.0	%	8.0	%
Machinery	7.3		7.4
Commercial Services & Supplies	6.7		6.7
Construction & Engineering	5.8		5.8
Distributors	5.2		5.1
Health Care Providers & Services	4.8		4.7
Diversified Consumer Services	4.6		4.5
Professional Services	4.6		4.2
Leisure Equipment & Products	4.5		4.5
IT Services	3.6		3.3
Specialty Retail	3.2		3.2
Energy Equipment & Services	3.1		3.7
Tobacco	3.1		3.1
Containers & Packaging	2.5		2.6
Media	2.4		2.4
Aerospace & Defense	2.4		2.3
Computers & Peripherals	2.2		2.2
Building Products	1.9		1.9
Software	1.9		1.9
Textiles, Apparel & Luxury Goods	1.8		1.9
Communications Equipment	1.8		1.8
Diversified Telecommunication Services	1.7		1.9
Auto Components	1.7		1.7
Food Products	1.6		1.6
Electronic Equipment, Instruments & Components	1.6		1.6
Diversified Financial Services	1.4		1.5
Internet & Catalog Retail	1.3		1.3
Health Care Equipment & Supplies	1.3		1.3
Food & Staples Retailing	1.1		1.2
Chemicals	1.1		1.1
Hotels, Restaurants & Leisure	1.1		1.1
Electrical Equipment	1.0		1.0
Household Products	1.0		0.4
Other (1)	2.7		3.1
	100.0	%	100.0	%

____________________

(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan and Middle Market portfolio investments at each date.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Fair Value:	March 31, 2023		December 31, 2022
Machinery	8.4	%	8.4	%
Internet Software & Services	6.9		6.8
Diversified Consumer Services	6.8		6.8
Commercial Services & Supplies	6.0		6.1
Construction & Engineering	5.6		5.7
Distributors	5.6		5.5
Health Care Providers & Services	4.5		4.3
Professional Services	4.1		3.8
Leisure Equipment & Products	3.9		4.0
Specialty Retail	3.3		3.5
Tobacco	3.3		3.4
IT Services	3.3		3.1
Computers & Peripherals	3.1		3.0
Media	2.9		3.0
Energy Equipment & Services	2.7		2.7
Containers & Packaging	2.6		2.8
Aerospace & Defense	2.2		2.2
Software	2.1		2.1
Building Products	1.8		1.9
Food Products	1.8		1.8
Textiles, Apparel & Luxury Goods	1.6		1.8
Diversified Financial Services	1.6		1.7
Auto Components	1.6		1.6
Diversified Telecommunication Services	1.5		1.8
Internet & Catalog Retail	1.3		1.3
Chemicals	1.1		1.1
Construction Materials	1.1		1.0
Food & Staples Retailing	1.0		1.1
Health Care Equipment & Supplies	1.0		1.0
Electrical Equipment	1.0		1.0
Other (1)	6.3		5.7
	100.0		100.0

____________________

(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan and Middle Market portfolio investments at each date.

At March 31, 2023 and December 31, 2022, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered “significant subsidiaries.” In evaluating its unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that Main Street must utilize to determine if any of Main Street’s Control Investments (as defined in Note A–Organization and Basis of Presentation, including those unconsolidated portfolio companies defined as Control Investments in which Main Street

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

does not own greater than 50% of the voting securities nor have rights to maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing Main Street’s investment in the Control Investment by the value of Main Street’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of Main Street’s change in net assets resulting from operations for the same period. Rules 3-09 and 4-08(g) of Regulation S-X require Main Street to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.

As of March 31, 2023 and December 31, 2022, Main Street had no single investment that qualified as a significant subsidiary under either the investment or income tests.

NOTE D — EXTERNAL INVESTMENT MANAGER

As discussed further in Note A.1. — Organization and Basis of Presentation — Organization and Note C — Fair Value Hierarchy for Investments — Portfolio Composition — Investment Portfolio Composition, the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20% incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.

As described more fully in Note L — Related Party Transactions, the External Investment Manager also serves as the investment adviser and administrator to MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”). The External Investment Manager entered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in exchange for asset-based and incentive fees.

The External Investment Manager provides administrative services for certain External Party clients that, to the extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly attributable to performing administrative services for clients. These fees are recognized as other revenue in the period in which the related services are rendered.

Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street’s Consolidated Statements of Operations in “Net Unrealized Appreciation (Depreciation) — Control investments.”

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

investment of Main Street and is not included as a consolidated subsidiary of Main Street in its consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. The total contribution of the External Investment Manager to Main Street’s net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. For the three months ended March 31, 2023 and 2022, the total contribution to Main Street’s net investment income was $8.1 million and $5.1 million, respectively.

Summarized financial information from the separate financial statements of the External Investment Manager as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 is as follows:

	As of		As of
	March 31,<br>2023		December 31, 2022
	(dollars in thousands)
Accounts receivable - advisory clients	$	9,405	$	8,130
Intangible Asset	29,500		29,500
Total assets	$	38,905	$	37,630
Accounts payable to MSCC and its subsidiaries	$	6,349	$	4,455
Dividend payable to MSCC and its subsidiaries	3,056		3,675
Equity	29,500		29,500
Total liabilities and equity	$	38,905	$	37,630	Three Months Ended<br><br>March 31,
---	---	---	---	---
	2023		2022
	(dollars in thousands)
Management fee income	$	5,470	$	5,444
Incentive fees	3,304		137
Administrative services fees	151		151
Total revenues	8,925		5,732
Expenses allocated from MSCC or its subsidiaries:
Salaries, share-based compensation and other personnel costs	(4,268)		(2,260)
Other G&A expenses	(730)		(557)
Total allocated expenses	(4,998)		(2,817)
Pre-tax income	3,927		2,915
Tax expense	(871)		(642)
Net income	$	3,056	$	2,273

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE E — DEBT

Summary of debt as of March 31, 2023 is as follows:

	Outstanding<br>Balance		Unamortized Debt<br><br>Issuance<br><br>(Costs)/Premiums (1)		Recorded Value		Estimated Fair<br><br>Value (2)
	(dollars in thousands)
Corporate Facility	$	394,000	$	—	$	394,000	$	394,000
SPV Facility	170,000		—		170,000		170,000
July 2026 Notes	500,000		(1,733)		498,267		438,945
May 2024 Notes	450,000		590		450,590		439,754
SBIC Debentures	334,000		(5,794)		328,206		261,555
December 2025 Notes	150,000		(1,422)		148,578		153,598
Total Debt	$	1,998,000	$	(8,359)	$	1,989,641	$	1,857,852

____________________

(1)The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the July 2026 Notes, May 2024 Notes, December 2025 Notes and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets.

(2)Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments.

Summary of debt as of December 31, 2022 is as follows:

	Outstanding<br>Balance		Unamortized Debt<br><br>Issuance<br><br>(Costs)/Premiums (1)		Recorded Value		Estimated Fair<br><br>Value (2)
	(dollars in thousands)
Corporate Facility	$	407,000	$	—	$	407,000	$	407,000
SPV Facility	200,000		—		200,000		200,000
July 2026 Notes	500,000		(1,864)		498,136		434,250
May 2024 Notes	450,000		727		450,727		444,749
SBIC Debentures	350,000		(6,086)		343,914		290,204
December 2025 Notes	100,000		(675)		99,325		106,607
Total Debt	$	2,007,000	$	(7,898)	$	1,999,102	$	1,882,810

____________________

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Summarized interest expense for the three months ended March 31, 2023 and 2022 is as follows:

	Three Months Ended March 31,
	2023		2022
	(dollars in thousands)
Corporate Facility	$	6,610	$	2,059
SPV Facility	3,427		—
July 2026 Notes	3,882		3,882
May 2024 Notes	5,714		5,714
SBIC Debentures	2,752		2,799
December 2025 Notes	2,612		—
December 2022 Notes	—		2,233
Total Interest Expense	$	24,997	$	16,687

SBIC Debentures

Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street’s SBIC debentures payable, under existing SBA-approved commitments, were $334.0 million as of March 31, 2023 and $350.0 million as of December 31, 2022. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. Main Street expects to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-average annual interest rate on the SBIC debentures was 2.9% as of March 31, 2023 and December 31, 2022. The first principal maturity due under the existing SBIC debentures is in 2024, and the weighted-average remaining duration as of March 31, 2023 was 5.1 years. In accordance with SBIC regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.

As of March 31, 2023, the SBIC debentures consisted of (i) $159.0 million par value of SBIC debentures outstanding issued by MSMF, with a recorded value of $156.2 million that was net of unamortized debt issuance costs of $2.8 million and (ii) $175.0 million par value of SBIC debentures issued by MSC III with a recorded value of $172.0 million that was net of unamortized debt issuance costs of $3.0 million.

Corporate Facility

Main Street maintains the Corporate Facility to provide additional liquidity to support its investment and operational activities. As of March 31, 2023, the Corporate Facility included total commitments of $980.0 million from a diversified group of 18 lenders and contained an accordion feature with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.4 billion. The revolving period under the Corporate Facility expires in August 2026 and the Corporate Facility is scheduled to mature in August 2027.

As of March 31, 2023, borrowings under the Corporate Facility bore interest, subject to Main Street’s election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable SOFR rate plus an applicable credit spread adjustment of 0.10% plus (i) 1.875% (or the applicable Prime rate plus 0.875%) as long as Main Street meets certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable Prime Rate plus 1.0%) otherwise. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Corporate Facility. The Corporate Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. In connection

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

with the Corporate Facility, MSCC has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

As of March 31, 2023, the interest rate on the Corporate Facility was 6.6%. The average interest rate for borrowings under the Corporate Facility was 6.5% and 2.0% for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, Main Street was in compliance with all financial covenants of the Corporate Facility.

SPV Facility

In November 2022 and December 2022, MSCC Funding I, LLC (“MSCC Funding”), a wholly-owned Structured Subsidiary that primarily holds originated loan investments, entered into (i) the SPV Facility with MSCC as collateral manager and (ii) a lender joinder agreement (the “Joinder Agreement”) to the SPV Facility that increased the total number of lenders from three to four lenders and increased the total commitments under the SPV Facility from $240.0 million to $255.0 million, respectively. As of March 31, 2023, the SPV Facility included total commitments of $255.0 million and an accordion feature, subject to the satisfaction of various conditions, that could bring total commitments and borrowing availability to up to $450.0 million. The revolving period under the SPV Facility expires in November 2025 and the SPV Facility is scheduled to mature in November 2027. Advances under the SPV Facility bear interest at a per annum rate equal to the one-month SOFR in effect, plus a 0.10% credit spread adjustment plus an applicable margin of 2.50% during the revolving period and 2.625% and 2.75% during the first and second years thereafter, respectively. MSCC Funding pays a commitment fee of 0.50% per annum on the unused lender commitments up to 35% the total lender commitments and 0.75% per annum on the unused lender commitments greater than 35% of the total lender commitments. The SPV Facility is secured by a collateral loan on the assets of MSCC Funding and its subsidiaries. In connection with the SPV Facility, MSCC Funding has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

As of March 31, 2023, the interest rate on the SPV Facility was 7.3%. The average interest rate for borrowings under the SPV Facility was 7.1% for the three months ended March 31, 2023. As of March 31, 2023, MSCC Funding was in compliance with all financial covenants of the SPV Facility.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

MSCC Funding balance sheets as of March 31, 2023 and December 31, 2022 are as follows:

Balance Sheets

(dollars in thousands)

	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Investments at fair value:
Non-Control Investments (cost: $300,018 and $314,752 as of March 31, 2023 and December 31, 2022, respectively)	$	301,102	$	316,507
Cash and cash equivalents	10,865		10,838
Interest and dividend receivable and other assets	3,281		2,828
Accounts receivable to MSCC and its subsidiaries	—		556
Receivable for securities sold	62		369
Deferred financing costs (net of accumulated amortization of $282 and $141 as of March 31, 2023 and December 31, 2022, respectively)	2,679		2,630
Total assets	317,989		333,728
LIABILITIES
SPV Facility	$	170,000	$	200,000
Accounts payable and other liabilities	192		112
Interest payable	1,104		1,272
Total liabilities	171,296		201,384
NET ASSETS
Contributed capital	136,883		126,010
Total undistributed earnings	9,810		6,334
Total net assets	146,693		132,344
Total liabilities and net assets	$	317,989	$	333,728

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

MSCC Funding statement of operations for the three months ended March 31, 2023 are as follows:

Statement of Operations

(dollars in thousands)

(Unaudited)

	March 31, 2023
INVESTMENT INCOME:
Interest, fee and dividend income:
Non‑Control/Non‑Affiliate investments	$	8,717
EXPENSES:
Interest	(3,428)
Management Fee to MSCC	(365)
General and administrative	(57)
Total expenses	(3,850)
NET INVESTMENT INCOME (LOSS)	4,867
NET UNREALIZED APPRECIATION (DEPRECIATION):
Non‑Control/Non‑Affiliate investments	(1,391)
SBIC debentures	—
Total net unrealized appreciation (depreciation)	(1,391)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	3,476

December 2022 Notes

In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due December 1, 2022 (the “December 2022 Notes”) at an issue price of 99.16%. The December 2022 Notes bore interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. In December 2022, Main Street repaid the entire principal amount of the issued and outstanding December 2022 Notes at par value plus the accrued and unpaid interest.

May 2024 Notes

In April 2019, Main Street issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “May 2024 Notes”) at an issue price of 99.125%. Subsequently, in December 2019, Main Street issued an additional $75.0 million aggregate principal amount of the May 2024 Notes at an issue price of 105.0% and, in July 2020, Main Street issued an additional $125.0 million aggregate principal amount at an issue price of 102.7%. The May 2024 Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the May 2024 Notes issued in April 2019. The May 2024 Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness. The May 2024 Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The May 2024 Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year.

As of March 31, 2023, Main Street was in compliance with all covenants and other requirements of the May 2024 Notes.

July 2026 Notes

In January 2021, Main Street issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “July 2026 Notes”) at an issue price of 99.004%. Subsequently, in October 2021, Main Street issued an additional $200.0 million aggregate principal amount of the July 2026 Notes at an issue price of 101.741%. The July 2026

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Notes issued in October 2021 have identical terms as, and are a part of a single series with, the July 2026 Notes issued in January 2021. The July 2026 Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness. The July 2026 Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The July 2026 Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year.

As of March 31, 2023, Main Street was in compliance with all covenants and other requirements of the July 2026 Notes.

December 2025 Notes

In December 2022, Main Street issued $100.0 million in aggregate principal amount of 7.84% Series A unsecured notes due December 23, 2025 (the “December 2025 Series A Notes”) at par. In February 2023, Main Street issued an additional $50.0 million in aggregate principal amount of 7.53% Series B unsecured notes due December 23, 2025 (the “December 2025 Series B Notes” and, together with the December 2025 Series A Notes, the “December 2025 Notes”), at par. The December 2025 Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness. The December 2025 Notes may be redeemed in whole or in part at any time at Main Street’s option at par plus accrued interest to the prepayment date, subject to certain make-whole provisions. The December 2025 Series A Notes and the December 2025 Series B Notes bear interest at a rate of 7.84% and 7.53% per year, respectively, payable semiannually on June 23 and December 23 of each year. In addition, Main Street is obligated to offer to repay the December 2025 Notes at par plus accrued and unpaid interest if certain change in control events occur. The December 2025 Notes will bear interest at an increased rate from the date that (i) the December 2025 Notes receive a below investment grade rating by a rating agency if there is one or two rating agencies providing ratings of the December 2025 Notes, or two-thirds of the rating agencies if there are three rating agencies who are rating the notes (a “Below Investment Grade Event”), or (ii) the ratio of the Company’s consolidated secured indebtedness (other than indebtedness of the Funds or any Structured Subsidiaries) to the value of its consolidated total assets is greater than 0.35 to 1.00 (a “Secured Debt Ratio Event”), to and until the date on which the Below Investment Grade Event and the Secured Debt Ratio Event are no longer continuing. The governing agreement for the December 2025 Notes contains customary terms and conditions for senior unsecured notes issued in a private placement, as well as customary events of default with customary cure and notice periods.

As of March 31, 2023, Main Street was in compliance with all covenants and other requirements of the December 2025 Notes.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE F — FINANCIAL HIGHLIGHTS

	Three Months Ended March 31,
Per Share Data:	2023		2022
NAV at the beginning of the period	$	26.86	$	25.29
Net investment income (1)	1.02		0.73
Net realized gain (loss) (1)(2)	(0.36)		0.05
Net unrealized appreciation (depreciation) (1)(2)	0.44		0.20
Income tax benefit (provision) (1)(2)	(0.10)		(0.07)
Net increase in net assets resulting from operations (1)	1.00		0.91
Dividends paid from net investment income	(0.85)		(0.72)
Dividends paid	(0.85)		(0.72)
Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period	(0.01)		(0.01)
Accretive effect of stock offerings (issuing shares above NAV per share)	0.15		0.35
Accretive effect of DRIP issuance (issuing shares above NAV per share)	0.03		0.03
Other (3)	0.05		0.04
NAV at the end of the period	$	27.23	$	25.89
Market value at the end of the period	$	39.46	$	42.64
Shares outstanding at the end of the period	79,794,089		72,370,407

____________________

(1)Based on weighted-average number of common shares outstanding for the period.

(2)Net realized gains or losses, net unrealized appreciation or depreciation, and income tax provision or benefit can fluctuate significantly from period to period.

(3)Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

	Three Months Ended March 31,
	2023			2022
	(dollars in thousands)
NAV at end of period	$	2,172,922		$	1,873,654
Average NAV	$	2,140,754		$	1,831,250
Average outstanding debt	$	1,992,000		$	1,784,750
Ratio of total expenses, including income tax expense, to average NAV (1)(2)	2.21		%	1.76		%
Ratio of operating expenses to average NAV (2)(3)	1.84		%	1.48		%
Ratio of operating expenses, excluding interest expense, to average NAV (2)(3)	0.67		%	0.57		%
Ratio of net investment income to average NAV (2)	3.78		%	2.85		%
Portfolio turnover ratio (2)	1.54		%	6.49		%
Total investment return (2)(4)	9.13		%	(3.32)		%
Total return based on change in NAV (2)(5)	3.77		%	3.64		%

____________________

(1)Total expenses are the sum of operating expenses and net income tax provision. Net income tax provision includes the accrual of net deferred tax provision relating to the net unrealized appreciation or depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

vary significantly from period to period. Main Street is required to include net deferred tax provision in calculating its total expenses even though these net deferred taxes are not currently payable or receivable.

(2)Not annualized.

(3)Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager of $5.0 million and $2.8 million for the three months ended March 31, 2023 and 2022, respectively.

(4)Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street’s dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(5)Total return based on change in NAV was calculated using the sum of ending NAV plus dividends to stockholders and other non-operating changes during the period, divided by the beginning NAV. Non-operating changes include any items that affect NAV other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

NOTE G — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

Main Street currently pays regular monthly dividends to its stockholders and periodically pays supplemental dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis. Main Street paid regular monthly dividends of $0.225 per share, totaling $53.6 million, or $0.675 per share, for the three months ended March 31, 2023 compared to aggregate regular monthly dividends of $46.0 million, or $0.645 per share, for the three months ended March 31, 2022. Main Street also paid a supplemental dividend of $14.0 million, or $0.175 per share, during the three months ended March 31, 2023 compared to supplemental dividends paid of $5.4 million, or $0.075 per share, during the three months ended March 31, 2022.

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds and Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and qualified dividends, but may also include either one or both of capital gains and return of capital.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the three months ended March 31, 2023 and 2022.

	Three Months Ended March 31,
	2023		2022
	(estimated, dollars in thousands)
Net increase in net assets resulting from operations	$	79,592	$	65,203
Book-tax difference from share-based compensation expense	2,747		2,818
Net unrealized appreciation	(35,118)		(14,752)
Income tax provision	8,114		5,097
Pre-tax book (income) loss not consolidated for tax purposes	15,791		(2,933)
Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates	5,824		2,862
Estimated taxable income (1)	76,950		58,295
Taxable income earned in prior year and carried forward for distribution in current year	49,216		50,834
Taxable income earned prior to period end and carried forward for distribution next period	(76,289)		(72,844)
Dividend payable as of period end and paid in the following period	18,036		15,519
Total distributions accrued or paid to common stockholders	$	67,913	$	51,804

____________________

(1)MSCC’s taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

The Taxable Subsidiaries primarily hold certain equity investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSCC for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

The income tax expense (benefit) for Main Street is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street’s Consolidated Statements of Operations. Main Street’s provision for income taxes was comprised of the following for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023		2022
	(dollars in thousands)
Current tax expense:
Federal	$	140	$	52
State	857		543
Excise	740		714
Total current tax expense	1,737		1,309
Deferred tax expense:
Federal	5,806		2,807
State	571		981
Total deferred tax expense	6,377		3,788
Total income tax provision	$	8,114	$	5,097

The net deferred tax liability at March 31, 2023 and December 31, 2022 was $54.2 million and $47.8 million, respectively, with the change primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards, and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. At March 31, 2023, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2034 through 2037. Any net operating losses generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward period.

NOTE H — COMMON STOCK

Main Street maintains a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the “ATM Program”). During the three months ended March 31, 2023, Main Street sold 1,055,416 shares of its common stock at a weighted-average price of $39.15 per share and raised $41.3 million of gross proceeds under the ATM Program. Net proceeds were $40.9 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2023, sales transactions representing 27,570 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statements of Operations and in the shares used to calculate the NAV per share. In March 2022, Main Street entered into new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of March 31, 2023, 9,407,268 shares remained available for sale under the ATM Program.

During the year ended December 31, 2022, Main Street sold 5,407,382 shares of its common stock at a weighted-average price of $39.29 per share and raised $212.4 million of gross proceeds under the ATM Program. Net proceeds were $209.9 million after commissions to the selling agents on shares sold and offering costs.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

During the year ended December 31, 2022, Main Street completed a public equity offering (the “Equity Offering”) of 1,345,500 shares of common stock at a public offering price of $42.85 per share, including the underwriters’ full exercise of their option to purchase 175,500 additional shares, resulting in total net proceeds, including exercise of the underwriters’ option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $55.1 million.

NOTE I — DIVIDEND REINVESTMENT PLAN

The dividend reinvestment feature of Main Street’s dividend reinvestment and direct stock purchase plan (the “DRIP”) provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, its stockholders who have not “opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC’s common stock on the valuation date determined for each dividend by Main Street’s Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street’s DRIP is administered by its transfer agent on behalf of Main Street’s record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street’s DRIP but may provide a similar dividend reinvestment plan for their clients.

Summarized DRIP information for the three months ended March 31, 2023 and 2022 is as follows:

	Three Months Ended March 31,
	2023		2022
	(dollars in thousands)
DRIP participation	$	7,808	$	4,813
Shares issued for DRIP	199,282		114,043

NOTE J — SHARE-BASED COMPENSATION

Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards (“RSAs”), Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

Main Street’s Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2022 Equity and Incentive Plan (the “Equity and Incentive Plan”). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street’s Board of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of March 31, 2023.

Restricted stock authorized under the plan	5,000,000
Less net restricted stock granted	(48,792)
Restricted stock available for issuance as of March 31, 2023	4,951,208

As of March 31, 2023, the following table summarizes the restricted stock issued to Main Street’s non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2022 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan	300,000
Less net restricted stock granted	(3,825)
Restricted stock available for issuance as of March 31, 2023	296,175

For the three months ended March 31, 2023 and 2022, Main Street recognized total share-based compensation expense of $4.1 million and $2.8 million, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.

Summarized RSAs for the three months ended March 31, 2023 is as follows:

	Three Months Ended March 31, 2023
	Number			Weighted-Average Grant-Date Fair Value
Restricted Stock Awards (RSAs):	of Shares			( per share)
Non-vested, December 31, 2022	817,401
Granted (1)	34,547			38.70
Vested (1)(2)	(35,092)			39.16
Forfeited	(7,581)			40.72
Non-vested, March 31, 2023	809,275
Aggregate intrinsic value as of March 31, 2023 (in thousands)	$	31,934	(3)

All values are in US Dollars. ___________________________

(1)Restricted units generally vest over a three-year period from the grant date (as noted above).

(2)Vested shares included 10,489 shares withheld for payroll taxes paid on behalf of employees.

(3)Aggregate intrinsic value is the product of total non-vested restricted shares as of March 31, 2023 and $39.46 per share, the closing price of our common stock on March 31, 2023.

The total fair value of RSAs that vested during the three months ended March 31, 2023 was $1.4 million.

As of March 31, 2023, there was $21.6 million of total unrecognized compensation expense related to Main Street’s non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of 2.2 years as of March 31, 2023.

NOTE K — COMMITMENTS AND CONTINGENCIES

At March 31, 2023, Main Street had the following outstanding commitments (in thousands):

Investments with equity capital commitments that have not yet funded:	Amount
Brightwood Capital Fund Investments
Brightwood Capital Fund V, LP	$	3,000
Brightwood Capital Fund III, LP	300
	3,300
Freeport Fund Investments
Freeport First Lien Loan Fund III LP	6,733
Freeport Financial SBIC Fund LP	3,841

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

	10,574
Harris Preston Fund Investments
HPEP 4, L.P.	7,668
HPEP 3, L.P.	1,555
HPEP 423 COR, LP	600
2717 MH, L.P.	52
	9,875
MS Private Loan Fund I, LP	750
UnionRock Energy Fund II, LP	2,124
Total Equity Commitments (1)(2)	$	26,623
Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:
Dalton US Inc.	$	16,865
Xenon Arc, Inc.	11,340
HEADLANDS OP-CO LLC	10,125
MS Private Loan Fund I, LP	10,000
JTI Electrical & Mechanical, LLC	8,421
PTL US Bidco, Inc	8,110
AMEREQUIP LLC.	7,704
SI East, LLC	7,500
NinjaTrader, LLC	7,472
Archer Systems, LLC	7,115
Veregy Consolidated, Inc.	5,875
Robbins Bros. Jewelry, Inc.	4,500
South Coast Terminals Holdings, LLC	4,465
Winter Services LLC	4,444
Channel Partners Intermediateco, LLC	4,346
Direct Marketing Solutions, Inc.	4,250
Bettercloud, Inc.	4,189
Microbe Formulas, LLC	3,601
Watterson Brands, LLC	3,453
Classic H&G Holdco, LLC	3,440
Paragon Healthcare, Inc.	3,245
VVS Holdco, LLC	3,200
SPAU Holdings, LLC	3,194
MetalForming AcquireCo, LLC	2,795
Batjer TopCo, LLC	2,700
Infolinks Media Buyco, LLC	2,520
IG Parent Corporation	2,500

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Nebraska Vet AcquireCo, LLC	2,500
CaseWorthy, Inc.	2,459
West Star Aviation Acquisition, LLC	2,411
Centre Technologies Holdings, LLC	2,400
GRT Rubber Technologies LLC	2,385
ArborWorks, LLC	2,339
NWN Corporation	2,335
Bluestem Brands, Inc.	2,154
MB2 Dental Solutions, LLC	2,023
PPL RVs, Inc.	2,000
The Affiliati Network, LLC	2,000
Cody Pools, Inc.	1,896
Elgin AcquireCo, LLC	1,877
GULF PACIFIC ACQUISITION, LLC	1,868
Mako Steel, LP	1,826
Johnson Downie Opco, LLC	1,800
Career Team Holdings, LLC	1,800
Engineering Research & Consulting, LLC	1,638
MonitorUS Holding, LLC	1,634
Trantech Radiator Topco, LLC	1,600
Colonial Electric Company LLC	1,600
Chamberlin Holding LLC	1,600
Roof Opco, LLC	1,556
Burning Glass Intermediate Holding Company, Inc.	1,549
Pearl Meyer Topco LLC	1,500
AVEX Aviation Holdings, LLC	1,474
ATS Operating, LLC	1,440
RTIC Subsidiary Holdings, LLC	1,370
American Health Staffing Group, Inc.	1,333
Evergreen North America Acquisitions, LLC	1,313
Project Eagle Holdings, LLC	1,250
Gamber-Johnson Holdings, LLC	1,200
GS HVAM Intermediate, LLC	1,136
AB Centers Acquisition Corporation	1,112
KMS, LLC	1,086
Wahoo Fitness Acquisition L.L.C.	1,000
Eastern Wholesale Fence LLC	967
RA Outdoors LLC	894
Orttech Holdings, LLC	800
Mystic Logistics Holdings, LLC	800
Project BarFly, LLC	760
DTE Enterprises, LLC	750
Jensen Jewelers of Idaho, LLC	500
Jackmont Hospitality, Inc.	400
Clad-Rex Steel, LLC	400

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Wall Street Prep, Inc.	400
Gulf Publishing Holdings, LLC	400
Flame King Holdings, LLC	400
Adams Publishing Group, LLC	394
Invincible Boat Company, LLC.	353
ASC Interests, LLC	300
AAC Holdings, Inc.	240
Acousti Engineering Company of Florida	53
Acumera, Inc.	15
Interface Security Systems, L.L.C	1
Total Loan Commitments	228,660
Total Commitments	$	255,283

____________________

(1)This table excludes commitments related to six additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses. The Company does not expect any material future capital to be called on its commitment to these investments and as a result has excluded those commitments from this table.

(2)This table excludes commitments related to three additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses or for follow on investments in existing portfolio companies. The Company does not expect any material future capital to be called on its commitment to these investments to pay fund expenses, and based on representations from the fund manager, the Company does not expect any further capital will be called on its commitment for follow on investments. As a result, the Company has excluded those commitments from this table.

Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facilities). Main Street follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had no unrealized appreciation or depreciation on the outstanding unfunded commitments as of March 31, 2023.

Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street’s financial condition or results of operations in any future reporting period.

NOTE L — RELATED PARTY TRANSACTIONS

As discussed further in Note D — External Investment Manager, the External Investment Manager is treated as a wholly-owned portfolio company of Main Street and is included as part of Main Street’s Investment Portfolio. At March 31, 2023, Main Street had a receivable of $9.4 million due from the External Investment Manager, which included (i) $6.3 million related primarily to operating expenses incurred by Main Street as required to support the External Investment Manager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D — External Investment Manager) and (ii) $3.1 million of dividends declared but not paid by the External Investment Manager. MSCC has entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for the External

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Investment Manager’s relationship with MSC Income and its other clients (see further discussion in Note A.1 — Organization and Basis of Presentation — Organization and Note D — External Investment Manager).

From time to time, Main Street may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by Main Street’s Board of Directors.

In May 2022, Main Street purchased 94,697 shares of common stock of MSC Income from MSC Income at the price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its May dividend on such date. Main Street’s purchase of MSC Income common stock was unanimously approved by the Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of March 31, 2023, Main Street owned 94,697 shares of MSC Income. In addition, certain of Main Street’s officers and employees own shares of MSC Income and therefore have direct pecuniary interests in MSC Income.

In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund to provide investment advisory and management services in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s initial closing in December 2020, Main Street committed to contribute up to $10.0 million as a limited partner and is entitled to distributions on such interest. In February 2022, Main Street increased its total commitment to the Private Loan Fund from $10.0 million to $15.0 million. In addition, certain of Main Street’s officers and employees (and certain of their immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. As of March 31, 2023, Main Street has funded $14.3 million of its limited partner commitment and Main Street’s unfunded commitment was $0.7 million. Main Street’s limited partner commitment to the Private Loan Fund was unanimously approved by the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.

Additionally, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and was subsequently amended on November 30, 2021 and on December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.

In March 2022, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to a Secured Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0 million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. As of March 31, 2023, there were no borrowings outstanding under the PL Fund 2022 Note.

In November 2015, Main Street’s Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of March 31, 2023, $17.2

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MAIN STREET CAPITAL CORPORATION

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

million of compensation, plus net unrealized gains and losses and investment income, and minus previous distributions, was deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.2 million is deferred into phantom Main Street stock units, representing 156,122 shares of Main Street’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the Consolidated Statements of Changes in Net Assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main Street’s Consolidated Statements of Operations as the deferred fees represented by such phantom stock units are earned over the service period. The dividend amounts related to additional phantom stock units are included in the Consolidated Statements of Changes in Net Assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.

NOTE M — SUBSEQUENT EVENTS

(unaudited)

Company	Total Rate	Base Rate	Spread	PIK Rate	Type of Investment(1) (10) (11)	Geography	Amount of<br>Realized<br>Gain/(Loss)		Amount of<br>Unrealized<br>Gain/(Loss)		Amount of<br>Interest,<br>Fees or<br>Dividends<br>Credited to<br>Income(2)		December 31,<br>2022 Fair Value (13)		Gross<br>Additions(3)		Gross<br>Reductions(4)		March 31,<br>2023 Fair Value (13)
Amounts related to investments transferred to or from other 1940 Act classification during the period							—		—		171		14,914		—		—		—
Total Affiliate investments							$	(26,264)	$	33,141	$	17,456	$	618,359	$	81,567	$	58,785	$	626,227

____________________

(1)The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of Investments included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

(2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred from other 1940 Act classifications during the period.”

(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2023 for control investments located in this region was $444,151. This represented 25.4% of net assets as of March 31, 2023. The fair value as of March 31, 2023 for affiliate investments located in this region was $77,468. This represented 12.4% of net assets as of March 31, 2023.

(6)Portfolio company located in the Northeast region and Canada as determined by location of the corporate headquarters. The fair value as of March 31, 2023 for control investments located in this region was $163,180. This represented 9.3% of net assets as of March 31, 2023. The fair value as of March 31, 2023 for affiliate investments located in this region was $109,543. This represented 17.5% of net assets as of March 31, 2023.

(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2023 for control investments located in this region was $49,003. This represented 2.8% of net assets as of March 31, 2023. The fair value as of March 31, 2023 for affiliate investments located in this region was $200,667. This represented 32.0% of net assets as of March 31, 2023.

(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2023 for control investments located in this region was $639,016. This represented 36.6% of net assets as of March 31, 2023. The fair value as of March 31, 2023 for affiliate investments located in this region was $84,732. This represented 13.5% of net assets as of March 31, 2023.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates (Continued)

March 31, 2023

(dollars in thousands)

(unaudited)

(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2023 for control investments located in this region was $450,653. This represented 25.8% of net assets as of March 31, 2023. The fair value as of March 31, 2023 for affiliate investments located in this region was $153,817. This represented 24.6% of net assets as of March 31, 2023.

(10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.

(dollars in thousands)

(unaudited)

Company	Total Rate	Base Rate	Spread	PIK Rate	Type of Investment(1)(10)(11)	Geography	Amount of<br>Realized<br>Gain/(Loss)		Amount of<br>Unrealized<br>Gain/(Loss)		Amount of<br>Interest,<br>Fees or<br>Dividends<br>Credited to<br>Income(2)		December 31,<br>2021<br>Fair Value		Gross<br>Additions(3)		Gross<br>Reductions(4)		March 31,<br>2022<br>Fair Value
Amounts related to investments transferred to or from other 1940 Act classification during the period							—		—		—		(6,123)		—		—		—
Total Affiliate investments							$	692	$	3,041	$	13,917	$	549,214	$	13,981	$	9,879	$	559,439

________________

(2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.”

(5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2022 for control investments located in this region was $338,390. This represented 22.8% of net assets as of March 31, 2022. The fair value as of March 31, 2022 for affiliate investments located in this region was $69,637. This represented 12.4% of net assets as of March 31, 2022.

(6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2022 for control investments located in this region was $134,636. This represented 9.1% of net assets as of March 31, 2022. The fair value as of March 31, 2022 for affiliate investments located in this region was $100,269. This represented 17.9% of net assets as of March 31, 2022.

(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2022 for control investments located in this region was $18,443. This represented 1.2% of net assets as of March 31, 2022. The fair value as of March 31, 2022 for affiliate investments located in this region was $165,903. This represented 29.7% of net assets as of March 31, 2022.

(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2022 for control investments located in this region was $587,631. This represented 39.5% of net assets as of March 31, 2022. The fair value as of March 31, 2022 for affiliate investments located in this region was $107,324. This represented 19.2% of net assets as of March 31, 2022.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates (Continued)

March 31, 2022

(dollars in thousands)

(unaudited)

(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2022 for control investments located in this region was $407,563. This represented 27.4% of net assets as of March 31, 2022. The fair value as of March 31, 2022 for affiliate investments located in this region was $116,306. This represented 20.8% of net assets as of March 31, 2022.

(10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.

(12)Investment has an unfunded commitment as of March 31, 2022 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation the factors referenced in Item 1A entitled “Risk Factors” below in Part II of this Quarterly Report on Form 10-Q, if any, and discussed in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023 and elsewhere in this Quarterly Report on Form 10-Q and our other SEC filings. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas.

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 Quarterly Report on Form 10-Q, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including subsequent periodic and current reports.

This discussion should be read in conjunction with our consolidated financial statements as of December 31, 2022, and for the year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

ORGANIZATION

Main Street Capital Corporation (“MSCC”, or together with its consolidated subsidiaries, “Main Street” or the “Company”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market (“Middle Market”) companies. The portfolio investments of Main Street are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides “one-stop” financing alternatives within its LMM investment strategy. Main Street invests primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

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investment management activities for External Parties, it is accounted for as a portfolio investment of Main Street and is not included as a consolidated subsidiary in Main Street’s consolidated financial statements.

MSCC has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes. MSCC also has certain direct and indirect wholly-owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”).

OVERVIEW OF OUR BUSINESS

Our principal investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve our investment objective through our LMM, Private Loan (as defined below) and Middle Market investment strategies. Our LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and $150 million and our LMM portfolio investments generally range in size from $5 million to $75 million. Our private loan (“Private Loan”) investment strategy involves investments in companies that are consistent with the size of the companies in our LMM and Middle Market investment strategies, and our Private Loan investments generally range in size from $10 million to $75 million. Our Middle Market investment strategy involves investments in companies that are generally larger in size than our LMM companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $25 million.

We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participation. Our ability to invest across a company’s capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a “one stop” financing solution. Providing customized, “one-stop” financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

Private Loan investments primarily consist of debt securities that have primarily been originated directly by us or, to a lesser extent, through our strategic relationships with other investment funds on a collaborative basis through investments that are often referred to in the debt markets as “club deals” because of the small lender group size. Our Private Loan investments are typically made to support a company owned by or in the process of being acquired by a private equity sponsor. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. We may also invest alongside the private equity sponsor in the equity securities of our Private Loan portfolio companies.

Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing syndicated loans or debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for our LMM, Private Loan or Middle Market portfolio investments, including investments which may

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be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

Subject to changes in our cash and overall liquidity, our Investment Portfolio (as defined below) may also include short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. These assets are typically expected to be liquidated in one year or less and are not expected to be a significant portion of the overall Investment Portfolio. The “Investment Portfolio”, as used herein, refers to all of our investments in LMM companies (including both our LMM and Private Loan portfolio investments) and investments in Middle Market companies (including both our Private Loan and Middle Market portfolio investments), Other Portfolio investments and our investment in the External Investment Manager.

Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed.

Our portfolio investments are generally made through MSCC, the Taxable Subsidiaries, the Funds and the Structured Subsidiaries. MSCC, the Taxable Subsidiaries, the Funds and the Structured Subsidiaries share the same investment strategies and criteria, although they are subject to different regulatory regimes (see Regulation). An investor’s return in MSCC will depend, in part, on the Taxable Subsidiaries’, the Funds’ and the Structured Subsidiaries’ investment returns as they are wholly-owned subsidiaries of MSCC.

The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a better alignment of interests between our management team and our employees and our shareholders and a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio and our External Investment Manager’s asset management business (as defined below). The ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% and 1.5%, for the trailing twelve months ended March 31, 2023 and 2022, respectively, and 1.4% for the year ended December 31, 2022. The ratio of our total operating expenses, including interest expense, as a percentage of our quarterly average total assets was 3.5% and 3.3% for the trailing twelve months ended March 31, 2023 and 2022, respectively, and 3.3% for the year ended December 31, 2022. Our ratio of expenses as a percentage of our average net asset value is described in greater detail in Note F – Financial Highlights to the consolidated financial statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Additionally, the External Investment Manager has entered into an Investment Management Agreement with MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The

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External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in exchange for asset-based and incentive fees.

The External Investment Manager earns management fees based on the assets of the funds and accounts under management and may earn incentive fees, or a carried interest, based on the performance of the funds and accounts managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. The total contribution to our net investment income was $8.1 million and $5.1 million for the three months ended March 31, 2023 and 2022, respectively. The External Investment Manager earned base management fee income of $5.5 million and $5.4 million during the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023 and 2022, the External Investment Manager earned incentive fee income of $3.3 million and $0.1 million, respectively. During both of the three months ended March 31, 2023 and 2022, the External Investment Manager earned administrative services fee income of $0.2 million. Our total expenses are net of expenses allocated to the External Investment Manager for the March 31, 2023 and 2022 of $5.0 million and $2.8 million, respectively.

We have received an exemptive order from the SEC permitting co-investments among us, MSC Income and other funds and clients advised by the External Investment Manager in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made co-investments with, and in the future intend to continue to make co-investments with MSC Income, the Private Loan Fund and other clients advised by the External Investment Manager, in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for us and the External Investment Manager’s advised clients, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because the External Investment Manager may receive performance-based fee compensation from funds and clients advised by the External Investment Manager, this may provide the Company and the External Investment Manager an incentive to allocate opportunities to other participating funds and clients instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict, including oversight by the independent members of our Board of Directors. In addition to the co-investment program described above, we also co-invest in syndicated deals and other transactions where price is the only negotiated point by us and our affiliates.

INVESTMENT PORTFOLIO SUMMARY

The following tables provide a summary of our investments in the LMM, Private Loan and Middle Market portfolios as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager which are discussed further below):

	As of March 31, 2023
	LMM (a)			Private Loan			Middle Market
	(dollars in millions)
Number of portfolio companies	79			86			30
Fair value	$	2,112.6		$	1,491.4		$	306.2
Cost	$	1,727.9		$	1,527.6		$	391.0
Debt investments as a % of portfolio (at cost)	72.9		%	97.1		%	93.6		%
Equity investments as a % of portfolio (at cost)	27.1		%	2.9		%	6.4		%
% of debt investments at cost secured by first priority lien	99.2		%	99.5		%	99.3		%
Weighted-average annual effective yield (b)	12.6		%	12.4		%	11.8		%
Average EBITDA (c)	$	8.3		$	38.1		$	65.4

____________________

(a)At March 31, 2023, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2023, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of March 31, 2023 including debt investments on non-accrual status was 12.2% for our LMM portfolio, 12.0% for our Private Loan portfolio and 10.4% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in

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shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including four LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

	As of December 31, 2022
	LMM (a)			Private Loan			Middle Market
	(dollars in millions)
Number of portfolio companies	78			85			31
Fair value	$	2,060.5		$	1,471.5		$	329.1
Cost	$	1,719.9		$	1,500.3		$	401.7
Debt investments as a % of portfolio (at cost)	73.7		%	97.1		%	93.8		%
Equity investments as a % of portfolio (at cost)	26.3		%	2.9		%	6.2		%
% of debt investments at cost secured by first priority lien	99.1		%	99.6		%	98.8		%
Weighted-average annual effective yield (b)	12.3		%	11.6		%	11.0		%
Average EBITDA (c)	$	8.0		$	38.1		$	68.7

____________________

(a)At December 31, 2022, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2022, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of December 31, 2022 including debt investments on non-accrual status was 11.6% for our LMM portfolio, 11.2% for our Private Loan portfolio and 10.3% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

For the three months ended March 31, 2023 and 2022, we achieved an annualized total return on investments of 13.4% and 11.8%, respectively. For the year ended December 31, 2022, we achieved a total return on investments of 11.1%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

As of March 31, 2023, we had Other Portfolio investments in 14 companies, collectively totaling $116.1 million in fair value and $119.7 million in cost basis and which comprised 2.8% and 3.2% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2022, we had Other Portfolio investments in 14 companies, collectively totaling $116.3 million in fair value and $120.4 million in cost basis and which comprised 2.8% and 3.2% of our Investment Portfolio at fair value and cost, respectively.

As previously discussed, the External Investment Manager is a wholly-owned subsidiary that is treated as a portfolio investment. As of March 31, 2023, this investment had a fair value of $132.7 million and a cost basis of $29.5 million, which comprised 3.2% and 0.8% of our Investment Portfolio at fair value and cost, respectively. As of

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December 31, 2022, this investment had a fair value of $122.9 million and a cost basis of $29.5 million, which comprised 3.0% and 0.8% of our Investment Portfolio at fair value and cost, respectively.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations.

Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater detail in Note B — Summary of Significant Accounting Policies to the consolidated financial statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Investment Portfolio Valuation

The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both March 31, 2023 and December 31, 2022, our Investment Portfolio valued at fair value represented 97% of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See Note B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a detailed discussion of our Investment Portfolio valuation process and procedures.

Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of our executive officers to serve as the Board of Directors’ valuation designee. We believe our Investment Portfolio as of March 31, 2023 and December 31, 2022 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

Revenue Recognition

Interest and Dividend Income

We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service its debt obligation, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has

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demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, we remove it from non-accrual status.

Fee Income

We may periodically provide services, including structuring and advisory services to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are generally deferred and accreted into income over the life of the financing.

Payment-in-Kind (“PIK”) Interest and Cumulative Dividends

We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies — Income Taxes included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2023 and 2022, (i) 2.4% and 1.2%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.3% and 1.1%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

INVESTMENT PORTFOLIO COMPOSITION

The following tables summarize the composition of our total combined LMM, Private Loan and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM, Private Loan and Middle Market portfolio investments as of March 31, 2023 and December 31, 2022 (this information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager).

Cost:	March 31, 2023		December 31, 2022
First lien debt	84.7	%	85.0	%
Equity	14.6		14.2
Second lien debt	0.3		0.3
Equity warrants	0.2		0.2
Other	0.2		0.3
	100.0	%	100.0	%	Fair Value:	March 31, 2023	December 31, 2022
---	---	---	---	---
First lien debt	74.6	%	75.2	%
Equity	24.7		24.1
Second lien debt	0.4		0.3
Equity warrants	0.1		0.1
Other	0.2		0.3
	100.0	%	100.0	%

Our LMM, Private Loan and Middle Market portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment-grade debt and equity investments in our Investment Portfolio. Please see Item 1A. Risk

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Factors — Risks Related to our Investments contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

We utilize an internally developed investment rating system to rate the performance of each LMM, Private Loan and Middle Market portfolio company and to monitor our expected level of returns on each of our LMM, Private Loan and Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to the portfolio company.

As of March 31, 2023, our total Investment Portfolio had 13 investments on non-accrual status, which comprised 0.6% of its fair value and 3.2% of its cost. As of December 31, 2022, our total Investment Portfolio had 12 investments on non-accrual status, which comprised 0.6% of its fair value and 3.7% of its cost.

The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.

DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Comparison of the three months ended March 31, 2023 and 2022

Set forth below is a comparison of the results of operations, and a reconciliation of net investment income to distributable net investment income, for the three months ended March 31, 2023 and 2022.

	Three Months Ended<br>March 31,				Net Change
	2023		2022		Amount		%
	(dollars in thousands)
Total investment income	$	120,254	$	79,395	$	40,859	51	%
Total expenses	(39,287)		(27,183)		(12,104)		45	%
Net investment income	80,967		52,212		28,755		55	%
Net realized gain (loss) from investments	(28,379)		3,336		(31,715)		NM
Net unrealized appreciation from investments	35,118		14,752		20,366		NM
Income tax provision	(8,114)		(5,097)		(3,017)		NM
Net increase in net assets resulting from operations	$	79,592	$	65,203	$	14,389	22	%

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	Three Months Ended<br>March 31,				Net Change
	2023		2022		Amount		%
	(dollars in thousands, except per share amounts)
Net investment income	$	80,967	$	52,212	$	28,755	55	%
Share‑based compensation expense	4,100		2,818		1,282		45	%
Deferred compensation expense (benefit)	376		(376)		752		NM
Distributable net investment income (a)	$	85,443	$	54,654	$	30,789	56	%
Net investment income per share—Basic and diluted	$	1.02	$	0.73	$	0.29	40	%
Distributable net investment income per share—Basic and diluted (a)	$	1.07	$	0.76	$	0.31	41	%

____________________

NM — Net Change % not meaningful

(a)Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impacts of share-based compensation expense and deferred compensation expense or benefit. We believe presenting distributable net investment income and the related per share amounts is useful and appropriate supplemental disclosure for analyzing our financial performance since share-based compensation does not require settlement in cash and deferred compensation expense or benefit does not result in a net cash impact to Main Street upon settlement. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income or other earnings measures presented in accordance with U.S. GAAP and should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is detailed in the table above.

Investment Income

Total investment income for the three months ended March 31, 2023 was $120.3 million, a 51% increase from the $79.4 million of total investment income for the corresponding period of 2022. The following table provides a summary of the changes in the comparable period activity.

	Three Months Ended<br>March 31,				Net Change
	2023		2022		Amount		%
	(dollars in thousands)
Interest income	$	93,392	$	59,441	$	33,951	57	%	(a)
Dividend income	24,222		16,622		7,600		46	%	(b)
Fee income	2,640		3,332		(692)		(21)	%	(c)
Total investment income	$	120,254	$	79,395	$	40,859	51	%	(d)

____________________

(a)The increase in interest income was primarily due to (i) higher average levels of Investment Portfolio debt investments, (ii) an increase in interest rates on floating rate Investment Portfolio debt investments primarily resulting from increases in benchmark index rates and (iii) an increase in interest rate spreads on new investments over the prior year.

(b)The increase in dividend income from Investment Portfolio equity investments was primarily a result of a (i) $7.4 million increase related to dividend income considered to be less consistent or non-recurring and (ii) continued strong dividend income from a variety of portfolio companies.

(c)The decrease in fee income was primarily related to a $1.5 million decrease related to lower originations of Investment Portfolio investments, partially offset by a $0.8 million increase in fees received from refinancing and prepayment of debt investments.

(d)The increase in total investment income includes a net increase of $8.1 million in the impact of certain income considered less consistent or non-recurring, including a $7.4 million increase in dividend income and a $0.7 million increase in total accelerated prepayment and other activity related to certain Investment Portfolio debt investments.

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Expenses

Total expenses for the three months ended March 31, 2023 were $39.3 million, a 45% increase from the $27.2 million in the corresponding period of 2022. The following table provides a summary of the changes in the comparable period activity.

	Three Months Ended<br>March 31,				Net Change
	2023		2022		Amount		%
	(dollars in thousands)
Cash compensation	$	10,735	$	7,645	$	3,090	40	%	(a)
Deferred compensation plan expense (benefit)	376		(376)		752		200	%	(b)
Compensation	11,111		7,269		3,842		53	%
General and administrative	4,077		3,226		851		26	%
Interest	24,997		16,687		8,310		50	%	(c)
Share-based compensation	4,100		2,818		1,282		46	%	(d)
Gross expenses	44,285		30,000		14,285		48	%
Expenses allocated to the External Investment Manager	(4,998)		(2,817)		(2,181)		77	%	(e)
Total expenses	$	39,287	$	27,183	$	12,104	45	%

____________________

(a)The increase in cash compensation was primarily related to increased incentive compensation accruals, increased base compensation rates and increased headcount.

(b)The increase in non-cash deferred compensation plan expense was a result of compensation expense recorded in the first quarter of 2023 resulting from an increase in the fair value of deferred compensation plan assets and corresponding liabilities in the quarter compared to a decrease in compensation expense resulting from a decrease in such fair values in the corresponding period of 2022.

(c)The increase in interest expense was primarily related to (i) an increased weighted average interest rate on our debt obligations resulting from the addition of the special purpose vehicle revolving credit facility (the “SPV Facility”) and the December 2025 Notes at higher contractual interest rates and an increased average interest rate on our multi-year corporate-level revolving credit facility (the “Corporate Facility” and, together with the SPV Facility, the “Credit Facilities” due to increases in benchmark index rates and (ii) increased average outstanding borrowings to fund our investment activity and support the growth of our Investment Portfolio.

(d)Share-based compensation increased $1.3 million in the first quarter of 2023 from the comparable period of the prior year, principally attributable to an increase in incentive based grants related to incentive compensation awards for 2022 and the accelerated vesting of certain prior incentive grants.

(e)The increase in expenses allocated to the External Investment Manager was primarily related to increased overall operating costs at Main Street, an increase in assets under management and the positive operating results from the assets managed for clients.

Net Investment Income

Net investment income for the three months ended March 31, 2023 increased 55% to $81.0 million, or $1.02 per share, compared to net investment income of $52.2 million, or $0.73 per share, in the corresponding period of 2022. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact of the increase in weighted average shares outstanding for the three months ended March 31, 2023, primarily due to shares issued over the last twelve months through our (i) public offering in August 2022 and at-the-market (“ATM”) program, (ii) equity incentive plans and (iii) dividend reinvestment plan. The increase in net investment income on a per share basis includes a $0.10 per share increase in investment income considered less consistent or non-recurring, partially offset by an increase in deferred compensation expense of $0.01 per share resulting from the comparable period difference in the change in fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.

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Distributable Net Investment Income

Distributable net investment income for the three months ended March 31, 2023 increased 56% to $85.4 million, or $1.07 per share, compared with $54.7 million, or $0.76 per share, in the corresponding period of 2022. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding the impact of share-based compensation expense and deferred compensation expense (benefit), both as discussed above. The increase in distributable net investment income per share reflects the net impact of the increase in weighted average shares outstanding for the three months ended March 31, 2023, primarily due to shares issued over the last twelve months through our (i) public offering in August 2022 and ATM program, (ii) equity incentive plans and (iii) dividend reinvestment plan. The increase in distributable net investment income on a per share basis includes a $0.10 per share increase in investment income considered less consistent or non-recurring, as discussed above.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized loss on investments of $28.4 million for the three months ended March 31, 2023:

	Three Months Ended March 31, 2023
	Full Exits			Partial Exits			Restructures			Other (a)		Total
	Net Gain/(Loss)		# of Investments	Net Gain/(Loss)		# of Investments	Net Gain/(Loss)		# of Investments	Net Gain/(Loss)		Net Gain/(Loss)
	(dollars in thousands)
LMM portfolio	$	—	—	$	(29,526)	1	$	(3,597)	1	$	2	$	(33,121)
Private Loan portfolio	868		1	—		—	—		—	(128)		740
Middle Market portfolio	3,248		1	—		—	—		—	56		3,304
Other Portfolio	—		—	631		1	—		—	67		698
Total net realized gain/(loss)	$	4,116	2	$	(28,895)	2	$	(3,597)	1	$	(3)	$	(28,379)

____________________

(a)Other activity includes realized gains and losses from transactions involving nine portfolio companies which are not considered to be significant individually or in the aggregate.

Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized appreciation of $35.1 million for the three months ended March 31, 2023:

	Three Months Ended March 31, 2023
	LMM(a)		Private<br>Loan		Middle<br>Market		Other			Total
	(dollars in thousands)
Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period	$	32,940	$	124	$	(3,248)	$	(698)		$	29,118
Net unrealized appreciation (depreciation) relating to portfolio investments	11,164		(7,514)		(8,909)		11,259		(b)	6,000
Total net unrealized appreciation (depreciation) relating to portfolio investments	$	44,104	$	(7,390)	$	(12,157)	$	10,561		$	35,118

____________________

(a)Includes unrealized appreciation on 29 LMM portfolio investments and unrealized depreciation on 23 LMM portfolio investments.

(b)Includes (i) $9.7 million of unrealized appreciation relating to the External Investment Manager, (ii) $1.1 million of net unrealized appreciation relating to the Other Portfolio and (iii) $0.4 million of unrealized appreciation relating to the assets of the deferred compensation plan.

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Income Tax Provision

The income tax provision for the three months ended March 31, 2023 of $8.1 million principally consisted of (i) a deferred tax provision of $6.4 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $1.7 million, related to a $1.0 million provision for current U.S. federal and state income taxes and a $0.7 million provision for excise tax on our estimated undistributed taxable income. The income tax provision for the three months ended March 31, 2022 of $5.1 million principally consisted of (i) a deferred tax provision of $3.8 million and (ii) a current tax provision of $1.3 million primarily related to a $0.7 million provision for excise tax on our estimated undistributed taxable income and a $0.6 million provision for current U.S. federal and state income taxes.

Net Increase in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the three months ended March 31, 2023 was $79.6 million, or $1.00 per share, compared with $65.2 million, or $0.91 per share, during the three months ended March 31, 2022. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

For the three months ended March 31, 2023, we realized a net decrease in cash and cash equivalents of $9.4 million, which is the result of $20.0 million of cash provided by our operating activities and $29.3 million of cash used in our financing activities.

The $20.0 million of cash provided by our operating activities resulted primarily from (i) cash flows that we generated from the operating profits earned totaling $77.8 million, which is our distributable net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs and (ii) cash proceeds totaling $63.5 million from the sales and repayments of debt investments and sales of and return on capital from equity investments, partially offset by (i) cash uses totaling $109.0 million for the funding of new and follow-on portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2022 and (ii) cash payments of $12.3 million related to changes in other assets and liabilities.

The $29.3 million of cash used in our financing activities principally consisted of (i) $59.6 million in dividends paid to stockholders of our common stock (ii) $43.0 million in net repayments from our Corporate Facility and the SPV Facility, (iii) $16.0 million in repayments of SBIC debentures, (iv) $1.2 million in debt issuance costs and (v) $0.4 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock, partially offset by (i) $50.0 million in proceeds from the issuance of additional aggregate principal amount of the December 2025 Notes (as defined below) and (ii) $40.9 million in net cash proceeds from equity offerings from our ATM Program (as described below) and direct stock purchase plan.

Capital Resources

As of March 31, 2023, we had $39.8 million in cash and cash equivalents and $671.0 million of unused capacity under the Credit Facilities which we maintain to support our investment and operating activities. As of March 31, 2023, our NAV totaled $2,172.9 million, or $27.23 per share.

As of March 31, 2023, we had $394.0 million outstanding and $586.0 million of undrawn commitments under the Corporate Facility, and $170.0 million outstanding and $85.0 million of undrawn commitments under our SPV Facility, both of which we estimated approximated fair value. Availability under our Credit Facilities is subject to certain leverage and borrowing base limitations, various covenants, reporting requirements and other customary requirements for similar credit facilities. For further information on our Credit Facilities, including key terms and financial covenants, refer to Note E — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Under

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existing SBA-approved commitments, we had $334.0 million of outstanding SBIC debentures guaranteed by the SBA as of March 31, 2023 through our wholly-owned SBICs, which bear a weighted-average annual fixed interest rate of 2.9%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in March 2024, and the weighted-average remaining duration is 5.1 years as of March 31, 2023. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds.

In April 2019, we issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “May 2024 Notes”). In December 2019 and July 2020, we issued an additional $75.0 million and $125.0 million, respectively, in aggregate principal amount of the May 2024 Notes. The outstanding aggregate principal amount of the May 2024 Notes was $450.0 million as of both March 31, 2023 and March 31, 2022.

In January 2021, we issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “July 2026 Notes”). In October 2021, we issued an additional $200.0 million in aggregate principal amount of the July 2026 Notes. The outstanding aggregate principal amount of the July 2026 Notes was $500.0 million as of both March 31, 2023 and March 31, 2022.

In December 2022, we issued $100.0 million in aggregate principal amount of 7.84% Series A unsecured notes due December 23, 2025 (the “December 2025 Notes”). In February 2023, we issued an additional $50.0 million in aggregate principal amount of the December 2025 Notes bearing interest at a fixed rate of 7.53% per year. The outstanding aggregate principal amount of the December 2025 Notes as of March 31, 2023 and December 31, 2022 was $150.0 million and $100.0 million, respectively.

We maintain a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the “ATM Program”).

During the three months ended March 31, 2023, we sold 1,055,416 shares of our common stock at a weighted-average price of $39.15 per share and raised $41.3 million of gross proceeds under the ATM Program. Net proceeds were $40.9 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2023, sales transactions representing 27,570 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statements of Operations and in the shares used to calculate the NAV per share. As of March 31, 2023, 9,407,268 shares remained available for sale under the ATM Program.

During the year ended December 31, 2022, we sold 5,407,382 shares of our common stock at a weighted-average price of $39.29 per share and raised $212.4 million of gross proceeds under the ATM Program. Net proceeds were $209.9 million after commissions to the selling agents on shares sold and offering costs.

During the year ended December 31, 2022, we completed a public equity offering (the “Equity Offering”) of 1,345,500 shares of common stock at a public offering price of $42.85 per share, including the underwriters’ full exercise of their option to purchase 175,500 additional shares, resulting in total net proceeds, including exercise of the underwriters’ option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $55.1 million.

We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facilities, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and repayments of note and debenture obligations as they come due.

We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Private Loan and Middle Market portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. We may also invest in short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid

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than investments within the other portfolios. Short-term portfolio investments consist primarily of investments in secured debt investments and independently rated debt investments.

If our common stock trades below our NAV per share, we will generally not be able to issue additional common stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current NAV per share of our common stock at our 2023 Annual Meeting of Stockholders, and have not sought such authorization since 2012, because our common stock price per share has generally traded significantly above the NAV per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current NAV per share.

In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income.

In addition, as a BDC, we generally are required to meet a coverage ratio, or BDC asset coverage ratio, of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by the Funds and any other wholly-owned subsidiaries of ours which operate as SBICs from the BDC asset coverage ratio which, in turn, enables us to fund more investments with debt capital. In May 2022, our stockholders also approved the application of the reduced BDC asset coverage ratio. As a result, the BDC asset coverage ratio applicable to us decreased from 200% to 150% effective May 3, 2022. As of March 31, 2023, our BDC asset coverage ratio was 230%.

Although we have been able to secure access to additional liquidity, including through the Credit Facilities, public and private debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

Recently Issued or Adopted Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. For a description of recently issued or adopted accounting standards, see Note B.13. — Summary of Significant Accounting Policies — Recently Issued or Adopted Accounting Standards included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Inflation

Inflation has not historically had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, specifically including over the last few years, as a result of recent geopolitical events, supply chain and labor issues, and may continue to experience, the increasing impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption. These issues and challenges related to inflation are receiving significant attention from our investment teams and the management teams of our portfolio companies as we work to manage these growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to affect their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative effect on the fair value of our investments in these portfolio companies. The combined impacts therefrom in turn could negatively affect our results of operations.

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. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the Consolidated Balance Sheets. At March 31, 2023, we had a total of $255.3 million in outstanding commitments comprised of (i) 82 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) 10 investments with equity capital commitments that had not been fully called.

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Contractual Obligations

As of March 31, 2023, the future fixed commitments for cash payments in connection with our SBIC debentures, the December 2025 Notes, the May 2024 Notes, the July 2026 Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows:

	2023		2024		2025		2026		2027		Thereafter		Total
	(dollars in thousands)
July 2026 Notes	$	—	$	—	$	—	$	500,000	$	—	$	—	$	500,000
Interest due on July 2026 Notes	7,517		15,000		15,000		15,000		—		—		52,517
May 2024 Notes	—		450,000		—		—		—		—		450,000
Interest due on May 2024 Notes	23,400		11,700		—		—		—		—		35,100
SBIC debentures	—		63,800		—		—		75,000		195,200		334,000
Interest due on SBIC debentures	4,939		8,455		7,228		7,228		6,512		9,053		43,415
December 2025 Notes	—		—		150,000		—		—		—		150,000
Interest due on December 2025 Notes	11,166		11,605		11,637		—		—		—		34,408
Operating Lease Obligation (1)	389		1,020		1,115		1,135		1,155		7,673		12,487
Total	$	47,411	$	561,580	$	184,980	$	523,363	$	82,667	$	211,926	$	1,611,927

____________________

(1)Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to ASC 842, as may be modified or supplemented.

As of March 31, 2023, we had $394.0 million in borrowings outstanding under our Corporate Facility, and the Corporate Facility is scheduled to mature in August 2027. As of March 31, 2023, we had $170.0 million in borrowings outstanding under our SPV Facility, and the SPV Facility is scheduled to mature in November 2027.

Related Party Transactions and Agreements

We have entered into agreements and transactions with the External Investment Manager, MSC Income and the Private Loan Fund, whereby we have made debt and equity investments and receive certain fees, expense reimbursements and investment income. See Note D — External Investment Manager and Note L — Related Party Transactions included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding these related party transactions and agreements.

In addition, we have a deferred compensation plan, whereby non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. See Note L — Related Party Transactions included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding the deferred compensation plan.

Recent Developments

In May 2023, we declared a supplemental cash dividend of $0.225 per share payable in June 2023. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the second quarter of 2023 of $0.225 per share for each of April, May and June 2023 or total monthly cash dividends of $0.690 per share for the quarter. Total dividends declared for the second quarter of 2023equal a total of $0.90, representing a 25% increase over the total dividends paid in the second quarter of 2022.

In May 2023, we declared regular monthly dividends of $0.23 per share for each of July, August and September of 2023. These regular monthly dividends equal a total of $0.69 per share for the third quarter of 2023, representing a 7.0% increase from the regular monthly dividends paid in the third quarter of 2022. Including the regular monthly and supplemental dividends declared for the second and third quarters of 2023 we will have paid $37.56 per share in cumulative dividends since our October 2007 initial public offering.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates, and changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facilities and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rate indices, including LIBOR, SOFR and Prime rates, to the extent that any debt investments include floating interest rates. See Risk Factors—Risks Related to our Investments — The interest rates of some of our investments are priced using a spread over LIBOR, which will be phased out in the future., Risk Factors — Risks Related to our Business and Structure — We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of capital, net investment income and the value of our investments. and Risk Factors — Risks Related to Leverage — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us. included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR, SOFR or Prime as a reference rate.

The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of March 31, 2023, 73% of our debt Investment Portfolio (at cost) bore interest at floating rates, 92% of which were subject to contractual minimum interest rates. As of March 31, 2023, 72% of our debt obligations bore interest at fixed rates. Our interest expense will be affected by changes in the published SOFR rate in connection with our Credit Facilities; however, the interest rates on our outstanding SBIC debentures, May 2024 Notes, July 2026 Notes and December 2025 Notes which collectively comprise the majority of our outstanding debt, are fixed for the life of such debt. As of March 31, 2023, we had not entered into any interest rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or regulation as a pool operator under such Act. The Company intends to operate as a “limited derivatives user” under Rule 18f-4 under the 1940 Act.

The following table shows the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of March 31, 2023.

Basis Point Change	Increase<br>(Decrease)<br>in Interest<br>Income		(Increase)<br>Decrease<br>in Interest<br>Expense		Increase<br>(Decrease) in Net<br>Investment<br>Income		Increase<br>(Decrease) in Net<br>Investment<br>Income per Share
	(dollars in thousands, except per share amounts)
(200)	$	(46,109)	$	11,844	$	(34,265)	$	(0.43)
(175)	(40,450)		10,434		(30,016)		(0.38)
(150)	(34,804)		9,024		(25,780)		(0.32)
(125)	(29,164)		7,614		(21,550)		(0.27)
(100)	(23,523)		6,204		(17,319)		(0.22)
(75)	(17,873)		4,794		(13,079)		(0.16)
(50)	(12,223)		3,384		(8,839)		(0.11)
(25)	(6,574)		1,974		(4,600)		(0.06)
25	4,736		(846)		3,890		0.05
50	10,375		(2,256)		8,119		0.10
75	16,025		(3,666)		12,359		0.15
100	21,675		(5,076)		16,599		0.21
125	27,325		(6,486)		20,839		0.26
150	32,974		(7,896)		25,078		0.31
175	38,624		(9,306)		29,318		0.37
200	44,274		(10,716)		33,558		0.42

Although we believe that this analysis is indicative of the impact of interest rate changes to our Net Investment Income as of March 31, 2023, the analysis does not take into consideration future changes in the credit market, credit

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quality or other business or economic developments that could affect our Net Investment Income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above. The hypothetical results assume that all LIBOR, SOFR and Prime rate changes would be effective on the first day of the period. However, the contractual LIBOR, SOFR and Prime rate reset dates would vary throughout the period. The majority of our investments are based on contracts which reset quarterly, while our Credit Facilities reset monthly. The hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facilities (with an increase (decrease) in the debt outstanding under the Credit Facilities resulting in an (increase) decrease in the hypothetical interest expense).

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act). Based on that evaluation, our Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

Item 1A. Risk Factors

You should carefully consider the risks described below and all other information contained in this Quarterly Report on Form 10-Q, including our interim financial statements and the related notes thereto, before making a decision to purchase our securities. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition and/or operating results, as well as the market price of our securities.

In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 that we filed with the SEC on February 24, 2023, which could materially affect our business, financial condition and/or operating results.

We maintain our cash at financial institutions, often in balances that exceed federally insured limits

Our cash is held in accounts at U.S. banking institutions that we believe are of high quality. Cash held in deposit accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. While the FDIC took control of two such banking institutions, Silicon Valley Bank (“SVB”) on March 10, 2023 and Signature Bank (“Signature”) on March 12, 3023, we did not have any accounts with SVB or Signature and therefore did not experience any direct risk of loss and our indirect exposure to SVB and Signature through our portfolio companies was determined to be immaterial. Any material loss, individually or in the aggregate, from a similarly failed banking relationship above FDIC insurance limits that we may experience in the future could have an adverse effect on our ability to pay our operational expenses or make other payments and may require us to move our accounts to other banks, which could cause a temporary delay in making payments to our vendors and employees and cause other operational inconveniences. In addition, if any of our portfolio companies are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such portfolio company’s ability to pay their obligations or make distributions to us could be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2023, we issued 199,282 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of common stock issued during the three months ended March 31, 2023, under the dividend reinvestment plan was $7.8 million.

Upon vesting of restricted stock awarded pursuant to our employee equity compensation plan, shares may be withheld to meet applicable tax withholding requirements. Any withheld shares are treated as common stock purchases by the Company in our consolidated financial statements as they reduce the number of shares received by employees upon vesting (see “Purchase of vested stock for employee payroll tax withholding” in the Consolidated Statements of Changes in Net Assets for share amounts withheld).

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Item 6. Exhibits

Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

Exhibit<br><br>Number	Description of Exhibit
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
101	The following financial information from our Quarterly Report on Form 10-Q for the first quarter of fiscal year 2023, filed with the SEC on May 5, 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, (ii) the Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, (iii) the Consolidated Statements of Changes in Net Assets for the periods ended March 31, 2023 and 2022, (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022, (v) the Consolidated Schedule of Investments for the periods ended March 31, 2023 and December 31, 2022, (vi) the Notes to Consolidated Financial Statements and (vii) the Consolidated Schedule 12-14 for the three months ended March 31, 2023 and 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Main Street Capital Corporation
	/s/ DWAYNE L. HYZAK
Date: May 5, 2023	Dwayne L. Hyzak
	Chief Executive Officer
	(principal executive officer)
	/s/ JESSE E. MORRIS
Date: May 5, 2023	Jesse E. Morris
	Chief Financial Officer and Chief Operating Officer
	(principal financial officer)
	/s/ RYAN R. NELSON
Date: May 5, 2023	Ryan R. Nelson
	Chief Accounting Officer
	(principal accounting officer)

143

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Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED

I, Dwayne L. Hyzak, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 of Main Street Capital Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this May 5, 2023.

By:	/s/ DWAYNE L. HYZAK
	Dwayne L. Hyzak
	Chief Executive Officer

Document

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED

I, Jesse E. Morris, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 of Main Street Capital Corporation (the “registrant”);

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this May 5, 2023.

By:	/s/ JESSE E. MORRIS
	Jesse E. Morris
	Chief Financial Officer and Chief Operating Officer

Document

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the accompanying Quarterly Report of Main Street Capital Corporation (the “Registrant”) on Form 10-Q for the quarterly period ended March 31, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Dwayne L. Hyzak, the Chief Executive Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ DWAYNE L. HYZAK
Name:	Dwayne L. Hyzak
Date:	May 5, 2023

Document

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the accompanying Quarterly Report of Main Street Capital Corporation (the “Registrant”) on Form 10-Q for the quarterly period ended March 31, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Jesse E. Morris, the Chief Financial Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ JESSE E. MORRIS
Name:	Jesse E. Morris
Date:	May 5, 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended March 31, 2023

For the transition period from: to

Commission File Number: 001-33723

Main Street Capital Corporation

(713) 350-6000

n/a

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MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

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

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

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

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

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

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

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

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2023

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)