10-Q/A

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

(Mark One)

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

For the quarterly period ended September 30, 2024

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: 814-00939

MSC Income Fund, Inc.

(Exact name of registrant as specified in its charter)

Maryland	45-3999996
(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
None	N/A	N/A

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

The number of shares outstanding of the issuer’s common stock as of November 12, 2024 was 80,480,822.

Explanatory Note

This amendment is being filed solely to amend Item 2 of Part I of the Quarterly Report on Form 10-Q of MSC Income Fund, Inc. originally filed on November 14, 2024 (the “Original Form 10-Q”) in order to correct the order of presentation of information therein, and the contents of the Original Form 10-Q have not otherwise been modified or changed. This Form 10-Q/A amends and replaces the Original Form 10-Q filing in its entirety.

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PART I
FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets—September30, 2024 (unaudited) and December 31, 2023	1
	Consolidated Statements of Operations (unaudited)—Three andninemonths endedSeptember30, 2024 and 2023	2
	Consolidated Statements of Changes in Net Assets (unaudited)—Three andninemonths endedSeptember30, 2024 and 2023	3
	Consolidated Statements of Cash Flows (unaudited)—Ninemonths endedSeptember30, 2024 and 2023	4
	Consolidated Schedule of Investments (unaudited)—September30, 2024	5
	Consolidated Schedule of Investments—December 31, 2023	29
	Notes to Consolidated Financial Statements (unaudited)	49
	Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Ninemonths endedSeptember30, 2024 and 2023	86
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	96
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	112
Item 4.	Controls and Procedures	113
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	114
Item 1A.	Risk Factors	114
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	114
Item 5.	Other Information	114
Item 6.	Exhibits	116
	Signatures	117

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MSC INCOME FUND, INC.

Consolidated Balance Sheets

(in thousands, except shares and per share amounts)

	September 30,<br>2024		December 31,<br>2023
ASSETS	(Unaudited)
Investments at fair value:
Control investments (cost: $41,717 and $43,159 as of September 30, 2024 and December 31, 2023, respectively)	$	56,833	$	53,644
Affiliate investments (cost: $254,666 and $231,378 as of September 30, 2024 and December 31, 2023, respectively)	315,190		291,279
Non‑Control/Non‑Affiliate investments (cost: $836,194 and $763,781 as of September 30, 2024 and December 31, 2023, respectively)	790,604		747,972
Total investments (cost: $1,132,577 and $1,038,318 as of September 30, 2024 and December 31, 2023, respectively)	1,162,627		1,092,895
Cash and cash equivalents	48,926		30,786
Interest and dividend receivable	11,597		10,541
Receivable for securities sold	—		171
Deferred financing costs (net of accumulated amortization of $6,282 and $4,168 as of September 30, 2024 and December 31, 2023, respectively)	1,327		3,416
Prepaids and other assets	2,805		2,091
Total assets	$	1,227,282	$	1,139,900
LIABILITIES
Credit Facilities	$	406,688	$	335,688
Series A Notes due 2026 (par: $150,000 as of both September 30, 2024 and December 31, 2023)	149,379		149,155
Accounts payable and other liabilities	3,609		255
Payable for securities purchased	11,655		206
Interest payable	8,631		6,266
Dividend payable	14,478		14,019
Management and incentive fees payable	7,474		8,745
Deferred tax liability, net	6,883		3,259
Total liabilities	608,797		517,593
Commitments and contingencies (Note I)
NET ASSETS
Common stock, $0.001 par value per share (450,000,000 shares authorized; 80,434,891 and 80,108,865 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)	80		80
Additional paid‑in capital	689,949		686,136
Total overdistributed earnings	(71,544)		(63,909)
Total net assets	618,485		622,307
Total liabilities and net assets	$	1,227,282	$	1,139,900
NET ASSET VALUE PER SHARE	$	7.69	$	7.77

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

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MSC INCOME FUND, INC.

Consolidated Statements of Operations

(in thousands, except shares and per share amounts)

(Unaudited)

	Three Months Ended<br>September 30,				Nine Months Ended<br>September 30,
	2024		2023		2024		2023
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments	$	818	$	804	$	2,643	$	2,321
Affiliate investments	7,719		6,941		22,891		22,241
Non‑Control/Non‑Affiliate investments	24,940		24,606		75,839		72,064
Total investment income	33,477		32,351		101,373		96,626
EXPENSES:
Interest	(10,374)		(9,403)		(29,470)		(26,599)
Base management fees	(5,338)		(4,994)		(15,545)		(14,761)
Incentive fees	(2,136)		(2,572)		(9,364)		(8,891)
Internal administrative services expenses	(2,368)		(2,168)		(7,155)		(6,752)
General and administrative	(1,285)		(1,106)		(3,424)		(3,291)
Total expenses before expense waivers	(21,501)		(20,243)		(64,958)		(60,294)
Waiver of internal administrative services expenses	2,206		2,014		6,678		6,297
Total expenses, net of expense waivers	(19,295)		(18,229)		(58,280)		(53,997)
NET INVESTMENT INCOME	14,182		14,122		43,093		42,629
NET REALIZED GAIN (LOSS):
Control investments	—		546		57		2,223
Affiliate investments	—		(2)		—		(7,188)
Non‑Control/Non‑Affiliate investments	25,372		(109)		23,745		(20,021)
Total net realized gain (loss)	25,372		435		23,802		(24,986)
NET UNREALIZED APPRECIATION (DEPRECIATION):
Control investments	912		(735)		4,631		(1,433)
Affiliate investments	182		4,780		1,166		22,468
Non‑Control/Non‑Affiliate investments	(30,843)		(5,247)		(30,453)		9,380
Total net unrealized appreciation (depreciation)	(29,749)		(1,202)		(24,656)		30,415
INCOME TAXES:
Federal and state income, excise and other taxes	(1,649)		(431)		(2,525)		(954)
Deferred taxes	(785)		458		(3,625)		(2,235)
Income tax benefit (provision)	(2,434)		27		(6,150)		(3,189)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,371	$	13,382	$	36,089	$	44,869
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED	$	0.18	$	0.18	$	0.54	$	0.53
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED	$	0.09	$	0.17	$	0.45	$	0.56
WEIGHTED-AVERAGE SHARES <br>OUTSTANDING—BASIC AND DILUTED	80,335,969		80,300,145		80,309,460		80,245,958

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

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MSC INCOME FUND, INC.

Consolidated Statements of Changes in Net Assets

(in thousands, except shares)

(Unaudited)

	Common Stock			Additional<br>Paid-In<br>Capital		Total<br>Overdistributed<br>Earnings		Total Net<br>Asset Value
	Number of<br>Shares	Par<br>Value
Balances as of December 31, 2022	80,105,999	$	80	$	684,165	$	(74,580)	$	609,665
Dividend reinvestment	564,377	1		4,413		—		4,414
Common stock repurchased	(519,489)	(1)		(3,984)		—		(3,985)
Net increase in net assets resulting from operations	—	—		—		12,231		12,231
Dividends to stockholders	—	—		—		(14,026)		(14,026)
Balances as of March 31, 2023	80,150,887	$	80	$	684,594	$	(76,375)	$	608,299
Issuance of common stock	255,754	—		2,000		—		2,000
Dividend reinvestment	608,618	1		4,759		—		4,760
Common stock repurchased	(965,568)	(1)		(6,522)		—		(6,523)
Net increase in net assets resulting from operations	—	—		—		19,256		19,256
Dividends to stockholders	—	—		—		(14,009)		(14,009)
Balances as of June 30, 2023	80,049,691	$	80	$	684,831	$	(71,128)	$	613,783
Issuance of common stock	348,542	—		2,750		—		2,750
Dividend reinvestment	594,294	1		4,689		—		4,690
Common stock repurchased	(978,579)	(1)		(7,033)		—		(7,034)
Net increase in net assets resulting from operations	—	—		—		13,382		13,382
Dividends to stockholders	—	—		—		(14,002)		(14,002)
Balances as of September 30, 2023	80,013,948	$	80	$	685,237	$	(71,748)	$	613,569
Balances as of December 31, 2023	80,108,865	$	80	$	686,136	$	(63,909)	$	622,307
Issuance of common stock	314,070	—		2,500		—		2,500
Dividend reinvestment	564,969	1		4,492		—		4,493
Common stock repurchased	(875,316)	(1)		(6,546)		—		(6,547)
Net increase in net assets resulting from operations	—	—		—		10,589		10,589
Dividends to stockholders	—	—		—		(14,821)		(14,821)
Balances as of March 31, 2024	80,112,588	$	80	$	686,582	$	(68,141)	$	618,521
Issuance of common stock	315,259	—		2,500		—		2,500
Dividend reinvestment	583,875	1		4,631		—		4,632
Common stock repurchased	(870,380)	(1)		(6,181)		—		(6,182)
Net increase in net assets resulting from operations	—	—		—		18,129		18,129
Dividends to stockholders	—	—		—		(14,425)		(14,425)
Balances as of June 30, 2024	80,141,342	$	80	$	687,532	$	(64,437)	$	623,175
Issuance of common stock	250,627	—		2,000		—		2,000
Dividend reinvestment	557,919	1		4,452		—		4,453
Common stock repurchased	(514,997)	(1)		(4,035)		—		(4,036)
Net increase in net assets resulting from operations	—	—		—		7,371		7,371
Dividends to stockholders	—	—		—		(14,478)		(14,478)
Balances as of September 30, 2024	80,434,891	$	80	$	689,949	$	(71,544)	$	618,485

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

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MSC INCOME FUND, INC.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended<br>September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	36,089	$	44,869
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Investments in portfolio companies	(253,889)		(156,523)
Proceeds from sales and repayments of debt investments in portfolio companies	169,961		119,927
Proceeds from sales and return of capital of equity investments in portfolio companies	39,496		13,280
Net unrealized (appreciation) depreciation	24,656		(30,415)
Net realized (gain) loss on portfolio investments	(23,802)		24,986
Amortization of deferred financing costs	2,338		1,273
Amortization of deferred offering costs	—		129
Accretion of unearned income	(5,740)		(5,772)
Payment-in-kind interest	(5,100)		(3,805)
Cumulative dividends	(101)		(129)
Deferred tax provision	3,625		2,235
Changes in other assets and liabilities:
Interest and dividend receivable	(4,650)		(2,307)
Prepaid and other assets	(714)		(1,982)
Management and incentive fees payable	(1,271)		524
Interest payable	2,365		3,231
Accounts payable and other liabilities	3,354		(552)
Net cash provided by (used in) operating activities	(13,383)		8,969
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock	7,000		4,750
Redemption of common stock	(16,765)		(17,542)
Payment of offering costs	—		(129)
Dividends paid	(29,686)		(26,990)
Proceeds from Credit Facilities	252,000		107,000
Repayments on Credit Facilities	(181,000)		(72,000)
Payment of deferred financing costs	(26)		(2,262)
Net cash provided by (used in) financing activities	31,523		(7,173)
Net increase in cash and cash equivalents	18,140		1,796
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	30,786		21,312
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	48,926	$	23,108
Supplemental cash flow disclosures:
Interest paid	$	24,766	$	22,106
Taxes paid	$	489	$	1,960
Non-cash financing activities:
Dividends declared and unpaid	$	14,478	$	14,002
Value of shares issued pursuant to the DRIP	$	13,578	$	13,864

Portfolio Company (1) (20)		Business Description	Type of Investment (2) (3) (15)		Investment Date (22)	Total Rate	Reference Rate and Spread (25)		PIK Rate (19)	Maturity Date	Principal (4)	Cost (4)		Fair Value (18)
YS Garments, LLC	(11)	Designer and Provider of Branded Activewear
			Secured Debt	(9)	8/22/2018	12.89%	SF+	7.50%		8/9/2026	5,153	5,087		4,699
Zips Car Wash, LLC	(10)	Express Car Wash Operator
			Secured Debt	(9) (26)	2/11/2022	12.46%	SF+	7.25%	1.50%	12/31/2024	2,360	2,360		2,219
			Secured Debt	(9) (26)	2/11/2022	12.46%	SF+	7.25%	1.50%	12/31/2024	591	591		555
												2,951		2,774
ZRG Partners, LLC	(10)	Talent Advisory Services Provider
			Secured Debt	(9) (30)	6/14/2024		SF+	6.00%		6/14/2029	—	(29)		(29)
			Secured Debt	(9)	6/14/2024		SF+	6.00%		6/14/2029	630	598		613
			Secured Debt	(9)	6/14/2024	11.26%	SF+	6.00%		6/14/2029	995	977		969
			Secured Debt	(9)	6/14/2024	11.30%	SF+	6.00%		6/14/2029	7,133	7,000		6,944
												8,546		8,497
Subtotal Non-Control/Non-Affiliate Investments (127.8% of net assets at fair value)												$	836,194	$	790,604
Total Portfolio Investments, September 30, 2024 (188.0% of net assets at fair value)												$	1,132,577	$	1,162,627
Money market funds (included in cash and cash equivalents)
First American Treasury Obligations Fund Class Z	(16)											$	10,798	$	10,798
Fidelity Government Portfolio Fund Class III	(34)											20,397		20,397
Total money market funds												$	31,195	$	31,195

___________________________________________________

(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 as security for one of the Company’s Credit Facilities.

(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.

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MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

(dollars in thousands)

(Unaudited)

(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, 96% of the loans (based on the par amount) contain Term SOFR (“SOFR”) floors which range between 0.75% and 5.25%, with a weighted-average floor of 1.25%.

(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 debt investment.

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

(16)Effective yield as of September 30, 2024 was approximately 4.97% on the First American Treasury Obligations Fund Class Z.

(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 September 30, 2024.

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

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

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

(25)A majority of the variable rate loans in the Company’s Investment Portfolio (defined below) bear interest at a rate that may be determined by reference to either 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 September 30, 2024, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.43%.

(26)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 September 30, 2024.

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

(28)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 September 30, 2024.

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

(30)The position is unfunded and no interest income is being earned as of September 30, 2024. The position may earn a nominal unused facility fee on committed amounts.

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

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MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

(dollars in thousands)

(Unaudited)

(32)RLOC facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. As of September 30, 2024, the facility had contracts running under the terms SF+7.00% (Floor 1.00%) and P+6.00% (Floor 2.00%). The rate presented represents a weighted-average rate for borrowings under the facility, as of September 30, 2024.

(dollars in thousands)

Portfolio Company (1) (20)	Business Description	Type of Investment (2) (3) (15)	Investment Date (22)	Shares/Units	Total Rate	Reference Rate and Spread (25)	PIK Rate (19)	Maturity Date	Principal (4)	Cost (4)		Fair Value (18)
First American Treasury Obligations Fund Class Z (39)										17,656		17,656
Total money market funds										$	20,844	$	20,844

___________________________________________________

(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, 95% of these floating rate loans (based on the par amount) contain LIBOR or SOFR floors which range between 0.75% and 2.00%, with a weighted-average floor of 1.17%.

(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.

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

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

(16)Money market fund interests included in cash and cash equivalents.

(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 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 December 31, 2023.

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MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

December 31, 2023

(dollars in thousands)

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

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

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

(25)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, 2023, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.43%.

(26)As of December 31, 2023, borrowings under the loan facility bear interest at SOFR+7.00% (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 December 31, 2023.

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

(28)As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+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, 2023.

(29)As of December 31, 2023, borrowings under the loan facility bore interest at SOFR+7.00% (Floor 1.50%). 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, 2023.

(Unaudited)

2.Basis of Presentation

MSC Income Fund’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, MSC Income Fund’s consolidated financial statements include the accounts of MSIF and its consolidated subsidiaries. The Investment Portfolio as used herein, refers to all of MSC Income Fund’s investments in Private Loan portfolio companies, investments in LMM portfolio companies, investments in Middle Market portfolio companies and Other Portfolio investments. MSC Income Fund’s results of operations for the three and nine months ended September 30, 2024 and 2023, cash flows for the nine months ended September 30, 2024 and 2023, and financial position as of September 30, 2024 and December 31, 2023, are presented on a consolidated basis. The effects of all intercompany transactions between MSIF and its consolidated subsidiaries have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements of MSC Income Fund 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 consolidated financial statements and notes thereto for the year ended December 31, 2023. 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 and nine months ended September 30, 2024 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, MSC Income Fund is precluded from consolidating other entities in which MSC Income Fund 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 MSC Income Fund holds a controlling interest in an operating company that provides all or substantially all of its services directly to MSC Income Fund. Accordingly, as noted above, MSC Income Fund’s consolidated financial statements include the financial position and operating results for the Taxable Subsidiaries and the Structured Subsidiaries. MSC Income Fund has determined that none of its portfolio investments qualify for this exception. Therefore, MSC Income Fund’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

MSC Income Fund classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which MSC Income Fund owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which MSC Income Fund owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, MSC Income Fund has excluded consideration of any voting securities or board appointment rights held by Main Street or third-party investment funds advised by the Adviser.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.Valuation of the Investment Portfolio

MSC Income Fund accounts for its Investment Portfolio at fair value. As a result, MSC Income Fund follows the provisions of 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 MSC Income Fund 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.

(Unaudited)

current hypothetical sale using the Waterfall valuation method. MSC Income Fund 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 (94% and 97% as of September 30, 2024 and December 31, 2023, respectively) of the Middle Market portfolio investments (i) are valued using third-party quotes or other independent pricing services or (ii) MSC Income Fund has consulted with and received an assurance certification from the Financial Advisory Firm within the last twelve months.

For valuation purposes, all of MSC Income Fund’s Other Portfolio investments are non-control investments. MSC Income Fund’s Other Portfolio investments comprised 2.2% and 2.3% of MSC Income Fund’s Investment Portfolio at fair value as of September 30, 2024 and December 31, 2023, 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, MSC Income Fund generally determines the fair value of these investments using the NAV valuation method.

Due to the inherent uncertainty in the valuation process, MSC Income Fund’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. MSC Income Fund determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

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

Rule 2a-5 under the 1940 Act 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. MSC Income Fund’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated the Adviser, led by a group of Main Street’s and the Adviser’s executive officers, to serve as the Board of Directors’ valuation designee. MSC Income Fund believes its Investment Portfolio as of September 30, 2024 and December 31, 2023 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates.

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 as of 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 MSC Income Fund pursuant to valuation policies and procedures approved and overseen by MSC Income Fund’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 pandemics, risk of recession, inflation, supply chain constraints or disruptions, geopolitical disruptions and changing market index 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 MSC Income Fund’s portfolio companies. 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 MSC Income Fund’s Investment Portfolio has and may continue to experience increased volatility.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

MSC Income Fund’s debt instruments, including all revolving and term debt, are accounted for on a historical cost basis as applicable under U.S. GAAP. As also required under U.S. GAAP, MSC Income Fund discloses the estimated fair value of its debt obligations in Note D — Debt. To estimate the fair value of MSC Income Fund’s Series A Notes as disclosed in Note D — Debt, MSC Income Fund 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. The inputs used to value MSC Income Fund’s debt instruments for purposes of the fair value estimate disclosures in Note D — Debt are considered to be Level 2 according to the ASC 820 fair value hierarchy.

10.Earnings Per Share

Net increase in net assets resulting from operations per share and net investment income per share are computed utilizing the weighted-average number of shares of common stock outstanding for the period.

11.Recently Issued or Adopted Accounting Standards

In November 2022, the FASB issued ASU 2022-06, Reference rate reform (Topic 848) — Deferral of the Sunset Date of Topic 848, which deferred 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 and exceptions provided by ASU 2020-04 and extended by ASU 2022-06 during the year ended December 31, 2023, the effect of which was not material to the consolidated financial statements and the notes thereto. For the current year, the Company will no longer utilize the optional expedients provided by ASU 2020-04, as LIBOR is no longer referenced in any of its contracts. ASU 2022-06 did not have a material impact on the consolidated financial statements and the notes thereto.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The amendments in this update require incremental disclosures related to a public entity’s reportable segments. ASU 2023-07 is effective for years beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of the new guidance on the consolidated financial statements and the notes thereto.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15, 2024, and early adoption is permitted. The Company is currently assessing the impact of the new guidance, but it does not expect ASU 2023-09 to have a material impact on 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.

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. MSC Income Fund accounts for its investments at fair value.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Fair Value Hierarchy

In accordance with ASC 820, MSC Income Fund 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 MSC Income Fund’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 MSC Income Fund 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 September 30, 2024 and December 31, 2023, MSC Income Fund’s Private Loan portfolio investments primarily consisted of investments in 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 available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income Fund’s Private Loan portfolio investments were categorized as Level 3 as of September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, all of MSC Income Fund’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 MSC Income Fund’s LMM portfolio investments were categorized as Level 3 as of September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, MSC Income Fund’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

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of MSC Income Fund’s Middle Market portfolio investments were categorized as Level 3 as of September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, MSC Income Fund’s Other Portfolio investments consisted of illiquid securities issued by privately held entities and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of MSC Income Fund’s Other Portfolio investments were categorized as Level 3 as of September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, all money market funds included in cash and cash equivalents were valued using Level 1 inputs.

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

•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 MSC Income Fund’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

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement, and 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 MSC Income Fund’s Private Loan, LMM and Middle Market debt 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 MSC Income Fund’s Level 3 portfolio investments as of September 30, 2024 and December 31, 2023:

Type of<br>Investment	Fair Value as of<br><br>September 30,<br>2024<br><br>(in thousands)		Valuation Technique	Significant<br>Unobservable Inputs	Range(3)	Weighted-Average<br>(3)(4)		Median(3)
Equity investments	$	244,788	Discounted cash flow	WACC	11.3% - 22.6%	14.5	%	15.0	%
			Market comparable / Enterprise value	EBITDA multiple (1)	4.0x - 9.2x (2)	7.0x		6.5x
Debt investments	$	879,495	Discounted cash flow	Risk adjusted discount factor (5)	9.8% - 17.5% (2)	13.6	%	12.9	%
				Expected principal recovery percentage	0.2% - 100.0%	99.7	%	100.0	%
Debt investments	$	38,344	Market approach	Third-party quote	27.5 - 99.0	83.1		91.5
Total Level 3 investments	$	1,162,627

_____________________

(1)EBITDA may include proforma adjustments and/or other add-backs 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 8.0% - 31.8%.

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

(4)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value.

(5)Discount rate includes the effect of the standard SOFR base rate, as applicable.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Type of<br>Investment	Fair Value as of<br><br>December 31, 2023<br><br>(in thousands)		Valuation Technique	Significant<br>Unobservable Inputs	Range(3)	Weighted-Average<br>(3)(4)		Median(3)
Equity investments	$	254,770	Discounted cash flow	WACC	10.9% - 22.5%	14.4	%	15.5	%
			Market comparable / Enterprise value	EBITDA multiple (1)	4.9x - 9.2x (2)	7.3x		6.5x
Debt investments	$	777,003	Discounted cash flow	Risk adjusted discount factor (5)	9.8% - 16.8% (2)	13.1	%	12.8	%
				Expected principal recovery percentage	0.6% - 100.0%	99.6	%	100.0	%
Debt investments	$	61,122	Market approach	Third-party quote	4.5 - 99.2	85.0		89.5
Total Level 3 investments	$	1,092,895

_____________________

(1)EBITDA may include proforma adjustments and/or other add-backs 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.

(4)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value.

(5)Discount rate includes the effect of the standard SOFR base rate, as applicable.

The following tables provide a summary of changes in fair value of MSC Income Fund’s Level 3 portfolio investments for the nine months ended September 30, 2024 and 2023 (amounts in thousands):

Type of<br>Investment	Fair Value<br><br>as of<br><br>December 31,<br>2023		Transfers<br>Into<br>Level 3<br>Hierarchy		Redemptions/<br>Repayments		New<br>Investments		Net<br>Changes<br>from<br>Unrealized<br>to Realized		Net<br>Unrealized<br>Appreciation<br>(Depreciation)		Other(1)		Fair Value<br><br>as of<br><br>September 30,<br>2024
Debt	$	838,125	$	—	$	(169,492)	$	264,572	$	2,180	$	(17,380)	$	(166)	$	917,839
Equity	254,029		—		(12,075)		10,127		(27,394)		17,987		166		242,840
Equity Warrant	741		—		—		1,128		(90)		169		—		1,948
	$	1,092,895	$	—	$	(181,567)	$	275,827	$	(25,304)	$	776	$	—	$	1,162,627

______________________

(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<br>Investment	Fair Value<br><br>as of<br><br>December 31,<br>2022		Transfers<br>Into<br>Level 3<br>Hierarchy		Redemptions/<br>Repayments		New<br>Investments		Net<br>Changes<br>from<br>Unrealized<br>to Realized		Net<br>Unrealized<br>Appreciation<br>(Depreciation)		Other(1)		Fair Value<br><br>as of<br><br>September 30,<br>2023
Debt	$	852,282	$	—	$	(146,652)	$	155,357	$	25,417	$	(7,776)	$	(11,446)	$	867,182
Equity	214,687		—		(12,686)		8,713		621		11,854		12,551		235,740
Equity Warrant	1,174		—		—		523		—		299		(1,105)		891
	$	1,068,143	$	—	$	(159,338)	$	164,593	$	26,038	$	4,377	$	—	$	1,103,813

_____________________

(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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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

As of September 30, 2024 and December 31, 2023, MSC Income Fund's investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

			Fair Value Measurements
			(in thousands)
As of September 30, 2024	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)
Private Loan portfolio investments	$	679,863	$	—	$	—	$	679,863
LMM portfolio investments	411,030		—		—		411,030
Middle Market portfolio investments	46,062		—		—		46,062
Other Portfolio investments	25,672		—		—		25,672
Total investments	$	1,162,627	$	—	$	—	$	1,162,627
			Fair Value Measurements
---	---	---	---	---	---	---	---	---
			(in thousands)
As of December 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)
Private Loan portfolio investments	$	595,326	$	—	$	—	$	595,326
LMM portfolio investments	386,956		—		—		386,956
Middle Market portfolio investments	85,990		—		—		85,990
Other Portfolio investments	24,623		—		—		24,623
Total investments	$	1,092,895	$	—	$	—	$	1,092,895

Investment Portfolio Composition

MSC Income Fund’s principal investment objective is to maximize its investment 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. MSC Income Fund seeks to achieve its investment objective primarily through its Private Loan and LMM investment strategies.

MSC Income Fund’s Private Loan investment strategy is focused on investments in secured debt in privately held companies that generally have annual revenues between $25 million and $500 million, and its Private Loan investments generally range in size from $1 million to $20 million. MSC Income Fund’s Private Loan investments primarily consist of debt securities that have primarily been originated directly by the Adviser or, to a lesser extent, through the Adviser’s 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, MSC Income Fund’s Private Loan investments are typically made in a company owned by or in the process of being acquired by a private equity fund. MSC Income Fund’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. MSC Income Fund may have the option to co-invest with Main Street and the private equity fund in the equity securities of its Private Loan portfolio companies.

MSC Income Fund’s LMM investment strategy is focused on investments in secured debt and equity in privately held, LMM companies based in the United States. MSC Income Fund’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $1 million to $20 million. The LMM debt investments are typically secured by a first priority lien on the assets of the portfolio company, can

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

include either fixed or floating interest rate terms and generally have a term of between five and seven years from the original investment date. MSC Income Fund typically makes direct equity investments and/or receives nominally priced equity warrants in connection with a debt investment.

MSC Income Fund also maintains a legacy portfolio of investments in Middle Market companies. MSC Income Fund’s Middle Market investments are generally debt investments in companies owned by a private equity fund that were originally issued through a syndication financing process. MSC Income Fund has generally stopped making new Middle Market investments and expects its Middle Market investment portfolio to continue to decline in future periods as its existing Middle Market investments are repaid or sold. MSC Income Fund’s Middle Market debt investments generally range in size from $1 million to $20 million, 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.

MSC Income Fund’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its Private Loan, LMM or Middle Market portfolio investments, including investments in unaffiliated investment companies and private funds managed by third parties. In the Other Portfolio, MSC Income Fund may incur indirect fees and expenses to third party managers. For Other Portfolio investments, MSC Income Fund generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be realized over a five to ten-year period.

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 and nine months ended September 30, 2024 and 2023, MSC Income Fund did not record investment income from any single portfolio company in excess of 10% of total investment income.

The following tables provide a summary of MSC Income Fund’s investments in the Private Loan, LMM and Middle Market portfolios as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments, which are discussed further below).

	As of September 30, 2024
	Private Loan			LMM (a)			Middle Market
	(dollars in millions)
Number of portfolio companies	84			55			11
Fair value	$	679.9		$	411.0		$	46.1
Cost	$	700.0		$	340.5		$	73.0
Debt investments as a % of portfolio (at cost)	95.6		%	70.8		%	88.9		%
Equity investments as a % of portfolio (at cost)	4.4		%	29.2		%	11.1		%
% of debt investments at cost secured by first priority lien	99.9		%	99.9		%	99.9		%
Weighted-average annual effective yield (b)	12.7		%	13.2		%	14.1		%
Average EBITDA (c)	$	33.2		$	10.0		$	44.3

___________________

(a)As of September 30, 2024, MSC Income Fund had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%.

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(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of September 30, 2024, 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, and are weighted based upon the principal amount of each applicable debt investment as of September 30, 2024. The weighted-average annual effective yield on MSC Income Fund’s debt portfolio as of September 30, 2024 including debt investments on non-accrual status was 12.1% for its Private Loan portfolio, 11.8% for its LMM portfolio and 9.4% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income Fund’s common stock will realize on its investment because it does not reflect MSC Income Fund’s utilization of debt capital in its capital structure, MSC Income Fund’s expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including two Private Loan portfolio companies, two LMM portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for MSC Income Fund’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains.

	As of December 31, 2023
	Private Loan			LMM (a)			Middle Market
	(dollars in millions)
Number of portfolio companies	78			50			16
Fair value	$	595.3		$	387.0		$	86.0
Cost	$	586.4		$	315.7		$	114.7
Debt investments as a % of portfolio (at cost)	94.1		%	70.2		%	93.1		%
Equity investments as a % of portfolio (at cost)	5.9		%	29.8		%	6.9		%
% of debt investments at cost secured by first priority lien	100.0		%	99.9		%	100.0		%
Weighted-average annual effective yield (b)	13.1		%	13.0		%	13.0		%
Average EBITDA (c)	$	30.5		$	8.8		$	74.2

___________________

(a)As of December 31, 2023, MSC Income Fund had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%.

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 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, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2023. The weighted-average annual effective yield on MSC Income Fund’s debt portfolio as of December 31, 2023 including debt investments on non-accrual status was 12.6% for its Private Loan portfolio, 13.0% for its LMM portfolio and 9.9% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of MSC Income Fund’s common stock will realize on its investment because it does not reflect MSC Income Fund’s utilization of debt capital in its capital structure, MSC Income Fund’s expenses or any sales load paid by an investor.

(c)The average EBITDA is calculated using a weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including one Private Loan portfolio company, as EBITDA is not a meaningful valuation metric for MSC Income Fund’s investment in this portfolio company, and those portfolio companies whose primary purpose is to own real estate.

For the three months ended September 30, 2024 and 2023, MSC Income Fund achieved an annualized total return on investments of 10.5% and 12.0%, respectively. For the nine months ended September 30, 2024 and 2023, MSC Income

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(Unaudited)

Fund achieved an annualized total return on investments of 12.4% and 12.9%, respectively. For the year ended December 31, 2023, MSC Income Fund achieved a total return on investments of 13.6%. 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. MSC Income Fund’s total return on investments is not reflective of what an investor in shares of MSC Income Fund’s common stock will realize on its investment because it does not reflect MSC Income Fund’s utilization of debt capital in its capital structure, MSC Income Fund’s expenses or any sales load paid by an investor.

As of September 30, 2024, MSC Income Fund had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $25.7 million in fair value and $19.1 million in cost basis and which comprised 2.2% and 1.7% of MSC Income Fund’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, MSC Income Fund had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.6 million in fair value and $21.5 million in cost basis and which comprised 2.3% and 2.1% of MSC Income Fund’s Investment Portfolio at fair value and cost, respectively.

The following tables summarize the composition of MSC Income Fund’s total combined Private Loan, LMM and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments, as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments, which are discussed above).

Cost:	September 30, 2024		December 31, 2023
First lien debt	87.6	%	86.5	%
Equity	12.1		13.3
Second lien debt	—		—
Equity warrants	0.3		0.2
Other	—		—
	100.0	%	100.0	%	Fair Value:	September 30, 2024	December 31, 2023
---	---	---	---	---
First lien debt	80.7	%	78.4	%
Equity	19.1		21.5
Second lien debt	—		—
Equity warrants	0.2		0.1
Other	—		—
	100.0	%	100.0	%

The following tables summarize the composition of MSC Income Fund’s total combined Private Loan, LMM 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 Private Loan, LMM and Middle Market portfolio investments, as of September 30, 2024

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(Unaudited)

and December 31, 2023 (this information excludes Other Portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:	September 30, 2024		December 31, 2023
Northeast	22.5	%	21.9	%
Midwest	22.4		17.6
West	18.7		17.0
Southeast	17.9		17.8
Southwest	16.8		23.8
Canada	0.7		0.8
Other Non-United States	1.0		1.1
	100.0	%	100.0	%	Fair Value:	September 30, 2024	December 31, 2023
---	---	---	---	---
Midwest	23.2	%	18.3	%
Northeast	22.6		21.6
Southwest	18.7		26.8
West	18.6		16.4
Southeast	15.2		15.0
Canada	0.7		0.8
Other Non-United States	1.0		1.1
	100.0	%	100.0	%

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

MSC Income Fund’s Private Loan, LMM and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of MSC Income Fund’s total combined Private Loan, LMM and Middle Market portfolio investments by industry at cost and fair value as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments).

Cost:	September 30, 2024		December 31, 2023
Commercial Services & Supplies	7.8	%	8.5	%
Internet Software & Services	7.3		8.8
Machinery	6.9		6.0
Professional Services	6.3		5.7
Electrical Equipment	6.1		2.2
Diversified Consumer Services	5.2		5.4
Containers & Packaging	4.5		4.3
IT Services	4.4		5.2
Distributors	4.2		4.4
Health Care Providers & Services	4.2		6.5
Leisure Equipment & Products	3.5		3.7
Textiles, Apparel & Luxury Goods	2.8		3.1
Specialty Retail	2.7		2.9
Communications Equipment	2.5		2.7
Computers & Peripherals	2.5		2.9
Hotels, Restaurants & Leisure	2.5		2.1
Diversified Financial Services	2.3		2.1
Building Products	2.2		2.1
Construction & Engineering	2.2		2.5
Household Products	1.8		2.0
Aerospace & Defense	1.7		2.6
Auto Components	1.7		0.8
Internet & Catalog Retail	1.7		1.6
Software	1.7		1.4
Energy Equipment & Services	1.6		0.5
Food & Staples Retailing	1.6		1.5
Marine	1.4		—
Media	1.2		2.5
Health Care Equipment & Supplies	1.1		1.3
Other (1)	4.4		4.7
	100.0	%	100.0	%

___________________

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

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Fair Value:	September 30, 2024		December 31, 2023
Machinery	8.3	%	7.4	%
Commercial Services & Supplies	6.9		7.3
Internet Software & Services	6.4		7.3
Professional Services	6.3		5.5
Diversified Consumer Services	6.1		6.5
Electrical Equipment	6.1		2.3
Containers & Packaging	4.9		4.6
IT Services	4.5		5.0
Computers & Peripherals	4.4		4.6
Distributors	4.4		4.6
Health Care Providers & Services	3.8		6.0
Construction & Engineering	3.0		3.1
Leisure Equipment & Products	3.0		3.3
Specialty Retail	2.7		2.7
Textiles, Apparel & Luxury Goods	2.6		2.9
Building Products	2.3		1.9
Diversified Financial Services	2.3		2.0
Software	2.1		1.7
Hotels, Restaurants & Leisure	1.8		1.6
Household Products	1.8		1.9
Aerospace & Defense	1.7		2.5
Auto Components	1.7		0.8
Internet & Catalog Retail	1.5		1.5
Air Freight & Logistics	1.4		1.6
Energy Equipment & Services	1.4		0.3
Food & Staples Retailing	1.4		1.2
Media	1.4		2.6
Marine	1.3		—
Communications Equipment	1.0		1.1
Construction Materials	—		2.2
Other (1)	3.5		4.0
	100.0	%	100.0	%

___________________

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

As of September 30, 2024 and December 31, 2023, MSC Income Fund 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, MSC Income Fund 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 MSC Income Fund must utilize to determine if any of MSC Income Fund’s Control Investments (as defined in Note A — Organization and Basis of Presentation, including those unconsolidated portfolio companies defined as Control Investments in which

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

MSC Income Fund 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 MSC Income Fund’s investment in the Control Investment by the value of MSC Income Fund’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 MSC Income Fund’s change in net assets resulting from operations for the same period. Rules 3-09 and 4-08(g) of Regulation S-X require MSC Income Fund to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which MSC Income Fund 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 September 30, 2024 and December 31, 2023, MSC Income Fund had no single investment that qualified as a significant subsidiary under either the investment or income tests.

NOTE D — DEBT

Summary of MSC Income Fund’s debt as of September 30, 2024 is as follows:

	Outstanding Balance		Unamortized Debt Issuance<br><br>Costs (1)		Recorded Value		Estimated Fair Value (2)
	(dollars in thousands)
SPV Facility	$	259,688	$	—	$	259,688	$	259,688
Corporate Facility	147,000		—		147,000		147,000
Series A Notes	150,000		(621)		149,379		138,677
Total Debt	$	556,688	$	(621)	$	556,067	$	545,365

_________________

(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 Series A Notes are reflected as a contra-liability to the Series A Notes on the Consolidated Balance Sheets.

(2)Estimated fair value for outstanding debt is shown as if MSC Income Fund had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of MSC Income Fund’s debt in Note B.9. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Summary of MSC Income Fund’s debt as of December 31, 2023 is as follows:

	Outstanding Balance		Unamortized Debt Issuance Costs (1)		Recorded Value		Estimated Fair Value (2)
	(dollars in thousands)
SPV Facility	$	203,688	$	—	$	203,688	$	203,688
Corporate Facility	132,000		—		132,000		132,000
Series A Notes	150,000		(845)		149,155		141,531
Total Debt	$	485,688	$	(845)	$	484,843	$	477,219

___________________

Summarized interest expense for the three and nine months ended September 30, 2024 and 2023 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(dollars in thousands)
SPV Facility	$	5,904	$	5,933	$	17,902	$	16,127
Corporate Facility	2,880		1,880		6,799		5,703
Series A Notes	1,590		1,590		4,769		4,769
Total Interest Expense	$	10,374	$	9,403	$	29,470	$	26,599

A summary of MSC Income Fund’s average amount of total borrowings outstanding and overall weighted-average effective interest rate including amortization of debt issuance costs, original issuance discounts and premiums and fees on unused lender commitments are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(dollars in millions)
Weighted-average borrowings outstanding	$	531.1		$	495.0		$	504.5		$	481.7
Weighted-average effective interest rate	7.8		%	7.6		%	7.8		%	7.4		%

SPV Facility

MSC Income Fund, through MSIF Funding, LLC (“MSIF Funding”), a wholly-owned Structured Subsidiary that primarily holds debt investments, is party to a senior secured revolving credit facility dated February 3, 2021 (as amended, the “SPV Facility” and, together with the Corporate Facility, the “Credit Facilities”) with JPMorgan Chase Bank, National Association (“JPM”), as administrative agent, and U.S. Bank, N.A., as collateral agent and collateral administrator, JPM and other financial institutions as lenders and MSIF as portfolio manager. In August 2023, the SPV facility was amended to extend the revolving period expiration date from February 3, 2024 to February 3, 2027 and the maturity date from February 3, 2025 to February 3, 2028. Additionally, total commitments were reduced from $325.0 million to $300.0 million. Advances under the SPV Facility bear interest at a per annum rate equal to the three month SOFR in effect, plus the

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

applicable margin of 3.00%. MSIF Funding also pays a commitment fee of 0.75% per annum on the average daily unused amount of the financing commitments until February 2, 2027. As of September 30, 2024, the SPV Facility included total commitments of $300.0 million and an accordion feature, with the right to request an increase of total commitments and borrowing availability up to $450.0 million. The SPV Facility is secured by a collateral loan on the assets of MSIF Funding. In connection with the SPV Facility, MSIF 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 September 30, 2024, the interest rate for borrowings on the SPV Facility was 7.84%. The average interest rate for borrowings under the SPV Facility was 8.32% and 8.25% per annum for the three months ended September 30, 2024 and 2023, respectively, and 8.32% and 7.99% per annum for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, MSIF Funding was in compliance with all financial covenants of the SPV Facility.

Corporate Facility

MSC Income Fund is a party to a senior secured revolving credit agreement dated March 6, 2017 (as amended, the “Corporate Facility”) with EverBank (formerly known as TIAA Bank), as administrative agent, and with EverBank and other financial institutions as lenders. As of September 30, 2024, the Corporate Facility included (i) total commitments of $165.0 million, (ii) 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 $200.0 million of total commitments and (iii) a revolving period and maturity date of September 1, 2025 and March 1, 2026, respectively, with two one-year extension options subject to lender approval.

Borrowings under the Corporate Facility bear interest, subject to MSC Income Fund’s election, on a per annum basis at a rate equal to (i) SOFR plus 2.50% or (ii) the base rate plus 1.40%. The base rate is defined as the higher of (a) the Prime rate, (b) the Federal Funds Rate (as defined in the credit agreement) plus 0.5% or (c) SOFR plus 1.1%. Additionally, MSC Income Fund pays an annual unused commitment fee of 0.30% per annum on the unused lender commitments if more than 50% or more of the lender commitments are being used and an annual unused commitment fee of 0.625% per annum on the unused lender commitments if less than 50% of the lender commitments are being used. Borrowings under the Corporate Facility are secured by a first lien on all of the assets of MSIF and its subsidiaries, excluding the assets of Structured Subsidiaries or immaterial subsidiaries, as well as all of the assets, and a pledge of equity ownership interests, of any future subsidiaries of MSIF (other than Structured Subsidiaries or immaterial subsidiaries). In connection with the Corporate Facility, MSIF has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Effective April 27, 2023, the reference rate under the Corporate Facility was amended from LIBOR to SOFR plus an applicable credit spread adjustment of 0.10%.

As of September 30, 2024, the interest rate for borrowings on the Corporate Facility was 7.70%. The average interest rate for borrowings under the Corporate Facility was 7.81% and 7.75% per annum for the three months ended September 30, 2024 and 2023, respectively, and 7.82% and 7.39% per annum for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, MSC Income Fund was in compliance with all financial covenants of the Corporate Facility.

Series A Notes

Pursuant to a Master Note Purchase Agreement dated October 21, 2021 (the “Note Purchase Agreement”), MSC Income Fund issued $77.5 million of 4.04% Series A Senior Notes due 2026 (the “Series A Notes”) upon entering into the Note Purchase Agreement and an additional $72.5 million on January 21, 2022. The Series A Notes bear a fixed interest rate of 4.04% per year and will mature on October 30, 2026, unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms.

Interest on the Series A Notes is due semiannually on April 30 and October 30 of each year. The Series A Notes may be redeemed in whole or in part at any time or from time to time at MSC Income Fund’s option at par plus accrued interest to the prepayment date and, if applicable, a make-whole premium. In addition, MSC Income Fund is obligated to

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

offer to prepay the Series A Notes at par plus accrued and unpaid interest up to, but excluding, the date of prepayment, if certain change in control events occur. In the event that a Below Investment Grade Event (as defined in the Note Purchase Agreement) occurs, the Series A Notes will bear interest at a fixed rate of 5.04% per year from the date of the occurrence of the Below Investment Grade Event to and until the date on which the Below Investment Grade Event ends. The Series A Notes are general unsecured obligations of MSIF that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by MSIF.

The Note Purchase Agreement also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness of MSIF or subsidiary guarantors subject to a cure pass-through, certain judgments and orders and certain events of bankruptcy. As of September 30, 2024, MSC Income Fund was in compliance with all financial covenants of the Note Purchase Agreement.

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Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE E — FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights of MSC Income Fund for the nine months ended September 30, 2024 and 2023:

	Nine Months Ended September 30,
Per Share Data:	2024		2023
NAV as of the beginning of the period	$	7.77	$	7.61
Net investment income (1)	0.54		0.53
Net realized gain (loss) (1)(2)	0.30		(0.31)
Net unrealized appreciation (depreciation) (1)(2)	(0.31)		0.38
Income tax provision (1)(2)	(0.08)		(0.04)
Net increase in net assets resulting from operations (1)	0.45		0.56
Dividends paid from net investment income (6)	(0.37)		(0.53)
Distributions paid from capital gains (6)	(0.17)		—
Distributions paid or accrued (3)(6)	(0.54)		(0.53)
Accretive effect of stock repurchases (repurchasing shares below NAV per share) (4)	0.01		0.02
Other (5)	—		0.01
NAV as of the end of the period	$	7.69	$	7.67
Shares outstanding as of the end of the period	80,434,891		80,013,948

________________

(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)Represents stockholder distributions paid or accrued for the period.

(4)Shares repurchased in connection with Dutch auction tender offers. See Note G — Share Repurchases for additional information.

(5)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.

(6)MSIF’s taxable income for each period is an estimate and will not be finally determined until MSIF files its tax return for each year. As a result, the character of MSIF’s dividends and distributions for each period is also an estimate. Therefore, the final character of MSIF’s dividends and distributions may be different than this estimate.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

	Nine Months Ended September 30,
	2024			2023
	(dollars in thousands)
NAV as of the end of the period	$	618,485		$	613,569
Average NAV	$	620,622		$	611,329
Average outstanding debt	$	512,088		$	482,021
Ratios to average NAV:
Ratio of total expenses, including income tax provision, to average NAV(1)(2)(3)(5)	10.38		%	9.35		%
Ratio of operating expenses to average NAV(2)(3)(5)	9.39		%	8.83		%
Ratio of operating expenses, excluding interest expense, to average NAV(2)(3)(5)	4.64		%	4.48		%
Ratio of operating expenses, excluding interest expense and incentive fees, to average NAV(2)(3)(5)	3.13		%	3.03		%
Ratio of net investment income to average NAV(2)(5)	6.94		%	6.97		%
Portfolio turnover ratio(2)	18.54		%	12.32		%
Total return based on change in NAV(2)(4)	6.41		%	7.36		%

_______________

(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 vary significantly from period to period. MSC Income Fund 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, management fees, incentive fees and general and administrative expenses.

(4)Total return is calculated based on the change in NAV per share and stockholder distributions declared per share during the reporting period, divided by the NAV per share at the beginning of the period. The total return does not reflect the sales load from the sale of MSC Income Fund’s common stock.

(5)Net of expense waivers of $6.7 million and $6.3 million for the nine months ended September 30, 2024 and 2023, respectively. Excluding these expense waivers, the expense and income ratios are as follows:

	Nine Months Ended September 30,
	2024		2023
Ratio of total expenses, including income tax provision, to average NAV(1)(2)(3)	11.49	%	10.39	%
Ratio of operating expenses to average NAV(2)(3)	10.49	%	9.87	%
Ratio of operating expenses, excluding interest expense, to average NAV(2)(3)	5.73	%	5.52	%
Ratio of operating expenses, excluding interest expense and incentive fees, to average NAV(2)(3)	4.22	%	4.06	%
Ratio of net investment income to average NAV(2)	5.88	%	5.95	%

________________

See footnotes (1), (2), and (3) immediately prior to this table.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE F — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

MSC Income Fund currently pays quarterly dividends to its stockholders. Future quarterly dividends, if any, will be determined by its Board of Directors on a quarterly basis. MSC Income Fund paid or accrued dividends to its common stockholders of $14.5 million, or $0.18 per share, during the three months ended September 30, 2024, and $43.7 million, or $0.545 per share, during the nine months ended September 30, 2024, compared to $14.0 million, or $0.175 per share, during the three months ended September 30, 2023, and $42.0 million, or $0.525 per share, during the nine months ended September 30, 2023.

MSIF has elected to be treated for U.S. federal income tax purposes as a RIC. MSIF’s taxable income includes the taxable income generated by MSIF and certain of its subsidiaries, including the Structured Subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, MSIF generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSIF distributes to its stockholders. MSIF 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 MSC Income Fund’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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MSC INCOME FUND, INC.

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 nine months ended September 30, 2024 and 2023.

	Nine Months Ended September 30,
	2024		2023
	(estimated, dollars in thousands)
Net increase in net assets resulting from operations	$	36,089	$	44,869
Net unrealized (appreciation) depreciation	24,656		(30,415)
Income tax provision	6,150		3,189
Pre-tax book income not consolidated for tax purposes	(9,867)		(676)
Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates	(9,989)		20,099
Estimated taxable income (1)	47,039		37,066
Taxable income earned in prior year and carried forward for distribution in current year	14,745		20,674
Taxable income earned prior to period end and carried forward for distribution next period	(32,538)		(29,705)
Dividend accrued as of period end and paid in the following period	14,478		14,002
Total distributions accrued or paid to common stockholders	$	43,724	$	42,037

________________

(1)MSIF’s taxable income for each period is an estimate and will not be finally determined until MSIF 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 MSC Income Fund. The Taxable Subsidiaries permit MSC Income Fund 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 MSIF for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in MSC Income Fund’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSIF 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 MSC Income Fund’s consolidated financial statements.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

The income tax provision for MSC Income Fund is generally composed of (i) deferred tax expense, 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 MSC Income Fund’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 MSC Income Fund’s Consolidated Statements of Operations. MSC Income Fund’s provision for income taxes was comprised of the following for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(dollars in thousands)
Current tax expense (benefit):
Federal	$	761	$	(39)	$	1,145	$	15
State	397		337		810		565
Excise	491		133		570		374
Total current tax expense	1,649		431		2,525		954
Deferred tax expense (benefit):
Federal	652		292		3,395		2,533
State	133		(750)		230		(298)
Total deferred tax expense (benefit)	785		(458)		3,625		2,235
Total income tax provision (benefit)	$	2,434	$	(27)	$	6,150	$	3,189

The net deferred tax liability as of September 30, 2024 and December 31, 2023 was $6.9 million and $3.3 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.

As of September 30, 2024, for U.S. federal income tax purposes, the Taxable Subsidiaries did not have any net operating loss carryforwards. The Taxable Subsidiaries have net capital loss carryforwards from prior years which, if unused, will expire in various taxable years 2025 through 2027. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward period.

NOTE G — SHARE REPURCHASES

Under the terms of its share repurchase program, MSC Income Fund offers to purchase shares at the NAV per share on the repurchase date. The amount of shares of MSC Income Fund’s common stock to be repurchased during any calendar quarter may be equal to the lesser of (i) the number of shares of common stock MSC Income Fund could repurchase with the proceeds it received from the issuance of common stock under MSC Income Fund’s dividend reinvestment plan or (ii) 2.5% of the weighted-average number of shares of common stock outstanding in the prior four calendar quarters. Repurchase offers are currently limited to the number of shares of common stock MSC Income Fund can repurchase with 90% of the cash retained as a result of issuances of common stock under its dividend reinvestment plan. At the discretion of the Board of Directors, MSC Income Fund may also use cash on hand, cash available from borrowings and cash from the sale of investments as of the end of the applicable period to repurchase shares. MSC Income Fund’s Board of Directors may amend, suspend or terminate the share repurchase program upon 30 days’ notice.

In addition to its share repurchase program, beginning in the second quarter of 2023, MSC Income Fund began periodically offering to complete modified Dutch auction tender offers (“Dutch Auction Tenders”), pursuant to which MSC Income Fund offered to purchase up to a specified amount of shares of its common stock at the lowest clearing purchase price elected by participating stockholders within a specified range that allowed MSC Income Fund to purchase the maximum amount offered. In such Dutch Auction Tenders all shares purchased are purchased at the clearing purchase price. SEC rules permit MSC Income Fund to increase the number of shares accepted for purchase in any Dutch Auction

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

Tender by up to 2% of MSC Income Fund’s outstanding shares without amending the offer. MSC Income Fund has no obligation to continue to offer Dutch Auction Tenders in the future.

On February 5, 2024, MSC Income Fund commenced a modified “Dutch Auction” tender offer (the “February 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated February 5, 2024, which expired on March 4, 2024. Pursuant to the February 2024 Dutch Auction Tender Offer, MSC Income Fund repurchased 357,143 shares on March 8, 2024 at a price of $7.00 per share for an aggregate cost of $2.5 million, excluding fees and expenses related to the February 2024 Dutch Auction Tender Offer.

On May 17, 2024, MSC Income Fund commenced a modified “Dutch Auction” tender offer (the “May 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated May 17, 2024, which expired on June 20, 2024. Pursuant to the May 2024 Dutch Auction Tender Offer, MSC Income Fund repurchased 333,333 shares on June 25, 2024 at a price of $6.00 per share for an aggregate cost of $2.0 million, excluding fees and expenses related to the May 2024 Dutch Auction Tender Offer.

For the three months ended September 30, 2024 and 2023, MSC Income Fund funded $4.0 million and $4.2 million, respectively, for shares of its common stock tendered for repurchase under the share repurchase program. For the three months ended September 30, 2024, MSC Income Fund did not tender any shares of its common stock for repurchase through its Dutch auction tender offers. For the three months ended September 30, 2023, MSC Income Fund funded $2.8 million for shares of its common stock tendered for repurchase through its Dutch auction tender offers. For the nine months ended September 30, 2024 and 2023, MSC Income Fund funded $12.3 million and $12.5 million, respectively, for shares of its common stock tendered for repurchase under the share repurchase program. For the nine months ended September 30, 2024 and 2023, MSC Income Fund funded $4.5 million and $5.1 million, respectively, for shares of its common stock tendered for repurchase through its Dutch auction tender offers.

Since the reinstatement of its share repurchase program in March 2021, after briefly suspending it during the COVID-19 pandemic, through September 30, 2024, MSC Income Fund has funded the repurchase of $54.9 million in shares of common stock under the share repurchase program. MSC Income Fund has also purchased $12.3 million in shares of common stock through its various Dutch auction tender offers completed from June 2023 through September 30, 2024.

NOTE H — DIVIDEND REINVESTMENT PLAN

MSC Income Fund’s dividend reinvestment plan (the “DRIP”) provides for the reinvestment of dividends on behalf of its stockholders. As a result, if MSC Income Fund declares a cash dividend, its stockholders who have “opted in” to the DRIP will have their cash dividend automatically reinvested into additional shares of MSC Income Fund common stock. The number of shares of common stock to be issued to a stockholder under the DRIP shall be determined by dividing the total dollar amount of the distribution payable to such stockholder by a price per share of common stock determined by MSC Income Fund’s Board of Directors or a committee thereof, in its sole discretion, that is (i) not less than the NAV per share of common stock determined in good faith by the Board of Directors or a committee thereof, in its sole discretion, within 48 hours prior to the payment of the distribution and (ii) not more than 2.5% greater than the NAV per share as of such date.

Summarized DRIP information for the nine months ended September 30, 2024 and 2023 is as follows:

	Nine Months Ended September 30,
	2024		2023
	(dollars in thousands)
DRIP participation	$	13,578	$	13,864
Shares issued for DRIP	1,706,763		1,767,289

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

NOTE I — COMMITMENTS AND CONTINGENCIES

As of September 30, 2024, MSC Income Fund had the following outstanding commitments (in thousands):

Investments with equity capital commitments that have not yet funded:	Amount
HPEP 3, L.P.	1,308
Brightwood Capital Fund III, LP	22
Total Equity Commitments (1)	$	1,330
Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:
Computer Data Source, LLC	$	6,250
HEADLANDS OP-CO LLC	5,000
CQ Fluency, LLC	4,500
Mako Steel, LP	4,057
Insight Borrower Corporation (Industrial Physics)	3,888
ZRG Partners, LLC	3,718
Winter Services LLC	3,333
Hornblower Sub, LLC	2,432
JDC Power Services, LLC	2,105
BP Loenbro Holdings Inc.	1,798
Ansira Partners II, LLC	1,756
SI East, LLC (Stavig)	1,750
American Health Staffing Group, Inc.	1,667
Creative Foam Corporation	1,562
Burning Glass Intermediate Holding Company, Inc.	1,549
Bluestem Brands, Inc.	1,428
Titan Meter Midco Corp.	1,384
IG Parent Corporation (Infogain)	1,361
Power System Solutions	1,330
Buca C, LLC	1,321
Bettercloud, Inc.	1,216
Bond Brand Loyalty ULC	900
Imaging Business Machines, L.L.C.	890
Garyline, LLC	840
VVS Holdco LLC	800
Cody Pools, Inc.	786
PurgeRite, LLC	781
NinjaTrader, LLC	750
Sales Performance International, LLC	630
Centre Technologies Holdings, LLC	600
IG Investor, LLC (Ira Green)	600
South Coast Terminals Holdings, LLC	589
Obra Capital, Inc.	521
Coregistics Buyer LLC (Belvika)	513
AVEX Aviation Holdings, LLC	512
NexRev LLC	510

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

The Affiliati Network, LLC	500
Wall Street Prep, Inc.	500
Island Pump and Tank, LLC	456
Microbe Formulas, LLC	434
CaseWorthy, Inc.	400
Johnson Downie Opco, LLC	400
Chamberlin Holding LLC	400
Trantech Radiator Topco, LLC	400
Colonial Electric Company LLC	400
Pinnacle TopCo, LLC	400
ArborWorks, LLC	382
Escalent, Inc.	349
Gamber-Johnson Holdings, LLC	300
Clad-Rex Steel, LLC	300
Roof Opco (Apple Roof), LLC	292
Career Team Holdings, LLC	225
SPAU Holdings, LLC	220
MetalForming AcquireCo, LLC	205
ASK (Analytical Systems Keco Holdings, LLC)	200
Mystic Logistics Holdings, LLC	200
Orttech Holdings, LLC	200
Batjer TopCo, LLC	180
PTL US Bidco, Inc	177
Mini Melts of America, LLC	150
ATS Operating, LLC	145
Elgin AcquireCo, LLC	123
Channel Partners Intermediateco, LLC	105
GRT Rubber Technologies LLC	100
LL Management, Inc.(Lab Logistics)	100
Gulf Publishing Holdings, LLC	100
AAC Holdings, Inc.	71
Inspire Aesthetics Management, LLC	43
Invincible Boat Company, LLC.	42
Total Loan Commitments	$	72,126
Total Commitments	$	73,456

____________________

(1)This table excludes commitments related to one additional Other Portfolio investment 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 this investment 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.

MSC Income Fund 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). MSC Income Fund follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. MSC Income Fund had no unrealized appreciation or depreciation on the outstanding unfunded commitments as of September 30, 2024.

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MSC INCOME FUND, INC.

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

MSC Income Fund 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 MSC Income Fund 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, MSC Income Fund 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 MSC Income Fund’s financial condition or results of operations in any future reporting period.

NOTE J — RELATED PARTY TRANSACTIONS

1.Advisory Agreements and Conditional Expense Reimbursement Waivers

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

5. Other Related Party Transactions

On August 1, 2024, the Company sold 250,627 shares of its common stock to Main Street at $7.98 per share, the price at which the Company issued new shares in connection with reinvestments of the August 1, 2024 dividend pursuant to the DRIP, for total proceeds to the Company of $2.0 million. The issuance and sale were made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and were 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, of the Company or the Adviser.

NOTE K — SUBSEQUENT EVENTS

Our management has evaluated subsequent events through the date of issuance of the consolidated financial statements, and identified the following to report:

On November 1, 2024, the Company repurchased 512,730 shares of its common stock validly tendered and not withdrawn on the terms set forth in the tender offer statement on Schedule TO and Offer to Purchase filed with the SEC on September 26, 2024. The shares were repurchased at a price of $7.74 per share, which was the Company’s NAV per share as of November 1, 2024, for an aggregate purchase price of $4.0 million (an amount equal to 90% of the proceeds the Company received from the issuance of shares under the Company’s DRIP from the November 1, 2024 dividend payment).

(dollars in thousands)

(unaudited)

Company	Total Rate	Base Rate	Spread	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>2023 Fair Value		Gross<br>Additions (3)		Gross<br>Reductions (4)		September 30,<br>2024 Fair Value (13)
VVS Holdco LLC		SF+	6.00%	Secured Debt (12)	(5)	—		—		3		—		—		—		—
	11.50%			Secured Debt	(5)	—		—		638		6,926		36		290		6,672
				Preferred Equity	(5)	—		—		80		3,060		—		—		3,060
Other<br>Amounts related to<br>investments transferred to<br>or from other<br>1940 Act classification<br>during the period						—		—		—		(12,834)		—		—		—
Total Affiliate investments						$	—	$	1,166	$	22,891	$	291,279	$	61,239	$	50,162	$	315,190

_________________________

(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 September 30, 2024 for affiliate investments located in this region was $118,398. This represented 19.1% of net assets as of September 30, 2024.

(6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2024 for affiliate investments located in this region was $37,526. This represented 6.1% of net assets as of September 30, 2024.

(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2024 for affiliate investments located in this region was $33,604. This represented 5.4% of net assets as of September 30, 2024.

(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2024 for control investments located in this region was $56,303. This represented 9.1% of net assets as of September 30, 2024. The fair value as of September 30, 2024 for affiliate investments located in this region was $101,202. This represented 16.4% of net assets as of September 30, 2024.

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MSC INCOME FUND, INC.

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

September 30, 2024

(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 September 30, 2024 for control investments located in this region was $530. This represented 0.1% of net assets as of September 30, 2024. The fair value as of September 30, 2024 for affiliate investments located in this region was $24,460. This represented 4.0% of net assets as of September 30, 2024.

(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	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		Gross<br>Additions (3)		Gross<br>Reductions (4)		September 30,<br>2023 Fair Value (13)
	11.50%	Secured Debt	(5)	—		—		686		7,421		45		551		6,915
		Preferred Equity	(5)	—		(30)		54		2,990		—		30		2,960
Other<br>Amounts related to<br>investments transferred to<br>or from other<br>1940 Act classification<br>during the period				(1,541)		649		(151)		—		—		—		—
Total Affiliate investments				$	(7,188)	$	22,468	$	22,241	$	277,000	$	91,114	$	92,225	$	275,889

___________________________________________________

(5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2023 for affiliate investments located in this region was $98,341. This represented 16.0% of net assets as of September 30, 2023.

(6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2023 for affiliate investments located in this region was $40,617. This represented 6.6% of net assets as of September 30, 2023.

(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2023 for affiliate investments located in this region was $31,613. This represented 5.2% of net assets as of September 30, 2023.

(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2023 for control investments located in this region was $53,478. This represented 8.7% of net assets as of September 30, 2023. The fair value as of September 30, 2023 for affiliate investments located in this region was $75,393. This represented 12.3% of net assets as of September 30, 2023.

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MSC INCOME FUND, INC.

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

September 30, 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 September 30, 2023 for control investments located in this region was $588. This represented 0.1% of net assets as of September 30, 2023. The fair value as of September 30, 2023 for affiliate investments located in this region was $29,925. This represented 4.9% of net assets as of September 30, 2023.

(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 September 30, 2023 (see Note I). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

(13)Negative fair value is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

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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 this Quarterly Report on Form 10-Q, if any, and discussed in Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 8, 2024 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, 2023, 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, 2023, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

ORGANIZATION

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OVERVIEW OF OUR BUSINESS

Our principal investment objective is to maximize our investment 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 Private Loan and LMM investment strategies. Our Private Loan investment strategy involves investments in companies that generally have annual revenues between $25 million and $500 million and annual earnings before interest, tax, depreciation and amortization expenses (“EBITDA”) between $7.5 million and $50 million. Our LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and $150 million and annual EBITDA between $3 million and $20 million. Our Private Loan and LMM investments generally range in size from $1 million to $20 million.

Private Loan investments primarily consist of debt securities that have primarily been originated directly by our Adviser or, to a lesser extent, through our Adviser’s 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 in a company owned by or in the process of being acquired by a private equity fund. 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 co-invest with Main Street and the private equity fund in the equity securities of our Private Loan portfolio companies.

We also 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. We believe that providing customized, “one-stop” financing solutions is important and valuable to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our LMM 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.

We also maintain a legacy portfolio of investments in larger middle market (“Middle Market”) companies (our “Middle Market investment portfolio”). Our Middle Market investments are generally debt investments in companies owned by private equity funds that were originally issued through a syndication financing process. We have generally stopped making new Middle Market investments and expect our Middle Market investment portfolio to continue to decline in future periods as existing Middle Market investments are repaid or sold. Our Middle Market debt investments generally

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range in size from $1 million to $20 million, 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 Private Loan, LMM or Middle Market portfolio investments, including investments in unaffiliated investment companies and private funds managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses to third party managers.

The “Investment Portfolio,” as used herein, refers to all of our Private Loan portfolio investments, LMM portfolio investments, Middle Market portfolio investments and Other Portfolio investments.

Our portfolio investments are generally made through MSIF, the Taxable Subsidiaries and the Structured Subsidiaries. MSIF, the Taxable Subsidiaries and the Structured Subsidiaries share the same investment strategies and criteria. An investor’s return in MSIF will depend, in part, on the Taxable Subsidiaries’ and the Structured Subsidiaries’ investment returns as they are wholly-owned subsidiaries of MSIF.

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 and our available liquidity. 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.

We have received an exemptive order from the SEC permitting co-investments among us, Main Street and other funds and clients advised by our Adviser 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 Main Street and other funds and clients advised by our Adviser, in accordance with the conditions of the order. The order requires, among other things, that we and our Adviser consider whether each such investment opportunity is appropriate for us, Main Street and the other funds and clients advised by our Adviser, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because our Adviser is wholly-owned by Main Street and is not managing our investment activities as its sole activity, this may provide our Adviser an incentive to allocate opportunities to Main Street, other participating funds and other clients instead of us. However, both we and our Adviser 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.

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INVESTMENT PORTFOLIO SUMMARY

The following tables provide a summary of our investments in the Private Loan, LMM and Middle Market portfolios as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments, which are discussed further below).

	As of September 30, 2024
	Private Loan			LMM (a)			Middle Market
	(dollars in millions)
Number of portfolio companies	84			55			11
Fair value	$	679.9		$	411.0		$	46.1
Cost	$	700.0		$	340.5		$	73.0
Debt investments as a % of portfolio (at cost)	95.6		%	70.8		%	88.9		%
Equity investments as a % of portfolio (at cost)	4.4		%	29.2		%	11.1		%
% of debt investments at cost secured by first priority lien	99.9		%	99.9		%	99.9		%
Weighted-average annual effective yield (b)	12.7		%	13.2		%	14.1		%
Average EBITDA (c)	$	33.2		$	10.0		$	44.3

__________________

(a)As of September 30, 2024, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 9%.

(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of September 30, 2024, 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, and are weighted based upon the principal amount of each applicable debt investment as of September 30, 2024. The weighted-average annual effective yield on our debt portfolio as of September 30, 2024 including debt investments on non-accrual status was 12.1% for our Private Loan portfolio, 11.8% for our LMM portfolio and 9.4% 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 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 weighted-average for the Private Loan and Middle Market portfolios and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including two Private Loan portfolio companies, two LMM portfolio companies and one Middle Market portfolio company, 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 and those portfolio companies whose primary operations have ceased and only residual value remains.

	As of December 31, 2023
	Private Loan			LMM (a)			Middle Market
	(dollars in millions)
Number of portfolio companies	78			50			16
Fair value	$	595.3		$	387.0		$	86.0
Cost	$	586.4		$	315.7		$	114.7
Debt investments as a % of portfolio (at cost)	94.1		%	70.2		%	93.1		%
Equity investments as a % of portfolio (at cost)	5.9		%	29.8		%	6.9		%
% of debt investments at cost secured by first priority lien	100.0		%	99.9		%	100.0		%
Weighted-average annual effective yield (b)	13.1		%	13.0		%	13.0		%
Average EBITDA (c)	$	30.5		$	8.8		$	74.2

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(a)As of December 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 9%.

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(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of December 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, and are weighted based upon the principal amount of each applicable debt investment as of December 31, 2023. The weighted-average annual effective yield on our debt portfolio as of December 31, 2023 including debt investments on non-accrual status was 12.6% for our Private Loan portfolio, 13.0% for our LMM portfolio and 9.9% 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 our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

For the three months ended September 30, 2024 and 2023, we achieved an annualized total return on investments of 10.5% and 12.0%, respectively. For the nine months ended September 30, 2024 and 2023, we achieved an annualized total return on investments of 12.4% and 12.9%, respectively. For the year ended December 31, 2023, we achieved a total return on investments of 13.6%. 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 our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

As of September 30, 2024, we had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $25.7 million in fair value and $19.1 million in cost basis and which comprised 2.2% and 1.7% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2023, we had Other Portfolio investments in six entities, spread across four investment managers, collectively totaling $24.6 million in fair value and $21.5 million in cost basis and which comprised 2.3% and 2.1% 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 September 30, 2024 and December 31, 2023, our Investment Portfolio valued at fair value represented 95% and 96%, respectively, 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

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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.

Rule 2a-5 under the 1940 Act 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 our Adviser, led by a group of Main Street’s and our Adviser’s executive officers, to serve as the Board of Directors’ valuation designee. We believe our Investment Portfolio as of September 30, 2024 and December 31, 2023 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. 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 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.7. — 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 September 30, 2024 and 2023, (i) 6.7% and 4.6%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.1% of our total investment income in each period was attributable to cumulative dividend income not paid currently in cash. For the nine months ended September 30, 2024 and 2023, (i) 5.4% and 3.9%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.1% of our total investment income in each period was attributable to cumulative dividend income not paid currently in cash.

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INVESTMENT PORTFOLIO COMPOSITION

The following tables summarize the composition of our total combined Private Loan, LMM and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined Private Loan, LMM and Middle Market portfolio investments as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments).

Cost:	September 30, 2024		December 31, 2023
First lien debt	87.6	%	86.5	%
Equity	12.1		13.3
Equity warrants	0.3		0.2
	100.0	%	100.0	%	Fair Value:	September 30, 2024	December 31, 2023
---	---	---	---	---
First lien debt	80.7	%	78.4	%
Equity	19.1		21.5
Equity warrants	0.2		0.1
	100.0	%	100.0	%

Our Private Loan, LMM 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 I tem 1A. Risk Factors — Risks Related to our Investments contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

Our Adviser utilizes an internally developed investment rating system to rate the performance of each Private Loan, LMM and Middle Market portfolio company and to monitor our expected level of returns on each of our Private Loan, LMM and Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, 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 September 30, 2024, investments on non-accrual status comprised 2.6% of our total Investment Portfolio at fair value and 6.5% at cost. As of December 31, 2023, investments on non-accrual status comprised 1.1% of our total Investment Portfolio at fair value and 4.0% at 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.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2024 and 2023

Set forth below is a comparison of the results of operations for the three months ended September 30, 2024 and 2023.

	Three Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Total investment income	$	33,477	$	32,351	$	1,126	3	%
Total expenses, net of expense waivers	(19,295)		(18,229)		(1,066)		6	%
Net investment income	14,182		14,122		60		—	%
Net realized gain from investments	25,372		435		24,937		NM
Net unrealized depreciation from investments	(29,749)		(1,202)		(28,547)		NM
Income tax benefit (provision)	(2,434)		27		(2,461)		NM
Net increase in net assets resulting from operations	$	7,371	$	13,382	$	(6,011)	(45)	%

_________________

NM — Net Change % not meaningful

Investment Income

Total investment income for the three months ended September 30, 2024 was $33.5 million, a 3% increase from the $32.4 million of total investment income for the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.

	Three Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Interest income	$	30,236	$	29,400	$	836	3	%	(a)
Dividend income	2,485		2,399		86		4	%
Fee income	756		552		204		37	%	(b)
Total investment income	$	33,477	$	32,351	$	1,126	3	%	(c)

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(a)The increase in interest income was primarily due to higher average levels of income producing Investment Portfolio debt investments, partially offset by (i) an increase in investments on non-accrual status and (ii) a decrease in interest rates on floating rate Investment Portfolio debt investments primarily resulting from decreases in benchmark index rates.

(b)The increase in fee income was primarily related to increased investment activity.

(c)The total investment income includes $0.5 million of certain income considered less consistent or non-recurring, representing a $0.3 million increase in such income compared to the corresponding period in the prior year.

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Expenses

Total expenses, net of expense waivers, for the three months ended September 30, 2024 were $19.3 million, a 6% increase from $18.2 million in the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.

	Three Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Interest	$	10,374	$	9,403	$	971	10	%	(a)
Base management fees	5,338		4,994		344		7	%
Incentive fees	2,136		2,572		(436)		(17)	%	(b)
Internal administrative services fees	2,368		2,168		200		9	%
General and administrative	1,285		1,106		179		16	%
Total expenses before expense waivers	21,501		20,243		1,258		6	%
Waiver of internal administrative services expenses	(2,206)		(2,014)		(192)		10	%
Total expenses, net of expense waivers	$	19,295	$	18,229	$	1,066	6	%

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(a)The increase in interest expense was primarily related to an increase in average borrowings on our floating rate multi-year revolving Credit Facilities (as defined below in Liquidity and Capital Resources) to fund the growth of our Investment Portfolio.

(b)The decrease in incentive fees was due to the decreased Pre-Incentive Fee Net Investment Income resulting from our less favorable operating results for the three months ended September 30, 2024 compared to the corresponding period prior year.

Net Investment Income

Net investment income for the three months ended September 30, 2024 was relatively unchanged at $14.2 million, or $0.18 per share, compared to net investment income of $14.1 million, or $0.18 per share, for the corresponding period of 2023. The slight increase in net investment income was principally attributable to the increase in total investment income, partially offset by the increase in total expenses, as discussed above. Net investment income per share for the three months ended September 30, 2024 included an insignificant change from income considered less consistent or non-recurring in nature when compared to the prior year.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized gain on investments of $25.4 million for the three months ended September 30, 2024.

	Three Months Ended September 30, 2024
	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)
Private Loan portfolio	$	25,514	1	$	—	—	$	—	—	$	23	$	25,537
LMM portfolio	—		—	—		—	—		—	4		4
Middle Market portfolio	—		—	—		—	—		—	(169)		(169)
Other Portfolio	—		—	—		—	—		—	—		—
Total net realized gain (loss)	$	25,514	1	$	—	—	$	—	—	$	(142)	$	25,372

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

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Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized depreciation of $29.7 million for the three months ended September 30, 2024.

	Three Months Ended September 30, 2024
	Private<br>Loan (a)		LMM (b)		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	$	(25,853)	$	(112)	$	(21)	$	—	$	(25,986)
Net unrealized appreciation (depreciation) relating to portfolio investments	(1,276)		(552)		(2,320)		385		(3,763)
Total net unrealized appreciation (depreciation) relating to portfolio investments	$	(27,129)	$	(664)	$	(2,341)	$	385	$	(29,749)

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(a)The $25.9 million reversal of net unrealized appreciation on the Private Loan investment portfolio is primarily due to a realized gain of $25.5 million on the full exit of one Private Loan portfolio investment.

(b)Includes unrealized appreciation on 25 LMM portfolio investments and unrealized depreciation on 12 LMM portfolio investments.

Income Tax Provision

The income tax provision for the three months ended September 30, 2024 of $2.4 million principally consisted of (i) a current tax provision of $1.6 million, related to a $1.2 million provision for current U.S. federal and state income taxes and a $0.5 million provision for excise tax and (ii) a deferred tax provision of $0.8 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.

The income tax provision for the three months ended September 30, 2023 principally consisted of a deferred tax provision of $0.5 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, partially offset by a current tax provision of $0.4 million related to a $0.3 million provision for current U.S. federal and state income taxes and a $0.1 million provision for excise tax on our estimated undistributed taxable income.

Net Increase in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the three months ended September 30, 2024 was $7.4 million, or $0.09 per share, compared with $13.4 million, or $0.17 per share, during the three months ended September 30, 2023. 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 September 30, 2024 as compared to the three months ended September 30, 2023.

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Comparison of the nine months ended September 30, 2024 and 2023

Set forth below is a comparison of the results of operations for the nine months ended September 30, 2024 and 2023.

	Nine Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Total investment income	$	101,373	$	96,626	$	4,747	5	%
Total expenses, net of expense waivers	(58,280)		(53,997)		(4,283)		8	%
Net investment income	43,093		42,629		464		1	%
Net realized gain (loss) from investments	23,802		(24,986)		48,788		NM
Net unrealized appreciation (depreciation) from investments	(24,656)		30,415		(55,071)		NM
Income tax provision	(6,150)		(3,189)		(2,961)		93	%
Net increase in net assets resulting from operations	$	36,089	$	44,869	$	(8,780)	(20)	%

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NM Net change % not meaningful

Investment Income

Total investment income for the nine months ended September 30, 2024 was $101.4 million, a 5% increase from the $96.6 million of total investment income for the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.

	Nine Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Interest income	$	88,154	$	86,791	$	1,363	2	%	(a)
Dividend income	8,964		7,862		1,102		14	%	(b)
Fee income	4,255		1,973		2,282		116	%	(c)
Total investment income	$	101,373	$	96,626	$	4,747	5	%	(d)

_________________

(a)The increase in interest income was primarily due to (i) higher average levels of income producing Investment Portfolio debt investments and (ii) an increase in interest rates on floating rate Investment Portfolio debt investments primarily resulting from increases in benchmark index rates, partially offset by an increase in investments on non-accrual status.

(b)The increase in dividend income from Investment Portfolio equity investments was primarily a result of an increase of $1.8 million in dividend income from certain of our LMM portfolio companies, partially offset by a decrease of $0.4 million in dividend income from certain of our Private Loan portfolio companies.

(c)The increase in fee income was primarily related to (i) a $1.8 million increase in fees received from the refinancing and prepayment of debt investments and (ii) a $0.5 million increase in fees related to increased investment activity.

(d)The increase in total investment income includes a net increase of $0.9 million in certain income considered less consistent or non-recurring, including a $1.9 million increase in such fee income, partially offset by (i) a $0.6 million decrease in accelerated interest income from accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments and (ii) a $0.4 million decrease in dividend income.

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Expenses

Total expenses, net of fee and expense waivers, for the nine months ended September 30, 2024 were $58.3 million, an 8% increase from $54.0 million in the corresponding period of 2023. The following table provides a summary of the changes in the comparable period activity.

	Nine Months Ended<br>September 30,				Net Change
	2024		2023		Amount		%
	(dollars in thousands)
Interest	$	29,470	$	26,599	$	2,871	11	%	(a)
Base management fees	15,545		14,761		784		5	%	(b)
Incentive fees	9,364		8,891		473		5	%
Internal administrative services fees	7,155		6,752		403		6	%
General and administrative	3,424		3,291		133		4	%
Total expenses before expense waivers	64,958		60,294		4,664		8	%
Waiver of internal administrative services expenses	(6,678)		(6,297)		(381)		6	%
Total expenses, net of expense waivers	$	58,280	$	53,997	$	4,283	8	%

_________________

(a)The increase in interest expense was primarily related to (i) increased weighted-average interest rates on our Credit Facilities based upon the increases in benchmark index rates for these floating rate obligations and (ii) higher weighted-average outstanding borrowings required to fund the growth in our Investment Portfolio.

(b)The increase in base management fees was due to an increase in average total assets subject to the base management fee.

Net Investment Income

Net investment income for the nine months ended September 30, 2024 increased 1% to $43.1 million, or $0.54 per share, compared to net investment income of $42.6 million, or $0.53 per share, for the corresponding period of 2023. The increase in net investment income was attributable to the increase in total investment income, partially offset by the increase in total expenses, both as discussed above. The increase in net investment income and net investment income per share includes a $0.9 million, or $0.01 per share, increase in investment income considered to be 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 gain on investments of $23.8 million for the nine months ended September 30, 2024.

	Nine Months Ended September 30, 2024
	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)
Private Loan portfolio	$	24,832	2	$	—	—	$	(595)	1	$	27	$	24,264
LMM portfolio	—		—	2,591		1	—		—	157		2,748
Middle Market portfolio	—		—	(2,325)		1	(773)		1	(169)		(3,267)
Other Portfolio	—		—	—		—	—		—	57		57
Total net realized gain (loss)	$	24,832	2	$	266	2	$	(1,368)	2	$	72	$	23,802

_________________

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

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Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized depreciation of $24.7 million for the nine months ended September 30, 2024.

	Nine Months Ended September 30, 2024
	Private<br>Loan (a)		LMM (b)		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	$	(25,129)	$	(3,116)	$	2,998	$	(56)	$	(25,303)
Net unrealized appreciation (depreciation) relating to portfolio investments	(3,998)		2,349		(1,248)		3,544		647
Total net unrealized appreciation (depreciation) relating to portfolio investments	$	(29,127)	$	(767)	$	1,750	$	3,488	$	(24,656)

_________________

(a)The $25.1 million reversal of net unrealized appreciation on the Private Loan investment portfolio is primarily due to a realized gain of $25.5 million on the full exit of one Private Loan portfolio investment.

(b)Includes unrealized appreciation on 28 LMM portfolio investments and unrealized depreciation on 17 LMM portfolio investments.

Income Tax Benefit (Provision)

The income tax provision for the nine months ended September 30, 2024 of $6.2 million principally consisted of (i) a deferred tax provision of $3.6 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 $2.5 million related to a $2.0 million provision for current federal and state income taxes and a $0.5 million provision for excise tax on our estimated undistributed taxable income.

The income tax provision for the nine months ended September 30, 2023 of $3.2 million consisted of (i) a deferred tax provision of $2.2 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 $1.0 million related to a $0.6 million provision for current federal and state income taxes and a $0.4 million provision for excise tax on our estimated undistributed taxable income.

Net Increase in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the nine months ended September 30, 2024 was $36.1 million, or $0.45 per share, compared with $44.9 million, or $0.56 per share, during the nine months ended September 30, 2023. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

For the nine months ended September 30, 2024, we realized a net increase in cash and cash equivalents of $18.1 million as the result of $13.4 million of cash used in our operating activities, partially offset by $31.5 million of cash provided by our financing activities.

The $13.4 million of cash used in our operating activities resulted primarily from (i) the funding of new portfolio investments of $253.9 million and (ii) $0.9 million in cash flows related to changes in other assets and liabilities, partially offset by (i) cash proceeds totaling $209.5 million from the sales and repayments of debt investments and sales of and return of capital from equity investments and (ii) cash flows that we generated from the operating profits earned totaling $34.5 million, which is our 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.

The $31.5 million of cash provided by our financing activities principally consisted of (i) $71.0 million net cash borrowings related to our Credit Facilities and (ii) $7.0 million cash proceeds related to common stock issuance, partially offset by (i) $29.7 million in cash dividends paid to stockholders and (ii) $16.8 million for the repurchases of our common stock.

Share Repurchases

We maintain a share repurchase program whereby we make quarterly offers to purchase shares at the estimated NAV per share, as determined within 48 hours prior to the repurchase date. The amount of shares of our common stock to be repurchased during any calendar quarter may be equal to the lesser of (i) the number of shares of common stock we could repurchase with the proceeds we received from the issuance of common stock under our dividend reinvestment plan (the “DRIP”) or (ii) 2.5% of the weighted-average number of shares of common stock outstanding in the prior four calendar quarters. Repurchase offers are currently limited to the number of shares of our common stock we can repurchase with 90% of the cash retained as a result of issuances of common stock under the DRIP.

On February 5, 2024, we commenced a $2.5 million modified “Dutch Auction” tender offer (the “February 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated February 5, 2024, which expired on March 4, 2024.

On May 17, 2024, we commenced a $2.0 million modified “Dutch Auction” tender offer (the “May 2024 Dutch Auction Tender Offer”) pursuant to the Offer to Purchase, dated May 17, 2024, which expired on June 20, 2024.

See Item 2. Unregistered Sales of Equity Securities and Use of Proceeds in this Quarterly Report on Form 10-Q for more information regarding repurchases of our common stock during the three months ended September 30, 2024.

Capital Resources

As of September 30, 2024, we had $48.9 million in cash and cash equivalents and $58.3 million of unused capacity under the Credit Facilities, which we maintain to support our investment and operating activities. As of September 30, 2024, our NAV totaled $618.5 million, or $7.69 per share.

As of September 30, 2024, we had $147.0 million outstanding and $18.0 million of undrawn commitments under our floating rate multi-year revolving credit facility (the “Corporate Facility”) and $259.7 million outstanding and $40.3 million of undrawn commitments under our special purpose vehicle revolving credit facility (the “SPV Facility” and, together with the Corporate Facility, the “Credit Facilities”), 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 D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

We closed our continuous follow-on public offering of shares to new investors effective September 2017. As such, our ability to raise additional equity is limited.

As a BDC, we generally are required to maintain 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

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150% if certain requirements are met in the future). This requirement limits the amount that we may borrow. As of September 30, 2024, our BDC asset coverage ratio was 211%. The combination of these factors limits our access to capital to fund future investment activities or operating requirements, including our ability to grow the Investment Portfolio. We anticipate that we will continue to fund our investment activities and operating requirements through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, including cash proceeds from the repayments and from the sales of investments in our portfolio companies, and utilization of available borrowings under our Credit Facilities. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and share repurchases under our share repurchase programs.

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 Private Loan and LMM portfolio investments. Marketable securities and idle funds investments generally consist of money market funds and certificates of deposit with financial institutions.

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.

Although we have been able to secure access to additional liquidity, including through the Credit Facilities and the Note Purchase Agreement, 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.11. — 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. As of September 30, 2024, we had a total of $73.5 million in outstanding commitments comprised of (i) 69 commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) two equity capital commitments that had not been fully called.

Contractual Obligations

As of September 30, 2024, we had $556.7 million in total borrowings outstanding under our Credit Facilities and Series A Notes. The Corporate Facility was scheduled to mature on March 1, 2026. See Note K — Subsequent Events included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for details on the related

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amendment. The SPV Facility will mature on February 3, 2028. The Series A Notes will mature on October 30, 2026. See further discussion of the terms of our Credit Facilities, Series A Notes and other debt in Note D — Debt included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

A summary of our significant contractual payment obligations for the repayment of outstanding borrowings at September 30, 2024 is as follows:

	2024		2025		2026		2027		2028		Thereafter		Total
	(dollars in thousands)
SPV Facility(1)	$	—	$	—	$	—	$	—	$	259,688	$	—	$	259,688
Series A Notes	—		—		150,000		—		—		—		150,000
Interest due on Series A Notes	3,030		6,060		6,060		—		—		—		15,150
Corporate Facility(2)	—		—		147,000		—		—		—		147,000
Total	$	3,030	$	6,060	$	303,060	$	—	$	259,688	$	—	$	571,838

_________________

(1)As of September 30, 2024, $40.3 million remained available to borrow under the SPV Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the SPV Facility and the 1940 Act, as discussed above.

(2)As of September 30, 2024, $18.0 million remained available to borrow under the Corporate Facility; however, our borrowing ability is limited to leverage and borrowing base restrictions imposed by the Corporate Facility and the 1940 Act, as discussed above.

Related Party Transactions and Agreements

We have entered into agreements with our Adviser and/or certain of its affiliates and other parties whereby we pay certain fees and reimbursements to these entities. These included payments for selling commissions and fees and for reimbursement of offering costs. In addition, we make payments for certain services that include the identification, execution and management of our investments and also the management of our day-to-day operations provided to us by our Adviser, pursuant to various agreements that we have entered into. See Note J — 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.

Recent Developments

On November 1, 2024, we repurchased 512,730 shares of our common stock validly tendered and not withdrawn on the terms set forth in the tender offer statement on Schedule TO and Offer to Purchase filed with the SEC on September 26, 2024. We repurchased the shares at a price of $7.74 per share, which was our NAV per share as of November 1, 2024, for an aggregate purchase price of $4.0 million (an amount equal to 90% of the proceeds we received from the issuance of shares under our DRIP from the November 1, 2024 dividend payment).

On November 8, 2024, we entered into an amendment to the Corporate Facility to, among other things: (i) extend the revolving period from September 2025 to November 2028, (ii) extend the final maturity date from March 2026 to May 2029 and (iii) reduce the interest rate, subject to our election to (a) SOFR plus 2.05% or (b) the base rate plus 1.05%.

On November 13, 2024, our Board of Directors declared a quarterly dividend of $0.18 per share payable on January 31, 2025 to stockholders of record as of December 31, 2024.

We have scheduled a special meeting of stockholders on December 2, 2024 to consider a series of proposals that we believe will position us to potentially effect a listing of our shares of common stock on a national securities exchange (such as the New York Stock Exchange) (a “Listing”) if and when market conditions make it desirable to do so and it is otherwise in our best interest. On November 13, 2024, our Board of directors, including the independent directors, unanimously approved suspending our share repurchase program in anticipation of a Listing and the opportunity for enhanced liquidity a Listing is expected to provide our stockholders. The share repurchase program will ultimately terminate upon a Listing.

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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 SOFR and Prime rates, to the extent that any debt investments include floating interest rates. See 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, 2023 for more information regarding risks associated with our debt investments and borrowings that utilize 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 September 30, 2024, 77% of our debt Investment Portfolio (at cost) bore interest at floating rates, 96% of which were subject to contractual minimum interest rates. As of September 30, 2024, 27% 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 Series A Notes are fixed for the life of such debt. As of September 30, 2024, 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 expects to operate as a “limited derivatives user” under Rule 18f-4 under the 1940 Act.

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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 September 30, 2024. The pro forma changes in incentive fee expense are calculated based upon the actual incentive fee expense for the third quarter of 2024 on an annualized basis, as adjusted for the pro forma changes in Pre-Incentive Fee Net Investment Income.

Basis Point Change	Increase<br>(Decrease)<br>in Interest<br>Income		(Increase)<br>Decrease<br>in Interest<br>Expense		Increase<br>(Decrease) in Pre Incentive Fee Net<br>Investment<br>Income		(Increase) Decrease in Incentive Fee Expense		Increase (Decrease) in Net Investment Income		Increase<br>(Decrease) in Net<br>Investment<br>Income per Share
	(dollars in thousands, except per share amounts)
(200)	$	(14,441)	$	8,134	$	(6,307)	$	6,307	$	—	$	—
(175)	(12,616)		7,117		(5,499)		5,499		—		—
(150)	(10,810)		6,100		(4,710)		4,710		—		—
(125)	(9,004)		5,084		(3,920)		3,920		—		—
(100)	(7,197)		4,067		(3,130)		3,130		—		—
(75)	(5,394)		3,050		(2,344)		2,344		—		—
(50)	(3,596)		2,033		(1,563)		1,563		—		—
(25)	(1,798)		1,017		(781)		781		—		—
25	1,798		(1,017)		781		(781)		—		—
50	3,598		(2,033)		1,565		(1,565)		—		—
75	5,399		(3,050)		2,349		(2,349)		—		—
100	7,201		(4,067)		3,134		(3,134)		—		—
125	9,002		(5,084)		3,918		(3,918)		—		—
150	10,804		(6,100)		4,704		(4,704)		—		—
175	12,605		(7,117)		5,488		(5,488)		—		—
200	14,407		(8,134)		6,273		(5,765)		508		0.01

Although we believe that this analysis is indicative of the impact of interest rate changes to our Net Investment Income as of September 30, 2024, the analysis does not take into consideration future changes in the credit market, credit 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 SOFR and Prime rate changes would be effective on the first day of the period. However, the contractual 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 Corporate Facility and our SPV Facility reset on a monthly and quarterly basis, respectively. 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 quarterly report on Form 10-Q, 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 September 30, 2024 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, the Adviser and/or Main Street 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, the Adviser and/or Main Street 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, the Adviser’s or Main Street’s 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, the Adviser’s or Main Street’s 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 consolidated 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 Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that we filed with the SEC on March 8, 2024, which could materially affect our business, financial condition and/or operating results.

There are no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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

Sales of Unregistered Securities

During the three months ended September 30, 2024, we issued 557,919 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 “Securities Act”). The aggregate value of the shares of common stock issued during the three months ended September 30, 2024 under the dividend reinvestment plan was $4.5 million.

Issuer Purchases of Equity Securities

The following chart summarizes repurchases of our common stock for the three months ended September 30, 2024.

Period	Total number of shares<br>purchased	Average price paid<br>per share		Total number of shares<br>purchased as part of publicly<br>announced plans or programs	Approximate dollar value of<br>shares that may yet be<br>purchased under the plans or<br>programs
July 1 through July 31, 2024	—	—		—	N/A
August 1 through August 31, 2024 (a)	514,997	$	7.83	514,997	N/A
September 1 through September 30, 2024	—	—		—	N/A
Total	514,997			514,997

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(a)Shares repurchased under the quarterly share repurchase program at NAV (see Note G — Share Repurchases included in Item 1. Consolidated Financial Statements for more information).

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Item 5. Other Information

Rule 10b5-1 Trading Plans

During the fiscal quarter ended September 30, 2024, none of our directors or officers adopted or terminated any contract, instruction or written plans for the purchase or sale of our securities to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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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
10.1*	Eighth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 8, 2024, by and among the Registrant, the Guarantors party thereto, the lenders party thereto and EverBank (filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K, filed on November 13, 2024 (File No. 814-00939) and incorporated herein by reference).
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 third quarter of fiscal year 2024, filed with the SEC on November 14, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023, (iii) the Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2024 and 2023, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023, (v) the Consolidated Schedule of Investments for the periods ended September 30, 2024 and December 31, 2023, (vi) the Notes to Consolidated Financial Statements and (vii) the Consolidated Schedule 12-14 for the nine months ended September 30, 2024 and 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
*	Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

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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.

	MSC INCOME FUND, INC.
Date: November 14, 2024	/s/ DWAYNE L. HYZAK
	Dwayne L. Hyzak
	Chief Executive Officer
	(principal executive officer)
Date: November 14, 2024	/s/ CORY E. GILBERT
	Cory E. Gilbert
	Chief Financial Officer
	(principal financial officer)
Date: November 14, 2024	/s/ RYAN H. MCHUGH
	Ryan H. McHugh
	Chief Accounting Officer
	(principal accounting officer)

117

Document

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 September 30, 2024 of MSC Income Fund, Inc. (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 November 14, 2024.

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, Cory E. Gilbert, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 of MSC Income Fund, Inc. (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 November 14, 2024.

By:	/s/ CORY E. GILBERT
	Cory E. Gilbert
	Chief Financial 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 MSC Income Fund, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2024 (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: November 14, 2024

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 MSC Income Fund, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2024 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Cory E. Gilbert, 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/ CORY E. GILBERT
Cory E. Gilbert
Date: November 14, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

For the quarterly period ended September 30, 2024

For the transition period from: to

Commission File Number: 814-00939

MSC Income Fund, Inc.

(713) 350-6000

n/a

Explanatory Note

TABLE OF CONTENTS

MSC INCOME FUND, INC.

Consolidated Balance Sheets

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

MSC INCOME FUND, INC.

Consolidated Statements of Operations

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

MSC INCOME FUND, INC.

Consolidated Statements of Changes in Net Assets

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

MSC INCOME FUND, INC.

Consolidated Statements of Cash Flows

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

MSC INCOME FUND, INC.

Consolidated Schedule of Investments

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024

MSC INCOME FUND, INC.

Consolidated Schedule of Investments (Continued)

September 30, 2024