##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the Quarterly Period Ended June 30, 2006
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 Commission File Number: 0-51459
 PATRIOT CAPITAL FUNDING, INC.
  Delaware
    
    74-3068511(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)274 Riverside AvenueWestport, CT
    
    06880(Address of principal executive office)
    
    (Zip Code)
 (203) 429-2700
 þ o
  o o þ
 o þ




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##### 



PATRIOT CAPITAL FUNDING, INC.
 FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2006
 TABLE OF CONTENTS
 PART I
    
    FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Financial Statements (Unaudited)
    
    
    1Consolidated Balance Sheets at June 30, 2006 and December 31, 2005
    
    
    1Consolidated Statements of Operations for the three and six months ended June 30,
2006 and 2005
    
    
    2Consolidated Statement of Stockholders Equity for the six months ended June 30, 2006
    
    
    3Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005
    
    
    4Consolidated Schedule of Investments as of June 30, 2006
    
    
    5Consolidated Schedule of Investments as of December 31, 2005
    
    
    9Notes to Consolidated Financial Statements
    
    
    11Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    30PART II
    
    OTHER INFORMATION
    
    
    31Item 1.
    
    Legal Proceedings
    
    
    31Item 1A.
    
    Risk Factors
    
    
    31Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3.
    
    Defaults upon Senior Securities
    
    
    31Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    31Item 5.
    
    Other Information
    
    
    32Item 6.
    
    Exhibits
    
    
    32Signatures
    
    
    
    
    33




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##### 



PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 Patriot Capital Funding, Inc.
Consolidated Balance Sheets
(unaudited)
 June 30,
    
    December 31,2006
    
    2005ASSETSInvestments at fair value:Investments in debt securities
(cost of $193,003,935  2006,
$144,154,600 - 2005)
    
    $
    193,003,935
    
    
    $
    140,395,654Investments in equity securities (cost of $1,856,308  2006,
$1,077,550  2005)
    
    
    1,822,080
    
    
    
    995,300Unearned income
    
    
    (3,092,071
    )
    
    
    (3,439,295
    )Total investments
    
    
    191,733,944
    
    
    
    137,951,659Cash and cash equivalents
    
    
    2,285,370
    
    
    
    2,371,841Restricted cash
    
    
    6,416,009
    
    
    
    7,806,328Interest receivable
    
    
    900,529
    
    
    
    867,475Other assets
    
    
    1,564,384
    
    
    
    1,658,690TOTAL ASSETS
    
    $
    202,900,236
    
    
    $
    150,655,993LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESBorrowings
    
    $
    32,278,750
    
    
    $
    21,650,000Interest payable
    
    
    191,867
    
    
    
    60,334Dividends payable
    
    
    3,525,932
    
    
    
    Accounts payable, accrued expenses and other
    
    
    2,099,662
    
    
    
    1,793,294TOTAL LIABILITIES
    
    
    38,096,211
    
    
    
    23,503,628STOCKHOLDERS EQUITYPreferred stock, $.01 par value, 1,000,000 shares authorized;
no shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, 49,000,000 shares authorized;
15,758,387 and 12,136,655 shares issued and outstanding at
at June 30, 2006, and December 31, 2005, respectively
    
    
    157,584
    
    
    
    121,367Paid-in capital
    
    
    173,389,548
    
    
    
    136,267,552Accumulated net investment loss
    
    
    (1,912,061
    )
    
    
    (1,912,061
    )Distributions in excess of net investment income
    
    
    (3,724,610
    )
    
    
    (3,483,297
    )Accumulated net realized loss
    
    
    (3,271,091
    )
    
    
    Net
unrealized gain on interest rate swap
    
    
    198,884
    
    
    
    Net unrealized depreciation on investments
    
    
    (34,229
    )
    
    
    (3,841,196
    )TOTAL STOCKHOLDERS EQUITY
    
    
    164,804,025
    
    
    
    127,152,365TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    202,900,236
    
    
    $
    150,655,993NET ASSET VALUE PER COMMON SHARE
    
    $
    10.46
    
    
    $
    10.48
  1




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##### 



Patriot Capital Funding, Inc.
Consolidated Statements of Operations
(unaudited)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005INVESTMENT INCOMEInterest and dividend income
    
    $
    5,752,032
    
    
    $
    2,792,453
    
    
    $
    11,191,803
    
    
    $
    5,099,690Fees
    
    
    55,833
    
    
    
    34,497
    
    
    
    125,901
    
    
    
    65,497Other investment income
    
    
    
    
    
    
    
    
    
    
    713,449
    
    
    
    Total Investment Income
    
    
    5,807,865
    
    
    
    2,826,950
    
    
    
    12,031,153
    
    
    
    5,165,187EXPENSESCompensation expense
    
    
    848,418
    
    
    
    461,879
    
    
    
    1,717,165
    
    
    
    890,229Consulting fees
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    500,000Interest expense
    
    
    954,257
    
    
    
    1,349,326
    
    
    
    1,923,388
    
    
    
    2,401,666Professional fees
    
    
    224,216
    
    
    
    166,866
    
    
    
    424,285
    
    
    
    236,179General and administrative expense
    
    
    686,259
    
    
    
    120,647
    
    
    
    1,162,066
    
    
    
    388,113Total Expenses
    
    
    2,713,150
    
    
    
    2,348,718
    
    
    
    5,226,904
    
    
    
    4,416,187Net Investment Income
    
    
    3,094,715
    
    
    
    478,232
    
    
    
    6,804,249
    
    
    
    749,000NET
REALIZED AND UNREALIZED GAINS AND (LOSSES)Net realized loss on investments
    
    
    (3,271,091
    )
    
    
    
    
    
    
    (3,271,091
    )
    
    
    Net unrealized appreciation (depreciation) on investments
    
    
    4,611,300
    
    
    
    (170,450
    )
    
    
    3,806,967
    
    
    
    680,011Net unrealized
gain on interest rate swap
    
    
    149,687
    
    
    
    
    
    
    
    198,884
    
    
    
    Net gain (loss)
    
    
    1,489,896
    
    
    
    (170,450
    )
    
    
    734,760
    
    
    
    680,011NET INCOME
    
    $
    4,584,611
    
    
    $
    307,782
    
    
    $
    7,539,009
    
    
    $
    1,429,011Earnings per share, basic and diluted
    
    $
    0.36
    
    
    $
    0.08
    
    
    $
    0.60
    
    
    $
    0.37Weighted average shares outstanding, basic and diluted
    
    
    12,788,727
    
    
    
    3,847,902
    
    
    
    12,464,492
    
    
    
    3,847,902
  2




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##### 



Patriot Capital Funding, Inc.
Consolidated Statement of Stockholders Equity
(unaudited)
 Distributions
    
    
    
    
    
    
    

    NetAccumulated
    
    In Excess of
    
    Net
    
    Net
    
    UnrealizedNet
    
    Net
    
    Realized
    
    Unrealized
    
    AppreciationInvestment
    
    Investment
    
    Loss on
    
    Gain on
    
    (Depreciation)
    
    TotalFor the Six Months Ended
    
    Common
    
    
    
    
    
    Income
    
    Income
    
    Sale of
    
    Interest Rate
    
    on
    
    StockholdersJune 30, 2006:
    
    Stock
    
    Paid-in Capital
    
    (Loss)
    
    (Loss)
    
    Investments
    
    Swap
    
    Investments
    
    EquityBalance, December 31, 2005
    
    $
    121,367
    
    
    $
    136,267,552
    
    
    $
    (1,912,061
    )
    
    $
    (3,483,297
    )
    
    $
    
    
    
    $
    
    
    
    $
    (3,841,196
    )
    
    $
    127,152,365Shares issued in
connection with dividend
reinvestment
    
    
    217
    
    
    
    269,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269,247Sale of Common Stock, net
of offering expenses of
$2.4 million
    
    
    36,000
    
    
    
    36,654,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,690,690Stock option compensation
    
    
    
    
    
    
    198,276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,276Distributions declared
($0.58 per common share)
    
    
    
    
    
    
    
    
    
    
    (6,804,249
    )
    
    
    (241,313
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,045,562
    )Net income
    
    
    
    
    
    
    
    
    
    
    6,804,249
    
    
    
    
    
    
    
    (3,271,091
    )
    
    
    198,884
    
    
    
    3,806,967
    
    
    
    7,539,009Balance, June 30, 2006
    
    $
    157,584
    
    
    $
    173,389,548
    
    
    $
    (1,912,061
    )
    
    $
    (3,724,610
    )
    
    $
    (3,271,091
    )
    
    $
    198,884
    
    
    $
    (34,229
    )
    
    $
    164,804,025
  3




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##### 



Patriot Capital Funding, Inc.
Consolidated Statements of Cash Flows
(unaudited)
 Six Months EndedJune 30,2006
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    7,539,009
    
    
    $
    1,429,011Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    237,245
    
    
    
    11,544Change in interest receivable
    
    
    (33,054
    )
    
    
    (82,422
    )Realized loss on sale of investment
    
    
    3,271,091
    
    
    
    Change in unrealized depreciation on investments
    
    
    (3,806,967
    )
    
    
    (680,011
    )Unrealized gain on interest rate swap
    
    
    (198,884
    )
    
    
    Payment-in-kind interest and dividends
    
    
    (1,144,116
    )
    
    
    (840,942
    )Stock-based compensation expense
    
    
    198,276
    
    
    
    Change in unearned income
    
    
    (153,947
    )
    
    
    203,649Change in interest payable
    
    
    131,533
    
    
    
    203,175Change in management fee payable
    
    
    
    
    
    
    375,000Change in other assets
    
    
    93,570
    
    
    
    Change in accounts payable and accrued expenses
    
    
    306,368
    
    
    
    821,520Net cash provided by operating activities
    
    
    6,440,124
    
    
    
    1,440,554CASH FLOWS FROM INVESTING ACTIVITIES:Funded investments
    
    
    (74,102,610
    )
    
    
    (17,900,000
    )Principal repayments on investments
    
    
    18,519,755
    
    
    
    1,691,250Proceeds from sale of investment
    
    
    3,634,509
    
    
    
    Purchase of furniture and equipment
    
    
    (37,625
    )
    
    
    (3,882
    )Net cash used for investing activities
    
    
    (51,985,971
    )
    
    
    (16,212,632
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings
    
    
    184,578,750
    
    
    
    18,900,000Repayments on borrowings
    
    
    (173,950,000
    )
    
    
    (3,254,583
    )Net proceeds from sale of common stock
    
    
    36,959,937
    
    
    
    Dividends paid
    
    
    (3,519,630
    )
    
    
    Deferred offering costs
    
    
    
    
    
    
    (747,826
    )Net decrease (increase) in restricted cash
    
    
    1,390,319
    
    
    
    (1,000,000
    )Net cash provided by financing activities
    
    
    45,459,376
    
    
    
    13,897,591NET DECREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (86,471
    )
    
    
    (874,517
    )CASH AND CASH EQUIVALENTS AT:Beginning of Period
    
    
    2,371,841
    
    
    
    2,491,477End of Period
    
    $
    2,285,370
    
    
    $
    1,616,960Supplemental information:Interest paid
    
    $
    1,791,856
    
    
    $
    2,198,499Non-cash financing activities:Dividends
declared but not paid
    
    $
    3,525,932
    
    
    $
    
  4




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##### 



Patriot Capital Funding, Inc.
Consolidated Schedule of Investments
(unaudited)
June 30, 2006
 Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)Agent Media Corporation
    
    Publisher of insurance industry periodicals
    
    Senior Secured Term Loan A (9.9%, Due 9/08)
    
    $
    1,125,000
    
    
    $
    1,125,000
    
    
    $
    1,125,000Senior Secured Term Loan B (2) (12.0%, Due 9/09)
    
    
    2,130,105
    
    
    
    2,130,105
    
    
    
    2,130,105Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    31,000
    
    
    
    58,100Allied Defense Group, Inc.
    
    Diversified defense company
    
    Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    463,168
    
    
    
    523,400Bare Escentuals Beauty, Inc.
    
    Marketer of mineral-based cosmetics and branded skin care products
    
    Junior Secured Term Loan (12.4%, Due 2/13)
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    1,000,000Borga, Inc.
    
    Manufacturer of pre-fabricated metal building systems
    
    Senior Secured Term Loan A (8.8%, Due 3/09)
    
    
    1,633,500
    
    
    
    1,633,500
    
    
    
    1,633,500Senior Secured Term Loan B (11.8%, Due 5/10)
    
    
    1,822,750
    
    
    
    1,822,750
    
    
    
    1,822,750Senior Secured Term Loan C (2) (16.0%, Due 5/10)
    
    
    7,333,838
    
    
    
    7,333,838
    
    
    
    7,333,838Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    20,250
    
    
    
    90,200Cheeseworks, Inc.
    
    Distributor of specialty cheese and food products
    
    Revolving Line of Credit (9.5%, Due 6/11)
    
    
    5,080,219
    
    
    
    5,080,219
    
    
    
    5,080,219Senior Secured Term Loan (12.5%, Due 6/11)
    
    
    12,275,000
    
    
    
    12,275,000
    
    
    
    12,275,000Copperhead Chemical Company, Inc.
    
    Manufacturer of bulk pharmaceuticals
    
    Senior Subordinated Debt (2) (15.3%, Due 11/10)
    
    
    4,745,416
    
    
    
    4,745,416
    
    
    
    4,745,416Dover Saddlery, Inc.
    
    Equestrian products catalog retailer
    
    Senior Subordinated Debt (11.5%, Due 9/09)
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    148,200
    
    
    
    170,400Eight OClock Coffee Company
    
    Manufacturer, distributor, and marketer of coffee
    
    Junior Secured Term Loan (12.1%, Due 11/12)
    
    
    6,500,000
    
    
    
    6,500,000
    
    
    
    6,500,000
 5




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##### 



Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)Encore Legal Solutions, Inc.
    
    Legal document management services
    
    Junior Secured Term Loan A (13.2%, Due 12/08)
    
    
    4,310,000
    
    
    
    4,310,000
    
    
    
    4,310,000Junior Secured Term Loan B (10.9%, Due 12/09)
    
    
    6,927,125
    
    
    
    6,927,125
    
    
    
    6,927,125Senior Subordinated Debt (2) (17.0%, Due 5/10)
    
    
    5,021,610
    
    
    
    5,021,610
    
    
    
    5,021,610Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    350,000
    
    
    
    56,500EXL Acquisition Corp.
    
    Manufacturer of lab testing supplies
    
    Senior Secured Term Loan A (8.4%, Due 3/11)
    
    
    7,700,000
    
    
    
    7,700,000
    
    
    
    7,700,000Senior Secured Term Loan B (8.9%, Due 3/12)
    
    
    2,394,000
    
    
    
    2,394,000
    
    
    
    2,394,000Senior Secured Term Loan D (15.0%, Due 3/12)
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000Common Stock  Class A (4)
    
    
    
    
    
    
    2,475
    
    
    
    45,300Common Stock  Class B (2)
    
    
    
    
    
    
    254,813
    
    
    
    255,200Fairchild Industrial Products, Co.
    
    Manufacturer of industrial controls and power transmission products
    
    Senior Secured Term Loan A (9.2%, Due 7/10)
    
    
    10,470,000
    
    
    
    10,470,000
    
    
    
    10,470,000Senior Secured Term Loan B (11.2%, Due 7/11)
    
    
    2,806,250
    
    
    
    2,806,250
    
    
    
    2,806,250Senior Subordinated Debt (2) (15.5%, Due 7/11)
    
    
    5,375,250
    
    
    
    5,375,250
    
    
    
    5,375,250Preferred Stock (2)
    
    
    
    
    
    
    381,995
    
    
    
    381,995Common Stock (4)
    
    
    
    
    
    
    121,597
    
    
    
    137,400Impact Products, LLC
    
    Distributor of janitorial supplies
    
    Junior Secured Term Loan B (9.6%, Due 9/12)
    
    
    7,481,250
    
    
    
    7,481,250
    
    
    
    7,481,250Senior Secured Term Loan C (2) (13.5%, Due
9/12)
    
    
    5,547,993
    
    
    
    5,547,993
    
    
    
    5,547,993Innovative Concepts in
Entertainment, Inc.
    
    Manufacturer of coin operated games
    
    Senior Secured Term Loan A (8.2%, Due 2/11)
    
    
    5,775,000
    
    
    
    5,775,000
    
    
    
    5,775,000Senior Secured Term Loan B (9.7%, Due 2/11)
    
    
    3,591,000
    
    
    
    3,591,000
    
    
    
    3,591,000Senior Secured Term Loan C (13.0%, Due 8/11)
    
    
    3,900,000
    
    
    
    3,900,000
    
    
    
    3,900,000Keltner Enterprises, LLC (5)
    
    Distributor of automotive oils, chemicals and parts
    
    Senior Subordinated Debt (14.0%, Due 12/11)
    
    
    3,850,000
    
    
    
    3,850,000
    
    
    
    3,850,000
 6




---



##### 



Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)L.A. Spas, Inc.
    
    Manufacturer of above ground spas
    
    Senior Subordinated Debt (2) (15.5%, Due 1/10)
    
    
    6,896,546
    
    
    
    6,896,546
    
    
    
    6,896,546Common Stock Warrants, Less than 5% of Co.(4)
    
    
    
    
    
    
    5,000
    
    
    
    Natural Products Group, LLC (5)
    
    Manufacturer and marketer of branded personal care products
    
    Junior Secured Term Loan (12.0%, Due 12/13)
    
    
    2,000,000
    
    
    
    2,000,000
    
    
    
    2,000,000Prince Mineral Company, Inc.
    
    Manufacturer of pigments
    
    Junior Secured Term Loan (11.0%, Due 3/11)
    
    
    3,600,000
    
    
    
    3,600,000
    
    
    
    3,600,000Senior Subordinated Debt (2) (17.0%, Due 9/11)
    
    
    10,435,313
    
    
    
    10,435,313
    
    
    
    10,435,313Quartermaster, Inc.
    
    Retailer of uniforms and tactical equipment to law enforcement and security
professionals
    
    Senior Secured Term Loan A (10.1%, Due 12/10)
    
    
    6,000,000
    
    
    
    6,000,000
    
    
    
    6,000,000Senior Secured Term Loan B (11.3%, Due 12/10)
    
    
    2,600,000
    
    
    
    2,600,000
    
    
    
    2,600,000Senior Secured Term Loan C (2) (15.0%, Due 12/11)
    
    
    3,151,131
    
    
    
    3,151,131
    
    
    
    3,151,131R-O-M Corporation
    
    Manufacturer of doors, ramps and bulk heads for fire trucks and food transportation
    
    Senior Secured Term Loan A (10.0%, Due 12/09)
    
    
    3,252,667
    
    
    
    3,252,667
    
    
    
    3,252,667Senior Secured Term Loan B (10.9%, Due 12/10)
    
    
    3,391,500
    
    
    
    3,391,500
    
    
    
    3,391,500Senior Subordinated Debt (2)
(16.0%, Due 12/10)
    
    
    7,078,829
    
    
    
    7,078,829
    
    
    
    7,078,829Robert Rothschild Farm, Inc.
    
    Manufacturer of specialty food products
    
    Senior Secured Term Loan B (8.9%, Due 7/10)
    
    
    4,650,000
    
    
    
    4,650,000
    
    
    
    4,650,000Senior Subordinated Debt (2) (16.3%, Due 1/12)
    
    
    4,798,077
    
    
    
    4,798,077
    
    
    
    4,798,077Sidumpr Trailer Company
    
    Manufacturer of side dump trailers
    
    Senior Secured Term Loan A (8.7%, Due 1/11)
    
    
    2,800,000
    
    
    
    2,800,000
    
    
    
    2,800,000Senior Secured Term Loan B (11.7%, Due 1/11)
    
    
    2,350,000
    
    
    
    2,350,000
    
    
    
    2,350,000Senior Secured Term Loan C (2) (14.0%, Due 7/11)
    
    
    3,129,566
    
    
    
    3,129,566
    
    
    
    3,129,566Senior Subordinated Debt (12.0%, Due 1/12)
    
    
    75,000
    
    
    
    75,000
    
    
    
    75,000
 7




---



##### 



Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)Preferred Stock (2)
    
    
    77,785
    
    
    
    77,785
    
    
    
    77,785Common Stock (4)
    
    
    25
    
    
    
    25
    
    
    
    25,800Total Investments
    
    
    
    
    
    
    
    
    
    
    194,860,243
    
    
    
    194,826,015Unearned Income
    
    
    
    
    
    
    
    
    
    
    (3,092,071
    )
    
    
    (3,092,071
    )Total Investments Net of
Unearned Income
    
    
    
    
    
    
    
    
    
    $
    191,768,172
    
    
    $
    191,733,944
 
 (1)
    
    The Company does not control, and is not an affiliate of, any of its portfolio
companies, each as defined in the Investment Company Act of 1940, as amended (the 1940
Act). In general, under the 1940 Act, the Company would control a portfolio company if
the Company owned 25% or more of its voting securities and would be an affiliate of a
portfolio company if the Company owned 5% or more of its voting securities.(2)
    
    Amount includes payment-in-kind (PIK) interest or dividends.(3)
    
    Fair value is determined in good faith by our board of directors.(4)
    
    Non-income producing.(5)
    
    Some of the investments listed are issued by an affiliate of the listed portfolio company.
  8




---



##### 



PATRIOT CAPITAL FUNDING, INC.
Consolidated Schedule of Investments
December 31, 2005
 Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)Agent Media Corporation
    
    Publisher of insurance industry periodicals
    
    Senior Secured Term Loan A (11.8%, Due 9/08)
    
    $
    1,375,000
    
    
    $
    1,375,000
    
    
    $
    1,375,000Senior Secured Term Loan B (2) (16.0%, Due 9/09)
    
    
    2,109,015
    
    
    
    2,109,015
    
    
    
    2,109,015Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    31,000
    
    
    
    49,900Allied Defense Group, Inc.
    
    Diversified defense company
    
    Senior Secured Term Loan (11.5%, Due 11/10)
    
    
    14,000,000
    
    
    
    14,000,000
    
    
    
    14,000,000Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    463,168
    
    
    
    573,800Borga, Inc.
    
    Manufacturer of pre-fabricated metal building systems
    
    Senior Secured Term Loan A  (7.7%, Due 3/09)
    
    
    2,046,000
    
    
    
    2,046,000
    
    
    
    2,046,000Senior Secured Term Loan B   (10.7%, Due 5/10)
    
    
    1,835,250
    
    
    
    1,835,250
    
    
    
    1,835,250Senior Secured Term Loan C (2)(16.0%, Due 5/10)
    
    
    7,188,062
    
    
    
    7,188,062
    
    
    
    7,188,062Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    20,250
    
    
    
    89,600Copperhead Chemical Company, Inc.
    
    Manufacturer of bulk pharmaceuticals
    
    Senior Subordinated Debt (2) (15.3%, Due 11/10)
    
    
    4,668,608
    
    
    
    4,668,608
    
    
    
    4,668,608Dover Saddlery, Inc.
    
    Equestrian products catalog retailer
    
    Senior Subordinated Debt (11.5%, Due 9/09)
    
    
    3,000,000
    
    
    
    3,000,000
    
    
    
    3,000,000Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    148,200
    
    
    
    178,600Eight OClock Coffee Company
    
    Manufacturer, distributor, and marketer of coffee
    
    Junior Secured Term Loan (11.4%, Due 11/12)
    
    
    6,500,000
    
    
    
    6,500,000
    
    
    
    6,500,000Encore Legal Solutions, Inc.
    
    Legal document management services
    
    Junior Secured Term Loan A (9.8%, Due 12/08)
    
    
    4,660,000
    
    
    
    4,660,000
    
    
    
    4,660,000Junior Secured Term Loan B (8.3%, Due 12/09)
    
    
    6,944,625
    
    
    
    6,944,625
    
    
    
    6,944,625Senior Subordinated Debt (2) (15.0%, Due 5/10)
    
    
    4,946,718
    
    
    
    4,946,718
    
    
    
    4,946,718Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    350,000
    
    
    
    103,400Fairchild Industrial Products, Co.
    
    Manufacturer of industrial controls
and power transmission products
    
    Senior Secured Term Loan A  (8.0%, Due 7/10)
    
    
    9,670,000
    
    
    
    9,670,000
    
    
    
    9,670,000Senior Secured Term Loan B  (10.0%, Due 7/11)
    
    
    2,818,750
    
    
    
    2,818,750
    
    
    
    2,818,750Senior Subordinated Debt  (15.5%, Due 7/11)
    
    
    5,355,000
    
    
    
    5,355,000
    
    
    
    5,355,000
 9




---



##### 



Company(1)
    
    Industry
    
    Investment
    
    Principal
    
    Cost
    
    Fair Value(3)Interstate Highway Sign Corporation
    
    Manufacturer of highway and
    
    Senior Secured Term Loan (10.5%, Due 12/09)
    
    
    1,360,000
    
    
    
    1,360,000
    
    
    
    1,360,000roadway signs
    
    Senior Subordinated Debt (2) (18.0%, Due 12/09)
    
    
    5,837,409
    
    
    
    5,758,946
    
    
    
    2,000,000Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    59,932
    
    
    
    Keltner Enterprises, LLC (5)
    
    Distributor of automotive oils, chemicals and parts
    
    Senior Subordinated Debt (14.0%, Due 12/11)
    
    
    3,850,000
    
    
    
    3,850,000
    
    
    
    3,850,000L.A. Spas, Inc.
    
    Manufacturer of above ground spas
    
    Senior Subordinated Debt (2) (15.5%, Due 1/10)
    
    
    6,776,424
    
    
    
    6,776,424
    
    
    
    6,776,424Common Stock Warrants, Less than  5% of Co.(4)
    
    
    
    
    
    
    5,000
    
    
    
    Prince Mineral Company, Inc.
    
    Manufacturer of pigments
    
    Junior Secured Term Loan (11.0%, Due 3/11)
    
    
    3,600,000
    
    
    
    3,600,000
    
    
    
    3,600,000Senior Subordinated Debt (2) (17.0%, Due 9/11)
    
    
    10,228,579
    
    
    
    10,228,579
    
    
    
    10,228,579Quartermaster, Inc.
    
    Retailer of uniforms and tactical equipment to law enforcement
    
    Revolving Line of Credit (9.5%, Due 12/10)
    
    
    250,000
    
    
    
    250,000
    
    
    
    250,000and security professionals
    
    Senior Secured Term Loan A (9.2%, Due 12/10)
    
    
    6,000,000
    
    
    
    6,000,000
    
    
    
    6,000,000Senior Secured Term Loan B (10.4%, Due 12/10)
    
    
    2,600,000
    
    
    
    2,600,000
    
    
    
    2,600,000Senior Secured Term Loan C (2) (15.0%, Due 12/11)
    
    
    3,104,133
    
    
    
    3,104,133
    
    
    
    3,104,133Robert Rothschild Farm, Inc.
    
    Manufacturer of specialty food products
    
    Senior Secured Term Loan B  (8.5%, Due 7/10)
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000Senior Subordinated Debt (2)  (16.3%, Due 1/12)
    
    
    4,697,171
    
    
    
    4,697,171
    
    
    
    4,697,171R-O-M Corporation
    
    Manufacturer of doors, ramps and bulk
    
    Senior Secured Term Loan A (8.8%, Due 12/09)
    
    
    3,400,000
    
    
    
    3,400,000
    
    
    
    3,400,000heads for fire trucks and food transportation
    
    Senior Secured Term Loan B (9.8%, Due 12/10)
    
    
    3,400,000
    
    
    
    3,400,000
    
    
    
    3,400,000Senior Subordinated Debt (2) (16.0%, Due 12/10)
    
    
    7,012,319
    
    
    
    7,012,319
    
    
    
    7,012,319Total Investments
    
    
    
    
    
    
    
    
    
    
    145,232,150
    
    
    
    141,390,954Unearned Income
    
    
    
    
    
    
    
    
    
    
    (3,439,295
    )
    
    
    (3,439,295
    )Total Investments Net of Unearned
Income
    
    
    
    
    
    
    
    
    
    $
    141,792,855
    
    
    $
    137,951,659
 
 (1)
    
    The Company does not control, and is not an affiliate of, any of its portfolio
companies, each as defined in the Investment Company Act of 1940, as amended (the 1940
Act). In general, under the 1940 Act, the Company would control a portfolio company if
the Company owned 25% or more of its voting securities and would be an affiliate of a
portfolio company if the Company owned 5% or more of its voting securities.(2)
    
    Principal amount includes payment-in-kind (PIK) interest.(3)
    
    Fair value is determined in good faith by the Companys board of directors.(4)
    
    Non-income producing.(5)
    
    Some of the investments listed are issued by an affiliate of the listed portfolio company.
  10




---



##### 



Patriot Capital Funding, Inc.
Notes to Consolidated Financial Statements
(unaudited)
  Description of Business
   Basis of Presentation
    Interest, Dividends, Fees, and Other Investment Income
  Dividends Paid
  11




---



##### 



As Reported
    
    Reclassification
    
    As ReclassifiedAccumulated net investment loss
    
    $
    (5,395,358
    )
    
    $
    3,483,297
    
    
    $
    (1,912,061
    )Distributions in excess of net investment income
    
    
    
    
    
    
    (3,483,297
    )
    
    
    (3,483,297
    )
   June 30, 2006
    
    
    December 31, 2005Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueCommercial loans
    
    $
    193,003,935
    
    
    $
    193,003,935
    
    
    $
    144,154,600
    
    
    $
    140,395,654Investments in equity securities
    
    
    1,856,308
    
    
    
    1,822,080
    
    
    
    1,077,550
    
    
    
    995,300Subtotal
    
    
    194,860,243
    
    
    
    194,826,015
    
    
    
    145,232,150
    
    
    
    141,390,954Unearned income
    
    
    (3,092,071
    )
    
    
    (3,092,071
    )
    
    
    (3,439,295
    )
    
    
    (3,439,295
    )Total
    
    $
    191,768,172
    
    
    $
    191,733,944
    
    
    $
    141,792,855
    
    
    $
    137,951,659
    June 30, 2006
    
    
    December 31, 2005Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)
    
    
    Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)Senior Secured Debt
    
    $
    101,210,395
    
    
    
    51.9
    
    
    $
    101,210,395
    
    
    
    51.9
    %
    
    $
    63,052,077
    
    
    
    43.4
    %
    
    $
    63,052,077
    
    
    
    44.6
    %Junior Secured Debt
    
    
    31,818,375
    
    
    
    16.3
    
    
    
    31,818,375
    
    
    
    16.3
    
    
    
    21,704,625
    
    
    
    15.0
    
    
    
    21,704,625
    
    
    
    15.3Subordinated Debt
    
    
    59,975,165
    
    
    
    30.8
    
    
    
    59,975,165
    
    
    
    30.8
    
    
    
    59,397,898
    
    
    
    40.9
    
    
    
    55,638,952
    
    
    
    39.4Warrants / Equity
    
    
    1,856,308
    
    
    
    1.0
    
    
    
    1,822,080
    
    
    
    1.0
    
    
    
    1,077,550
    
    
    
    0.7
    
    
    
    995,300
    
    
    
    0.7Total
    
    $
    194,860,243
    
    
    
    100.0
    %
    
    $
    194,826,015
    
    
    
    100.0
    %
    
    $
    145,232,150
    
    
    
    100.0
    %
    
    $
    141,390,954
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of total portfolio. 12




---



##### 



June 30, 2006
    
    
    December 31, 2005Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)
    
    
    Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)Manufacturing
    
    $
    106,018,819
    
    
    
    54.4
    %
    
    $
    106,173,559
    
    
    
    54.5
    %
    
    $
    74,921,696
    
    
    
    51.6
    %
    
    $
    71,172,168
    
    
    
    50.3
    %Distribution
    
    
    34,234,462
    
    
    
    17.6
    
    
    
    34,234,462
    
    
    
    17.6
    
    
    
    3,850,000
    
    
    
    2.6
    
    
    
    3,850,000
    
    
    
    2.7Service
    
    
    16,608,735
    
    
    
    8.5
    
    
    
    16,315,235
    
    
    
    8.4
    
    
    
    16,901,343
    
    
    
    11.6
    
    
    
    16,654,743
    
    
    
    11.8Consumer / Retail Goods
    
    
    34,248,954
    
    
    
    17.6
    
    
    
    34,266,154
    
    
    
    17.6
    
    
    
    31,580,928
    
    
    
    21.8
    
    
    
    31,606,328
    
    
    
    22.4Publishing
    
    
    3,286,105
    
    
    
    1.7
    
    
    
    3,313,205
    
    
    
    1.7
    
    
    
    3,515,015
    
    
    
    2.4
    
    
    
    3,533,915
    
    
    
    2.5Defense
    
    
    463,168
    
    
    
    0.2
    
    
    
    523,400
    
    
    
    0.2
    
    
    
    14,463,168
    
    
    
    10.0
    
    
    
    14,573,800
    
    
    
    10.3Total
    
    $
    194,860,243
    
    
    
    100.0
    %
    
    $
    194,826,015
    
    
    
    100.0
    %
    
    $
    145,232,150
    
    
    
    100.0
    %
    
    $
    141,390,954
    
    
    
    100.0
    %
 
      13




---



##### 



Accounting for Stock Issued to
Employees.
     Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    4,584,611
    
    
    $
    307,782
    
    
    $
    7,539,009
    
    
    $
    1,429,011Weighted average common shares outstanding, basic and diluted
    
    
    12,788,727
    
    
    
    3,847,902
    
    
    
    12,464,492
    
    
    
    3,847,902Earnings per common share, basic and diluted
    
    $
    0.36
    
    
    $
    0.08
    
    
    $
    0.60
    
    
    $
    0.37
   14




---



##### 



15




---



##### 



January 1, 2006
    
    
    August 1, 2005to
    
    
    toJune 30, 2006
    
    
    June 30, 2006GAAP Net Investment Income
    
    $
    6,804,000
    
    
    $
    6,781,000Tax timing differences of:Origination fees
    
    
    22,000
    
    
    
    832,000Stock compensation expense and bonus accruals
    
    
    741,000
    
    
    
    536,000Tax Distributable Income
    
    $
    7,567,000
    
    
    $
    8,149,000
    16




---



##### 



For the Six Months EndedJune 30,Per Share Data:
    
    2006
    
    
    2005Net asset value at beginning of period
    
    $
    10.48
    
    
    $
    7.10Net investment income (loss)
    
    
    .55
    
    
    
    .20Net loss on investments
    
    
    (.26
    )
    
    
    Net change in unrealized appreciation
on investments
    
    
    .31
    
    
    
    .17Distributions from net investment income
    
    
    (.56
    )
    
    
    Distributions in excess of net investment income
    
    
    (.02
    )
    
    
    Net change
in unrealized gains on interest rate swap
    
    
    .01
    
    
    
    Stock based compensation expense
    
    
    .01
    
    
    
    Dilutive effect of share issuance
    
    
    (.06
    )
    
    
    Net asset value at end of period
    
    $
    10.46
    
    
    $
    7.47Total Net Asset Value Return (1)
    
    
    11.2
    %
    
    
    5.2
    %Per share market value, December 31, 2005
    
    $
    12.20Per share market value, June 30, 2006
    
    $
    11.10Total Market Value Return (2)
    
    
    ( 4.3
    )%Shares outstanding at end of period
    
    
    15,758,387
    
    
    
    3,847,902Ratios and Supplemental Data:Net assets at end of period
    
    $
    164,804,000
    
    
    $
    28,741,000Average net assets
    
    
    134,491,000
    
    
    
    28,162,000Ratio of operating expenses to average
net assets (annualized)
    
    
    7.8
    %
    
    
    31.4
    %Ratio of net investment income (loss) to
average net assets (annualized)
    
    
    10.1
    %
    
    
    5.3
    %Average borrowings outstanding
    
    $
    48,360,000
    
    
    $
    47,201,000Average amount of borrowings per
share
    
    $
    3.07
    
    
    $
    12.27
 
 (1)
    
    The total net asset value return (not annualized) reflects the change in net asset
value of a share of stock, plus dividends. On July 27, 2005, the Company merged Patriot
and Wilton, and effected a stock split. As a result, the Companys financial statements
reflect 3,847,902 shares issued and outstanding for the periods prior to the merger. On
August 2, 2005, the Company closed its initial public offering of 7,190,477 shares of
common stock and on August 15, 2005, the underwriters exercised their option to purchase an
additional 1,078,572 shares of common stock.(2)
    
    The total market value return (not annualized) reflects the change in the ending market
value per share plus dividends, divided by the beginning market value per share.      17




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   
    
    Our future operating results;
    
    Our business prospects and the prospects of our portfolio companies;
    
    The impact of the investments that we expect to make;
    
    The ability of our portfolio companies to achieve their objectives;
    
    Our expected financings and investments;
    
    The adequacy of our cash resources and working capital; and
    
    The timing of cash flows, if any, from the operations of our portfolio companies.
  
    
    changes in the economy;
    
    risks associated with possible disruption in our operations or the economy generally due to terrorism; and
    
    future changes in laws or regulations and conditions in our operating areas.
  Overview
   18




---



##### 



Portfolio Composition
   June 30, 2006
    
    
    December 31, 2005Beginning portfolio at fair value
    
    $
    141,390,954
    
    
    $
    67,677,751Originations/draws/purchases
    
    
    73,277,613
    
    
    
    88,850,000Investments in equity securities
    
    
    824,997
    
    
    
    575,490Investment repayments
    
    
    (18,519,755
    )
    
    
    (14,572,867
    )Increase in payment-in-kind interest / dividends
    
    
    1,144,116
    
    
    
    1,825,755Sale of investments
    
    
    (7,098,877
    )
    
    
    Increase (decrease) in fair value of investments
    
    
    3,806,967
    
    
    
    (2,965,175
    )Ending portfolio at fair value
    
    $
    194,826,015
    
    
    $
    141,390,954
  June 30, 2006
    
    
    December 31, 2005Investments at
    
    
    Percentage of
    
    
    Investments at
    
    
    Percentage ofFair Value
    
    
    Total Portfolio
    
    
    Fair Value
    
    
    Total PortfolioSenior secured revolving lines of credit
    
    $
    5,080,219
    
    
    
    2.6
    %
    
    $
    250,000
    
    
    
    0.2
    %Senior secured term loans
    
    
    96,130,176
    
    
    
    49.3
    
    
    
    62,802,077
    
    
    
    44.4Junior secured term loans
    
    
    31,818,375
    
    
    
    16.3
    
    
    
    21,704,625
    
    
    
    15.3Senior subordinated debt
    
    
    59,975,165
    
    
    
    30.8
    
    
    
    55,638,952
    
    
    
    39.4Investments in equity securities
    
    
    1,822,080
    
    
    
    1.0
    
    
    
    995,300
    
    
    
    0.7Totals
    
    $
    194,826,015
    
    
    
    100.0
    %
    
    $
    141,390,954
    
    
    
    100.0
    %
  19




---



##### 



June 30, 2006
    
    
    December 31, 2005Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)
    
    
    Cost
    
    
    % (1)
    
    
    Fair Value
    
    
    % (1)Manufacturing
    
    $
    106,018,819
    
    
    
    54.4
    %
    
    $
    106,173,559
    
    
    
    54.5
    %
    
    $
    74,921,696
    
    
    
    51.6
    %
    
    $
    71,172,168
    
    
    
    50.3
    %Distribution
    
    
    34,234,462
    
    
    
    17.6
    
    
    
    34,234,462
    
    
    
    17.6
    
    
    
    3,850,000
    
    
    
    2.6
    
    
    
    3,850,000
    
    
    
    2.7Service
    
    
    16,608,735
    
    
    
    8.5
    
    
    
    16,315,235
    
    
    
    8.4
    
    
    
    16,901,343
    
    
    
    11.6
    
    
    
    16,654,743
    
    
    
    11.8Consumer / Retail Goods
    
    
    34,248,954
    
    
    
    17.6
    
    
    
    34,266,154
    
    
    
    17.6
    
    
    
    31,580,928
    
    
    
    21.8
    
    
    
    31,606,328
    
    
    
    22.4Publishing
    
    
    3,286,105
    
    
    
    1.7
    
    
    
    3,313,205
    
    
    
    1.7
    
    
    
    3,515,015
    
    
    
    2.4
    
    
    
    3,533,915
    
    
    
    2.5Defense
    
    
    463,168
    
    
    
    0.2
    
    
    
    523,400
    
    
    
    0.2
    
    
    
    14,463,168
    
    
    
    10.0
    
    
    
    14,573,800
    
    
    
    10.3Total
    
    $
    194,860,243
    
    
    
    100.0
    %
    
    $
    194,826,015
    
    
    
    100.0
    %
    
    $
    145,232,150
    
    
    
    100.0
    %
    
    $
    141,390,954
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of total portfolio.   Portfolio Asset Quality
   20




---



##### 



June 30, 2006
    
    
    December 31, 2005Investments at
    
    
    Percentage of
    
    
    Investments at
    
    
    Percentage ofInvestment Rating
    
    Fair Value
    
    
    Total Portfolio
    
    
    Fair Value
    
    
    Total Portfolio1
    
    $
    23,545,193
    
    
    
    12.2
    %
    
    $
    16,069,312
    
    
    
    11.5
    %2
    
    
    146,303,461
    
    
    
    75.8
    
    
    
    102,189,918
    
    
    
    72.83
    
    
    23,155,281
    
    
    
    12.0
    
    
    
    20,136,424
    
    
    
    14.34
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    1.45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totals
    
    $
    193,003,935
    
    
    
    100.0
    %
    
    $
    140,395,654
    
    
    
    100.0
    %
 Loans and Debt Securities on Non-Accrual Status
  Results of Operations
  Comparison for the three months ended June 30, 2006 and 2005
 Total Investment Income
    21




---



##### 



Expenses
    Realized Gains (Losses) on Sale of Investments
  Net Change in Unrealized Appreciation or Depreciation on Investments
     22




---



##### 



Unrealized
Gain on Interest Rate Swap
  Net Income
  Comparison for the six months ended June 30, 2006 and 2005
 Total Investment Income
    Expenses
    23




---



##### 



Realized Gains (Losses) on Sale of Investments
  Net Change in Unrealized Appreciation or Depreciation on Investments
  Unrealized
Gain on Interest Rate Swap
  Net Income
  Financial Condition, Liquidity and Capital Resources
 Cash, Cash Equivalents and Restricted Cash
   Liquidity and Capital Resources
  24




---



##### 



Borrowings
 Credit Agreement.
 Revolving Credit Agreement.
 Demand Note.
 Securitization Revolving Credit Facility.
 25




---



##### 



Regulated Investment Company Status and Dividends
     Critical Accounting Policies
  Valuation of Portfolio Investments
  26




---



##### 



Fee Income Recognition
  Payment-in-Kind
or PIK Interest and Dividends
  27




---



##### 



Six MonthsEndedJune 30, 2006Beginning PIK balance
    
    $
    2,174,974PIK interest
and dividends
earned during the period
    
    
    1,144,116Sale of investment
    
    
    (383,945
    )PIK receipts during the period
    
    
    (172,778
    )Ending PIK balance
    
    $
    2,762,367
 Interest Income Recognition
  Off-Balance Sheet Arrangements
   Contractual Obligations
  Related Party Transactions
  28




---



##### 



Recent Developments
     29




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Item 4. Controls and Procedures
 (a)
    
    As of the end of the period covered by this report, we carried out an evaluation,
under the supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our current disclosure
controls and procedures are effective to allow timely decisions
regarding required disclosure of any material information relating to us that is required
to be disclosed by us in the reports we file or submit under the Securities Exchange Act of
1934.
 (b)
    
    There have been no changes in our internal control over financial reporting that occurred
during the quarter ended June 30, 2006 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
 30




---



##### 



PART II. OTHER INFORMATION
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
   For
    
    WithheldSteven Drogin
    
    
    10,166,402
    
    
    
    542,859Mel P. Melsheimer
    
    
    10,599,632
    
    
    
    109,629Richard A. Sebastiao
    
    
    10,609,307
    
    
    
    99,954
  
  For
    
    Against
    
    AbstainTotals
    
    
    10,630,000
    
    
    
    49,698
    
    
    
    29,564
  For
    
    Against
    
    Abstain
    

BrokerNon-VotesTotals
    
    
    3,380,981
    
    
    
    1,342,780
    
    
    
    79,569
    

    
    
    5,905,766
 31




---



##### 



Item 5. Other Information
  Item 6. Exhibits
  ExhibitNumber
    
    Description of Document3.1*
    
    Restated By-Laws of Patriot Capital Funding, Inc.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).
 
 *
    
    Submitted herewith. 32




---



##### 



SIGNATURES
  PATRIOT CAPITAL FUNDING, INC.By:
    
    /s/ Richard P. BuckanavageRichard P. BuckanavageChief Executive Officer and PresidentBy:
    
    /s/ William E. Alvarez, Jr.William E. Alvarez, Jr.Executive Vice President, ChiefFinancial Officer and Secretary
 33