UNITED STATES

SECURITIES AND
EXCHANGE COMMISSION

Washington, DC
20549



FORM 10-Q



(Mark One)

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



For the quarterly period ended March
31, 2016



OR



| ̈ | TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------------



Commission file
number: 814-00866



MONROE CAPITAL
CORPORATION

(Exact Name of
Registrant as Specified in its Charter)



|Maryland                                                                                                          | 27-4895840                                                                             
|----------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------
|(State
                                   or Other Jurisdiction of
        Incorporation
        or Organization) | (I.R.S.
                                   Employer
        Identification
        No.)
|                                                                                                                  |                                                                                        
|311
                                         South Wacker Drive, Suite 6400
        Chicago,
        Illinois     | 60606                                                                                  
|(Address
    of Principal Executive Office)                                                                       | (Zip
    Code)                                                                         



(312) 258-8300

(Registrant’s Telephone Number,
Including Area Code)



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.  YesxNo ̈



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YesxNo ̈



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (check one):



|Large
    accelerated filer |  ̈                                                  | Accelerated
    filer         | x
|--------------------------- | -------------------------------------------------- | ----------------------------- | -
|                            |                                                    |                               |  
|Non-accelerated
    filer   |  ̈(Do
    not check if a smaller reporting company) | Smaller reporting
    company |  ̈



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ̈Nox



As
of May 9, 2016, the registrant had 13,008,007 shares of common stock, $0.001 par value, outstanding.











TABLE OF CONTENTS



|                              |                                                                                                                             | Page
|----------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----
|PART I. FINANCIAL INFORMATION |                                                                                                                            
|                              |                                                                                                                             |     
|Item 1.                       | Consolidated Financial Statements                                                                                           | 3   
|                              |                                                                                                                             |     
|                              | Consolidated Statements of Assets and Liabilities as of March 31, 2016 (unaudited) and December 31, 2015                    | 3   
|                              |                                                                                                                             |     
|                              | Consolidated Statements of Operations for the three months ended March 31, 2016 (unaudited) and 2015 (unaudited)            | 4   
|                              |                                                                                                                             |     
|                              | Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2016 (unaudited) and 2015 (unaudited) | 5   
|                              |                                                                                                                             |     
|                              | Consolidated Statements of Cash Flows for the three months ended March 31, 2016 (unaudited) and 2015 (unaudited)            | 6   
|                              |                                                                                                                             |     
|                              | Consolidated Schedules of Investments as of March 31, 2016 (unaudited) and December 31, 2015                                | 7   
|                              |                                                                                                                             |     
|                              | Notes to Consolidated Financial Statements (unaudited)                                                                      | 11  
|                              |                                                                                                                             |     
|Item 2.                       | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                       | 27  
|                              |                                                                                                                             |     
|Item 3.                       | Quantitative and Qualitative Disclosures About Market Risk                                                                  | 39  
|                              |                                                                                                                             |     
|Item 4.                       | Controls and Procedures                                                                                                     | 39  
|                              |                                                                                                                             |     
|PART II. OTHER INFORMATION    |                                                                                                                            
|                              |                                                                                                                             |     
|Item 1.                       | Legal Proceedings                                                                                                           | 40  
|                              |                                                                                                                             |     
|Item 1A.                      | Risk Factors                                                                                                                | 40  
|                              |                                                                                                                             |     
|Item 2.                       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                 | 40  
|                              |                                                                                                                             |     
|Item 3.                       | Defaults upon Senior Securities                                                                                             | 40  
|                              |                                                                                                                             |     
|Item 4.                       | Mine Safety Disclosures                                                                                                     | 40  
|                              |                                                                                                                             |     
|Item 5.                       | Other Information                                                                                                           | 40  
|                              |                                                                                                                             |     
|Item 6.                       | Exhibits                                                                                                                    | 41  
|                              |                                                                                                                             |     
|Signatures                    |                                                                                                                             | 42  



2







Part I. Financial Information

Item
1. Consolidated Financial Statements



MONROE CAPITAL
CORPORATION



CONSOLIDATED
STATEMENTS OF ASSETS AND LIABILITIES



(in thousands,
except per share data)



|                                                                                                       |  | March 31, 2016 |         |   | December 31,
    2015 |  
|------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | - | --------------------- | -
|                                                                                                       |  | (unaudited)    |         |   |                       |  
|                                                                                                       |  |                |         |   |                       |  
|ASSETS                                                                                                 |  |                |        
|Investments, at fair value:                                                                            |  |                |         |   |                       |  
|Non-controlled/non-affiliate company investments                                                       |  | $              | 295,576 |   |                       | $
|Non-controlled affiliate company investments                                                           |  |                | 40,454  |   |                       |  
|Controlled affiliate company investments                                                               |  |                | 7,438   |   |                       |  
|Total investments, at fair value (cost of: $343,573 and
    $342,738, respectively)                    |  |                | 343,468 |   |                       |  
|Cash                                                                                                   |  |                | 5,770   |   |                       |  
|Restricted cash                                                                                        |  |                | 14,745  |   |                       |  
|Interest receivable                                                                                    |  |                | 1,876   |   |                       |  
|Other assets                                                                                           |  |                | 679     |   |                       |  
|Total assets                                                                                           |  |                | 366,538 |   |                       |  
|                                                                                                       |  |                |         |   |                       |  
|LIABILITIES                                                                                            |  |                |         |  
|Debt:                                                                                                  |  |                |         |   |                       |  
|Revolving credit facility                                                                              |  |                | 134,700 |   |                       |  
|SBA debentures payable                                                                                 |  |                | 40,000  |   |                       |  
|Total debt                                                                                             |  |                | 174,700 |   |                       |  
|Less:  Unamortized deferred
    financing costs                                                        |  |                | (3,387  | ) |                       |  
|Total debt less unamortized deferred financing costs                                                   |  |                | 171,313 |   |                       |  
|Secured borrowings, at fair value (proceeds of: $2,335 and $2,535, respectively)                       |  |                | 2,248   |   |                       |  
|Payable for open trades                                                                                |  |                | -       |   |                       |  
|Interest payable                                                                                       |  |                | 241     |   |                       |  
|Management fees payable                                                                                |  |                | 1,500   |   |                       |  
|Incentive fees payable                                                                                 |  |                | 1,740   |   |                       |  
|Accounts payable and accrued expenses                                                                  |  |                | 1,535   |   |                       |  
|Directors fees payable                                                                                 |  |                | 35      |   |                       |  
|Total liabilities                                                                                      |  |                | 178,612 |   |                       |  
|Net assets                                                                                             |  | $              | 187,926 |   |                       | $
|                                                                                                       |  |                |         |   |                       |  
|Commitments and contingencies (See Note 10)                                                            |  |                |         |   |                       |  
|                                                                                                       |  |                |         |   |                       |  
|ANALYSIS OF NET ASSETS                                                                                 |  |                |         |   |                      
|Common stock, $0.001 par value, 100,000 shares authorized,                                             |  |                |         |   |                       |  
|13,008 and 13,008 shares issued and outstanding, respectively                                          |  | $              | 13      |   |                       | $
|Capital in excess of par value                                                                         |  |                | 184,419 |   |                       |  
|Undistributed net investment income (accumulated distributions in excess of
    net investment income) |  |                | 3,513   |   |                       |  
|Accumulated net unrealized appreciation (depreciation)
    on investments and secured borrowings       |  |                | (19     | ) |                       |  
|Total net assets                                                                                       |  | $              | 187,926 |   |                       | $
|                                                                                                       |  |                |         |   |                       |  
|Net asset value per share                                                                              |  | $              | 14.45   |   |                       | $



See Notes to Consolidated
Financial Statements.









3









MONROE CAPITAL
CORPORATION





CONSOLIDATED
STATEMENTS OF OPERATIONS

(unaudited)





(in thousands,
except per share data)







|                                                                                       |  | Three months
    ended March 31, |       
|-------------------------------------------------------------------------------------- |  | -------------------------------- | ------
|                                                                                       |  | 2016                             |       
|Investment income:                                                                     |  |                                  |       
|Interest income:                                                                       |  |                                  |       
|Non-controlled/non-affiliate company investments                                       |  | $                                | 8,604 
|Non-controlled affiliate company investments                                           |  |                                  | 1,073 
|Controlled affiliate company investments                                               |  |                                  | -     
|Total interest income                                                                  |  |                                  | 9,677 
|Dividend income:                                                                       |  |                                  |       
|Non-controlled/non-affiliate company investments                                       |  |                                  | 250   
|Non-controlled affiliate company investments                                           |  |                                  | 1,612 
|Total dividend income                                                                  |  |                                  | 1,862 
|Total investment income                                                                |  |                                  | 11,539
|                                                                                       |  |                                  |       
|Operating expenses:                                                                    |  |                                  |       
|Interest and other debt financing expenses                                             |  |                                  | 1,691 
|Base management fees                                                                   |  |                                  | 1,500 
|Incentive fees                                                                         |  |                                  | 1,740 
|Professional fees                                                                      |  |                                  | 207   
|Administrative service fees                                                            |  |                                  | 328   
|General and administrative expenses                                                    |  |                                  | 251   
|Directors fees                                                                         |  |                                  | 35    
|Total expenses                                                                         |  |                                  | 5,752 
|Net investment income                                                                  |  |                                  | 5,787 
|                                                                                       |  |                                  |       
|Net gain (loss) on investments and secured borrowings:                                 |  |                                  |       
|Net realized gain (loss) on investments:                                               |  |                                  |       
|Non-controlled/non-affiliate company investments                                       |  |                                  | 587   
|Net realized gain (loss) on investments                                                |  |                                  | 587   
|                                                                                       |  |                                  |       
|Net change in unrealized appreciation (depreciation)
    on investments:               |  |                                  |       
|Non-controlled/non-affiliate company investments                                       |  |                                  | (859  
|Non-controlled affiliate company investments                                           |  |                                  | 1,828 
|Controlled affiliate company investments                                               |  |                                  | 573   
|Net change in unrealized appreciation (depreciation)
    on investments                |  |                                  | 1,542 
|                                                                                       |  |                                  |       
|Net change in unrealized (appreciation) depreciation
    on secured borrowings         |  |                                  | 28    
|                                                                                       |  |                                  |       
|Net gain (loss) on investments and secured borrowings                                  |  |                                  | 2,157 
|                                                                                       |  |                                  |       
|Net increase (decrease)
    in net assets resulting from operations                    |  | $                                | 7,944 
|                                                                                       |  |                                  |       
|Per common share data:                                                                 |  |                                  |       
|Net investment
    income per share - basic and diluted                                |  | $                                | 0.44  
|Net increase in net assets resulting from operations
    per share - basic and diluted |  | $                                | 0.61  
|Weighted average common shares outstanding - basic and
    diluted                     |  |                                  | 13,008





See Notes to Consolidated
Financial Statements.





4









MONROE CAPITAL CORPORATION



CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)



(in thousands)



|                                                                                                         |  | Common
    Stock      |        |  | Capital in    |   |    | Accumulated distributions in excess of net |  |   | Accumulated net realized |  |  | Accumulated net unrealized appreciation (depreciation) on investments |        |   |                             |  
|-------------------------------------------------------------------------------------------------------- |  | --------------------- | ------ |  | ------------- | - | -- | ------------------------------------------ |  | - | ------------------------ |  |  | --------------------------------------------------------------------- | ------ | - | --------------------------- | -
|                                                                                                         |  | Number
    of
 shares |        |  | Par
    value |   |    | excess
    of
    par value                |  |   | investment
    income    |  |  | gain
    (loss) on
 investments                                       |        |   | and
    secured
 borrowings |  
|Balances at December 31, 2014                                                                            |  |                       | 9,518  |  |               | $ | 10 |                                            |  | $ | 134,803                  |  |  | $                                                                     | (639   | ) |                             | $
|Net increase (decrease) in net assets resulting from
    operations                                      |  |                       | -      |  |               |   | -  |                                            |  |   | -                        |  |  |                                                                       | 4,167  |   |                             |  
|Issuance of common stock, net of offering and underwriting
    costs                                     |  |                       | 114    |  |               |   | -  |                                            |  |   | 1,684                    |  |  |                                                                       | -      |   |                             |  
|Stockholder distributions paid,
    including stock issued in connection with dividend reinvestment plan |  |                       | -      |  |               |   | -  |                                            |  |   | -                        |  |  |                                                                       | (3,371 | ) |                             |  
|Balances at March 31, 2015                                                                               |  |                       | 9,632  |  |               | $ | 10 |                                            |  | $ | 136,487                  |  |  | $                                                                     | 157    |   |                             | $
|                                                                                                         |  |                       |        |  |               |   |    |                                            |  |   |                          |  |  |                                                                       |        |   |                             |  
|Balances at December 31, 2015                                                                            |  |                       | 13,008 |  |               | $ | 13 |                                            |  | $ | 184,419                  |  |  | $                                                                     | 1,692  |   |                             | $
|Net increase (decrease) in net assets resulting from
    operations                                      |  |                       | -      |  |               |   | -  |                                            |  |   | -                        |  |  |                                                                       | 5,787  |   |                             |  
|Stockholder distributions paid                                                                           |  |                       | -      |  |               |   | -  |                                            |  |   | -                        |  |  |                                                                       | (3,966 | ) |                             |  
|Balances at March 31, 2016                                                                               |  |                       | 13,008 |  |               | $ | 13 |                                            |  | $ | 184,419                  |  |  | $                                                                     | 3,513  |   |                             | $





See Notes to Consolidated
Financial Statements.



5









MONROE
CAPITAL CORPORATION



CONSOLIDATED
STATEMENTS OF CASH FLOWS

(unaudited)



(in
thousands)





|                                                                               |  | Three months
    ended March 31, |        
|------------------------------------------------------------------------------ |  | -------------------------------- | -------
|                                                                               |  | 2016                             |        
|                                                                               |  |                                  |        
|Cash flows from operating activities:                                          |  |                                  |        
|Net increase (decrease) in net assets resulting from operations                |  | $                                | 7,944  
|Adjustments to reconcile net increase (decrease) in net assets resulting from  |  |                                  |        
|operations to net cash provided by (used in) operating
    activities:         |  |                                  |        
|Net change in unrealized (appreciation) depreciation on
    investments        |  |                                  | (1,542 
|Net change in unrealized appreciation (depreciation) on
    secured borrowings |  |                                  | (28    
|Net realized (gain) loss on investments                                        |  |                                  | (587   
|Payment-in-kind interest income                                                |  |                                  | (370   
|Net accretion of discounts and amortization of premiums                        |  |                                  | (365   
|Proceeds from principal payments and sales of investments                      |  |                                  | 26,803 
|Purchases of investments                                                       |  |                                  | (26,316
|Amortization of deferred financing costs                                       |  |                                  | 182    
|Changes in operating assets and liabilities:                                   |  |                                  |        
|Interest receivable                                                            |  |                                  | (270   
|Other assets                                                                   |  |                                  | 68     
|Payable for open trades                                                        |  |                                  | (5,297 
|Interest payable                                                               |  |                                  | (336   
|Management fees payable                                                        |  |                                  | (3     
|Incentive fees payable                                                         |  |                                  | 489    
|Accounts payable and accrued expenses                                          |  |                                  | 69     
|Directors fees payable                                                         |  |                                  | (39    
|Net cash provided by (used in) operating
    activities                        |  |                                  | 402    
|                                                                               |  |                                  |        
|Cash flows from investing activities:                                          |  |                                  |        
|Net change in restricted cash                                                  |  |                                  | (6,157 
|Net cash provided by (used in) investing
    activities                        |  |                                  | (6,157 
|                                                                               |  |                                  |        
|Cash flows from financing activities:                                          |  |                                  |        
|Borrowings on credit facility                                                  |  |                                  | 20,000 
|Repayments of credit facility                                                  |  |                                  | (9,000 
|SBA debentures borrowings                                                      |  |                                  | -      
|Payments of deferred financing costs                                           |  |                                  | -      
|Repayments on secured borrowings                                               |  |                                  | (200   
|Proceeds from shares sold, net of offering and underwriting
    costs          |  |                                  | -      
|Stockholder distributions paid                                                 |  |                                  | (4,553 
|Net cash provided
    by (used in) financing activities                        |  |                                  | 6,247  
|                                                                               |  |                                  |        
|Net increase (decrease) in cash                                                |  |                                  | 492    
|Cash, beginning of period                                                      |  |                                  | 5,278  
|Cash, end of period                                                            |  | $                                | 5,770  
|                                                                               |  |                                  |        
|Supplemental disclosure of cash flow information:                              |  |                                  |        
|Cash interest paid during the period                                           |  | $                                | 1,772  
|Cash paid for excise taxes during the period                                   |  | $                                | 167    





See Notes to Consolidated
Financial Statements.



6









MONROE CAPITAL
CORPORATION



CONSOLIDATED
SCHEDULE OF INVESTMENTS

(unaudited)



March 31, 2016





(in thousands,
except for units)





|Portfolio
    Company (a)                                                    |  | Industry                                  |  | Spread
                                         Above
                                                                                Index
                                         (b) |          |  | Interest Rate |  |                                                                | Maturity |  | Principal  |  |  | Amortized Cost |  |  | Fair
                                                                                Value
                                         (c) |         |  | %
                                         ofNet
                                                                                Assets
                                         (d) |  
|---------------------------------------------------------------------------- |  | ----------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  | ------------- |  | -------------------------------------------------------------- | -------- |  | ---------- |  |  | -------------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -
|Senior Secured Loans                                                         |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  |                |  |  |                                                                                                                                         |         |  |                                                                                                                                                                                      |  
|360 Holdings III Corp.                                                       |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 10/1/2021  |  |  | 5,970          |  |  | $                                                                                                                                       | 5,739   |  |                                                                                                                                                                                      | $
|Alora
    Pharmaceuticals, LLC (e)                                           |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 8.50                                                           | %        |  | 9/13/2018  |  |  | 11,193         |  |  |                                                                                                                                         | 11,094  |  |                                                                                                                                                                                      |  
|Alora
    Pharmaceuticals, LLC (Revolver) (f)                                |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 8.50                                                           | %        |  | 9/13/2018  |  |  | 1,336          |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|American
    Community Homes, Inc.(g)                                        |  | Banking, Finance, Insurance & Real Estate |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.50                                                           | %        |  | 7/22/2019  |  |  | 7,667          |  |  |                                                                                                                                         | 7,520   |  |                                                                                                                                                                                      |  
|American
    Community Homes, Inc.(g)                                        |  | Banking, Finance, Insurance & Real Estate |  |                                                                                                                                                                                          | L+12.50% |  |               |  | 9.50%
                                         Cash/4.50% PIK  |          |  | 7/22/2019  |  |  | 4,075          |  |  |                                                                                                                                         | 4,002   |  |                                                                                                                                                                                      |  
|American
    Community Homes, Inc.(g)                                        |  | Banking, Finance, Insurance & Real Estate |  |                                                                                                                                                                                          | L+12.50% |  |               |  | 9.50%
                                         Cash/4.50% PIK  |          |  | 5/16/2016  |  |  | 501            |  |  |                                                                                                                                         | 488     |  |                                                                                                                                                                                      |  
|Answers Corporation                                                          |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+5.25%  |  |               |  | 6.25                                                           | %        |  | 10/1/2021  |  |  | 2,910          |  |  |                                                                                                                                         | 2,815   |  |                                                                                                                                                                                      |  
|BCC
    Software, LLC (h)                                                    |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.00                                                           | %        |  | 6/20/2019  |  |  | 2,754          |  |  |                                                                                                                                         | 2,725   |  |                                                                                                                                                                                      |  
|BCC
    Software, LLC (Revolver)(f)                                          |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.00                                                           | %        |  | 6/20/2019  |  |  | 469            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Bluestem Brands, Inc.                                                        |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 8.50                                                           | %        |  | 11/6/2020  |  |  | 2,879          |  |  |                                                                                                                                         | 2,853   |  |                                                                                                                                                                                      |  
|Cali Bamboo, LLC                                                             |  | Construction & Building                   |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 9.00                                                           | %        |  | 7/10/2020  |  |  | 5,464          |  |  |                                                                                                                                         | 5,378   |  |                                                                                                                                                                                      |  
|Cali
    Bamboo, LLC (Revolver) (f)                                          |  | Construction & Building                   |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 9.00                                                           | %        |  | 7/10/2020  |  |  | 1,623          |  |  |                                                                                                                                         | 714     |  |                                                                                                                                                                                      |  
|Cornerstone
    Detention Products, Inc. (i)                                 |  | Construction & Building                   |  |                                                                                                                                                                                          | L+10.50% |  |               |  | 10.50%
                                         Cash/1.00% PIK |          |  | 4/8/2019   |  |  | 4,111          |  |  |                                                                                                                                         | 4,057   |  |                                                                                                                                                                                      |  
|Cornerstone
    Detention Products, Inc. (Revolver) (f)                      |  | Construction & Building                   |  |                                                                                                                                                                                          | L+9.50%  |  |               |  | 10.50                                                          | %        |  | 4/8/2019   |  |  | 400            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Cyalume
    Technologies Holdings, Inc.(h)                                   |  | Aerospace & Defense                       |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 5,127          |  |  |                                                                                                                                         | 5,004   |  |                                                                                                                                                                                      |  
|Cyalume Technologies Holdings,
    Inc. (Delayed Draw)                       |  | Aerospace & Defense                       |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 447            |  |  |                                                                                                                                         | 447     |  |                                                                                                                                                                                      |  
|Cyalume
    Technologies Holdings, Inc. (Revolver) (f)                       |  | Aerospace & Defense                       |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 1,528          |  |  |                                                                                                                                         | 306     |  |                                                                                                                                                                                      |  
|Diesel
    Direct Holdings, Inc. (h)                                         |  | Energy: Oil & Gas                         |  |                                                                                                                                                                                          | L+7.00%  |  |               |  | 7.50                                                           | %        |  | 2/17/2020  |  |  | 5,328          |  |  |                                                                                                                                         | 5,278   |  |                                                                                                                                                                                      |  
|EB
    Employee Solutions, LLC (h)                                           |  | Services: Business                        |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 10.00                                                          | %        |  | 2/28/2019  |  |  | 3,445          |  |  |                                                                                                                                         | 3,385   |  |                                                                                                                                                                                      |  
|G&M
    Opco LLC (h)                                                         |  | Construction & Building                   |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 8.00                                                           | %        |  | 6/23/2020  |  |  | 3,128          |  |  |                                                                                                                                         | 3,060   |  |                                                                                                                                                                                      |  
|InMobi
    Pte, Ltd. (Delayed Draw) (f)
    (j) (k)                          |  | Media: Advertising, Printing & Publishing |  |                                                                                                                                                                                          | L+10.17% |  |               |  | 10.80                                                          | %        |  | 9/1/2018   |  |  | 10,000         |  |  |                                                                                                                                         | 6,667   |  |                                                                                                                                                                                      |  
|Jerry Lee Radio, LLC                                                         |  | Media: Broadcasting & Subscription        |  |                                                                                                                                                                                          | L+9.50%  |  |               |  | 10.00                                                          | %        |  | 12/17/2020 |  |  | 14,813         |  |  |                                                                                                                                         | 14,459  |  |                                                                                                                                                                                      |  
|Landpoint, LLC                                                               |  | Energy: Oil & Gas                         |  |                                                                                                                                                                                          | L+12.75% |  |               |  | 12.00%
                                         Cash/2.25% PIK | (q)      |  | 12/20/2018 |  |  | 3,625          |  |  |                                                                                                                                         | 3,569   |  |                                                                                                                                                                                      |  
|Landpoint,
    LLC (Revolver) (f)                                            |  | Energy: Oil & Gas                         |  |                                                                                                                                                                                          | L+10.50% |  |               |  | 12.00                                                          | %        |  | 12/20/2018 |  |  | 313            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|L.A.R.K. Industries, Inc.                                                    |  | Construction & Building                   |  |                                                                                                                                                                                          | L+7.00%  |  |               |  | 8.00                                                           | %        |  | 9/3/2019   |  |  | 6,603          |  |  |                                                                                                                                         | 6,486   |  |                                                                                                                                                                                      |  
|Luxury Optical Holdings Co.                                                  |  | Retail                                    |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 9.00%
                                         Cash/1.00% PIK  |          |  | 9/12/2019  |  |  | 3,994          |  |  |                                                                                                                                         | 3,935   |  |                                                                                                                                                                                      |  
|Luxury
    Optical Holdings Co. (Revolver) (f)                               |  | Retail                                    |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.00                                                           | %        |  | 9/12/2019  |  |  | 272            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Miles Media Group LLC                                                        |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 10.50%
                                         Cash/3.00% PIK |          |  | 3/24/2021  |  |  | 6,077          |  |  |                                                                                                                                         | 6,004   |  |                                                                                                                                                                                      |  
|Miles
    Media Group LLC (Delayed Draw) (f)
    (j)                         |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 10.50%
                                         Cash/3.00% PIK |          |  | 3/24/2021  |  |  | 1,455          |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Miles
    Media Group LLC (Revolver) (f)                                     |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 10.50%
                                         Cash/3.00% PIK |          |  | 3/24/2021  |  |  | 320            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|O’Brien Industrial Holdings, LLC                                             |  | Metals & Mining                           |  |                                                                                                                                                                                          | L+11.50% |  |               |  | 11.00%
                                         Cash/2.00% PIK |          |  | 5/13/2019  |  |  | 6,358          |  |  |                                                                                                                                         | 6,252   |  |                                                                                                                                                                                      |  
|O’Brien
    Industrial Holdings, LLC (Revolver) (f)                          |  | Metals & Mining                           |  |                                                                                                                                                                                          | L+9.50%  |  |               |  | 11.00                                                          | %        |  | 5/13/2019  |  |  | 2,844          |  |  |                                                                                                                                         | 691     |  |                                                                                                                                                                                      |  
|PD Products, LLC                                                             |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | L+10.50% |  |               |  | 12.00%
                                         Cash           |          |  | 10/4/2018  |  |  | 12,523         |  |  |                                                                                                                                         | 12,424  |  |                                                                                                                                                                                      |  
|PD
    Products, LLC (Revolver) (f)                                          |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | L+10.50% |  |               |  | 12.00%
                                         Cash           |          |  | 10/4/2018  |  |  | 2,500          |  |  |                                                                                                                                         | 525     |  |                                                                                                                                                                                      |  
|PeopleConnect Intermediate, LLC
    (formerly Intelius, Inc.)                |  | Services: Consumer                        |  |                                                                                                                                                                                          | L+5.50%  |  |               |  | 6.50                                                           | %        |  | 7/1/2020   |  |  | 4,917          |  |  |                                                                                                                                         | 4,819   |  |                                                                                                                                                                                      |  
|PeopleConnect Intermediate, LLC
    (formerly Intelius, Inc.)                |  | Services: Consumer                        |  |                                                                                                                                                                                          | L+11.50% |  |               |  | 12.50                                                          | %        |  | 7/1/2020   |  |  | 4,958          |  |  |                                                                                                                                         | 4,858   |  |                                                                                                                                                                                      |  
|PeopleConnect
    Intermediate, LLC (formerly Intelius, Inc.) (Revolver) (f) |  | Services: Consumer                        |  |                                                                                                                                                                                          | L+8.50%  |  |               |  | 9.50                                                           | %        |  | 7/1/2020   |  |  | 354            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Precision
    Toxicology, LLC (h)                                            |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 8.00%
                                         Cash/1.00% PIK  |          |  | 3/24/2020  |  |  | 5,420          |  |  |                                                                                                                                         | 5,330   |  |                                                                                                                                                                                      |  
|Precision
    Toxicology, LLC (Revolver) (f)                                 |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 8.00%
                                         Cash/1.00% PIK  |          |  | 3/24/2020  |  |  | 634            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Rockdale
    Blackhawk, LLC (g)                                              |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 11,886         |  |  |                                                                                                                                         | 10,906  |  |                                                                                                                                                                                      |  
|Rockdale
    Blackhawk, LLC (Revolver) (f)
    (g)                           |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 1,849          |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Rockdale
    Blackhawk, LLC (Capex) (g)                                      |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 613            |  |  |                                                                                                                                         | 613     |  |                                                                                                                                                                                      |  
|Rocket
    Dog Brands LLC (g)                                                |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | n/a      |  |               |  | 10.00                                                          | %        |  | 8/29/2019  |  |  | 1,032          |  |  |                                                                                                                                         | 1,033   |  |                                                                                                                                                                                      |  
|Rocket
    Dog Brands LLC (Delayed Draw) (f)
    (g) (j)                     |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | n/a      |  |               |  | 15.00                                                          | %        |  | 8/29/2019  |  |  | 375            |  |  |                                                                                                                                         | 370     |  |                                                                                                                                                                                      |  
|SHI
    Holdings, Inc. (h)                                                   |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+9.25%  |  |               |  | 9.69                                                           | %        |  | 7/10/2019  |  |  | 2,681          |  |  |                                                                                                                                         | 2,636   |  |                                                                                                                                                                                      |  
|SHI
    Holdings, Inc. (Revolver) (f)                                        |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+9.25%  |  |               |  | 9.69                                                           | %        |  | 7/10/2019  |  |  | 955            |  |  |                                                                                                                                         | 845     |  |                                                                                                                                                                                      |  
|SNI
    Companies (l)                                                        |  | Services: Business                        |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.00                                                           | %        |  | 12/31/2018 |  |  | 6,443          |  |  |                                                                                                                                         | 6,349   |  |                                                                                                                                                                                      |  
|SNI
    Companies (Revolver) (f)                                             |  | Services: Business                        |  |                                                                                                                                                                                          | L+8.00%  |  |               |  | 9.00                                                           | %        |  | 12/31/2018 |  |  | 1,250          |  |  |                                                                                                                                         | 475     |  |                                                                                                                                                                                      |  
|Summit
    Container Corporation (g)
    (h)                                 |  | Containers, Packaging & Glass             |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 11.00%
                                         Cash/2.00% PIK |          |  | 1/6/2019   |  |  | 3,724          |  |  |                                                                                                                                         | 3,639   |  |                                                                                                                                                                                      |  
|TPP
    Acquisition, Inc. (m)                                                |  | Retail                                    |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 10.50%
                                         Cash/2.00% PIK | (r)      |  | 12/17/2017 |  |  | 6,835          |  |  |                                                                                                                                         | 6,769   |  |                                                                                                                                                                                      |  
|TPP
    Acquisition, Inc. (Revolver) (m)                                     |  | Retail                                    |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 4.50%
                                         Cash/8.00% PIK  | (r)      |  | 12/17/2017 |  |  | 2,035          |  |  |                                                                                                                                         | 2,035   |  |                                                                                                                                                                                      |  
|TPP
    Acquisition, Inc. (f)
    (j) (m)                                    |  | Retail                                    |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 10.50%
                                         Cash/2.00% PIK | (r)      |  | 12/17/2017 |  |  | 800            |  |  |                                                                                                                                         | 340     |  |                                                                                                                                                                                      |  
|TPP
    Acquisition, Inc. (Delayed Draw) (m)                                 |  | Retail                                    |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 10.50%
                                         Cash/2.00% PIK | (r)      |  | 12/17/2017 |  |  | 3,429          |  |  |                                                                                                                                         | 3,429   |  |                                                                                                                                                                                      |  
|TRG, LLC                                                                     |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+11.51% |  |               |  | 8.00%
                                         Cash/4.01% PIK  | (s)      |  | 3/31/2021  |  |  | 11,711         |  |  |                                                                                                                                         | 11,663  |  |                                                                                                                                                                                      |  
|TRG, LLC (Revolver)                                                          |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+9.50%  |  |               |  | 10.00                                                          | %        |  | 3/31/2021  |  |  | 131            |  |  |                                                                                                                                         | 131     |  |                                                                                                                                                                                      |  
|TRG,
    LLC (CapEx) (f)                                                     |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+9.50%  |  |               |  | 8.50%
                                         Cash/2.00% PIK  |          |  | 3/31/2021  |  |  | 1,598          |  |  |                                                                                                                                         | 656     |  |                                                                                                                                                                                      |  
|TTM Technologies, Inc.                                                       |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+5.00%  |  |               |  | 6.00                                                           | %        |  | 5/31/2021  |  |  | 1,223          |  |  |                                                                                                                                         | 1,184   |  |                                                                                                                                                                                      |  
|Vacation Innovations, LLC                                                    |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 9.50                                                           | %        |  | 8/20/2020  |  |  | 6,172          |  |  |                                                                                                                                         | 6,060   |  |                                                                                                                                                                                      |  
|Vacation
    Innovations, LLC (Revolver) (f)                                 |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 9.50                                                           | %        |  | 8/20/2020  |  |  | 343            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Yandy Holding, LLC                                                           |  | Retail                                    |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 9/30/2019  |  |  | 6,338          |  |  |                                                                                                                                         | 6,265   |  |                                                                                                                                                                                      |  
|Yandy
    Holding, LLC (Revolver) (f)                                        |  | Retail                                    |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 9/30/2019  |  |  | 907            |  |  |                                                                                                                                         | -       |  |                                                                                                                                                                                      |  
|Total
    Senior Secured Loans                                               |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  | 230,665        |  |  |                                                                                                                                         | 206,282 |  |                                                                                                                                                                                      |  
|                                                                             |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  |                |  |  |                                                                                                                                         |         |  |                                                                                                                                                                                      |  
|Unitranche Loans                                                             |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  |                |  |  |                                                                                                                                         |         |  |                                                                                                                                                                                      |  
|Collaborative
    Neuroscience Network, LLC (n)                              |  | Healthcare & Pharmaceuticals              |  |                                                                                                                                                                                          | L+11.50% |  |               |  | 13.00                                                          | %        |  | 12/27/2017 |  |  | 7,058          |  |  |                                                                                                                                         | 6,972   |  |                                                                                                                                                                                      |  
|Fabco Automotive Corporation                                                 |  | Automotive                                |  |                                                                                                                                                                                          | L+9.25%  |  |               |  | 10.25                                                          | %        |  | 4/3/2017   |  |  | 8,438          |  |  |                                                                                                                                         | 8,397   |  |                                                                                                                                                                                      |  
|Gracelock Industries, LLC                                                    |  | Wholesale                                 |  |                                                                                                                                                                                          | L+12.05% |  |               |  | 11.00%
                                         Cash/2.55% PIK | (t)      |  | 5/7/2019   |  |  | 5,127          |  |  |                                                                                                                                         | 5,029   |  |                                                                                                                                                                                      |  
|Incipio
    Technologies, Inc. (o)                                           |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | L+6.00%  |  |               |  | 7.00                                                           | %        |  | 12/26/2019 |  |  | 15,000         |  |  |                                                                                                                                         | 14,686  |  |                                                                                                                                                                                      |  
|MooreCo, Inc.                                                                |  | Consumer Goods: Durable                   |  |                                                                                                                                                                                          | L+14.50% |  |               |  | 13.50%
                                         Cash/2.50% PIK |          |  | 12/27/2017 |  |  | 4,186          |  |  |                                                                                                                                         | 4,146   |  |                                                                                                                                                                                      |  
|Output Services Group, Inc.                                                  |  | Services: Business                        |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 9.50%
                                         Cash/1.00% PIK  |          |  | 12/17/2018 |  |  | 6,674          |  |  |                                                                                                                                         | 6,580   |  |                                                                                                                                                                                      |  
|Output Services Group, Inc.                                                  |  | Services: Business                        |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 9.50%
                                         Cash/1.00% PIK  |          |  | 12/17/2018 |  |  | 8,467          |  |  |                                                                                                                                         | 8,322   |  |                                                                                                                                                                                      |  
|Playtime,
    LLC (n)                                                        |  | Hotels, Gaming & Leisure                  |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 9.00                                                           | %        |  | 12/4/2017  |  |  | 5,477          |  |  |                                                                                                                                         | 5,435   |  |                                                                                                                                                                                      |  
|Total
    Unitranche Loans                                                   |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  | 60,427         |  |  |                                                                                                                                         | 59,567  |  |                                                                                                                                                                                      |  
|                                                                             |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  |                |  |  |                                                                                                                                         |         |  |                                                                                                                                                                                      |  
|Junior Secured
    Loans                                                     |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  |                |  |  |                                                                                                                                         |         |  |                                                                                                                                                                                      |  
|AIM Aerospace, Inc.                                                          |  | Aerospace & Defense                       |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.00                                                          | %        |  | 8/2/2022   |  |  | 5,000          |  |  |                                                                                                                                         | 4,928   |  |                                                                                                                                                                                      |  
|Confie Seguros Holdings II Co.                                               |  | Banking, Finance, Insurance & Real Estate |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.25                                                          | %        |  | 5/8/2019   |  |  | 8,594          |  |  |                                                                                                                                         | 8,119   |  |                                                                                                                                                                                      |  
|CSM Bakery Supplies LLC                                                      |  | Beverage, Food & Tobacco                  |  |                                                                                                                                                                                          | L+7.75%  |  |               |  | 8.75                                                           | %        |  | 7/3/2021   |  |  | 5,792          |  |  |                                                                                                                                         | 5,724   |  |                                                                                                                                                                                      |  
|Education Corporation of America                                             |  | Services: Consumer                        |  |                                                                                                                                                                                          | L+11.00% |  |               |  | 11.63                                                          | %        |  | 12/31/2018 |  |  | 5,417          |  |  |                                                                                                                                         | 5,300   |  |                                                                                                                                                                                      |  
|Hyland Software Inc.                                                         |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+7.25%  |  |               |  | 8.25                                                           | %        |  | 7/1/2023   |  |  | 5,000          |  |  |                                                                                                                                         | 4,815   |  |                                                                                                                                                                                      |  
|Mergermarket USA, Inc.                                                       |  | Media: Broadcasting & Subscription        |  |                                                                                                                                                                                          | L+6.50%  |  |               |  | 7.50                                                           | %        |  | 12/19/2021 |  |  | 4,500          |  |  |                                                                                                                                         | 4,388   |  |                                                                                                                                                                                      |  
|Micro Holdings Corp.                                                         |  | High Tech Industries                      |  |                                                                                                                                                                                          | L+7.50%  |  |               |  | 8.50                                                           | %        |  | 7/8/2022   |  |  | 5,590          |  |  |                                                                                                                                         | 5,459   |  |                                                                                                                                                                                      |  
|Mud Pie, LLC                                                                 |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | n/a      |  |               |  | 10.00%
                                         Cash/1.50% PIK |          |  | 11/4/2020  |  |  | 10,139         |  |  |                                                                                                                                         | 9,964   |  |                                                                                                                                                                                      |  
|New NSI Holdings, Inc.                                                       |  | Chemicals, Plastics & Rubber              |  |                                                                                                                                                                                          | L+8.25%  |  |               |  | 9.25                                                           | %        |  | 7/28/2022  |  |  | 4,000          |  |  |                                                                                                                                         | 3,944   |  |                                                                                                                                                                                      |  
|Pre-Paid Legal Services, Inc. (Legal
    Shield)                             |  | Services: Consumer                        |  |                                                                                                                                                                                          | L+9.00%  |  |               |  | 10.25                                                          | %        |  | 7/1/2020   |  |  | 3,000          |  |  |                                                                                                                                         | 2,992   |  |                                                                                                                                                                                      |  
|Rocket
    Dog Brands LLC (g)                                                |  | Consumer Goods: Non-Durable               |  |                                                                                                                                                                                          | n/a      |  |               |  | 15.00%
                                         PIK            |          |  | 5/1/2020   |  |  | 1,735          |  |  |                                                                                                                                         | 1,736   |  |                                                                                                                                                                                      |  
|Sterling Infosystems, Inc.                                                   |  | Services: Business                        |  |                                                                                                                                                                                          | L+7.75%  |  |               |  | 8.75                                                           | %        |  | 6/19/2023  |  |  | 5,000          |  |  |                                                                                                                                         | 4,953   |  |                                                                                                                                                                                      |  
|SCP TPZ Acquisition,
    Inc.                                                |  | Media: Diversified & Production           |  |                                                                                                                                                                                          | L+8.25%  |  |               |  | 9.25                                                           | %        |  | 5/29/2022  |  |  | 5,000          |  |  |                                                                                                                                         | 4,930   |  |                                                                                                                                                                                      |  
|Total
    Junior Secured Loans                                               |  |                                           |  |                                                                                                                                                                                          |          |  |               |  |                                                                |          |  |            |  |  | 68,767         |  |  |                                                                                                                                         | 67,252  |  |                                                                                                                                                                                      |  





7







|Equity Securities                                                                                                        |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  |   |  |  |   |         |  |  |   |         |  |  |  |       |  
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------- |  |  | --- |  |  |  | --------------------------------------------------- | --- |  | ---------- |  |  | - |  |  | - | ------- |  |  | - | ------- |  |  |  | ----- | -
|American
    Community Homes, Inc. (warrant to purchase up to 9.0% of the equity)(g)                                     |  | Banking, Finance, Insurance & Real Estate |  |  | -   |  |  |  | -                                                   | (u) |  | 10/9/2024  |  |  | - |  |  |   | -       |  |  |   | 684     |  |  |  | 0.4   | %
|BookIt
    Operating LLC (warrant to purchase up to 3.0% of the equity) (p)                                              |  | Hotels, Gaming & Leisure                  |  |  | -   |  |  |  | -                                                   | (u) |  | 12/21/2023 |  |  | - |  |  |   | -       |  |  |   | 587     |  |  |  | 0.3   | %
|Collaborative
    Neuroscience Network, LLC (warrant to purchase up to 1.67 LLC units) (p)                               |  | Healthcare & Pharmaceuticals              |  |  | -   |  |  |  | -                                                   | (u) |  | 12/27/2022 |  |  | - |  |  |   | -       |  |  |   | 122     |  |  |  | 0.1   | %
|Cyalume
    Technologies Holdings, Inc. - Series D Preferred Stock (3.06 shares)(p)                                      |  | Aerospace & Defense                       |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | -       |  |  |   | 605     |  |  |  | 0.3   | %
|Education
    Corporation of America - Series G Preferred Stock (8,333 shares) (p)                                       |  | Services: Consumer                        |  |  | n/a |  |  |  | 12.00                                               | %   |  | -          |  |  | - |  |  |   | 8,125   |  |  |   | 8,389   |  |  |  | 4.5   | %
|InMobi
    Pte, Ltd. (represents the right to purchase 0.42% of the equity) (k) (p)                                      |  | Media: Advertising, Printing & Publishing |  |  | -   |  |  |  | -                                                   | (u) |  | 9/18/2025  |  |  | - |  |  |   | -       |  |  |   | 108     |  |  |  | 0.1   | %
|O’Brien
    Industrial Holdings, LLC (warrants to purchase up to 2.44% of certain affiliated entities of the company)(p) |  | Metals & Mining                           |  |  | -   |  |  |  | -                                                   | (u) |  | 5/13/2024  |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Output
    Services Group, Inc. (warrant to purchase up to 3.89% of the common stock) (p)                                |  | Services: Business                        |  |  | -   |  |  |  | -                                                   | (u) |  | 12/17/2022 |  |  | - |  |  |   | -       |  |  |   | 628     |  |  |  | 0.3   | %
|Playtime,
    LLC - Preferred Units (8,665 units) (p)                                                                    |  | Hotels, Gaming & Leisure                  |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | 200     |  |  |   | 11      |  |  |  | 0.0   | %
|Rocket
    Dog Brands LLC - Common Units (75,502 units) (g)                                                              |  | Consumer Goods: Non-Durable               |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Rocket
    Dog Brands LLC - Preferred Units (10 units) (g)                                                               |  | Consumer Goods: Non-Durable               |  |  | -   |  |  |  | 15.00%
                                         PIK | (v) |  | -          |  |  | - |  |  |   | 967     |  |  |   | -       |  |  |  | 0.0   | %
|Rockdale
    Blackhawk, LLC - LLC Units (11.56% of the LLC interest) (g)                                                 |  | Healthcare & Pharmaceuticals              |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | 1,093   |  |  |   | 9,942   |  |  |  | 5.3   | %
|Summit
    Container Corporation (warrant to purchase up to 19.50% of the equity) (g)                                    |  | Containers, Packaging & Glass             |  |  | -   |  |  |  | -                                                   | (u) |  | 1/6/2024   |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|The
    Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units)(p)                                        |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | 86      |  |  |   | 89      |  |  |  | 0.0   | %
|The
    Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) (p)                                       |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | 1       |  |  |   | -       |  |  |  | 0.0   | %
|TPP
    Acquisition, Inc. (829 shares of common stock) (m)                                                               |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (u) |  | -          |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Total Equity Securities                                                                                                  |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  | - |  |  |   | 10,472  |  |  |   | 21,165  |  |  |  | 11.3  | %
|TOTAL INVESTMENTS                                                                                                        |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  |   |  |  | $ | 343,573 |  |  | $ | 343,468 |  |  |  | 183.2 | %



________________________

| | (a) | All of our investments are issued by eligible U.S. portfolio
                                                                                                                     companies, as defined in the Investment Company Act of 1940 (the “1940 Act”) except for InMobi Pte, Ltd. which
                                                                                                                     is                                                                                                                      an
                                                                                                                     international company headquartered in California.  All investments are non-controlled/non-affiliate company investments,
                                                                                                                     unless
                                                                                                                     otherwise
                                                                                                                     noted.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | The majority of the investments bear interest at a rate that
                                                                                                                     may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime
                                                                                                                     Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such
                                                                                                                     investment
                                                                                                                     the Company has
                                                                                                                     provided
                                                                                                                     the
                                                                                                                     spread over LIBOR or Prime and the current contractual interest rate in effect at March 31, 2016. Certain investments are
                                                                                                                     subject to a LIBOR or Prime interest rate floor.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Because there is no readily
available market value for these investments, the fair value of these investments is determined in good faith by our board of
directors as required by the Investment Company Act of 1940. (See Note 4 in the accompanying notes to the consolidated financial
statements.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Percentages are based on
net assets of $187,926 as of March 31, 2016.
| | --- | ---------------------------------------------------------------------

| | (e) | A portion of this loan
(principal of $4,619) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | All or a portion of this
commitment was unfunded at March 31, 2016. As such, interest is earned only on the funded portion of this commitment.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | As defined in the 1940
Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns five percent or more of
the portfolio company's voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional
information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed
to control).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h) | All of this loan is held
in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s
revolving credit facility.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) | A portion of this loan
(principal of $2,466) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j) | This delayed draw loan
requires that certain financial covenants be met by the portfolio company prior to any fundings.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | (k) | This investment is treated
as a non-qualifying investment under Section 55(a) of the 1940 Act.  Under the 1940 Act, the Company may not acquire
any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s
total assets.  As of March 31, 2016, non-qualifying assets totaled 1.79% of the Company’s total assets.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l) | A portion of this loan
(principal of $4,132) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (m) | As defined in the 1940 Act, the Company is deemed to be both an
                                                                                                                     “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% percent of
                                                                                                                     the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for
                                                                                                                     additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the
                                                                                                                     Company is deemed to Control.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (n) | The sale of a portion of
this loan does not qualify for sale accounting under ASC Topic 860 — Transfers and Servicing, and therefore, the entire
unitranche loan asset remains in the Consolidated Schedule of Investments.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (o) | A portion of this loan
(principal of $5,500) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (p) | Represents less than 5%
ownership of the portfolio company’s voting securities.
| | --- | -------------------------------------------------------------------------------

| | (q) | The PIK portion of the
interest rate for Landpoint, LLC is structured as a guaranteed fee paid upon the termination of the commitment. The fee accrues
at 2.25% per annum and is subject to a minimum payment upon termination of $338.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (r) | This position is currently
on non-accrual status.
| | --- | -------------------------------------------------

| | (s) | A portion of the PIK interest
rate for TRG, LLC is structured as a guaranteed fee paid upon the termination of the commitment. The fee accrues at 2.01% per
annum and is subject to an estimated minimum payment upon termination of $1,407.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (t) | The PIK portion of the
interest rate for Gracelock Industries, LLC is structured as a fee paid upon the termination of the commitment. The fee accrues
at 2.55% per annum.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (u) | Represents a non-income
producing security.
| | --- | -------------------------------------------

| | (v) | This position includes
a PIK dividend and is currently on non-accrual status.
| | --- | -----------------------------------------------------------------------------

n/a
- not applicable



See Notes to Consolidated
Financial Statements.



8







MONROE CAPITAL CORPORATION



CONSOLIDATED SCHEDULE OF INVESTMENTS





December 31, 2015





(in thousands, except for units)



|Portfolio
    Company (a)                                                    |  | Industry                                  |  | Spread
    Above 
Index (b) |          |  | Interest
    Rate |  |                                                                | Maturity |  | Principal  |  |  | Amortized
    Cost |  |  | Fair

    Value (c) |         |  | %
    of Net 
Assets (d) |  
|---------------------------------------------------------------------------- |  | ----------------------------------------- |  | --------------------------- | -------- |  | ----------------- |  | -------------------------------------------------------------- | -------- |  | ---------- |  |  | ------------------ |  |  | ------------------- | ------- |  | ------------------------ | -
|Senior Secured Loans                                                         |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  |                    |  |  |                     |         |  |                          |  
|360 Holdings III Corp.                                                       |  | Consumer Goods: Non-Durable               |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 10/1/2021  |  |  | 5,985              |  |  | $                   | 5,746   |  |                          | $
|Alora
    Pharmaceuticals, LLC (e)                                           |  | Healthcare & Pharmaceuticals              |  |                             | L+7.50%  |  |                   |  | 8.50                                                           | %        |  | 9/13/2018  |  |  | 11,338             |  |  |                     | 11,229  |  |                          |  
|Alora
    Pharmaceuticals, LLC (Revolver) (f)                                |  | Healthcare & Pharmaceuticals              |  |                             | L+7.50%  |  |                   |  | 8.50                                                           | %        |  | 9/13/2018  |  |  | 1,336              |  |  |                     | -       |  |                          |  
|American
    Community Homes, Inc.(g)                                        |  | Banking, Finance, Insurance & Real Estate |  |                             | L+8.00%  |  |                   |  | 9.50                                                           | %        |  | 7/22/2019  |  |  | 7,667              |  |  |                     | 7,511   |  |                          |  
|American
    Community Homes, Inc.(g)                                        |  | Banking, Finance, Insurance & Real Estate |  |                             | L+12.50% |  |                   |  | 9.50%
                                         Cash/4.50% PIK  |          |  | 7/22/2019  |  |  | 4,029              |  |  |                     | 3,951   |  |                          |  
|Answers Corporation                                                          |  | High Tech Industries                      |  |                             | L+5.25%  |  |                   |  | 6.25                                                           | %        |  | 10/1/2021  |  |  | 2,918              |  |  |                     | 2,818   |  |                          |  
|BCC Software,
    LLC (h)                                                    |  | High Tech Industries                      |  |                             | L+8.00%  |  |                   |  | 9.00                                                           | %        |  | 6/20/2019  |  |  | 2,817              |  |  |                     | 2,785   |  |                          |  
|BCC Software,
    LLC (Revolver)(f)                                          |  | High Tech Industries                      |  |                             | L+8.00%  |  |                   |  | 9.00                                                           | %        |  | 6/20/2019  |  |  | 469                |  |  |                     | -       |  |                          |  
|Bluestem Brands, Inc.                                                        |  | Consumer Goods: Non-Durable               |  |                             | L+7.50%  |  |                   |  | 8.50                                                           | %        |  | 11/6/2020  |  |  | 2,919              |  |  |                     | 2,892   |  |                          |  
|Cali Bamboo, LLC                                                             |  | Construction & Building                   |  |                             | L+8.50%  |  |                   |  | 9.00                                                           | %        |  | 7/10/2020  |  |  | 4,179              |  |  |                     | 4,101   |  |                          |  
|Cali Bamboo,
    LLC (Revolver) (f)                                          |  | Construction & Building                   |  |                             | L+8.50%  |  |                   |  | 9.00                                                           | %        |  | 7/10/2020  |  |  | 1,624              |  |  |                     | 1,039   |  |                          |  
|Cornerstone
    Detention Products, Inc. (i)                                 |  | Construction & Building                   |  |                             | L+10.50% |  |                   |  | 10.50%
                                         Cash/1.00% PIK |          |  | 4/8/2019   |  |  | 4,221              |  |  |                     | 4,161   |  |                          |  
|Cornerstone
    Detention Products, Inc. (Revolver) (f)                      |  | Construction & Building                   |  |                             | L+9.50%  |  |                   |  | 10.50                                                          | %        |  | 4/8/2019   |  |  | 400                |  |  |                     | -       |  |                          |  
|Cyalume
    Technologies Holdings, Inc.(h)                                   |  | Aerospace & Defense                       |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 5,236              |  |  |                     | 5,106   |  |                          |  
|Cyalume Technologies Holdings, Inc. (Delayed Draw)                           |  | Aerospace & Defense                       |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 453                |  |  |                     | 453     |  |                          |  
|Cyalume
    Technologies Holdings, Inc. (Revolver) (f)                       |  | Aerospace & Defense                       |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 5/18/2020  |  |  | 1,528              |  |  |                     | 306     |  |                          |  
|Diesel
    Direct Holdings, Inc. (h)                                         |  | Energy: Oil & Gas                         |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 2/17/2020  |  |  | 5,363              |  |  |                     | 5,299   |  |                          |  
|EB Employee
    Solutions, LLC (h)                                           |  | Services: Business                        |  |                             | L+8.50%  |  |                   |  | 10.00                                                          | %        |  | 2/28/2019  |  |  | 3,470              |  |  |                     | 3,406   |  |                          |  
|G&M
    Opco LLC (h)                                                         |  | Construction & Building                   |  |                             | L+7.50%  |  |                   |  | 8.00                                                           | %        |  | 6/23/2020  |  |  | 3,169              |  |  |                     | 3,096   |  |                          |  
|InMobi
    Pte, Ltd. (Delayed Draw) (f)
    (j) (k)                          |  | Media: Advertising, Printing & Publishing |  |                             | L+10.17% |  |                   |  | 10.50                                                          | %        |  | 9/1/2018   |  |  | 10,000             |  |  |                     | 5,842   |  |                          |  
|Jerry Lee Radio, LLC                                                         |  | Media: Broadcasting & Subscription        |  |                             | L+9.50%  |  |                   |  | 10.00                                                          | %        |  | 12/17/2020 |  |  | 15,000             |  |  |                     | 14,627  |  |                          |  
|Landpoint, LLC                                                               |  | Energy: Oil & Gas                         |  |                             | L+12.75% |  |                   |  | 12.00%
                                         Cash/2.25% PIK | (q)      |  | 12/20/2018 |  |  | 3,750              |  |  |                     | 3,688   |  |                          |  
|Landpoint,
    LLC (Revolver) (f)                                            |  | Energy: Oil & Gas                         |  |                             | L+10.50% |  |                   |  | 12.00                                                          | %        |  | 12/20/2018 |  |  | 313                |  |  |                     | -       |  |                          |  
|L.A.R.K. Industries, Inc.                                                    |  | Construction & Building                   |  |                             | L+7.00%  |  |                   |  | 8.00                                                           | %        |  | 9/3/2019   |  |  | 6,690              |  |  |                     | 6,562   |  |                          |  
|Luxury Optical Holdings Co.                                                  |  | Retail                                    |  |                             | L+9.00%  |  |                   |  | 9.00%
                                         Cash/1.00% PIK  |          |  | 9/12/2019  |  |  | 4,035              |  |  |                     | 3,972   |  |                          |  
|Luxury
    Optical Holdings Co. (Revolver) (f)                               |  | Retail                                    |  |                             | L+8.00%  |  |                   |  | 9.00                                                           | %        |  | 9/12/2019  |  |  | 273                |  |  |                     | -       |  |                          |  
|Miles Media Group LLC                                                        |  | Hotels, Gaming & Leisure                  |  |                             | L+8.50%  |  |                   |  | 9.50                                                           | %        |  | 9/12/2019  |  |  | 3,875              |  |  |                     | 3,814   |  |                          |  
|Miles
    Media Group LLC (Delayed Draw) (f)
    (j)                         |  | Hotels, Gaming & Leisure                  |  |                             | L+8.50%  |  |                   |  | 9.50                                                           | %        |  | 9/12/2019  |  |  | 1,600              |  |  |                     | -       |  |                          |  
|Miles
    Media Group LLC (Revolver) (f)                                     |  | Hotels, Gaming & Leisure                  |  |                             | L+8.50%  |  |                   |  | 9.50                                                           | %        |  | 9/12/2019  |  |  | 320                |  |  |                     | -       |  |                          |  
|O’Brien Industrial Holdings, LLC                                             |  | Metals & Mining                           |  |                             | L+11.50% |  |                   |  | 11.00%
                                         Cash/2.00% PIK |          |  | 5/13/2019  |  |  | 6,326              |  |  |                     | 6,213   |  |                          |  
|O’Brien
    Industrial Holdings, LLC (Revolver) (f)                          |  | Metals & Mining                           |  |                             | L+9.50%  |  |                   |  | 11.00                                                          | %        |  | 5/13/2019  |  |  | 2,844              |  |  |                     | 1,219   |  |                          |  
|PD Products, LLC                                                             |  | Consumer Goods: Non-Durable               |  |                             | L+10.50% |  |                   |  | 12.00%
                                         Cash           |          |  | 10/4/2018  |  |  | 12,698             |  |  |                     | 12,589  |  |                          |  
|PD Products,
    LLC (Revolver) (f)                                          |  | Consumer Goods: Non-Durable               |  |                             | L+10.50% |  |                   |  | 12.00%
                                         Cash           |          |  | 10/4/2018  |  |  | 2,500              |  |  |                     | 1,025   |  |                          |  
|PeopleConnect Intermediate, LLC (formerly Intelius,
    Inc.)                |  | Services: Consumer                        |  |                             | L+5.50%  |  |                   |  | 6.50                                                           | %        |  | 7/1/2020   |  |  | 4,958              |  |  |                     | 4,855   |  |                          |  
|PeopleConnect Intermediate, LLC (formerly Intelius,
    Inc.)                |  | Services: Consumer                        |  |                             | L+11.50% |  |                   |  | 12.50                                                          | %        |  | 7/1/2020   |  |  | 4,979              |  |  |                     | 4,874   |  |                          |  
|PeopleConnect
    Intermediate, LLC (formerly Intelius, Inc.) (Revolver) (f) |  | Services: Consumer                        |  |                             | L+8.50%  |  |                   |  | 9.50                                                           | %        |  | 7/1/2020   |  |  | 354                |  |  |                     | -       |  |                          |  
|Precision
    Toxicology, LLC (h)                                            |  | Healthcare & Pharmaceuticals              |  |                             | L+8.00%  |  |                   |  | 8.00%
                                         Cash/1.00% PIK  |          |  | 3/24/2020  |  |  | 5,440              |  |  |                     | 5,345   |  |                          |  
|Precision
    Toxicology, LLC (Revolver) (f)                                 |  | Healthcare & Pharmaceuticals              |  |                             | L+8.00%  |  |                   |  | 8.00%
                                         Cash/1.00% PIK  |          |  | 3/24/2020  |  |  | 635                |  |  |                     | -       |  |                          |  
|Rockdale
    Blackhawk, LLC (g)                                              |  | Healthcare & Pharmaceuticals              |  |                             | L+11.00% |  |                   |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 12,207             |  |  |                     | 11,155  |  |                          |  
|Rockdale
    Blackhawk, LLC (Revolver) (f)
    (g)                           |  | Healthcare & Pharmaceuticals              |  |                             | L+11.00% |  |                   |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 1,849              |  |  |                     | 789     |  |                          |  
|Rockdale
    Blackhawk, LLC (Capex) (f)
    (g)                              |  | Healthcare & Pharmaceuticals              |  |                             | L+11.00% |  |                   |  | 12.00                                                          | %        |  | 3/31/2020  |  |  | 2,288              |  |  |                     | 629     |  |                          |  
|Rocket
    Dog Brands LLC (g)                                                |  | Consumer Goods: Non-Durable               |  |                             | n/a      |  |                   |  | 10.00                                                          | %        |  | 8/29/2019  |  |  | 1,032              |  |  |                     | 1,032   |  |                          |  
|Rocket
    Dog Brands LLC (Delayed Draw) (f)
    (g) (j)                     |  | Consumer Goods: Non-Durable               |  |                             | n/a      |  |                   |  | 15.00                                                          | %        |  | 8/29/2019  |  |  | 350                |  |  |                     | 150     |  |                          |  
|SHI Holdings,
    Inc. (h)                                                   |  | Healthcare & Pharmaceuticals              |  |                             | L+9.25%  |  |                   |  | 9.67                                                           | %        |  | 7/10/2019  |  |  | 2,737              |  |  |                     | 2,688   |  |                          |  
|SHI Holdings,
    Inc. (Revolver) (f)                                        |  | Healthcare & Pharmaceuticals              |  |                             | L+9.25%  |  |                   |  | 9.67                                                           | %        |  | 7/10/2019  |  |  | 818                |  |  |                     | 573     |  |                          |  
|SNI Companies
    (l)                                                        |  | Services: Business                        |  |                             | L+10.00% |  |                   |  | 11.00                                                          | %        |  | 12/31/2018 |  |  | 6,852              |  |  |                     | 6,743   |  |                          |  
|SNI Companies
    (Revolver) (f)                                             |  | Services: Business                        |  |                             | L+10.00% |  |                   |  | 11.00                                                          | %        |  | 12/31/2018 |  |  | 1,250              |  |  |                     | 125     |  |                          |  
|Summit
    Container Corporation (g)
    (h)                                 |  | Containers, Packaging & Glass             |  |                             | L+9.00%  |  |                   |  | 11.00                                                          | %        |  | 1/6/2019   |  |  | 3,600              |  |  |                     | 3,537   |  |                          |  
|The Sandbox
    Group LLC (h)                                                |  | Media: Advertising, Printing & Publishing |  |                             | L+10.00% |  |                   |  | 9.00%
                                         Cash/2.00% PIK  |          |  | 2/23/2020  |  |  | 5,388              |  |  |                     | 5,274   |  |                          |  
|The Sandbox
    Group LLC (Revolver) (f)                                     |  | Media: Advertising, Printing & Publishing |  |                             | L+10.00% |  |                   |  | 9.00%
                                         Cash/2.00% PIK  |          |  | 2/23/2020  |  |  | 1,250              |  |  |                     | 1,243   |  |                          |  
|TRG, LLC                                                                     |  | Hotels, Gaming & Leisure                  |  |                             | L+17.92% |  |                   |  | 11.00%
                                         Cash/7.92% PIK | (r)      |  | 12/23/2019 |  |  | 3,068              |  |  |                     | 3,017   |  |                          |  
|TRG, LLC
    (Revolver) (f)                                                  |  | Hotels, Gaming & Leisure                  |  |                             | L+12.00% |  |                   |  | 13.00                                                          | %        |  | 12/23/2019 |  |  | 131                |  |  |                     | -       |  |                          |  
|TRG, LLC
    (CapEx) (f)                                                     |  | Hotels, Gaming & Leisure                  |  |                             | L+12.00% |  |                   |  | 11.00%
                                         Cash/2.00% PIK |          |  | 12/23/2019 |  |  | 919                |  |  |                     | 653     |  |                          |  
|TTM Technologies, Inc.                                                       |  | High Tech Industries                      |  |                             | L+5.00%  |  |                   |  | 6.00                                                           | %        |  | 5/31/2021  |  |  | 1,330              |  |  |                     | 1,287   |  |                          |  
|Vacation Innovations, LLC                                                    |  | Hotels, Gaming & Leisure                  |  |                             | L+9.00%  |  |                   |  | 9.50                                                           | %        |  | 8/20/2020  |  |  | 6,211              |  |  |                     | 6,093   |  |                          |  
|Vacation
    Innovations, LLC (Revolver) (f)                                 |  | Hotels, Gaming & Leisure                  |  |                             | L+9.00%  |  |                   |  | 9.50                                                           | %        |  | 8/20/2020  |  |  | 342                |  |  |                     | -       |  |                          |  
|Yandy Holding, LLC                                                           |  | Retail                                    |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 9/30/2019  |  |  | 6,419              |  |  |                     | 6,342   |  |                          |  
|Yandy
    Holding, LLC (Revolver) (f)                                        |  | Retail                                    |  |                             | L+9.00%  |  |                   |  | 10.00                                                          | %        |  | 9/30/2019  |  |  | 907                |  |  |                     | -       |  |                          |  
|Total
    Senior Secured Loans                                               |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  | 214,659            |  |  |                     | 189,854 |  |                          |  
|                                                                             |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  |                    |  |  |                     |         |  |                          |  
|Unitranche Loans                                                             |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  |                    |  |  |                     |         |  |                          |  
|Accutest Corporation                                                         |  | Services: Business                        |  |                             | L+9.50%  |  |                   |  | 11.00                                                          | %        |  | 6/5/2018   |  |  | 6,586              |  |  |                     | 6,440   |  |                          |  
|Collaborative
    Neuroscience Network, LLC (m)                              |  | Healthcare & Pharmaceuticals              |  |                             | L+11.50% |  |                   |  | 13.00                                                          | %        |  | 12/27/2017 |  |  | 7,058              |  |  |                     | 6,968   |  |                          |  
|Fabco Automotive Corporation                                                 |  | Automotive                                |  |                             | L+9.25%  |  |                   |  | 10.25                                                          | %        |  | 4/3/2017   |  |  | 8,437              |  |  |                     | 8,393   |  |                          |  
|Gracelock Industries, LLC                                                    |  | Wholesale                                 |  |                             | L+12.05% |  |                   |  | 11.00%
                                         Cash/2.55% PIK | (s)      |  | 5/7/2019   |  |  | 5,207              |  |  |                     | 5,101   |  |                          |  
|Incipio
    Technologies, Inc. (n)                                           |  | Consumer Goods: Non-Durable               |  |                             | L+6.00%  |  |                   |  | 7.00                                                           | %        |  | 12/26/2019 |  |  | 15,000             |  |  |                     | 14,669  |  |                          |  
|MooreCo, Inc.                                                                |  | Consumer Goods: Durable                   |  |                             | L+13.50% |  |                   |  | 12.50%
                                         Cash/2.50% PIK |          |  | 12/27/2017 |  |  | 4,223              |  |  |                     | 4,177   |  |                          |  
|Output Services Group, Inc.                                                  |  | Services: Business                        |  |                             | L+9.00%  |  |                   |  | 9.50%
                                         Cash/1.00% PIK  |          |  | 12/17/2018 |  |  | 6,655              |  |  |                     | 6,555   |  |                          |  
|Output Services Group, Inc.                                                  |  | Services: Business                        |  |                             | L+9.00%  |  |                   |  | 9.50%
                                         Cash/1.00% PIK  |          |  | 12/17/2018 |  |  | 7,429              |  |  |                     | 7,301   |  |                          |  
|Playtime,
    LLC (m)                                                        |  | Hotels, Gaming & Leisure                  |  |                             | L+7.50%  |  |                   |  | 9.00                                                           | %        |  | 12/4/2017  |  |  | 5,677              |  |  |                     | 5,627   |  |                          |  
|TPP Acquisition,
    Inc. (o)                                                |  | Retail                                    |  |                             | L+11.00% |  |                   |  | 10.50%
                                         Cash/2.00% PIK |          |  | 12/17/2017 |  |  | 6,835              |  |  |                     | 6,769   |  |                          |  
|TPP Acquisition,
    Inc. (Revolver) (o)                                     |  | Retail                                    |  |                             | L+11.00% |  |                   |  | 4.50%
                                         Cash/8.00% PIK  |          |  | 12/17/2017 |  |  | 2,035              |  |  |                     | 2,035   |  |                          |  
|TPP
    Acquisition, Inc. (Delayed Draw) (o)                                 |  | Retail                                    |  |                             | L+11.00% |  |                   |  | 10.50%
                                         Cash/2.00% PIK |          |  | 12/17/2017 |  |  | 3,429              |  |  |                     | 3,429   |  |                          |  
|Total
    Unitranche Loans                                                   |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  | 78,571             |  |  |                     | 77,464  |  |                          |  
|                                                                             |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  |                    |  |  |                     |         |  |                          |  
|Junior Secured Loans                                                         |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  |                    |  |  |                     |         |  |                          |  
|Confie Seguros Holdings II Co.                                               |  | Banking, Finance, Insurance & Real Estate |  |                             | L+9.00%  |  |                   |  | 10.25                                                          | %        |  | 5/8/2019   |  |  | 5,594              |  |  |                     | 5,555   |  |                          |  
|CSM Bakery Supplies LLC                                                      |  | Beverage, Food & Tobacco                  |  |                             | L+7.75%  |  |                   |  | 8.75                                                           | %        |  | 7/3/2021   |  |  | 5,792              |  |  |                     | 5,691   |  |                          |  
|Education Corporation of America                                             |  | Services: Consumer                        |  |                             | L+11.00% |  |                   |  | 11.60                                                          | %        |  | 12/31/2018 |  |  | 5,833              |  |  |                     | 5,698   |  |                          |  
|Hyland Software Inc.                                                         |  | High Tech Industries                      |  |                             | L+7.25%  |  |                   |  | 8.25                                                           | %        |  | 7/1/2023   |  |  | 5,000              |  |  |                     | 4,810   |  |                          |  
|Mergermarket USA, Inc.                                                       |  | Media: Broadcasting & Subscription        |  |                             | L+6.50%  |  |                   |  | 7.50                                                           | %        |  | 12/19/2021 |  |  | 4,500              |  |  |                     | 4,384   |  |                          |  
|Micro Holdings Corp.                                                         |  | High Tech Industries                      |  |                             | L+7.50%  |  |                   |  | 8.50                                                           | %        |  | 7/8/2022   |  |  | 5,590              |  |  |                     | 5,455   |  |                          |  
|Mud Pie, LLC                                                                 |  | Consumer Goods: Non-Durable               |  |                             | n/a      |  |                   |  | 10.00%
                                         Cash/1.50% PIK |          |  | 11/4/2020  |  |  | 10,101             |  |  |                     | 9,919   |  |                          |  
|New NSI Holdings, Inc.                                                       |  | Chemicals, Plastics & Rubber              |  |                             | L+8.25%  |  |                   |  | 9.25                                                           | %        |  | 7/28/2022  |  |  | 4,000              |  |  |                     | 3,942   |  |                          |  
|Pre-Paid Legal Services, Inc. (Legal Shield)                                 |  | Services: Consumer                        |  |                             | L+9.00%  |  |                   |  | 10.25                                                          | %        |  | 7/1/2020   |  |  | 3,000              |  |  |                     | 2,988   |  |                          |  
|Physiotherapy Corporation                                                    |  | Healthcare & Pharmaceuticals              |  |                             | L+8.50%  |  |                   |  | 9.50                                                           | %        |  | 6/3/2022   |  |  | 5,000              |  |  |                     | 4,953   |  |                          |  
|Rocket
    Dog Brands LLC (g)                                                |  | Consumer Goods: Non-Durable               |  |                             | n/a      |  |                   |  | 15.00%
                                         PIK            |          |  | 5/1/2020   |  |  | 1,673              |  |  |                     | 1,673   |  |                          |  
|Sterling Infosystems, Inc.                                                   |  | Services: Business                        |  |                             | L+7.75%  |  |                   |  | 8.75                                                           | %        |  | 6/19/2023  |  |  | 5,000              |  |  |                     | 4,952   |  |                          |  
|SCP TPZ Acquisition, Inc.                                                    |  | Media: Diversified & Production           |  |                             | L+8.25%  |  |                   |  | 9.25                                                           | %        |  | 5/29/2022  |  |  | 5,000              |  |  |                     | 4,928   |  |                          |  
|Total
    Junior Secured Loans                                               |  |                                           |  |                             |          |  |                   |  |                                                                |          |  |            |  |  | 66,083             |  |  |                     | 64,948  |  |                          |  





9







|Equity Securities                                                                                                        |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  |   |  |  |   |         |  |  |   |         |  |  |  |       |  
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------- |  |  | --- |  |  |  | --------------------------------------------------- | --- |  | ---------- |  |  | - |  |  | - | ------- |  |  | - | ------- |  |  |  | ----- | -
|American
    Community Homes, Inc. (warrant to purchase up to 9.0% of the equity)(p)                                     |  | Banking, Finance, Insurance & Real Estate |  |  | -   |  |  |  | -                                                   | (t) |  | 10/9/2024  |  |  | - |  |  |   | -       |  |  |   | 353     |  |  |  | 0.2   | %
|BookIt
    Operating LLC (warrant to purchase up to 3.0% of the equity) (p)                                              |  | Hotels, Gaming & Leisure                  |  |  | -   |  |  |  | -                                                   | (t) |  | 12/21/2023 |  |  | - |  |  |   | -       |  |  |   | 587     |  |  |  | 0.3   | %
|Collaborative
    Neuroscience Network, LLC (warrant to purchase up to 1.67 LLC units) (p)                               |  | Healthcare & Pharmaceuticals              |  |  | -   |  |  |  | -                                                   | (t) |  | 12/27/2022 |  |  | - |  |  |   | -       |  |  |   | 147     |  |  |  | 0.1   | %
|Cyalume
    Technologies Holdings, Inc. - Series D Preferred Stock (3.06 shares)(p)                                      |  | Aerospace & Defense                       |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | -       |  |  |   | 449     |  |  |  | 0.2   | %
|Education
    Corporation of America - Series G Preferred Stock (8,333 shares) (p)                                       |  | Services: Consumer                        |  |  | n/a |  |  |  | 12.00                                               | %   |  | -          |  |  | - |  |  |   | 8,125   |  |  |   | 8,345   |  |  |  | 4.5   | %
|InMobi
    Pte, Ltd. (represents the right to purchase 0.42% of the equity) (k)
    (p)                                  |  | Media: Advertising, Printing & Publishing |  |  | -   |  |  |  | -                                                   | (t) |  | 9/18/2025  |  |  | - |  |  |   | -       |  |  |   | 108     |  |  |  | 0.1   | %
|O’Brien
    Industrial Holdings, LLC (warrants to purchase up to 2.44% of certain affiliated entities of the company)(p) |  | Metals & Mining                           |  |  | -   |  |  |  | -                                                   | (t) |  | 5/13/2024  |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Output
    Services Group, Inc. (warrant to purchase up to 3.89% of the common stock) (p)                                |  | Services: Business                        |  |  | -   |  |  |  | -                                                   | (t) |  | 12/17/2022 |  |  | - |  |  |   | -       |  |  |   | 450     |  |  |  | 0.2   | %
|Playtime,
    LLC - Preferred Units (8,665 units) (p)                                                                    |  | Hotels, Gaming & Leisure                  |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | 200     |  |  |   | 64      |  |  |  | 0.0   | %
|Rocket
    Dog Brands LLC - Common Units (75,502 units) (g)                                                              |  | Consumer Goods: Non-Durable               |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Rocket
    Dog Brands LLC - Preferred Units (10 units) (g)                                                               |  | Consumer Goods: Non-Durable               |  |  | -   |  |  |  | 15.00%
                                         PIK | (u) |  | -          |  |  | - |  |  |   | 967     |  |  |   | -       |  |  |  | 0.0   | %
|Rockdale
    Blackhawk, LLC - LLC Units (11.56% of the LLC interest)(g)                                                  |  | Healthcare & Pharmaceuticals              |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | 1,093   |  |  |   | 8,184   |  |  |  | 4.4   | %
|Summit
    Container Corporation (warrant to purchase up to 19.50% of the equity) (g)                                    |  | Containers, Packaging & Glass             |  |  | -   |  |  |  | -                                                   | (t) |  | 1/6/2024   |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|The Sandbox
    Group LLC (warrant to purchase up to 1.0% of the equity) (p)                                             |  | Media: Advertising, Printing & Publishing |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | -       |  |  |   | 277     |  |  |  | 0.2   | %
|The Tie
    Bar Operating Company, LLC - Class A Preferred Units (1,275 units)(p)                                        |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | 86      |  |  |   | 90      |  |  |  | 0.1   | %
|The Tie
    Bar Operating Company, LLC - Class B Preferred Units (1,275 units) (p)                                       |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | 1       |  |  |   | -       |  |  |  | 0.0   | %
|TPP
    Acquisition, Inc. (829 shares of common stock) (o)                                                               |  | Retail                                    |  |  | -   |  |  |  | -                                                   | (t) |  | -          |  |  | - |  |  |   | -       |  |  |   | -       |  |  |  | 0.0   | %
|Total
    Equity Securities                                                                                              |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  | - |  |  |   | 10,472  |  |  |   | 19,054  |  |  |  | 10.3  | %
|TOTAL
    INVESTMENTS                                                                                                    |  |                                           |  |  |     |  |  |  |                                                     |     |  |            |  |  |   |  |  | $ | 342,738 |  |  | $ | 341,091 |  |  |  | 184.8 | %

______________________________



| | (a) | All of our investments are issued by eligible U.S. portfolio
                                                                                                                     companies, as defined in the Investment Company Act of 1940 (the “1940 Act”) except for InMobi Pte, Ltd. which
                                                                                                                     is                                                                                                                      an
                                                                                                                     international company headquartered in California.  All investments are non-controlled/non-affiliate company investments,
                                                                                                                     unless
                                                                                                                     otherwise
                                                                                                                     noted.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | The majority of the investments bear interest at a rate that
                                                                                                                    may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate
                                                                                                                    (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment the
                                                                                                                    Company
                                                                                                                    has
                                                                                                                    provided the spread over
                                                                                                                    LIBOR or Prime and the current contractual interest rate in effect at December 31, 2015. Certain investments are subject to
                                                                                                                    a                                                                                                                     LIBOR
                                                                                                                    or Prime interest rate floor.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Because there is no readily
available market value for these investments, the fair value of these investments is determined in good faith by our board of
directors as required by the Investment Company Act of 1940. (See Note 4 in the accompanying notes to the consolidated financial
statements.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Percentages are based on
net assets of $184,535 as of December 31, 2015.
| | --- | ------------------------------------------------------------------------

| | (e) | A portion of this loan
(principal of $4,679) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | All or a portion of this
commitment was unfunded at December 31, 2015. As such, interest is earned only on the funded portion of this commitment.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | As defined in the 1940
Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns five percent or more of
the portfolio company's voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional
information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed
to control).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h) | All of this loan is held
in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s
revolving credit facility.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) | A portion of this loan
(principal of $2,532) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j) | This delayed draw loan
requires that certain financial covenants be met by the portfolio company prior to any fundings.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | (k) | This investment is treated
as a non-qualifying investment under Section 55(a) of the 1940 Act.  Under the 1940 Act, the Company may not acquire
any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s
total assets.  As of December 31, 2015, non-qualifying assets totaled 1.60% of the Company’s total assets.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l) | A portion of this loan
(principal of $4,394) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (m) | The sale of a portion of
this loan does not qualify for sale accounting under ASC Topic 860 — Transfers and Servicing, and therefore, the entire
unitranche loan asset remains in the Consolidated Schedule of Investments.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (n) | A portion of this loan
(principal of $5,500) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore
not collateral to the Company’s revolving credit facility.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (o) | As defined in the 1940 Act, the Company is deemed to be both an
                                                                                                                     “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% percent of
                                                                                                                     the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for
                                                                                                                     additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the
                                                                                                                     Company is deemed to Control.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (p) | Represents less than 5%
ownership of the portfolio company’s voting securities.
| | --- | -------------------------------------------------------------------------------

| | (q) | The PIK portion of the
interest rate for Landpoint, LLC is structured as a guaranteed fee paid upon the termination of the commitment. The fee accrues
at 2.25% per annum and is subject to a minimum payment upon termination of $338.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (r) | A portion of the PIK interest
rate for TRG, LLC is structured as a guaranteed fee paid upon the termination of the commitment. The fee accrues at 5.92% per
annum and is subject to an estimated minimum payment upon termination of $891.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (s) | The PIK portion of the
interest rate for Gracelock Industries, LLC is structured as a fee paid upon the termination of the commitment. The fee accrues
at 2.55% per annum.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (t) | Represents a non-income
producing security.
| | --- | -------------------------------------------

| | (u) | This position includes
a PIK dividend and is currently on non-accrual status.
| | --- | -----------------------------------------------------------------------------

n/a
- not applicable





See
Notes to Consolidated Financial Statements.



10







MONROE CAPITAL
CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except share and per
share data)



Note 1. Organization and Principal Business



Monroe Capital Corporation (“Monroe
Capital” and together with its subsidiaries, the “Company”) was formed in February 2011 to act as an externally-managed
nondiversified, closed-end management investment company and has elected to be treated as a business development company under
the Investment Company Act of 1940, as amended (the “1940 Act”). The Company had no substantive operating activities
prior to October 24, 2012, the date of its initial public offering. Monroe Capital’s investment objective is to maximize
the total return to its stockholders in the form of current income and capital appreciation through investment in senior secured,
junior secured and unitranche (a combination of senior secured and junior secured debt in the same facility) debt and, to a lesser
extent, unsecured subordinated debt and equity investments. Monroe Capital is managed by Monroe Capital BDC Advisors, LLC (“MC
Advisors”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. In addition, for U.S.
federal income tax purposes, Monroe Capital has elected to be treated as a regulated investment company (“RIC”) under
Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).



On
February 28, 2014, the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”),
a Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a
Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as amended.
MRCC SBIC commenced operations on September 16, 2013. As of March 31, 2016, MRCC SBIC had $20,000 in regulatory and leveragable
capital and $40,000 in SBA-guaranteed debentures outstanding. On April 13, 2016, MRCC SBIC was approved by the SBA for an additional
$75,000 in SBA-guaranteed debentures. See Note 7 for additional information.



Note 2. Summary of Significant Accounting Policies



Basis of Presentation



The accompanying consolidated financial
statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
of America (“GAAP”). The accompanying consolidated financial statements of the Company and related financial information
have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. The Company
has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial
Services —  Investment Companies (“ASC Topic 946”). Certain prior period amounts have been reclassified
to conform to the current period presentation.



Use of Estimates



The preparation of the consolidated financial
statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



Consolidation



As permitted under Regulation S-X and
ASC Topic 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company
subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company
consolidated the results of the Company’s wholly-owned subsidiaries, MRCC SBIC and its wholly-owned general partner MCC
SBIC GP, LLC, in its consolidated financial statements beginning with the commencement of their operations in September 2013.
All intercompany balances and transactions have been eliminated.



Fair Value of Financial Instruments



The Company applies fair value to substantially
all of its financial instruments in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures(“ASC
Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures
for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency
of valuation inputs. See Note 4 to the consolidated financial statements for further discussion regarding the fair value measurements
and hierarchy.



ASC Topic 820 requires disclosure of
the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying
amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due
to the short maturity of such instruments.





11







Revenue Recognition



The Company’s revenue recognition
policies are as follows:



Investments and related investment
income: Interest and dividend income is recorded on the accrual basis to the extent that the Company expects to collect such
amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity
investments. Interest is accrued on a daily basis. All other income is recorded into income when earned. The Company records prepayment
fees and amendment fees on loans as interest income in the period earned. For the three months ended March 31, 2016 and 2015,
interest income included $331 and $567 of prepayment and amendment fees, respectively.



Dividend income on preferred equity securities
is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are
expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies.
Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments
is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company
will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated
tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital
are recorded as a reduction in the cost basis of the investment. For the three months ended March 31, 2016 and 2015, the Company
recorded dividend income of $1,862 and zero, respectively.



Loan origination fees, original issue
discount and market discount or premiums are capitalized, and the Company then amortizes such amounts using the effective interest
method as interest income over the life of the investment. Unamortized discounts and loan origination fees totaled $6,227 and
$6,340 as of March 31, 2016 and December 31, 2015, respectively. Upfront loan origination and closing fees received for the three
months ended March 31, 2016 and 2015 totaled $1,146 and $918, respectively. For the three months ended March 31, 2016 and 2015,
interest income included $365 and $198 of accretion of loan origination fees, original issue discounts and market discounts or
premiums, respectively. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination
fees are recorded as interest income. For the three months ended March 31, 2016 and 2015, interest income included $377 and $267
of unamortized discount or loan origination fees recorded as interest income upon prepayment of a loan or debt security, respectively.



The Company has certain investments in
its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or
dividends that are added to the principal balance and recorded as income. For the three months ended March 31, 2016 and 2015,
interest income included $370 and $530 of PIK interest, respectively. The Company stops accruing PIK interest when it is determined
that PIK interest is no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this
income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.



Investment transactions are recorded
on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the
net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains and losses
previously recognized. Realized gains and loss are recorded within net realized gain (loss) on investments in the consolidated
statements of operations. Changes in the fair value of investments from the prior period, as determined by the Company’s
board of directors (the “Board”) through the application of the Company’s valuation policy, are included within
net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.



Non-accrual:
Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become
materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected. Interest
payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s
judgment. Non-accrual loans are restored to accrual status when past due principal, interest or dividends are paid and, in
management’s judgment, are likely to remain current. During the three months ended March 31, 2016, the Company placed
its loan investments in TPP Acquisition, Inc. on non-accrual status. Prior to placing TPP Acquisition Inc. on non-accrual
status there were no other loan investments on non-accrual status. The Company’s preferred unit investment in Rocket
Dog Brands LLC, which has a stated PIK interest rate, continues to remain on non-accrual status, and no dividend income was
recorded related to this investment for the three months ended March 31, 2016 and 2015. The fair value of the Company’s
investments on non-accrual status totaled $7,438 and zero at March 31, 2016 and December 31, 2015, respectively.



Partial loan sales: The Company
follows the guidance in ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”), when accounting
for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet
the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed.
Participations or other partial loan sales which do not meet the definition of a participating interest remain on the Company’s
consolidated statements of assets and liabilities and the proceeds are recorded as a secured borrowing until the definition is
met. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income”
and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses”
in the accompanying consolidated statements of operations. Changes in the fair value of secured borrowings from the prior period,
as determined by the Board through the application of the Company’s valuation policy, are included as changes in unrealized
appreciation (depreciation) on secured borrowings in the consolidated statements of operations. See Note 7 “Secured Borrowings”
for additional information.





12







Distributions



Distributions to common stockholders
are recorded on the record date. The amount, if any, to be distributed is determined by the Board each quarter and is generally
based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually,
although the Company may decide to retain such capital gains for investment.



The determination of the tax attributes
for the Company’s distributions is made annually, based upon its taxable income for the full year and distributions paid
for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified 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 capital gains, but may also include qualified dividends or return of capital.



The Company has adopted a dividend reinvestment
plan (“DRIP”) that provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder
has elected to receive dividends in cash. As a result, if the Company declares a cash dividend, the Company’s stockholders
who have not “opted out” of the DRIP at least three days prior to the dividend payment date will have their cash dividend
automatically reinvested into additional shares of the Company’s common stock. The Company has the option to satisfy the
share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock
by the DRIP plan administrator. Newly issued shares are valued based upon the final closing price of the Company’s common
stock on a date determined by the Board. Shares purchased in the open market to satisfy the DRIP requirements will be valued based
upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other
costs. See Note 8 regarding distributions for additional information.



Earnings per Share



In accordance with the provisions of
ASC Topic 260 — Earnings per Share (“ASC Topic 260”), basic earnings per share is computed by dividing
earnings available to common stockholders by the weighted average number of shares outstanding during the period. The weighted
average shares outstanding utilized in the calculation of earnings per share take into account share issues under the ATM program
on the issuance date and the Company’s repurchases of its common stock on the repurchase date. See Note 9 for additional
information on the Company’s share issuances and repurchases. For the periods presented in these consolidated financial
statements, there were no potentially dilutive common shares issued.



Segments



In accordance with ASC Topic 280 —
Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.



Cash



The Company deposits its cash in a financial
institution and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.



Restricted Cash



Restricted cash includes amounts held
within MRCC SBIC. Cash held within an SBIC is generally restricted to the originations of new loans from the SBIC and the payment
of SBA debentures and related interest expense.



Deferred Financing Costs



Deferred financing costs represent fees
and other direct incremental costs incurred in connection with the Company’s borrowings. As of March 31, 2016 and December
31, 2015, the Company had deferred financing costs of $3,387 and $3,569, respectively. These amounts are amortized and included
in interest expense in the consolidated statements of operations over the estimated average life of the borrowings. Amortization
of deferred financing costs for the three months ended March 31, 2016 and 2015 was $182 and $167, respectively.



Offering Costs



Offering costs include, among other things,
fees paid in relation to legal, accounting, regulatory and printing work completed in preparation of equity offerings. Offering
costs are charged against the proceeds from equity offerings within the consolidated statements of changes in net assets. As of
March 31, 2016 and December 31, 2015, other assets on the consolidated statements of assets and liabilities included $383 and
$358, respectively, of deferred offering costs which will be charged against the proceeds from further equity offerings when received.





13







Income Taxes



The Company has elected to be treated
as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment available to RICs. To
maintain qualification as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification
requirements and distribute to stockholders, for each taxable year, at least 90% of the Company’s “investment company
taxable income,” which is generally the Company’s net ordinary income plus the excess, if any, of realized net short-term
capital gains over realized net long-term capital losses. If the Company qualifies as a RIC and satisfies the annual distribution
requirement, the Company will not have to pay corporate-level federal income taxes on any income that the Company distributes
to its stockholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to
avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if the Company
does not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and
undistributed income from prior years for which it paid no federal income taxes. To the extent that the Company determines that
its estimated current year annual taxable income may exceed estimated current year dividend distributions, the Company accrues
excise tax, if any, calculated as 4% of the estimated excess taxable income as taxable income is earned. For the three months
ended March 31, 2016 and 2015, $87 and $3 were recorded within general and administrative expenses on the consolidated statements
of operations for U.S. federal excise tax, respectively. As of March 31, 2016 and December 31, 2015, payables for excise taxes
of zero and $80, respectively, were included in accounts payable and accrued expenses on the consolidated statements of assets
and liabilities.



The Company accounts for income taxes
in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines
for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements.
ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine
whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits
of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It
is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense.
There were no material uncertain income tax positions through March 31, 2016. The 2012 through 2015 tax years remain subject to
examination by U.S. federal and state tax authorities.



Recent Accounting Pronouncements



In May 2014, the FASB issued Accounting
Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606) (“ASU 2014-09”).
The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with
a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate
the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies
a performance obligation.



ASU 2014-09 also specified the accounting
for some costs to obtain or fulfill a contract with a customer. In addition, ASU 2014-09 requires that an entity disclose sufficient
information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash
flows arising from contracts with customers. The initial effective date of ASU 2014-09 was for fiscal periods beginning after
December 15, 2016. However, in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (ASC Topic
606): Deferral of the Effective Date, which deferred the effective date to fiscal periods beginning after December 15,
2017. Management is currently evaluating the impact these changes will have on the Company’s consolidated financial statements
and disclosures.



In February 2015, the FASB issued ASU
2015-02, Consolidation (ASC Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02
significantly changes the consolidation analysis required under GAAP and ends the deferral granted to investment companies from
applying the variable interest entity guidance. ASU 2015-02 is effective for interim and annual reporting periods in fiscal years
that begin after December 15, 2015 and early adoption is permitted. The Company has adopted ASU 2015-02 and the adoption did not
have a material impact on the Company’s consolidated financial statements and disclosures.



In April 2015, the FASB issued ASU No.
2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU
2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the statements
of assets and liabilities as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.
The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. ASU 2015-03 is
effective for fiscal years that begin after December 15, 2015 and early adoption is permitted. The Company has adopted ASU 2015-03
and the revised presentation is reflected in the Company’s consolidated financial statements for the periods presented.



In January 2016, the FASB issued ASU
2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and
measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification
and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities
measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments.
This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted
for public business entities. Management is currently evaluating the impact these changes will have on the Company’s consolidated
financial statements and disclosures.





14







Note 3. Investments



The following table shows the composition
of the investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):



|                     |  | March 31, 2016 |         |  | December 31, 2015 | 
|-------------------- |  | -------------- | ------- |  | ----------------- | 
|Amortized Cost:      |  |                |         |  |                   | 
|Senior secured loans |  | $              | 206,282 |  |                   | 
|Unitranche loans     |  |                | 59,567  |  |                   | 
|Junior secured loans |  |                | 67,252  |  |                   | 
|Equity securities    |  |                | 10,472  |  |                   | 
|Total                |  | $              | 343,573 |  |                   | 



|                     |  | March 31, 2016 |         |  | December 31, 2015 | 
|-------------------- |  | -------------- | ------- |  | ----------------- | 
|Fair Value:          |  |                |         |  |                   | 
|Senior secured loans |  | $              | 202,268 |  |                   | 
|Unitranche loans     |  |                | 55,560  |  |                   | 
|Junior secured loans |  |                | 64,475  |  |                   | 
|Equity securities    |  |                | 21,165  |  |                   | 
|Total                |  | $              | 343,468 |  |                   | 



The following table shows the composition
of the investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio
investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company,
which may not be indicative of the primary source of the portfolio company’s business:



|                |  | March 31, 2016 |         |  | December 31, 2015 | 
|--------------- |  | -------------- | ------- |  | ----------------- | 
|Amortized Cost: |  |                |         |  |                   | 
|West            |  | $              | 125,989 |  |                   | 
|Southeast       |  |                | 65,654  |  |                   | 
|Northeast       |  |                | 58,964  |  |                   | 
|Midwest         |  |                | 48,797  |  |                   | 
|Southwest       |  |                | 37,502  |  |                   | 
|International   |  |                | 6,667   |  |                   | 
|Mid-Atlantic    |  |                | —       |  |                   | 
|Total           |  | $              | 343,573 |  |                   | 





|              |  | March 31, 2016 |         |  | December 31, 2015 | 
|------------- |  | -------------- | ------- |  | ----------------- | 
|Fair Value:   |  |                |         |  |                   | 
|West          |  | $              | 119,335 |  |                   | 
|Southeast     |  |                | 67,149  |  |                   | 
|Northeast     |  |                | 59,653  |  |                   | 
|Midwest       |  |                | 48,383  |  |                   | 
|Southwest     |  |                | 42,230  |  |                   | 
|International |  |                | 6,718   |  |                   | 
|Mid-Atlantic  |  |                | —       |  |                   | 
|Total         |  | $              | 343,468 |  |                   | 





15







The following table shows the composition
of the investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):



|                                          |  | March 31, 2016 |         |  | December 31, 2015 | 
|----------------------------------------- |  | -------------- | ------- |  | ----------------- | 
|Amortized Cost:                           |  |                |         |  |                   | 
|Consumer Goods: Non-Durable               |  | $              | 50,297  |  |                   | 
|Healthcare & Pharmaceuticals              |  |                | 39,489  |  |                   | 
|Hotels, Gaming & Leisure                  |  |                | 30,149  |  |                   | 
|Services: Business                        |  |                | 30,064  |  |                   | 
|Services: Consumer                        |  |                | 26,094  |  |                   | 
|Retail                                    |  |                | 22,860  |  |                   | 
|Banking, Finance, Insurance & Real Estate |  |                | 20,129  |  |                   | 
|Construction & Building                   |  |                | 19,695  |  |                   | 
|Media: Broadcasting & Subscription        |  |                | 18,847  |  |                   | 
|High Tech Industries                      |  |                | 16,998  |  |                   | 
|Aerospace & Defense                       |  |                | 10,685  |  |                   | 
|Energy: Oil & Gas                         |  |                | 8,847   |  |                   | 
|Automotive                                |  |                | 8,397   |  |                   | 
|Metals & Mining                           |  |                | 6,943   |  |                   | 
|Media: Advertising, Printing & Publishing |  |                | 6,667   |  |                   | 
|Beverage, Food & Tobacco                  |  |                | 5,724   |  |                   | 
|Wholesale                                 |  |                | 5,029   |  |                   | 
|Media: Diversified & Production           |  |                | 4,930   |  |                   | 
|Consumer Goods: Durable                   |  |                | 4,146   |  |                   | 
|Chemicals, Plastics & Rubber              |  |                | 3,944   |  |                   | 
|Containers, Packaging & Glass             |  |                | 3,639   |  |                   | 
|Total                                     |  | $              | 343,573 |  |                   | 



|                                          |  | March 31, 2016 |         |  | December 31, 2015 | 
|----------------------------------------- |  | -------------- | ------- |  | ----------------- | 
|Fair Value:                               |  |                |         |  |                   | 
|Healthcare & Pharmaceuticals              |  | $              | 48,938  |  |                   | 
|Consumer Goods: Non-Durable               |  |                | 47,936  |  |                   | 
|Services: Business                        |  |                | 30,877  |  |                   | 
|Hotels, Gaming & Leisure                  |  |                | 30,239  |  |                   | 
|Services: Consumer                        |  |                | 26,653  |  |                   | 
|Banking, Finance, Insurance & Real Estate |  |                | 20,631  |  |                   | 
|Construction & Building                   |  |                | 19,693  |  |                   | 
|Media: Broadcasting & Subscription        |  |                | 18,787  |  |                   | 
|Retail                                    |  |                | 17,753  |  |                   | 
|High Tech Industries                      |  |                | 15,798  |  |                   | 
|Aerospace & Defense                       |  |                | 11,698  |  |                   | 
|Energy: Oil & Gas                         |  |                | 8,796   |  |                   | 
|Metals & Mining                           |  |                | 6,998   |  |                   | 
|Media: Advertising, Printing & Publishing |  |                | 6,718   |  |                   | 
|Beverage, Food & Tobacco                  |  |                | 5,286   |  |                   | 
|Automotive                                |  |                | 5,227   |  |                   | 
|Media: Diversified & Production           |  |                | 4,875   |  |                   | 
|Wholesale                                 |  |                | 4,681   |  |                   | 
|Consumer Goods: Durable                   |  |                | 4,186   |  |                   | 
|Chemicals, Plastics & Rubber              |  |                | 4,000   |  |                   | 
|Containers, Packaging & Glass             |  |                | 3,698   |  |                   | 
|Total                                     |  | $              | 343,468 |  |                   | 





16







Note 4. Fair Value Measurements



Investments



The Company values all investments in
accordance with ASC Topic 820. ASC Topic 820 requires enhanced disclosures about assets and liabilities that are measured and
reported at fair value. As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date.



ASC Topic 820 establishes a hierarchal
disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments
at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics
specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from
actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used
in measuring fair value.



Based on the observability of the inputs
used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair
value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried
at fair value are classified and disclosed in one of the following three categories:



| | • | Level
1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the
Company has the ability to access.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Level
2 — Valuations based on inputs other than quoted prices in active markets, which are either directly or indirectly
observable.
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | • | Level 3 — Valuations
based on inputs that are unobservable and significant to the overall fair value measurement. The inputs into the determination
of fair value may require significant management judgment or estimation. Such information may be the result of consensus pricing
information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction.
The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3
information, assuming no additional corroborating evidence.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



With respect to investments for which
market quotations are not readily available, the Company’s Board undertakes a multi-step valuation process each quarter,
as described below:



| | • | the
    quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment
    professionals of MC Advisors responsible for the portfolio investment;                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                               
| | • | preliminary
    valuation conclusions are then documented and discussed with the investment committee of the Company;                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                               
| | • | the
    Board also engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments
    for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative
    to each portfolio company at least once in every calendar year, but are generally received quarterly;
| |   |                                                                                                                                                                                                                                                                                                                                                                               
| | • | the
    audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and
    responds and supplements the valuation recommendations to reflect any comments; and                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                               
| | • | the
    Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on
    the input of MC Advisors, the independent valuation firm(s) and the audit committee.                                                                                                                                                   



The availability of
valuation techniques and observable inputs can vary from investment to investment and is affected by a wide variety of factors
including the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics
particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable
in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the
amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because
of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would
have been used had a ready market for the securities existed. Accordingly, the degree of judgment exercised by the Company in
determining fair value is greatest for securities categorized in Level 3. In certain cases, the inputs used to measure fair value
may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value
hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is
significant to the fair value measurement.



Fair value is a market-based measure
considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions
are not readily available, assumptions utilized in the valuation are set to reflect those that market participants would use in
pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement
date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be
reduced for many securities. This condition could cause an investment to be reclassified to a lower level within the fair value
hierarchy.



The accompanying consolidated schedules
of investments held by the Company consist primarily of private debt instruments (“Level 3 debt”). Management generally
uses the yield approach to determine fair value, as long as it is appropriate. If there is deterioration in credit quality or
a debt investment is in workout status, the Company may consider other factors in determining the fair value, including the value
attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received
in a liquidation analysis. The Company considers its Level 3 debt to be performing loans if the borrower is not in default, the
borrower is remitting payments in a timely manner; the loan is in covenant compliance or is otherwise not deemed to be impaired.
In determining the fair value of the performing Level 3 debt, the Company considers fluctuations in current interest rates, the
trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and
other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined
above, the Company will evaluate the value of the collateral utilizing the same framework described above for a performing loan
to determine the value of the Level 3 debt instrument.





17







Senior, unitranche and junior secured
loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that
have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates
on these loans are either fixed or floating, and are based on current market conditions and credit ratings of the borrower. The
contractual interest rates on the loans ranged between 6.00% and 16.00% at March 31, 2016 and 6.00% and 18.92% at December 31,
2015. The maturity dates on the loans outstanding at March 31, 2016 range between May 2016 and July 2023. Management evaluates
the collectability of the loans on an ongoing basis based upon various factors including, but not limited to, the credit history
of the borrower, its financial status and its available collateral.



Under the yield approach, the Company
uses discounted cash flow models to determine the present value of the future cash flow streams of its debt investments, based
on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the
yield approach, the Company also considers the following factors: applicable market yields and leverage levels, credit quality,
prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments,
and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments
may be made. This evaluation will be updated quarterly for Level 3 debt instruments that are performing and are not performing,
respectively, and more frequently for time periods where there are significant changes in the investor base or significant changes
in the perceived value of the underlying collateral. The collateral value will be analyzed on an ongoing basis using internal
metrics, appraisals, third-party valuation agents and other data as may be acquired and analyzed by the Company.



Under the market approach, the Company
typically uses the enterprise value methodology to determine the fair value of an investment. There is no one methodology to estimate
enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values,
from which the Company derives a single estimate of enterprise value. In estimating the enterprise value of a portfolio company,
the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples,
the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables,
applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio
company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values
of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”),
cash flows, net income, revenues, or in limited cases, book value.



Under the income approach, the Company
prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio
company. In determining the fair value under the income approach, the Company considers various factors including, but not limited
to, the portfolio company’s projected financial results, applicable market trading and transaction comparables, applicable
market yields and leverage levels, the markets in which the portfolio company does business, and comparisons of financial ratios
of peer companies that are public.



Secured Borrowings



The Company has elected the fair value
option under ASC Topic 825 — Financial Instruments (“ASC Topic 825”) relating to accounting for
debt obligations at their fair value for its secured borrowings which arose due to partial loan sales which did not meet the criteria
for sale treatment under ASC Topic 860. The Company reports changes in the fair value of its secured borrowings within net change
in unrealized (appreciation) depreciation on secured borrowings in the consolidated statements of operations. The net gain or
loss reflects the difference between the fair value and the principal amount due on maturity.



Due to the absence of a liquid trading
market for these secured borrowings, they are valued by calculating the net present value of the future expected cash flow streams
using an appropriate risk-adjusted discount rate model. The discount rate considers projected performance of the related loan
investment, applicable market yields and leverage levels, credit quality, prepayment penalties and comparable company analysis.
The Company consults with an independent valuation firm relative to the fair value of its secured borrowings at least once in
every calendar year.





18







Fair Value Disclosures



The following table presents fair value
measurements of investments and secured borrowings, by major class, as of March 31, 2016, according to the fair value hierarchy:



|                     |  | Fair Value Measurements |  
|-------------------- |  | ----------------------- | -
|                     |  | Level 1                 |  
|Investments:         |  |                         |  
|Senior secured loans |  | $                       | —
|Unitranche loans     |  |                         | —
|Junior secured loans |  |                         | —
|Equity securities    |  |                         | —
|Total Investments    |  | $                       | —
|                     |  |                         |  
|Secured borrowings   |  | $                       | —



The following table presents fair value
measurements of investments and secured borrowings, by major class, as of December 31, 2015, according to the fair value
hierarchy:



|                     |  | Fair Value Measurements |  
|-------------------- |  | ----------------------- | -
|                     |  | Level 1                 |  
|Investments:         |  |                         |  
|Senior secured loans |  | $                       | —
|Unitranche loans     |  |                         | —
|Junior secured loans |  |                         | —
|Equity securities    |  |                         | —
|Total Investments    |  | $                       | —
|                     |  |                         |  
|Secured borrowings   |  | $                       | —



The following tables provide a reconciliation
of the beginning and ending balances for investments and secured borrowings that use Level 3 inputs for the three months ended
March 31, 2016 and 2015:



|                                                                           |  | Investments          |         |   |                  |  
|-------------------------------------------------------------------------- |  | -------------------- | ------- | - | ---------------- | -
|                                                                           |  | Senior secured loans |         |   | Unitranche loans |  
|Balance as of December 31, 2015                                            |  | $                    | 190,559 |   |                  | $
|Reclassifications                                                          |  |                      | 6,525   |   |                  |  
|Net change in unrealized appreciation (depreciation) on investments        |  |                      | 989     |   |                  |  
|Net realized gain (loss) on investments                                    |  |                      | —       |   |                  |  
|Purchases of
    investments and other adjustments to cost (1)             |  |                      | 18,271  |   |                  |  
|Proceeds from
    principal payments and sales on investments  (2)         |  |                      | (14,076 | ) |                  |  
|Net change in unrealized appreciation (depreciation) on secured borrowings |  |                      | —       |   |                  |  
|Proceeds from secured borrowings                                           |  |                      | —       |   |                  |  
|Repayments on secured borrowings                                           |  |                      | —       |   |                  |  
|Balance as of March 31, 2016                                               |  | $                    | 202,268 |   |                  | $



|                                                                           |  | Investments          |         |   |                  |  
|-------------------------------------------------------------------------- |  | -------------------- | ------- | - | ---------------- | -
|                                                                           |  | Senior secured loans |         |   | Unitranche loans |  
|Balance as of December 31, 2014                                            |  | $                    | 124,161 |   |                  | $
|Net change in unrealized appreciation (depreciation) on investments        |  |                      | (160    | ) |                  |  
|Net realized gain (loss) on investments                                    |  |                      | —       |   |                  |  
|Purchases of
    investments and other adjustments to cost (1)             |  |                      | 33,840  |   |                  |  
|Proceeds from
    principal payments and sales on investments  (2)         |  |                      | (9,181  | ) |                  |  
|Net change in unrealized appreciation (depreciation) on secured borrowings |  |                      | —       |   |                  |  
|Proceeds from secured borrowings                                           |  |                      | —       |   |                  |  
|Repayments on secured borrowings                                           |  |                      | —       |   |                  |  
|Balance as of March 31, 2015                                               |  | $                    | 148,660 |   |                  | $












|(1) | Includes
    purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and
    PIK interest.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Represents net
    proceeds from investments sold and principal paydowns received.                                                                         





19







The total change in unrealized
appreciation (depreciation) included in the consolidated statements of operations within net change in unrealized appreciation
(depreciation) on investments for the three months ended March 31, 2016 and 2015, attributable to Level 3 investments still held
at March 31, 2016 and 2015, was $2,067 and ($9), respectively. The total change in unrealized (appreciation) depreciation included
in the consolidated statements of operations within net change in unrealized (appreciation) depreciation on secured borrowings
for the three months ended March 31, 2016 and 2015, attributable to Level 3 investments still held at March 31, 2016 and 2015,
was $28 and $39, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or
out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2
and 3 during the three months ended March 31, 2016 and 2015.



Significant Unobservable Inputs



ASC Topic 820 requires disclosure of
quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified
as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation
(unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably
available to the Company and as such, the disclosures provided below exclude those investments valued in that manner. The tables
below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation
techniques used by the Company.



The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of March 31, 2016 were as follows:



|                         |  |            |         |     |                         |                                                              |                        |                   |                      |  |      | Range   | 
|------------------------ |  | ---------- | ------- | --- | ----------------------- | ------------------------------------------------------------ | ---------------------- | ----------------- | -------------------- |  | ---- | ------- | 
|                         |  | Fair Value |         |     | Valuation
    Technique |                                                              | Unobservable
    Input |                   | Weighted
    Average |  |      | Minimum | 
|Assets:                  |  |            |         |     |                         |                                                              |                        |                   |                      |  |      |         | 
|Senior
    secured loans |  | $          | 181,998 |     |                         | Discounted cash flow                                         |                        | EBITDA multiples  |                      |  | 6.3  | x       | 
|                         |  |            |         |     |                         |                                                              |                        | Market yields     |                      |  | 12.2 | %       | 
|Senior
    secured loans |  |            | 1,408   |     |                         | Enterprise value                                             |                        | Revenue multiples |                      |  | 0.5  | x       | 
|Senior
    secured loans |  |            | 7,438   |     |                         | Enterprise value                                             |                        | EBITDA multiples  |                      |  | 4.0  | x       | 
|Unitranche
    loans     |  |            | 50,333  |     |                         | Discounted cash flow                                         |                        | EBITDA multiples  |                      |  | 5.9  | x       | 
|                         |  |            |         |     |                         |                                                              |                        | Market yields     |                      |  | 14.1 | %       | 
|Unitranche
    loans     |  |            | 5,227   |     |                         | Combination of discounted cash flow and enterprise
    value |                        | EBITDA multiples  |                      |  | 4.5  | x       | 
|                         |  |            |         |     |                         |                                                              |                        | Market yields     |                      |  | 30.6 | %       | 
|Junior
    secured loans |  |            | 24,577  |     |                         | Discounted cash flow                                         |                        | EBITDA multiples  |                      |  | 7.3  | x       | 
|                         |  |            |         |     |                         |                                                              |                        | Market yields     |                      |  | 11.8 | %       | 
|Junior
    secured loans |  |            | 91      |     |                         | Enterprise value                                             |                        | Revenue multiples |                      |  | 0.5  | x       | 
|Equity
    securities    |  |            | 8,389   |     |                         | Discounted cash flow                                         |                        | EBITDA multiples  |                      |  | 3.8  | x       | 
|                         |  |            |         |     |                         |                                                              |                        | Market yields     |                      |  | 15.0 | %       | 
|Equity
    securities    |  |            | 12,776  |     |                         | Enterprise value                                             |                        | EBITDA multiples  |                      |  | 3.2  | x       | 
|Total
    Level 3 Assets |  | $          | 292,237 | (1) |                         |                                                              |                        |                   |                      |  |      |         | 
|                         |  |            |         |     |                         |                                                              |                        |                   |                      |  |      |         | 
|Liabilities:             |  |            |         |     |                         |                                                              |                        |                   |                      |  |      |         | 
|Secured
    borrowings   |  | $          | 2,248   |     |                         | Discounted cash flow                                         |                        | Market yields     |                      |  | 10.2 | %       | 








| | (1) | Excludes loans of
                                                                                                                                                                                         $51,231 fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is
                                                                                                                                                                                         not required.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of assets as of December 31, 2015 were as follows:



|                     |  |            |         |     |                         |                                                          |                        |                   |                      |  |      | Range   | 
|-------------------- |  | ---------- | ------- | --- | ----------------------- | -------------------------------------------------------- | ---------------------- | ----------------- | -------------------- |  | ---- | ------- | 
|                     |  | Fair Value |         |     | Valuation
    Technique |                                                          | Unobservable
    Input |                   | Weighted
    Average |  |      | Minimum | 
|Assets:              |  |            |         |     |                         |                                                          |                        |                   |                      |  |      |         | 
|Senior secured loans |  | $          | 163,078 |     |                         | Discounted cash flow                                     |                        | EBITDA multiples  |                      |  | 6.2  | x       | 
|                     |  |            |         |     |                         |                                                          |                        | Market yields     |                      |  | 12.3 | %       | 
|Senior secured loans |  |            | 1,182   |     |                         | Enterprise value                                         |                        | Revenue multiples |                      |  | 0.5  | x       | 
|Unitranche loans     |  |            | 49,620  |     |                         | Discounted cash flow                                     |                        | EBITDA multiples  |                      |  | 6.1  | x       | 
|                     |  |            |         |     |                         |                                                          |                        | Market yields     |                      |  | 13.6 | %       | 
|Unitranche loans     |  |            | 5,358   |     |                         | Combination of discounted cash flow and enterprise value |                        | EBITDA multiples  |                      |  | 4.3  | x       | 
|                     |  |            |         |     |                         |                                                          |                        | Market yields     |                      |  | 29.7 | %       | 
|Unitranche loans     |  |            | 6,526   |     |                         | Enterprise value                                         |                        | EBITDA multiples  |                      |  | 3.5  | x       | 
|Junior secured loans |  |            | 19,862  |     |                         | Discounted cash flow                                     |                        | EBITDA multiples  |                      |  | 6.8  | x       | 
|                     |  |            |         |     |                         |                                                          |                        | Market yields     |                      |  | 12.2 | %       | 
|Junior secured loans |  |            | 570     |     |                         | Enterprise value                                         |                        | Revenue multiples |                      |  | 0.5  | x       | 
|Equity securities    |  |            | 8,345   |     |                         | Discounted cash flow                                     |                        | EBITDA multiples  |                      |  | 3.8  | x       | 
|                     |  |            |         |     |                         |                                                          |                        | Market yields     |                      |  | 15.0 | %       | 
|Equity securities    |  |            | 10,709  |     |                         | Enterprise value                                         |                        | EBITDA multiples  |                      |  | 3.3  | x       | 
|Total Level 3 Assets |  | $          | 265,250 | (1) |                         |                                                          |                        |                   |                      |  |      |         | 
|                     |  |            |         |     |                         |                                                          |                        |                   |                      |  |      |         | 
|Liabilities:         |  |            |         |     |                         |                                                          |                        |                   |                      |  |      |         | 
|Secured borrowings   |  | $          | 2,476   |     |                         | Discounted cash flow                                     |                        | Market yields     |                      |  | 9.0  | %       | 












| | (1) | Excludes
loans of $75,841 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure
is not required.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------





20







The significant unobservable inputs used
in the market approach of fair value measurement of our investments are the market multiples of EBITDA or revenue of the comparable
guideline public companies. The Company selects a population of public companies for each investment with similar operations and
attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value
to EBITDA is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio
company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA of the portfolio
company (or other meaningful measure). Significant increases (decreases) in the multiple will result in an increase (decrease)
in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.



The significant unobservable input used
in the income approach of fair value measurement of our investments is the discount rate used to discount the estimated future
cash flows expected to be received from the underlying investment, which include both future principal and interest payments.
Significant increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the
investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of
the investment and comparable investments, and call provisions.



Other Financial Assets and Liabilities



ASC Topic 820 requires disclosure of
the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying
amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due
to the short maturity of such instruments. Fair value of the Company’s revolving credit facility is estimated by discounting
remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if applicable.
The Company believes that the carrying value of its revolving credit facility approximates fair value. SBA-guaranteed debentures
are carried at cost and with their longer maturity dates, fair value is estimated by discounting remaining payments using current
market rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants
to prepay the debentures. As of March 31, 2016 and December 31, 2015, the fair value of the Company’s SBA debentures using
Level 3 inputs is estimated at $40,000 and $40,000, respectively, which is the same as the Company’s carrying value of the
SBA debentures.



Note 5. Transactions with Affiliated Companies



An affiliated company is a company in
which the Company has  ownership of 5% or more of its voting securities. A controlled affiliate company is a company in which
the Company has ownership of more than 25% of its voting securities. Transactions related to our investments with affiliates for
the three months ended March 31, 2016 and 2015 were as follows:



|Portfolio Company                                      |  | Fair value at December 31, 2015 |        |  | Purchases (cost) |   |     | Sales and paydowns (cost) |  |   | PIK interest (cost) |   |  | Discount accretion |     |  | Net realized gains/ (losses) |   |    | Net unrealized gains/ (losses) |  |   | Fair value at March 31, 2016 |  |  | Interest income |       |   | Dividend income |  
|------------------------------------------------------ |  | ------------------------------- | ------ |  | ---------------- | - | --- | ------------------------- |  | - | ------------------- | - |  | ------------------ | --- |  | ---------------------------- | - | -- | ------------------------------ |  | - | ---------------------------- |  |  | --------------- | ----- | - | --------------- | -
|Non-controlled
    affiliate company investments (1) : |  |                                 |        |  |                  |   |     |                           |  |   |                     |   |  |                    |     |  |                              |   |    |                                |  |   |                              |  |  |                 |       |   |                 |  
|American Community Homes, Inc.                         |  | $                               | 11,692 |  |                  | $ | 488 |                           |  | $ | —                   |   |  | $                  | 46  |  |                              | $ | 14 |                                |  | $ | —                            |  |  | $               | 506   |   |                 | $
|Rockdale Blackhawk LLC                                 |  |                                 | 21,903 |  |                  |   | —   |                           |  |   | (1,099              | ) |  |                    | —   |  |                              |   | 45 |                                |  |   | —                            |  |  |                 | 1,662 |   |                 |  
|Rocket Dog Brands LLC                                  |  |                                 | 1,752  |  |                  |   | 194 |                           |  |   | —                   |   |  |                    | 89  |  |                              |   | —  |                                |  |   | —                            |  |  |                 | (536  | ) |                 |  
|Summit Container Corporation                           |  |                                 | 3,400  |  |                  |   | 137 |                           |  |   | (51                 | ) |  |                    | 10  |  |                              |   | 6  |                                |  |   | —                            |  |  |                 | 196   |   |                 |  
|Total non-controlled affiliate company investments     |  | $                               | 38,747 |  |                  | $ | 819 |                           |  | $ | (1,150              | ) |  | $                  | 145 |  |                              | $ | 65 |                                |  | $ | —                            |  |  | $               | 1,828 |   |                 | $
|Controlled
    affiliate company investments (1) :     |  |                                 |        |  |                  |   |     |                           |  |   |                     |   |  |                    |     |  |                              |   |    |                                |  |   |                              |  |  |                 |       |   |                 |  
|TPP Acquisition, Inc.                                  |  | $                               | 6,525  |  |                  | $ | 340 |                           |  | $ | —                   |   |  | $                  | —   |  |                              | $ | —  |                                |  | $ | —                            |  |  | $               | 573   |   |                 | $
|Total controlled affiliate company investments         |  | $                               | 6,525  |  |                  | $ | 340 |                           |  | $ | —                   |   |  | $                  | —   |  |                              | $ | —  |                                |  | $ | —                            |  |  | $               | 573   |   |                 | $



|Portfolio Company                                      |  | Fair value at December 31, 2014 |        |  | Purchases (cost) |   |        | Sales and paydowns (cost) |  |   | PIK interest (cost) |   |  | Discount accretion |    |  | Net realized gains/ (losses) |   |    | Net unrealized gains/ (losses) |  |   | Fair value at March 31, 2015 |  |  | Interest income |     |   | Dividend income |  
|------------------------------------------------------ |  | ------------------------------- | ------ |  | ---------------- | - | ------ | ------------------------- |  | - | ------------------- | - |  | ------------------ | -- |  | ---------------------------- | - | -- | ------------------------------ |  | - | ---------------------------- |  |  | --------------- | --- | - | --------------- | -
|Non-controlled
    affiliate company investments (1) : |  |                                 |        |  |                  |   |        |                           |  |   |                     |   |  |                    |    |  |                              |   |    |                                |  |   |                              |  |  |                 |     |   |                 |  
|American Community Homes, Inc.                         |  | $                               | 10,163 |  |                  | $ | —      |                           |  | $ | —                   |   |  | $                  | 38 |  |                              | $ | 10 |                                |  | $ | —                            |  |  | $               | 71  |   |                 | $
|Rockdale Blackhawk LLC                                 |  |                                 | —      |  |                  |   | 13,353 |                           |  |   | —                   |   |  |                    | —  |  |                              |   | —  |                                |  |   | —                            |  |  |                 | —   |   |                 |  
|Rocket Dog Brands LLC                                  |  |                                 | 2,454  |  |                  |   | —      |                           |  |   | —                   |   |  |                    | 53 |  |                              |   | —  |                                |  |   | —                            |  |  |                 | (71 | ) |                 |  
|Summit Container Corporation                           |  |                                 | 3,979  |  |                  |   | —      |                           |  |   | (49                 | ) |  |                    | —  |  |                              |   | 5  |                                |  |   | —                            |  |  |                 | 283 |   |                 |  
|Total non-controlled affiliate company investments     |  | $                               | 16,596 |  |                  | $ | 13,353 |                           |  | $ | (49                 | ) |  | $                  | 91 |  |                              | $ | 15 |                                |  | $ | —                            |  |  | $               | 283 |   |                 | $
|Controlled
    affiliate company investments (1) :     |  |                                 |        |  |                  |   |        |                           |  |   |                     |   |  |                    |    |  |                              |   |    |                                |  |   |                              |  |  |                 |     |   |                 |  
|TPP Acquisition, Inc.                                  |  | $                               | 6,621  |  |                  | $ | —      |                           |  | $ | —                   |   |  | $                  | 34 |  |                              | $ | 7  |                                |  | $ | —                            |  |  | $               | 15  |   |                 | $
|Total controlled affiliate company investments         |  | $                               | 6,621  |  |                  | $ | —      |                           |  | $ | —                   |   |  | $                  | 34 |  |                              | $ | 7  |                                |  | $ | —                            |  |  | $               | 15  |   |                 | $








|(1) | Includes
both loan and equity security investment transactions for these portfolio companies.
|--- | ---------------------------------------------------------------------------------------------





21







Note 6. Transactions with Related Parties



The Company has entered into an Investment
Advisory and Management Agreement with MC Advisors, under which MC Advisors, subject to the overall supervision of the Board,
provides investment advisory services to the Company. The Company pays MC Advisors a fee for its services under the Investment
Advisory and Management Agreement consisting of two components—a base management fee and an incentive fee. The base management
fee is calculated at an annual rate equal to 1.75% of invested assets (calculated as total assets excluding cash) and is payable
in arrears. Base management fees for the three months ended March 31, 2016 and 2015 was $1,500 and $1,068, respectively.



The incentive fee consists of two parts.
The first part is calculated and payable quarterly in arrears and equals 20% of “pre-incentive fee net investment income”
for the immediately preceding quarter, subject to a 2% (8% annualized) preferred return, or “hurdle,” and a “catch
up” feature. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee
in respect of preincentive fee net investment income will be payable except to the extent that 20.0% of the cumulative net increase
in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative incentive
fees accrued and/or paid for the 11 preceding calendar quarters. Therefore, any ordinary income incentive fee that is payable
in a calendar quarter will be limited to the lesser of (1) 20% of the amount by which preincentive fee net investment income for
such calendar quarter exceeds the 2.0% hurdle, subject to the “catch-up” provision, and (2) (x) 20% of the cumulative
net increase in net assets resulting from operations for the then current and 11 preceding calendar quarters minus (y) the cumulative
incentive fees accrued and/or paid for the 11 preceding calendar quarters. For the foregoing purpose, the “cumulative net
increase in net assets resulting from operations” is the sum of preincentive fee net investment income, realized gains and
losses and unrealized appreciation and depreciation for the then current and 11 preceding calendar quarters. The second part of
the incentive fee is determined and payable in arrears as of the end of each fiscal year in an amount equal to 20% of realized
capital gains, if any, on a cumulative basis from inception through the end of the year, computed net of all realized capital
losses on a cumulative basis and unrealized depreciation, less the aggregate amount of any previously paid capital gain incentive
fees.



Incentive fees for the three months ended
March 31, 2016 and 2015 were $1,740 and $1,042, respectively. Incentive fees for the three months ended March 31, 2016 consisted
of part one incentive fees (based on net investment income) of $1,505 and part two incentive fees (based upon net realized and
unrealized gains and losses, or capital gains) of $235. Incentive fees for the three months ended March 31, 2015 consisted solely
of part one incentive fees (based on net investment income) of $1,042. The Company accrues, but does not pay, a capital gains
incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net
realized gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any
excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than
20% of the sum of net realized gains (losses) plus net unrealized appreciation (depreciation).



The
Company has entered into an Administration Agreement with Monroe Capital Management Advisors, LLC (“MC Management”),
under which the Company reimburses MC Management (subject to the review and approval of the Board) for its allocable portion of
overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing
clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable
portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that
MC Management outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis,
without incremental profit to MC Management. For the three
months ended March 31, 2016 and 2015, the Company incurred $786 and $666, respectively, in administrative expenses (included within
Professional fees, Administrative service fees and General and administrative on the consolidated statements of operations) under
the Administration Agreement, of which $328 and $271, respectively, was related to MC Management overhead and salary allocation
and paid directly to MC Management. As of March 31, 2016 and December 31, 2015, $328 and $249, respectively, of expenses were
due to MC Management under this agreement and are included in accounts payable and accrued expenses on the consolidated statements
of assets and liabilities.





22







The Company has entered into a license
agreement with Monroe Capital LLC under which Monroe Capital LLC has agreed to grant the Company a non-exclusive, royalty-free
license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Company
will have a right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as the Advisor
or one of its affiliates remains its investment advisor. Other than with respect to this limited license, the Company has no legal
right to the “Monroe Capital” name.



As of March 31, 2016 and December 31,
2015, the Company had accounts payable to members of the Board of $35 and $74, respectively, representing accrued and unpaid fees
for their services.



Note 7. Borrowings



Revolving Credit Facility: As of
March 31, 2016 and December 31, 2015, we had $134,700 and $123,700 outstanding, respectively, under our revolving credit facility
with ING Capital LLC, as agent, to finance the purchase of our assets. As of March 31, 2016, the maximum amount we were able to
borrow under the revolving credit facility is $160,000 and this maximum borrowing can be increased to $300,000 pursuant to an
accordion feature (subject to maintaining 200% asset coverage, as defined by the 1940 Act). The maturity date on the facility
is December 14, 2020.



The revolving credit facility is secured
by a lien on all of our assets, including cash on hand, but excluding the assets of our wholly-owned subsidiary, MRCC SBIC. Our
ability to borrow under the revolving credit facility is subject to availability under a defined borrowing base, which varies
based on our portfolio characteristics and certain eligibility criteria and concentration limits, as well as required valuation
methodologies. We may make draws under the revolving credit facility to make or purchase additional investments through December
2019 and for general working capital purposes until the maturity date of the revolving credit facility. Borrowings under the revolving
credit facility bear interest, at our election, at an annual rate of LIBOR (one-month, two-month, three-month or six-month at
our discretion based on the term of the borrowing) plus 3.00%, with a further step-down to LIBOR plus 2.75% when net worth exceeds
$225,000 or at a daily rate equal to 2.00% per annum plus the greater of the prime interest rate, the federal funds rate plus
0.5% or LIBOR plus 1.0%. In addition to the stated interest rate on borrowings under the revolving credit facility, we are required
to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is
less than 65% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit
facility if the unused portion of the facility is greater than or equal to 65% of the then available maximum borrowing. As of
March 31, 2016 and December 31, 2015, all of the outstanding borrowings were accruing at an interest rate of 3.4% and 3.4% (based
on one-month LIBOR), respectively. The weighted average interest rate of our revolving credit facility borrowings (excluding debt
issuance costs) for the three months ended March 31, 2016 and March 31, 2015 was 3.5% and 3.5%, respectively. The weighted average
fee rate on our unused portion of the revolving credit facility for the three months ended March 31, 2016 and March 31, 2015 was
0.5% and 0.5%, respectively.



The
Company’s ability to borrow under the revolving credit facility is subject to availability under the borrowing
base, which permits us to borrow up to 70% of the fair market value of our portfolio company investments depending on the
type of the investment we hold and whether the investment is quoted. Our ability to borrow is also subject to certain
concentration limits, and our continued compliance with the representations, warranties and covenants given by us under the
facility. The revolving credit facility contains certain financial and restrictive covenants, including, but not limited to,
our maintenance of: (1) a minimum consolidated total net assets at least equal to the greater of (a) 40% of the consolidated
total assets on the last day of each quarter or (b) $120.0 million plus 65% of the net proceeds to us from sales of
our securities after December 14, 2015; (2) a ratio of total assets (less total liabilities other than indebtedness) to
total indebtedness of not less than 2.1 times; and (3) a ratio of earnings before interest and taxes to interest expense of
at least 2.5 times. The credit facility also requires us to undertake customary indemnification obligations with respect to
ING Capital LLC and other members of the lending group and to reimburse the lenders for expenses associated with entering
into the credit facility. The revolving credit facility also has customary provisions regarding events of default,
including events of default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC
Advisors, failure to comply with financial and negative covenants, and failure to maintain our relationship with MC Advisors.
If we incur an event of default under the revolving credit facility and fail to remedy such default under any applicable
grace period, if any, then the entire revolving credit facility could become immediately due and payable, which would
materially and adversely affect our liquidity, financial condition, results of operations and cash flows.



The Company’s revolving credit facility
also imposes certain conditions that may limit the amount of our distributions to stockholders. Distributions payable in our common
stock under the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock
are generally limited to 115% of the amount of distributions required to maintain our status as a RIC.



SBA Debentures: On February 28,
2014, the Company’s wholly-owned subsidiary, MRCC SBIC received a license from the SBA to operate as a SBIC under Section
301(c) of the Small Business Investment  Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.





23







The SBIC license allows MRCC SBIC to
obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a leverage commitment by the SBA and other customary
procedures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have
a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be
prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis (pooling date)
at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC
SBIC’s assets over the Company’s stockholders in the event the Company liquidates MRCC SBIC or the SBA exercises its
remedies upon an event of default. As of March 31, 2016 and December 31, 2015, MRCC SBIC had $20,000 in regulatory capital and
leveragable capital and $40,000 in SBA-guaranteed debentures outstanding.



As of March 31, 2016 and
December 31, 2015, MRCC SBIC had the following SBA-guaranteed debentures outstanding:





|http:||content.edgar-online.com|edgar_conv_img|2016|03|04|0001144204-16-085951_SPACER.GIF |  | http:||content.edgar-online.com|edgar_conv_img|2016|03|04|0001144204-16-085951_SPACER.GIF |     |   | http:||content.edgar-online.com|edgar_conv_img|2016|03|04|0001144204-16-085951_SPACER.GIF |  
|----------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | --- | - | ----------------------------------------------------------------------------------------- | -
|Maturity Date                                                                             |  | Interest Rate                                                                             |     |   | Amount                                                                                    |  
|September 2024                                                                            |  |                                                                                           | 3.4 | % |                                                                                           | $
|March 2025                                                                                |  |                                                                                           | 3.3 | % |                                                                                           |  
|March 2025                                                                                |  |                                                                                           | 2.9 | % |                                                                                           |  
|September 2025                                                                            |  |                                                                                           | 3.6 | % |                                                                                           |  
|Total                                                                                     |  |                                                                                           |     |   |                                                                                           | $



SBA
regulations currently limit the amount that an individual SBIC may borrow to a maximum of $150,000 when it has at least
$75,000 in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the
SBA subsequent to licensing. The SBA also historically limited a related group of SBICs (commonly referred to as a
“family of funds”) to a maximum of $225,000 in total borrowings. On December 18, 2015, this family of funds
limitation was raised to $350,000 in total borrowings. As the Company has other affiliated SBICs already in operation, MRCC
SBIC was historically limited to a maximum of $40,000 in borrowings. Pursuant to the increase in the family of funds
limitation, the Company submitted a commitment application to the SBA and on April 13, 2016 were approved for $75,000 in
additional SBA-guaranteed debentures for MRCC SBIC.  In order for MRCC SBIC to gain access to the entirety of the $75,000 in
SBA-guaranteed debentures, the Company would be required to contribute to MRCC SBIC an additional $37,500 in leveragable and
regulatory capital.



Secured Borrowings:Certain
partial loan sales do not qualify for sale accounting under ASC Topic 860 because these sales do not meet the definition of a
“participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or
other partial loan sales which do not meet the definition of a participating interest remain as an investment on the accompanying
consolidated statements of assets and liabilities and the portion sold is recorded as a secured borrowing in the liabilities section
of the consolidated statements of assets and liabilities. For these partial loan sales, the interest earned on the entire loan
balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded
within “interest and other debt financing expenses” in the accompanying consolidated statements of operations.



As of March 31, 2016, secured borrowings
at fair value totaled $2,248 and the fair value of the loans that are associated with these secured borrowings was $11,416. As
of December 31, 2015, secured borrowings at fair value totaled $2,476 and the fair value of the loans that are associated with
these secured borrowings was $11,803. These secured borrowings were created as a result of the Company’s completion of partial
loan sales of three unitranche loan assets totaling $10,000 during the year ended December 31, 2013 that did not meet the definition
of a “participating interest.” As a result, sale treatment was not allowed and these partial loan sales were treated
as secured borrowings. No such partial loan sales occurred during the year ended December 31, 2015 and the three months ended
March 31, 2016. During the three months ended March 31, 2016 and 2015, repayments on secured borrowings totaled $200 and $150,
respectively. The weighted average interest rate on our secured borrowings was approximately 5.9% as of March 31, 2016.



Components of interest expense:The
components of the Company’s interest expense and other debt financing expenses are as follows:



|                                                 |  | Three months ended March 31, |      
|------------------------------------------------ |  | ---------------------------- | -----
|                                                 |  | 2016                         |      
|Interest expense – revolving credit facility     |  | $                            | 1,128
|Interest expense – SBA debentures                |  |                              | 326  
|Amortization of deferred financing costs         |  |                              | 182  
|Interest expense – secured borrowings            |  |                              | 37   
|Other                                            |  |                              | 18   
|Total interest and other debt financing expenses |  | $                            | 1,691





24







Note 8. Distributions



The Company’s distributions are
recorded on the record date. The following table summarizes distributions declared during the three months ended March 31, 2016
and 2015:



|Date Declared                      |  | Record Date    |      | Payment Date   |  | Amount Per Share |       |  | Cash Distribution |   |       | DRIP Shares Issued |  |   | DRIP Shares Value |  |  | DRIP Shares Repurchased in the Open Market |        |  | Cost of DRIP Shares Repurchased |  
|---------------------------------- |  | -------------- | ---- | -------------- |  | ---------------- | ----- |  | ----------------- | - | ----- | ------------------ |  | - | ----------------- |  |  | ------------------------------------------ | ------ |  | ------------------------------- | -
|Three months ended March 31, 2016: |  |                |      |                |  |                  |       |  |                   |   |       |                    |  |   |                   |  |  |                                            |        |  |                                 |  
|March 4, 2016                      |  | March 15, 2016 |      | March 31, 2016 |  | $                | 0.35  |  |                   | $ | 4,553 |                    |  |   | —                 |  |  | $                                          | —      |  |                                 |  
|Total distributions declared       |  | $              | 0.35 |                |  | $                | 4,553 |  |                   |   | —     |                    |  | $ | —                 |  |  |                                            | 20,144 |  |                                 | $
|                                   |  |                |      |                |  |                  |       |  |                   |   |       |                    |  |   |                   |  |  |                                            |        |  |                                 |  
|Three months ended March 31, 2015: |  |                |      |                |  |                  |       |  |                   |   |       |                    |  |   |                   |  |  |                                            |        |  |                                 |  
|March 6, 2015                      |  | March 20, 2015 |      | March 31, 2015 |  | $                | 0.35  |  |                   | $ | 3,371 |                    |  |   | —                 |  |  | $                                          | —      |  |                                 |  
|Total distributions declared       |  | $              | 0.35 |                |  | $                | 3,371 |  |                   |   | —     |                    |  | $ | —                 |  |  |                                            | 16,057 |  |                                 | $



Note 9. Stock Issuances and Repurchases



Stock
Issuances:   On February 6, 2015, the Company entered into an ATM securities offering program with MLV &
Co. LLC and JMP Securities LLC through which the Company may sell, by means of ATM offerings from time to time, up to $50,000
of the Company’s common stock. During the three months ended March 31, 2016, the Company did not sell any shares of its
common stock. During the three months ended March 31, 2015, the Company sold 114,451 shares at an average price of $14.75 per
share for aggregate proceeds, net of offering and underwriting costs, of $1,684.



Note 10. Commitments and Contingencies



Commitments: As of March 31, 2016
and December 31, 2015, the Company had $20,526 and $20,703, respectively, in outstanding commitments to fund investments under
undrawn revolvers, capital expenditure loans and delayed draw commitments.



Indemnifications:In the normal
course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties
that provide general indemnifications. The Company’s maximum exposure under these agreements is unknown, as these involve
future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations
under these indemnifications to be remote.



Concentration of credit and counterparty
risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms
of the contract. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The
risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s
policy to review, as necessary, the credit standing of each counterparty.



Market risk: The Company’s
investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes.
Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.



Legal proceedings: In the normal
course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing
operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently
aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial
statements.





25







Note 11.
Financial Highlights



The following is a schedule of financial
highlights for the three months ended March 31, 2016 and 2015:



|                                                                                   |  | March 31, 2016 |            |   | March 31, 2015 |  
|---------------------------------------------------------------------------------- |  | -------------- | ---------- | - | -------------- | -
|Per share data:                                                                    |  |                |            |   |                |  
|Net asset value at beginning of period                                             |  | $              | 14.19      |   |                | $
|Net investment
    income (1)                                                      |  |                | 0.44       |   |                |  
|Net
    gain (loss) on investments and secured borrowings (1)                      |  |                | 0.17       |   |                |  
|Net increase
    in net assets from operations (1)                                 |  |                | 0.61       |   |                |  
|Stockholder
    distributions (2)                                                  |  |                | (0.35      | ) |                |  
|Other
    (3)                                                                      |  |                | —          |   |                |  
|Net asset value at end of period                                                   |  | $              | 14.45      |   |                | $
|                                                                                   |  |                |            |   |                |  
|Net assets at end of period                                                        |  | $              | 187,926    |   |                | $
|Shares outstanding at end of period                                                |  |                | 13,008,007 |   |                |  
|Per share market value at end of period                                            |  | $              | 13.85      |   |                | $
|Total return
    based on market value (4)                                         |  |                | 8.50       | % |                |  
|Total return
    based on net asset value (5)                                      |  |                | 4.30       | % |                |  
|Ratio/Supplemental data:                                                           |  |                |            |   |                |  
|Ratio of
    net investment income to average net assets  (6)                      |  |                | 15.32      | % |                |  
|Ratio of
    interest and other debt financing expenses to average net assets  (7) |  |                | 3.65       | % |                |  
|                                                                                   |  |                |            |   |                |  
|Ratio of
    expenses (without incentive fees) to average net assets  (7)          |  |                | 8.67       | % |                |  
|Ratio
    of incentive fees to average net assets  (8)                             |  |                | 0.93       | % |                |  
|Ratio
    of total expenses to average net assets  (6)                             |  |                | 9.60       | % |                |  
|Average debt outstanding                                                           |  | $              | 162,085    |   |                | $
|Average debt outstanding per share                                                 |  | $              | 12.46      |   |                | $
|Portfolio
    turnover  (8)                                                        |  |                | 7.69       | % |                |  










| | (1) | Calculated
using the weighted average shares outstanding during the period.
| | --- | ---------------------------------------------------------------------------

| | (2) | Management
monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return
of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s
distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s
stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of
such distributions were determined as of March 31, 2016 and 2015, none of the distributions would have been characterized as a
tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated
with reference to net investment income for financial reporting purposes.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (4) | Total
return based on market value is calculated assuming a purchase of common shares at the market value on the first day and a sale
at the market value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation
to be reinvested at prices obtained under the Company’s dividend reinvestment plan. Total return based on market value does
not reflect brokerage commissions. Return calculations are not annualized.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Total
return based on net asset value is calculated by dividing the net increase in net assets from operations by the net asset value
per share at the beginning of the period (excluding the impact of dividends paid). Total returns based on net asset value covering
less than a full period are not annualized.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Ratios
are annualized. Incentive fees included within the ratio are not annualized.
| | --- | -----------------------------------------------------------------------------------

| | (7) | Ratios
are annualized.
| | --- | ----------------------

| | (8) | Ratios
are not annualized.
| | --- | --------------------------





26







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



Except as otherwise specified, references
to “we,” “us,” and “our” refer to Monroe Capital Corporation and its consolidated subsidiaries.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
our consolidated financial statements and related notes appearing in our annual report on Form 10-K (the “Annual Report”)
for the year ended December 31, 2015, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 4,
2016. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements
and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly
Report”).



FORWARD-LOOKING STATEMENTS



This Quarterly Report, including Management’s
Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking
statements, which relate to future events or our future performance or future financial condition. These forward-looking statements
are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry,
our beliefs and our assumptions. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties,
including statements as to:



| | · | our
future operating results;
| | - | -----------------------------



| | · | our
    business prospects and the prospects of our prospective portfolio companies;
| | - | ------------------------------------------------------------------------------------



| | · | the
    dependence of our future success on the general economy and its impact on the industries in which we invest;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | the
    impact of a protracted decline in the liquidity of credit markets on our business;
| | - | ------------------------------------------------------------------------------------------



| | · | the
    impact of increased competition;
| | - | ----------------------------------------



| | · | the
    impact of fluctuations in interest rates on our business and our portfolio companies;
| | - | ---------------------------------------------------------------------------------------------



| | · | our
    contractual arrangements and relationships with third parties;
| | - | ----------------------------------------------------------------------



| | · | the
    valuation of our investments in portfolio companies, particularly those having no liquid trading market;
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | the
    ability of our prospective portfolio companies to achieve their objectives;
| | - | -----------------------------------------------------------------------------------



| | · | our
    expected financings and investments;
| | - | --------------------------------------------



| | · | the
    adequacy of our cash resources and working capital;
| | - | -----------------------------------------------------------



| | · | the
    ability of our Monroe Capital BDC Advisors, LLC (“MC Advisors”) to locate suitable investments for us and to monitor
    our investments; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the
    impact of future legislation and regulation on our business and our portfolio companies.
| | - | ------------------------------------------------------------------------------------------------



We use words such as “anticipates,”
“believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,”
“targets,” “expects” and similar expressions to identify forward-looking statements. The forward looking
statements contained in this Quarterly Report involve risks and uncertainties. Our actual results could differ materially from
those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I—Item
1A. Risk Factors” in our Annual Report and “Part II—Item 1A. Risk Factors” in this Quarterly
Report.



Although we believe that the assumptions
on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and
as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include
our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional
capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly
Report should not be regarded as a representation by us that our plans and objectives will be achieved.



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





27







Overview



Monroe Capital Corporation is an externally
managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company
(“BDC”) under the 1940 Act. In addition, for tax purposes, we have elected to be treated as a regulated investment
company (“RIC”) under the subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).
We were incorporated under the Maryland General Corporation Law on February 9, 2011. We are a specialty finance company focused
on providing financing solutions primarily to lower middle-market companies in the United States. We provide customized financing
solutions focused primarily on senior secured, junior secured and unitranche (a combination of senior secured and junior secured
debt in the same facility) debt and, to a lesser extent, unsecured subordinated debt and equity, including equity co-investments
in preferred and common stock, and warrants.



Our shares are currently listed on the
NASDAQ Global Select Market under the symbol “MRCC”.



Our investment objective is to maximize
the total return to our stockholders in the form of current income and capital appreciation through investment in senior, unitranche
and junior secured debt and, to a lesser extent, subordinated debt and equity investments. We seek to use our extensive leveraged
finance origination infrastructure and broad expertise in sourcing loans to invest in primarily senior, unitranche and junior
secured debt of middle-market companies. Our investments in senior, unitranche, junior secured debt and other investments generally
will range between $2.0 million and $18.0 million each, although this investment size may vary proportionately with the size of
our capital base. As of March 31, 2016, our portfolio included approximately 58.9% senior secured debt, 16.2% unitranche secured
debt, 18.8% junior secured debt and 6.1% equity securities, compared to December 31, 2015, when our portfolio consisted of 55.9%
senior secured debt, 20.0% unitranche secured debt, 18.6% junior secured debt and 5.5% equity securities. We expect that the companies
in which we invest may be leveraged, often as a result of leveraged buy-outs or other recapitalization transactions, and, in certain
cases, will not be rated by national ratings agencies. If such companies were rated, we believe that they would typically receive
a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies.



While our primary focus is to maximize
current income and capital appreciation through debt investments in thinly traded or private U.S. companies, we may invest a portion
of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include
investments in high-yield bonds, distressed debt, private equity or securities of public companies that are not thinly traded
and securities of middle-market companies located outside of the United States. We expect that these public companies generally
will have debt securities that are non-investment grade.



On
February 28, 2014, our wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”), a
Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a
Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment  Act of 1958.
MRCC SBIC commenced operations on September 16, 2013. As of March 31, 2016, MRCC SBIC had $20.0 million in regulatory
and leveragable capital and $40.0 million in SBA-guaranteed debentures outstanding. On April 13, 2016, MRCC SBIC was approved
by the SBA for an additional $75.0 million in SBA-guaranteed debentures. See “SBA Debentures” below for
more information.



Investment income



We generate interest income on
the debt investments in portfolio company investments that we originate or acquire. Our debt investments, whether in the form
of senior, junior or unitranche secured debt, typically have an initial term of three to seven years and bear interest at a fixed
or floating rate. In some instances we receive payments on our debt investment based on scheduled amortization of the outstanding
balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. In some cases,
our investments provide for deferred interest of payment-in-kind (“PIK”) interest. In addition, we may generate revenue
in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance
and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete
or amortize such amounts as interest income. We record prepayment premiums and prepayment gains (losses) on loans as interest
income. Interest and dividend income is recorded on the accrual basis to the extent we expect to collect such amounts. In addition,
we also generate dividend income on preferred equity securities, common equity securities and LLC interests in accordance with
our revenue recognition policies.



Expenses



Our primary operating expenses include
the payment of fees to MC Advisors under the Investment Advisory and Management Agreement (management and incentive fees), and
the payment of fees to Monroe Capital Management Advisors, LLC (“MC Management”) for our allocable portion of overhead
and other expenses under the Administration Agreement and other operating costs. See Note 6 to our consolidated financial statements
and “Related Party Transactions” below for additional information on our Investment Advisory and Management
Agreement and Administration agreement. Our expenses also include interest expense on our revolving credit facility, our SBA-guaranteed
debentures and our secured borrowings. We bear all other out-of-pocket costs and expenses of our operations and transactions.





28







Net gain (loss) on investments and secured borrowings



We recognize realized gains or losses
on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment or derivative
instrument without regard to unrealized gains or losses previously recognized. We record current period changes in fair value
of investments and secured borrowings within net change in unrealized appreciation (depreciation) on investments and net change
in unrealized (appreciation) depreciation on secured borrowings, respectively, in the consolidated statements of operations.



Portfolio and Investment Activity



During
the three months ended March 31, 2016, we invested $4.9 million in one new portfolio company and $21.4 million in 13
existing portfolio companies and had $26.8 million in aggregate amount of sales and principal repayments, resulting in net
repayments of $0.5 million for the period.



During
the three months ended March 31, 2015, we invested $30.5 million in four new portfolio companies and $5.9 million in five
existing portfolio companies and had $17.7 million in aggregate amount of sales and principal repayments, resulting in net
investments of $18.7 million for the period.



The following table shows the composition
of the investment portfolio (in thousands) and associated yield data:



|                     |  | March 31, 2016 |        
|-------------------- |  | -------------- | -------
|                     |  | Fair Value     |        
|Senior secured loans |  | $              | 202,268
|Unitranche loans     |  |                | 55,560 
|Junior secured loans |  |                | 64,475 
|Equity securities    |  |                | 21,165 
|Total                |  | $              | 343,468



|                     |  | December 31, 2015 |        
|-------------------- |  | ----------------- | -------
|                     |  | Fair Value        |        
|Senior secured loans |  | $                 | 190,559
|Unitranche loans     |  |                   | 68,090 
|Junior secured loans |  |                   | 63,388 
|Equity securities    |  |                   | 19,054 
|Total                |  | $                 | 341,091










| | (1) | Based
upon the par value of our debt investments and the cost basis of our preferred equity investments.
| | --- | --------------------------------------------------------------------------------------------------------



The following table shows the portfolio
composition by industry grouping at fair value (dollars in thousands):



|                                          |  | March 31, 2016            |         |  | December 31, 2015             | 
|----------------------------------------- |  | ------------------------- | ------- |  | ----------------------------- | 
|                                          |  | Investments at Fair Value |         |  | Percentage of Total Portfolio | 
|Healthcare & Pharmaceuticals              |  | $                         | 48,938  |  |                               | 
|Consumer Goods: Non-Durable               |  |                           | 47,936  |  |                               | 
|Services: Business                        |  |                           | 30,877  |  |                               | 
|Hotels, Gaming & Leisure                  |  |                           | 30,239  |  |                               | 
|Services: Consumer                        |  |                           | 26,653  |  |                               | 
|Banking, Finance, Insurance & Real Estate |  |                           | 20,631  |  |                               | 
|Construction & Building                   |  |                           | 19,693  |  |                               | 
|Media: Broadcasting & Subscription        |  |                           | 18,787  |  |                               | 
|Retail                                    |  |                           | 17,753  |  |                               | 
|High Tech Industries                      |  |                           | 15,798  |  |                               | 
|Aerospace & Defense                       |  |                           | 11,698  |  |                               | 
|Energy: Oil & Gas                         |  |                           | 8,796   |  |                               | 
|Metals & Mining                           |  |                           | 6,998   |  |                               | 
|Media: Advertising, Printing & Publishing |  |                           | 6,718   |  |                               | 
|Beverage, Food & Tobacco                  |  |                           | 5,286   |  |                               | 
|Automotive                                |  |                           | 5,227   |  |                               | 
|Media: Diversified & Production           |  |                           | 4,875   |  |                               | 
|Wholesale                                 |  |                           | 4,681   |  |                               | 
|Consumer Goods: Durable                   |  |                           | 4,186   |  |                               | 
|Chemicals, Plastics & Rubber              |  |                           | 4,000   |  |                               | 
|Containers, Packaging & Glass             |  |                           | 3,698   |  |                               | 
|Total                                     |  | $                         | 343,468 |  |                               | 





29







Portfolio Asset Quality



MC Advisors’ portfolio management
staff closely monitors all credits, with senior portfolio managers covering agented and more complex investments. MC Advisors
segregates our capital markets investments by industry. The MC Advisors’ monitoring process and projections developed by
Monroe Capital both have daily, weekly, monthly and quarterly components and related reports, each to evaluate performance against
historical, budget and underwriting expectations. MC Advisors’ analysts will monitor performance using standard industry
software tools to provide consistent disclosure of performance. MC Advisors also monitors our investment exposure using a proprietary
trend analysis tool. When necessary, MC Advisors will update our internal risk ratings, borrowing base criteria and covenant compliance
reports.



As part of the monitoring process, MC
Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal proprietary
system that uses the categories listed below, which we refer to as MC Advisors’ investment performance rating. For any investment
rated in grades 3, 4 or 5, MC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee,
summarizing current operating results and material impending events and suggesting recommended actions. MC Advisors monitors and,
when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation
process, MC Advisors reviews these investment ratings on a quarterly basis, and our board of directors (the “Board”)
reviews and affirms such ratings. A definition of the rating system follows:



|Investment
        Performance
        Risk Rating |  | Summary
    Description                                                                                                                                                                                                                                                                                                                                                                                             
|-------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Grade 1                                            |  | Includes investments
    exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating
    trends and risk factors are generally positive.                                                                                                                                                                                                            
|                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Grade 2                                            |  | Includes investments
    exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing
    as expected or the risk factors are neutral to positive.                                                                                                                                                                                             
|                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Grade 3                                            |  | Includes investments
    performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The
    issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.                                                                                                                                                 
|                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Grade 4                                            |  | Includes an issuer
    performing materially below expectations and indicates that the issuer’s risk has increased materially since origination.
    In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but
    generally not more than six months past due). For grade 4 investments, we intend to increase monitoring of the issuer.       
|                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                     
|Grade 5                                            |  | Indicates that
    the issuer is performing substantially below expectations and the investment risk has substantially increased since origination.
    Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are
    not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we expect to recover.



Our investment performance risk ratings
do not constitute any rating of investments by a nationally recognized statistical rating organization or reflect or represent
any third-party assessment of any of our investments.



In the event of a delinquency or a decision
to rate an investment grade 4 or grade 5, the applicable analyst, in consultation with a member of the investment committee, will
develop an action plan. Such a plan may require a meeting with the borrower’s management or the lender group to discuss
reasons for the default and the steps management is undertaking to address the under-performance, as well as required amendments
and waivers that may be required. In the event of a dramatic deterioration of a credit, MC Advisors intends to form a team or
engage outside advisors to analyze, evaluate and take further steps to preserve its value in the credit. In this regard, we would
expect to explore all options, including in a private equity sponsored investment, assuming certain responsibilities for the private
equity sponsor or a formal sale of the business with oversight of the sale process by us. Several of Monroe Capital’s professionals
are experienced in running work-out transactions and bankruptcies.





30







The following table shows the distribution
of our investments on the 1 to 5 investment performance rating scale as of March 31, 2016 (dollars in thousands):



|Investment Performance Rating |  | Investments at Fair Value |         |  | Percentage of Total Investments | 
|----------------------------- |  | ------------------------- | ------- |  | ------------------------------- | 
|1                             |  | $                         | —       |  |                                 | 
|2                             |  |                           | 304,963 |  |                                 | 
|3                             |  |                           | 31,067  |  |                                 | 
|4                             |  |                           | 7,438   |  |                                 | 
|5                             |  |                           | —       |  |                                 | 
|Total                         |  | $                         | 343,468 |  |                                 | 



The following table shows the distribution
of our investments on the 1 to 5 investment performance rating scale as of December 31, 2015 (dollars in thousands):



|Investment Performance Rating |  | Investments at Fair Value |         |  | Percentage of Total Investments | 
|----------------------------- |  | ------------------------- | ------- |  | ------------------------------- | 
|1                             |  | $                         | —       |  |                                 | 
|2                             |  |                           | 315,358 |  |                                 | 
|3                             |  |                           | 19,208  |  |                                 | 
|4                             |  |                           | 6,525   |  |                                 | 
|5                             |  |                           | —       |  |                                 | 
|Total                         |  | $                         | 341,091 |  |                                 | 



Results of Operations



Operating
results  were as follows (dollars in thousands):



|                                                                           |  | Three months ended March 31, |       
|-------------------------------------------------------------------------- |  | ---------------------------- | ------
|                                                                           |  | 2016                         |       
|Total investment income                                                    |  | $                            | 11,539
|Total expenses                                                             |  |                              | 5,752 
|Net investment income                                                      |  |                              | 5,787 
|Net realized gain (loss) on investments                                    |  |                              | 587   
|Net change in unrealized appreciation (depreciation) on investments        |  |                              | 1,542 
|Net change in unrealized (appreciation) depreciation on secured borrowings |  |                              | 28    
|Net increase (decrease) in net assets resulting from operations            |  | $                            | 7,944 



Investment Income



The composition of our investment income
was as follows (dollars in thousands):



|                                                   |  | Three months ended March 31, |       
|-------------------------------------------------- |  | ---------------------------- | ------
|                                                   |  | 2016                         |       
|Interest income                                    |  | $                            | 8,604 
|Dividend income                                    |  |                              | 1,862 
|Fee income                                         |  |                              | 331   
|Prepayment gain (loss)                             |  |                              | 377   
|Accretion of discounts and amortization of premium |  |                              | 365   
|Total investment income                            |  | $                            | 11,539



The increase in investment income
of $3.5 million during the three months ended March 31, 2016, as compared to the three months ended March 31, 2015, is primarily
due to increases in average outstanding loan balances and increases in dividend income.





31







Operating Expenses



The composition of our operating expenses
was as follows (dollars in thousands):



|                                           |  | Three months ended March 31, |      
|------------------------------------------ |  | ---------------------------- | -----
|                                           |  | 2016                         |      
|Interest and other debt financing expenses |  | $                            | 1,691
|Base management fees                       |  |                              | 1,500
|Incentive fees                             |  |                              | 1,740
|Professional fees                          |  |                              | 207  
|Administrative service fees                |  |                              | 328  
|General and administrative expenses        |  |                              | 251  
|Directors fees                             |  |                              | 35   
|Total operating expenses                   |  | $                            | 5,752



The composition of our interest and other
debt financing expenses was as follows (dollars in thousands):



|                                                 |  | Three months ended March 31, |      
|------------------------------------------------ |  | ---------------------------- | -----
|                                                 |  | 2016                         |      
|Interest expense – revolving credit facility     |  | $                            | 1,128
|Interest expense – SBA debentures                |  |                              | 326  
|Amortization of deferred financing costs         |  |                              | 182  
|Interest expense – secured borrowings            |  |                              | 37   
|Other                                            |  |                              | 18   
|Total interest and other debt financing expenses |  | $                            | 1,691



The increase in expenses of $1.8 million
during the three months ended March 31, 2016, as compared to the three months ended March 31, 2015, is primarily due to an increase
in base management fees due to the growth in invested assets and increased incentive fees resulting from improvement in performance.
Increases in interest expense also contributed to the increase in expenses during the three months ended March 31, 2016 as a result
of additional borrowings (including SBA-guaranteed debentures) required to support the growth of the portfolio.



Net Realized Gain (Loss) on Investments



During
the three months ended March 31, 2016 and 2015, we had sales of investments of $0.6 million and zero, respectively, resulting
in net realized gain (loss) on investments of $0.6 million and zero of realized gains (losses), respectively.



Net Change in Unrealized Appreciation (Depreciation)
on Investments and Secured Borrowings



For
the three months ended March 31, 2016 and 2015, our investments had $1.5 million and ($0.3) million of net change in
unrealized appreciation (depreciation), respectively. For the three months ended March 31, 2016 and 2015, our secured
borrowings had $0.03 million and $0.04 million of net change in unrealized (appreciation) depreciation, respectively.



Net Increase (Decrease) in Net Assets Resulting from
Operations



For the three months ended March 31,
2016 and 2015, the net increase in net assets from operations was $7.9 million and $3.9 million, respectively. Based on the weighted
average shares of common stock outstanding for the three months ended March 31, 2016 and 2015, our per share net increase in net
assets resulting from operations was $0.61 and $0.41, respectively. The $4.1 million increase during the three months ended
March 31, 2016, as compared to three months ended March 31, 2015, is the result of a $1.6 million increase in net investment income
primarily due to portfolio growth and increases in dividend income and a $2.5 million increase in net gain (loss) on investments
and secured borrowings, primarily due to net unrealized gains on the mark-to-market of our portfolio of investments.



Liquidity and Capital Resources



As of March 31, 2016, we had $5.8 million
in cash, $14.7 million in cash at MRCC SBIC, $134.7 million of total debt outstanding on our revolving credit facility and $40.0
million in outstanding SBA-guaranteed debentures. We had $25.3 million available for additional borrowings on our revolving credit
facility and zero in available SBA-guaranteed debentures. See “Borrowings” below for additional information.





32







Cash Flows



For
the three months ended March 31, 2016 and 2015, we experienced a net increase (decrease) in cash of $0.5 million and ($0.8) million,
respectively. For the three months ended March 31, 2016, operating activities provided $0.4 million, primarily as a result of
net income from operations, partially offset by net cash outflows for the settlement of open trades. For the three months ended
March 31, 2015, we used $15.1 million in operating activities, primarily as a result of purchases of portfolio investments, partially
offset by sales of and principal repayments on portfolio investments. During the three months ended March 31, 2016 and 2015, investing
activities utilized $6.2 million and $3.7 million, respectively, due to changes in the restricted cash balance at MRCC SBIC.
During the three months ended March 31, 2016, we generated $6.3 from
financing activities primarily net borrowings on our revolving credit facility, partially offset by distributions to stockholders.
During the three months ended March 31, 2015, we generated $18.0 from financing activities, principally from SBA-guaranteed debenture
borrowings, net borrowings on our revolving credit facility and proceeds from shares sold under our ATM program, partially offset
by distributions to stockholders.



Capital Resources



As a BDC, we distribute substantially
all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. We intend
to generate additional cash primarily from future offerings of securities, future borrowings and cash flows from operations, including
income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds
will be to invest in portfolio companies and make cash distributions to our stockholders.



As a BDC, we are generally not permitted
to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants,
options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock
if our Board, including independent directors, determines that such sale is in the best interests of us and our stockholders,
and if our stockholders have approved such sales. On June 24, 2015, our stockholders voted to allow us to sell or otherwise issue
common stock at a price below net asset value per share for a period of one year, subject to certain limitations. As of March
31, 2016 and December 31, 2015, we had 13,008,007 and 13,008,007 shares outstanding, respectively.



On June 24, 2015, our stockholders approved
a proposal to authorize us to issue warrants, options or rights to subscribe to, convert to, or purchase our common stock in one
or more offerings. This is a standing authorization and does not require annual re-approval by our stockholders.



Stock
Issuances: On February 6, 2015, we entered into an at-the-market (“ATM”) securities offering program with
MLV & Co. LLC and JMP Securities LLC through which we may sell, by means of ATM offerings from time to time, up to $50.0 million
of our common stock. During the three months ended March 31, 2016, we did not make any sales of our common stock under the ATM
program.



Borrowings



Revolving
Credit Facility: As of March 31, 2016 and December 31, 2015, we had $134.7 million and $123.7 million outstanding, respectively,
under our revolving credit facility with ING Capital LLC, as agent, to finance the purchase of our assets. As of March 31, 2016,
the maximum amount we were able to borrow under the revolving credit facility is $160.0 million and this maximum borrowing can
be increased to $300.0 million pursuant to an accordion feature (subject to maintaining 200% asset coverage, as defined by the
1940 Act). The maturity date on the facility is December 14, 2020.



The revolving credit facility is secured
by a lien on all of our assets, including cash on hand, but excluding the assets of our wholly-owned subsidiary, MRCC SBIC. Our
ability to borrow under the revolving credit facility is subject to availability under a defined borrowing base, which varies
based on our portfolio characteristics and certain eligibility criteria and concentration limits, as well as required valuation
methodologies. We may make draws under the revolving credit facility to make or purchase additional investments through December
2019 and for general working capital purposes until the maturity date of the revolving credit facility. Borrowings under the revolving
credit facility bear interest, at our election, at an annual rate of LIBOR (one-month, two-month, three-month or six-month at
our discretion based on the term of the borrowing) plus 3.00%, with a further step-down to LIBOR plus 2.75% when net worth exceeds
$225.0 million or at a daily rate equal to 2.00% per annum plus the greater of the prime interest rate, the federal funds rate
plus 0.5% or LIBOR plus 1.0%. In addition to the stated interest rate on borrowings under the revolving credit facility, we are
required to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility
is less than 65% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit
facility if the unused portion of the facility is greater than or equal to 65% of the then available maximum borrowing. As of
March 31, 2016 and December 31, 2015, all of the outstanding borrowings were accruing at an interest rate of 3.4% and 3.4% (based
on one-month LIBOR), respectively. The weighted average interest rate of our revolving credit facility borrowings (excluding debt
issuance costs) for the three months ended March 31, 2016 and March 31, 2015 was 3.5% and 3.5%, respectively. The weighted average
fee rate on our unused portion of the revolving credit facility for the three months ended March 31, 2016 and March 31, 2015 was
0.5% and 0.5%, respectively.





33







Our
ability to borrow under the revolving credit facility is subject to availability under the borrowing base, which permits
us to borrow up to 70% of the fair market value of our portfolio company investments depending on the type of the investment
we hold and whether the investment is quoted. Our ability to borrow is also subject to certain concentration limits, and
our continued compliance with the representations, warranties and covenants given by us under the facility. The revolving
credit facility contains certain financial and restrictive covenants, including, but not limited to, our maintenance of: (1)
a minimum consolidated total net assets at least equal to the greater of (a) 40% of the consolidated total assets on the last
day of each quarter  or (b) $120.0 million plus 65% of the net proceeds to us from sales of our securities after December 14,
2015; (2) a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of not less than
2.1 times; and (3) a ratio of earnings before interest and taxes to interest expense of at least 2.5 times. The
credit facility also requires us to undertake customary indemnification obligations with respect to ING Capital LLC and
other members of the lending group and to reimburse the lenders for expenses associated with entering into the credit
facility. The revolving credit facility also has customary provisions regarding events of default, including events of
default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC Advisors, failure to comply
with financial and negative covenants, and failure to maintain our relationship with MC Advisors. If we incur an event of
default under the revolving credit facility and fail to remedy such default under any applicable grace period, if any, then
the entire revolving credit facility could become immediately due and payable, which would materially and adversely affect
our liquidity, financial condition, results of operations and cash flows.



Our revolving credit facility also imposes
certain conditions that may limit the amount of our distributions to stockholders. Distributions payable in our common stock under
the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock are generally
limited to 115% of the amount of distributions required to maintain our status as a RIC.



SBA Debentures: On February
28, 2014, our wholly-owned subsidiary, MRCC SBIC, received a license from the SBA to operate as a SBIC under Section 301(c) of
the Small Business Investment  Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.



The SBIC license allows MRCC SBIC to
obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a leverage commitment by the SBA and other customary
procedures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have
a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be
prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis (pooling date)
at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC
SBIC’s assets over our stockholders in the event we liquidate MRCC SBIC or the SBA exercises its remedies upon an event
of default. As of March 31, 2016, MRCC SBIC had $20.0 million in regulatory capital and leveragable capital and $40.0 million
in SBA-guaranteed debentures outstanding. As of December 31, 2015, MRCC SBIC had $20.0 million in regulatory and leveragable capital
and $40.0 million in SBA-guaranteed debentures outstanding.



As of March 31, 2016 and
December 31, 2015, MRCC SBIC had the following SBA-guaranteed debentures outstanding (dollars in thousands):



|               |  |               |     |   |        |  
|-------------- |  | ------------- | --- | - | ------ | -
|Maturity Date  |  | Interest Rate |     |   | Amount |  
|September 2024 |  |               | 3.4 | % |        | $
|March 2025     |  |               | 3.3 | % |        |  
|March 2025     |  |               | 2.9 | % |        |  
|September 2025 |  |               | 3.6 | % |        |  
|Total          |  |               |     |   |        | $



SBA regulations currently limit
the amount that an individual SBIC may borrow to a maximum of $150.0 million when it has at least $75.0 million in regulatory
capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing.
The SBA also historically limited a related group of SBICs (commonly referred to as a “family of funds”) to a maximum
of $225.0 million in total borrowings. On December 18, 2015, this family of funds limitation was raised to $350.0 million in total
borrowings. As we have other affiliated SBICs already in operation, MRCC SBIC was historically limited to a maximum of $40.0 million
in borrowings. Pursuant to the increase in the family of funds limitation, we submitted a commitment application
to the SBA and on April 13, 2016 were approved for $75.0 million in additional SBA-guaranteed debentures for MRCC SBIC.
In order for MRCC SBIC to gain access to the entirety of the $75.0 million in SBA-guaranteed debentures, we would be required
to contribute to MRCC SBIC an additional $37.5 million in leveragable and regulatory capital.





34







Secured Borrowings: Certain partial
loan sales do not qualify for sale accounting under ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”)
because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order
for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating
interest remain as an investment on the accompanying consolidated statements of assets and liabilities and the portion sold is
recorded as a secured borrowing in the liabilities section of the consolidated statements of assets and liabilities. For these
partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest
earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the
accompanying consolidated statements of operations.



As of March 31, 2016, secured borrowings
at fair value totaled $2.2 million and the fair value of the loans that are associated with these secured borrowings was $11.4
million. As of December 31, 2015, secured borrowings at fair value totaled $2.5 million and the fair value of the loans that are
associated with these secured borrowings was $11.8 million. These secured borrowings were created as a result of our completion
of partial loan sales of three unitranche loan assets totaling $10.0 million during the year ended December 31, 2013, that did
not meet the definition of a “participating interest.” As a result, sale treatment was not allowed and these partial
loan sales were treated as secured borrowings. No such partial loan sales occurred during the year ended December 31, 2015 and
the three months ended March 31, 2016. During the three months ended March 31, 2016 and 2015, repayments on secured borrowings
totaled $0.2 million and $0.2 million, respectively. The weighted average interest rate on our secured borrowings was approximately
5.9% and 5.8% as of March 31, 2016 and December 31, 2015, respectively.



Distribution Policy



Our Board will determine the timing and
amount, if any, of our distributions. We intend to pay distributions on a quarterly basis. In order to avoid corporate-level tax
on the income we distribute as a RIC, we must distribute to our stockholders at least 90% of our ordinary income and realized
net short-term capital gains in excess of realized net long-term capital losses, if any, on an annual basis out of the assets
legally available for such distributions. In addition, we also intend to distribute any realized net capital gains (i.e., realized
net long-term capital gains in excess of realized net short-term capital losses) at least annually out of the assets legally available
for such distributions. Distributions to stockholders for the three months ended March 31, 2016 totaled $4.6 million ($0.35 per
share). Distributions to stockholders for the three months ended March 31, 2015 totaled $3.4 million ($0.35 per share). The tax
character of such distributions is determined at the end of the fiscal year. However, if the character of such distributions were
determined as of March 31, 2016 and 2015, no portion of these distributions would have been characterized as a tax return of capital
to stockholders.



We have adopted an “opt
out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, our stockholders’
cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically
“opts out” of our dividend reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions.
Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state
and local taxes in the same manner as cash distributions, stockholders participating in our dividend reinvestment plan will not
receive any corresponding cash distributions with which to pay any such applicable taxes.



Related Party Transactions



We have a number of business relationships
with affiliated or related parties, including the following:



| | · | We
have an Investment Advisory and Management Agreement with MC Advisors, an investment advisor registered with the SEC, to manage
our day-to-day operating and investing activities. We pay MC Advisors a fee for its services under the Investment Advisory and
Management Agreement consisting of two components — a base management fee and an incentive fee. See Note 6 to
our consolidated financial statements and “Significant Accounting Estimates and Critical Accounting Policies — Capital
Gains Incentive Fee” for additional information.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We
    have an Administration Agreement with MC Management to provide us with the office facilities and administrative services necessary
    to conduct our day-to-day operations. See Note 6 to our consolidated financial statements for additional information.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Theodore
    L. Koenig, our Chief Executive Officer and Chairman of our Board is also a manager of MC Advisors and the President and Chief
    Executive Officer of MC Management. Aaron D. Peck, our Chief Financial Officer and Chief Investment Officer, serves as a director
    on our Board and is also a managing director of MC Management.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We
    have a license agreement with Monroe Capital LLC, under which Monroe Capital LLC has agreed to grant us a non-exclusive, royalty-free
    license to use the name “Monroe Capital” for specified purposes in our business.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





35







In addition, we have adopted a formal
code of ethics that governs the conduct of our Advisor’s officers, directors and employees. Our officers and directors also
remain subject to the duties imposed by both the 1940 Act and Maryland General Corporation Law.



Commitments and Contingencies and Off-Balance Sheet Arrangements



Commitments and Contingencies



As of March 31, 2016 and December 31,
2015, we had $20.5 million and $20.7 million in outstanding commitments to fund investments under the underdrawn revolvers, capital
expenditure loans and delayed draw commitments. Additionally, we have entered into certain contracts with other parties that contain
a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experiences claims
or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.



Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



Market Trends



We have identified the following trends
that may affect our business:



Target Market:   We
believe that small and middle-market companies in the United States with annual revenues between $10 million and $2.5 billion
represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market
companies have generated a significant number of investment opportunities for investment funds managed or advised by Monroe Capital,
and we believe that this market segment will continue to produce significant investment opportunities for us.



Specialized Lending Requirements:  We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market
companies. For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally
more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of
information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic
limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender.



Demand for Debt Capital:   We
believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms
will seek to leverage their investments by combining equity capital with senior secured loans and mezzanine debt from other sources,
such as us.



Competition from Other Lenders:  We believe that many traditional bank lenders, in recent years, de-emphasized their service and product offerings
to middle-market businesses in favor of lending to large corporate clients and managing capital market transactions. In addition,
many commercial banks face significant balance sheet constraints as they seek to build capital and meet future regulatory capital
requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore
drive increased new investment opportunities for us. Conversely, there is increased competitive pressure in the business development
company and investment company marketplace for senior and subordinated debt which could result in lower yields for increasingly
riskier assets.



Pricing
and Deal Structures:  We believe that the volatility in global markets over the last several years and current
macroeconomic issues such as a weakened U.S. economy has reduced access to, and availability of, debt capital to middle-market
companies, causing a reduction in competition and generally more favorable capital structures and deal terms. Recent capital raises
in the business development company and investment company marketplace have created increased competition; however, we believe
that current market conditions may continue to create favorable opportunities to invest at attractive risk-adjusted returns.



Significant Accounting Estimates and Critical Accounting
Policies



Revenue Recognition



We record interest income on an accrual
basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, we do
not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue
as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination
fees, original issue discount and market discount or premium is capitalized, and we then amortize such amounts using the effective
interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized
premium or discount or loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt
securities as interest income when we receive such amounts.





36







Dividend income on preferred
equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio
company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private
portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”)
investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally,
we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated
tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital
are recorded as a reduction in the cost basis of the investment.



Valuation of Portfolio Investments



As a business development company, we
generally invest in illiquid securities including debt and, to a lesser extent, equity securities of middle-market companies.
Under procedures established by our Board, we value investments for which market quotations are readily available and within a
recent date at such market quotations. We obtain these market values from an independent pricing service or at the mean between
the bid and ask prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a
primary market dealer). When doing so, we determine whether the quote obtained is sufficient in accordance with generally accepted
accounting principles in the United States (“GAAP”) to determine the fair value of the security. Debt and equity securities
that are not publicly traded or whose market prices are not readily available or whose market prices are not regularly updated
are valued at fair value as determined in good faith by our Board. Such determination of fair values may involve subjective
judgments and estimates. Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus
amortized premium, which approximates fair value. With respect to unquoted or thinly-traded securities, our Board, together with
our independent valuation firms, values each investment considering, among other measures, discounted cash flow models, comparisons
of financial ratios of peer companies that are public and other factors.



Our Board is ultimately and solely responsible
for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily
available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination.



When an external event such as a purchase
transaction, public offering or subsequent equity sale occurs, our Board uses the pricing indicated by the external event to corroborate
and/or assist us in our valuation. Because we expect that there will not be a readily available market for many of the investments
in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board
using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining
the fair value of investments that do not have a readily available market value, the fair value of our investments may differ
significantly from the values that would have been used had a readily available market value existed for such investments, and
the differences could be material.



With respect to investments for which
market quotations are not readily available, our Board undertakes a multi-step valuation process each quarter, as described below:



| | · | the
    quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment
    professionals responsible for the credit monitoring of the portfolio investment;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | preliminary
    valuation conclusions are then documented and discussed with senior management;
| | - | -----------------------------------------------------------------------------------------------



| | · | our
    Board engages one or more independent valuation firm(s) to conduct fair value appraisals of material investments for which
    market quotations are not readily available. These fair value appraisals for material investments are received at least once
    in every calendar year for each portfolio company investment, but are generally received quarterly;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our
    audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and
    responds and supplements the valuation recommendations to reflect any comments; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our
    Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on
    the input of MC Advisors, the independent valuation firm(s) and the audit committee.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Valuation of Secured Borrowings



We have elected the fair value option
under ASC Topic 825 — Financial Instruments (“ASC Topic 825”) relating to accounting for debt
obligations at their fair value for our secured borrowings, which arose due to partial loan sales which did not meet the criteria
for sale treatment under ASC Topic 860. Due to the absence of a liquid trading market for these secured borrowings, they are valued
by calculating the net present value of the future expected cash flow streams using an appropriate risk-adjusted discount rate
model. The discount rate considers projected performance of the related loan investment, applicable market yields and leverage
levels, credit quality, prepayment penalties and comparable company analysis. We will consult with an independent valuation firm
relative to the fair value of its secured borrowings at least once in every calendar year.





37







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



We measure realized gains or losses by
the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized
appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation reflects the change
in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation
or depreciation, when gains or losses are realized. We report changes in the fair value of secured borrowings that are measured
at fair value as a component of the net change in unrealized (appreciation) depreciation on secured borrowings in the consolidated
statements of operations.



Capital Gains Incentive Fee



Pursuant to the terms of the Investment
Advisory and Management Agreement with MC Advisors, the incentive fee on capital gains earned on liquidated investments of our
portfolio is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory
and administrative services agreement). This fee equals 20.0% of our incentive fee capital gains (i.e., our realized capital
gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses
and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive
fees. On a quarterly basis, we accrue for the capital gains incentive fee by calculating such fee as if it were due and payable
as of the end of such period.



While the Investment
Advisory and Management Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the
calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants
Technical Practice Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive
fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to
MC Advisors if our entire portfolio was liquidated at its fair value as of the consolidated statement of asset and liabilities
date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains
are actually realized.



During the three months ended March 31,
2016, we accrued $0.2 million in capital gains incentive fees. During the three months ended March 31, 2015, we did not accrue
any capital gains incentive fees based on the performance of our portfolio.



New
Accounting Pronouncements



In May 2014, the FASB issued Accounting
Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606) (“ASU 2014-09”).
The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with
a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate
the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies
a performance obligation.



ASU 2014-09 also specified the accounting
for some costs to obtain or fulfill a contract with a customer. In addition, ASU 2014-09 requires that an entity disclose sufficient
information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash
flows arising from contracts with customers. The initial effective date of ASU 2014-09 was for fiscal periods beginning after
December 15, 2016. However, in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (ASC Topic
606): Deferral of the Effective Date, which deferred the effective date to fiscal periods beginning after December 15,
2017. Management is currently evaluating the impact these changes will have on our consolidated financial statements and disclosures.



In February 2015, the FASB issued ASU
2015-02, Consolidation (ASC Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02
significantly changes the consolidation analysis required under GAAP and ends the deferral granted to investment companies from
applying the variable interest entity guidance. ASU 2015-02 is effective for interim and annual reporting periods in fiscal years
that begin after December 15, 2015 and early adoption is permitted. We have adopted ASU 2015-02 and the adoption did not have
a material impact on our consolidated financial statements and disclosures.



In
April 2015, the FASB issued ASU No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying
the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs
related to a recognized debt liability be presented in the statements of assets and liabilities as a direct deduction from
the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt
issuance costs are not affected by the amendments in this ASU. ASU 2015-03 is effective for fiscal years that begin after
December 15, 2015 and early adoption is permitted. We have adopted ASU 2015-03 and the revised presentation is reflected in
our consolidated financial statements for the periods presented.





38







In January 2016, the FASB issued
ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification
and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification
and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities
measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments.
This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted
for public business entities. Management is currently evaluating the impact these changes will have on our consolidated financial
statements and disclosures.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



We are subject to financial market risks,
including changes in interest rates. The majority of the loans in our portfolio have floating interest rates, and we expect that
our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically
have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly
or quarterly basis. The majority of the loans in our current portfolio have interest rate floors which have effectively converted
the loans to fixed rate loans in the current interest rate environment. In addition, our credit facility has a floating interest
rate provision and we expect that other credit facilities into which we enter in the future may have floating interest rate provisions.



Assuming that the consolidated statement
of financial condition as of March 31, 2016 were to remain constant and that we took no actions to alter our existing interest
rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.



|                         |  | Increase (decrease) in |       |   | Increase (decrease) in |   |       | Net increase (decrease) in | 
|------------------------ |  | ---------------------- | ----- | - | ---------------------- | - | ----- | -------------------------- | 
|Change in Interest Rates |  | interest income        |       |   | interest expense       |   |       | net investment income      | 
|                         |  | (in thousands)         |      
|Down 25 basis points     |  | $                      | (39   | ) |                        | $ | (337  | )                          | 
|Up 100 basis points      |  |                        | 1,841 |   |                        |   | 1,359 |                            | 
|Up 200 basis points      |  |                        | 4,962 |   |                        |   | 2,729 |                            | 
|Up 300 basis points      |  |                        | 8,096 |   |                        |   | 4,100 |                            | 



Although we believe that this analysis
is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit
quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the
credit facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly,
we can offer no assurances that actual results would not differ materially from the analysis above.



We may in the future hedge against interest
rate fluctuations by using standard hedging instruments such as futures, options and forward contracts to the extent permitted
under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest
rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments
in our portfolio with fixed interest rates or interest rate floors.



ITEM 4. CONTROLS AND PROCEDURES



In accordance with Rules 13a-15(b) and
15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with
the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on that evaluation,
our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, at the end of the period covered
by our Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and provided reasonable assurance
that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise
required to be set forth in the Company’s periodic reports.



No change occurred in our internal control
over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March
31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



39









PART II



OTHER INFORMATION



Item 1. Legal Proceedings



Neither we nor our investment adviser
are currently subject to any material legal proceedings.



Item 1A. Risk Factors



None.



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



None.



Item 3. Defaults upon Senior Securities



None.



Item 4. Mine Safety Disclosures



None.



Item 5. Other Information



None.



40







Item 6. Exhibits



|Exhibit |  |                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Document                                                                                                                                                              
|        |  |                                                                                                                                                                                      
|31.1    |  | Certification of
    Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                                                                      
|31.2    |  | Certification of
    Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                                                                      
|32.1    |  | Certification pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                           





41







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.



|Date:
    May 10, 2016  |  | By | /s/
    Theodore L. Koenig                                                                                                                                                          
|----------------------- |  | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  |    | Theodore L. Koenig
        Chairman, Chief Executive Officer and Director
        (Principal Executive Officer)                                                                     
|                        |  |    | Monroe Capital
    Corporation                                                                                                                                                      
|                        |  |    |                                                                                                                                                                                     
|Date:  May
    10, 2016 |  | By | /s/
    Aaron D. Peck                                                                                                                                                               
|                        |  |    | Aaron D. Peck
        Chief Financial Officer, Chief Investment
        Officer and Director
        (Principal Financial and Accounting Officer)
        Monroe Capital Corporation



42