New Mountain Finance (NMFC) Risk Analysis

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies Basis of Accounting We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMFDB, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID, NMF YP, NMF Permian, NMF HB, NMF TRM, NMF Pioneer and NMF OEC and our majority-owned consolidated subsidiary, NMNLC. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services-Investment Companies , ("ASC 946"). Valuation and Leveling of Portfolio Investments At all times consistent with GAAP and the 1940 Act, we conduct a valuation of our assets, which impacts our net asset value. We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below: Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services. Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP. a. Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and b. For investments other than bonds, we look at the number of quotes readily available and perform the following procedures: i. Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value;ii. Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below). Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process: a. Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;b. Preliminary valuation conclusions will then be documented and discussed with our senior management;c. If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and d. When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided. For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded. The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. 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 fluctuate from period to period and the fluctuations could be material. GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows: Level I-Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. Level II-Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently); Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability. Level III-Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs. The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period. Financial Statements and Supplementary Data - Note 4. Fair Value in this Quarterly Report on Form 10-Q for additional information on fair value hierarchy as of June 30, 2022. We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered: Company Performance, Financial Review, and Analysis: Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation. For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment. Market Based Approach: We may estimate the total enterprise value of each portfolio company by utilizing EBITDA or revenue multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA or revenue multiples to the portfolio company's latest twelve month ("LTM") EBITDA or revenue, or projected EBITDA or revenue to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA or revenue multiples will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. Income Based Approach: We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. Financial Statements and Supplementary Data - Note 4. Fair Value in this Quarterly Report on Form 10-Q for additional information on unobservable inputs used in the fair value measurement of our Level III investments as of June 30, 2022. NMFC Senior Loan Program III LLC NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC ("SkyKnight II") and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement. SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of June 30, 2022, we and SkyKnight II have committed and contributed $140.0 million and $35.0 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of June 30, 2022 and December 31, 2021. On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on January 8, 2026. Effective July 8, 2021, the reinvestment period was extended to July 8, 2024. As of the most recent amendment on July 8, 2021, during the reinvestment period the credit facility bears interest at a rate of LIBOR plus 1.60% and after the reinvestment period it will bear interest at a rate of LIBOR plus 1.90%. Prior to July 8, 2021, the credit facility bore interest at a rate of LIBOR plus 1.70%. Effective November 23, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $525.0 million. As of June 30, 2022 and December 31, 2021, SLP III had total investments with an aggregate fair value of approximately $654.6 million and $702.1 million, respectively, and debt outstanding under its credit facility of $514.5 million and $510.9 million, respectively. As of June 30, 2022 and December 31, 2021, none of SLP III's investments were on non-accrual. Additionally, as of June 30, 2022 and December 31, 2021, SLP III had unfunded commitments in the form of delayed draws of $4.5 million and $4.6 million, respectively. Below is a summary of SLP III's portfolio as of June 30, 2022 and December 31, 2021: (in thousands)June 30, 2022December 31, 2021First lien investments (1)$697,482 $709,517 Weighted average interest rate on first lien investments (2)5.75 %4.50 %Number of portfolio companies in SLP III82 80 Largest portfolio company investment (1)$23,368 $23,489 Total of five largest portfolio company investments (1)$93,960 $95,504 Reflects principal amount or par value of investment. Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments. Financial Statements and Supplementary Data-Note 3. Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP III's portfolio as of June 30, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP III as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and June 30, 2021. NMFC Senior Loan Program IV LLC NMFC Senior Loan Program IV LLC ("SLP IV") was formed as a Delaware limited liability company on April 6, 2021, and commenced operations on May 5, 2021. SLP IV is structured as a private joint venture investment fund between us and SkyKnight Income Alpha, LLC ("SkyKnight Alpha") and operates under the First Amended and Restated Limited Liability Company Agreement of NMFC Senior Loan Program IV LLC (the "SLP IV Agreement"). Upon the effectiveness of the SLP IV Agreement dated May 5, 2021, the members contributed their respective membership interests in NMFC Senior Loan Program I LLC ("SLP I") and NMFC Senior Loan Program II LLC ("SLP II") to SLP IV. Immediately following the contribution of their membership interests, SLP I and SLP II became wholly-owned subsidiaries of SLP IV. The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP IV, which has equal representation from us and SkyKnight Alpha. SLP IV has a five year investment period and will continue in existence until May 5, 2028. The investment period may be extended for up to one year pursuant to certain terms of the SLP IV Agreement. SLP IV is capitalized with equity contributions which were transferred and contributed from its members. As of June 30, 2022, we and SkyKnight Alpha have transferred and contributed $112.4 million and $30.6 million, respectively, of their membership interests in SLP I and SLP II to SLP IV. Our investment in SLP IV is disclosed on our Consolidated Schedule of Investments as of June 30, 2022 and December 31, 2021. On May 5, 2021, SLP IV entered into a $370.0 million revolving credit facility with Wells Fargo Bank, National Association which matures on May 5, 2026 and bears interest at a rate of LIBOR plus 1.60% per annum. As of June 30, 2022 and December 31, 2021, SLP IV had total investments with an aggregate fair value of approximately $489.8 million and $504.9 million, respectively, and debt outstanding under its credit facility of $364.9 million and $360.1 million, respectively. As of June 30, 2022 and December 31, 2021, none of SLP IV's investments were on non-accrual. Additionally, as of June 30, 2022 and December 31, 2021, SLP IV had unfunded commitments in the form of delayed draws of $4.3 million and $6.1 million, respectively. Below is a summary of SLP IV's consolidated portfolio as of June 30, 2022 and December 31, 2021: (in thousands)June 30, 2022December 31, 2021First lien investments (1)$521,079 $513,298 Weighted average interest rate on first lien investments (2)5.77 %4.64 %Number of portfolio companies in SLP IV74 68 Largest portfolio company investment (1)$22,099 $22,215 Total of five largest portfolio company investments (1)$94,413 $99,875 Reflects principal amount or par value of investment. Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments. Financial Statements and Supplementary Data-Note 3. Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP IV's consolidated portfolio as of June 30, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP IV as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022. New Mountain Net Lease Corporation NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of June 30, 2022. On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC's common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020. Below is certain summarized property information for NMNLC as of June 30, 2022: Lease Total Fair Value as ofPortfolio CompanyTenantExpiration DateLocationSquare FeetJune 30, 2022(in thousands)(in thousands)NM NL Holdings LP / NM GP Holdco LLCVariousVariousVariousVarious$98,295 NM CLFX LPVictor Equipment Company8/31/2033TX42321,067 NM APP Canada, Corp.A.P. Plasman, Inc.9/30/2031Canada43612,314 NM YI, LLCYoung Innovations, Inc.10/31/2039IL / MO2128,184 $139,860 Collateralized agreements or repurchase financings We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing-Secured Borrowing and Collateral , ("ASC 860") when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of June 30, 2022 and December 31, 2021, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $19.4 million and $21.4 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position. PPVA Black Elk (Equity) LLC On May 3, 2013, we entered into a collateralized securities purchase and put agreement (the "SPP Agreement") with a private hedge fund. Under the SPP Agreement, we purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC ("Black Elk") for $20.0 million with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20.0 million plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, we received a payment of $20.5 million, the full amount due under the SPP Agreement. In August 2017, a trustee (the "Trustee") for Black Elk informed us that the Trustee intended to assert a fraudulent conveyance claim (the "Claim") against us and one of its affiliates seeking the return of the $20.5 million repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the U.S. Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund's obligation to us under the SPP Agreement. We were unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. On December 22, 2017, we settled the Trustee's $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of June 30, 2022 and December 31, 2021, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $9.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction. Revenue Recognition Sales and paydowns of investments: Realized gains and losses on investments are determined on the specific identification method. Interest and dividend income: Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind ("PIK") interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three and six months ended June 30, 2022, we recognized PIK and non-cash interest from investments of approximately $7.3 million and $15.8 million, respectively, and PIK and non-cash dividends from investments of approximately $5.2 million and $10.3 million, respectively. For the three and six months ended June 30, 2021, we recognized PIK and non-cash interest from investments of approximately $5.6 million and $11.4 million, respectively, and PIK and non-cash dividends from investments of approximately $5.8 million and $11.0 million, respectively. Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible. Non-accrual income: Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. Other income: Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.

See Item 1.- Financial Statements and Supplementary Data-Note 13. Recent Accounting Standards Updates for details on recent accounting standards updates.

Revenue Three Months Ended(in thousands)June 30, 2022June 30, 2021Total interest income$50,344 $47,081 Total dividend income16,022 16,963 Other income6,744 2,517 Total investment income$73,110 $66,561 Our total investment income increased by approximately $6.5 million, or 10%, for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. For the three months ended June 30, 2022, total investment income of approximately $73.1 million consisted of approximately $41.0 million in cash interest from investments, approximately $7.3 million in PIK and non-cash interest from investments, $0.4 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.7 million, approximately $10.8 million in cash dividends from investments, approximately $5.2 million in PIK and non-cash dividends from investments and approximately $6.7 million in other income. The increase in interest income of approximately $3.3 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily due to a higher effective interest rate of our portfolio on larger invested balances. The decrease in dividend income for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily driven by a decrease in cash dividends from our investments in SLP III, SLP IV and NMNLC. Other income during the three months ended June 30, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 21 different portfolio companies. Operating Expenses Three Months Ended(in thousands)June 30, 2022June 30, 2021Management fee$11,770 $13,725 Less: management fee waiver(1,142)(3,804)Total management fee10,628 9,921 Incentive fee7,926 7,298 Interest and other financing expenses20,672 17,871 Administrative expenses932 1,029 Professional fees817 764 Other general and administrative expenses518 466 Net expenses before income taxes41,493 37,349 Income tax (benefit) expense(87)22 Net expenses after income taxes$41,406 $37,371 Our total net operating expenses increased by approximately $3.8 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. Our management fee increased by approximately $0.7 million, net of a management fee waiver, and our incentive fee increased by approximately $0.6 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. The increase in management and incentive fees was attributable to higher invested balances. Interest and other financing expenses increased by approximately $2.8 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, primarily due to larger drawn balances on the Holdings Credit Facility and NMFC Credit Facility, higher interest rates on those facilities and interest costs associated with the 2022A Unsecured Notes, issued on June 15, 2022. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 increased in line with invested capital. Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation) Three Months Ended(in thousands)June 30, 2022June 30, 2021Net realized gains on investments$16,518 $180 Net realized gains on foreign currency40 - Net change in unrealized (depreciation) appreciation of investments(32,774)49,808 Net change in unrealized depreciation on foreign currency(193)- Provision for taxes(155)- Net realized and unrealized (losses) gains$(16,564)$49,988 Our net realized gains and unrealized losses resulted in a net loss of approximately $16.6 million for the three months ended June 30, 2022 compared to net realized gains and unrealized gains resulting in a net gain of approximately $50.0 million for the same period in 2021. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the three months ended June 30, 2022 was primarily driven by realized and unrealized losses in NM CLFX LP, NHME Holdings Corp. and Ansira Holdings, Inc. which was partially offset by unrealized appreciation in Haven Midstream LLC, UniTek and New Permian Holdco, Inc. and a realized gain in NM GLCR LP. The provision for income taxes was attributable to equity investments that are held as of June 30, 2022 in eight of our corporate subsidiaries. The net gain for the three months ended June 30, 2021 was primarily driven by unrealized appreciation on our investments in TVG-Edmentum Ultimate Holdings, LLC ("Edmentum"), NM CLFX LP and NM GLCR LP. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

Distributions declared and paid to stockholders for the six months ended June 30, 2022 totaled approximately $59.8 million. The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the two most recent fiscal years and the current fiscal year to date: Fiscal Year EndedDate DeclaredRecord DatePayment DatePer ShareAmount (1)December 31, 2022Second QuarterMay 3, 2022June 16, 2022June 30, 2022$0.30 First QuarterFebruary 23, 2022March 17, 2022March 31, 20220.30 $0.60 December 31, 2021Fourth QuarterOctober 27, 2021December 16, 2021December 30, 2021$0.30 Third QuarterJuly 29, 2021September 16, 2021September 30, 20210.30 Second QuarterApril 30, 2021June 16, 2021June 30, 20210.30 First QuarterFebruary 17, 2021March 17, 2021March 31, 20210.30 $1.20 December 31, 2020Fourth QuarterOctober 28, 2020December 16, 2020December 30, 2020$0.30 Third QuarterJuly 29, 2020September 16, 2020September 30, 20200.30 Second QuarterApril 29, 2020June 16, 2020June 30, 20200.30 First QuarterFebruary 19, 2020March 13, 2020March 27, 20200.34 $1.24 Tax characteristics of all distributions paid are reported to stockholders on Form 1099 after the end of the calendar year. For the years ended December 31, 2021 and December 31, 2020, total distributions were $116.5 million and $120.1 million, respectively, of which the distributions were comprised of approximately 90.99% and 84.58%, respectively, of ordinary income, 0.00% and 0.00%, respectively, of long-term capital gains and approximately 9.01% and 15.42%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors. We intend to pay quarterly distributions to our stockholders in amounts sufficient to maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment. We maintain an "opt out" dividend reinvestment plan on behalf of our common stockholders, pursuant to which each of our stockholders' cash distributions will be automatically reinvested in additional shares of common stock, unless the stockholder elects to receive cash. See Item 1- Financial Statements-Note 2. Summary of Significant Accounting Policies for additional details regarding our dividend reinvestment plan.

We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy. We have recently consolidated our portfolio monitoring procedures by combining our previously bifurcated system that separately (1) rated investments based on their performance compared to expectations and (2) assigned a risk rating to each investment based on the expected impact from the COVID-19 pandemic. As described more fully below, our new portfolio monitoring procedures are designed to provide a simple yet comprehensive analysis of our portfolio companies based on their operating performance and underlying business characteristics, which in turn forms the basis of its Risk Rating (as defined below). We use an investment risk rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. As such, we assign each investment a composite score ("Risk Rating") based on two metrics – 1) Operating Performance and 2) Business Characteristics: Operating Performance assesses the health of the investment in context of its financial performance and the market environment it faces. The metric is expressed in Tiers of "1" to "4", with "1" being the worst and "4" being the best: ? Tier 1 – Severe business underperformance and/or severe market headwinds ? Tier 2 – Significant business underperformance and/or significant market headwinds ? Tier 3 – Moderate business underperformance and/or moderate market headwinds ? Tier 4 – Business performance is in-line with or above expectations Business Characteristics assesses the health of the investment in context of the underlying portfolio company's business and credit quality, the underlying portfolio company's current balance sheet, and the level of support from the equity sponsor. The metric is expressed as on a qualitative scale of "A" to "C", with "A" being the best and "C" being the worst. The Risk Rating for each investment is a composite of these two metrics. The Risk Rating is expressed in categories of Red, Orange, Yellow and Green with Red reflecting an investment performing materially below expectations and Green reflecting an investment that is in-line with or above expectations. The mapping of the composite scores to these categories are below: Red – 1C (e.g., Tier 1 for Operating Performance and C for Business Characteristics) Orange – 2C and 1B Yellow – 3C, 2B, and 1A Green – 4C, 3B, 2A, 4B, 3A, and 4A The following table shows the Risk Rating of our portfolio companies as of June 30, 2022: (in millions)As of June 30, 2022Risk RatingCostPercentFair ValuePercentRed$83.9 2.5 %$30.6 0.9 %Orange57.5 1.7 %40.6 1.2 %Yellow214.3 6.4 %205.3 6.2 %Green2,971.8 89.4 %3,043.1 91.7 % $3,327.5 100.0 %$3,319.6 100.0 % As of June 30, 2022, all investments in our portfolio had a Green Risk Rating with the exception of nine portfolio companies that had a Yellow Risk Rating, three portfolio companies that had an Orange Risk Rating and three portfolio companies that had a Red Risk Rating. As of June 30, 2022, our aggregate principal amount of our second lien term loan in Integro Parent Inc. ("Integro") was $10.5 million. During the second quarter of 2022, we placed an aggregate principal amount of $3.7 million of our second lien position on non-accrual status. As of June 30, 2022, our position in Integro on non-accrual status had an aggregate cost basis of $3.6 million, an aggregate fair value of $2.4 million, total unearned interest income of $0.1 million and $0.1 million, respectively, for the three and six months then ended and total unearned other income of $36 thousand and $36 thousand , respectively, for the three and six months then ended. As of June 30, 2022, our Integro portfolio company has a Green Risk Rating. During the second quarter of 2022, we placed our second lien positions in National HME, Inc. ("National HME") on non-accrual status. As of June 30, 2022, our second lien positions in National HME had an aggregate cost basis of $36.5 million, an aggregate fair value of $8.5 million, and total unearned interest income of $1.2 million and $1.2 million, respectively, for the three and six months then ended. As of June 30, 2022, our National HME portfolio company has a Red Risk Rating. As of June 30, 2022, our aggregate principal amount of our subordinated position and first lien term loans in American Achievement Corporation ("AAC") was $5.2 million and $29.7 million, respectively. During the first quarter of 2021, we placed an aggregate principal amount of $5.2 million of our subordinated position on non-accrual status. During the third quarter of 2021, we placed an aggregate principal amount of $12.8 million of our first lien term loans on non-accrual status. As of June 30, 2022, our positions in AAC on non-accrual status had an aggregate cost basis of $12.8 million, an aggregate fair value of $7.2 million and total unearned interest income of $0.3 million and $0.6 million, respectively, for the three and six months then ended. As of June 30, 2022, our AAC portfolio company has a Red Risk Rating. During the third quarter of 2021, we placed our second lien position in Sierra Hamilton Holdings Corporation ("Sierra") on non-accrual status. As of June 30, 2022, our second lien position in Sierra had an aggregate cost basis of $0.0 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million, respectively, for the three and six months then ended. As of June 30, 2022, our Sierra portfolio company has a Red Risk Rating. During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. ("UniTek") on non-accrual status. As of June 30, 2022, our junior preferred shares of UniTek had an aggregate cost basis of $34.4 million, an aggregate fair value of $0.0 million and total unearned dividend income of $1.6 million and $3.2 million, respectively, for the three and six months then ended. During the third quarter of 2021, we placed an aggregate principal amount of $19.8 million of our investment in our senior preferred shares of UniTek on non-accrual status. As of June 30, 2022,our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $7.6 million and total unearned dividend income of approximately $1.1 million and $2.2 million, respectively, for the three and six months then ended. As of June 30, 2022, our UniTek portfolio company has a Green Risk Rating. During the first quarter of 2018, we placed our first lien positions in Education Management II LLC on non-accrual status as the portfolio company announced its intention to wind down and liquidate the business. As of June 30, 2022, our Education Management Corporation portfolio company has an Orange Risk Rating and an aggregate cost basis of $1.4 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million, respectively, for the three and six months then ended. During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual. As of June 30, 2022, our investment in this security has a Yellow Risk Rating and has an aggregate cost basis of $30.0 million and an aggregate fair value of approximately $19.4 million.

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,300.2 million in 107 portfolio companies at June 30, 2022 and approximately $3,174.4 million in 106 portfolio companies at December 31, 2021. The following table shows our portfolio and investment activity for the six months ended June 30, 2022 and June 30, 2021: Six Months Ended(in millions)June 30, 2022June 30, 2021New investments in 38 and 22 portfolio companies, respectively$397.1 $300.0 Debt repayments in existing portfolio companies146.9 262.5 Sales of securities in 5 and 2 portfolio companies, respectively145.8 7.0 Change in unrealized appreciation on 28 and 46 portfolio companies, respectively49.9 115.5 Change in unrealized depreciation on 79 and 61 portfolio companies, respectively(92.6)(32.2)

Revenue Six Months Ended(in thousands)June 30, 2022June 30, 2021Total interest income$98,222 $94,090 Total dividend income32,794 32,625 Other income11,057 7,554 Total investment income$142,073 $134,269 Our total investment income increased by approximately $7.8 million, or 6%, for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. For the six months ended June 30, 2022, total investment income of approximately $142.1 million consisted of approximately $78.9 million in cash interest from investments, approximately $15.8 million in PIK and non-cash interest from investments, $0.4 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $3.1 million, approximately $22.5 million in cash dividends from investments, approximately $10.3 million in PIK and non-cash dividends from investments and approximately $11.1 million in other income. The increase in interest income of approximately $4.1 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily due to higher LIBOR and SOFR rates on larger invested balances. The dividend income for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 remained relatively flat. Other income during the six months ended June 30, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 32 different portfolio companies. Operating Expenses Six Months Ended(in thousands)June 30, 2022June 30, 2021Management fee$23,323 $27,145 Less: management fee waiver(2,234)(7,441)Total management fee21,089 19,704 Incentive fee15,403 14,546 Interest and other financing expenses39,309 37,256 Administrative expenses2,141 2,158 Professional fees1,754 1,490 Other general and administrative expenses995 908 Total expenses80,691 76,062 Less: expenses waived and reimbursed(238)- Net expenses before income taxes80,453 76,062 Income tax expense8 23 Net expenses after income taxes$80,461 $76,085 Our total net operating expenses increased by approximately $4.4 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Our management fee increased by approximately $1.4 million, net of a management fee waiver, and our incentive fee increased by approximately $0.9 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase in management and incentive fees was attributable to higher invested balances. Interest and other financing expenses increased by approximately $2.1 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to larger drawn balances on the Holdings Credit Facility and NMFC Credit Facility and higher LIBOR rates on those facilities. Our total professional fees, administrative expenses and total other general and administrative expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 remained relatively flat. Net Realized Gains (Losses) and Net Change in Unrealized (Depreciation) Appreciation Six Months Ended(in thousands)June 30, 2022June 30, 2021Net realized gains (losses) on investments$35,690 $(10,316)Net realized gains on foreign currency385 - Net change in unrealized (depreciation) appreciation of investments(42,707)83,280 Net change in unrealized depreciation securities purchased under collateralized agreements to resell(2,021)- Net change in unrealized depreciation on foreign currency(615)- Provision for taxes(157)(115)Net realized and unrealized (losses) gains$(9,425)$72,849 Our net realized gains and unrealized losses resulted in a net loss of approximately $9.4 million for the six months ended June 30, 2022 compared to net realized losses and unrealized gains resulting in a net gain of approximately $72.8 million for the same period in 2021. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the six months ended June 30, 2022 was primarily driven by unrealized depreciation in NM CLFX LP, NM APP US LLC, NHME Holdings Corp. and Ansira Holdings, Inc. which was partially offset by unrealized appreciation in UniTek, TVG-Edmentum Holdings, LLC, Haven Midstream LLC and New Permian Holdco, Inc. and a realized gain in NM GLCR LP. The provision for income taxes was attributable to equity investments that are held as of June 30, 2022 in eight of our corporate subsidiaries. The net gain for the six months ended June 30, 2021 was primarily driven by unrealized appreciation on our investments in Edmentum, NM CLFX LP and NM GLCR LP. See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of June 30, 2022 and December 31, 2021, we had outstanding commitments to third parties to fund investments totaling $280.8 million and $215.4 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments. We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of June 30, 2022 and December 31, 2021, we had commitment letters to purchase investments in an aggregate par amount of $62.1 million and $6.8 million, respectively. As of June 30, 2022 and December 31, 2021, we had not entered into any bridge financing commitments which could require funding in the future.