Edgar Filing: Main Street Capital CORP

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to

Commission File Number: 001-33723

Main Street Capital Corporation
(Exact name of registrant as specified in its charter)


Maryland (State or other jurisdiction of incorporation or organization)		41-2230745 (I.R.S. Employer Identification No.)
1300 Post Oak Boulevard, Suite 800 Houston, TX (Address of principal executive offices)		77056 (Zip Code)

(713) 350-6000
(Registrant's telephone number including area code)

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

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

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). Yes o No o

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 ý		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

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

The number of shares outstanding of the issuer's common stock as of November 6, 2014 was 44,944,926.

Table of Contents

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION


Item 1.	Financial Statements
	Consolidated Balance Sheets—September 30, 2014 (unaudited) and December 31, 2013	1
	Consolidated Statements of Operations (unaudited)—Three and nine months ended September 30, 2014 and 2013	2
	Consolidated Statements of Changes in Net Assets (unaudited)—Nine months ended September 30, 2014 and 2013	3
	Consolidated Statements of Cash Flows (unaudited)—Nine months ended September 30, 2014 and 2013	4
	Consolidated Schedule of Investments (unaudited)—September 30, 2014	5
	Consolidated Schedule of Investments—December 31, 2013	30
	Notes to Consolidated Financial Statements (unaudited)	54
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	101
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	130
Item 4.	Controls and Procedures	130

PART II
OTHER INFORMATION


Item 1.	Legal Proceedings	131
Item 1A.	Risk Factors	131
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	131
Item 6.	Exhibits	131
	Signatures	132

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(in thousands, except shares and per share amounts)

	September 30, 2014			December 31, 2013

	(Unaudited)
ASSETS
Portfolio investments at fair value:
Control investments (cost: $299,621 and $277,411 as of September 30, 2014 and December 31, 2013, respectively)	$	413,587		$	356,973
Affiliate investments (cost: $244,223 and $242,592 as of September 30, 2014 and December 31, 2013, respectively)		259,795			268,113
Non-Control/Non-Affiliate investments (cost: $804,031 and $643,068 as of September 30, 2014 and December 31, 2013, respectively)		814,652			661,102


Total portfolio investments (cost: $1,347,875 and $1,163,071 as of September 30, 2014 and December 31, 2013, respectively)		1,488,034			1,286,188
Marketable securities and idle funds investments (cost: $9,871 and $14,885 as of September 30, 2014 and December 31, 2013, respectively)		9,207			13,301


Total investments (cost: $1,357,746 and $1,177,956 as of September 30, 2014 and December 31, 2013, respectively)		1,497,241			1,299,489
Cash and cash equivalents		24,324			34,701
Interest receivable and other assets		21,076			16,054
Receivable for securities sold		26,075			—
Deferred financing costs (net of accumulated amortization of $5,906 and $4,722 as of September 30, 2014 and December 31, 2013, respectively)		10,627			9,931


Total assets	$	1,579,343		$	1,360,175




LIABILITIES
Credit facility	$	287,000		$	237,000
SBIC debentures (par: $225,000 as of September 30, 2014 and $200,200 as of December 31, 2013, par of $75,200 is recorded at a fair value of $72,829 and $62,050 as of September 30, 2014 and December 31, 2013, respectively)		222,629			187,050
6.125% Notes		90,882			90,882
Payable for securities purchased		498			27,088
Deferred tax liability, net		12,583			5,940
Dividend payable		7,640			6,577
Accounts payable and other liabilities		8,220			10,549
Interest payable		2,385			2,556


Total liabilities		631,837			567,642
Commitments and contingencies (Note M)
NET ASSETS
Common stock, $0.01 par value per share (150,000,000 shares authorized; 44,945,194 and 39,852,604 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively)		449			398
Additional paid-in capital		847,796			694,981
Accumulated net investment income, net of cumulative dividends of $262,238 and $199,140 as of September 30, 2014 and December 31, 2013, respectively		28,886			22,778
Accumulated net realized gain from investments (accumulated net realized gain from investments of $27,904 before cumulative dividends of $56,998 as of September 30, 2014 and accumulated net realized gain from investments of $17,115 before cumulative dividends of $43,449 as of December 31, 2013)		(29,094	)		(26,334	)
Net unrealized appreciation, net of income taxes		99,469			100,710


Total net assets		947,506			792,533


Total liabilities and net assets	$	1,579,343		$	1,360,175




NET ASSET VALUE PER SHARE	$	21.08		$	19.89

The accompanying notes are an integral part of these financial statements

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,

	2014			2013			2014			2013
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments	$	9,705		$	8,840		$	29,547		$	23,543
Affiliate investments		6,687			6,453			18,412			17,514
Non-Control/Non-Affiliate investments		19,839			13,974			53,488			40,974


Interest, fee and dividend income		36,231			29,267			101,447			82,031
Interest, fee and dividend income from marketable securities and idle funds		120			392			557			1,073


Total investment income		36,351			29,659			102,004			83,104
EXPENSES:
Interest		(5,954	)		(5,922	)		(16,713	)		(15,346	)
Compensation		(3,047	)		(2,575	)		(9,115	)		(5,148	)
General and administrative		(1,871	)		(1,533	)		(5,279	)		(3,471	)
Share-based compensation		(1,208	)		(2,152	)		(3,034	)		(3,357	)
Expenses charged to the External Investment Manager		616			—			1,343			—
Expenses reimbursed to affiliated Internal Investment Manager		—			—			—			(3,189	)


Total expenses		(11,464	)		(12,182	)		(32,798	)		(30,511	)


NET INVESTMENT INCOME		24,887			17,477			69,206			52,593
NET REALIZED GAIN (LOSS):
Control investments		—			(2,635	)		—			(2,635	)
Affiliate investments		14,737			780			8,159			780
Non-Control/Non-Affiliate investments		962			(1,164	)		2,634			(1,024	)
Marketable securities and idle funds investments		11			22			(4	)		285
SBIC debentures		—			(4,775	)		—			(4,775	)


Total net realized gain (loss)		15,710			(7,772	)		10,789			(7,369	)


NET REALIZED INCOME		40,597			9,705			79,995			45,224
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Portfolio investments		(6,891	)		14,475			17,018			30,889
Marketable securities and idle funds investments		(426	)		(490	)		920			(1,300	)
SBIC debentures		(8,749	)		4,839			(10,778	)		4,183


Total net change in unrealized appreciation (depreciation)		(16,066	)		18,824			7,160			33,772


INCOME TAXES:
Federal and state income, excise, and other taxes		(960	)		(371	)		(1,758	)		(1,793	)
Deferred taxes		(2,002	)		(104	)		(6,643	)		(1,515	)


Income tax provision		(2,962	)		(475	)		(8,401	)		(3,308	)


NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	21,569		$	28,054		$	78,754		$	75,688




NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED	$	0.55		$	0.47		$	1.61		$	1.48




NET REALIZED INCOME PER SHARE—BASIC AND DILUTED	$	0.90		$	0.26		$	1.86		$	1.27




NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED	$	0.48		$	0.76		$	1.83		$	2.13




DIVIDENDS PAID PER SHARE:
Regular monthly dividends	$	0.495		$	0.465		$	1.485		$	1.380
Supplemental dividends		—			0.200			0.275			0.550


Total dividends	$	0.495		$	0.665		$	1.760		$	1.930




WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED		44,910,756			37,144,693			43,027,105			35,558,266

The accompanying notes are an integral part of these financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(in thousands, except shares)

(Unaudited)

	Common Stock												Accumulated Net Realized Gain From Investments, Net of Dividends			Net Unrealized Appreciation from Investments, Net of Income Taxes

	Common Stock									Accumulated Net Investment Income, Net of Dividends
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Net Investment Income, Net of Dividends									Total Net Asset Value
Balances at December 31, 2012		34,589,484		$	346		$	544,136		$	35,869		$	(19,155	)	$	81,780		$	642,976
Public offering of common stock, net of offering costs		4,600,000			46			131,407			—			—			—			131,453
Share-based compensation		—			—			3,357			—			—			—			3,357
Purchase of vested stock for employee payroll tax withholding		(62,025	)		(1	)		(1,764	)		—			—			—			(1,765	)
Dividend reinvestment		278,166			3			8,727			—			—			—			8,730
Issuance of restricted stock		274,895			3			(3	)		—			—			—			—
Consolidation of Internal Investment Manager		—			—			2,037			—			—			—			2,037
Issuances of common stock		18,125			—			578			—			—			—			578
Other		—			—			69			—			—			—			69
Dividends to stockholders		—			—			—			(65,748	)		(3,199	)		—			(68,947	)
Net increase resulting from operations		—			—			—			43,043			2,181			30,464			75,688


Balances at September 30, 2013		39,698,645		$	397		$	688,544		$	13,164		$	(20,173	)	$	112,244		$	794,176




Balances at December 31, 2013		39,852,604		$	398		$	694,981		$	22,778		$	(26,334	)	$	100,710		$	792,533
Public offering of common stock, net of offering costs		4,600,000			46			139,651			—			—			—			139,697
Share-based compensation		—			—			3,034			—			—			—			3,034
Purchase of vested stock for employee payroll tax withholding		(46,507	)		—			(1,481	)		—			—			—			(1,481	)
Dividend reinvestment		333,657			3			10,842			—			—			—			10,845
Amortization of directors' deferred compensation		—			—			229			—			—			—			229
Issuance of restricted stock		241,578			2			(2	)		—			—			—			—
Tax benefit related to vesting of restricted shares					—			542			—			—			—			542
Forfeited shares of terminated employees		(36,138	)		—			—			—			—			—			—
Dividends to stockholders		—			—			—			(63,098	)		(13,549	)		—			(76,647	)
Net increase (loss) resulting from operations		—			—			—			69,206			10,789			(1,241	)		78,754


Balances at September 30, 2014		44,945,194		$	449		$	847,796		$	28,886		$	(29,094	)	$	99,469		$	947,506

The accompanying notes are an integral part of these financial statements

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended September 30,

	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	78,754		$	75,688
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Investments in portfolio companies		(637,843	)		(533,435	)
Proceeds from sales and repayments of debt investments in portfolio companies		396,557			325,150
Proceeds from sales of equity investments in portfolio companies		26,117			1,336
Investments in marketable securities and idle funds investments		(17,704	)		(53,102	)
Proceeds from sales and repayments of marketable securities and idle funds investments		22,747			44,395
Net change in unrealized appreciation		(7,160	)		(33,772	)
Net realized (gain) loss		(10,789	)		7,369
Accretion of unearned income		(8,167	)		(7,721	)
Payment-in-kind interest		(3,947	)		(3,517	)
Cumulative dividends		(1,422	)		(1,000	)
Share-based compensation expense		3,034			3,357
Amortization of deferred financing costs		1,184			1,167
Deferred taxes		6,643			1,515
Changes in other assets and liabilities:
Interest receivable and other assets		(4,480	)		1,009
Interest payable		(171	)		(1,345	)
Payable to affiliated Internal Investment Manager		—			(3,960	)
Accounts payable and other liabilities		(1,584	)		1,376
Deferred fees and other		1,457			2,558


Net cash used in operating activities		(156,774	)		(172,932	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of offering costs		139,697			131,453
Proceeds from public offering of 6.125% Notes		—			92,000
Repurchases of 6.125% Notes		—			(1,108	)
Dividends paid to stockholders		(64,739	)		(59,052	)
Proceeds from issuance of SBIC debentures		24,800			—
Repayments of SBIC debentures		—			(63,800	)
Proceeds from credit facility		353,000			360,000
Repayments on credit facility		(303,000	)		(326,000	)
Payment of deferred loan costs and SBIC debenture fees		(1,880	)		(5,317	)
Purchase of vested stock for employee payroll tax withholding		(1,481	)		(1,765	)
Other		—			578


Net cash provided by financing activities		146,397			126,989


Net decrease in cash and cash equivalents		(10,377	)		(45,943	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		34,701			63,517


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	24,324		$	17,574




Supplemental cash flow disclosures:
Interest paid	$	15,701		$	15,558
Taxes paid	$	3,656		$	4,803
Non-cash financing activities:
Shares issued pursuant to the DRIP	$	10,845		$	8,730

The accompanying notes are an integral part of these financial statements

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Control Investments(5)
ASC Interests, LLC	Recreational and Educational Shooting Facility
		11% Secured Debt (Maturity—July 31, 2018)	3,225	3,172	3,225
		Member Units (1,500 units)		1,500	1,660


				4,672	4,885
Bond-Coat, Inc.	Casing and Tubing Coating Services
		12% Secured Debt (Maturity—December 28, 2017)	13,570	13,438	13,570
		Common Stock (57,508 shares)		6,350	11,210


				19,788	24,780
Café Brazil, LLC	Casual Restaurant Group
		Member Units (1,233 units)(8)		1,742	6,980
California Healthcare Medical Billing, Inc.	Outsourced Billing and Revenue Cycle Management
		9% Secured Debt (Maturity—October 17, 2016)	8,703	8,551	8,703
		Warrants (466,947 equivalent shares)		1,193	3,480
		Common Stock (207,789 shares)		1,177	1,460


				10,921	13,643
CBT Nuggets, LLC	Produces and Sells IT Training Certification Videos
		Member Units (416 units)(8)		1,300	25,150
Ceres Management, LLC (Lambs Tire & Automotive)	Aftermarket Automotive Services Chain
		14% Secured Debt (Maturity—May 31, 2018)	4,000	4,000	4,000
		Class B Member Units (12% cumulative)(8)		3,926	3,926
		Member Units (5,460 units)		5,273	1,520
		9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—October 1, 2025)	980	980	980
		Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)		625	1,240


				14,804	11,666
Datacom, LLC	Technology and Telecommunications Provider
		8% Secured Debt (Maturity—May 31, 2015)	450	447	447
		10.5% Secured Debt (Maturity—May 31, 2019)	11,205	11,099	11,099
		Member Units (6,453 units)		6,030	6,030


				17,576	17,576

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Garreco, LLC	Manufacturer and Supplier of Dental Products
		14% Secured Debt (Maturity—January 12, 2018)	5,400	5,315	5,315
		Member Units (1,200 units)		1,200	1,200


				6,515	6,515
Gulf Manufacturing, LLC	Manufacturer of Specialty Fabricated Industrial Piping Products
		9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)	744	744	744
		Member Units (438 units)(8)		2,980	16,540


				3,724	17,284
Harrison Hydra-Gen, Ltd.	Manufacturer of Hydraulic Generators
		12% Secured Debt (Maturity—June 4, 2015)	5,487	5,372	5,487
		Preferred Stock (8% cumulative)(8)		1,237	1,237
		Common Stock (107,456 shares)(8)		718	1,620


				7,327	8,344
Hawthorne Customs and Dispatch Services, LLC	Facilitator of Import Logistics, Brokerage, and Warehousing
		Member Units (500 units)(8)		589	290
		Member Units (Wallisville Real Estate, LLC) (Fully diluted 59.2%)(8)		1,215	2,050


				1,804	2,340
Hydratec, Inc.	Designer and Installer of Micro-Irrigation Systems
		Common Stock (7,095 shares)(8)		7,095	13,720
IDX Broker, LLC	Provider of Marketing and CRM Tools for the Real Estate Industry
		12.5% Secured Debt (Maturity—November 18, 2018)	10,571	10,479	10,479
		Member Units (5,029 units)		5,029	5,450


				15,508	15,929
Impact Telecom, Inc.	Telecommunications Services Provider
		LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity—May 31, 2018)(9)	1,575	1,569	1,569
		13% Secured Debt (Maturity—May 31, 2018)	22,500	15,342	15,342
		Warrants (5,516,667 equivalent shares)		8,000	4,160


				24,911	21,071

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Indianapolis Aviation Partners, LLC	Fixed Base Operator
		15% Secured Debt (Maturity—January 15, 2015)	3,100	3,100	3,100
		Warrants (1,046 equivalent units)		1,129	2,541


				4,229	5,641
Jensen Jewelers of Idaho, LLC	Retail Jewelry Store
		Prime Plus 6.75% (Floor 3.25%), Current Coupon 10.00%, Secured Debt (Maturity—November 14, 2016)(9)	3,805	3,762	3,805
		Member Units (627 units)(8)		811	3,300


				4,573	7,105
Lighting Unlimited, LLC	Commercial and Residential Lighting Products and Design Services
		8% Secured Debt (Maturity—August 22, 2015)	1,568	1,568	1,568
		Preferred Equity (non-voting)		442	442
		Warrants (71 equivalent units)		54	40
		Member Units (700 units)(8)		100	360


				2,164	2,410
Marine Shelters Holdings, LLC (LoneStar Marine Shelters)	Fabricator of Marine and Industrial Shelters
		12% Secured Debt (Maturity—December 28, 2017)	10,250	10,103	10,103
		Preferred Member Units (2,669 units)		3,750	3,750


				13,853	13,853
Mid-Columbia Lumber Products, LLC	Manufacturer of Finger-Jointed Lumber Products
		10% Secured Debt (Maturity—December 18, 2017)	1,750	1,750	1,750
		12% Secured Debt (Maturity—December 18, 2017)	3,900	3,900	3,900
		Member Units (2,829 units)(8)		1,244	11,750
		9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)	938	938	938
		Member Units (Mid-Columbia Real Estate, LLC) (250 units)(8)		250	550


				8,082	18,888
MSC Adviser I, LLC	Third Party Investment Advisory Services
		Member Units (Fully diluted 100.0%)(8)		—	8,549
Mystic Logistics, Inc	Logistics and Distribution Services Provider for Large Volume Mailers
		12% First Lien Secured Term Loan (Maturity—August 15, 2019)	10,000	9,782	9,782
		Common Stock (5,873 shares)		2,720	2,720


				12,502	12,502

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


NAPCO Precast, LLC	Precast Concrete Manufacturing
		Prime Plus 2% (Floor 7.00%), Current Coupon 9%, Secured Debt (Maturity—September 1, 2015)(9)	625	612	625
		Prime Plus 2% (Floor 7.00%), Current Coupon 9%, Secured Debt (Maturity—February 1, 2016)(9)	2,923	2,913	2,923
		18% Secured Debt (Maturity—February 1, 2016)	4,468	4,434	4,468
		Member Units (2,955 units)(8)		2,975	6,740


				10,934	14,756
NRI Clinical Research, LLC	Clinical Research Service Provider
		14% Secured Debt (Maturity—September 8, 2016)	4,991	4,862	4,862
		Warrants (251,723 equivalent units)		252	160
		Member Units (671,233 units)		671	722


				5,785	5,744
NRP Jones, LLC	Manufacturer of Hoses, Fittings and Assemblies
		12% Secured Debt (Maturity—December 22, 2016)	12,100	11,535	11,535
		Warrants (14,331 equivalent units)		817	1,020
		Member Units (50,877 units)(8)		2,900	3,390


				15,252	15,945
OMi Holdings, Inc.	Manufacturer of Overhead Cranes
		Common Stock (1,500 shares)(8)		1,080	13,420
Pegasus Research Group, LLC (Televerde)	Provider of Telemarketing and Data Services
		Member Units (460 units)(8)		1,290	5,650
PPL RVs, Inc.	Recreational Vehicle Dealer
		11.1% Secured Debt (Maturity—June 10, 2015)	7,860	7,843	7,860
		Common Stock (1,961 shares)		2,150	8,160


				9,993	16,020
Principle Environmental, LLC	Noise Abatement Service Provider
		12% Secured Debt (Maturity—April 30, 2017)	4,060	3,762	4,060
		12% Current / 2% PIK Secured Debt (Maturity - April 30, 2017)	3,228	3,207	3,228
		Preferred Member Units (19,631 units)		4,663	11,830
		Warrants (1,036 equivalent units)		1,200	720


				12,832	19,838

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


River Aggregates, LLC	Processor of Construction Aggregates
		Zero Coupon Secured Debt (Maturity—June 30, 2018)	750	448	448
		12% Secured Debt (Maturity—June 30, 2018)	500	500	500
		Member Units (1,150 units)		1,150	1,690
		Member Units (RA Properties, LLC) (1,500 units)		369	369


				2,467	3,007
Southern RV, LLC	Recreational Vehicle Dealer
		13% Secured Debt (Maturity—August 8, 2018)	11,400	11,259	11,259
		Member Units (1,680 units)(8)		1,680	4,450
		13% Secured Debt (Southern RV Real Estate, LLC) (Maturity—August 8, 2018)	3,250	3,210	3,210
		Member Units (Southern RV Real Estate, LLC) (480 units)		480	470


				16,629	19,389
The MPI Group, LLC	Manufacturer of Custom Hollow Metal Doors, Frames and Accessories
		4.5% Current / 4.5% PIK Secured Debt (Maturity - July 1, 2019)	1,079	1,079	880
		6% Current / 6% PIK Secured Debt (Maturity—July 1, 2019)	5,845	5,845	4,806
		Warrants (1,068 equivalent units)		1,096	—


				8,020	5,686
Travis Acquisition LLC	Manufacturer of Aluminum Trailers
		12% Secured Debt (Maturity—August 30, 2018)	4,808	4,728	4,808
		Member Units (7,282 units)		7,100	12,350


				11,828	17,158
Uvalco Supply, LLC	Farm and Ranch Supply Store
		9% Secured Debt (Maturity—January 1, 2019)	1,896	1,896	1,896
		Member Units (1,006 units)(8)		1,113	3,420


				3,009	5,316
Vision Interests, Inc.	Manufacturer / Installer of Commercial Signage
		13% Secured Debt (Maturity—December 23, 2016)	3,204	3,167	3,167
		Series A Preferred Stock (3,000,000 shares)		3,000	3,250
		Common Stock (1,126,242 shares)		3,706	100


				9,873	6,517

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Ziegler's NYPD, LLC	Casual Restaurant Group
		Prime Plus 2% (Floor 7.00%), Current Coupon 9%, Secured Debt (Maturity—October 1, 2018)(9)	1,500	1,490	1,490
		9% Current / 9% PIK Secured Debt (Maturity—October 1, 2018)	5,449	5,449	4,820
		Warrants (587 equivalent units)		600	—


				7,539	6,310


Subtotal Control Investments (27.6% of total investments at fair value)				299,621	413,587

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Affiliate Investments(6)
Boss Industries, LLC	Manufacturer and distributor of air compressors, auxiliary power units, gas booster systems and vapor recovery systems
		Preferred Member Units (2,242 units)		2,000	2,000
Bridge Capital Solutions Corporation	Financial Services and Cash Flow Solutions Provider
		13% Secured Debt (Maturity—April 17, 2017)	6,000	5,823	5,823
		Warrants (19 equivalent shares)		200	630


				6,023	6,453
Brightwood Capital Fund III, LP(12)(13)	Investment Partnerships
		LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 9.14%)(8)		8,718	8,718
Condit Exhibits, LLC	Tradeshow Exhibits / Custom Displays Provider
		Member Units (3,936 units)(8)		100	500
Congruent Credit Opportunities Funds(12)(13)	Investment Partnerships
		LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)		22,106	22,048
		LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)		5,382	5,382


				27,488	27,430
Daseke, Inc.	Specialty Transportation Provider
		12% Current / 2.5% PIK Secured Debt (Maturity—July 31, 2018)	20,592	20,256	20,592
		Common Stock (19,467 shares)		5,213	12,610


				25,469	33,202
Dos Rios Partners(12)(13)	Investment Partnerships
		LP Interests (Dos Rios Partners, LP) (Fully diluted 20.24%)		1,269	1,247
		LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.43%)		403	424


				1,672	1,671
East Teak Fine Hardwoods, Inc.	Distributor of Hardwood Products
		Common Stock (5,000 shares)(8)		480	860
Freeport Financial SBIC Fund LP(12)(13)	Investment Partnership
		LP Interests (Fully diluted 9.9%)(8)		4,213	4,213

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Gault Financial, LLC (RMB Capital, LLC)	Purchases and Manages Liquidation of Distressed Assets
		8% Current / 9% PIK Secured Debt (Maturity—November 21, 2016)	13,046	12,717	10,750
		Warrants (29,025 equivalent units)		400	—


				13,117	10,750
Glowpoint, Inc.	Provider of Cloud Managed Video Collaboration Services
		8% Secured Debt (Maturity—October 18, 2018)	400	397	397
		12% Secured Debt (Maturity—October 18, 2018)	9,000	8,904	8,904
		Common Stock (GP Investment Holdings, LLC) (7,711,517 shares)		3,958	10,020


				13,259	19,321
Guerdon Modular Holdings, Inc.	Multi-Family and Commercial Modular Construction Company
		11% Senior Secured Term Loan (Maturity—August 13, 2019)	11,200	11,038	11,038
		Common Stock (213,221 shares)		2,400	2,400


				13,438	13,438
Houston Plating and Coatings, LLC	Provider of Plating and Industrial Coating Services
		Member Units (248,082 units)(8)		996	10,570
Indianhead Pipeline Services, LLC	Provider of Pipeline Support Services
		12% Secured Debt (Maturity—February 6, 2017)	7,125	6,817	6,817
		Preferred Member Units (28,905 units; 8% cumulative)(8)		1,952	1,952
		Warrants (38,193 equivalent units)		459	—
		Member Units (14,732 units)		1	—


				9,229	8,769
irth Solutions, LLC	Provider of Damage Prevention Information Technology Services
		Member Units (128 units)(8)		624	3,870
KBK Industries, LLC	Specialty Manufacturer of Oilfield and Industrial Products
		12.5% Secured Debt (Maturity—September 28, 2017)	8,250	8,194	8,250
		Member Units (250 units)(8)		341	5,920


				8,535	14,170
L.F. Manufacturing Holdings, LLC(10)	Manufacturer of Fiberglass Products
		Member Units (2,000,000 units)(8)		2,019	2,374
MPS Denver, LLC	Specialty Card Printing
		Member Units (13,800 units)		1,130	1,130

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


OnAsset Intelligence, Inc.	Provider of Transportation Monitoring / Tracking Products and Services
		12% PIK Secured Debt (Maturity—November 30, 2014)	1,795	1,795	1,795
		12% PIK Secured Debt (Maturity—November 30, 2014)	1,652	1,652	1,652
		Preferred Stock (912 shares; 7% cumulative)(8)		1,913	2,663
		Warrants (5,333 equivalent shares)		1,919	502


				7,279	6,612
OPI International Ltd.(13)	Provider of Man Camp and Industrial Storage Services
		Common Stock (20,766,317 shares)		1,371	4,971
PCI Holding Company, Inc.	Manufacturer of Industrial Gas Generating Systems
		Preferred Stock (1,500,000 shares; 20% cumulative)(8)		2,147	3,970
Quality Lease and Rental Holdings, LLC	Provider of Rigsite Accommodation Unit Rentals and Related Services
		8% Secured Revolver (Maturity—October 1, 2014)(14)	330	330	330
		12% Secured Debt (Maturity—January 8, 2018)(14)	36,577	36,073	12,500
		Preferred Member Units (Rocaciea, LLC) (250 units)		2,500	—


				38,903	12,830
Radial Drilling Services Inc.	Oil and Gas Technology Provider
		12% Secured Debt (Maturity—November 22, 2016)	4,200	3,748	3,748
		Warrants (316 equivalent shares)		758	—


				4,506	3,748
Samba Holdings, Inc.	Provider of Intelligent Driver Record Monitoring Software and Services
		12.5% Secured Debt (Maturity—November 17, 2016)	10,418	10,327	10,418
		Common Stock (158,066 shares)		1,707	4,990


				12,034	15,408

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Spectrio LLC	Provider of Audio and Digital Messaging Services
		LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 19, 2018)(9)	15,302	14,975	15,302
		LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 19, 2018)(9)	2,296	2,296	2,296
		Warrants (191 equivalent units)		887	4,200


				18,158	21,798
SYNEO, LLC	Manufacturer of Automation Machines, Specialty Cutting Tools and Punches
		12% Secured Debt (Maturity—July 13, 2016)	2,800	2,770	2,770
		Member Units (1,177 units)(8)		1,097	801
		10% Secured Debt (Leadrock Properties, LLC) (Maturity—May 4, 2026)	1,440	1,414	1,414


				5,281	4,985
Tin Roof Acquisition Company	Casual Restaurant Group
		12% Secured Debt (Maturity—November 30, 2018)	14,100	13,849	13,849
		Class C Preferred Equity (Fully diluted 10%; 10% cumulative)(8)		2,185	2,185


				16,034	16,034


Subtotal Affiliate Investments (17.4% of total investments at fair value)				244,223	259,795

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Non-Control/Non-Affiliate Investments(7)
Academi Holdings, LLC(11)	Provider of Training, Security, and Support Services
		LIBOR Plus 5.25% (Floor 1%), Current Coupon 6.25%, Secured Debt (Maturity—July 25, 2019)(9)	6,000	5,943	5,970
Accuvant Finance, LLC(11)	Cyber Security Value Added Reseller
		LIBOR Plus 4.75% (Floor 1%), Current Coupon 5.75%, Secured Debt (Maturity—October 22, 2020)(9)	5,603	5,551	5,575
Allflex Holdings III Inc.(11)	Manufacturer of Livestock Identification Products
		LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—July 19, 2021)(9)	8,000	7,956	7,972
AM3 Pinnacle Corporation(10)	Provider of Comprehensive Internet, TV and Voice Services for Multi-Dwelling Unit Properties
		10% Secured Debt (Maturity—October 22, 2018)	22,036	21,882	21,882
		Common Stock (60,240 shares)		2,000	2,000


				23,882	23,882
AM General LLC(11)	Specialty Vehicle Manufacturer
		LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity—March 22, 2018)(9)	2,625	2,566	2,441
AmeriTech College, LLC	For-Profit Nursing and Healthcare College
		18% Secured Debt (Maturity—March 9, 2017)	6,050	5,977	5,977
AMF Bowling Centers, Inc.(11)	Bowling Alley Operator
		LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—September 18, 2021)(9)	5,000	4,926	4,997
Anchor Hocking, LLC(11)	Household Products Manufacturer
		LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75% / 1.75% PIK, Current Coupon Plus PIK 9.50%, Secured Debt (Maturity—May 21, 2020)(9)	10,890	10,813	8,481
Ancile Solutions, Inc.(11)	Provider of eLearning Solutions
		LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—July 15, 2018)(9)	8,450	8,408	8,450

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Answers Corporation(11)	Consumer Internet Search Services Provider
		LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—December 20, 2018)(9)	6,256	6,202	6,334
AP Gaming I, LLC(10)	Developer, Manufacturer, and Operator of Gaming Machines
		LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—December 20, 2020)(9)	6,948	6,755	7,017
Applied Products, Inc.(10)	Adhesives Distributor
		LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 30, 2019)(9)	236	225	225
		LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 30, 2019)(9)	6,000	5,948	5,948


				6,173	6,173
Aptean, Inc.(11)	Enterprise Application Software Provider
		LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—February 26, 2020)(9)	12,686	12,643	12,623
Artel, LLC(11)	Land-Based and Commercial Satellite Provider
		LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—November 27, 2017)(9)	4,711	4,662	4,641
Ascend Learning, LLC(11)	Technology-based Healthcare Learning Solutions
		LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—July 31, 2019)(9)	4,479	4,460	4,503
ATS Workholding, Inc.(10)	Manufacturer of Machine Cutting Tools and Accessories
		LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—March 10, 2019)(9)	838	821	821
		LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—March 10, 2019)(9)	5,796	5,750	5,750


				6,571	6,571

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Beers Enterprises, Inc.(10)	Provider of Broadcast Video Transport Services
		Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.5%, Secured Debt (Maturity—March 19, 2019)(9)	1,842	1,822	1,822
		Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.5%, Secured Debt (Maturity—March 19, 2019)(9)	4,421	4,385	4,385


				6,207	6,207
B. J. Alan Company	Retailer and Distributor of Consumer Fireworks
		12.75% Current / 2.75% PIK Secured Debt (Maturity—June 22, 2017)	10,634	10,576	10,576
Blackbrush Oil and Gas LP(11)	Oil & Gas Exploration
		LIBOR Plus 6.50%, Secured Debt (Maturity—July 30, 2021)	4,000	3,970	3,950
Blackhawk Specialty Tools LLC(11)	Oilfield Equipment & Services
		LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity—August 1, 2019)(9)	6,307	6,270	6,307
Blue Bird Body Company(11)	School Bus Manufacturer
		LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—June 26, 2020)(9)	11,500	11,335	11,356
Bluestem Brands, Inc.(11)	Multi-Channel Retailer of General Merchandise
		LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 6, 2018)(9)	3,289	3,232	3,299
Brainworks Software, LLC(10)	Advertising Sales and Production and Newspaper Circulation Software
		LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—July 22, 2019)(9)	6,263	6,178	6,178
Brasa Holdings Inc.(11)	Upscale Full Service Restaurants
		LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—January 20, 2020)(9)	2,143	2,126	2,166
Brundage-Bone Concrete Pumping, Inc.(11)	Construction Services Provider
		10.375% Secured Debt (Maturity—September 1, 2021)	2,500	2,500	2,575
Calloway Laboratories, Inc.(10)	Health Care Testing Facilities
		12% PIK Secured Debt (Maturity—September 30, 2015)(14)	7,131	7,082	2,968
		Warrants (125,000 equivalent shares)		17	—


				7,099	2,968

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Cedar Bay Generation Company LP(11)	Coal-Fired Cogeneration Plant
		LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—April 23, 2020)(9)	7,087	7,029	7,118
Charlotte Russe, Inc(11)	Fast-Fashion Retailer to Young Women
		LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity—May 22, 2019)(9)	4,950	4,910	4,876
CHI Overhead Doors, Inc.(11)	Manufacturer of Overhead Garage Doors
		LIBOR Plus 9.50%, (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—September 18, 2019)(9)	2,500	2,466	2,494
Clarius ASIG, LLC(10)	Prints & Advertising Film Financing
		12% PIK Secured Debt (Maturity—September 14, 2014)	3,813	3,707	3,680
Clarius BIGS, LLC(10)	Prints & Advertising Film Financing
		12% PIK Secured Debt (Maturity—January 5, 2015)	3,307	3,200	3,200
CGSC of Delaware Holdings Corp.(11)(13)	Insurance Brokerage Firm
		LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity—October 16, 2020)(9)	2,000	1,974	1,760
Compact Power Equipment, Inc.	Equipment / Tool Rental
		6% Current / 6% PIK Secured Debt (Maturity—October 1, 2017)	4,100	4,084	4,100
		Series A Preferred Stock (4,298,435 shares; 8% cumulative)(8)		1,058	2,381


				5,142	6,481
Covenant Surgical Partners, Inc.(11)	Ambulatory Surgical Centers
		8.75% Secured Debt (Maturity—August 1, 2019)	2,000	2,000	1,990
CST Industries Inc.(11)	Storage Tank Manufacturer
		LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity—May 22, 2017)(9)	7,418	7,351	7,418
Darr Equipment LP(10)	Heavy Equipment Dealer
		11.75% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)	20,188	19,553	19,553
		Warrants (915,734 equivalent units)		474	474


				20,027	20,027

Table of Contents

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

September 30, 2014

(in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)			Fair Value


Digity Media LLC(11)	Radio Station Operator
		LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity—February 10, 2019)(9)	7,500	7,424		7,481
Drilling Info, Inc.	Information Services for the Oil and Gas Industry
		Common Stock (3,788,865 shares)		1,335		9,920
Energy and Exploration Partners, LLC(11)	Oil & Gas Exploration & Production				&nb