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10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023


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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 814-00736

PENNANTPARK INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)



MARYLAND		20-8250744
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1691 Michigan Avenue, Miami Beach, Florida		33139
(Address of principal executive offices)		(Zip Code)

(786) 297-9500

(Registrant’s Telephone Number, Including Area Code)

None

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

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	PNNT	The New York Stock Exchange

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  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No 

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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of May 11, 2023 was 65,224,500.

PENNANTPARK INVESTMENT CORPORATION

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023

TABLE OF CONTENTS



PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Consolidated Statements of Assets and Liabilities as of March 31, 2023 (unaudited) and September 30, 2022		4

Consolidated Statements of Operations for the three and six months ended March 31, 2023 and 2022 (unaudited)		5

Consolidated Statements of Changes in Net Assets for the three and six months ended March 31, 2023 and 2022 (unaudited)		6

Consolidated Statements of Cash Flows for the six months ended March 31, 2023 and 2022 (unaudited)		7

Consolidated Schedules of Investments as of March 31, 2023 (unaudited) and September 30, 2022		8

Notes to Consolidated Financial Statements (unaudited)		19

Report of Independent Registered Public Accounting Firm (PCAOB ID 49)		36

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		38

Item 3. Quantitative and Qualitative Disclosures About Market Risk		53

Item 4. Controls and Procedures		53

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		54

Item 1A. Risk Factors		54

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		55

Item 3. Defaults Upon Senior Securities		55

Item 4. Mine Safety Disclosures		55

Item 5. Other Information		55

Item 6. Exhibits		56

SIGNATURES		57

PART I—CONSOLIDATED FINANCIAL INFORMATION

We are filing this Quarterly Report on Form 10-Q, or the Report, in compliance with Rule 13a-13 as promulgated by the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In this Report, except where context suggest otherwise, the terms “Company,” “we,” “our” or “us” refers to PennantPark Investment Corporation and its consolidated subsidiaries; “PennantPark Investment” refers to only PennantPark Investment Corporation; “our SBIC Fund” refers collectively to our consolidated subsidiaries, PennantPark SBIC II LP, or SBIC II, and its general partner, PennantPark SBIC GP II, LLC; “Funding I” refers to PennantPark Investment Funding I, LLC, a wholly-owned subsidiary prior to deconsolidation on July 31, 2020; “Taxable Subsidiary” refers to PNNT Investment Holdings, LLC; “PSLF” refers to PennantPark Senior Loan Fund, LLC, an unconsolidated joint venture; “PTSF II” refers to PennantPark-TSO Senior Loan Fund II, LP, an unconsolidated limited partnership; “PennantPark Investment Advisers” or “Investment Adviser” refers to PennantPark Investment Advisers, LLC; “PennantPark Investment Administration” or “Administrator” refers to PennantPark Investment Administration, LLC; “SBA” refers to the Small Business Administration; “SBIC” refers to a small business investment company under the Small Business Investment Act of 1958, as amended, or the “1958 Act”; “BNP Credit Facility” refers to our revolving credit facility with BNP Paribas prior to deconsolidation of Funding I; “Truist Credit Facility” refers to our multi-currency, senior secured revolving credit facility with Truist Bank (formerly SunTrust Bank), as amended and restated; “2024 Notes” refers to our 5.50% Notes due 2024; “2026 Notes” refers to our 4.50% Notes due May 2026; “2026 Notes-2” refers to our 4.00% Notes due November 2026; “BDC” refers to a business development company under the Investment Company Act of 1940, as amended, or the “1940 Act”; “SBCAA” refers to the Small Business Credit Availability Act; “Code” refers to the Internal Revenue Code of 1986, as amended; and “RIC” refers to a regulated investment company under the Code. References to our portfolio, our investments and our business include investments we make through SBIC II and other consolidated subsidiaries.

Item 1. Consolidated Financial Statements

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(In thousands, except share and per share data)


	March 31, 2023			September 30, 2022
	(unaudited)
Assets
Investments at fair value
Non-controlled, non-affiliated investments (cost—$876,705 and $882,513, respectively)	$	879,572		$	932,155
Non-controlled, affiliated investments (cost—$54,813 and $37,612, respectively)		51,807			34,760
Controlled, affiliated investments (cost—$233,082 and $381,904, respectively)		201,132			259,386
Total investments (cost—$1,164,600 and $1,302,029, respectively)		1,132,511			1,226,301
Cash and cash equivalents (cost—$63,105 and $52,844, respectively)		63,135			52,666
Interest receivable		4,419			3,593
Receivable for investments sold		—			29,494
Distribution receivable		4,834			2,420
Prepaid expenses and other assets		12,036			4,036
Total assets		1,216,935			1,318,510
Liabilities
Distributions payable		12,067			9,784
Payable for investments purchased		15,149			—
Truist Credit Facility payable, at fair value (cost—$377,420 and $385,920, respectively) (See Notes 5 and 10)		362,268			376,687
2026 Notes payable, net (par— $150,000) (See Notes 5 and 10)		147,218			146,767
2026 Notes-2 payable, net (par— $165,000) (See Notes 5 and 10)		161,800			161,373
SBA debentures payable, net (par—zero and $20,000, respectively) (See Notes 5 and 10)		—			19,686
Base management fee payable (See Note 3)		4,040			4,849
Incentive fee payable (See Note 3)		3,530			—
Interest payable on debt		6,093			6,264
Accrued expenses		9,055			6,639
Deferred tax liability		—			896
Total liabilities		721,220			732,945
Commitments and contingencies (See Note 11)
Net assets
Common stock, 65,224,500 shares issued and outstanding Par value $0.001 per share and 100,000,000 shares authorized		65			65
Paid-in capital in excess of par value		748,169			748,169
Accumulated deficit		(252,519	)		(162,669	)
Total net assets	$	495,715		$	585,565
Total liabilities and net assets	$	1,216,935		$	1,318,510
Net asset value per share	$	7.60		$	8.98

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Investment income:
From non-controlled, non-affiliated investments:
Interest	$	26,759		$	14,543		$	48,990		$	30,083
Payment-in-kind		24			996			24			3,406
Dividend income		1,131			—			1,131			—
Other income		346			2,612			833			6,803
From non-controlled, affiliated investments:
Interest		81			—			81			—
From controlled, affiliated investments:
Interest		3,648			2,343			6,506			4,609
Payment-in-kind		658			1,425			1,789			3,551
Dividend income		3,702			2,420			6,958			4,235
Total investment income		36,349			24,339			66,312			52,687
Expenses:
Base management fee (See Note 3)		4,040			4,981			8,642			10,090
Incentive fee (See Note 3)		3,530			—			5,721			2,657
Interest and expenses on debt (See Note 10)		10,587			6,498			20,316			13,385
Administrative services expenses (See Note 3)		267			250			533			500
General and administrative expenses		835			723			1,676			1,446
Expenses before provision for taxes		19,259			12,452			36,888			28,078
Provision for taxes on net investment income		450			200			2,450			400
Total expenses		19,709			12,652			39,338			28,478
Net investment income		16,640			11,687			26,974			24,209
Realized and unrealized gain (loss) on investments and debt:
Net realized gain (loss) on investments and debt:
Non-controlled, non-affiliated investments		(14,613	)		1,889			(10,549	)		7,090
Non-controlled and controlled, affiliated investments		(133,098	)		140,898			(133,098	)		109,624
Debt extinguishment		(289	)		(1,132	)		(289	)		(2,801	)
Provision for taxes on realized gain on investments		(717	)		(5,060	)		(717	)		(5,060	)
Net realized gain (loss) on investments and debt		(148,717	)		136,595			(144,653	)		108,853
Net change in unrealized appreciation (depreciation) on:
Non-controlled, non-affiliated investments		3,950			(158,062	)		(46,567	)		(207,665	)
Non-controlled and controlled, affiliated investments		131,459			6,610			90,411			102,982
Provision for taxes on unrealized appreciation (depreciation) on investments		—			5,045			896			—
Debt appreciation (depreciation) (See Notes 5 and 10)		1,540			1,285			5,919			289
Net change in unrealized appreciation (depreciation) on investments and debt		136,949			(145,122	)		50,659			(104,394	)
Net realized and unrealized gain (loss) from investments and debt		(11,768	)		(8,527	)		(93,994	)		4,459
Net increase (decrease) in net assets resulting from operations	$	4,872		$	3,160		$	(67,020	)	$	28,668
Net increase (decrease) in net assets resulting from operations per common share (See Note 7)	$	0.07		$	0.05		$	(1.03	)	$	0.43
Net investment income per common share	$	0.26		$	0.18		$	0.41		$	0.36

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)

(In thousands)


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Net increase (decrease) in net assets resulting from operations:
Net investment income	$	16,640		$	11,687		$	26,974		$	24,209
Net realized gain (loss) on investments and debt		(148,000	)		141,655			(143,936	)		113,913
Net change in unrealized appreciation (depreciation) on investments		135,409			(151,452	)		43,844			(104,683	)
Net change in provision for taxes on net realized gain (loss) on investments		(717	)		(5,060	)		(717	)		(5,060	)
Net change in provision for taxes on unrealized appreciation (depreciation) on investments		—			5,045			896			—
Net change in unrealized (appreciation) depreciation on debt		1,540			1,285			5,919			289
Net increase (decrease) in net assets resulting from operations		4,872			3,160			(67,020	)		28,668
Distributions to stockholders:		(12,066	)		(9,389	)		(22,830	)		(17,432	)
Capital Transactions:
Repurchase of common stock (See Note 13)		—			(7,055	)		—			(7,055	)
Net increase (decrease) in net assets		(7,194	)		(13,284	)		(89,850	)		4,181
Net assets:
Beginning of period		502,909			677,609			585,565			660,144
End of period	$	495,715		$	664,325		$	495,715		$	664,325
Capital share activity:
Shares of common stock repurchased		—			913,454			—			913,454

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)


	Six Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations		(67,020	)	$	28,668
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in net unrealized (appreciation) depreciation on investments		(43,844	)	$	104,683
Net change in unrealized appreciation (depreciation) on debt		(5,919	)	$	(289	)
Net realized (gain) loss on investments		143,647		$	(116,714	)
Debt extinguishment realized loss		289		$	2,801
Net accretion of discount and amortization of premium		(4,717	)	$	(3,515	)
Purchases of investments		(144,489	)	$	(473,128	)
Payment-in-kind income		(1,812	)	$	(7,688	)
Proceeds from dispositions of investments		144,780		$	537,695
Amortization of deferred financing costs		903		$	1,049
(Increase) or Decrease in:
Interest receivable		(826	)	$	1,565
Receivables from investments sold		29,494		$	12,793
Distribution receivable		(2,414	)	$	(726	)
Prepiad expenses and other assets		(8,000	)	$	—
Increase or (Decrease) in:
Payable for investments purchased		15,149		$	1,213
Interest payable on debt		(171	)	$	1,742
Base management fee payable, net		(809	)	$	401
Performance-based incentive fee payable, net		3,530		$	(575	)
Deferred tax liability		(896	)	$	—
Accrued other expenses		2,416		$	(221	)
Net cash provided by (used in) operating activities		59,291		$	89,754
Cash flows from financing activities:
Repurchase of common stock		-			(7,055	)
Distributions paid to stockholders		(20,546	)		(16,091	)
Net repayments of the 2024 Notes issuance		-			(86,250	)
Proceeds from 2026 Notes-2 issuance		-			160,519
Repayments under SBA debentures		(20,000	)		(36,358	)
Borrowings under Truist Credit Facility		75,500			496,841
Repayments under Truist Credit Facility		(84,000	)		(595,466	)
Net cash provided by (used in) financing activities		(49,046	)		(83,860	)
Net increase (decrease) in cash equivalents		10,245			5,894
Effect of exchange rate changes on cash		223			—
Cash and cash equivalents, beginning of period		52,666			20,357
Cash and cash equivalents, end of period		63,134		$	26,251
Supplemental disclosure of cash flow information:
Interest paid	$	19,584		$	10,594
Taxes paid	$	299		$	5,055
Non-cash exchanges and conversions	$	12,628		$	(31,274	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration	Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Investments in Non-Controlled, Non-Affiliated Portfolio Companies—177.4% of Net Assets (1), (2)
First Lien Secured Debt—118.9% of Net Assets
A1 Garage Merger Sub, LLC	12/22/2028	Personal, Food and Miscellaneous Services		11.12	%	3M L+660			1,705	$	1,681	$	1,680
A1 Garage Merger Sub, LLC - Unfunded Term Loan	12/21/2024	Personal, Food and Miscellaneous Services		—			—		5,253		-		-
A1 Garage Merger Sub, LLC (Revolver) (7)	12/22/2028	Personal, Food and Miscellaneous Services		—			—		2,532		-		(38	)
Ad.net Acquisition, LLC (Revolver)	05/07/2026	Media		11.16	%	3M L+600			178		178		176
Ad.net Acquisition, LLC (Revolver) (7)	05/07/2026	Media		—			—		267		-		(2	)
Altamira Technologies, LLC (Revolver)	07/24/2025	Aerospace and Defense		10.55	%	3M L+550			50		50		50
Altamira Technologies, LLC (Revolver) (7)	07/24/2025	Aerospace and Defense		—			—		138		—		-
Anteriad, LLC (f/k/a MeritDirect, LLC)	05/23/2024	Media		11.46	%	3M L+650			1,268		1,243		1,243
Anteriad, LLC (f/k/a MeritDirect, LLC) (Revolver) (7)	05/23/2024	Media		—			—		1,612		—		(48	)
Any Hour Services	07/21/2027	Personal, Food and Miscellaneous Services		10.49	%	3M L+563			4,099		4,077		3,986
Any Hour Services (Revolver) (7)	07/21/2027	Personal, Food and Miscellaneous Services		—			—		1,147		—		(32	)
Apex Service Partners, LLC	07/31/2025	Personal, Food and Miscellaneous Services		7.60	%	1M L+550			1,331		1,331		1,324
Apex Service Partners, LLC Term Loan C	07/31/2025	Personal, Food and Miscellaneous Services		9.08	%	1M L+550			1,893		1,876		1,883
Apex Service Partners, LLC (Revolver)	07/31/2025	Personal, Food and Miscellaneous Services		10.26	%	3M L+525			466		466		464
Apex Service Partners, LLC (Revolver) (7)	07/31/2025	Personal, Food and Miscellaneous Services		—			—		466		—		(2	)
Applied Technical Services, LLC	12/29/2026	Environmental Services		10.91	%	3M L+575			2,256		2,234		2,211
Applied Technical Services, LLC (7)	04/21/2023	Environmental Services		—			—		735		—		(6	)
Applied Technical Services, LLC (Revolver)	12/29/2026	Environmental Services		12.47	%	3M P+475			825		825		809
Applied Technical Services, LLC (Revolver) (7)	12/29/2026	Environmental Services		—			—		175		—		(4	)
Arcfield Acquisition Corp. (Revolver) (7)	03/07/2028	Aerospace and Defense		—			—		2,263		—		(45	)
Berwick Industrial Park	05/02/2023	Buildings and Real Estate		11.00	%		—		4,000		4,005		3,936
Beta Plus Technologies, Inc.	07/01/2029	Business Services		9.42	%	SOFR+475			4,975		4,886		4,378
BioDerm, Inc.	01/31/2028	Healthcare, Education and Childcare		10.86	%	3M L+650			9,000		8,895		8,865
BioDerm, Inc. (Revolver) (7)	01/31/2028	Healthcare, Education and Childcare		—			—		1,071		—		(16	)
Blackhawk Industrial Distribution, Inc.	09/17/2024	Distribution		11.15	%	3M L+625			1,407		1,394		1,375
Blackhawk Industrial Distribution, Inc.(7)	09/17/2024	Distribution		—			—		3,808		—		(67	)
Blackhawk Industrial Distribution, Inc. (Revolver)	09/17/2024	Distribution		11.15	%	3M L+625			343		343		332
Blackhawk Industrial Distribution, Inc. (Revolver) (7)	09/17/2024	Distribution		—			—		3,203		—		(104	)
Broder Bros., Co.	12/04/2025	Consumer Products		10.73	%	3M L+600			9,967		9,967		9,967
Cartessa Aesthetics, LLC	06/14/2028	Distribution		10.90	%	1M L+600			34,229		33,618		33,887
Cartessa Aesthetics, LLC - (Revolver)	06/14/2028	Distribution		10.90	%	1M L+600			1,265		1,265		1,253
Cartessa Aesthetics, LLC - (Revolver) (7)	06/14/2028	Distribution		—			—		2,297		—		(23	)
CF512, Inc.	08/20/2026	Media		10.96	%	3M L+600			6,686		6,607		6,552
CF512, Inc.(Revolver) (7)	08/20/2026	Media		—			—		909		—		(18	)
Compex Legal Services, Inc.	02/09/2026	Business Services		10.45	%	3M L+555			849		840		849
Compex Legal Services, Inc. (Revolver)	02/07/2025	Business Services		10.45	%	3M L+555			393		393		393
Compex Legal Services, Inc. (Revolver) (7)	02/07/2025	Business Services		—			—		262		—		—
Connatix Buyer, Inc. (7)	07/14/2023	Media		—			—		3,158		—		(87	)
Connatix Buyer, Inc. (Revolver) (7)	07/13/2027	Media		—			—		1,859		—		(70	)
Confluent Health, LLC	11/30/2028	Healthcare, Education and Childcare		11.00	%	3M P+300			2,000		1,860		1,860
Crane 1 Services, Inc.	08/16/2027	Personal, Food and Miscellaneous Services		10.91	%	3M L+575			2,588		2,562		2,562
Crane 1 Services, Inc. (Revolver)	08/16/2027	Personal, Food and Miscellaneous Services		10.91	%	1M L+575			78		78		77
Crane 1 Services, Inc. (Revolver) (7)	08/16/2027	Personal, Food and Miscellaneous Services		—			—		214		—		(2	)
DermaRite Industries LLC	06/30/2023	Manufacturing / Basic Industries		12.16	%	1M L+700			8,755		8,749		3,169
Dr. Squatch, LLC	08/31/2027	Personal and Non-Durable Consumer Products		10.75	%	3M L+575			12,853		12,688		12,661
Dr. Squatch, LLC (7)	08/27/2026	Personal and Non-Durable Consumer Products		—			—		2,000		—		(10	)
Dr. Squatch, LLC (Revolver)	08/31/2027	Personal and Non-Durable Consumer Products		10.75	%	1M L+575			1,551		1,551		1,527
Dr. Squatch, LLC (Revolver) (7)	08/31/2027	Personal and Non-Durable Consumer Products		—			—		775		—		(12	)
DRS Holdings III, Inc.	11/03/2025	Consumer Products		10.59	%	3M L+575			7		7		7
DRS Holdings III, Inc. (Revolver) (7)	11/03/2025	Consumer Products		—			—		1,783		—		(52	)
ECL Entertainment, LLC	05/01/2028	Hotels, Motels, Inns and Gaming		12.42	%	1M L+750			19,059		18,930		18,881
ECM Industries, LLC (Revolver)	12/23/2025	Electronics		9.77	%	3M L+450			97		97		93
ECM Industries, LLC (Revolver) (7)	12/23/2025	Electronics		—			—		421		—		(18	)
EDS Buyer, LLC	12/22/2028	Aerospace and Defense		11.15	%	3M L+625			6,250		6,161		6,094
EDS Buyer, LLC - Unfunded Term Loan	12/22/2028	Aerospace and Defense		—			—		5,625		—		(70	)
EDS Buyer, LLC - (Revolver) (7)	12/22/2028	Aerospace and Defense		—			—		1,687		—		(42	)
Exigo Intermediate II, LLC	03/15/2027	Business Services		10.59	%	3M L+575			24,750		24,438		24,255
Exigo Intermediate II, LLC (7)	03/15/2024	Business Services		—			—		7,424		—		(93	)
Exigo Intermediate II, LLC (Revolver) (7)	03/15/2027	Business Services		—			—		1,856		—		(37	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration	Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Fairbanks Morse Defense	06/17/2028	Aerospace and Defense		9.48	%	3M L+475			738	$	735	$	702
Five Star Buyer, Inc.	02/23/2028	Leisure, Amusement, Motion Pictures, Entertainment		11.90	%	3M L+700			5,173		5,070		5,069
Five Star Buyer, Inc. - Unfunded Term Loan	02/23/2028	Leisure, Amusement, Motion Pictures, Entertainment		—			—		1,079		—		(22	)
Five Star Buyer, Inc. - Unfunded Revolver	02/23/2028	Leisure, Amusement, Motion Pictures, Entertainment		—			—		670		—		(14	)
Gantech Acquisition Corp.	05/14/2026	Business Services		11.09	%	1M L+625			16,637		16,408		16,055
Gantech Acquisition Corp. (Revolver)	05/14/2026	Business Services		11.09	%	1M L+625			862		863		833
Gantech Acquisition Corp. (Revolver) (7)	05/14/2026	Business Services		—			—		1,128		—		(40	)
Graffiti Buyer, Inc.	08/10/2027	Distribution		10.66	%	3M L+550			227		225		225
Graffiti Buyer, Inc. (7)	08/10/2023	Distribution		—			—		665		—		—
Graffiti Buyer, Inc. (Revolver)	08/10/2027	Distribution		10.66	%	3M L+550			451		451		446
Graffiti Buyer, Inc. (Revolver) (7)	08/10/2027	Distribution		—			—		318		—		(3	)
Hancock Roofing and Construction L.L.C.	12/31/2026	Insurance		10.30	%	1M L+550			160		160		157
Hancock Roofing and Construction L.L.C. (Revolver) (7)	12/31/2026	Insurance		—			—		590		—		(12	)
Holdco Sands Intermediate, LLC	11/23/2028	Aerospace and Defense		10.17	%	3M L+600			1,908		1,876		1,889
Holdco Sands Intermediate, LLC (Revolver) (7)	11/23/2027	Aerospace and Defense		—			—		3,941		—		(39	)
HV Watterson Holdings, LLC	12/17/2026	Business Services		11.41	%	1M L+625			280		278		272
HV Watterson Holdings, LLC (7)	12/17/2026	Business Services		—			—		2,219		—		(43	)
HV Watterson Holdings, LLC - (Revolver)	12/17/2026	Business Services		11.41	%	3M L+625			1,050		1,050		1,022
HV Watterson Holdings, LLC - (Revolver)(7)	12/17/2026	Business Services		—			—		200		—		(5	)
HW Holdco, LLC	12/10/2024	Media		9.78	%	3M L+500			11,237		11,140		11,069
HW Holdco, LLC (7)	12/10/2024	Media		—			—		1,858		—		(9	)
HW Holdco, LLC (Revolver) (7)	12/10/2024	Media		—			—		3,387		—		(51	)
Icon Partners III, LP	05/11/2028	Auto Sector		9.32	%	3M L+450			1,985		1,606		1,395
IDC Infusion Services, Inc.	12/30/2026	Healthcare, Education and Childcare		11.90	%	3M L+700			3,667		3,568		3,593
IDC Infusion Services, Inc. (Revolver) (7)	12/30/2026	Healthcare, Education and Childcare		—			—		4,167		—		(146	)
IG Investments Holdings, LLC (Revolver) (7)	09/22/2027	Business Services		—			—		477		—		(7	)
Imagine Acquisitionco, LLC (7)	11/15/2027	Business Services		—			—		2,341		—		(47	)
Imagine Acquisitionco, LLC (Revolver) (7)	11/15/2027	Business Services		—			—		1,685		—		(51	)
Inception Fertility Ventures, LLC	12/07/2023	Healthcare, Education and Childcare		11.95	%	3M L+715			20,403		20,248		19,995
Infinity Home Services Holdco, Inc.	12/28/2028	Personal, Food and Miscellaneous Services		11.73	%	3M L+685			517		517		506
Infinity Home Services Holdco, Inc. - Unfunded Term Loan	12/28/2023	Personal, Food and Miscellaneous Services		—			—		3,230		—		(65	)
Infinity Home Services Holdco, Inc.(Revolver)	12/28/2028	Personal, Food and Miscellaneous Services		13.75	%	3M L+575			97		97		95
Infinity Home Services Holdco, Inc.(Revolver) (7)	12/28/2028	Personal, Food and Miscellaneous Services		—			—		678		—		(14	)
Infolinks Media Buyco, LLC (7)	11/01/2023	Media		—			—		2,372		—		24
Integrity Marketing Acquisition, LLC	08/27/2025	Insurance		11.00	%	3M L+605			9,930		9,885		9,831
ITI Holdings, Inc.	03/03/2028	Business Services		10.58	%	3M L+550			8,883		8,751		8,705
ITI Holdings, Inc. (Revolver)	03/03/2028	Business Services		10.45	%	3M L+550			942		942		923
ITI Holdings, Inc. (Revolver) (7)	03/03/2028	Business Services		—			—		548		—		(11	)
K2 Pure Solutions NoCal, L.P.	12/20/2023	Chemicals, Plastics and Rubber		11.95	%	1M L+700			10,853		10,826		10,853
K2 Pure Solutions NoCal, L.P. (Revolver)	12/20/2023	Chemicals, Plastics and Rubber		12.91	%	1M L+800			485		485		485
K2 Pure Solutions NoCal, L.P. (Revolver) (7)	12/20/2023	Chemicals, Plastics and Rubber		—			—		1,454		—		—
Kinetic Purchaser, LLC	11/10/2027	Consumer Products		11.16	%	3M L+600			24,219		23,734		23,856
Kinetic Purchaser, LLC (Revolver)	11/10/2026	Consumer Products		11.16	%	3M L+600			3,883		3,883		3,825
Kinetic Purchaser, LLC (Revolver) (7)	11/10/2026	Consumer Products		—			—		971		—		(15	)
Lash OpCo, LLC	02/18/2027	Consumer Products		11.84	%	1M L+700			2,814		2,765		2,757
Lash OpCo, LLC (Revolver)	08/16/2026	Consumer Products		11.84	%	1M L+700			1,092		1,092		1,070
Lash OpCo, LLC (Revolver) (7)	08/16/2026	Consumer Products		—			—		728		—		(15	)
LAV Gear Holdings, Inc.	10/31/2024	Leisure, Amusement, Motion Pictures, Entertainment		10.55	%	1M L+550			2,102		2,083		2,072
			(PIK 5.50%)
LAV Gear Holdings, Inc. - Unfunded Term Loan	10/31/2024	Leisure, Amusement, Motion Pictures, Entertainment		—			—		51		—		(1	)
Ledge Lounger, Inc.	11/09/2026	Consumer Products		11.15	%	3M L+625			9,131		8,992		8,949
Ledge Lounger, Inc. (Revolver)	11/09/2026	Consumer Products		11.15	%	3M L+625			966		966		947
Ledge Lounger, Inc. (Revolver) (7)	11/09/2026	Consumer Products		—			—		966		—		(19	)
Lightspeed Buyer Inc.	02/03/2026	Healthcare, Education and Childcare		10.34	%	1M L+550			2,209		2,196		2,154
Lightspeed Buyer Inc. (Revolver) (7)	02/03/2026	Healthcare, Education and Childcare		—			—		1,166		—		(29	)
Limerick Town Cener, LLC	09/27/2023	Real Estate		12.50	%		—		3,000		2,985		2,994
LJ Avalon Holdings, LLC - Unfunded Term Loan	07/31/2024	Environmental Services		—			—		1,467		—		(7	)
LJ Avalon Holdings, LLC (Revolver)(7)	01/31/2030	Environmental Services		—			—		587		—		(12	)
LSF9 Atlantis Holdings, LLC	03/31/2029	Retail		12.15	%	SOFR+725			5,850		5,641		5,684
Mars Acquisition Holdings Corp.	05/14/2026	Media		10.55	%	3M L+550			4,901		4,814		4,852
Mars Acquisition Holdings Corp. (Revolver)(7)	05/14/2026	Media		—			—		1,209		—		(12	)
MBS Holdings, Inc. (Revolver) (7)	04/16/2027	Telecommunications		—			—		694		—		(7	)
MDI Buyer, Inc.	07/25/2028	Chemicals, Plastics and Rubber		10.79	%	3M L+600			20,236		19,911		19,785
MDI Buyer, Inc. (Revolver)	07/25/2028	Chemicals, Plastics and Rubber		10.30	%	3M L+600			683		683		668
MDI Buyer, Inc. (Revolver) (7)	07/25/2028	Chemicals, Plastics and Rubber		—			—		1,544		—		(19	)
Meadowlark Acquirer, LLC	12/10/2027	Business Services		10.41	%	3M L+525			1,947		1,929		1,927
Meadowlark Acquirer, LLC Term Loan I (7)	12/10/2027	Business Services		—			—		1,038		—		—
Meadowlark Acquirer, LLC Term Loan II (7)	12/10/2027	Business Services		—			—		8,922		—		—
Meadowlark Acquirer, LLC (Revolver) (7)	12/10/2027	Business Services		—			—		1,685		—		(17	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration	Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Municipal Emergency Services, Inc.	09/28/2027	Distribution		11.05	%	3M L+600			1,862	$	1,845	$	1,784
Municipal Emergency Services, Inc. (7)	09/28/2027	Distribution		—			—		12		—		—
Municipal Emergency Services, Inc. - Unfunded Term Loan A	06/16/2023	Distribution		—			—		1,255		—		(34	)
Municipal Emergency Services, Inc. - Unfunded Term Loan B	12/16/2024	Distribution		—			—		2,510		—		(105	)
Municipal Emergency Services, Inc. (Revolver)	09/28/2027	Distribution		11.05	%	3M L+600			1,128		1,128		1,081
Municipal Emergency Services, Inc. (Revolver) (7)	09/28/2027	Distribution		—			—		752		—		(32	)
NBH Group LLC (Revolver) (7)	08/19/2026	Healthcare, Education and Childcare		—			—		1,163		—		—
Neptune Flood Incorporated	10/14/2026	Financial Services		10.82	%	1M L+600			3,117		3,099		3,117
One Stop Mailing, LLC	05/07/2027	Cargo Transport		11.09	%	3M L+625			6,972		6,863		6,763
ORL Acquisition, Inc.	09/03/2027	Business Services		10.41	%	3M L+525			4,431		4,362		4,387
ORL Acquisition, Inc. (Revolver) (7)	09/03/2027	Business Services		—			—		597		—		(6	)
Ox Two, LLC	05/18/2026	Building Materials		12.41	%	1M L+725			15,313		15,138		14,853
Ox Two, LLC (Revolver) (7)	05/18/2026	Building Materials		—			—		2,419		—		(73	)
Pequod Merger Sub, Inc. - Term Loan	12/02/2026	Financial Services		11.32	%	3M L+640			11,532		11,301		11,301
Pequod Merger Sub, Inc. - Unfunded Term Loan	12/02/2026	Financial Services		—			—		2,847		—		—
Pequod Merger Sub, Inc. (Revolver) (7)	12/02/2026	Financial Services		—			—		757		—		—
PL Acquisitionco, LLC (Revolver) (7)	11/09/2027	Retail		—			—		3,236		—		(146	)
Pragmatic Institute, LLC	07/06/2028	Business Services		10.64	%	3M L+575			35,163		34,685		34,636
Pragmatic Institute, LLC Term Loan (7)	07/06/2028	Business Services		—			—		7,193		—		(36	)
Pragmatic Institute, LL (Revolver)	07/06/2028	Business Services		10.64	%	3M L+575			959		959		945
Pragmatic Institute, LL (Revolver) (7)	07/06/2028	Business Services		—			—		3,836		—		(58	)
Quantic Electronics, LLC	11/19/2026	Aerospace and Defense		11.21	%	1M L+625			1,498		1,487		1,476
Quantic Electronics, LLC - Unfunded Term Loan	11/19/2026	Aerospace and Defense		—			—		584		—		(3	)
Quantic Electronics, LLC (Revolver)	11/19/2026	Aerospace and Defense		11.21	%	3M L+625			423		423		416
Quantic Electronics, LLC (Revolver) (7)	11/19/2026	Aerospace and Defense		—			—		106		—		(2	)
Questex, LLC	09/09/2024	Media		8.98	%	3M L+500			21,488		21,365		21,273
Questex, LLC (Revolver) (7)	09/09/2024	Media		—			—		3,590		—		(36	)
Radius Aerospace, Inc. (Revolver)	03/31/2025	Aerospace and Defense		10.78	%	3M L+575			371		371		364
Radius Aerospace, Inc. (Revolver) (7)	03/31/2025	Aerospace and Defense		—			—		1,856		—		(37	)
Rancho Health MSO, Inc. (7)	12/18/2025	Healthcare, Education and Childcare		10.48	%	3M L+575			289		289		289
Rancho Health MSO, Inc. - Unfunded Term Loan	12/18/2025	Healthcare, Education and Childcare		—			—		761		—		—
Rancho Health MSO, Inc. (Revolver) (7)	12/18/2025	Healthcare, Education and Childcare		—			—		525		—		—
Reception Purchaser, LLC	02/28/2028	Transportation		10.83	%	SOFR+600			5,940		5,861		5,665
Recteq, LLC (Revolver)	01/29/2026	Consumer Products		11.41	%	3M L+625			188		188		180
Recteq, LLC (Revolver) (7)	01/29/2026	Consumer Products		—			—		939		—		(38	)
Research Now Group, Inc. and Dynata, LLC	12/20/2024	Business Services		10.31	%	3M L+550			125		125		95
Riverpoint Medical, LLC (Revolver) (7)	06/20/2025	Healthcare, Education and Childcare		—			—		364		—		(5	)
Riverside Assessments, LLC	03/10/2025	Education		10.67	%	3M L+575			12,773		12,612		12,581
Sales Benchmark Index LLC (Revolver) (7)	01/03/2025	Business Services		—			—		732		—		(4	)
Sargent & Greenleaf Inc. (Revolver)	12/20/2024	Electronics		12.26	%	3M L+450			453		453		445
Sargent & Greenleaf Inc. (Revolver) (7)	12/20/2024	Electronics		—			—		154		-		(3	)
Schlesinger Global, Inc.	07/14/2025	Business Services		11.41	%	3M L+650			4,667		4,622		4,562
Schlesinger Global, Inc. (Revolver)	07/14/2025	Business Services		11.41	%	3M L+650			30		30		30
			(PIK 0.5%)
Schlesinger Global, Inc. (Revolver)(7)	07/14/2025	Business Services		—			—		8		—		—
Seaway Buyer, LLC	06/13/2029	Chemicals, Plastics and Rubber		10.95	%	1M L+605			4,776		4,711		4,657
Seaway Buyer, LLC (Revolver)(7)	06/13/2029	Chemicals, Plastics and Rubber		—			—		3,126		—		(78	)
Shiftkey, LLC	06/21/2027	Business Services		10.91	%	1M L+575			17,865		17,710		17,472
Sigma Defense Systems, LLC	12/18/2025	Telecommunications		13.66	%	1M L+850			31,273		30,655		30,725
Sigma Defense Systems, LLC (Revolver)	12/18/2025	Telecommunications		13.66	%	1M L+850			2,232		2,232		2,193
Sigma Defense Systems, LLC (Revolver) (7)	12/18/2025	Telecommunications		—			—		744		—		(13	)
Signature Systems Holding Company (Revolver) (7)	05/03/2024	Chemicals, Plastics and Rubber		—			—		2,016		—		—
Solutionreach, Inc. (Revolver) (7)	01/17/2024	Communications		—			—		1,665		—		(80	)
Spendmend Holdings LLC	03/01/2028	Business Services		10.61	%	1M L+565			9,656		9,542		9,386
Spendmend Holdings LLC (7)	03/01/2028	Business Services		—			—		2,784		—		(57	)
Spendmend Holdings LLC - Funded Revolver	03/01/2028	Business Services		10.61	%	3M L+565			561		561		545
Spendmend Holdings LLC - Unfunded Revolver (7)	03/01/2028	Business Services		—			—		841		—		(24	)
System Planning and Analysis, Inc. - (Revolver) (f/k/a Management Consulting & Research, LLC)	08/16/2027	Aerospace and Defense		11.10	%	3M L+590			836		836		823
System Planning and Analysis, Inc. - (Revolver) (7) (f/k/a Management Consulting & Research, LLC)	08/16/2027	Aerospace and Defense		—			—		2,089		—		(31	)
The Aegis Technologies Group, LLC	10/31/2025	Aerospace and Defense		11.55	%	3M L+650			1,126		1,098		1,104
The Bluebird Group LLC	07/27/2026	Business Services		12.15	%	3M L+725			4,835		4,757		4,767
The Bluebird Group LLC (Revolver) (7)	07/27/2026	Business Services		—			—		734		—		(11	)
The Vertex Companies, LLC	08/30/2027	Business Services		9.96	%	3M L+550			1,745		1,729		1,709
The Vertex Companies, LLC (7)	08/30/2027	Business Services		—			—		466		—		(5	)
The Vertex Companies, LLC (Revolver)	08/30/2027	Business Services		10.01	%	3M L+550			192		192		188
The Vertex Companies, LLC (Revolver) (7)	08/30/2027	Business Services		—			—		548		—		(12	)
TVC Enterprises, LLC	03/26/2026	Transportation		10.59	%	1M L+575			12,597		12,365		12,408
TVC Enterprises, LLC (Revolver) (7)	03/26/2026	Transportation		—			—		1,370		—		(21	)
TWS Acquisition Corporation	06/16/2025	Education		11.39	%	1M L+625			1,143		1,143		1,143
TWS Acquisition Corporation (Revolver) (7)	06/16/2025	Education		—			—		1,644		—		—
Tyto Athene, LLC (Revolver) (7)	04/01/2026	Aerospace and Defense		—			—		364		—		(34	)
Unique Indoor Comfort, LLC	05/24/2027	Home and Office Furnishings		10.30	%	1M L+525			36,648		36,266		36,428
Unique Indoor Comfort, LLC (7)	05/24/2027	Home and Office Furnishings		—			—		6,540		—		26
Unique Indoor Comfort, LLC (Revolver) (7)	05/24/2027	Home and Office Furnishings		—			—		3,000		—		(18	)
Urology Management Holdings, Inc.	06/15/2026	Healthcare, Education and Childcare		11.36	%	3M L+625			3,879		3,805		3,763
Urology Management Holdings, Inc. - Unfunded Term Loan	02/01/2024	Healthcare, Education and Childcare		—			—		7,222		—		(216	)
Wildcat Buyerco, Inc.	02/27/2026	Electronics		10.80	%	3M L+575			3,815		3,764		3,720
Wildcat Buyerco, Inc. (Revolver)	02/27/2026	Electronics		11.46	%	3M L+585			176		176		172
Wildcat Buyerco, Inc. (Revolver) (7)	02/27/2026	Electronics		—			—		398		—		(10	)
Zips Car Wash, LLC	03/01/2024	Auto Sector		12.11	%	3M L+725			2,611		2,596		2,552
Total First Lien Secured Debt											601,494		589,649
Second Lien Secured Debt—22.4% of Net Assets

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)—(Continued)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Ascensus Holdings, Inc.	08/02/2028		Financial Services		11.31	%	3M L+650			3,000	$	2,698	$	2,680
Atlas Purchaser, Inc	05/07/2029		Telecommunications		14.20	%	3M L+900			17,000		16,575		13,532
Best Practice Associates LLC	06/29/2027		Aerospace and Defense		14.16	%	3M L+900			17,825		17,532		17,290
Burgess Point Purchaser Corporation	07/28/2030		Auto Sector		13.91	%	3M L+900			8,000		7,967		7,760
ENC Parent Corporation	08/19/2029		Business Services		12.66	%	3M L+750			7,500		7,436		6,975
Halo Buyer, Inc.	07/06/2026		Consumer Products		13.16	%	1M L+825			32,500		32,197		31,769
Inventus Power, Inc.	09/29/2024		Electronics		13.23	%	3M L+850			16,593		16,436		16,427
QuantiTech LLC	02/04/2027		Aerospace and Defense		14.71	%	3M L+1,000			150		148		149
VT Topco, Inc.	08/17/2026		Business Services		11.59	%	3M L+675			15,000		14,938		14,700
Total Second Lien Secured Debt												115,927		111,282
Subordinated Debt/Corporate Notes—10.6% of Net Assets
Express Wash Acquisition Company, LLC	01/15/2029		Auto Sector		16.66	%	3M L+1,150			21,000		20,314		19,572
Flock Financial, LLC	05/26/2027		Financial Services		12.50	%		—		34,000		33,256		32,980
Total Subordinated Debt/Corporate Notes												53,570		52,552
Preferred Equity/Partnership Interests—2.5% of Net Assets (6)
Ad.net Holdings, Inc. (9)		—	Media		—			—		2,400		240		276
AH Newco Equityholdings, LLC		—	Healthcare, Education and Childcare		6.00	%		—		211		500		1,967
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (9)		—	Media		—			—		1,135		1,135		1,470
Cartessa Aesthetics, LLC		—	Distribution		—			—		3,562,500		3,563		4,406
Imagine Topco, LP		—	Business Services		8.00	%		—		743,826		744		702
Mars Intermediate Holdings II, Inc (9)		—	Media		—			—		414		414		498
NXOF Holdings, Inc. (Tyto Athene, LLC)		—	Aerospace and Defense		—			—		160		160		148
ORL Holdco, Inc.		—	Business Services		—			—		575		58		65
Signature CR Intermediate Holdco, Inc.		—	Chemicals, Plastics and Rubber		12.00	%		—		1,527		1,527		2,347
TPC Holding Company, LP (8),(11)		—	Food		—			—		219		219		305
TWD Parent Holdings, LLC		—	Business Services		—			—		30		30		35
(The Vertex Companies, LLC)
Total Preferred Equity/Partnership Interests												8,590		12,219
Common Equity/Partnership Interests/Warrants—23.0% of Net Assets (6)
A1 Garage Equity, LLC		—	Personal, Food and Miscellaneous Services		—			—		2,193,038		2,193		2,193
Ad.net Holdings, Inc. (9)		—	Media		—			—		2,667		26		6
Affinion Group Holdings, Inc. (Warrants)	04/10/2024		Consumer Products		—			—		77,190		2,126		—
AG Investco LP (9)		—	Business Services		—			—		805,164		805		1,206
AG Investco LP (7), (9)		—	Business Services		—			—		194,836		—		—
Altamira Intermediate Company II, Inc.		—	Aerospace and Defense		—			—		125,000		125		110
AMCSI Crash Co-Invest, LP		—	Auto Sector		—			—		2,489,777		2,490		3,215
AMCSI Crash Co-Invest, LP (7)		—	Auto Sector		—			—		510,223		—		—
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (9)		—	Media		—			—		1,135		—		94
Athletico Holdings, LLC		—	Healthcare, Education and Childcare		—			—		9,357		10,000		7,566
Atlas Investment Aggregator, LLC (9)		—	Telecommunications		—			—		1,700,000		1,700		722
BioDerm, Inc.		—	Healthcare, Education and Childcare		—			—		1,312		1,312		1,312
Burgess Point Holdings, LP		—	Auto Sector		—			—		680		680		717
Connatix Parent, LLC		—	Media		—			—		57,416		632		491
Cowboy Parent LLC		—	Distribution		—			—		27,778		3,015		4,559
(Blackhawk Industrial Distribution, Inc.)
Crane 1 Acquisition Parent Holdings, L.P.		—	Personal, Food and Miscellaneous Services		—			—		113		104		145
Delta InvestCo LP		—	Telecommunications		—			—		698,889		684		1,562
(Sigma Defense Systems, LLC) (9)
Delta InvestCo LP (7)		—	Telecommunications		—			—		442,155		—		—
(Sigma Defense Systems, LLC) (7), (9)
ECM Investors, LLC (9)		—	Electronics		—			—		167,537		37		492
eCommission Holding Corporation (11)		—	Financial Services		—			—		80		1,005		1,542
EDS Topco, LP		—	Aerospace and Defense		—			—		937,500		938		938
Exigo, LLC (9)		—	Business Services		—			—		1,458,333		1,458		1,584
Express Wash Topco, LLC		—	Auto Sector		—			—		658,000		3,290		2,520
FedHC InvestCo LP (9)		—	Aerospace and Defense		—			—		14,186		469		1,378
FedHC InvestCo LP (7),(9)		—	Aerospace and Defense		—			—		6,384		—		(18	)
FedHC InvestCo II LP (9)		—	Aerospace and Defense		—			—		20,357		2,199		1,979
Five Star Parent Holdings, LLC		—	Leisure, Amusement, Motion Pictures, Entertainment		—			—		655,714		656		656
Gauge Lash Coinvest LLC		—	Consumer Products		—			—		889,376		135		4,074
Gauge Schlesinger Coinvest, LLC		—	Business Services		—			—		9		10		10
Gauge TVC Coinvest, LLC		—	Transportation		—			—		810,645		—		3,543
(TVC Enterprises, LLC)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon		Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
GCOM InvestCo LP (9)		—	Business Services		—		—		2,434	$	1,003	$	487
Go Dawgs Capital III, LP		—	Building Materials		—		—		675,325		675		1,297
(American Insulated Glass, LLC) (9)
Hancock Claims Consultants Investors, LLC (9)		—	Insurance		—		—		450,000		450		376
HV Watterson Holdings, LLC		—	Business Services		—		—		1,600,000		1,600		1,230
Icon Partners V C, L.P.		—	Business Services		—		—		1,118,318		1,118		1,111
Icon Partners V C, L.P. (7),(9)		—	Business Services		—		—		381,682		—		(2	)
IHS Parent Holdngs, L.P.			Personal, Food and Miscellaneous Services						1,218,045		1,218		1,237
Imagine Topco, LP		—	Business Services		—		—		743,826		—		—
Infogroup Parent Holdings, Inc.		—	Other Media		—		—		181,495		2,040		3,004
(Data Axle, Inc.)
Ironclad Holdco, LLC		—	Environmental Services		—		—		4,566		450		573
(Applied Technical Services, LLC) (9)
ITC Infusion Co-invest, LP		—	Healthcare, Education and Childcare		—		—		162,445		1,624		1,189
ITC Rumba, LLC		—	Healthcare, Education and Childcare		—		—		375,675		8		4,216
(Cano Health, LLC) (9)
Kentucky Racing Holdco, LLC (Warrants)		—	Hotels, Motels, Inns and Gaming		—		—		161,252		—		1,433
Kinetic Purchaser, LLC		—	Consumer Products		—		—		1,308,814		1,309		1,977
KL Stockton Co-Invest LP		—	Personal, Food and Miscellaneous Services		—		—		382,353		382		1,087
(Any Hour Services) (9)
Lariat ecoserv Co-Invest Holdings, LLC (9)		—	Environmental Services		—		—		363,656		—		4
LEP Pequod Holdings, LP		—	Financial Services		—		—		864,865		865		865
Lightspeed Investment Holdco LLC		—	Healthcare, Education and Childcare		—		—		273,143		273		498
LJ Avalon, LP		—	Environmental Services		—		—		851,087		851		851
Lorient Peregrine Investments, LP		—	Business Services		—		—		335,590		4,530		4,452
Mars Intermidiate Holdings II, Inc. (9)		—	Media		—		—		414		—		195
MDI Aggregator, LP		—	Chemicals, Plastics and Rubber		—		—		30,993		3,103		3,184
Meadowlark Title, LLC (9)		—	Business Services		—		—		815,385		802		147
Municipal Emergency Services, Inc.		—	Distribution		—		—		3,920,145		3,984		3,399
NEPRT Parent Holdings, LLC		—	Consumer Products		—		—		1,299		1,259		64
(Recteq, LLC) (9)
North Haven Saints Equity Holdings, LP		—	Business Services		—		—		351,553		352		376
NXOF Holdings, Inc.		—	Aerospace and Defense		—		—		3,261		3		—
(Tyto Athene, LLC)
OceanSound Discovery Equity, LP		—	Aerospace and Defense		—		—		98,286		961		1,950
(Holdco Sands Intermediate, LLC) (9)
OHCP V BC COI, L.P.		—	Distribution		—		—		446,250		446		415
OHCP V BC COI, L.P. (7),(9)		—	Distribution		—		—		303,750		—		(21	)
ORL Holdco, Inc.		—	Business Services		—		—		638		6		28
PennantPark-TSO Senior Loan Fund II, LP		—	Financial Services		—		—		12,500,409		12,500		11,990
Pink Lily Holdco, LLC (9)		—	Retail		—		—		1,044		1,044		401
Pragmatic Institute, LLC		—	Business Services		—		—		1,918,047		1,918		1,693
Quad (U.S.) Co-Invest, L.P.		—	Business Services		—		—		2,958,706		2,959		3,238
QuantiTech InvestCo LP (9)		—	Aerospace and Defense		—		—		712		68		362
QuantiTech InvestCo LP (7),(9)		—	Aerospace and Defense		—		—		955		—		—
QuantiTech InvestCo II LP (9)		—	Aerospace and Defense		—		—		40		24		25
RFMG Parent, LP		—	Healthcare, Education and Childcare		—		—		1,050,000		1,050		1,050
(Rancho Health MSO, Inc.)
SBI Holdings Investments LLC		—	Business Services		—		—		36,585		366		368
(Sales Benchmark Index LLC)
Seaway Topco, LP		—	Chemicals, Plastics and Rubber		—		—		2,981		2,981		2,840
Signature CR Intermediate Holdco, Inc.		—	Chemicals, Plastics and Rubber		—		—		80		80		528
SP L2 Holdings, LLC		—	Consumer Products		—		—		881,966		882		539
SSC Dominion Holdings, LLC		—	Electronics		—		—		1,500		1,500		2,041
Class A (US Dominion, Inc.)
SSC Dominion Holdings, LLC		—	Electronics		—		—		1,500		—		3,049
Class B (US Dominion, Inc.)
StellPen Holdings, LLC		—	Media		—		—		153,846		154		162
(CF512, Inc.)
TAC LifePort Holdings, LLC (9)		—	Aerospace and Defense		—		—		254,206		259		305
Tower Arch Infolinks Media, LP (9)		—	Media		—		—		533,903		513		1,061
Tower Arch Infolinks Media, LP (7), (9)		—	Media		—		—		361,541		—		—
TPC Holding Company, LP (8). (11)		—	Food		—		—		11,527		12		18
TWD Parent Holdings, LLC		—	Business Services		—		—		608		1		—
(The Vertex Companies, LLC)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)

MARCH 31, 2023

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
UniVista Insurance (9)		—	Business Services		—			—		400	$	374	$	482
Urology Partners Co., L.P.		—	Healthcare, Education and Childcare		—			—		1,111,111		1,111		1,122
WCP Ivyrehab QP CF Feeder, LP		—	Healthcare, Education and Childcare		—			—		3,762,257		3,696		3,620
WCP Ivyrehab QP CF Feeder, LP - Unfunded (7)		—	Healthcare, Education and Childcare		—			—		237,743		—		(9	)
Wildcat Parent, LP		—	Electronics		—			—		2,314		231		767
(Wildcat Buyerco, Inc.)
Total Common Equity/Partnership Interests/Warrants												97,124		113,870
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies												876,705		879,572
Investments in Non-Controlled, Affiliated Portfolio Companies—10.5% of Net Assets (1), (2)
First Lien Secured Debt—1.9% of Net Assets
Walker Edison Furniture Company LLC	03/31/2027		Home and Office Furnishings		11.52	%	3M L+675			6,263		6,263		6,263
Walker Edison Furniture Company, LLC - Unfunded Term Loan	03/31/2027		Home and Office Furnishings		—			—		833		—		—
Walker Edison Furniture Company LLC - Junior Revolver	03/31/2027		Home and Office Furnishings		11.02	%		—		3,333		3,333		3,333
Total First Lien Secured Debt												9,596		9,596
Preferred Equity/Partnership Interests—6.8% of Net Assets(6)
Cascade Environmental Holdings, LLC (9)		—	Environmental Services		—			—		5,887,236		32,791		32,791
Cascade Environmental Holdings, LLC - Series B		—	Environmental Services		—			—		819		819		834
Total Preferred Equity/Partnership Interests												33,610		33,625
Common Equity/Partnership Interests/Warrants—1.7% of Net Assets (6)
Cascade Environmental Holdings, LLC		—	Environmental Services		—			—		7,444,347		2,852		—
JF Intermediate, LLC		—	Distribution		—			—		19,687		1,969		1,969
Walker Edison Furniture		—	Home and Office Furnishings		—			—		72,917		6,786		6,617
Total Common Equity/Partnership Interests/Warrants												11,607		8,586
Total Investments in Non-Controlled, Affiliated Portfolio Companies												54,813		51,807
Investments in Controlled, Affiliated Portfolio Companies—40.6% of Net Assets (1), (2)
First Lien Secured Debt—9.9% of Net Assets
AKW Holdings Limited (8), (10), (11)	03/15/2027		Healthcare, Education and Childcare		10.89	%	3M L+700		£	39,722		54,580		49,114
Total First Lien Secured Debt												54,580		49,114
Second Lien Secured Debt—0% of Net Assets
Mailsouth Inc.	04/23/2025		Printing and Publishing		—			—		13,847		12,382		—
Total Second Lien Secured Debt												12,382		—
Subordinated Debt—19.2% of Net Assets
PennantPark Senior Loan Fund, LLC (11)	07/31/2027		Financial Services		12.83	%	3M L+800			95,351		95,351		95,351
Total Subordinated Debt												95,351		95,351
Common Equity—11.4% of Net Assets (6)
AKW Holdings Limited (8), (10), (11)		—	Healthcare, Education and Childcare		—			—	£	950		132		3,293
MSpark, LLC		—	Printing and Publishing		—			—		51,151		16,516		—
PennantPark Senior Loan Fund, LLC		—	Financial Services		—			—		54,058,415		54,121		53,374
Total Common Equity												70,769		56,667
Total Investments in Controlled, Affiliated Portfolio Companies												233,082		201,132
Total Investments—228.5% of Net Assets												1,164,600		1,132,511
Cash and Cash Equivalents—12.7% of Net Assets
BlackRock Federal FD Institutional 30												46,497		46,497
BNY Mellon Cash Reserve and Cash												16,608		16,638
Total Cash and Cash Equivalents												63,105		63,135
Total Investments and Cash Equivalents—241.2% of Net Assets											$	1,227,705	$	1,195,646
Liabilities in Excess of Other Assets—(141.2%) of Net Assets														(699,931	)
Net Assets—100.0%													$	495,715

(1)

The provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be “non-controlled” when we own 25% or less of the portfolio company’s voting securities and “controlled” when we own more than 25% of the portfolio company’s voting securities (See Note 6).

(2)

The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as “non-affiliated” when we own less than 5% of a portfolio company’s voting securities and “affiliated” when we own 5% or more of a portfolio company’s voting securities (See Note 6).

(3)

Valued based on our accounting policy (See Note 2).

(4)

Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable London Interbank Offered Rate, or LIBOR or “L,” the Euro Interbank Offered Rate, or EURIBOR or “E”, Secured Overnight Financing Rate or "SOFR", or Prime rate, or “P.” The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to a 30-day, 90-day or 180-day LIBOR rate (1M L, 3M L, or 6M L, respectively), and EURIBOR loans are typically indexed to a 90-day EURIBOR rate (3M E), at the borrower’s option. All securities are subject to a LIBOR or Prime rate floor where a spread is provided, unless noted. The spread provided includes payment-in-kind, or PIK, interest and other fee rates, if any.

(5)

The security was not valued using significant unobservable inputs. The value of all other securities was determined using significant unobservable inputs (See Note 5).

(6)

Non-income producing securities.

(7)

Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

(8)

Non-U.S. company or principal place of business outside the United States.

(9)

Investment is held through our Taxable Subsidiary (See Note 1).

(10)

Par / Shares amount is denominated in British Pounds (£) as denoted.

(11)

The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. As of March 31, 2023, qualifying assets represent 79% of the Company’s total assets and non-qualifying assets represent 21% of the Company’s total assets.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2022

(In thousands, except share data)


Issuer Name	Maturity / Expiration	Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Investments in Non-Controlled, Non-Affiliated Portfolio Companies—159.2% of Net Assets (1), (2)
First Lien Secured Debt—100.5% of Net Assets
Ad.net Acquisition, LLC (Revolver) (7)	05/06/2026	Media		—			—		444	$	—	$	(3	)
Altamira Technologies, LLC (Revolver)	07/24/2025	Aerospace and Defense		11.67	%	3M L+800			50		50		48
Altamira Technologies, LLC (Revolver) (7)	07/24/2025	Aerospace and Defense		—			—		138		—		(5	)
American Insulated Glass, LLC	12/21/2023	Building Materials		7.79	%	3M L+550			3,329		3,310		3,329
Anteriad, LLC (f/k/a MeritDirect, LLC) (Revolver) (7)	05/23/2024	Media		—			—		1,612		—		—
Any Hour Services	07/21/2027	Personal, Food and Miscellaneous Services		8.15	%	3M L+525			4,120		4,086		4,038
Any Hour Services (Revolver) (7)	07/21/2027	Personal, Food and Miscellaneous Services		—			—		1,147		—		(23	)
Apex Service Partners, LLC	07/31/2025	Personal, Food and Miscellaneous Services		7.60	%	1M L+550			1,331		1,331		1,324
Apex Service Partners, LLC Term Loan C	07/31/2025	Personal, Food and Miscellaneous Services		9.08	%	1M L+550			1,893		1,873		1,883
Apex Service Partners, LLC (Revolver)	07/31/2025	Personal, Food and Miscellaneous Services		6.72	%	3M L+525			62		62		62
Apex Service Partners, LLC (Revolver) (7)	07/31/2025	Personal, Food and Miscellaneous Services		—			—		870		—		(4	)
Applied Technical Services, LLC	12/29/2026	Environmental Services		7.59	%	3M L+575			1,402		1,388		1,367
Applied Technical Services, LLC (7)	04/21/2023	Environmental Services		—			—		1,595		—		(22	)
Applied Technical Services, LLC (Revolver)	12/29/2026	Environmental Services		10.25	%	3M P+475			200		200		195
Applied Technical Services, LLC (Revolver) (7)	12/29/2026	Environmental Services		—			—		800		—		(20	)
Arcfield Acquisition Corp. (Revolver) (7)	03/07/2028	Aerospace and Defense		—			—		2,263		—		(45	)
Berwick Industrial Park	04/28/2023	Buildings and Real Estate		11.00	%		—		4,000		3,953		3,934
Beta Plus Technologies, Inc.	07/01/2029	Business Services		7.56	%	SOFR+525			5,000		4,904		4,900
Blackhawk Industrial Distribution, Inc.	09/17/2024	Distribution		8.69	%	3M L+500			1,175		1,160		1,149
Blackhawk Industrial Distribution, Inc.(7)	09/17/2024	Distribution		—			—		4,043		—		(51	)
Blackhawk Industrial Distribution, Inc. (Revolver)	09/17/2024	Distribution		8.69	%	3M L+500			686		686		667
Blackhawk Industrial Distribution, Inc. (Revolver) (7)	09/17/2024	Distribution		—			—		2,746		—		(77	)
Broder Bros., Co.	12/02/2022	Consumer Products		7.39	%	3M L+600			10,096		10,096		10,096
Cartessa Aesthetics, LLC	05/13/2028	Distribution		9.55	%	1M L+600			39,401		38,644		38,810
Cartessa Aesthetics, LLC - (Revolver)	05/13/2028	Distribution		9.55	%	1M L+600			1,265		1,265		1,246
Cartessa Aesthetics, LLC - (Revolver) (7)	05/13/2028	Distribution		—			—		2,297		—		(34	)
CF512, Inc.	08/20/2026	Media		9.30	%	3M L+600			6,720		6,630		6,619
CF512, Inc.(Revolver) (7)	08/20/2026	Media		—			—		909		—		(14	)
Compex Legal Services, Inc.	02/09/2026	Business Services		7.48	%	3M L+525			853		843		853
Compex Legal Services, Inc. (Revolver)	02/07/2025	Business Services		8.92	%	3M L+525			361		361		361
Compex Legal Services, Inc. (Revolver) (7)	02/07/2025	Business Services		—			—		295		—		—
Connatix Buyer, Inc. (7)	01/13/2023	Media		—			—		3,158		—		(47	)
Connatix Buyer, Inc. (Revolver) (7)	07/13/2027	Media		—			—		1,859		—		(46	)
Crane 1 Services, Inc.	08/16/2027	Personal, Food and Miscellaneous Services		8.40	%	3M L+575			2,606		2,577		2,580
Crane 1 Services, Inc. (Revolver)	08/16/2027	Personal, Food and Miscellaneous Services		8.87	%	1M L+575			194		194		192
Crane 1 Services, Inc. (Revolver) (7)	08/16/2027	Personal, Food and Miscellaneous Services		—			—		97		—		(1	)
DermaRite Industries LLC	06/30/2023	Manufacturing / Basic Industries		10.67	%	1M L+700			8,755		8,734		7,030
Dr. Squatch, LLC	08/31/2027	Personal and Non-Durable Consumer Products		9.17	%	3M L+600			12,930		12,742		12,736
Dr. Squatch, LLC (7)	08/27/2026	Personal and Non-Durable Consumer Products		—			—		2,000		—		(10	)
Dr. Squatch, LLC (Revolver)	08/31/2027	Personal and Non-Durable Consumer Products		8.95	%	1M L+600			775		775		764
Dr. Squatch, LLC (Revolver) (7)	08/31/2027	Personal and Non-Durable Consumer Products		—			—		1,551		—		(23	)
DRS Holdings III, Inc. (Revolver) (7)	11/03/2025	Consumer Products		—			—		1,783		—		(57	)
ECL Entertainment, LLC	05/01/2028	Hotels, Motels, Inns and Gaming		10.62	%	1M L+750			19,156		19,019		18,869
ECM Industries, LLC (Revolver)	12/23/2025	Electronics		7.93	%	3M L+475			291		291		277
ECM Industries, LLC (Revolver) (7)	12/23/2025	Electronics		—			—		226		—		(11	)
Exigo Intermediate II, LLC	03/15/2027	Business Services		8.87	%	3M L+575			24,875		24,532		24,315
Exigo Intermediate II, LLC (7)	03/15/2024	Business Services		—			—		7,424		—		(111	)
Exigo Intermediate II, LLC (Revolver)	03/15/2027	Business Services		8.87	%	3M L+575			371		371		363
Exigo Intermediate II, LLC (Revolver) (7)	03/15/2027	Business Services		—			—		1,485		—		(33	)
Fairbanks Morse Defense	06/17/2028	Aerospace and Defense		7.00	%	3M L+475			738		735		682
Gantech Acquisition Corp.	05/14/2026	Business Services		9.37	%	1M L+625			16,809		16,548		16,305
Gantech Acquisition Corp. (Revolver)	05/14/2026	Business Services		9.37	%	1M L+625			132		133		129
Gantech Acquisition Corp. (Revolver) (7)	05/14/2026	Business Services		—			—		1,858		—		(56	)
Graffiti Buyer, Inc. (7)	08/10/2023	Distribution		—			—		892		—		(20	)
Graffiti Buyer, Inc. (Revolver)	08/10/2027	Distribution		9.16	%	3M L+575			372		372		357
Graffiti Buyer, Inc. (Revolver) (7)	08/10/2027	Distribution		—			—		397		—		(16	)
Hancock Roofing and Construction L.L.C. (7)	12/31/2022	Insurance		—			—		400		—		(6	)
Hancock Roofing and Construction L.L.C.	12/31/2026	Insurance		7.82	%	1M L+500			270		270		266
Hancock Roofing and Construction L.L.C. (Revolver) (7)	12/31/2026	Insurance		—			—		480		—		(7	)
Holdco Sands Intermediate, LLC	11/23/2028	Aerospace and Defense		10.17	%	3M L+600			1,918		1,883		1,879
Holdco Sands Intermediate, LLC (Revolver) (7)	11/23/2027	Aerospace and Defense		—			—		3,941		—		(79	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

September 30, 2022

(In thousands, except share data)


Issuer Name	Maturity / Expiration	Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
HV Watterson Holdings, LLC	12/17/2026	Business Services		9.67	%	1M L+600			281	$	279	$	271
HV Watterson Holdings, LLC (7)	12/17/2026	Business Services		—			—		2,219		—		(61	)
HV Watterson Holdings, LLC - (Revolver)	12/17/2026	Business Services		9.63	%	3M L+600			200		200		193
HV Watterson Holdings, LLC - (Revolver)(7)	12/17/2026	Business Services		—			—		1,050		—		(37	)
HW Holdco, LLC	12/10/2024	Media		6.00	%	3M L+500			10,188		10,077		10,061
HW Holdco, LLC (7)	12/10/2024	Media		—			—		3,049		—		(8	)
HW Holdco, LLC (Revolver) (7)	12/10/2024	Media		—			—		3,387		—		(42	)
Icon Partners III, LP	05/11/2028	Auto Sector		7.55	%	3M L+475			995		834		727
IDC Infusion Services, Inc.	12/30/2026	Healthcare, Education and Childcare		10.70	%	3M L+600			3,685		3,576		3,574
IDC Infusion Services, Inc. (Revolver) (7)	12/30/2026	Healthcare, Education and Childcare		—			—		4,167		—		(187	)
IG Investments Holdings, LLC (Revolver) (7)	09/22/2027	Business Services		—			—		477		—		(5	)
Imagine Acquisitionco, LLC (7)	11/15/2027	Business Services		—			—		2,341		—		(35	)
Imagine Acquisitionco, LLC (Revolver) (7)	11/15/2027	Business Services		—			—		1,685		—		(42	)
Inception Fertility Ventures, LLC	12/07/2023	Healthcare, Education and Childcare		10.18	%	3M L+715			20,506		20,239		20,301
Infolinks Media Buyco, LLC (7)	11/01/2023	Media		—			—		2,372		—		24
Integrity Marketing Acquisition, LLC	08/27/2025	Insurance		7.83	%	3M L+550			9,930		9,876		9,831
ITI Holdings, Inc.	03/03/2028	Business Services		8.67	%	3M L+550			8,927		8,784		8,749
ITI Holdings, Inc. (Revolver)	03/03/2028	Business Services		8.25	%	3M L+550			298		298		292
ITI Holdings, Inc. (Revolver) (7)	03/03/2028	Business Services		—			—		1,192		—		(24	)
K2 Pure Solutions NoCal, L.P.	12/20/2023	Chemicals, Plastics and Rubber		11.12	%	1M L+800			11,678		11,629		11,678
K2 Pure Solutions NoCal, L.P. (Revolver) (7)	12/20/2023	Chemicals, Plastics and Rubber		—			—		1,938		—		—
Kinetic Purchaser, LLC	11/10/2027	Consumer Products		9.67	%	3M L+600			24,341		23,807		23,855
Kinetic Purchaser, LLC (Revolver)	11/10/2026	Consumer Products		9.67	%	3M L+600			4,854		4,854		4,757
Lash OpCo, LLC	02/18/2027	Consumer Products		11.78	%	1M L+700			2,828		2,774		2,771
Lash OpCo, LLC (Revolver)	08/16/2026	Consumer Products		9.38	%	1M L+700			568		568		556
Lash OpCo, LLC (Revolver) (7)	08/16/2026	Consumer Products		—			—		1,252		—		(25	)
LAV Gear Holdings, Inc.	10/31/2024	Leisure, Amusement, Motion Pictures, Entertainment		9.95	%	1M L+750			2,061		2,036		2,013
			(PIK 5.50%)
Ledge Lounger, Inc.	11/09/2026	Consumer Products		9.92	%	3M L+625			9,177		9,021		9,040
Ledge Lounger, Inc. (Revolver) (7)	11/09/2026	Consumer Products		—			—		1,933		—		(29	)
Lightspeed Buyer Inc.	02/03/2026	Healthcare, Education and Childcare		8.87	%	1M L+575			2,220		2,205		2,148
Lightspeed Buyer Inc. (Revolver)	02/03/2026	Healthcare, Education and Childcare		8.87	%	1M L+575			505		505		489
Lightspeed Buyer Inc. (Revolver) (7)	02/03/2026	Healthcare, Education and Childcare		—			—		661		—		(21	)
Limerick Town Cener, LLC	09/27/2023	Real Estate		12.50	%		—		3,000		2,970		2,970
LSF9 Atlantis Holdings, LLC	03/31/2029	Retail		9.37	%	SOFR+725			6,000		5,772		5,685
Mars Acquisition Holdings Corp. (Revolver)(7)	05/14/2026	Media		—			—		806		—		(4	)
MBS Holdings, Inc. (Revolver) (7)	04/16/2027	Telecommunications		—			—		694		—		(7	)
MDI Buyer, Inc.	07/25/2028	Chemicals, Plastics and Rubber		8.98	%	3M L+600			14,400		14,117		14,112
MDI Buyer, Inc. Term Loan (7)	07/25/2028	Chemicals, Plastics and Rubber		—			—		5,196		—		(52	)
MDI Buyer, Inc. (Revolver) (7)	07/25/2028	Chemicals, Plastics and Rubber		—			—		2,227		—		(22	)
Meadowlark Acquirer, LLC	12/10/2027	Business Services		9.17	%	3M L+550			1,320		1,307		1,307
Meadowlark Acquirer, LLC Term Loan I (7)	12/10/2027	Business Services		—			—		1,676		—		—
Meadowlark Acquirer, LLC Term Loan II (7)	12/10/2027	Business Services		—			—		8,922		—		—
Meadowlark Acquirer, LLC (Revolver) (7)	12/10/2027	Business Services		—			—		1,685		—		(17	)
Municipal Emergency Services, Inc.	09/28/2027	Distribution		8.67	%	3M L+500			703		697		663
Municipal Emergency Services, Inc. (7)	09/28/2027	Distribution		—			—		1,175		—		(56	)
Municipal Emergency Services, Inc. (Revolver)	09/28/2027	Distribution		7.25	%	3M L+500			282		282		266
Municipal Emergency Services, Inc. (Revolver) (7)	09/28/2027	Distribution		—			—		1,598		—		(93	)
NBH Group LLC (Revolver) (7)	08/19/2026	Healthcare, Education and Childcare		—			—		1,163		—		—
Neptune Flood Incorporated	10/14/2026	Financial Services		7.10	%	1M L+525			4,379		4,352		4,423
OIS Management Services, LLC (Revolver) (7)	07/09/2026	Healthcare, Education and Childcare		—			—		333		—		—
One Stop Mailing, LLC	05/07/2027	Cargo Transport		8.77	%	3M L+625			7,008		6,889		6,798
ORL Acquisition, Inc.	09/03/2027	Business Services		8.92	%	3M L+525			4,454		4,378		4,454
ORL Acquisition, Inc. (Revolver) (7)	09/03/2027	Business Services		—			—		597		—		—
Ox Two, LLC	05/18/2026	Building Materials		9.81	%	1M L+700			15,391		15,189		15,083
Ox Two, LLC (Revolver)	05/18/2026	Building Materials		9.81	%	3M L+700			1,774		1,774		1,739
Ox Two, LLC (Revolver) (7)	05/18/2026	Building Materials		—			—		645		—		(13	)
PL Acquisitionco, LLC (Revolver) (7)	11/09/2027	Retail		—			—		3,236		—		(81	)
PRA Events, Inc.	08/07/2025	Business Services		14.17	%	3M L+1,050			24,907		21,694		24,907
			(PIK 10.5%)
PRA Events, Inc. (Revolver) (7)	08/07/2025	Business Services		—		3M L+1,050			2,000		—		—
Pragmatic Institute, LLC	07/06/2028	Business Services		9.30	%	3M L+575			35,340		34,826		34,987
Pragmatic Institute, LLC Term Loan (7)	07/06/2028	Business Services		—			—		7,193		—		—
Pragmatic Institute, LL (Revolver)	07/06/2028	Business Services		9.30	%	3M L+575			959		959		949
Pragmatic Institute, LL (Revolver) (7)	07/06/2028	Business Services		—			—		3,836		—		(38	)
Quantic Electronics, LLC	11/19/2026	Aerospace and Defense		8.00	%	1M L+625			679		673		666
Quantic Electronics, LLC (Revolver)	11/19/2026	Aerospace and Defense		9.51	%	3M L+600			211		211		207
Quantic Electronics, LLC (Revolver) (7)	11/19/2026	Aerospace and Defense		—			—		317		—		(6	)
Questex, LLC	09/09/2024	Media		7.45	%	3M L+500			21,600		21,436		21,168
Questex, LLC (Revolver) (7)	09/09/2024	Media		—			—		3,590		—		(72	)
Radius Aerospace, Inc. (Revolver)	03/31/2025	Aerospace and Defense		8.28	%	3M L+575			891		891		877
Radius Aerospace, Inc. (Revolver) (7)	03/31/2025	Aerospace and Defense		—			—		1,336		—		(20	)
Rancho Health MSO, Inc. (7)	12/18/2025	Healthcare, Education and Childcare		—			—		1,050		—		—
Rancho Health MSO, Inc. (Revolver) (7)	12/18/2025	Healthcare, Education and Childcare		—			—		525		—		—
Reception Purchaser, LLC	02/28/2028	Transportation		9.13	%	SOFR+600			5,970		5,885		5,701
Recteq, LLC (Revolver)	01/29/2026	Consumer Products		9.92	%	1M L+600			313		313		302
Recteq, LLC (Revolver) (7)	01/29/2026	Consumer Products		—			—		814		—		(28	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

September 30, 2022

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
Research Now Group, Inc. and Dynata, LLC	12/20/2024		Business Services		8.84	%	3M L+550			126	$	126	$	113
Riverpoint Medical, LLC (Revolver) (7)	06/20/2025		Healthcare, Education and Childcare		—			—		364		—		(9	)
Riverside Assessments, LLC	03/10/2025		Education		8.97	%	3M L+625			12,906		12,705		12,648
Sales Benchmark Index LLC (Revolver) (7)	01/03/2025		Business Services		—			—		732		—		(7	)
Sargent & Greenleaf Inc. (Revolver)	12/20/2024		Electronics		8.28	%	3M L+550			593		593		587
Sargent & Greenleaf Inc. (Revolver) (7)	12/20/2024		Electronics		—			—		5		-		-
Schlesinger Global, Inc.	07/14/2025		Business Services		11.11	%	3M L+700			4,689		4,636		4,571
Schlesinger Global, Inc. (Revolver)	07/14/2025		Business Services		9.09	%	3M L+600			30		30		30
				(PIK 0.5%)
Schlesinger Global, Inc. (Revolver)(7)	07/14/2025		Business Services		—			—		8		—		—
Seaway Buyer, LLC	06/13/2029		Chemicals, Plastics and Rubber		9.70	%	1M L+575			4,800		4,730		4,728
Seaway Buyer, LLC (Revolver)(7)	06/13/2029		Chemicals, Plastics and Rubber		—			—		3,126		—		(47	)
Shiftkey, LLC	06/21/2027		Business Services		9.56	%	1M L+575			17,955		17,784		17,722
Sigma Defense Systems, LLC	12/18/2025		Telecommunications		12.17	%	1M L+850			31,680		31,004		31,047
Sigma Defense Systems, LLC (Revolver)	12/18/2025		Telecommunications		12.17	%	1M L+850			1,131		1,131		1,108
Sigma Defense Systems, LLC (Revolver) (7)	12/18/2025		Telecommunications		—			—		1,845		—		(37	)
Signature Systems Holding Company (Revolver) (7)	05/03/2024		Chemicals, Plastics and Rubber		—			—		2,016		—		(15	)
Solutionreach, Inc. (Revolver) (7)	01/17/2024		Communications		—			—		1,665		—		(40	)
Spear Education, LLC	02/26/2025		Education		9.42	%	3M L+575			12,018		11,947		12,018
Spendmend Holdings LLC	03/01/2028		Business Services		8.63	%	1M L+575			9,705		9,581		9,433
Spendmend Holdings LLC (7)	03/01/2023		Business Services		—			—		2,784		—		(57	)
Spendmend Holdings LLC - Funded Revolver	03/01/2028		Business Services		8.63	%	3M L+575			187		187		182
Spendmend Holdings LLC - Unfunded Revolver (7)	03/01/2028		Business Services		—			—		1,215		—		(34	)
System Planning and Analysis, Inc. - (Revolver) (7) (f/k/a Management Consulting & Research, LLC)	08/16/2027		Aerospace and Defense		—			—		2,925		—		(47	)
The Bluebird Group LLC	07/27/2026		Business Services		10.67	%	3M L+700			4,884		4,796		4,933
The Bluebird Group LLC (Revolver) (7)	07/27/2026		Business Services		—			—		734		—		7
The Vertex Companies, LLC	08/30/2027		Business Services		8.18	%	3M L+550			1,754		1,737		1,745
The Vertex Companies, LLC (7)	08/30/2027		Business Services		—			—		466		—		2
The Vertex Companies, LLC (Revolver)	08/30/2027		Business Services		8.26	%	3M L+550			148		148		147
The Vertex Companies, LLC (Revolver) (7)	08/30/2027		Business Services		—			—		592		—		(3	)
TVC Enterprises, LLC	03/26/2026		Transportation		8.87	%	1M L+600			12,864		12,626		12,543
TVC Enterprises, LLC (Revolver) (7)	03/26/2026		Transportation		—			—		1,370		—		(34	)
TWS Acquisition Corporation	06/16/2025		Education		8.76	%	1M L+625			1,143		1,143		1,137
TWS Acquisition Corporation (Revolver) (7)	06/16/2025		Education		—			—		1,644		—		(8	)
Tyto Athene, LLC (Revolver) (7)	04/01/2026		Aerospace and Defense		—			—		364		—		(26	)
Unique Indoor Comfort, LLC	05/24/2027		Home and Office Furnishings		8.95	%	1M L+525			27,233		26,904		26,634
Unique Indoor Comfort, LLC (7)	05/24/2027		Home and Office Furnishings		—			—		16,140		—		(194	)
Unique Indoor Comfort, LLC (Revolver) (7)	05/24/2027		Home and Office Furnishings		—			—		3,000		—		(66	)
Walker Edison Furniture Company LLC	03/31/2027		Home and Office Furnishings		12.42	%	3M L+875			25,368		24,881		16,946
Wildcat Buyerco, Inc.	02/27/2026		Electronics		9.09	%	3M L+575			3,831		3,771		3,716
Wildcat Buyerco, Inc. (Revolver) (7)	02/27/2026		Electronics		—			—		574		—		(41	)
Zips Car Wash, LLC	03/01/2024		Auto Sector		10.13	%	3M L+725			2,627		2,608		2,562
Total First Lien Secured Debt												599,263		588,267
Second Lien Secured Debt—22.2% of Net Assets
Atlas Purchaser, Inc	05/07/2029		Telecommunications		11.19	%	3M L+900			17,000		16,551		14,909
Best Practice Associates LLC	06/29/2027		Aerospace and Defense		12.67	%	3M L+900			17,825		17,506		17,290
Burgess Point Purchaser Corporation	07/28/2030		Auto Sector		12.16	%	3M L+900			8,000		7,752		7,680
Data Axle, Inc.	04/03/2024		Other Media		12.92	%	3M L+925			20,400		20,288		20,196
ENC Parent Corporation	08/19/2029		Business Services		11.17	%	3M L+750			7,500		7,432		7,125
Halo Buyer, Inc.	07/06/2026		Consumer Products		11.37	%	1M L+825			32,500		32,164		31,769
Inventus Power, Inc.	09/29/2024		Electronics		12.17	%	3M L+850			16,593		16,387		16,344
QuantiTech LLC	02/04/2027		Aerospace and Defense		12.68	%	3M L+1,000			150		148		148
VT Topco, Inc.	08/17/2026		Business Services		9.87	%	3M L+675			15,000		14,932		14,475
Total Second Lien Secured Debt												133,160		129,936
Subordinated Debt/Corporate Notes—9.1% of Net Assets
Express Wash Acquisition Company, LLC	01/15/2029		Auto Sector		15.31	%	3M L+1,150			21,000		20,278		20,359
Flock Financial, LLC	05/26/2027		Financial Services		12.50	%		—		34,000		33,190		32,895
Total Subordinated Debt/Corporate Notes												53,468		53,254
Preferred Equity/Partnership Interests—1.3% of Net Assets (6)
Ad.net Holdings, Inc. (9)		—	Media		—			—		2,400		240		267
AH Newco Equityholdings, LLC		—	Healthcare, Education and Childcare		6.00	%		—		211		500		2,127
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (9)		—	Media		—			—		1,135		1,135		1,427
Imagine Topco, LP		—	Business Services		8.00	%		—		743,826		744		704
Mars Intermediate Holdings II, Inc (9)		—	Media		—			—		414		414		484
NXOF Holdings, Inc. (Tyto Athene, LLC)		—	Aerospace and Defense		—			—		160		160		227
ORL Holdco, Inc.		—	Business Services		—			—		575		57		62
Signature CR Intermediate Holdco, Inc.		—	Chemicals, Plastics and Rubber		12.00	%		—		1,527		1,527		1,932
TPC Holding Company, LP (8),(11)		—	Food		—			—		219		219		62
TWD Parent Holdings, LLC		—	Business Services		—			—		30		30		33
(The Vertex Companies, LLC)
Total Preferred Equity/Partnership Interests												5,026		7,325
Common Equity/Partnership Interests/Warrants—26.2% of Net Assets (6)
Ad.net Holdings, Inc. (9)		—	Media		—			—		2,667		27		35
Affinion Group Holdings, Inc. (Warrants)	04/10/2024		Consumer Products		—			—		77,190		2,126		—
AG Investco LP (9)		—	Business Services		—			—		805,164		805		1,127
AG Investco LP (7), (9)		—	Business Services		—			—		194,836		—		—
Altamira Intermediate Company II, Inc.		—	Aerospace and Defense		—			—		125,000		125		79

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

September 30, 2022

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon		Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
AMCSI Crash Co-Invest, LP		—	Auto Sector		—		—		2,419,200	$	2,419	$	2,470
AMCSI Crash Co-Invest, LP (7)		—	Auto Sector		—		—		580,800		—		—
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (9)		—	Media		—		—		1,135		—		270
Athletico Holdings, LLC		—	Healthcare, Education and Childcare		—		—		9,357		10,000		9,516
Atlas Investment Aggregator, LLC (9)		—	Telecommunications		—		—		1,700,000		1,700		1,219
Burgess Point Holdings, LP		—	Auto Sector		—		—		680		680		690
Cartessa Aesthetics, LLC		—	Distribution		—		—		3,562,500		3,563		3,716
CI (Allied) Investment Holdings, LLC		—	Business Services		—		—		120,962		1,243		1,651
(PRA Events, Inc.) (9)
Connatix Parent, LLC		—	Media		—		—		57,416		632		689
Cowboy Parent LLC		—	Distribution		—		—		26,360		2,782		4,011
(Blackhawk Industrial Distribution, Inc.)
Crane 1 Acquisition Parent Holdings, L.P.		—	Personal, Food and Miscellaneous Services		—		—		113		104		122
Delta InvestCo LP		—	Telecommunications		—		—		698,889		684		1,425
(Sigma Defense Systems, LLC) (9)
Delta InvestCo LP (7)		—	Telecommunications		—		—		442,155		—		—
(Sigma Defense Systems, LLC) (7), (9)
ECM Investors, LLC (9)		—	Electronics		—		—		167,537		37		358
eCommission Holding Corporation (11)		—	Financial Services		—		—		80		1,005		1,391
Exigo, LLC (9)		—	Business Services		—		—		1,458,333		1,458		1,288
Express Wash Topco, LLC		—	Auto Sector		—		—		658,000		3,290		3,369
FedHC InvestCo LP (9)		—	Aerospace and Defense		—		—		14,186		478		1,441
FedHC InvestCo LP (7),(9)		—	Aerospace and Defense		—		—		6,384		—		—
FedHC InvestCo II LP (9)		—	Aerospace and Defense						20,357		2,290		2,253
Gauge Lash Coinvest LLC		—	Consumer Products		—		—		889,376		137		4,208
Gauge Schlesinger Coinvest, LLC		—	Business Services		—		—		9		9		10
Gauge TVC Coinvest, LLC		—	Transportation		—		—		810,645		—		3,229
(TVC Enterprises, LLC)
GCOM InvestCo LP (9)		—	Business Services		—		—		2,434		1,003		587
Go Dawgs Capital III, LP		—	Building Materials		—		—		675,325		675		783
(American Insulated Glass, LLC) (9)
Green Veracity Holdings, LP - Class A		—	Business Services		—		—		15,000		1,500		5,700
(VT Topco, Inc.)
Hancock Claims Consultants Investors, LLC (9)		—	Insurance		—		—		450,000		450		477
HV Watterson Holdings, LLC		—	Business Services		—		—		1,600,000		1,600		1,387
Icon Partners V C, L.P.		—	Business Services		—		—		1,111,111		1,111		1,194
Icon Partners V C, L.P. (7),(9)		—	Business Services		—		—		388,889		—		—
Imagine Topco, LP		—	Business Services		—		—		743,826		—		—
Infogroup Parent Holdings, Inc.		—	Other Media		—		—		181,495		2,040		3,270
(Data Axle, Inc.)
Ironclad Holdco, LLC		—	Environmental Services		—		—		4,566		450		592
(Applied Technical Services, LLC) (9)
ITC Infusion Co-invest, LP		—	Healthcare, Education and Childcare		—		—		113,839		1,138		1,199
ITC Rumba, LLC		—	Healthcare, Education and Childcare		—		—		375,675		8		42,031
(Cano Health, LLC) (9)
JWC-WE Holdings, L.P.		—	Home and Office Furnishings		—		—		2,688		783		—
(Walker Edison Furniture Company LLC) (9)
Kentucky Racing Holdco, LLC (Warrants)		—	Hotels, Motels, Inns and Gaming		—		—		161,252		—		1,774
Kinetic Purchaser, LLC		—	Consumer Products		—		—		1,308,814		1,309		1,854
KL Stockton Co-Invest LP		—	Personal, Food and Miscellaneous Services		—		—		382,353		382		643
(Any Hour Services) (9)
Lariat ecoserv Co-Invest Holdings, LLC (9)		—	Environmental Services		—		—		363,656		180		1,376
Lightspeed Investment Holdco LLC		—	Healthcare, Education and Childcare		—		—		273,143		273		373
Mars Intermidiate Holdings II, Inc. (9)		—	Media		—		—		414		—		126
MDI Aggregator, LP		—	Chemicals, Plastics and Rubber		—		—		1,925,990		1,930		1,926
Meadowlark Title, LLC (9)		—	Business Services		—		—		815,385		815		897
Municipal Emergency Services, Inc.		—	Distribution		—		—		3,920,145		3,984		2,990
NEPRT Parent Holdings, LLC		—	Consumer Products		—		—		1,299		1,261		243
(Recteq, LLC) (9)
North Haven Saints Equity Holdings, LP		—	Business Services		—		—		351,553		352		373
NXOF Holdings, Inc.		—	Aerospace and Defense		—		—		3,261		3		68
(Tyto Athene, LLC)
OceanSound Discovery Equity, LP		—	Aerospace and Defense		—		—		98,286		979		1,651
(Holdco Sands Intermediate, LLC) (9)
OHCP V BC COI, L.P.		—	Distribution		—		—		446,250		446		382
OHCP V BC COI, L.P. (7),(9)		—	Distribution		—		—		303,750		—		(44	)
Oral Surgery (ITC) Holdings, LLC (9)		—	Healthcare, Education and Childcare		—		—		2,904		63		173
ORL Holdco, Inc.		—	Business Services		—		—		638		6		113
PennantPark-TSO Senior Loan Fund II, LP		—	Financial Services		—		—		15,038,871		15,039		15,571
Pink Lily Holdco, LLC (9)		—	Retail		—		—		1,044		1,044		550
Pragmatic Institute, LLC		—	Business Services		—		—		1,918,047		1,918		1,918
QuantiTech InvestCo LP (9)		—	Aerospace and Defense		—		—		712		68		352
QuantiTech InvestCo LP (7),(9)		—	Aerospace and Defense		—		—		955		—		—
QuantiTech InvestCo II LP (9)		—	Aerospace and Defense		—		—		40		25		24
RFMG Parent, LP		—	Healthcare, Education and Childcare		—		—		1,050,000		1,050		1,090
(Rancho Health MSO, Inc.)
SBI Holdings Investments LLC		—	Business Services		—		—		36,585		366		359
(Sales Benchmark Index LLC)
Seaway Topco, LP		—	Chemicals, Plastics and Rubber		—		—		2,981		2,981		2,981
Signature CR Intermediate Holdco, Inc.		—	Chemicals, Plastics and Rubber		—		—		80		80		—
SP L2 Holdings, LLC		—	Consumer Products		—		—		881,966		882		913

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)

September 30, 2022

(In thousands, except share data)


Issuer Name	Maturity / Expiration		Industry	Current Coupon			Basis Point Spread Above Index (4)		Par / Shares		Cost		Fair Value (3)
SSC Dominion Holdings, LLC		—	Electronics		—			—		1,500	$	1,500	$	2,041
Class A (US Dominion, Inc.)
SSC Dominion Holdings, LLC		—	Electronics		—			—		1,500		—		4,389
Class B (US Dominion, Inc.)
StellPen Holdings, LLC		—	Media		—			—		153,846		154		152
(CF512, Inc.)
TAC LifePort Holdings, LLC (9)		—	Aerospace and Defense		—			—		232,558		233		296
Tower Arch Infolinks Media, LP (9)		—	Media		—			—		531,293		511		896
Tower Arch Infolinks Media, LP (7), (9)		—	Media		—			—		364,151		—		—
TPC Holding Company, LP (8). (11)		—	Food		—			—		11,527		12		—
TWD Parent Holdings, LLC		—	Business Services		—			—		608		1		—
(The Vertex Companies, LLC)
U.S. Well Services, Inc. - Class A (5), (11)		—	Oil and Gas		—			—		60,057		3,022		304
UniVista Insurance (9)		—	Business Services		—			—		400		382		454
WCP Ivyrehab QP CF Feeder, LP		—	Healthcare, Education and Childcare		—			—		3,762,257		3,762		3,762
WCP Ivyrehab QP CF Feeder, LP - Unfunded (7)		—	Healthcare, Education and Childcare		—			—		237,743		—		—
Wildcat Parent, LP		—	Electronics		—			—		2,314		231		616
(Wildcat Buyerco, Inc.)
Total Common Equity/Partnership Interests/Warrants												91,596		153,373
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies												882,513		932,155
Investments in Non-Controlled, Affiliated Portfolio Companies—5.9% of Net Assets (1), (2)
Preferred Equity/Partnership Interests—5.6% of Net Assets(6)
Cascade Environmental Holdings, LLC (9)		—	Environmental Services		—			—		5,887,236		32,791		32,791
Total Preferred Equity/Partnership Interests												32,791		32,791
Common Equity/Partnership Interests/Warrants—0.3% of Net Assets (6)
Cascade Environmental Holdings, LLC		—	Environmental Services		—			—		7,444,347		2,852		—
JF Intermediate, LLC		—	Distribution		—			—		19,687		1,969		1,969
Total Common Equity/Partnership Interests/Warrants												4,821		1,969
Total Investments in Non-Controlled, Affiliated Portfolio Companies												37,612		34,760
Investments in Controlled, Affiliated Portfolio Companies—44.3% of Net Assets (1), (2)
First Lien Secured Debt—7.3% of Net Assets
AKW Holdings Limited (8), (10), (11)	03/13/2024		Healthcare, Education and Childcare		8.67	%	3M L+700		£	38,250		52,792		42,698
Total First Lien Secured Debt												52,792		42,698
Second Lien Secured Debt—0% of Net Assets
Mailsouth Inc.	04/23/2025		Printing and Publishing		—			—		12,846		12,383		—
Total Second Lien Secured Debt												12,383		—
Subordinated Debt—15.0% of Net Assets
PennantPark Senior Loan Fund, LLC (11)	07/31/2027		Financial Services		10.79	%	3M L+800			88,011		88,011		88,011
Total Subordinated Debt												88,011		88,011
Common Equity—22.0% of Net Assets (6)
AKW Holdings Limited (8), (10), (11)		—	Healthcare, Education and Childcare		—			—	£	950		132		3,297
MSpark, LLC		—	Printing and Publishing		—			—		51,151		16,516		—
PennantPark Senior Loan Fund, LLC		—	Financial Services		—			—		49,298,789		49,362		51,098
RAM Energy Holdings LLC (9)		—	Energy and Utilities		—			—		180,805		162,708		74,282
Total Common Equity												228,718		128,677
Total Investments in Controlled, Affiliated Portfolio Companies												381,904		259,386
Total Investments—209.4% of Net Assets												1,302,029		1,226,301
Cash and Cash Equivalents—9.0% of Net Assets
BlackRock Federal FD Institutional 30												39,122		39,122
BNY Mellon Cash Reserve and Cash												13,722		13,544
Total Cash and Cash Equivalents												52,844		52,666
Total Investments and Cash Equivalents—218.4% of Net Assets											$	1,354,873	$	1,278,967
Liabilities in Excess of Other Assets—(118.4%) of Net Assets														(693,402	)
Net Assets—100.0%													$	585,565

(1)

(2)

(3)

Valued based on our accounting policy (See Note 2).

(4)

(5)

The security was not valued using significant unobservable inputs. The value of all other securities was determined using significant unobservable inputs (See Note 5).

(6)

Non-income producing securities.

(7)

(8)

Non-U.S. company or principal place of business outside the United States.

(9)

Investment is held through our Taxable Subsidiary (See Note 1).

(10)

Par / Shares amount is denominated in British Pounds (£) as denoted.

(11)

The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. As of September 30, 2022, qualifying assets represent 88% of the Company’s total assets and non-qualifying assets represent 12% of the Company’s total assets.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

MARCH 31, 2023

1. ORGANIZATION

PennantPark Investment Corporation was organized as a Maryland corporation in January 2007. We are a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. Our investment objective is to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments. We invest primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and, to a lesser extent, equity investments. On April 24, 2007, we closed our initial public offering. On April 14, 2022, trading of the Company's common stock commenced on the New York Stock Exchange after the Company voluntarily withdrew the principal listing of its common stock from the Nasdaq Stock Market LLC effective at market close on April 13, 2022. Our common stock trades on the New York Stock Exchange under the symbol “PNNT.”

We have entered into an investment management agreement, or the Investment Management Agreement, with the Investment Adviser, an external adviser that manages our day-to-day operations. PennantPark Investment, through the Investment Adviser, manages the day-to-day operations of, and provides investment advisory services to, SBIC II under a separate investment management agreement. We have also entered into an administration agreement, or the Administration Agreement, with the Administrator, which provides the administrative services necessary for us to operate. PennantPark Investment, through the Administrator, also provides similar services to SBIC II under a separate administration agreement. See Note 3.

SBIC II, our wholly-owned subsidiary, was organized as a Delaware limited partnership in 2012. SBIC II received a license from the SBA to operate as a SBIC under Section 301(c) of the 1958 Act. SBIC II’s objectives are to generate both current income and capital appreciation through debt and equity investments generally by investing with us in SBA-eligible businesses that meet the investment selection criteria used by PennantPark Investment.

On July 31, 2020, we and certain entities and managed accounts of the private credit investment manager of Pantheon Ventures (UK) LLP, or Pantheon, entered into a limited liability company agreement to co-manage PSLF, a newly-formed unconsolidated joint venture. In connection with this transaction, we contributed in-kind our formerly wholly-owned subsidiary, Funding I. As a result of this transaction, Funding I became a wholly-owned subsidiary of PSLF and was deconsolidated from our financial statements. PSLF invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSLF was formed as a Delaware limited liability company. See Note 4.

We have formed the Taxable Subsidiary, which is subject to tax as a corporation. The Taxable Subsidiary allows us to hold equity securities of certain portfolio companies treated as pass-through entities for federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.

In January 2022, we funded PennantPark-TSO Senior Loan Fund II LP, ("PTSF II"), an unconsolidated Delaware limited partnership. We sold $82.3 million in investments to a wholly-owned subsidiary of PTSF II in exchange for cash in the amount of $75.7 million and an $6.6 million equity interest in PTSF II representing 23.1% of the total outstanding Class A Units of PTSF II. We recognized $0.2 million of realized gain upon the formation of PTSF II. As of March 31, 2023, our capital commitment of $15.0 million is 100% funded and we hold 23.1% of the total outstanding Class A Units of PTSF II and a 4.99% voting interest in the general partner which manages PTSF II.

We are operated by a person who has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and the Investment Adviser intends to continue to affirm the exclusion on an annual basis, and therefore, is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of our Consolidated Financial Statements, in conformity with U.S. generally accepted accounting principles, or GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Changes in the economic and regulatory environment, financial markets, the credit worthiness of our portfolio companies and any other parameters used in determining these estimates and assumptions could cause actual results to differ from such estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions in consolidation. References to the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Codification, as amended, or ASC, serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued.

Our Consolidated Financial Statements are prepared in accordance with GAAP, consistent with ASC Topic 946, Financial Services – Investment Companies, and pursuant to the requirements for reporting on Form 10-K/Q and Articles 6, 10 and 12 of Regulation S-X, as appropriate. In accordance with Article 6-09 of Regulation S-X, we have provided a Consolidated Statement of Changes in Net Assets in lieu of a Consolidated Statement of Changes in Stockholders’ Equity.

Our significant accounting policies consistently applied are as follows:

(a)

Investment Valuations

We expect that there may not be readily available market values for many of the investments which are or will be in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that our board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material. See Note 5.

Our portfolio generally consists of illiquid securities, including debt and equity investments. With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, our board of directors undertakes a multi-step valuation process each quarter, as described below:

(1)

Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

(2)

Preliminary valuation conclusions are then documented and discussed with the management of the Investment Adviser;

(3)

Our board of directors also engages independent valuation firms to conduct independent appraisals of our investments for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment. The independent valuation firms review management’s preliminary valuations in light of their own independent assessment and also in light of any market quotations obtained from an independent pricing service, broker, dealer or market maker;

(4)

The audit committee of our board of directors reviews the preliminary valuations of the Investment Adviser and those of the independent valuation firms on a quarterly basis, periodically assesses the valuation methodologies of the independent valuation firms, and responds to and supplements the valuation recommendations of the independent valuation firms to reflect any comments; and

(5)

Our board of directors discusses these valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of our Investment Adviser, the respective independent valuation firms and the audit committee.

Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If our board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.

(b)

Security Transactions, Revenue Recognition, and Realized/Unrealized Gains or Losses

Security transactions are recorded on a trade-date basis. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering prepayment penalties. Net change in unrealized appreciation or depreciation reflects, as applicable, the change in the fair values of our portfolio investments and the Credit Facility during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount, or OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties earned on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or if there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. 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 and interest is paid and, in management’s judgment, are likely to remain current. As of March 31, 2023, we had one portfolio companies on non-accrual, representing 1.0% and zero percent of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2022, we had one portfolio company on non-accrual, representing 1.0% and zero percent of our overall portfolio on a cost and fair value basis, respectively.

(c)

Income Taxes

We have complied with the requirements of Subchapter M of the Code and have qualified to be treated as a RIC for federal income tax purposes. In this regard, we account for income taxes using the asset and liability method prescribed by ASC Topic 740, Income Taxes, or ASC 740. Under this method, income taxes are provided for amounts currently payable and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Based upon our qualification and election to be treated as a RIC for U.S. federal income tax purposes, we typically do not incur material federal income taxes. However, we may choose to retain a portion of our calendar year income, which may result in the imposition of an excise tax. Additionally, certain of the Company’s consolidated subsidiaries are subject to federal, state and local income taxes. For the three and six months ended March 31, 2023, we recorded a provision for taxes on net investment income of $0.5 million and $2.5 million respectively, which pertains to U.S. federal excise tax. For the three and six months ended March 31, 2022, we recorded a provision for taxes on net investment income of $0.2 million and $0.4 million respectively, all of which pertains to U.S. federal excise tax.

We recognize the effect of a tax position in our Consolidated Financial Statements in accordance with ASC 740 when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not considered to satisfy the “more-likely-than-not” threshold would be recorded as a tax expense or benefit. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the financial statements. There were no tax accruals relating to uncertain tax positions and no amounts accrued for any related interest or penalties with respect to the periods presented herein. The Company’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, the Company’s major tax jurisdiction is federal.

The Taxable Subsidiary (PNNT Investment Holdings, LLC, a second-tier wholly-owned subsidiary of the Company) is subject to U.S. federal, state and local corporate income taxes. The income tax expense and related tax liabilities of the Taxable Subsidiary are reflected in the Company’s consolidated financial statements.

For the three and six months ended March 31, 2023, the Company recognized a provision for taxes of $0.7 million and $0.7 million, respectively, on net realized gain on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2022, the Company recognized a provision for taxes of $5.1 million and $5.1 million, respectively, on net realized gain on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2023, the Company recognized a provision for taxes of zero and $(0.9) million, respectively, on net unrealized gain (loss) on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2022, the Company recognized a provision for taxes of $(5.1) million and zero, respectively, on unrealized gain(loss) on investments by the Taxable Subsidiary. The provision for taxes on net realized and unrealized gains on investments is the result of netting (i) the expected tax liability on the gains from the sales of investments which is likely to be realized and unrealized during fiscal year ending September 30, 2023 and (ii) the expected tax benefit resulting from the use of loss carryforwards to offset such gains. As of March

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

31, 2023 and September 30, 2022, the Company recognized a provision for taxes of $(0.7) million and $7.1 million on net realized and unrealized gains on investments by the Taxable Subsidiary.

During the three and six months ended March 31, 2023, the Company paid zero, respectively, in federal taxes on realized gains on the sale of investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2022, the Company paid $4.0 million in taxes on realized gains on the sale of investments held by the Taxable Subsidiary, resulting in remaining tax liability of $1.1 million as of March 31, 2022, included under accrued other expenses in the consolidated statement of assets and liabilities. Due to offsetting losses in the year ended September 30, 2022, the $4.0 million is shown on the consolidated statement of assets and liabilities under prepaid expenses and other assets. The state and local tax liability of $6.9 million as of March 31, 2023 is included under accrued other expenses in the consolidated statement of assets and liabilities.

We operate in a manner to maintain our election to be subject to tax as a RIC and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and capital gain net income (if any). As a result, we will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiary. As such, a reconciliation of the differences between our reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful.

Because federal income tax regulations differ from GAAP, distributions characterized in accordance with tax regulations may differ from net investment income and net realized gains recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

(d)

Distributions and Capital Transactions

Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid, if any, as a distribution is determined by our board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually. The tax attributes for distributions will generally include ordinary income and capital gains but may also include certain tax-qualified dividends and/or a return of capital.

Capital transactions, in connection with our dividend reinvestment plan or through offerings of our common stock, are recorded when issued and offering costs are charged as a reduction of capital upon issuance of our common stock.

(e)

Foreign Currency Translation

Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

Fair value of investment securities, other assets and liabilities – at the exchange rates prevailing at the end of the applicable period; and

Purchases and sales of investment securities, income and expenses – at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, we do not isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt from the fluctuations arising from changes in fair values of investments and liabilities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and liabilities.

Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.

(f)

Consolidation

As permitted under Regulation S-X and as explained by ASC paragraph 946-810-45-3, PennantPark Investment will generally not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we have consolidated the results of our SBIC Funds and our Taxable Subsidiary in our Consolidated Financial Statements. We do not consolidate our non-controlling interests in PSLF or PTSF II. See further description of our investment in PSLF in Note 4.

(g)

Asset Transfers and Servicing

Asset transfers that do not meet ASC Topic 860, Transfers and Servicing, requirements for sale accounting treatment are reflected in the Consolidated Statements of Assets and Liabilities and the Consolidated Schedules of Investments as investments.

(h) Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update, or ASU, No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through March 31, 2023. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the year ended September 30, 2022, the effect of which was not material to the consolidated financial statements and the notes thereto.

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)”, which is intended to address issues identified during the post-implementation review of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment, among other things, eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors”, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The new guidance is effective for interim and annual periods beginning after December 15, 2022. The Company has adopted the new accounting standard implementing appropriate controls and procedures, however the impact of the adoption is not expected to be material.

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2022-03, which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company is currently evaluating the impact the adoption of this new accounting standard will have on its consolidated financial statements, but the impact of the adoption is not expected to be material.

3. AGREEMENTS AND RELATED PARTY TRANSACTIONS

(a) Investment Management Agreement

The Investment Management Agreement with the Investment Adviser was reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in February 2023. Under the Investment Management Agreement, the Investment Adviser, subject to the overall supervision of our board of directors, manages the day-to-day operations of and provides investment advisory services to, us. The Investment Adviser serves as the servicer to Funding I and has irrevocably directed that the management fee owed to it with respect to such services be paid to the Company so long as the Investment Adviser remains the servicer. SBIC II’s investment management agreement does not affect the management or incentive fees that we pay to the Investment Adviser on a consolidated basis. For providing these services, the Investment Adviser receives a fee from us, consisting of two components— a base management fee and an incentive fee or, collectively, Management Fees.

Base Management Fee

The base management fee is calculated at an annual rate of 1.50% of our “average adjusted gross assets,” which equals our gross assets (exclusive of U.S. Treasury Bills, temporary draws under any credit facility, cash and cash equivalents, repurchase agreements or other balance sheet transactions undertaken at the end of a fiscal quarter for purposes of preserving investment flexibility for the next quarter and unfunded commitments, if any) and is payable quarterly in arrears. In addition, on November 13, 2018, in connection with our board of directors’ approval of the application of the modified asset coverage requirements under the 1940 Act to the Company, our board of directors also approved an amendment to the Investment Management Agreement reducing the Investment Adviser’s annual base management fee from 1.50% to 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter-end. This amendment became effective on February 5, 2019 with the amendment and restatement of the Investment Management Agreement on April 12, 2019. The base management fee is calculated based on the average adjusted gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. For example, if we sold shares on the 45th day of a quarter and did not use the proceeds from the sale to repay outstanding indebtedness, our gross assets for such quarter would give effect to the net proceeds of the issuance for only 45 days of the quarter during which the additional shares were outstanding. For the three and six months ended March 31, 2023, the Investment Adviser earned base management fees of $4.0 million and $8.6 million, respectively, from us. For the three and six months ended March 31, 2022, the Investment Adviser earned base management fee of $5.0 million and $10.1 million, respectively, from us.

Incentive Fee

The incentive fee has two parts, as follows:

One part is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income, including any other fees (other than fees for providing managerial assistance), such as amendment, commitment, origination, prepayment penalties, structuring, diligence and consulting fees or other fees received from portfolio companies, accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense or amendment fees under any credit facility and distribution paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero-coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a percentage of the value of our net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7.00% annualized). We pay the Investment Adviser an incentive fee with respect to our Pre- Incentive Fee Net Investment Income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 1.75%, (2) 100% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.1212% in any calendar quarter (8.4848% annualized), and (3) 17.5% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1212% in any calendar quarter. These calculations are pro-rated for any share issuances or repurchases during the relevant quarter, if applicable.

For the three and six months ended March 31, 2023, the Investment Adviser earned $3.5 million and $5.7 million, respectively, in incentive fees on net investment income from us. For the three and six months ended March 31, 2022, the Investment Adviser earned an incentive fee of zero and $2.7 million, respectively, on net investment income from us.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date) and, effective January 1, 2018, equals 17.5% of our realized capital gains, (20.0% for periods prior to January 1, 2018), if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. For each of the three and six months ended March 31, 2023 and 2022 , the Investment Adviser did not accrue an incentive fee on capital gains as calculated under the Investment Management Agreement (as described above).

Under GAAP, we are required to accrue a capital gains incentive fee based upon net realized capital gains and net unrealized capital appreciation and depreciation on investments held at the end of each period. In calculating the capital gains incentive fee accrual, we considered the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement. This accrual is calculated using the aggregate cumulative realized capital gains and losses and cumulative unrealized capital appreciation or depreciation. If such amount is positive at the end of a period, then we record a capital gains incentive fee equal to 17.5% of such amount, less the aggregate amount of actual capital gains related to incentive fees paid in all prior years, if any. If such amount is negative,

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

then there is no accrual for such year. There can be no assurance that such unrealized capital appreciation will be realized in the future. For each of the three and six months ended March 31, 2023 and 2022 the Investment Adviser did not accrue an incentive fee on capital gains as calculated under GAAP.

(b) Administration Agreement

The Administration Agreement with the Administrator was reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in February 2023. Under the Administration Agreement, the Administrator provides administrative services and office facilities to us. The Administrator provides similar services to SBIC II under its administration agreement with PennantPark Investment. For providing these services, facilities and personnel, we have agreed to reimburse the Administrator for its allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer, Corporate Counsel and their respective staffs. The amount billed by the Administrator may include credits related to its administrative agreement with PSLF. The Administrator also offers, on our behalf, significant managerial assistance to portfolio companies to which we are required to offer such assistance. Reimbursement for certain of these costs is included in administrative services expenses in the Consolidated Statements of Operations. For the three and six months ended March 31, 2023, we reimbursed the Investment Administrator approximately $0.3 million and $0.6 million, respectively, for the services described above. For the three and six months ended March 31, 2022, we reimbursed the Administrator approximately $0.6 million and $0.9 million, respectively, for the services described above.

On July 1, 2022, the Administration Agreement with the Administrator was amended to clarify that the Administrator may be reimbursed by the Company for certain (i) tax and general legal advice and/or services provided to the Company by in-house professionals of the Administrator related to ongoing operations of the Company; and (ii) transactional legal advice and/or services provided to the Company or portfolio companies by in-house professionals of the Administrator or its affiliates on matters related to potential or actual investments and transactions, including tax structuring and/or due diligence.

There were no transactions subject to Rule 17a-7 under the 1940 Act during each of the three and six months ended March 31, 2023 and 2022.

For the three and six months ended March 31, 2023, we sold $18.4 million and $18.4 million in investments to PSLF at fair value, respectively, and recognized less than $0.1 million and less than $0.1 million of net realized gains, respectively. For the three and six months ended March 31, 2022, we sold $11.5 million and $59.6 million in investments to PSLF at fair value, respectively, and recognized zero and $0.1 million of net realized gains, respectively.

For the three and six months ended March 31, 2023, we sold zero in investments to PTSF II at fair value, respectively, and recognized zero of net realized gains, respectively. For three and six months ended March 31, 2022, we sold $82.3 million in investments to PTSF II at fair value and recognized $0.2 million of net realized gains.

4. INVESTMENTS

Purchases of investments, including PIK interest, for the three and six months ended March 31, 2023 totaled $59.0 million and $146.3 million, respectively. For the same periods in the prior year, purchases of investments, including PIK interest, totaled $185.7 million and $480.8 million, respectively. Sales and repayments of investments for the three and six months ended March 31, 2023 totaled $114.2 million and $144.8 million, respectively. For the same periods in prior year, sales and repayments of investments totaled $405.5 million and $537.7 million, respectively.

Investments and cash and cash equivalents consisted of the following:


	March 31, 2023				September 30, 2022
Investment Classification ($ in thousands)	Cost		Fair Value		Cost		Fair Value
First lien	$	665,671	$	648,359	$	652,055	$	630,965
Second lien		128,309		111,282		145,542		129,936
Subordinated debt / corporate notes		53,570		52,552		53,468		53,255
Subordinated notes in PSLF		95,351		95,351		88,011		88,011
Equity		167,578		171,593		313,591		273,036
Equity in PSLF		54,121		53,374		49,362		51,098
Total investments		1,164,600		1,132,511		1,302,029		1,226,301
Cash and cash equivalents		63,105		63,135		52,844		52,666
Total investments and cash and cash equivalents	$	1,227,705	$	1,195,646	$	1,354,873	$	1,278,967

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets (excluding cash and cash equivalents) in such industries as of:


Industry Classification	March 31, 2023			September 30, 2022
Business Services		18	%		18	%
Healthcare, Education and Childcare		12			12
Consumer Products		9			8
Financial Services		6			5
Distribution		5			5
Home and Office Furnishings		5			4
Media		5			4
Telecommunications		5			5
Chemicals, Plastics and Rubber		4			3
Environmental Services		4			3
Auto Sector		4			3
Aerospace and Defense		4			3
Electronics		3			3
Transportation		2			2
Hotels, Motels, Inns and Gaming		2			2
Personal, Food and Miscellaneous Services		2			1
Building Materials		2			2
Personal and Non-Durable Consumer Products		1			1
Education		1			2
Insurance		1			1
Leisure, Amusement, Motion Pictures, Entertainment		1			1
Cargo Transport		1			1
Retail		1			1
Manufacturing / Basic Industries		1			1
Other		1			9
Total		100	%		100	%

(1)

Excludes investments in PSLF.

PennantPark Senior Loan Fund, LLC

In July 2020, we and Pantheon formed PSLF, an unconsolidated joint venture. PSLF invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSLF was formed as a Delaware limited liability company. As of March 31, 2023 and September 30, 2022, PSLF had total assets of $793.0 million and $781.3 million, respectively and its investment portfolio consisted of debt investments in 86 and 80 portfolio companies, respectively. As of March 31, 2023, at fair value, the largest investment in a single portfolio company in PSLF was $19.8 million and the five largest investments totaled $97.6 million. As of September 30, 2022, at fair value, the largest investment in a single portfolio company in PSLF was $19.9 million and the five largest investments totaled $98.5 million. PSLF invests in portfolio companies in the same industries in which we may directly invest.

We and Pantheon provide capital to PSLF in the form of subordinated notes and equity interests. As of March 31, 2023 and September 30, 2022, we and Pantheon owned 60.5% and 39.5%, respectively, of each of the outstanding subordinated notes and equity interests of PSLF. As of March 31, 2023 and September 30, 2022 our investment in PSLF consisted of subordinated notes of $95.4 million (additional $20.5 million unfunded) and $88.0 million (additional $27.9 million unfunded), respectively, and equity interests of $57.5 million (additional $13.3 million unfunded) and $54.8 million (additional $18.3 million unfunded), respectively.

We and Pantheon each appointed two members to PSLF’s four-person Member Designees’ Committee, or the Member Designees’ Committee. All material decisions with respect to PSLF, including those involving its investment portfolio, require unanimous approval of a quorum of the Member Designees’ Committee. Quorum is defined as (i) the presence of two members of the Member Designees’ Committee; provided that at least one individual is present that was elected, designated or appointed by each of us and Pantheon; (ii) the presence of three members of the Member Designees’ Committee, provided that the individual that was elected, designated or appointed by each of us or Pantheon, as the case may be, with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the Member Designees’ Committee shall constitute a quorum, provided that two individuals are present that were elected, designated or appointed by each of us and Pantheon.

Additionally, PSLF, through its wholly-owned subsidiary, or PSLF Subsidiary, has entered into a $325.0 million (increased from $225.0 million on September 2, 2022) senior secured revolving credit facility, or the PSLF Credit Facility, with BNP Paribas, which bears interest at SOFR (or an alternative risk-free interest rate index) plus 260 basis points during the investment period and is subject to leverage and borrowing base restrictions.

In March 2022, PSLF completed a $304.0 million debt securitization in the form of a collateralized loan obligation, or the “2034 Asset-Backed Debt”. The 2034 Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO IV, LLC., a wholly-owned and consolidated subsidiary of PSLF, consisting primarily of middle market loans and participation interests in middle market loans. The 2034 Asset-Backed Debt is scheduled to mature in April 2034. On the closing date of the transaction, in consideration of PSLF’s transfer to PennantPark CLO IV, LLC. of the initial closing date loan portfolio, which included loans distributed to PSLF by certain of its wholly owned subsidiaries and us, PennantPark CLO IV, LLC. transferred to PSLF 100% of the Preferred Shares of PennantPark CLO IV, LLC. and 100% of the Subordinated Notes issued by PennantPark CLO IV, LLC.

Below is a summary of PSLF’s portfolio at fair value:


($ in thousands)	March 31, 2023			September 30, 2022
Total investments	$	747,561		$	730,108
Weighted average cost yield on income producing investments		11.3	%		9.4	%
Number of portfolio companies in PSLF		86			80
Largest portfolio company investment at fair value	$	19,750		$	19,906
Total of five largest portfolio company investments at fair value	$	97,638		$	98,502

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

Below is a listing of PSLF’s individual investments as of March 31, 2023 ($ in thousands)


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value(2)
First Lien Secured Debt - 847.4%
A1 Garage Merger Sub, LLC	12/22/2028	Personal, Food and Miscellaneous Services		11.12	%	3M L+650		15,000	$	14,726	$	14,775
Ad.net Acquisition, LLC	5/7/2026	Media		10.84	%	3M L+600		4,913		4,913		4,876
Alpine Acquisition Corp II	11/30/2026	Containers, Packaging and Glass		10.45	%	SOFR+600		14,912		14,574		14,316
Altamira Technologies, LLC	7/24/2025	Aerospace and Defense		10.83	%	3M L+550		846		840		846
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)	6/10/2025	Media		11.30	%	SOFR+625		14,031		13,919		13,820
Anteriad, LLC (f/k/a MeritDirect, LLC)	5/23/2024	Media		10.55	%	3M L+550		14,761		14,707		14,318
Any Hour Services	7/21/2027	Personal, Food and Miscellaneous Services		10.53	%	3M L+575		9,877		9,870		9,605
Apex Service Partners, LLC	7/31/2025	Personal, Food and Miscellaneous Services		9.46	%	3M L+575		6,441		6,388		6,408
Apex Service Partners, LLC Term Loan B	7/31/2025	Personal, Food and Miscellaneous Services		9.77	%	3M L+550		3,324		3,303		3,308
Apex Service Partners, LLC - Term Loan C	7/31/2025	Personal, Food and Miscellaneous Services		9.84	%	3M L+600		7,550		7,550		7,512
Applied Technical Services, LLC	12/29/2026	Environmental Services		10.91	%	3M L+500		8,774		8,687		8,598
Arcfield Acquisition Corp.	3/7/2028	Aerospace and Defense		10.62	%	3M L+575		11,880		11,681		11,642
Beta Plus Technologies, Inc.	7/1/2029	Business Services		9.32	%	SOFR+575		14,963		14,706		13,167
Blackhawk Industrial Distribution, Inc.	9/17/2024	Distribution		9.50	%	SOFR+500		17,908		17,742		17,505
Broder Bros., Co.	12/4/2025	Personal and Non-Durable Consumer Products		10.73	%	3M L+600		9,810		9,810		9,810
Burgess Point Purchaser Corporation	9/26/2029	Auto Sector		10.16	%	SOFR+525		898		837		853
Cartessa Aesthetics, LLC	6/14/2028	Distribution		10.90	%	3M L+600		17,369		17,069		17,195
CF512, Inc.	8/20/2026	Media		10.96	%	3M L+575		2,962		2,940		2,903
Connatix Buyer, Inc.	7/13/2027	Media		10.23	%	1M L+550		8,855		8,842		8,523
Dr. Squatch, LLC	8/31/2027	Personal and Non-Durable Consumer Products		10.48	%	3M L+475		6,403		6,396		6,307
DRI Holding Inc.	12/21/2028	Media		10.09	%	3M L+575		4,404		3,953		3,914
DRS Holdings III, Inc.	11/3/2025	Consumer Products		10.90	%	3M L+600		14,591		14,532		14,168
Duraco Specialty Tapes LLC	6/30/2024	Manufacturing / Basic Industries		10.36	%	3M L+575		8,098		8,002		7,920
ECL Entertainment, LLC	5/1/2028	Hotels, Motels, Inns and Gaming		12.42	%	3M L+500		4,535		4,535		4,492
ECM Industries, LLC	12/23/2025	Electronics		9.45	%	3M L+600		2,801		2,749		2,682
EDS Buyer, LLC	1/10/2029	Aerospace and Defense		11.15	%	SOFR+625		6,250		6,172		6,094
Electro Rent Corporation	1/17/2024	Electronics		10.27	%	3M L+550		3,732		3,606		3,632
Exigo Intermediate II, LLC	3/15/2027	Business Services		10.59	%	1M L+575		9,900		9,778		9,702
Fairbanks Morse Defense	6/17/2028	Aerospace and Defense		9.91	%	6M L+475		794		751		756
Global Holdings InterCo LLC	3/16/2026	Banking, Finance, Insurance & Real Estate		11.23	%	3M L+600		7,305		7,283		6,949
Graffiti Buyer, Inc.	8/10/2027	Distribution		10.66	%	3M L+550		1,964		1,933		1,945
Hancock Roofing and Construction L.L.C.	12/31/2026	Insurance		10.39	%	1M L+575		6,827		6,827		6,691
Holdco Sands Intermediate, LLC	11/23/2028	Aerospace and Defense		11.21	%	1M L+800		19,817		19,467		19,619
HV Watterson Holdings, LLC	12/17/2026	Business Services		11.41	%	3M L+600		15,179		14,991		14,769
HW Holdco, LLC	12/10/2024	Media		10.15	%	1M L+700		14,250		14,143		14,036
Icon Partners III, LP	5/11/2028	Auto Sector		9.32	%	3M L+475		2,316		2,008		1,627
IDC Infusion Services, Inc.	12/30/2026	Healthcare, Education and Childcare		11.55	%	3M L+750		17,313		17,090		16,707
IG Investments Holdings, LLC	9/22/2028	Business Services		10.86	%	1M L+575		4,451		4,372		4,384
Imagine Acquisitionco, LLC	11/15/2027	Business Services		10.37	%	3M L+625		5,594		5,503		5,426
Inception Fertility Ventures, LLC	12/7/2023	Healthcare, Education and Childcare		11.91	%	3M L+550		19,837		19,589		19,441
Infinity Home Services Holdco, Inc.	12/28/2028	Personal, Food and Miscellaneous Services		11.73	%	SOFR+675		11,109		10,910		10,886
Infolinks Media Buyco, LLC	11/1/2026	Media		10.66	%	1M L+550		6,396		6,396		6,396
Integrity Marketing Acquisition, LLC	8/27/2025	Insurance		11.00	%	3M L+575		19,950		19,881		19,750
K2 Pure Solutions NoCal, L.P.	12/20/2023	Chemicals, Plastics and Rubber		12.91	%	SOFR+800		13,418		13,351		13,418
LAV Gear Holdings, Inc.	10/31/2024	Leisure, Amusement, Motion Pictures, Entertainment		10.70	%	SOFR+603		2,579		2,573		2,543
Lash OpCo, LLC	2/18/2027	Consumer Products		11.17	%	1M L+650		19,824		19,642		19,428
Lightspeed Buyer Inc.	2/3/2026	Healthcare, Education and Childcare		10.13	%	3M L+475		12,282		12,089		11,975
LJ Avalon Holdings, LLC	1/31/2030	Environmental Services		11.33	%	3M L+650		6,350		6,236		6,223
MAG DS Corp.	4/1/2027	Aerospace and Defense		10.50	%	3M L+550		5,540		5,139		5,042
Magenta Buyer, LLC	7/31/2028	Software		9.58	%	3M L+500		3,804		3,551		3,123
Mars Acquisition Holdings Corp.	5/14/2026	Media		10.23	%	3M L+550		7,884		7,835		7,805
MBS Holdings, Inc.	4/16/2027	Telecommunications		10.59	%	3M L+575		7,369		7,295		7,295
Meadowlark Acquirer, LLC	12/10/2027	Business Services		10.41	%	3M L+575		2,968		2,916		2,938
Municipal Emergency Services, Inc.	9/28/2027	Distribution		10.55	%	3M L+550		4,133		4,076		3,959
NBH Group LLC	8/19/2026	Healthcare, Education and Childcare		9.92	%	3M L+575		7,467		7,399		7,467
Owl Acquisition, LLC	2/4/2028	Education		10.16	%	3M L+550		3,805		3,702		3,710
Ox Two, LLC (New Issue)	5/18/2026	Distribution		12.41	%	1M L+650		4,937		4,893		4,789
PL Acquisitionco, LLC	11/9/2027	Retail		11.34	%	1M L+575		8,591		8,459		8,204
PlayPower, Inc.	5/8/2026	Consumer Products		10.25	%	1M L+525		2,565		2,485		2,309
Quantic Electronics, LLC	11/19/2026	Aerospace and Defense		11.21	%	1M L+600		3,331		3,278		3,281
Quantic Electronics, LLC - Unfunded Term Loan	11/19/2026	Aerospace and Defense		0.00	%	3M L+625		56		—		—
Radius Aerospace, Inc.	3/31/2025	Aerospace and Defense		10.80	%	3M L+600		12,730		12,650		12,476
Rancho Health MSO, Inc.	12/18/2025	Healthcare, Education and Childcare		9.42	%	1M L+450		5,154		5,154		5,154
Reception Purchaser, LLC	2/28/2028	Transportation		10.78	%	SOFR+600		4,950		4,885		4,721
Recteq, LLC	1/29/2026	Consumer Products		10.98	%	3M L+700		9,800		9,688		9,408
Research Now Group, LLC and Dynata, LLC	12/20/2024	Business Services		10.31	%	1M L+550		14,504		14,424		10,996
Riverpoint Medical, LLC	6/20/2025	Healthcare, Education and Childcare		9.86	%	3M L+525		3,192		3,175		3,144
Riverside Assessments, LLC	3/10/2025	Education		10.48	%	SOFR+575		9,908		9,846		9,759
Sales Benchmark Index LLC	1/3/2025	Business Services		11.16	%	3M L+625		6,859		6,797		6,825
Sargent & Greenleaf Inc.	12/20/2024	Electronics		12.26	%	SOFR+300		4,857		4,857		4,772
Seaway Buyer, LLC	6/13/2029	Chemicals, Plastics and Rubber		11.05	%	3M L+575		14,925		14,734		14,552
Signature Systems Holding Company	5/3/2024	Chemicals, Plastics and Rubber		11.55	%	1M L+450		11,576		11,531		11,576
Solutionreach, Inc.	1/17/2024	Communications		10.59	%	6M L+675		11,320		11,299		10,777
STV Group Incorporated	12/11/2026	Transportation		10.16	%	SOFR+525		12,099		12,039		12,038

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value(2)

Summit Behavioral Healthcare, LLC	11/24/2028	Healthcare, Education and Childcare		9.71	%	3M L+475		3,590		3,396		3,465
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)	8/16/2027	Aerospace and Defense		10.69	%	SOFR+575		16,047		15,742		15,806
Team Services Group, LLC	11/24/2028	Healthcare, Education and Childcare		9.95	%	SOFR+500		696		667		676
Teneo Holdings LLC	7/18/2025	Financial Services		10.16	%	SOFR+525		2,951		2,941		2,911
The Aegis Technologies Group, LLC	10/31/2025	Aerospace and Defense		11.50	%	3M L+600		11,152		11,065		10,928
The Bluebird Group LLC	7/27/2026	Business Services		12.15	%	3M L+650		5,446		5,488		5,370
The Vertex Companies, LLC	8/30/2027	Business Services		10.16	%	SOFR+525		4,508		4,467		4,414
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025	Food		9.24	%	3M L+525		5,508		5,385		5,403
TVC Enterprises, LLC	3/26/2026	Transportation		10.59	%	3M L+600		17,019		16,899		16,763
TWS Acquisition Corporation	6/16/2025	Education		11.39	%	3M L+625		7,949		7,924		7,949
Tyto Athene, LLC	4/3/2028	Aerospace and Defense		10.24	%	SOFR+550		12,003		11,888		10,887
UBEO, LLC	4/3/2024	Printing and Publishing		9.48	%	3M L+450		4,650		4,639		4,580
Unique Indoor Comfort, LLC	5/24/2027	Home and Office Furnishings, Housewares		10.30	%	3M L+525		9,925		9,805		9,865
Wildcat Buyerco, Inc.	2/27/2026	Electronics		10.80	%	SOFR+575		11,449		11,378		11,163
Zips Car Wash, LLC	3/1/2024	Business Services		12.14	%	3M L+725		19,848		19,636		19,401

Total First Lien Secured Debt										761,289		747,561
Total Investments - 847.4%
Cash and Cash Equivalents - 46.9%
BlackRock Federal FD Institutional 30										41,361		41,361
Total Cash and Cash Equivalents										41,361		41,361
Total Investments and Cash Equivalents - 894.2%									$	802,650	$	788,922
Liabilities in Excess of Other Assets — (794.2)%												(700,700	)
Members' Equity—100.0%											$	88,222

(1)

Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable LIBOR or “L” , Secured Overnight Financing Rate or "SOFR" or Prime rate or “P”. The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to a 30-day, 60-day, 90-day or 180-day LIBOR rate (1M L, 2M L, 3M L, or 6M L, respectively), at the borrower’s option. All securities are subject to a LIBOR or Prime rate floor where a spread is provided, unless noted. The spread provided includes PIK interest and other fee rates, if any.

(2)

Valued based on PSLF’s accounting policy.

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

Below is a listing of PSLF’s individual investments as of September 30, 2022 ($ in thousands):


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value (2)
First Lien Secured Debt - 864.4%
Ad.net Acquisition, LLC	05/06/26	Media		9.67	%	3M L+600	$	4,938	$	4,938	$	4,901
Alpine Acquisition Corp II	11/30/26	Containers, Packaging and Glass		8.69	%	3M L+800		9,975		9,785		9,576
Altamira Technologies, LLC	07/24/25	Aerospace and Defense		10.81	%	3M L+550		871		864		841
American Insulated Glass, LLC	12/21/23	Building Materials		7.79	%	3M L+575		19,906		19,868		19,906
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)	06/10/25	Media		9.95	%	1M L+550		14,104		13,968		13,892
Anteriad, LLC (f/k/a MeritDirect, LLC)	05/23/24	Media		9.17	%	3M L+550		15,168		15,084		15,168
Any Hour Services	07/21/27	Personal, Food and Miscellaneous Services		7.98	%	3M L+575		9,942		9,934		9,743
Apex Service Partners, LLC	07/31/25	Personal, Food and Miscellaneous Services		6.25	%	3M L+575		6,569		6,502		6,536
Apex Service Partners, LLC Term Loan B	07/31/25	Personal, Food and Miscellaneous Services		6.55	%	3M L+550		3,323		3,298		3,307
Apex Service Partners, LLC - Term Loan C	07/31/25	Personal, Food and Miscellaneous Services		6.50	%	3M L+600		7,607		7,608		7,569
Applied Technical Services, LLC	12/29/26	Environmental Services		9.42	%	3M L+500		8,822		8,725		8,602
Arcfield Acquisition Corp.	03/07/28	Aerospace and Defense		8.99	%	3M L+575		11,940		11,721		11,701
Beta Plus Technologies, Inc.	07/01/29	Business Services		7.56	%	1M L+525		15,000		14,700		14,700
Blackhawk Industrial Distribution, Inc.	09/17/24	Distribution		8.57	%	3M L+600		17,993		17,772		17,596
Broder Bros., Co.	12/02/22	Personal, Food and Miscellaneous Services		7.39	%	3M L+600		9,937		9,937		9,937
Cartessa Aesthetics, LLC	05/13/28	Distribution		9.55	%	3M L+600		17,456		17,131		17,194
CF512, Inc.	08/20/26	Media		9.08	%	3M L+575		2,985		2,958		2,940
Connatix Buyer, Inc.	07/13/27	Media		8.42	%	1M L+550		9,045		9,029		8,819
Dr. Squatch, LLC	08/31/27	Personal and Non-Durable Consumer Products		9.42	%	3M L+475		6,435		6,427		6,339
DRI Holding Inc.	12/21/28	Media		8.37	%	3M L+575		2,776		2,526		2,490
DRS Holdings III, Inc.	11/03/25	Consumer Products		8.87	%	3M L+600		15,142		15,063		14,658
Duraco Specialty Tapes LLC	06/30/24	Manufacturing / Basic Industries		8.62	%	3M L+575		8,139		8,008		7,944
ECL Entertainment, LLC	05/01/28	Hotels, Motels, Inns and Gaming		10.62	%	3M L+500		4,558		4,558		4,489
ECM Industries, LLC	12/23/25	Electronics		6.32	%	3M L+600		2,823		2,761		2,689
Exigo Intermediate II, LLC	03/15/27	Business Services		8.87	%	1M L+575		9,950		9,817		9,726
Fairbanks Morse Defense	06/17/28	Aerospace and Defense		7.63	%	6M L+475		800		754		740
Global Holdings InterCo LLC	03/16/26	Banking, Finance, Insurance & Real Estate		8.74	%	3M L+600		7,343		7,313		7,013
Graffiti Buyer, Inc.	08/10/27	Distribution		8.00	%	3M L+550		1,974		1,939		1,895
Hancock Roofing and Construction L.L.C.	12/31/26	Insurance		8.67	%	1M L+575		6,835		6,835		6,733
Holdco Sands Intermediate, LLC	11/23/28	Aerospace and Defense		10.17	%	1M L+800		19,915		19,535		19,516
HV Watterson Holdings, LLC	12/17/26	Business Services		9.67	%	3M L+600		15,255		15,045		14,721
HW Holdco, LLC	12/10/24	Media		6.00	%	3M L+700		14,438		14,303		14,257
Icon Partners III, LP	05/11/28	Auto Sector		6.87	%	3M L+475		2,333		2,001		1,705
IDC Infusion Services, Inc.	12/30/26	Healthcare, Education and Childcare		10.20	%	3M L+750		17,400		17,154		16,617
IG Investments Holdings, LLC	09/22/28	Business Services		9.45	%	1M L+575		4,473		4,388		4,428
Imagine Acquisitionco, LLC	11/15/27	Business Services		6.91	%	3M L+625		5,636		5,534		5,495
Inception Fertility Ventures, LLC	12/07/23	Healthcare, Education and Childcare		9.96	%	3M L+550		20,000		19,545		19,800
Infolinks Media Buyco, LLC	11/01/26	Media		9.42	%	1M L+550		6,428		6,428		6,428
Integrity Marketing Acquisition, LLC	08/27/25	Insurance		9.21	%	3M L+575		19,954		19,866		19,754
K2 Pure Solutions NoCal, L.P.	12/20/23	Chemicals, Plastics and Rubber		11.12	%	3M L+550		14,438		14,316		14,438
LAV Gear Holdings, Inc.	10/31/24	Leisure, Amusement, Motion Pictures, Entertainment		9.95	%	3M L+500		2,137		2,129		2,088
Lash OpCo, LLC	02/18/27	Consumer Products		11.17	%	1M L+650		19,925		19,708		19,526
Lightspeed Buyer Inc.	02/03/26	Healthcare, Education and Childcare		8.87	%	3M L+475		12,345		12,119		11,944
MAG DS Corp.	04/01/27	Aerospace and Defense		9.17	%	3M L+550		5,570		5,128		5,069
Magenta Buyer, LLC	07/31/28	Software		7.87	%	3M L+500		3,140		2,946		2,826
Mars Acquisition Holdings Corp.	05/14/26	Media		8.62	%	1M L+625		7,920		7,861		7,880
MBS Holdings, Inc.	04/16/27	Telecommunications		8.56	%	3M L+575		7,406		7,326		7,332
Meadowlark Acquirer, LLC	12/10/27	Business Services		9.17	%	3M L+575		2,983		2,926		2,953
Municipal Emergency Services, Inc.	09/28/27	Distribution		7.25	%	3M L+550		4,164		4,102		3,923
NBH Group LLC	08/19/26	Healthcare, Education and Childcare		7.80	%	3M L+575		7,505		7,426		7,505
OIS Management Services, LLC	07/09/26	Healthcare, Education and Childcare		9.45	%	3M L+600		5,257		5,210		5,257
Owl Acquisition, LLC	02/04/28	Education		8.41	%	3M L+550		3,990		3,874		3,890
Ox Two, LLC (New Issue)	05/18/26	Distribution		8.32	%	1M L+650		4,962		4,911		4,863
PL Acquisitionco, LLC	11/09/27	Retail		9.62	%	1M L+575		8,634		8,489		8,419
PlayPower, Inc.	05/08/26	Consumer Products		9.17	%	1M L+525		2,580		2,487		2,309
Quantic Electronics, LLC	11/19/26	Aerospace and Defense		9.92	%	1M L+600		3,403		3,342		3,335
Quantic Electronics, LLC - Unfunded Term Loan	11/19/26	Aerospace and Defense		0.00	%	3M L+625		143		-		(1	)
Radius Aerospace, Inc.	03/31/25	Aerospace and Defense		9.46	%	3M L+600		12,757		12,657		12,566
Rancho Health MSO, Inc.	12/18/25	Healthcare, Education and Childcare		7.75	%	1M L+450		5,180		5,180		5,180
Reception Purchaser, LLC	02/28/28	Transportation		9.13	%	SOFR+600		4,975		4,904		4,751
Recteq, LLC	01/29/26	Consumer Products		9.92	%	3M L+700		9,850		9,718		9,505
Research Now Group, LLC and Dynata, LLC	12/20/24	Business Services		8.84	%	1M L+550		14,542		14,440		13,070
Riverpoint Medical, LLC	06/20/25	Healthcare, Education and Childcare		7.74	%	3M L+525		3,192		3,172		3,112
Riverside Assessments, LLC	03/10/25	Education		9.95	%	1M L+575		9,949		9,872		9,750
Sales Benchmark Index LLC	01/03/25	Business Services		9.67	%	3M L+625		6,859		6,779		6,791
Sargent & Greenleaf Inc.	12/20/24	Electronics		7.15	%	3M L+550		5,082		5,082		5,031
Seaway Buyer, LLC	06/13/29	Chemicals, Plastics and Rubber		7.90	%	3M L+575		15,000		14,794		14,775
Signature Systems Holding Company	05/03/24	Chemicals, Plastics and Rubber		10.17	%	1M L+450		11,951		11,879		11,861
Solutionreach, Inc.	01/17/24	Communications		8.87	%	6M L+675		11,386		11,352		11,113
STV Group Incorporated	12/11/26	Transportation		8.37	%	3M L+575		12,099		12,031		11,978

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value (2)

System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)	8/16/2027	Aerospace and Defense		8.73	%	SOFR+600		16,128		15,785		15,870
Teneo Holdings LLC	7/18/2025	Financial Services		7.73	%	3M L+525		3,474		3,435		3,271
The Aegis Technologies Group, LLC	10/31/2025	Aerospace and Defense		9.67	%	3M L+600		11,208		11,102		11,096
The Bluebird Group LLC	7/27/2026	Business Services		10.67	%	3M L+650		5,502		5,549		5,557
The Vertex Companies, LLC	8/30/2027	Business Services		8.62	%	3M L+550		4,531		4,485		4,509
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025	Food		7.78	%	3M L+525		5,536		5,392		5,370
TVC Enterprises, LLC	3/26/2026	Transportation		8.87	%	3M L+600		17,381		17,244		16,946
TWS Acquisition Corporation	6/16/2025	Education		8.76	%	3M L+625		7,949		7,917		7,910
Tyto Athene, LLC	4/3/2028	Aerospace and Defense		7.76	%	3M L+550		12,064		11,938		11,208
UBEO, LLC	4/3/2024	Printing and Publishing		8.17	%	3M L+450		4,674		4,657		4,604
Unique Indoor Comfort, LLC	5/24/2027	Home and Office Furnishings, Housewares		8.95	%	3M L+525		9,975		9,840		9,755
Wildcat Buyerco, Inc.	2/27/2026	Electronics		9.45	%	SOFR+575		11,506		11,420		11,110
Zips Car Wash, LLC	3/1/2024	Business Services		10.24	%	3M L+725		19,998		19,673		19,498

Total First Lien Secured Debt										738,219		730,108
Total Investments - 864.4%
Cash and Cash Equivalents - 50.9%
BlackRock Federal FD Institutional 30										42,966		42,966
Total Cash and Cash Equivalents										42,966		42,966
Total Investments and Cash Equivalents - 915.3%									$	781,185	$	773,074
Liabilities in Excess of Other Assets — (815.3)%												(688,612	)
Members' Equity—100.0%											$	84,462

(1)

(2)

Valued based on PSLF’s accounting policy.

Below are the consolidated statements of assets and liabilities for PSLF ($ in thousands):


	March 31, 2023
	(Unaudited)		September 30, 2022
Assets
Investments at fair value (cost—$761,289 and $738,219, respectively)	$	747,561	$	730,108
Cash and cash equivalents (cost—$41,361 and $42,966, respectively)		41,361		42,966
Receivable for investments sold		—		3,870
Interest receivable		2,997		2,970
Prepaid expenses and other assets		1,089		1,373
Total assets		793,008		781,287
Liabilities
Credit facility payable		284,600		257,600
2034 Asset-backed debt, net (par—$246,000)		244,089		243,896
Notes payable to members		157,605		145,472
Payable for investments purchased		—		37,658
Interest payable on credit facility and asset backed debt		8,019		4,676
Distribution payable to Members		6,500		4,000
Interest payable on notes to members		3,369		2,703
Accrued expenses		604		820
Total liabilities		704,786		696,825
Commitments and contingencies (1)
Members' equity		88,222		84,462
Total liabilities and members' equity	$	793,008	$	781,287

———————————

(1)

As of March 31, 2023 and September 30, 2022, PSLF had unfunded commitments to fund investments of $0.1 million and $0.1 million, respectively

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

Below are the consolidated statements of operations for PSLF ($ in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Investment income:
Interest	$	21,223		$	7,698		$	40,068		$	15,268
Other income		751			39			848			142
Total investment income		21,974			7,737			40,916			15,410
Expenses:
Interest expense on credit facility and asset-backed debt		8,874			2,046			16,689			3,654
Interest expense on notes to members		5,003			2,430			9,726			4,869
Administrative services expenses		493			293			1,220			586
General and administrative expenses		177			112			291			224
Total expenses		14,547			4,881			27,926			9,333
Net investment income		7,427			2,856			12,990			6,077
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investments		54			387			21			386
Net change in unrealized appreciation (depreciation) on investments		(1,695	)		(1,233	)		(5,617	)		(727	)
Net realized and unrealized gain (loss) from investments		(1,641	)		(846	)		(5,596	)		(341	)
Net increase (decrease) in members' equity resulting from operations	$	5,786		$	2,010		$	7,394		$	5,736

———————————

(*) No management or incentive fees are payable by PSLF.

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined under ASC 820, is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us on the reporting period date.

ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:


Level 1:	Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2:	Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
Level 3:	Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, our Credit Facility and our SBA debentures are classified as Level 3. Our 2026 Notes and 2026 Notes-2 are classified as Level 2, as they are financial instruments with readily observable market inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.

The inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data is available, such information may be the result of consensus pricing information, disorderly transactions 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 were available. Corroborating evidence that would result in classifying these non-binding broker/dealer bids as a Level 2 asset includes observable orderly market-based transactions for the same or similar assets or other relevant observable market-based inputs that may be used in pricing an asset.

Our investments are generally structured as debt and equity investments in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. The transaction price, excluding transaction costs, is typically the best estimate of fair value at inception. Ongoing reviews by our Investment Adviser and independent valuation firms are based on an assessment of each underlying investment, incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information including comparable transactions, performance multiples and yields, among other factors. These non-public investments valued using unobservable inputs are included in Level 3 of the fair value hierarchy.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in our ability to observe valuation inputs may result in a reclassification for certain financial assets or liabilities.

In addition to using the above inputs to value cash equivalents, investments, our SBA debentures, our 2026 Notes, our 2026 Notes -2 and our Truist Credit Facility, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. See Note 2.

As outlined in the table below, some of our Level 3 investments using a market approach valuation technique are valued using the average of the bids from brokers or dealers. The bids include a disclaimer, may not have corroborating evidence, may be the result of a disorderly transaction and may be the result of consensus pricing. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such bids do not reflect

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

the fair value of an investment, it may independently value such investment by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available. In accordance with ASC 820, we do not categorize any investments for which fair value is measured using the net asset value per share within the fair value hierarchy.

The remainder of our investment portfolio and our long-term Truist Credit Facility are valued using a market comparable or an enterprise market value technique. With respect to investments for which there is no readily available market value, the factors that our board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities, discount for lack of marketability and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the pricing indicated by the external event, excluding transaction costs, is used to corroborate the valuation. When using earnings multiples to value a portfolio company, the multiple used requires the use of judgment and estimates in determining how a market participant would price such an asset. These non-public investments using unobservable inputs are included in Level 3 of the fair value hierarchy. Generally, the sensitivity of unobservable inputs or combination of inputs such as industry comparable companies, market outlook, consistency, discount rates and reliability of earnings and prospects for growth, or lack thereof, affects the multiple used in pricing an investment. As a result, any change in any one of those factors may have a significant impact on the valuation of an investment. Generally, an increase in a market yield will result in a decrease in the valuation of a debt investment, while a decrease in a market yield will have the opposite effect. Generally, an increase in an earnings before interest, taxes, depreciation and amortization, or EBITDA, multiple will result in an increase in the valuation of an investment, while a decrease in an EBITDA multiple will have the opposite effect.

Our Level 3 valuation techniques, unobservable inputs and ranges were categorized as follows for ASC 820 purposes:


Asset Category ($ in thousands)	Fair value at March 31, 2023		Valuation Technique	Unobservable Input	Range of Input (Weighted Average) (1)
First lien	$	40,797	Market Comparable	Broker/Dealer bids or quotes	N/A
First lien		604,393	Market Comparable	Market yield	7% - 18.4% (10.6%)
First lien		3,169	Enterprise Market Value	EBITDA multiple	3.5x
Second lien		9,655	Market Comparable	Broker/Dealer bids or quotes	N/A
Second lien		101,627	Market Comparable	Market yield	12.4% - 19.9% (14.5%)
Subordinated debt / corporate notes		147,903	Market Comparable	Market yield	12.8% - 18.4% (13.7%)
Equity		155,387	Enterprise Market Value	EBITDA multiple	0.3x - 19.8x (10.7x)
Equity		4,216	Enterprise Market Value	DLOM(2)	25.3%
Total Level 3 investments	$	1,067,147
Debt Category ($ in thousands)
Truist Credit Facility	$	362,268	Market Comparable	Market yield	3.1%

(1)

The weighted averages disclosed in the table above were weighted by their relative fair value.

(2)

DLOM is defined as discount for lack of marketability.


Asset Category ($ in thousands)	Fair value at September 30, 2022		Valuation Technique	Unobservable Input	Range of Input (Weighted Average) (1)
First lien	$	44,530	Market Comparable	Broker/Dealer bids or quotes	N/A
First lien		569,488	Market Comparable	Market yield	7.0% – 20.2% (10.8%)
First lien		16,946	Market Comparable	EBITDA multiple	14.0x
Second lien		21,600	Market Comparable	Broker/Dealer bids or quotes	N/A
Second lien		108,336	Market Comparable	Market yield	13.3% – 17.0% (14.4%)
Second lien		—	Enterprise Market Value	EBITDA multiple	6.0x
Subordinated debt / corporate notes		141,265	Market Comparable	Market yield	10.8x – 17.2x (12.3x)
Equity		215,131	Enterprise Market Value	EBITDA multiple	3.3x – 21.4x (9.1x)
Equity		42,031	Enterprise Market Value	DLOM(2)	11.8
Total Level 3 investments	$	1,159,327
Debt Category ($ in thousands)
Truist Credit Facility	$	376,687	Market Comparable	Market yield	2.4%

The weighted averages disclosed in the table above were weighted by their relative fair value.

DLOM is defined as discount for lack of marketability.

Our investments, cash and cash equivalents, Truist Credit Facility, SBA debentures, 2024 Notes, 2026 Notes and 2026 Notes-2 were categorized as follows in the fair value hierarchy:


	Fair Value at March 31, 2023
Description ($ in thousands)	Fair Value		Level 1		Level 2		Level 3		Measured at Net Asset Value (1)
Debt investments	$	907,544	$	—	$	—	$	907,544	$	—
Equity investments		224,967		—		—		159,603		65,364
Total investments		1,132,511		—		—		1,067,147		65,364
Cash and cash equivalents		63,135		63,135		—		—		—
Total investments and cash and cash equivalents	$	1,195,646	$	63,135	$	—	$	1,067,147	$	65,364
Truist Credit Facility	$	362,268	$	—	$	—	$	362,268	$	—
2026 Notes(2)		147,218		—		147,218		—		—
2026 Notes-2(2)		161,800		—		161,800		—		—
Total debt	$	671,286	$	—	$	309,018	$	362,268	$	—

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023


(1)	In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSLF and PTSF II are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus has not been classified in the fair value hierarchy.
(2)	We elected not to apply ASC 825-10 to the SBA debentures, the 2026 Notes and the 2026 Notes-2, and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value.


	Fair Value at September 30, 2022
Description ($ in thousands)	Fair Value		Level 1		Level 2		Level 3		Measured at Net Asset Value (1)
Debt investments	$	902,165	$	—	$	—	$	902,165	$	—
Equity investments		324,136		304		—		257,162		66,670
Total investments		1,226,301		304		—		1,159,327		66,670
Cash and cash equivalents		52,666		52,666		—		—		—
Total investments and cash and cash equivalents	$	1,278,967	$	52,970	$	—	$	1,159,327	$	66,670
Truist Credit Facility	$	376,687	$	—	$	—	$	376,687		—
SBA Debentures (2)		19,686		—		—		19,686		—
2026 Notes (2)		146,767		—		146,767		—		—
2026-2 Notes (2)		161,373		—		161,373		—		—
Total debt	$	704,513	$	—	$	308,140	$	396,373	$	—


(1)	In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSLF is measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus has not been classified in the fair value hierarchy.
(2)	We elected not to apply ASC 825-10 to the SBA debentures and the 2026 Notes and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value. As of September 30, 2022, the carrying value of the SBA debentures approximates the fair value.

The tables below show a reconciliation of the beginning and ending balances for investments measured at fair value using significant unobservable inputs (Level 3):


	Six Months Ended March 31, 2023
Description ($ in thousands)	Debt investments			Equity investments			Totals
Beginning Balance	$	902,165		$	257,162		$	1,159,327
Net realized (loss) gain		(11,792	)		(128,201	)		(139,993	)
Net change in unrealized appreciation		1,554			42,893			44,447
Purchases, PIK interest, net discount accretion and non-cash exchanges		126,528			19,893			146,421
Sales, repayments and non-cash exchanges		(110,911	)		(32,144	)		(143,055	)
Transfers in/out of Level 3		—			—			—
Ending Balance	$	907,544		$	159,603		$	1,067,147
Net change in unrealized appreciation reported within the net change in unrealized appreciation on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date	$	(2,814	)	$	(42,728	)	$	(45,542	)


	Six Months Ended March 31, 2022
Description ($ in thousands)	Debt investments			Equity investments			Totals
Beginning Balance	$	850,593		$	360,428		$	1,211,021
Net realized (loss) gain		421			116,163			116,584
Net change in unrealized appreciation		(14,269	)		(89,480	)		(103,749	)
Purchases, PIK interest, net discount accretion and non-cash exchanges		441,570			29,813			471,383
Sales, repayments and non-cash exchanges		(366,418	)		(175,067	)		(541,485	)
Transfers in/out of Level 3		—			—			—
Ending Balance	$	911,897		$	241,857		$	1,153,754
Net change in unrealized appreciation reported within the net change in unrealized appreciation on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date	$	(12,650	)	$	(90,848	)	$	(103,498	)

The table below shows a reconciliation of the beginning and ending balances for liabilities measured at fair value using significant unobservable inputs (Level 3):


	Six months ended March 31,
Long-Term Credit Facility	2023			2022
Beginning Balance (cost – $385,920 and $316,545, respectively)	$	376,687		$	314,813
Net change in unrealized appreciation (depreciation) included in earnings		(5,919	)		(289	)
Borrowings (1)		75,500			496,841
Repayments (1)		(84,000	)		(595,466	)
Transfers in and/or out of Level 3		—			—
Ending Balance (cost – $377,420 and $217,920, respectively)	$	362,268		$	215,899
Temporary draws outstanding, at cost		—			—
Ending Balance (cost – $377,420 and $217,920, respectively)	$	362,268		$	215,899

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

(1)

Excludes temporary draws.

As of March 31, 2023, we had outstanding non-U.S. dollar borrowings on our Credit Facility. Net change in fair value on foreign currency translation on outstanding borrowings is listed below ($ in thousands):


Foreign Currency	Amount Borrowed		Borrowing Cost		Current Value		Reset Date	Change in Fair Value
British Pound	£	36,000	$	49,420	$	44,512	June 30, 2023	$	(4,908	)

As of September 30, 2022, we had outstanding non-U.S. dollar borrowings on our Truist Credit Facility. Net change in fair value on foreign currency translation on outstanding borrowings is listed below ($ in thousands):


Foreign Currency	Amount Borrowed		Borrowing Cost		Current Value		Reset Date	Change in Fair Value
British Pound	£	36,000	$	49,420	$	40,187	December 31, 2022	$	(9,233	)

Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did not incur any expenses relating to amendment costs on the Truist Credit Facility during the three and six months ended March 31, 2023 and 2022. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires us to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Truist Credit Facility is reported in our Consolidated Statements of Operations. We did not elect to apply ASC 825-10 to any other financial assets or liabilities, including the 2024 Notes, the 2026 Notes, 2026 Notes-2, and the SBA debentures.

For the three and six months ended March 31, 2023, the Truist Credit Facility had a net change in unrealized depreciation of $1.5 million and $5.9 million, respectively. For the three and six months ended March 31, 2022, the Truist Credit Facility had a net change in unrealized depreciation of $1.3 million and $0.3 million, respectively. As of March 31, 2023 and September 30, 2022, the net unrealized depreciation on the Truist Credit Facility totaled $15.2 million and $9.2 million, respectively. We use an independent valuation service to measure the fair value of our Truist Credit Facility in a manner consistent with the valuation process that our board of directors uses to value our investments.

6. TRANSACTIONS WITH AFFILIATED COMPANIES

An affiliated portfolio company is a company in which we have ownership of 5% or more of its voting securities. A portfolio company is generally presumed to be a non-controlled affiliate when we own at least 5% but 25% or less of its voting securities and a controlled affiliate when we own more than 25% of its voting securities. Transactions related to our funded investments with both controlled and non-controlled affiliates for the six months ended March 31, 2023 were as follows ($ in thousands):


Name of Investment	Fair Value at September 30, 2022		Gross Additions(1)		Gross Reductions			Net Change in Appreciation / (Depreciation)			Fair Value at March 31, 2023		Interest Income		PIK Income		Dividend Income		Net Realized Gains (Losses)
Controlled Affiliates
AKW Holdings Limited	$	45,995	$	1,789	$	—		$	4,623		$	52,407	$	662	$	1,789	$	—	$	—
Mailsouth Inc.		—		—		—			—			—		—		—		—		—
PennantPark Senior Loan Fund, LLC (3)		139,109		12,100		—			(2,484	)		148,725		5,844		—		6,958		—
RAM Energy LLC		74,282		—		(162,708	)		88,426			—		—		—		—		(133,098	)
Total Controlled Affiliates	$	259,386	$	13,889	$	(162,708	)	$	90,565		$	201,132	$	6,506	$	1,789	$	6,958	$	(133,098	)
Non-Controlled Affiliates
Cascade Environmental Holdings, LLC	$	32,791	$	819	$	—		$	15		$	33,625	$	—	$	—	$	—	$	—
MidOcean JF Holdings Corp.		1,969		—		—			—			1,969		—		—		—		—
Walker Edison Furniture Company LLC (2)		—		16,382		—		$	(169	)	$	16,213		81		—		—		—
Total Non-Controlled Affiliates	$	34,760	$	17,201	$	-		$	(154	)	$	51,807	$	81	$	—	$	—	$	—
Total Controlled and Non-Controlled Affiliates	$	294,146	$	31,090	$	(162,708	)	$	90,411		$	252,939	$	6,587	$	1,789	$	6,958	$	(133,098	)

(1)

Includes PIK.

(2)

Walker Edison Furniture Company LLC became a non-controlled affiliate during the quarter ended March 31, 2023.

(3)

We and Pantheon are the members of PSLF, a joint venture formed as a Delaware limited liability company that is not consolidated by us for financial reporting purposes. The members of PSLF make investments in the PSLF in the form of subordinated debt and equity interests, and all portfolio and other material decision regarding PSLF must be submitted to PSFL’s board of directors or investment committee, both of which are comprised of two members appointed by each of us and Pantheon. Because management of PSLF is shared equally between us and Pantheon, we do not believe we control PSLF for purposes of the 1940 Act or otherwise.

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

7. CHANGE IN NET ASSETS FROM OPERATIONS PER COMMON SHARE

The following information sets forth the computation of basic and diluted per share net increase in net assets resulting from operations ($ in thousands, except per share data):


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023			2022
Numerator for net increase (decrease) in net assets resulting from operations	$	4,872	$	3,160	$	(67,020	)	$	28,668
Denominator for basic and diluted weighted average shares		65,224,500		66,747,256		65,224,500			66,897,817
Basic and diluted net increase (decrease) in net assets per share resulting from operations	$	0.07	$	0.05	$	(1.03	)	$	0.43

8. CASH AND CASH EQUIVALENTS

Cash equivalents represent cash in money market funds pending investment in longer-term portfolio holdings. Our portfolio may consist of temporary investments in U.S. Treasury Bills (of varying maturities), repurchase agreements, money market funds or repurchase agreement-like treasury securities. These temporary investments with original maturities of 90 days or less are deemed cash equivalents and are included in the Consolidated Schedule of Investments. At the end of each fiscal quarter, we may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which is dependent upon the composition of our total assets at quarter-end. We may accomplish this in several ways, including purchasing U.S. Treasury Bills and closing out positions on a net cash basis after quarter-end, temporarily drawing down on the Credit Facility, or utilizing repurchase agreements or other balance sheet transactions as are deemed appropriate for this purpose. These amounts are excluded from average adjusted gross assets for purposes of computing the Investment Adviser’s management fee. U.S. Treasury Bills with maturities greater than 60 days from the time of purchase are valued consistent with our valuation policy. As of March 31, 2023 and September 30, 2022, cash and cash equivalents consisted of money market funds in the amounts of $63.1 million and $52.7 million at fair value, respectively.

9. FINANCIAL HIGHLIGHTS

Below are the financial highlights ($ in thousands, except share and per share data):


	Six Months Ended March 31,
	2023			2022
Per Share Data:
Net asset value, beginning of period	$	8.98		$	9.85
Net investment income (1)		0.41			0.36
Net change in realized and unrealized (loss) gain (1)		(1.44	)		0.07
Net increase (decrease) in net assets resulting from operations (1)		(1.03	)		0.43
Distributions to stockholders (1), (2)		(0.35	)		(0.26	)
Repurchase of common stock (1)		—			0.03
Net asset value, end of period	$	7.60		$	10.05
Per share market value, end of period	$	5.28		$	7.78
Total return* (3)		2.96	%		24.09	%
Shares outstanding at end of period		65,224,500			66,131,651
Ratios** / Supplemental Data:
Ratio of operating expenses to average net assets (4)		7.11	%		4.55	%
Ratio of debt related expenses to average net assets (5)		7.55	%		4.03	%
Ratio of total expenses to average net assets (5)		14.66	%		8.58	%
Ratio of net investment income to average net assets (5)		10.09	%		7.30	%
Net assets at end of period	$	495,715		$	664,325
Weighted average debt outstanding(6)	$	700,434		$	558,399
Weighted average debt per share (1)(6)	$	10.74		$	8.37
Asset coverage per unit (7)	$	1,697		$	2,271
Portfolio turnover rate*		12.11	%		35.66	%

* Not annualized for periods less than one year.

** Annualized for periods less than one year.

(1)

Based on the weighted average shares outstanding for the respective periods.

(2)

The tax status of distributions is calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP, and reported on Form 1099-DIV each calendar year.

(3)

Based on the change in market price per share during the periods and assumes distributions, if any, are reinvested.

(4)

Excludes debt-related costs.

(5)

Includes interest and expenses on debt (annualized) as well as Credit Facility amendment, debt issuance costs and excludes debt extinguishment cost, if any, (not annualized).

(6)

Includes SBA debentures outstanding.

(7)

The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by the senior securities representing indebtedness at par (changed from fair value). This asset coverage ratio is multiplied by $1,000 to determine the asset coverage per unit. These amounts exclude SBA debentures from our asset coverage per unit computation pursuant to exemptive relief received from the SEC in June 2011.

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

10. DEBT

The annualized weighted average cost of debt for the six months ended March 31, 2023 and 2022, inclusive of the fee on the undrawn commitment and amendment costs on the Truist Credit Facility and amortized upfront fees on 2026 Notes and 2026 Notes-2, was 5.8% and 4.8%, respectively. As of March 31, 2023, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing, excluding SBA debentures, pursuant to exemptive relief from the SEC received in June 2011.

On February 5, 2019, our stockholders approved the application of the modified asset coverage requirements set forth in Secti377.4on 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the Small Business Credit Availability Act, or SBCAA) as approved by our board of directors on November 13, 2018. As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), subject to compliance with certain disclosure requirements. As of March 31, 2023 and September 30, 2022, our asset coverage ratio, as computed in accordance with the 1940 Act, was 170% and 186%, respectively.

Truist Credit Facility

As of March 31, 2023, we had the multi-currency Truist Credit Facility for up to $500.0 million (increased from $465.0 million in July 2022), which may be further increased up to $750.0 million in borrowings with certain lenders and Truist Bank (formerly SunTrust Bank), acting as administrative agent, Regions Bank, acting as an additional multicurrency lender, and JPMorgan Chase Bank, N.A., acting as syndication agent for the lenders. As of March 31, 2023 and September 30, 2022, we had $377.4 million and $385.9 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 7.1% and 5.3%, respectively, exclusive of the fee on undrawn commitment, as of March 31, 2023 and September 30, 2022. The Truist Credit Facility is a revolving facility with a stated maturity date of July 29, 2027 for $475.0 million out of the total $500.0 million commitments (with the revolving period with respect to the remaining $25.0 million of commitments expiring on September 4, 2023 and the related obligations maturing on September 4, 2024) and pricing set at 235 basis points over SOFR (or an alternative risk-free floating interest rate index). As of March 31, 2023 and September 30, 2022, we had $122.6 million and $114.1 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Truist Credit Facility is secured by substantially all of our assets, excluding assets held by SBIC II. As of March 31, 2023, we were in compliance with the terms of the Truist Credit Facility.

SBA Debentures

SBIC II is able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid-in and is subject to customary regulatory requirements including an examination by the SBA. We have funded SBIC II with $75.0 million of equity capital and it had SBA debentures outstanding of zero and $20.0 million as of March 31, 2023 and September 30, 2022, respectively. SBA debentures are non-recourse to us and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. Under current SBA regulations, a SBIC may individually borrow up to a maximum of $175.0 million, which is up to twice its potential regulatory capital, and as part of a group of SBICs under common control may borrow a maximum of $350 million in the aggregate.

As of both March 31, 2023 and September 30, 2022, SBIC II had an initial $150.0 million in debt commitments, all of which were drawn. During the three and six months ended March 31, 2023, $20.0 million and $20.0 million of SBA debentures were repaid, respectively. During the three and six months ended March 31, 2022, $36.0 million and $36.0 million in SBA debentures were repaid, resectively. The SBA debentures’ upfront fees of 3.4% consist of a commitment fee of 1.0% and an issuance discount of 2.4%, which are being amortized. As of March 31, 2023 and September 30, 2022, the unamortized fees on the SBA debentures was zero and $0.3 million, respectively. We repaid the remaining $20.0 million SBA debentures during the three months ended March 31, 2022.

Our fixed-rate SBA debentures were as follows ($ in thousands):


Issuance Dates	Maturity	Fixed All-in Coupon Rate (1)			As of September 30, 2022 Principal Balance
September 20, 2017	September 1, 2027		2.9	%	$	20,000

(1)

Excluding 3.4% of upfront fees.

The SBIC program is designed to stimulate the flow of capital into eligible businesses. Under SBA regulations, SBIC II is subject to regulatory requirements, including making investments in SBA eligible businesses, investing at least 25% of regulatory capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, prohibiting investment in certain industries and requiring capitalization thresholds that limit distributions to us, and is subject to periodic audits and examinations of its financial statements that are prepared on a basis of accounting other than GAAP (for example, fair value, as defined under ASC 820, is not required to be used for assets or liabilities for such compliance reporting).

2024 Notes

As of March 31, 2023 and September 30, 2022, we had zero in aggregate principal amount of 2024 Notes outstanding, respectively. The 2024 Notes were redeemed on November 13, 2021 at a redemption price of $25.00 per 2024 Note, plus accrued and unpaid interest to November 13, 2021, pursuant to the indenture governing the 2024 Notes. Interest on the 2024 Notes was paid quarterly at a rate of 5.5% per year.

2026 Notes

In April 2021, we issued $150.0 million in aggregate principal amount of our 2026 Notes at a public offering price per note of 99.4%. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1 of each year, at a rate of 4.50% per year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026 and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.

PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)

March 31, 2023

2026 Notes-2

In October 2021, we issued $165.0 million in aggregate principal amount of our 2026 Notes-2 at a public offering price per note of 99.436%. Interest on the 2026 Notes-2 is paid semi-annually on May 1 and November 1 of each year, at a rate of 4.00% per year, commencing May 1, 2022. The 2026 Notes-2 mature on November 1, 2026 and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes-2 are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes-2 are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes-2 on any securities exchange or automated dealer quotation system.

11. COMMITMENTS AND CONTINGENCIES

From time to time, we, may be a party to legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Unfunded debt and equity investments, if any, are disclosed in the Consolidated Schedules of Investments. Under these arrangements, we may be required to supply a letter of credit to a third party if the portfolio company were to request a letter of credit. As of March 31, 2023 and September 30, 2022, we had $182.0 million and $169.2 million, respectively, in commitments to fund investments. For the same periods, there were no letters of credit issued.

12. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

We must determine which, if any, of our unconsolidated controlled portfolio companies is a "significant subsidiary" within the meaning of Regulation S-X. We have determined that, as of September 30, 2022, PennantPark Senior Loan Fund, LLC and RAM Energy Holdings LLC triggered at least one of the significance tests. In accordance with Rule 4-08(g) of Regulation S-X, which requires summarized financial information to be included in the notes to the Company’s financial statements, please refer to Note 4 to review the Statement of Assets and Liabilities as well as the Statement of Operations for PennantPark Senior Loan Fund, LLC. PennantPark Senior Loan Fund, LLC did not meet the significance threshold under Rule 3-09 which requires separate audited financial statements. Our investment in RAM Energy Holdings, LLC was releaized on February 8, 2023.

13. STOCK REPURCHASE PROGRAM

On February 9, 2022, we announced a share repurchase program which allows us to repurchase up to $25 million of our outstanding common shares in the open market at prices below our net asset value as reported in our then most recently published consolidated financial statements. The program expired on March 31, 2023. During the three months ended March 31, 2023, we did not make any repurchases of our common shares. During the three months ended March 31, 2022, we repurchased 913,454 shares of common stock in open market transactions for an aggregate cost (including transaction costs) of $7.1 million.

14. SUBSEQUENT EVENTS

On April 18, 2023, Dominion Voting Systems ("Dominion") and Fox News Network ("Fox News") agreed to settle the defamation lawsuit filed by Dominion against Fox News. As part of the settlement Fox News agreed to pay Dominion $787.5 million. Dominion is a portfolio company of PNNT, which holds a minority equity interest in the company. While Dominion may retian some of the settlment proceeds for corporate purposes, the company communicated its intention to distribute a substantial portion of the proceeds, net of estimated taxes and expenses, to its equity holders and PNNT's portion is estimated to be approximately $12 million. The timing and amount of any distribution is uncertain and subject to change.

Guy Talarico resigned as the Company's Chief Compliance Officer, effective as of the close of business on May 9, 2023. Mr. Talarico's resignation is not a result of any disagreement with the Compnay's operations, policies, practices or accounting matters. On May 9, 20023, the Company's Board of Directors appointed Frank Galea as Chief Compliance Officer of the Company, effective as of the close of business on May 9, 2023.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of PennantPark Investment Corporation and its Subsidiaries

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated statement of assets and liabilities of PennantPark Investment Corporation and its Subsidiaries (collectively referred to as the Company), including the consolidated schedule of investments, as of March 31, 2023, the related consolidated statements of operations and changes in net assets for the three-month and six-month periods ended March 31, 2023 and 2022, and cash flows for the six-month periods ended March 31, 2023 and 2022, and the related notes to the consolidated financial statements (collectively, the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of September 30, 2022, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated November 17, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of September 30, 2022, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ RSM US LLP

New York, New York

May 11, 2023

Awareness Letter of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of PennantPark Investment Corporation and its Subsidiaries

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of PennantPark Investment Corporation for the periods ended March 31, 2023 and 2022, as indicated in our report dated May 11, 2023; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, is incorporated by reference in Registration Statement No. 333-263564 on Form N-2.

We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ RSM US LLP

New York, New York

May 11, 2023

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

FORWARD-LOOKING STATEMENTS

This Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to us and our consolidated subsidiaries regarding 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 Report involve risks and uncertainties, including statements as to:

•

our future operating results;

•

our business prospects and the prospects of our prospective portfolio companies, including as a result of the pandemic caused by COVID-19 or any future worsening there of;

•

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets that could result in changes to the value of our assets, including changes from the impact of the COVID-19 pandemic or any future worsening there of;

•

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;

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the impact of investments that we expect to make;

•

the impact of fluctuations in interest rates and foreign exchange rates on our business and our portfolio companies;

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our contractual arrangements and relationships with third parties;

•

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

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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 timing of cash flows, if any, from the operations of our prospective portfolio companies;

•

the impact of price and volume fluctuations in the stock market;

•

increasing levels of inflation, and its impact on us and our portfolio companies;

•

the ability of our Investment Adviser to locate suitable investments for us and to monitor and administer our investments;

•

the impact of future legislation and regulation on our business and our portfolio companies; and

•

the impact of the ongoing invasion of Ukraine by Russia, United Kingdom’s withdrawal from the European Union (commonly known as “Brexit”)

and other world economic and political issues.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. You should not place undue influence on the forward-looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors in “Risk Factors” and elsewhere in this 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 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 Report on information available to us on the date of this 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 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 reports on Form 10-Q/K and current reports on Form 8-K.

You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.

The following analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained elsewhere in this Report.

Overview

PennantPark Investment Corporation is a BDC whose objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments.

We believe middle-market companies offer attractive risk-reward to investors due to a limited amount of capital available for such companies. We seek to create a diversified portfolio that includes first lien secured debt, second lien secured debt, subordinated debt and equity investments by investing approximately $10 million to $50 million of capital, on average, in the securities of middle-market companies. We expect this investment size to vary proportionately with the size of our capital base. We use the term “middle-market” to refer to companies with annual revenues between $50 million and $1 billion. The companies in which we invest are typically highly leveraged, and, in most cases, are not rated by national rating 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. Securities rated below investment grade are often referred to as “leveraged loans” or “high yield” securities or “junk bonds” and are often higher risk compared to debt instruments that are rated above investment grade and have speculative characteristics. Our debt investments may generally range in maturity from three to ten years and are made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions.

Our investment activity depends on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.

Organization and Structure of PennantPark Investment Corporation

PennantPark Investment Corporation, a Maryland corporation organized in January 2007, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated, and intend to qualify annually, as a RIC under the Code.

SBIC II, our wholly-owned subsidiary, was organized as a Delaware limited partnership in 2012. SBIC II received a license from the SBA to operate as a SBIC under Section 301(c) of the 1958 Act. SBIC II’s objectives are to generate both current income and capital appreciation through debt and equity investments generally by investing with us in SBA eligible businesses that meet the investment selection criteria used by PennantPark Investment.

Our investment activities are managed by the Investment Adviser. Under our Investment Management Agreement, we have agreed to pay our Investment Adviser an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. PennantPark Investment, through the Investment Adviser, provides similar services to SBIC II under its investment management agreement. SBIC II’s investment management agreement does not affect the management and incentive fees on a consolidated basis. We have also entered into an Administration Agreement with the Administrator. Under our Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer, Corporate Counsel and their respective staffs. PennantPark Investment, through the Administrator, provides similar services to SBIC II under its administration agreement with us. Our board of directors, a majority of whom are independent of us, provides overall supervision of our activities, and the Investment Adviser supervises our day-to-day activities.

Revenues

We generate revenue in the form of interest income on the debt securities we hold and capital gains and dividends, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of first lien secured debt, second lien secured debt or subordinated debt, typically have a term of three to ten years and bear interest at a fixed or a floating rate. Interest on debt securities is generally payable quarterly or semiannually. In some cases, our investments provide for deferred interest payments and PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of amendment, commitment, origination, structuring or diligence fees, fees for providing significant managerial assistance and possibly consulting fees. Loan origination fees, OID and market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned.

Expenses

Our primary operating expenses include interest expense on the outstanding debt and unused commitment fees on undrawn amounts, under our various debt facilities, the payment of a management fee and the payment of an incentive fee to our Investment Adviser, if any, our allocable portion of overhead under our Administration Agreement and other operating costs as detailed below. Our management fee compensates our Investment Adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. We bear all other direct or indirect costs and expenses of our operations and transactions, including:

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the cost of calculating our net asset value, including the cost of any third-party valuation services;

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the cost of effecting sales and repurchases of shares of our common stock and other securities;

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fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence and reviews of prospective investments or complementary businesses;

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expenses incurred by the Investment Adviser in performing due diligence and reviews of investments;

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transfer agent and custodial fees;

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fees and expenses associated with marketing efforts;

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federal and state registration fees and any exchange listing fees;

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federal, state, local and foreign taxes;

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independent directors’ fees and expenses;

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brokerage commissions;

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fidelity bond, directors and officers, errors and omissions liability insurance and other insurance premiums;

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direct costs such as printing, mailing, long distance telephone and staff;

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fees and expenses associated with independent audits and outside legal costs;

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costs associated with our reporting and compliance obligations under the 1940 Act, the 1958 Act and applicable federal and state securities laws; and

•

all other expenses incurred by either the Administrator or us in connection with administering our business, including payments under our Administration Agreement that will be based upon our allocable portion of overhead, and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer, Corporate Counsel and their respective staffs.

Generally, during periods of asset growth, we expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities would be additive to the expenses described above.

PORTFOLIO AND INVESTMENT ACTIVITY

As of March 31, 2023, our portfolio totaled $1,132.5 million, which consisted of $648.4 million of first lien secured debt, $111.3 million of second lien secured debt, $147.9 million of subordinated debt (including $95.4 million in PSLF) and $224.9 million of preferred and common equity (including $53.4 million in PSLF). Our debt portfolio consisted of 96% variable-rate investments and 4% fixed-rate investments. As of March 31, 2023, we had one portfolio companies on non-accrual, representing 1.0% and zero of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $32.1 million as of March 31, 2023. Our overall portfolio consisted of 135 companies with an average investment size of $8.4 million, had a weighted average yield on interest bearing debt investments of 12.1% and was invested 57% in first lien secured debt, 10% in second lien secured debt, 13% in subordinated debt (including 8% in PSLF) and 20% in preferred and common equity (including 5% in PSLF). As of March 31, 2023, all of the investments held by PSLF were first lien secured debt.

As of September 30, 2022, our portfolio totaled $1,226.3 million and consisted of $631.0 million of first lien secured debt, $129.9 million of second lien secured debt, $141.3 million of subordinated debt (including $88.0 million in PSLF) and $324.1 million of preferred and common equity (including $51.1 million in PSLF). Our interest bearing debt portfolio consisted of 96% variable-rate investments and 4% fixed-rate investments. As of September 30, 2022, we had one portfolio company on non-accrual, representing 1% and zero percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $71.0 million as of September 30, 2022. Our overall portfolio consisted of 123 companies with an average investment size of $10.1 million, had a weighted average yield on interest bearing debt investments of 10.8 % and was invested 51 % in first lien secured debt, 11 % in second lien secured debt, 12% in subordinated debt (including 7% in PSLF) and 26 % in preferred and common equity (including 4 % in PSLF).

For the three months ended March 31, 2023, we invested $58.3 million in six new and 34 existing portfolio companies with a weighted average yield on debt investments of 11.8%. Sales and repayments of investments for the three months ended March 31, 2023 totaled $114.2 million. For the six months ended March 31, 2023, we invested $144.8 million in 12 new and 64 existing portfolio companies with a weighted average yield on debt investments of 11.5%. Sales and repayment for the six months ended March 31, 2023 of investments for the totaled $136.8 million.

For the three months ended March 31, 2022, we invested $178.0 million in eight new and 29 existing portfolio companies with a weighted average yield on debt investments of 7.2%. Sales and repayments of investments for the three months ended March 31, 2022 totaled $405.5 million. For the six months ended March 31, 2022, we invested $473.1 million in 24 new and 59 existing portfolio companies with a weighted average yield on debt investments of 7.8% Sales and repayment of investments for the six months ended March 31, 2022 totaled $537.7 million.

PennantPark Senior Loan Fund, LLC

As of March 31, 2023, PSLF’s portfolio totaled $747.6 million, consisted of 86 companies with an average investment size of $8.7 million and had a weighted average yield on debt investments of 11.3 %.

As of September 30, 2022, PSLF’s portfolio totaled $730.1 million, consisted of 80 companies with an average investment size of $9.1 million and had a weighted average yield on debt investments of 9.4%.

For the three months ended March 31, 2023, PSLF invested $38.5 million (of which $18.4 million were purchased from the Company) in one new and one existing portfolio companies with a weighted average yield on debt investments of 11.6%. PSLF’s sales and repayments of investments for the same period totaled $24.9 million. For the six months ended March 31, 2023, PSLF invested $55.3 (of which $18.4 million was purchased from the Company) in eight new and five existing portfolio companies with a weighted average yield on debt investments of 11.5%. PSLF's sales and repayments of investments for the same period totaled $33.9 million.

For the three months ended March 31, 2022, PSLF invested $27.4 million (of which $11.5 million was purchased from the Company) in six new and two existing portfolio companies with a weighted average yield on debt investments of 7.5%. PSLF’s sales and repayments of investments for the same period totaled $2.3 million. For the six months ended March 31, 2022, PSLF invested $78.1 million (of which $59.6 million was purchased from the Company) in 15 new and two existing portfolio companies with a weighted average yield on debt investment of 7.5%. PSLF's sales and repayments of investments for the same period totaled $37.9 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Actual results could differ from these estimates due to changes in the economic and regulatory environment, financial markets and any other parameters used in determining such estimates and assumptions, including the credit worthiness of our portfolio companies. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to ASC serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued. In addition to the discussion below, we describe our critical accounting policies in the notes to our Consolidated Financial Statements. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates during the six months from those disclosed in our 2022 Annual Report on Form 10-K.

Investment Valuations

(1)

Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser responsible for the portfolio investment;

(2)

Preliminary valuation conclusions are then documented and discussed with the management of the Investment Adviser;

(3)

(4)

(5)

ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:


Level 1:	Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2:	Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
Level 3:	Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, our Truist Credit Facility, 2026 Notes, 2026-2 Notes and our SBA debentures are classified as Level 3. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.

On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which establishes an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. The new rule clarifies how fund boards of directors can satisfy their valuation obligations and requires, among other things, the board of directors to periodically assess material valuation risks and take steps to manage those risks. The rule also permit boards of directors, subject to board oversight and certain other conditions, to designate the fund’s investment adviser to perform fair value determinations. The new rule went into effect on March 8, 2021 and had a compliance date of September 8, 2022. We came into compliance with Rule 2a-5 under the 1940 Act before the compliance date. While our board of directors has not elected to designate the Investment Adviser as the valuation designee at this time, we have adopted certain revisions to our valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 under the 1940 Act.

In addition to using the above inputs to value cash equivalents, investments, our SBA debentures, our 2026 Notes, 2026 Notes-2 and our Truist Credit Facility valuations, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.

Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did not incur any expenses relating to amendment costs on the Truist Credit Facility for both the three and six months ended March 31, 2023 and 2022. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Truist Credit Facility is reported in our Consolidated Statements of Operations. We elect not to apply ASC 825-10 to any other financial assets or liabilities, including the 2026 Notes, 2026 Notes-2 and SBA debentures.

For the three and six months ended March 31, 2023, the Truist Credit Facility had a net change in unrealized depreciation of $1.5 million and $5.9 million, respectively. For the three and six months ended March 31, 2022, our Truist Credit Facility had a net change in unrealized depreciation of $1.3 million and $0.3 million, respectively. As of March 31, 2023 and September 30, 2022, the net unrealized depreciation on the Truist Credit Facility totaled $15.2 million and $9.2 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of our Truist Credit Facility in a manner consistent with the valuation process that the board of directors uses to value our investments.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned.

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 repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in fair values of our portfolio investments and our Truist Credit Facility, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Foreign Currency Translation

Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

Fair value of investment securities, other assets and liabilities – at the exchange rates prevailing at the end of the applicable period; and

Purchases and sales of investment securities, income and expenses – at the exchange rates prevailing on the respective dates of such transactions.

Payment-in-Kind, or PIK Interest

We have investments in our portfolio which contain a PIK interest provision. PIK interest is added to the principal balance of the investment and is recorded as income. In order for us to maintain our ability to be subject to tax as a RIC, substantially all of this income must be paid out to stockholders in the form of dividends for U.S. federal income tax purposes, even though we may not have collected any cash with respect to interest on PIK securities.

Federal Income Taxes

We have elected to be treated, and intend to qualify annually to maintain our election to be treated, as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid.

Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible U.S. federal excise tax imposed on RICs, we must distribute dividends for federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our net ordinary income (subject to certain deferrals and elections) for the calendar year, (2) 98.2% of the excess, if any, of our capital gains over our capital losses, or capital gain net income (adjusted for certain ordinary losses) for the one-year period ending on October 31 of the calendar year plus (3) the sum of any net ordinary income plus capital gain net income for preceding years that was realized but not distributed during such years and on which we did not incur any U.S. federal income tax, or the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, contingent on maintaining our ability to be subject to tax as a RIC, in order to provide us with additional liquidity.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and net realized gain recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

For the three and six months ended March 31, 2023, we recorded a provision for taxes on net investment income of $0.5 million and $2.5 million respectively, pertaining to federal excise tax. For the three and six months ended March 31, 2022, we recorded a provision for taxes on net investment income of $0.2 million and $0.4 million respectively, all of which pertains to U.S. federal excise tax.

The Taxable Subsidiary (PNNT Investment Holdings, LLC, a second-tier wholly-owned subsidiary of the Company,) is subject to U.S. federal, state and local corporate income taxes. The income tax expense and related tax liabilities of the Taxable Subsidiary are reflected in the Company’s consolidated financial statements..

Company recognized a provision for taxes of $(5.1) million and zero, respectively, on unrealized gain(loss) on investments by the Taxable Subsidiary. The provision for taxes on net realized and unrealized gains on investments is the result of netting (i) the expected tax liability on the gains from the sales of investments which is likely to be realized and unrealized during fiscal year ending September 30, 2023 and (ii) the expected tax benefit resulting from the use of loss carryforwards to offset such gains. As of March 31, 2023 and September 30, 2022, the Company recognized a provision for taxes of $(0.7) million and $7.1 million on net realized and unrealized gains on investments by the Taxable Subsidiary.

The Taxable Subsidiary, which is subject to tax as a corporation, allows us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.

RESULTS OF OPERATIONS

Set forth below are the results of operations for the three and six months ended March 31, 2023 and 2022.

Investment Income

For the three and six months ended March 31, 2023, investment income was $36.3 million and $66.3 million, respectively, which was attributable to $26.8 million and $48.6 million from first lien secured debt, $3.7 million and $7.4 from second lien secured debt, $2.2 million and $1.1 from subordinated debt and $4.8 million from preferred and common equity, respectively. For the three and six months ended March 31, 2022, investment income was $24.3 million and $52.7 million, respectively, which was attributable to $14.5 million and $34.6 million from first lien secured debt, $6.3 million and $10.8 million from second lien secured debt, $0.4 million and $2.3 million from subordinated debt and $3.1 million and $4.9 million from preferred and common equity, respectively. The increase in investment income was primarily due to the increase in the cost yield of our debt portfolio compared to the same period in the prior year.

Expenses

For the three and six months ended March 31, 2023, expenses totaled $19.7 million and $39.3 million, respectively and were comprised of; $10.6 million and $20.3 million of debt related interest and expenses, $4.0 million and $8.6 million of base management fees, $3.5 million and $5.7 million of incentive fees, $1.1 million and $2.2 million of general and administrative expenses and $0.5 million and $2.5 million of provision for excise taxes. For the three and six months ended March 31, 2022, expenses totaled $12.7 million and $28.5 million, respectively, and were comprised of $6.5 million and $13.4 million of debt related interest and expenses, $5.0 million and $10.1 million of base management fees, zero and $2.7 million of performance based incentive fees, $1.0 million and $1.9 million of general and administrative expenses and $0.2 million and $0.4 million of provision for excise taxes, respectively. The increase in expenses was primarily due to the increased financing costs of our liabilities debt compared to the same period in the prior year.

Net Investment Income

For the three and six months ended March 31, 2023, net investment income totaled $16.6 million, and $27.0 million, or $0.26 per share, and $0.41 per share, respectively. For the three and six months ended March 31, 2022, net investment income totaled $11.7 million, and $24.2 million, or $0.18 per share and $0.36 per share. The increase in net investment income was primarily due to an increase in investment income partially offset by an increase in expenses compared to the same period in the prior year.

Net Realized Gains or Losses on Investments and Debt

For the three and six months ended March 31, 2023, net realized gains (losses) totaled $(148.7) million and $(144.7) million, respectively. For the three and six months ended March 31, 2022 net realized gains (losses) totaled $136.6 million and $108.9 million, respectively. The change in realized gains or losses was primarily due to changes in the market conditions of our investments and the values at which they were realized compared to the same periods in the prior year.

Unrealized Appreciation or Depreciation on Investments and Debt

For the three and six months ended March 31, 2023, we reported net change in unrealized appreciation (depreciatoin) on investments of $135.4 million and $43.8 million, respectively. For the three and six months ended March 31, 2022, we reported net change in unrealized appreciation (depreciation) on investments of $(151.5) million and $(104.7) million, respectively. As of March 31, 2023 and September 30, 2022, our net unrealized appreciation (depreciation) on investments totaled $(32.1) million and $(75.7) million, respectively. The net change in unrealized appreciation or depreciation on our investments compared to the same period in the prior year was primarily due to the operating performance of the portfolio companies within the portfolio and changes in the capital market conditions of our investments.

For the three and six months ended March 31, 2023, our credit facility with Truist (the "Credit Facility") had a net change in unrealized (appreciation) depreciation of $1.5 million and $5.9 million, respectively. For the three and six months ended March 31, 2022, the Credit Facility had a net change in unrealized (appreciation) depreciation of $1.3 million and $0.3 million, respectively. As of March 31, 2023 and September 30, 2022, the net unrealized (appreciation) depreciation on the Credit Facility totaled $15.2 million and $9.2 million, respectively. The net change in unrealized appreciation or depreciation compared to the same periods in the prior year was primarily due to changes in the capital markets.

Net Increasese (Decrease) in Net Assets Resulting from Operations

For the three and six months ended March 31, 2023, net increase (decrease) in net assets resulting from operations totaled $4.9 million, and $(67.0) million, or $0.07 per share, and $(1.03) per share, respectively. For the three and six months ended March 31, 2022, net increase (decrease) in net assets resulting from operations totaled $3.2 million and $28.7 million, or $0.05 and $0.43 per share. The increase or decrease from operations compared to the same periods in the prior year was primarily due to an increase in realized loss.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are derived primarily from cash flows from operations, including investment sales and repayments, and income earned, proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations. As of March 31, 2023, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing, excluding SBA debentures pursuant to exemptive relief from the SEC received in June 2011. This “Liquidity and Capital Resources” section should be read in conjunction with the "Forward-Looking Statements" section above.

On February 5, 2019, our stockholders approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the SBCAA) as approved by our board of directors on November 13, 2018. As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), subject to compliance with certain disclosure requirements.

As of March 31, 2023 and September 30, 2022, our asset coverage ratio, as computed in accordance with the 1940 Act was 170% and 186%, respectively.

For the six months ended March 31, 2023 and 2022, the annualized weighted average cost of debt inclusive of the fee on the undrawn commitment and amendment costs on the Credit Facility, was 5.8% and 4.8%, respectively.

As of March 31, 2023, we had the multi-currency Credit Facility for up to $500.0 million (increased from $465.0 million in July 2022), which may be further increased up to $750.0 million in borrowings with certain lenders and Truist Bank (formerly SunTrust Bank), acting as administrative agent, Regions Bank, acting as an additional multicurrency lender, and JPMorgan Chase Bank, N.A., acting as syndication agent for the lenders. As of March 31, 2023 and September 30, 2022, we had $377.4 million and $385.9 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 7.1% and 5.3%, respectively, exclusive of the fee on undrawn commitments, as of March 31, 2023 and September 30, 2022. The Truist Credit Facility is a revolving facility with a stated maturity date of July 29, 2027 for $475.0 million out of the total $500.0 million commitments (with the revolving period with respect to the remaining $25.0 million of commitments expiring on September 4, 2023 and the related obligations maturing on September 4, 2024) and pricing set at 235 basis points over SOFR. As of March 31, 2023 and September 30, 2022, we had $122.6 million and $114.1 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Truist Credit Facility is secured by substantially all of our assets excluding assets held by SBIC II. As of March 31, 2023, we were in compliance with the terms of the Truist Credit Facility.

On November 13, 2021, the 2024 Notes were redeemed at a redemption price of $25.00 per 2024 Note, plus accrued and unpaid interest to November 13, 2021, pursuant to the indenture governing the 2024 Notes. Accordingly, as of March 31, 2023 and September 30, 2022, we had zero in aggregate principal amount of 2024 Notes outstanding, respectively. Interest on the 2024 Notes was paid quarterly on January 15, April 15, July 15 and October 15, at a rate of 5.5% per year.

As of March 31, 2023, we had $150.0 million in aggregate principal amount of 2026 Notes outstanding. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1, at a rate of 4.50% per year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.

As of March 31, 2023, we had $165.0 million in aggregate principal amount of 2026 Notes-2 outstanding. Interest on the 2026 Notes is paid semi-annually on May 1 and November 1, at a rate of 4.0% per year, commencing May 1, 2022. The 2026 Notes-2 mature on November 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes-2 are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes-2 are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.

We may raise additional equity or debt capital through both registered offerings off our shelf registration statement and private offerings of securities, by securitizing a portion of our investments, among other sources. Any future additional debt capital we incur, to the extent it is available, may be issued at a higher cost and on less favorable terms and conditions than the Truist Credit Facility, 2026 Notes, 2026 Notes-2 and SBA debentures. Furthermore, the Truist Credit Facility availability depends on various

covenants and restrictions. The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate or strategic purposes such as our stock repurchase program.

We have entered into certain contracts under which we have material future commitments. Under our Investment Management Agreement, which was reapproved by our board of directors (including a majority of our directors who are not interested persons of us or the Investment Adviser) in February 2023 PennantPark Investment Advisers serves as our investment adviser. PennantPark Investment, through the Investment Adviser, provides similar services to SBIC II under its investment management agreement with us. SBIC II’s investment management agreement does not affect the management or incentive fees that we pay to the Investment Adviser on a consolidated basis. Payments under our Investment Management Agreement in each reporting period are equal to (1) a management fee equal to a percentage of the value of our average adjusted gross assets and (2) an incentive fee based on our performance.

Under our Administration Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in February 2023 and amended in July 2022, the Administrator furnishes us with office facilities and administrative services necessary to conduct our day-to-day operations. The Administration Agreement was amended on July 1, 2022. PennantPark Investment, through the Administrator, provides similar services to SBIC II under its administration agreements, which are intended to have no effect on the consolidated administration fee. If requested to provide significant managerial assistance to our portfolio companies, we or the Administrator will be paid an additional amount based on the services provided. Payment under our Administration Agreement is based upon our allocable portion of the Administrator’s overhead in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of our Chief Compliance Officer, Chief Financial Officer, Corporate Counsel and their respective staffs.

If any of our contractual obligations discussed above are terminated, our costs under new agreements that we enter into may increase. In addition, we will likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.

As of both March 31, 2023 and September 30, 2022, SBIC II had an initial $150.0 million in debt commitments, all of which were drawn. During the three and six months ended March 31, 2023, there were $20.0 million and $20.0 million of SBA debentures were repaid, respectively. During the three and six months ended March 31, 2022, there was $36.0 million and $36.0 million in SBA debentures were repaid, respectively. The SBA debentures’ upfront fees of 3.4% consist of a commitment fee of 1.0% and an issuance discount of 2.4%, which are being amortized. As of March 31, 2023 and September 30, 2022, the unamortized fees on the SBA debentures was zero and $0.3 million, respectively. We repaid the remaining $20.0 million SBA debentures during the three months ended March 31, 2023.

Our fixed-rate SBA debentures were as follows:


Issuance Dates	Maturity	Fixed All-in Coupon Rate (1)			As of September 30, 2022 Principal Balance
September 20, 2017	September 1, 2027		2.9	%	$	20,000

(1)

Excluding 3.4% of upfront fees.

The SBIC program is designed to stimulate the flow of capital into eligible businesses. Under SBA regulations, SBIC II is subject to regulatory requirements, including making investments in SBA eligible businesses, investing at least 25% of regulatory capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, prohibiting investment in certain industries and requiring capitalization thresholds that limit distributions to us, and is subject to periodic audits and examinations of their financial statements that are prepared on a basis of accounting other than GAAP (for example, fair value, as defined under ASC 820, is not required to be used for assets or liabilities for such compliance reporting). As of March 31, 2023, SBIC II was in compliance with their regulatory requirements.

In accordance with the 1940 Act, with certain limited exceptions, PennantPark Investment is only allowed to borrow amounts such that our required 150% asset coverage ratio is met after such borrowing. As of March 31, 2023 and September 30, 2022, we excluded the principal amounts of our SBA debentures from our asset coverage ratio pursuant to SEC exemptive relief. In 2011, we received exemptive relief from the SEC allowing us to modify the asset coverage ratio requirement to exclude the SBA debentures from the calculation. Accordingly, our ratio of total assets on a consolidated basis to outstanding indebtedness may be less than 150% which, while providing increased investment flexibility, also increases our exposure to risks associated with leverage.

As of March 31, 2023 and September 30, 2022, we had cash and cash equivalents of $63.1 million and $52.7 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.

For the six months ended March 31, 2023, our operating activities provided cash of $59.3 million and our financing activities used cash of $49.0 million. Our operating activities used cash primarily due to our investment activities and our financing activities used cash primarily due to repayments under the Truist Credit Facility.

For the six months ended March 31, 2022, our operating activities provided cash of $89.8 million, and our financing activities used cash of $83.9 million. Our operating activities provided cash primarily from proceeds from our investment activities and our financing activities used cash primarily due to fund under the Truist Credit Facility.

PennantPark Senior Loan Fund, LLC

Below is a summary of PSLF’s portfolio at fair value:


($ in thousands)	March 31, 2023			September 30, 2022
Total investments	$	747,561		$	730,108
Weighted average cost yield on income producing investments		11.3	%		9.4	%
Number of portfolio companies in PSLF		86			80
Largest portfolio company investment at fair value	$	19,750		$	19,906
Total of five largest portfolio company investments at fair value	$	97,638		$	98,502

Below is a listing of PSLF’s individual investments as of March 31, 2023 ($ in thousands):


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value(2)
First Lien Secured Debt - 847.4%
A1 Garage Merger Sub, LLC	12/22/2028	Personal, Food and Miscellaneous Services		11.12	%	3M L+650		15,000	$	14,726	$	14,775
Ad.net Acquisition, LLC	5/7/2026	Media		10.84	%	3M L+600		4,913		4,913		4,876
Alpine Acquisition Corp II	11/30/2026	Containers, Packaging and Glass		10.45	%	SOFR+600		14,912		14,574		14,316
Altamira Technologies, LLC	7/24/2025	Aerospace and Defense		10.83	%	3M L+550		846		840		846
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)	6/10/2025	Media		11.30	%	SOFR+625		14,031		13,919		13,820
Anteriad, LLC (f/k/a MeritDirect, LLC)	5/23/2024	Media		10.55	%	3M L+550		14,761		14,707		14,318
Any Hour Services	7/21/2027	Personal, Food and Miscellaneous Services		10.53	%	3M L+575		9,877		9,870		9,605
Apex Service Partners, LLC	7/31/2025	Personal, Food and Miscellaneous Services		9.46	%	3M L+575		6,441		6,388		6,408
Apex Service Partners, LLC Term Loan B	7/31/2025	Personal, Food and Miscellaneous Services		9.77	%	3M L+550		3,324		3,303		3,308
Apex Service Partners, LLC - Term Loan C	7/31/2025	Personal, Food and Miscellaneous Services		9.84	%	3M L+600		7,550		7,550		7,512
Applied Technical Services, LLC	12/29/2026	Environmental Services		10.91	%	3M L+500		8,774		8,687		8,598
Arcfield Acquisition Corp.	3/7/2028	Aerospace and Defense		10.62	%	3M L+575		11,880		11,681		11,642
Beta Plus Technologies, Inc.	7/1/2029	Business Services		9.32	%	SOFR+575		14,963		14,706		13,167
Blackhawk Industrial Distribution, Inc.	9/17/2024	Distribution		9.50	%	SOFR+500		17,908		17,742		17,505
Broder Bros., Co.	12/4/2025	Personal and Non-Durable Consumer Products		10.73	%	3M L+600		9,810		9,810		9,810
Burgess Point Purchaser Corporation	9/26/2029	Auto Sector		10.16	%	SOFR+525		898		837		853
Cartessa Aesthetics, LLC	6/14/2028	Distribution		10.90	%	3M L+600		17,369		17,069		17,195
CF512, Inc.	8/20/2026	Media		10.96	%	3M L+575		2,962		2,940		2,903
Connatix Buyer, Inc.	7/13/2027	Media		10.23	%	1M L+550		8,855		8,842		8,523
Dr. Squatch, LLC	8/31/2027	Personal and Non-Durable Consumer Products		10.48	%	3M L+475		6,403		6,396		6,307
DRI Holding Inc.	12/21/2028	Media		10.09	%	3M L+575		4,404		3,953		3,914
DRS Holdings III, Inc.	11/3/2025	Consumer Products		10.90	%	3M L+600		14,591		14,532		14,168
Duraco Specialty Tapes LLC	6/30/2024	Manufacturing / Basic Industries		10.36	%	3M L+575		8,098		8,002		7,920
ECL Entertainment, LLC	5/1/2028	Hotels, Motels, Inns and Gaming		12.42	%	3M L+500		4,535		4,535		4,492
ECM Industries, LLC	12/23/2025	Electronics		9.45	%	3M L+600		2,801		2,749		2,682
EDS Buyer, LLC	1/10/2029	Aerospace and Defense		11.15	%	SOFR+625		6,250		6,172		6,094
Electro Rent Corporation	1/17/2024	Electronics		10.27	%	3M L+550		3,732		3,606		3,632
Exigo Intermediate II, LLC	3/15/2027	Business Services		10.59	%	1M L+575		9,900		9,778		9,702
Fairbanks Morse Defense	6/17/2028	Aerospace and Defense		9.91	%	6M L+475		794		751		756
Global Holdings InterCo LLC	3/16/2026	Banking, Finance, Insurance & Real Estate		11.23	%	3M L+600		7,305		7,283		6,949
Graffiti Buyer, Inc.	8/10/2027	Distribution		10.66	%	3M L+550		1,964		1,933		1,945
Hancock Roofing and Construction L.L.C.	12/31/2026	Insurance		10.39	%	1M L+575		6,827		6,827		6,691
Holdco Sands Intermediate, LLC	11/23/2028	Aerospace and Defense		11.21	%	1M L+800		19,817		19,467		19,619
HV Watterson Holdings, LLC	12/17/2026	Business Services		11.41	%	3M L+600		15,179		14,991		14,769
HW Holdco, LLC	12/10/2024	Media		10.15	%	1M L+700		14,250		14,143		14,036
Icon Partners III, LP	5/11/2028	Auto Sector		9.32	%	3M L+475		2,316		2,008		1,627
IDC Infusion Services, Inc.	12/30/2026	Healthcare, Education and Childcare		11.55	%	3M L+750		17,313		17,090		16,707
IG Investments Holdings, LLC	9/22/2028	Business Services		10.86	%	1M L+575		4,451		4,372		4,384
Imagine Acquisitionco, LLC	11/15/2027	Business Services		10.37	%	3M L+625		5,594		5,503		5,426
Inception Fertility Ventures, LLC	12/7/2023	Healthcare, Education and Childcare		11.91	%	3M L+550		19,837		19,589		19,441
Infinity Home Services Holdco, Inc.	12/28/2028	Personal, Food and Miscellaneous Services		11.73	%	SOFR+675		11,109		10,910		10,886
Infolinks Media Buyco, LLC	11/1/2026	Media		10.66	%	1M L+550		6,396		6,396		6,396
Integrity Marketing Acquisition, LLC	8/27/2025	Insurance		11.00	%	3M L+575		19,950		19,881		19,750
K2 Pure Solutions NoCal, L.P.	12/20/2023	Chemicals, Plastics and Rubber		12.91	%	SOFR+800		13,418		13,351		13,418
LAV Gear Holdings, Inc.	10/31/2024	Leisure, Amusement, Motion Pictures, Entertainment		10.70	%	SOFR+603		2,579		2,573		2,543
Lash OpCo, LLC	2/18/2027	Consumer Products		11.17	%	1M L+650		19,824		19,642		19,428
Lightspeed Buyer Inc.	2/3/2026	Healthcare, Education and Childcare		10.13	%	3M L+475		12,282		12,089		11,975
LJ Avalon Holdings, LLC	1/31/2030	Environmental Services		11.33	%	3M L+650		6,350		6,236		6,223
MAG DS Corp.	4/1/2027	Aerospace and Defense		10.50	%	3M L+550		5,540		5,139		5,042
Magenta Buyer, LLC	7/31/2028	Software		9.58	%	3M L+500		3,804		3,551		3,123
Mars Acquisition Holdings Corp.	5/14/2026	Media		10.23	%	3M L+550		7,884		7,835		7,805
MBS Holdings, Inc.	4/16/2027	Telecommunications		10.59	%	3M L+575		7,369		7,295		7,295
Meadowlark Acquirer, LLC	12/10/2027	Business Services		10.41	%	3M L+575		2,968		2,916		2,938
Municipal Emergency Services, Inc.	9/28/2027	Distribution		10.55	%	3M L+550		4,133		4,076		3,959
NBH Group LLC	8/19/2026	Healthcare, Education and Childcare		9.92	%	3M L+575		7,467		7,399		7,467
Owl Acquisition, LLC	2/4/2028	Education		10.16	%	3M L+550		3,805		3,702		3,710
Ox Two, LLC (New Issue)	5/18/2026	Distribution		12.41	%	1M L+650		4,937		4,893		4,789
PL Acquisitionco, LLC	11/9/2027	Retail		11.34	%	1M L+575		8,591		8,459		8,204
PlayPower, Inc.	5/8/2026	Consumer Products		10.25	%	1M L+525		2,565		2,485		2,309
Quantic Electronics, LLC	11/19/2026	Aerospace and Defense		11.21	%	1M L+600		3,331		3,278		3,281
Quantic Electronics, LLC - Unfunded Term Loan	11/19/2026	Aerospace and Defense		0.00	%	3M L+625		56		—		—
Radius Aerospace, Inc.	3/31/2025	Aerospace and Defense		10.80	%	3M L+600		12,730		12,650		12,476
Rancho Health MSO, Inc.	12/18/2025	Healthcare, Education and Childcare		9.42	%	1M L+450		5,154		5,154		5,154
Reception Purchaser, LLC	2/28/2028	Transportation		10.78	%	SOFR+600		4,950		4,885		4,721
Recteq, LLC	1/29/2026	Consumer Products		10.98	%	3M L+700		9,800		9,688		9,408
Research Now Group, LLC and Dynata, LLC	12/20/2024	Business Services		10.31	%	1M L+550		14,504		14,424		10,996
Riverpoint Medical, LLC	6/20/2025	Healthcare, Education and Childcare		9.86	%	3M L+525		3,192		3,175		3,144
Riverside Assessments, LLC	3/10/2025	Education		10.48	%	SOFR+575		9,908		9,846		9,759
Sales Benchmark Index LLC	1/3/2025	Business Services		11.16	%	3M L+625		6,859		6,797		6,825
Sargent & Greenleaf Inc.	12/20/2024	Electronics		12.26	%	SOFR+300		4,857		4,857		4,772
Seaway Buyer, LLC	6/13/2029	Chemicals, Plastics and Rubber		11.05	%	3M L+575		14,925		14,734		14,552
Signature Systems Holding Company	5/3/2024	Chemicals, Plastics and Rubber		11.55	%	1M L+450		11,576		11,531		11,576
Solutionreach, Inc.	1/17/2024	Communications		10.59	%	6M L+675		11,320		11,299		10,777
STV Group Incorporated	12/11/2026	Transportation		10.16	%	SOFR+525		12,099		12,039		12,038


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value(2)

Summit Behavioral Healthcare, LLC	11/24/2028	Healthcare, Education and Childcare		9.71	%	3M L+475		3,590		3,396		3,465
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)	8/16/2027	Aerospace and Defense		10.69	%	SOFR+575		16,047		15,742		15,806
Team Services Group, LLC	11/24/2028	Healthcare, Education and Childcare		9.95	%	SOFR+500		696		667		676
Teneo Holdings LLC	7/18/2025	Financial Services		10.16	%	SOFR+525		2,951		2,941		2,911
The Aegis Technologies Group, LLC	10/31/2025	Aerospace and Defense		11.50	%	3M L+600		11,152		11,065		10,928
The Bluebird Group LLC	7/27/2026	Business Services		12.15	%	3M L+650		5,446		5,488		5,370
The Vertex Companies, LLC	8/30/2027	Business Services		10.16	%	SOFR+525		4,508		4,467		4,414
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025	Food		9.24	%	3M L+525		5,508		5,385		5,403
TVC Enterprises, LLC	3/26/2026	Transportation		10.59	%	3M L+600		17,019		16,899		16,763
TWS Acquisition Corporation	6/16/2025	Education		11.39	%	3M L+625		7,949		7,924		7,949
Tyto Athene, LLC	4/3/2028	Aerospace and Defense		10.24	%	SOFR+550		12,003		11,888		10,887
UBEO, LLC	4/3/2024	Printing and Publishing		9.48	%	3M L+450		4,650		4,639		4,580
Unique Indoor Comfort, LLC	5/24/2027	Home and Office Furnishings, Housewares		10.30	%	3M L+525		9,925		9,805		9,865
Wildcat Buyerco, Inc.	2/27/2026	Electronics		10.80	%	SOFR+575		11,449		11,378		11,163
Zips Car Wash, LLC	3/1/2024	Business Services		12.14	%	3M L+725		19,848		19,636		19,401

Total First Lien Secured Debt										761,289		747,561
Total Investments - 847.4%
Cash and Cash Equivalents - 46.9%
BlackRock Federal FD Institutional 30										41,361		41,361
Total Cash and Cash Equivalents										41,361		41,361
Total Investments and Cash Equivalents - 894.2%									$	802,650	$	788,922
Liabilities in Excess of Other Assets — (794.2)%												(700,700	)
Members' Equity—100.0%											$	88,222

(1)

Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable LIBOR, or “L” or Prime rate or “P”. The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to a 30-day, 60-day, 90-day or 180-day LIBOR rate (1M L, 2M L, 3M L, or 6M L, respectively), at the borrower’s option. All securities are subject to a LIBOR or Prime rate floor where a spread is provided, unless noted. The spread provided includes PIK interest and other fee rates, if any.

(2)

Valued based on PSLF’s accounting policy.

(3)

Below is a listing of PSLF’s individual investments as of September 30, 2022 ($ in thousands):


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value (2)
First Lien Secured Debt - 864.4%
Ad.net Acquisition, LLC	05/06/26	Media		9.67	%	3M L+600	$	4,938	$	4,938	$	4,901
Alpine Acquisition Corp II	11/30/26	Containers, Packaging and Glass		8.69	%	3M L+800		9,975		9,785		9,576
Altamira Technologies, LLC	07/24/25	Aerospace and Defense		10.81	%	3M L+550		871		864		841
American Insulated Glass, LLC	12/21/23	Building Materials		7.79	%	3M L+575		19,906		19,868		19,906
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)	06/10/25	Media		9.95	%	1M L+550		14,104		13,968		13,892
Anteriad, LLC (f/k/a MeritDirect, LLC)	05/23/24	Media		9.17	%	3M L+550		15,168		15,084		15,168
Any Hour Services	07/21/27	Personal, Food and Miscellaneous Services		7.98	%	3M L+575		9,942		9,934		9,743
Apex Service Partners, LLC	07/31/25	Personal, Food and Miscellaneous Services		6.25	%	3M L+575		6,569		6,502		6,536
Apex Service Partners, LLC Term Loan B	07/31/25	Personal, Food and Miscellaneous Services		6.55	%	3M L+550		3,323		3,298		3,307
Apex Service Partners, LLC - Term Loan C	07/31/25	Personal, Food and Miscellaneous Services		6.50	%	3M L+600		7,607		7,608		7,569
Applied Technical Services, LLC	12/29/26	Environmental Services		9.42	%	3M L+500		8,822		8,725		8,602
Arcfield Acquisition Corp.	03/07/28	Aerospace and Defense		8.99	%	3M L+575		11,940		11,721		11,701
Beta Plus Technologies, Inc.	07/01/29	Business Services		7.56	%	1M L+525		15,000		14,700		14,700
Blackhawk Industrial Distribution, Inc.	09/17/24	Distribution		8.57	%	3M L+600		17,993		17,772		17,596
Broder Bros., Co.	12/02/22	Personal, Food and Miscellaneous Services		7.39	%	3M L+600		9,937		9,937		9,937
Cartessa Aesthetics, LLC	05/13/28	Distribution		9.55	%	3M L+600		17,456		17,131		17,194
CF512, Inc.	08/20/26	Media		9.08	%	3M L+575		2,985		2,958		2,940
Connatix Buyer, Inc.	07/13/27	Media		8.42	%	1M L+550		9,045		9,029		8,819
Dr. Squatch, LLC	08/31/27	Personal and Non-Durable Consumer Products		9.42	%	3M L+475		6,435		6,427		6,339
DRI Holding Inc.	12/21/28	Media		8.37	%	3M L+575		2,776		2,526		2,490
DRS Holdings III, Inc.	11/03/25	Consumer Products		8.87	%	3M L+600		15,142		15,063		14,658
Duraco Specialty Tapes LLC	06/30/24	Manufacturing / Basic Industries		8.62	%	3M L+575		8,139		8,008		7,944
ECL Entertainment, LLC	05/01/28	Hotels, Motels, Inns and Gaming		10.62	%	3M L+500		4,558		4,558		4,489
ECM Industries, LLC	12/23/25	Electronics		6.32	%	3M L+600		2,823		2,761		2,689
Exigo Intermediate II, LLC	03/15/27	Business Services		8.87	%	1M L+575		9,950		9,817		9,726
Fairbanks Morse Defense	06/17/28	Aerospace and Defense		7.63	%	6M L+475		800		754		740
Global Holdings InterCo LLC	03/16/26	Banking, Finance, Insurance & Real Estate		8.74	%	3M L+600		7,343		7,313		7,013
Graffiti Buyer, Inc.	08/10/27	Distribution		8.00	%	3M L+550		1,974		1,939		1,895
Hancock Roofing and Construction L.L.C.	12/31/26	Insurance		8.67	%	1M L+575		6,835		6,835		6,733
Holdco Sands Intermediate, LLC	11/23/28	Aerospace and Defense		10.17	%	1M L+800		19,915		19,535		19,516
HV Watterson Holdings, LLC	12/17/26	Business Services		9.67	%	3M L+600		15,255		15,045		14,721
HW Holdco, LLC	12/10/24	Media		6.00	%	3M L+700		14,438		14,303		14,257
Icon Partners III, LP	05/11/28	Auto Sector		6.87	%	3M L+475		2,333		2,001		1,705
IDC Infusion Services, Inc.	12/30/26	Healthcare, Education and Childcare		10.20	%	3M L+750		17,400		17,154		16,617
IG Investments Holdings, LLC	09/22/28	Business Services		9.45	%	1M L+575		4,473		4,388		4,428
Imagine Acquisitionco, LLC	11/15/27	Business Services		6.91	%	3M L+625		5,636		5,534		5,495
Inception Fertility Ventures, LLC	12/07/23	Healthcare, Education and Childcare		9.96	%	3M L+550		20,000		19,545		19,800
Infolinks Media Buyco, LLC	11/01/26	Media		9.42	%	1M L+550		6,428		6,428		6,428
Integrity Marketing Acquisition, LLC	08/27/25	Insurance		9.21	%	3M L+575		19,954		19,866		19,754
K2 Pure Solutions NoCal, L.P.	12/20/23	Chemicals, Plastics and Rubber		11.12	%	3M L+550		14,438		14,316		14,438
LAV Gear Holdings, Inc.	10/31/24	Leisure, Amusement, Motion Pictures, Entertainment		9.95	%	3M L+500		2,137		2,129		2,088
Lash OpCo, LLC	02/18/27	Consumer Products		11.17	%	1M L+650		19,925		19,708		19,526
Lightspeed Buyer Inc.	02/03/26	Healthcare, Education and Childcare		8.87	%	3M L+475		12,345		12,119		11,944
MAG DS Corp.	04/01/27	Aerospace and Defense		9.17	%	3M L+550		5,570		5,128		5,069
Magenta Buyer, LLC	07/31/28	Software		7.87	%	3M L+500		3,140		2,946		2,826
Mars Acquisition Holdings Corp.	05/14/26	Media		8.62	%	1M L+625		7,920		7,861		7,880
MBS Holdings, Inc.	04/16/27	Telecommunications		8.56	%	3M L+575		7,406		7,326		7,332
Meadowlark Acquirer, LLC	12/10/27	Business Services		9.17	%	3M L+575		2,983		2,926		2,953
Municipal Emergency Services, Inc.	09/28/27	Distribution		7.25	%	3M L+550		4,164		4,102		3,923
NBH Group LLC	08/19/26	Healthcare, Education and Childcare		7.80	%	3M L+575		7,505		7,426		7,505
OIS Management Services, LLC	07/09/26	Healthcare, Education and Childcare		9.45	%	3M L+600		5,257		5,210		5,257
Owl Acquisition, LLC	02/04/28	Education		8.41	%	3M L+550		3,990		3,874		3,890
Ox Two, LLC (New Issue)	05/18/26	Distribution		8.32	%	1M L+650		4,962		4,911		4,863
PL Acquisitionco, LLC	11/09/27	Retail		9.62	%	1M L+575		8,634		8,489		8,419
PlayPower, Inc.	05/08/26	Consumer Products		9.17	%	1M L+525		2,580		2,487		2,309
Quantic Electronics, LLC	11/19/26	Aerospace and Defense		9.92	%	1M L+600		3,403		3,342		3,335
Quantic Electronics, LLC - Unfunded Term Loan	11/19/26	Aerospace and Defense		0.00	%	3M L+625		143		-		(1	)
Radius Aerospace, Inc.	03/31/25	Aerospace and Defense		9.46	%	3M L+600		12,757		12,657		12,566
Rancho Health MSO, Inc.	12/18/25	Healthcare, Education and Childcare		7.75	%	1M L+450		5,180		5,180		5,180
Reception Purchaser, LLC	02/28/28	Transportation		9.13	%	SOFR+600		4,975		4,904		4,751
Recteq, LLC	01/29/26	Consumer Products		9.92	%	3M L+700		9,850		9,718		9,505
Research Now Group, LLC and Dynata, LLC	12/20/24	Business Services		8.84	%	1M L+550		14,542		14,440		13,070
Riverpoint Medical, LLC	06/20/25	Healthcare, Education and Childcare		7.74	%	3M L+525		3,192		3,172		3,112
Riverside Assessments, LLC	03/10/25	Education		9.95	%	1M L+575		9,949		9,872		9,750
Sales Benchmark Index LLC	01/03/25	Business Services		9.67	%	3M L+625		6,859		6,779		6,791
Sargent & Greenleaf Inc.	12/20/24	Electronics		7.15	%	3M L+550		5,082		5,082		5,031
Seaway Buyer, LLC	06/13/29	Chemicals, Plastics and Rubber		7.90	%	3M L+575		15,000		14,794		14,775
Signature Systems Holding Company	05/03/24	Chemicals, Plastics and Rubber		10.17	%	1M L+450		11,951		11,879		11,861
Solutionreach, Inc.	01/17/24	Communications		8.87	%	6M L+675		11,386		11,352		11,113
STV Group Incorporated	12/11/26	Transportation		8.37	%	3M L+575		12,099		12,031		11,978


Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index (1)	Par		Cost		Fair Value (2)

System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)	8/16/2027	Aerospace and Defense		8.73	%	SOFR+600		16,128		15,785		15,870
Teneo Holdings LLC	7/18/2025	Financial Services		7.73	%	3M L+525		3,474		3,435		3,271
The Aegis Technologies Group, LLC	10/31/2025	Aerospace and Defense		9.67	%	3M L+600		11,208		11,102		11,096
The Bluebird Group LLC	7/27/2026	Business Services		10.67	%	3M L+650		5,502		5,549		5,557
The Vertex Companies, LLC	8/30/2027	Business Services		8.62	%	3M L+550		4,531		4,485		4,509
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025	Food		7.78	%	3M L+525		5,536		5,392		5,370
TVC Enterprises, LLC	3/26/2026	Transportation		8.87	%	3M L+600		17,381		17,244		16,946
TWS Acquisition Corporation	6/16/2025	Education		8.76	%	3M L+625		7,949		7,917		7,910
Tyto Athene, LLC	4/3/2028	Aerospace and Defense		7.76	%	3M L+550		12,064		11,938		11,208
UBEO, LLC	4/3/2024	Printing and Publishing		8.17	%	3M L+450		4,674		4,657		4,604
Unique Indoor Comfort, LLC	5/24/2027	Home and Office Furnishings, Housewares		8.95	%	3M L+525		9,975		9,840		9,755
Wildcat Buyerco, Inc.	2/27/2026	Electronics		9.45	%	SOFR+575		11,506		11,420		11,110
Zips Car Wash, LLC	3/1/2024	Business Services		10.24	%	3M L+725		19,998		19,673		19,498

Total First Lien Secured Debt										738,219		730,108
Total Investments - 864.4%
Cash and Cash Equivalents - 50.9%
BlackRock Federal FD Institutional 30										42,966		42,966
Total Cash and Cash Equivalents										42,966		42,966
Total Investments and Cash Equivalents - 915.3%									$	781,185	$	773,074
Liabilities in Excess of Other Assets — (815.3)%												(688,612	)
Members' Equity—100.0%											$	84,462

(1)

(2)

Valued based on PSLF’s accounting policy.

Below are the consolidated statements of assets and liabilities for PSLF,($ in thousands):


	March 31, 2023
	(Unaudited)		September 30, 2022
Assets
Investments at fair value (cost—$761,289 and $738,219, respectively)	$	747,561	$	730,108
Cash and cash equivalents (cost—$41,361 and $42,966, respectively)		41,361		42,966
Receivable for investments sold		—		3,870
Interest receivable		2,997		2,970
Prepaid expenses and other assets		1,089		1,373
Total assets		793,008		781,287
Liabilities
Credit facility payable		284,600		257,600
2034 Asset-backed debt, net (par—$246,000)		244,089		243,896
Notes payable to members		157,605		145,472
Payable for investments purchased		—		37,658
Interest payable on credit facility and asset backed debt		8,019		4,676
Distribution payable to Members		6,500		4,000
Interest payable on notes to members		3,369		2,703
Accrued expenses		604		820
Total liabilities		704,786		696,825
Commitments and contingencies (1)
Members' equity		88,222		84,462
Total liabilities and members' equity	$	793,008	$	781,287

(1)

As of March 31, 2023 and September 30, 2022, PSLF had unfunded commitments to fund investments of investments of $0.1 million and $0.1 million, respectively.

Below are the consolidated statements of operations for PSLF, ($ in thousands):


	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Investment income:
Interest	$	21,223		$	7,698		$	40,068		$	15,268
Other income		751			39			848			142
Total investment income		21,974			7,737			40,916			15,410
Expenses:
Interest expense on credit facility and asset-backed debt		8,874			2,046			16,689			3,654
Interest expense on notes to members		5,003			2,430			9,726			4,869
Administrative services expenses		493			293			1,220			586
General and administrative expenses		177			112			291			224
Total expenses		14,547			4,881			27,926			9,333
Net investment income		7,427			2,856			12,990			6,077
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on investments		54			387			21			386
Net change in unrealized appreciation (depreciation) on investments		(1,695	)		(1,233	)		(5,617	)		(727	)
Net realized and unrealized gain (loss) from investments		(1,641	)		(846	)		(5,596	)		(341	)
Net increase (decrease) in members' equity resulting from operations	$	5,786		$	2,010		$	7,394		$	5,736

(*) No management or incentive fees are payable by PSLF.

Distributions

In order to be treated as a RIC for federal income tax purposes and to not be subject to corporate-level tax on undistributed income or gains, we are required, under Subchapter M of the Code, to annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to any deduction for dividends paid.

Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, contingent on our ability to be subject to tax as a RIC, in order to provide us with additional liquidity.

During the three and six months ended March 31, 2023, we declared distributions of $0.185 and $0.35 per share, for total distributions of $12.1 million and $22.8 million, respectively. For the same periods in the prior year, we declared distributions of $0.14 and $0.26 per share, for total distributions of $9.4 million and $17.4 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

We intend to continue to make quarterly distributions to our stockholders. Our quarterly distributions, if any, are determined by our board of directors.

We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage ratio for borrowings applicable to us as a BDC under the 1940 Act and/or due to provisions in future credit facilities. If we do not distribute at least a certain percentage of our income annually, we could suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions at a particular level.

Recent Accounting Pronouncements

Share Repurchase Program

Recent Developments

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. As of March 31, 2023, our debt portfolio consisted of 96% variable-rate investments and 4% fixed rate investments. The variable-rate loans are usually based on a SOFR (or an alternative risk-free floating interest rate index) rate and typically have durations of three months after which they reset to current market interest rates. Variable-rate investments subject to a floor generally reset by reference to the current market index after one to nine months only if the index exceeds the floor. In regards to variable-rate instruments with a floor, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. In contrast, our cost of funds, to the extent it is not fixed, will fluctuate with changes in interest rates since it has no floor.

Assuming that the most recent Consolidated Statements of Assets and Liabilities was to remain constant, and no actions were taken to alter the interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:


Change in Interest Rates	Change in Interest Income, Net of Interest Expense (in thousands)			Change in Interest Income, Net of Interest Expense Per Share
Down 1%	$	(5,196	)	$	(0.08	)
Up 1%		5,196			0.08
Up 2%		10,391			0.16
Up 3%		15,587			0.24
Up 4%		20,808			0.32

Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that could affect net increase in net assets resulting from operations, or net investment income. Accordingly, no assurances can be given that actual results would not differ materially from those shown above.

Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds as well as our level of leverage. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income or net assets.

We may hedge against interest rate and foreign currency fluctuations by using standard hedging instruments such as futures, options and forward contracts or our Truist Credit Facility subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates and foreign currencies, they may also limit our ability to participate in benefits of lower interest rates or higher exchange rates with respect to our portfolio of investments with fixed interest rates or investments denominated in foreign currencies. During the periods covered by this Report, we did not engage in interest rate hedging activities or foreign currency derivatives hedging activities.

Item 4. Controls and Procedures

As of the period covered by this Report, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). As disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, a material weakness was previously identified in connection with our internal control over financial reporting relating to procedures ensuring the timely transmission of portfolio company financial information to our independent valuation service providers. We have taken steps to remediate this material weakness, which steps have included (i) enhancing existing controls to ensure the timely transmission of all relevant portfolio company financial information to our independent service providers and (ii) enhancing policies and procedures to demonstrate a commitment to improving our overall control environment.

Taking the above efforts into consideration, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures for the quarter ended March 31, 2023 were effective and provided reasonable assurance that information required to be disclosed in our periodic filings with the SEC 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. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

Other than disclosed in this Item 4, there have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None of us, our Investment Adviser or our Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Investment Adviser or Administrator. From time to time, we, our Investment Adviser or Administrator may be a party to certain legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, you should consider carefully the factors discussed below, as well as in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 filed on November 17, 2022 which could materially affect our business, financial condition and/or operating results. The risks described below, as well as in our Annual Report on Form 10-K, are not the only risks facing PennantPark Investment. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

We, the Adviser, and our portfolio companies may maintain cash balances at financial institutions that exceed federally insured limits and may otherwise be materially affected by adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties.

Our cash and our Adviser’s cash is held in accounts at U.S. banking institutions that we believe are of high quality. Cash held by us, our Adviser and by our portfolio companies in non-interest-bearing and interest-bearing operating accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we, our Adviser, or our portfolio companies could lose all or a portion of those amounts held in excess of such insurance limitations. In addition, actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems, which could adversely affect our, our Adviser’s and our portfolio companies’ business, financial condition, results of operations, or prospects.

Although we and our Adviser assess our and our portfolio companies’ banking relationships as we believe necessary or appropriate, our and our portfolio companies’ access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our respective current and projected future business operations could be significantly impaired by factors that affect us, our Adviser or our portfolio companies, the financial institutions with which we, our Adviser or our portfolio companies have arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we, our Adviser or our portfolio companies have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us, our Adviser, or our portfolio companies to acquire financing on acceptable terms or at all.

Legislation enacted in 2018 allows us to incur additional leverage.

A BDC has historically been able to issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that its asset coverage, as defined in Section 61(a)(2) of the 1940 Act, equals at least 200% after such incurrence or issuance. In March 2018, the Consolidated Appropriations Act of 2018 (which includes the SBCAA) was enacted which amended the 1940 Act to decrease this percentage from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity) for a BDC that has received either stockholder approval or approval of a “required majority” (as defined in Section 57(o) of the 1940 Act) of its board of directors of the application of such lower asset coverage ratio to the BDC. On February 5, 2019, our stockholders approved such reduction, as approved by our board of directors on November 13, 2018. As of February 5, 2019, we are able to incur additional indebtedness so long as we comply with the applicable disclosure requirements, which may increase the risk of investing in us. Under the 200% minimum asset coverage ratio, we were permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity and, under the 150% minimum asset coverage ratio, we are permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a)(2) of the 1940 Act permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1-to-1 to a maximum of 2-to-1. In addition, since our base management fee is determined and payable based upon our average adjusted gross assets, which includes any borrowings for investment purposes, our base management fee expense may increase if we incur additional leverage. Effective February 5, 2019, base management fees were reduced from 1.50% to 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter-end.

Because we intend to distribute substantially all of our income to our stockholders to maintain our ability to be subject to tax as a RIC, we may need to raise additional capital to finance our growth. If funds are not available to us, we may need to curtail new investments, and our common stock value could decline.

In connection with satisfying the requirements to be subject to tax as a RIC for federal income tax purposes, we intend to distribute to our stockholders substantially all of our investment company taxable income and net capital gains each taxable year. However, we may retain all or a portion of our net capital gains and incur applicable income taxes with respect thereto and elect to treat such retained net capital gains as deemed dividend distributions to our stockholders.

As noted above, on November 13, 2018 and February 5, 2019, our board of directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act), and our stockholders, respectively, approved a reduction of our asset coverage ratio from 200% to 150%. As a result, as of February 6, 2019, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity). If we incur additional indebtedness under this provision, the risk of investing in us will increase. If the value of our assets declines, we may be unable to satisfy this asset coverage test. If that happens, we may be required to sell a portion of our investments or sell additional common stock and, depending on the nature of our leverage, to repay a portion of our indebtedness at a time when such sales and repayments may be disadvantageous. In addition, the issuance of additional securities could dilute the percentage ownership of our current stockholders in us.

We are partially dependent on our SBIC Fund for cash distributions to enable us to meet the distribution requirements in order to permit us to be subject to tax as a RIC. In this regard, our SBIC Fund is limited by the SBA regulations governing SBICs from making certain distributions to us that may be necessary to satisfy the requirements to

be subject to tax as a RIC. In such a case, we would need to request a waiver of the SBA’s restrictions for our SBIC Fund to make certain distributions to enable us to be subject to tax as a RIC. We cannot assure you that the SBA will grant such waiver, and if our SBIC Fund is unable to obtain a waiver, compliance with the SBA regulations may cause us to incur a corporate-level income tax.

If we incur additional debt, it could increase the risk of investing in our shares.

We have indebtedness outstanding pursuant to the Truist Credit Facility, 2024 Notes, 2026 Notes, 2026 Notes-2 and SBA debentures and expect in the future to borrow additional amounts under the Truist Credit Facility or other debt securities, subject to market availability, and, may increase the size of the Truist Credit Facility. We cannot assure you that our leverage will remain at current levels. The amount of leverage that we employ will depend upon our assessment of the market and other factors at the time of any proposed borrowing. Lenders have fixed dollar claims on our assets that are superior to the claims of our common stockholders or preferred stockholders, if any, and we have granted a security interest in our assets, excluding those of SBIC II, in connection with borrowings under the Truist Credit Facility. In the case of a liquidation event, those lenders would receive proceeds before our stockholders. Additionally, the SBA, as a lender and an administrative agent, has a superior claim over the assets of SBIC II in relation to our other creditors. Any future debt issuance will increase our leverage and may be subordinate to the Truist Credit Facility and SBA debentures. In addition, borrowings or debt issuances and SBA debentures, also known as leverage, magnify the potential for loss or gain on amounts invested and, therefore, increase the risks associated with investing in our securities. Leverage is generally considered a speculative investment technique. If the value of our assets decreases, then leveraging would cause the net asset value attributable to our common stock to decline more than it otherwise would have had we not utilized leverage. Similarly, any decrease in our revenue would cause our net income to decline more than it would have had we not borrowed funds and could negatively affect our ability to make distributions on our common or preferred stock. Our ability to service any debt that we incur depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures.

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

No unregistered securities were sold in the quarter ended March 31, 2023.

Issuer Purchases of Equity Securities

Repurchases of our common stock under our share repurchase program are as follows:


Period	Total Number of Shares Purchased		Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
January 1, 2022 through March 31, 2022		913,454	$	7.72		913,454	$	17,944
April 1, 2022 through June 30, 2022		717,709	$	6.91		1,631,163	$	12,986
July 1, 2022 through September 30, 2022		189,442	$	6.52		1,820,605	$	11,751
October 1, 2022 through December 31, 2022		—	$	-		1,820,605	$	11,751
January 1, 2023 through March 31, 2023		—	$	-		1,820,605	$	-
Total investments		1,820,605	$	7.28

—————————


(1)	On February 9, 2022, we announced a share repurchase program which allows us to repurchase up to $25.0 million of our outstanding commons stock. The program expired on March 31, 2023 and we purchased $1.8 million shares of our common stock in open market transaction while the program was in effect for an aggregate cost (including transaction costs) of $13.2 million.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Unless specifically indicated otherwise, the following exhibits are incorporated by reference to exhibits previously filed with the SEC:


3.1	Articles of Incorporation (Incorporated by reference to Exhibit 99(a) to the Registrant’s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2/A (File No. 333-140092), filed on April 5, 2007).

3.2	Second Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 814-00736), filed on May 11, 2020).

4.1	Form of Share Certificate (Incorporated by reference to Exhibit 99(d)(1) to the Registrant’s Registration Statement on Form N-2 (File No. 333-150033), filed on April 2, 2008).

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1	Privacy Policy of the Registrant (Incorporated by reference to Exhibit 99.1 to the Registrant’s Annual Report on Form 10-K (File No. 814-00736), filed on November 16, 2011).

101.INS*	Inline XBRL Instance Document

101.SCH*	Inline XBRL Taxonomy Extension Schema

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


	PENNANTPARK INVESTMENT CORPORATION

Date: May 11, 2023	By:	/s/ Arthur H. Penn
		Arthur H. Penn
		Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

Date: May 11, 2023	By:	/s/ Richard T. Allorto, Jr.
		Richard T. Allorto, Jr.
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

EX-31

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Arthur H. Penn, Chief Executive Officer of PennantPark Investment Corporation, certify that:

1. I have reviewed this Report on Form 10-Q of PennantPark Investment Corporation;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 11, 2023


/s/ Arthur H. Penn
Name:	Arthur H. Penn
Title:	Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Richard T. Allorto, Jr., Chief Financial Officer of PennantPark Investment Corporation, certify that:

1. I have reviewed this Report on Form 10-Q of PennantPark Investment Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 11, 2023


/s/ Richard T. Allorto, Jr.
Name:	Richard T. Allorto, Jr.
Title:	Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

In connection with this Report on Form 10-Q for the three and six months ended March 31, 2023 (the “Report”) of PennantPark Investment Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Arthur H. Penn, Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


/s/ Arthur H. Penn
Name:		Arthur H. Penn
Title:		Chief Executive Officer
Date:		May 11, 2023

EX-32

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

In connection with this Report on Form 10-Q for the three and six months ended March 31, 2023 (the “Report”) of PennantPark Investment Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Richard T. Allorto, Jr., Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


/s/ Richard T. Allorto, Jr.
Name:		Richard T. Allorto, Jr.
Title:		Chief Financial Officer
Date:		May 11, 2023