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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 June 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-39958
TRINITY CAPITAL INC.
(Exact name of registrant as specified in its charter)
Maryland
35-2670395
(State or other jurisdiction of incorporation ororganization)
(IRS Employer Identification No.)
1 N. 1st StreetSuite 302Phoenix, Arizona
85004
(Address of principal executive offices)
(Zip Code)
(480) 374‑5350
(Registrant’s telephone number, including area code)
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
TRIN
Nasdaq Global Select Market
7.00% Notes Due 2025
TRINL
7.875% Notes Due 2029
TRINZ
TRINI
Securities registered pursuant to Section 12(g) of the Act: None
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 Act). Yes ☐ No ☒
As of August 6, 2024, the registrant had 53,370,609 shares of common stock ($0.001 par value per share) outstanding.
FORM 10‑Q FOR THE QUARTER ENDED JUNE 30, 2024
TABLE OF CONTENTS
PAGE NO.
PART I
FINANCIAL INFORMATION
3
Item 1.
Consolidated Financial Statements
Consolidated Statements of Assets and Liabilities as of June 30, 2024 (unaudited) and December 31, 2023
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)
4
Consolidated Statements of Changes in Net Assets for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)
5
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)
7
Consolidated Schedule of Investments as of June 30, 2024 (unaudited)
9
Consolidated Schedule of Investments as of December 31, 2023
35
Notes to Consolidated Financial Statements (unaudited)
60
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
100
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
117
Item 4.
Controls and Procedures
119
PART II
OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
121
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
SIGNATURES
123
PART I: FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Statements of Assets and Liabilities
(In thousands, except share and per share data)
June 30,
December 31,
2024
2023
(Unaudited)
ASSETS
Investments at fair value:
Control investments (cost of $33,055 and $43,807, respectively)
$
29,764
32,861
Affiliate investments (cost of $26,853 and $11,006, respectively)
29,109
11,335
Non-Control / Non-Affiliate investments (cost of $1,410,470 and $1,264,503, respectively)
1,365,942
1,230,984
Total investments (cost of $1,470,378 and $1,319,316, respectively)
1,424,815
1,275,180
Cash and cash equivalents
46,102
4,761
Interest receivable
13,976
11,206
Deferred credit facility costs
1,765
2,144
Other assets
18,769
17,691
Total assets
1,505,427
1,310,982
LIABILITIES
KeyBank Credit Facility
254,700
213,000
2025 Notes, net of $1,048 and $2,015, respectively, of unamortized deferred financing costs
151,452
180,485
August 2026 Notes, net of $1,238 and $1,526, respectively, of unamortized deferred financing costs
123,762
123,474
March 2029 Notes, net of $3,218 and $0, respectively, of unamortized deferred financing costs
111,782
—
December 2026 Notes, net of $915 and $1,102, respectively, of unamortized deferred financing costs
74,085
73,898
Convertible Notes, net of $924 and $1,243, respectively, of unamortized deferred financing costs and discount
49,076
48,757
Distribution payable
26,443
23,162
Security deposits
11,169
12,287
Accounts payable, accrued expenses and other liabilities
22,919
24,760
Total liabilities
825,388
699,823
Commitments and contingencies (Note 6)
NET ASSETS
Common stock, $0.001 par value per share (200,000,000 authorized, 51,849,429 and 46,323,712 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)
52
46
Paid-in capital in excess of par
708,529
633,740
Distributable earnings/(accumulated deficit)
(28,542
)
(22,627
Total net assets
680,039
611,159
Total liabilities and net assets
NET ASSET VALUE PER SHARE
13.12
13.19
See accompanying notes to unaudited consolidated financial statements.
Consolidated Statements of Operations
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
INVESTMENT INCOME:
Interest and dividend income:
Control investments
783
1,083
1,635
2,199
Affiliate investments
1,256
84
859
118
Non-Control / Non-Affiliate investments
49,798
43,362
98,735
82,743
Total interest and dividend income
51,837
44,529
101,229
85,060
Fee and other income:
835
674
1,702
1,127
1,969
842
2,163
1,396
Total fee and other income
2,804
1,516
3,865
2,523
Total investment income
54,641
46,045
105,094
87,583
EXPENSES:
Interest expense and other debt financing costs
13,885
11,985
26,029
23,067
Compensation and benefits
9,944
8,350
19,808
15,967
Professional fees
1,338
1,411
2,058
2,828
General and administrative
2,092
1,549
4,021
3,044
Total expenses
27,259
23,295
51,916
44,906
NET INVESTMENT INCOME/(LOSS) BEFORE TAXES
27,382
22,750
53,178
42,677
Excise tax expense
639
653
1,278
1,251
NET INVESTMENT INCOME
26,743
22,097
51,900
41,426
NET REALIZED GAIN/(LOSS) FROM INVESTMENTS:
(3,916
(26,251
(2,572
(360
(1,220
(725
Net realized gain/(loss) from investments
(6,488
(26,611
(5,136
(26,976
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) FROM INVESTMENTS:
5,691
(1,188
7,655
(780
1,673
26,152
1,926
27,128
3,209
(568
(11,008
1,568
Net change in unrealized appreciation/(depreciation) from investments
10,573
24,396
(1,427
27,916
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
30,828
19,882
45,337
42,366
NET INVESTMENT INCOME PER SHARE - BASIC
0.53
0.61
1.07
1.17
NET INVESTMENT INCOME PER SHARE - DILUTED
0.51
0.58
1.03
1.10
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC
0.55
0.94
1.19
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - DILUTED
0.59
0.52
0.90
1.13
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
50,161,680
36,024,566
48,455,033
35,551,947
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
54,064,395
39,691,361
52,357,748
39,218,742
Consolidated Statements of Changes in Net Assets
Three Months Ended June 30, 2024:
Distributable
Paid In Capital
Earnings /
Common Stock
in Excess of
(Accumulated
Total
Shares
Par Value
Deficit)
Net Assets
Balance as of March 31, 2024
48,643,194
49
659,194
(32,927
626,316
Issuance of common stock pursuant to distribution reinvestment plan
22,578
319
Stock-based compensation
2,892
Issuance of restricted stock awards
13,340
Issuance of common stock, net of issuance costs
3,224,708
46,930
46,933
Retired and forfeited shares of restricted stock
(54,391
(806
Distributions to stockholders
(26,443
Net increase/(decrease) in net assets resulting from operations
Balance as of June 30, 2024
51,849,429
Three Months Ended June 30, 2023:
Balance as of March 31, 2023
35,925,764
36
484,951
(15,317
469,670
43,655
552
2,310
15,196
719,329
1
9,539
9,540
(39,080
(527
(19,432
Balance as of June 30, 2023
36,664,864
37
496,825
(14,867
481,995
Six Months Ended June 30, 2024:
Balance as of December 31, 2023
46,323,712
46,034
658
5,343
766,391
(1
4,877,340
71,169
71,174
(164,048
(2,380
(51,252
Six Months Ended June 30, 2023:
Balance as of December 31, 2022
34,960,672
480,532
(20,918
459,649
97,840
1,215
4,075
798,296
1,022,309
13,587
13,588
Stock repurchase and cancellation of shares
(91,691
(1,003
(122,562
(1,580
(36,315
6
Consolidated Statements of Cash Flows
(In thousands)
Cash flows provided by/(used in) operating activities:
Adjustments to reconcile net increase/(decrease) in net assets resulting from operation to net cash provided by/(used in) operating activities:
Purchase of investments, net of deferred fees
(469,567
(223,831
Proceeds from sales and paydowns of investments
328,878
186,265
Net change in unrealized (appreciation)/depreciation from investments
1,427
(27,916
Net realized (gain)/loss from investments
5,136
26,976
Accretion of original issue discounts and end of term payments on investments
(15,509
(15,105
Amortization of deferred financing costs
2,311
Change in operating assets and liabilities
(Increase)/Decrease in interest receivable
(2,770
(2,167
(Increase)/Decrease in other assets
(919
(4,120
Increase/(Decrease) in security deposits
(1,118
(114
Increase/(Decrease) in accounts payable, accrued expenses and other liabilities
(1,841
(3,955
Net cash provided by/(used in) operating activities
(103,292
(15,382
Cash flows provided by/(used in) investing activities:
Disposal/(Acquisition) of fixed assets
(159
(1,470
Net cash provided by/(used in) investing activities
Cash flows provided by/(used in) financing activities
Stock repurchase and cancellation of shares, net of costs
Retirement of employee shares
Cash distributions paid
(47,312
(36,996
Issuance of debt, net of issuance costs
111,610
Repayment of debt
(30,000
Borrowings under Credit Facilities
340,000
147,000
Repayments under Credit Facilities
(298,300
(102,500
Net cash provided by/(used in) financing activities
144,792
18,508
Net increase/(decrease) in cash, cash equivalents and restricted cash
41,341
1,656
Cash, cash equivalents and restricted cash at beginning of period
10,612
Cash, cash equivalents and restricted cash at end of period
12,268
Supplemental and non-cash investing and financing activities:
Cash paid for interest
21,031
20,338
Income tax, including excise tax, paid
2,524
2,304
Non-cash settlement of investments
21
Accrued but unpaid distributions
19,432
Distributions reinvested
8
Consolidated Schedule of Investments
Portfolio Company (1)
Type of Investment (2)
Investment Date (3)
Maturity Date
Interest Rate (4)
Principal Amount (5)
Cost
Fair Value (6)
Footnotes
Debt Securities- United States
Artificial Intelligence & Automation
Ambient Photonics, Inc.
Secured Loan
July 28, 2022
July 1, 2025
Variable interest rate Prime + 6.0% or Floor rate 9.5%; EOT 4.0%
1,630
1,783
1,795
(8)(14)
November 17, 2022
May 1, 2025
1,736
1,897
1,766
December 20, 2022
June 1, 2025
300
324
305
Total Ambient Photonics, Inc.
3,666
4,004
3,866
Applied Digital Corporation
Equipment Financing
March 13, 2024
October 1, 2025
Fixed interest rate 19.0%; EOT 0.0%
6,405
6,402
6,504
(9)(10)(14)
March 25, 2024
March 1, 2026
9,336
9,332
9,480
(9)(10)(14)(19)
April 24, 2024
April 1, 2026
4,879
4,880
May 28, 2024
May 1, 2026
Fixed interest rate 16.0%; EOT 0.0%
3,597
3,596
(10)(14)
June 21, 2024
11,362
11,361
Total Applied Digital Corporation
35,579
35,571
35,821
Augmented Reality Concepts, Inc.
June 17, 2024
June 14, 2029
Variable interest rate SOFR 3 Month Term + 7.32%; EOT 0.0%
20,500
20,055
Cirrascale Cloud Services, LLC
June 27, 2024
September 1, 2026
Fixed interest rate 12.7%; EOT 4.0%
29,900
29,763
(14)
Rigetti & Co, Inc.
March 10, 2021
April 1, 2025
Variable interest rate Prime + 7.5% or Floor rate 11.0%; EOT 2.8%
4,524
4,824
4,825
(8)
May 18, 2021
3,578
3,768
3,765
November 10, 2021
December 1, 2025
4,527
4,662
4,649
January 27, 2022
February 1, 2026
3,549
3,653
3,644
Total Rigetti & Co, Inc.
16,178
16,907
16,883
Sub-total: Artificial Intelligence & Automation (7.1%)*
105,823
106,300
106,388
Biotechnology
Greenlight Biosciences Inc.
August 31, 2021
September 1, 2024
Fixed interest rate 22.6%; EOT 8.0%
74
146
212
Fixed interest rate 19.3%; EOT 8.0%
43
85
Total Greenlight Biosciences Inc.
231
335
Pendulum Therapeutics, Inc.
December 31, 2021
July 1, 2026
Variable interest rate Prime + 6.8% or Floor rate 10.0%; EOT 4.0%
4,292
4,454
4,417
February 28, 2022
4,581
4,743
4,712
March 30, 2022
4,722
4,884
4,856
May 6, 2022
5,000
5,162
5,139
June 17, 2022
February 1, 2024
1,405
879
893
Total Pendulum Therapeutics, Inc.
25,000
25,284
25,156
Taysha Gene Therapies, Inc.
November 13, 2023
December 1, 2028
Variable interest rate Prime + 4.5% or Floor rate 12.8%; EOT 5.0%
30,000
29,964
30,641
(8)(9)
Sub-total: Biotechnology (3.7%)*
55,117
55,479
56,132
Debt Securities- United States, Continued
Connectivity
Vertical Communications, Inc.
August 23, 2021
November 1, 2026
Variable interest rate Prime + 4.0% or Floor rate 11.0%; EOT 23.8%
12,600
15,387
(8)(14)(20)
Sub-total: Connectivity (1.0%)*
Consumer Products & Services
Eterneva, Inc.
November 24, 2021
Fixed interest rate 10.6%; EOT 11.5%
223
279
266
March 16, 2022
369
438
416
Fixed interest rate 16.2%; EOT 11.5%
1,092
1,166
Total Eterneva, Inc.
1,684
1,968
1,848
Gravie, Inc.
June 4, 2024
July 1, 2029
Variable interest rate Prime + 4.5% or Floor rate 13.0%; EOT 2.5%
20,000
19,451
Molekule, Inc.
June 19, 2020
December 31, 2024
Fixed interest rate 8.8%; EOT 10.0%
312
595
440
(14)(18)
September 29, 2020
Fixed interest rate 12.3%; EOT 10.0%
273
347
386
December 18, 2020
Fixed interest rate 11.9%; EOT 10.0%
473
584
668
August 25, 2021
Fixed interest rate 11.3%; EOT 10.0%
385
454
545
Total Molekule, Inc.
1,443
1,980
2,039
Ogee, Inc.
February 14, 2023
March 1, 2027
Variable interest rate Prime + 5.8% or Floor rate 12.0%; EOT 3.8%
5,017
5,011
September 29, 2023
4,974
5,047
Total Ogee, Inc.
10,000
9,991
10,058
Portofino Labs, Inc.
April 1, 2021
November 1, 2025
Variable interest rate Prime + 8.3% or Floor rate 11.5%; EOT 4.0%
1,522
1,513
Quip NYC, Inc.
March 9, 2021
Variable interest rate Prime + 8.0% or Floor rate 11.3%; EOT 3.0%
10,694
11,083
11,147
February 10, 2022
1,528
1,588
1,600
Total Quip NYC, Inc.
12,222
12,671
12,747
Rinse, Inc.
May 10, 2022
June 1, 2027
Variable interest rate Prime + 8.0% or Floor rate 11.3%; EOT 3.8%
4,449
4,517
4,566
September 22, 2023
October 1, 2028
4,000
3,961
4,050
Total Rinse, Inc.
8,449
8,478
8,616
SI Tickets, Inc.
May 11, 2022
Variable interest rate Prime + 8.3% or Floor rate 11.5%; EOT 3.0%
2,384
2,421
2,351
UnTuckIt, Inc.
January 16, 2020
September 1, 2025
Fixed interest rate 12.0%; EOT 4.5%
5,945
6,729
6,649
VitaCup, Inc.
June 23, 2021
January 1, 2026
Variable interest rate Prime + 7.5% or Floor rate 11.5%; EOT 5.0%
6,000
5,969
5,753
Whoop, Inc.
May 17, 2023
June 1, 2028
Variable interest rate Prime + 5.3% or Floor rate 13.0%; EOT 2.5%
22,739
22,407
22,730
(8)(9)(19)
March 1, 2024
April 1, 2029
9,739
9,126
9,214
Total Whoop, Inc.
32,478
31,533
31,944
Sub-total: Consumer Products & Services (6.8%)*
102,048
102,713
102,969
10
Diagnostics & Tools
Metabolon, Inc.
March 28, 2024
Variable interest rate Prime + 4.5% or Floor rate 11.9%; EOT 4.8%
42,500
41,586
41,622
Sub-total: Diagnostics & Tools (2.8%)*
Digital Assets Technology and Services
Cleanspark, Inc.
April 22, 2022
Fixed interest rate 10.3%; EOT 5.0%
6,147
7,063
6,955
(10)
Sub-total: Digital Assets Technology and Services (0.5%)*
Education Technology
Edblox, Inc.
March 19, 2024
Variable interest rate Prime + 4.5% or Floor rate 11.8%; EOT 2.5%
15,000
14,747
14,525
(8)(9)(14)
Medical Sales Training Holding Company
March 18, 2021
Variable interest rate Prime + 8.8% or Floor rate 12.0%; EOT 6.3%
5,175
5,492
5,328
July 21, 2021
August 1, 2025
1,825
1,928
1,842
Total Medical Sales Training Holding Company
7,000
7,420
7,170
Yellowbrick Learning, Inc.
February 1, 2021
Fixed interest rate 2.0%; EOT 5.0%
7,500
7,875
6,133
August 10, 2021
2,500
2,625
2,047
Total Yellowbrick Learning, Inc.
10,500
8,180
Sub-total: Education Technology (2.0%)*
32,000
32,667
29,875
11
Finance and Insurance
Bestow, Inc.
April 25, 2022
May 1, 2027
Variable interest rate Prime + 6.5% or Floor rate 10.0%; EOT 1.5%
24,446
24,632
24,573
May 12, 2022
15,105
15,156
Total Bestow, Inc.
39,446
39,737
39,729
Busbot, Inc.
April 1, 2024
October 1, 2026
Variable interest rate SOFR 30 Day Forward + 11.5% or Floor rate 13.5%; EOT 0.0%
6,380
6,184
(8)(10)(12)(14)
Cherry Technologies, Inc.
March 29, 2024
Variable interest rate PRIME + 4.5% or Floor rate 12.0%+PIK Fixed Interest Rate 1.0%; EOT 2.0%
14,507
14,370
14,748
(8)(9)(14)(15)(19)
Empower Financial, Inc.
October 13, 2023
May 1, 2028
Variable interest rate Prime + 4.8% or Floor rate 11.5%; EOT 3.8%
11,622
11,418
11,759
January 5, 2024
2,902
2,773
2,872
February 8, 2024
4,353
4,156
4,305
April 9, 2024
4,348
4,002
May 15, 2024
14,495
14,511
(8)(19)
Total Empower Financial, Inc.
37,720
36,860
37,449
Eqis Capital Management, Inc.
June 15, 2022
Variable interest rate Prime + 7.5% or Floor rate 10.8%; EOT 3.0%
6,809
7,019
6,914
Kafene, Inc.
February 1, 2029
Variable interest rate Prime + 4.0% or Floor rate 12.0%; EOT 1.0%
12,500
12,359
12,483
Openly Holdings Corp.
November 18, 2022
December 1, 2027
Variable interest rate Prime + 6.3% or Floor rate 10.5%; EOT 2.8%
2,833
2,858
2,869
January 31, 2023
5,669
5,711
5,782
June 22, 2023
14,189
14,262
14,634
Total Openly Holdings Corp.
22,691
22,831
23,285
Parafin SPV 2, LLC
February 22, 2024
December 21, 2026
Variable interest rate SOFR 30 Day Forward + 10.8% or Floor rate 12.8%; EOT 0.0%
13,909
Slope Tech, Inc.
October 5, 2022
March 14, 2025
Variable interest rate SOFR 30 Day Forward + 11.8% or Floor rate 11.8%; EOT 0.0%
830
710
ZenDrive, Inc.
July 16, 2021
August 1, 2026
Variable interest rate Prime + 7.0% or Floor rate 10.3%; EOT 3.0%
11,502
11,812
11,952
Sub-total: Finance and Insurance (11.1%)*
166,294
165,470
167,042
12
Food and Agriculture Technologies
Athletic Brewing Company, LLC
December 7, 2021
Fixed interest rate 11.1%; EOT 7.0%
19,854
20,714
20,230
Fixed interest rate 11.2%; EOT 7.0%
4,960
5,050
December 15, 2023
January 1, 2028
Fixed interest rate 11.2%; EOT 8.0%
5,061
5,152
5,393
(9)(19)
Total Athletic Brewing Company, LLC
31,028
30,673
Bowery Farming, Inc.
September 10, 2021
September 10, 2026
Variable interest rate SOFR 30 Day Forward + 10.0% or Floor rate 1.0%; EOT 0.0%
7,652
6,938
2,735
(8)(14)(18)
Daring Foods, Inc.
Fixed interest rate 10.0%; EOT 7.5%
39
83
November 1, 2021
December 1, 2024
Fixed interest rate 9.4%; EOT 7.5%
166
244
241
March 8, 2022
Fixed interest rate 9.5%; EOT 7.5%
630
789
777
April 29, 2022
Fixed interest rate 10.2%; EOT 7.5%
308
376
370
July 6, 2022
Fixed interest rate 10.9%; EOT 7.5%
179
208
206
August 25, 2022
Fixed interest rate 12.1%; EOT 7.5%
453
520
515
Total Daring Foods, Inc.
1,775
2,221
2,192
DrinkPak, LLC
February 17, 2023
Fixed interest rate 12.9%; EOT 7.0%
9,170
9,720
9,711
Emergy, Inc.
December 15, 2021
Fixed interest rate 11.2%; EOT 11.5%
4,148
4,956
4,147
December 13, 2022
July 1, 2027
Fixed interest rate 8.8%; EOT 11.5%
7,204
7,988
6,681
(9)
Total Emergy, Inc.
11,352
12,944
10,828
Intelligent Brands, Inc. (f.k.a. Sun Basket, Inc.)
December 31, 2020
September 30, 2024
Fixed interest rate 20.0%; EOT 5.8%
8,881
9,947
8,522
The Fynder Group, Inc.
March 31, 2022
Fixed interest rate 9.3%; EOT 10.0%
1,169
1,387
1,351
Sub-total: Food and Agriculture Technologies (4.4%)*
69,874
74,185
66,012
13
Green Technology
Bolb, Inc.
October 12, 2021
November 1, 2024
Fixed interest rate 10.3%; EOT 6.0%
216
318
315
Commonwealth Fusion Systems, LLC
October 1, 2024
Fixed interest rate 9.5%; EOT 8.5%
221
420
414
October 20, 2021
Fixed interest rate 9.7%; EOT 8.5%
142
140
June 16, 2023
July 1, 2030
Fixed interest rate 13.0%; EOT 10.0%
3,659
3,720
3,868
Fixed interest rate 13.2%; EOT 10.0%
22,086
21,873
Total Commonwealth Fusion Systems, LLC
26,051
26,155
26,295
Crusoe Energy Systems LLC
March 1, 2029
Fixed interest rate 12.7%; EOT 0.0%
8,794
8,711
8,768
(9)(14)(19)
Dandelion Energy, Inc.
June 25, 2024
Fixed interest rate 15.9%; EOT 0.0%
1,826
1,807
Electric Hydrogen Co.
September 12, 2022
Fixed interest rate 9.0%; EOT 10.0%
1,091
1,243
1,224
December 22, 2023
January 1, 2029
Fixed interest rate 12.5%; EOT 15.0%
4,273
4,370
4,480
Fixed interest rate 12.6%; EOT 15.0%
7,602
7,569
Total Electric Hydrogen Co.
12,966
13,182
13,273
Hi-Power, LLC
September 30, 2021
Fixed interest rate 12.4%; EOT 1.0%
1,748
1,813
1,835
September 30, 2022
Fixed interest rate 14.7%; EOT 1.0%
2,348
2,367
2,393
Total Hi-Power, LLC
4,096
4,180
4,228
SeaOn Global, LLC
June 16, 2022
Fixed interest rate 9.3%; EOT 11.0%
3,672
4,217
4,029
August 17, 2022
1,901
2,147
2,066
Total SeaOn Global, LLC
5,573
6,364
6,095
Edeniq, Inc.
November 30, 2021
Fixed interest rate 11.0%; EOT 5.7%
1,951
1,816
2,172
(14)(20)
Footprint International Holding, Inc.
February 18, 2022
Variable interest rate Prime + 7.3% or Floor rate 10.5%; EOT 3.5%
18,668
18,162
17,759
April 20, 2022
18,114
17,708
Total Footprint International Holding, Inc.
37,336
36,276
35,467
Mainspring Energy, Inc.
March 18, 2022
Fixed interest rate 11.0%; EOT 3.8%
24,158
24,842
24,271
RTS Holding, Inc.
January 1, 2027
Variable interest rate Prime + 7.3% or Floor rate 10.5%+PIK Interest Rate 4.3%; EOT 3.0%
13,800
15,212
15,006
(8)(9)(15)
October 21, 2022
November 1, 2027
Variable interest rate Prime + 7.3% or Floor rate 13.5%; EOT 3.0%
7,200
7,242
7,145
January 19, 2024
Variable interest rate Prime + 4.3% or Floor rate 12.5%; EOT 3.0%
5,624
5,715
Total RTS Holding, Inc.
27,000
28,078
27,866
Sub-total: Green Technology (10.0%)*
149,967
151,729
150,557
14
Healthcare Technology
Emerald Cloud Lab, Inc.
July 13, 2021
August 1, 2024
Fixed interest rate 9.7%; EOT 7.0%
337
1,077
1,069
Dentologie Enterprises, Inc.
October 14, 2022
October 1, 2027
Variable interest rate Prime + 6.9% or Floor rate 10.9%; EOT 3.0%
3,000
3,026
3,032
4,200
4,151
4,329
Total Dentologie Enterprises, Inc.
7,177
7,361
Lark Technologies, Inc.
September 30, 2020
Variable interest rate Prime + 8.3% or Floor rate 11.5% or ceiling rate of 13.5%; EOT 4.0%
1,593
1,776
1,754
June 30, 2021
2,888
3,022
2,958
July 7, 2023
4,989
5,060
Total Lark Technologies, Inc.
9,481
9,787
9,772
Moxe Health Corporation
December 29, 2023
Variable interest rate Prime + 5.5% or Floor rate 13.0%; EOT 3.8%
12,411
12,529
RXAnte, Inc.
November 21, 2022
Variable interest rate Prime + 4.48% or Floor rate 9.98%+PIK Fixed Interest Rate 1.5%; EOT 3.5%
8,452
8,484
8,649
(8)(9)(15)(19)
April 14, 2023
2,810
2,786
2,936
October 19, 2023
2,782
2,749
2,873
Total RXAnte, Inc.
14,044
14,019
14,458
TMRW Life Sciences, Inc.
Variable interest rate Prime + 5.0% or Floor rate 8.8%; EOT 4.0%
5,102
4,799
March 3, 2023
15,206
15,192
December 8, 2023
10,036
10,292
Total TMRW Life Sciences, Inc.
30,344
30,283
WorkWell Prevention & Care Inc.
December 31, 2022
Variable interest rate Prime + 5.0% or Floor rate 6.0%; EOT 0.0%
500
Sub-total: Healthcare Technology (5.0%)*
74,062
75,315
75,972
15
Human Resource Technology
Nomad Health, Inc.
March 29, 2022
December 1, 2026
Variable interest rate Prime + 5.5% or Floor rate 9.3%; EOT 4.0%
30,275
30,975
30,157
Sub-total: Human Resource Technology (2.0%)*
Industrials
3DEO, Inc.
February 23, 2022
Fixed interest rate 9.3%; EOT 9.0%
1,318
1,628
1,613
April 12, 2022
Fixed interest rate 2.3%; EOT 9.0%
716
850
844
Total 3DEO, Inc.
2,034
2,478
2,457
Formlogic Corporation
December 28, 2023
Fixed interest rate 12.1%; EOT 1.5%
4,357
4,354
4,392
April 25, 2024
377
374
Total Formlogic Corporation
4,734
4,728
4,766
Sub-total: Industrials (0.5%)*
6,768
7,206
7,223
Marketing, Media, and Entertainment
Drone Racing League, Inc.
October 17, 2022
April 17, 2027
Variable interest rate Prime + 7.5% or Floor rate 11.0%; EOT 2.5%
10,203
10,196
10,453
(8)(14)(15)
Grabit Interactive Media, Inc.
April 8, 2022
Variable interest rate Prime + 7.5% or Floor rate 10.8%; EOT 2.5%
3,784
3,842
3,862
Incontext Solutions, Inc.
Fixed interest rate 11.8%; EOT 11.4%
2,248
3,397
2,977
PebblePost, Inc.
May 7, 2021
June 1, 2026
Variable interest rate Prime + 8.8% or Floor rate 11.5%; EOT 3.8%
9,576
9,935
9,915
Vox Media Holdings, Inc.
October 18, 2022
Variable interest rate Prime + 6.3% or Floor rate 11.8%; EOT 2.5%
10,506
10,547
10,950
December 29, 2022
5,251
5,260
5,467
Total Vox Media Holdings, Inc.
15,757
15,807
16,417
Sub-total: Marketing, Media, and Entertainment (2.9%)*
41,568
43,177
43,624
16
Medical Devices
Apiject Holdings, Inc.
June 24, 2024
July 1, 2028
Fixed interest rate 12.6%; EOT 7.5%
24,349
24,348
Convergent Dental, Inc.
April 21, 2023
Variable interest rate Prime + 5.8% or Floor rate 13.5%; EOT 4.0%
12,000
11,890
12,030
February 29, 2024
Variable interest rate Prime + 5.8% or Floor rate 13.5%; EOT 5.5%
5,893
6,051
Total Convergent Dental, Inc.
18,000
17,783
18,081
Neurolens, Inc.
Variable interest rate Prime + 3.0% or Floor rate 11.0%; EOT 3.0%
19,920
20,352
Neuros Medical, Inc.
August 10, 2023
September 1, 2027
Variable interest rate Prime + 6.0% or Floor rate 14.3%; EOT 4.5%
6,180
Restor3d, Inc.
July 4, 2028
Variable interest rate Prime + 4.8% or Floor rate 12.3%; EOT 3.3%
14,797
Revelle Aesthetics, Inc.
May 30, 2023
May 30, 2028
14,986
15,136
May 10, 2024
May 30, 2029
9,859
Total Revelle Aesthetics, Inc.
24,845
24,995
Shoulder Innovations, Inc.
August 7, 2023
September 1, 2028
Variable interest rate Prime + 3.5% or Floor rate 11.5%; EOT 3.0%
11,250
11,189
11,312
Velentium, Inc.
May 24, 2024
June 1, 2029
Variable interest rate Prime + 5.0% or Floor rate 12.5%; EOT 4.0%
9,765
Sub-total: Medical Devices (8.6%)*
130,250
128,617
129,830
17
Multi-Sector Holdings
Senior Credit Corp 2022 LLC
January 30, 2023
December 5, 2028
Fixed interest rate 8.5%; EOT 0.0%
(10)(14)(20)
Sub-total: Multi-Sector Holdings (0.8%)*
Real Estate Technology
BlueGround US, Inc.
June 6, 2022
Fixed interest rate 9.6%; EOT 8.0%
2,086
2,340
2,325
July 26, 2022
Fixed interest rate 11.1%; EOT 8.0%
3,041
3,379
3,380
August 12, 2022
Fixed interest rate 11.6%; EOT 8.0%
2,467
2,721
2,739
September 26, 2022
Fixed interest rate 11.9%; EOT 8.0%
3,065
3,356
3,402
October 25, 2022
Fixed interest rate 12.6%; EOT 8.0%
2,610
2,839
2,881
November 30, 2022
Fixed interest rate 12.7%; EOT 8.0%
1,749
1,891
1,936
Total BlueGround US, Inc.
15,018
16,526
16,663
BoardRE, Inc.
October 15, 2021
Variable interest rate Prime + 8.3% or Floor rate 11.5%; EOT 4.5%
5,230
4,671
Knockaway, Inc.
Variable interest rate Prime + 6.8% or Floor rate 15.3%; EOT 0.0%
23,644
21,576
20,209
December 6, 2023
Variable interest rate SOFR 30 Day Forward + 9.0% or Floor rate 11.8%; EOT 0.0%
1,742
3,917
(8)(12)(14)
Total Knockaway, Inc.
25,386
25,493
24,126
Maxwell Financial Labs, Inc.
Variable interest rate Prime + 6.0% or Floor rate 10.0%; EOT 5.0%
15,270
14,503
Orchard Technologies, Inc.
January 1, 2024
Variable interest rate Prime + 8.0% or Floor rate 15.0%; EOT 3.0%
28,540
28,658
26,998
Sub-total: Real Estate Technology (5.8%)*
88,944
91,177
86,961
18
Software as a Service ("SaaS")
BackBlaze, Inc.
July 27, 2020
Fixed interest rate 7.4%; EOT 11.5%
205
239
September 4, 2020
Fixed interest rate 7.2%; EOT 11.5%
47
March 29, 2021
Fixed interest rate 7.5%; EOT 11.5%
868
Total BackBlaze, Inc.
637
1,145
1,153
Cpacket Networks, Inc.
January 29, 2024
Variable interest rate PRIME + 4.8% or Floor rate 12.0%+PIK Fixed Interest Rate 1.3%; EOT 3.0%
20,330
20,057
19,738
Steno Agency, Inc.
Variable interest rate Prime + 4.0% or Floor rate 12.5%; EOT 2.5%
4,795
Sub-total: SaaS (1.7%)*
25,967
25,997
25,686
Space Technology
Astranis Space Technology Corporation
April 13, 2023
Fixed interest rate 12.1%; EOT 5.0%
9,411
9,741
10,040
Axiom Space, Inc.
May 28, 2021
Variable interest rate Prime + 6.0% or Floor rate 9.3%; EOT 2.5%
20,552
20,612
Hadrian Automation, Inc.
March 2, 2022
Fixed interest rate 12.6%; EOT 0.0%
204
Fixed interest rate 12.9%; EOT 0.0%
2,242
2,237
2,259
July 15, 2022
Fixed interest rate 14.3%; EOT 0.0%
1,680
Fixed interest rate 15.2%; EOT 0.0%
3,092
3,086
3,151
December 22, 2022
Fixed interest rate 16.1%; EOT 0.0%
785
778
809
Fixed interest rate 16.4%; EOT 0.0%
330
329
342
March 29, 2023
Fixed interest rate 15.7%; EOT 0.0%
1,033
1,030
1,064
September 28, 2023
Fixed interest rate 17.7%; EOT 0.0%
532
530
540
Fixed interest rate 17.6%; EOT 0.0%
5,447
5,420
Total Hadrian Automation, Inc.
15,349
15,294
15,493
Hermeus Corporation
August 9, 2022
Fixed interest rate 9.6%; EOT 6.0%
563
613
601
October 11, 2022
Fixed interest rate 11.8%; EOT 6.0%
541
578
572
April 12, 2023
Fixed interest rate 12.6%; EOT 6.0%
770
791
799
October 24, 2023
Fixed interest rate 14.0%; EOT 6.0%
448
446
458
Fixed interest rate 13.7%; EOT 6.0%
651
640
655
Total Hermeus Corporation
2,973
3,068
3,085
Impulse Space, Inc.
June 18, 2024
Fixed interest rate 12.7%; EOT 3.0%
1,970
1,925
Rocket Lab USA, Inc.
Fixed interest rate 12.6%; EOT 1.0%
50,264
49,506
49,957
(9)(10)
Space Perspective, Inc.
March 3, 2022
Variable interest rate Prime + 7.8% or Floor rate 11.0%; EOT 5.0%
3,719
3,863
3,462
Sub-total: Space Technology (6.9%)*
103,686
103,949
104,574
19
Supply Chain Technology
Macrofab, Inc.
July 21, 2023
August 1, 2027
Variable interest rate Prime + 5.5% or Floor rate 13.3%; EOT 4.0%
19,589
20,195
Nucleus RadioPharma, Inc.
Fixed interest rate 11.8%; EOT 4.0%
496
Sub-total: Supply Chain Technology (1.4%)*
20,085
20,691
Transportation Technology
NextCar Holding Company, Inc.
December 14, 2021
Variable interest rate Prime + 5.8% or Floor rate 9.0%; EOT 5.3%
3,715
3,976
1,958
(8)(18)
2,274
2,379
1,199
2,843
2,974
1,499
3,411
3,569
1,799
April 18, 2022
May 17, 2022
5,685
5,948
2,998
June 22, 2022
Total NextCar Holding Company, Inc.
26,457
27,768
13,950
Get Spiffy, Inc.
July 14, 2023
January 14, 2028
Variable interest rate Prime + 4.5% or Floor rate 12.3%; EOT 6.0%
9,000
9,003
8,902
February 1, 2027
Fixed interest rate 12.1%; EOT 4.0%
350
343
291
Total Get Spiffy, Inc.
9,350
9,346
9,193
Zuum Transportation, Inc.
December 17, 2021
Variable interest rate Prime + 6.0% or Floor rate 10.8%; EOT 2.5%
5,036
4,768
Sub-total: Transportation Technology (1.9%)*
40,807
42,150
27,911
Total: Debt Securities- United States (89.6%)*
1,316,532
1,332,562
1,306,903
20
Debt Securities- Canada
Construction Technology
Nexii Building Solutions, Inc.
August 27, 2021
August 27, 2025
Variable interest rate Prime + 7.0% or Floor rate 10.3%; EOT 2.5%
10,094
10,491
2,939
(8)(10)(14)(18)
June 8, 2022
June 8, 2026
5,329
5,527
1,550
June 21, 2023
August 30, 2024
Variable interest rate Prime + 7.0% or Floor rate 10.3%; EOT 0.0%
2,856
811
Total Nexii Building Solutions, Inc.
18,279
18,874
5,300
Sub-total: Construction Technology (0.4%)*
GoFor Delivers, Inc.
June 28, 2024
Variable interest rate Prime + 3.5% or Floor rate 12.0%; EOT 2.5%
(8)(10)(20)
Sub-total: Supply Chain Technology (0.4%)*
Total: Debt Securities- Canada (0.8%)*
24,279
24,874
11,300
Debt Securities- Europe
Aledia, Inc.
Fixed interest rate 9.0%; EOT 7.0%
4,992
6,181
6,105
June 30, 2022
427
499
493
August 5, 2022
Fixed interest rate 10.7%; EOT 7.0%
646
735
728
Fixed interest rate 12.0%; EOT 7.0%
1,101
1,237
1,231
Total Aledia, Inc.
7,166
8,652
8,557
Sub-total: Industrials (0.6%)*
All.Space Networks, Limited.
August 22, 2022
Variable interest rate Prime + 7.0% or Floor rate 11.5%; EOT 2.5%
8,562
8,639
8,459
(8)(10)(14)
Sub-total: Space Technology (0.6%)*
Total: Debt Securities- Europe (1.1%)*
15,728
17,291
17,016
Total: Debt Securities (88.7%)*
1,356,539
1,374,727
1,335,219
Type of Investment (2)(14)
Expiration Date
Series
Strike Price
Warrant Investments- United States
Warrant
July 27, 2022
July 27, 2032
159,760
192
Everalbum, Inc.
July 29, 2026
Preferred Series A
851,063
0.10
25
38
(17)
Hologram, Inc.
January 31, 2020
January 27, 2030
193,054
0.26
222
Presto Automation, Inc.
April 28, 2027
402,679
0.37
185
(7)(17)
July 28, 2027
170,993
5.85
28
(7)
Total Presto Automation, Inc.
213
Sub-Total: Artificial Intelligence & Automation (0.0%)*
334
452
October 9, 2029
Preferred Series B
55,263
1.90
June 1, 2020
July 15, 2030
36,842
December 31, 2031
Preferred Series C
322,251
3.24
89
February 5, 2024
February 5, 2034
1,143,690
588
727
858
Sub-Total: Biotechnology (0.1%)*
Tarana Wireless, Inc.
June 30, 2031
5,027,629
0.19
967
2,736
July 11, 2026
828,479
1.00
(11)(17)(20)
viaPhoton, Inc.
March 31, 2032
15,839
0.60
22
Sub-Total: Connectivity (0.2%)*
989
Project Frog, Inc.
February 28, 2027
Preferred Series AA-1
211,649
(17)(20)
180,340
(20)
August 3, 2021
Preferred Series CC
250,000
0.01
Total Project Frog, Inc.
Sub-total: Construction Technology (0.0%)*
Warrant Investments- United States, Continued
BaubleBar, Inc.
March 29, 2027
531,806
1.96
26
April 20, 2028
60,000
72
Total BaubleBar, Inc.
711
29
Boosted eCommerce, Inc.
December 14, 2020
December 14, 2030
Preferred Series A-1
759,263
0.84
259
55
June 4, 2034
154,964
2.68
367
378
Happiest Baby, Inc.
May 16, 2029
182,554
0.33
193
57
Madison Reed, Inc.
March 23, 2027
194,553
2.57
July 18, 2028
43,158
0.99
71
June 30, 2029
36,585
1.23
56
80
Total Madison Reed, Inc.
480
February 14, 2033
Preferred Series A-3
259,221
0.68
105
September 29, 2033
109
210
December 31, 2030
99,148
1.53
160
153
April 1, 2031
39,912
1.46
99
64
Total Portofino Labs, Inc.
217
March 9, 2031
10,833
48.46
203
May 10, 2032
278,761
394
May 11, 2032
53,029
2.52
162
Super73, Inc.
177,305
3.16
224
Trendly, Inc.
August 10, 2026
245,506
1.14
June 23, 2031
68,996
2.79
November 22, 2023
November 22, 2033
51,225
0.41
Total VitaCup, Inc.
May 17, 2033
2,393,845
0.43
1,099
2,257
Sub-Total: Consumer Products & Services (0.3%)*
4,128
March 28, 2034
Preferred Series 3
2,288,461
0.65
644
368
Sub-total: Diagnostics & Tools (0.0%)*
23
March 19, 2034
111,458
1.71
March 18, 2031
130,853
7.74
108
257
April 17, 2024
April 17, 2034
21,771
151
September 30, 2028
222,222
120
Sub-Total: Education Technology (0.0%)*
424
419
April 1, 2034
44,133
0.96
86
53
DailyPay, Inc.
September 30, 2030
89,264
3.00
1,561
October 13, 2033
404,893
1.43
953
1,493
June 15, 2032
Preferred Class B
904,000
January 5, 2034
44,448
4.03
58
65
Parafin, Inc.
February 16, 2024
February 16, 2034
24,616
7.09
RealtyMogul, Co.
December 18, 2027
954,979
0.95
285
1,686
September 14, 2022
September 14, 2032
90,971
0.88
425
August 30, 2023
August 30, 2033
21,303
112
Total Slope Tech, Inc.
525
July 16, 2031
30,466
2.46
Sub-Total: Finance and Insurance (0.4%)*
1,911
5,506
October 28, 2022
October 28, 2032
3,741
140.21
287
313
June 10, 2029
68,863
5.08
410
December 22, 2020
December 22, 2030
29,925
6.24
September 10, 2028
21,577
617
December 29, 2030
114,725
Total Bowery Farming, Inc.
1,216
April 8, 2021
April 8, 2031
68,100
0.27
106
149
September 13, 2022
September 13, 2032
2,387
19.12
82
February 17, 2033
12,010
18.89
Total DrinkPak, LLC
33
498
October 5, 2032
4,051
3.96
181
GrubMarket, Inc.
June 15, 2020
June 15, 2030
405,000
115
4,276
Intelligent Brands, Inc. (f.k.a. PSB Holdings, Inc.)
October 5, 2027
103,636
14.47
111
December 29, 2032
33,348
3.17
546
Total Intelligent Brands, Inc.
657
October 14, 2020
October 14, 2030
36,445
0.49
68
Zero Acre Farms, Inc.
December 23, 2022
December 23, 2032
20,181
2.13
79
Sub-Total: Food and Agriculture Technologies (0.4%)*
2,742
5,307
24
October 12, 2031
181,784
0.07
December 23, 2026
2,685,501
0.22
2,184,672
June 29, 2027
5,106,972
0.44
November 2, 2028
3,850,294
1,348
November 29, 2021
November 29, 2031
Preferred Series D
154,906,320
1,520
Total Edeniq, Inc.
3,529
February 14, 2020
February 14, 2030
38,171
0.31
February 18, 2032
77,524
4,246
June 23, 2022
June 23, 2032
14,624
359
4,614
July 9, 2029
140,186
1.15
283
189
November 20, 2020
November 20, 2030
81,294
226
March 18, 2032
137,692
1.66
344
177
Total Mainspring Energy, Inc.
853
475
December 10, 2021
December 10, 2031
2,314
205.28
75
(9)(17)
October 10, 2022
October 10, 2032
917
196.50
87
54
January 19, 2034
Preferred Series D-1
2,876
203.47
418
169
580
Sub-Total: Green Technology (0.3%)*
6,090
4,361
October 14, 2034
51,632
0.76
66
186
Exer Holdings, LLC
November 19, 2021
November 19, 2031
281
527.51
93
Hospitalists Now, Inc.
March 30, 2026
Preferred Series D-2
135,807
5.89
485
December 6, 2026
750,000
391
2,681
Total Hospitalists Now, Inc.
462
3,166
76,231
1.76
2
79,325
258
December 22, 2032
97,970
2.49
December 29, 2033
155,438
3.62
135
128
November 21, 2032
Preferred A
16,517
10.00
173
(9)(17)(19)
April 7, 2023
April 6, 2033
5,518
October 17, 2023
October 16, 2033
289
April 29, 2032
Preferred Class A
268,983
2.09
March 3, 2033
Sub-Total: Healthcare Technology (0.3%)*
1,560
3,802
BetterLeap, Inc.
April 20, 2032
88,435
2.26
Qwick, Inc.
33,928
96
Sub-Total: Human Resource Technology (0.0%)*
134
February 23, 2032
37,218
1.81
SBG Labs, Inc.
September 18, 2024
25,714
0.70
50
March 24, 2025
12,155
March 26, 2025
200,000
388
Total SBG Labs, Inc.
77
461
Sub-total: Industrials (0.0%)*
170
October 17, 2032
253,824
6.76
Firefly Systems, Inc.
January 29, 2030
133,147
282
150
April 8, 2034
142,828
40
September 28, 2028
2,219
220.82
34
May 7, 2031
657,343
620
Sub-Total: Marketing, Media, and Entertainment (0.1%)*
798
805
June 24, 2034
1,177,261
769
758
April 21, 2033
446,982
1.61
Delphinus, Inc.
June 27, 2023
June 27, 2033
Preferred Series E
294,289
0.69
42
August 10, 2033
798,085
0.38
81
Preferred Series A Preferred
119,760
5.01
May 30, 2033
Preferred Series A-2
549,056
2.16
August 7, 2033
623,615
0.54
114
May 24, 2034
9,363
53.40
155
Sub-Total: Medical Devices (0.1%)*
1,344
Homelight, Inc.
October 1, 2022
5,434
18.40
May 24, 2029
880
85.27
November 10, 2031
16,350
2.20
265
2,804,355
December 6, 2033
Preferred Series AA
457,778
October 7, 2020
October 7, 2030
106,735
0.29
110,860
September 30, 2031
79,135
1.04
148
May 10, 2034
303,562
70
Total Maxwell Financial Labs, Inc.
286
132
February 12, 2024
February 12, 2034
Preferred Series 1
228,000
Sub-Total: Real Estate Technology (0.0%)*
760
SaaS
All Seated, Inc.
February 28, 2032
5,101
15.72
Cart.com, Inc.
November 17, 2023
November 17, 2033
30,666
15.87
521
January 29, 2034
Preferred Class B Common
499,366
0.36
98
Crowdtap, Inc.
December 16, 2025
442,233
1.09
782
December 11, 2027
100,000
Total Crowdtap, Inc.
51
959
Gtxcel, Inc.
September 24, 2025
1,000,000
0.21
Total Gtxcel, Inc.
31
Lucidworks, Inc.
June 27, 2026
619,435
0.77
806
1,175
Reciprocity, Inc.
September 25, 2020
September 25, 2030
114,678
4.17
April 29, 2021
April 29, 2031
57,195
Total Reciprocity, Inc.
Smartly, Inc.
May 16, 2022
May 16, 2034
48,097
June 21, 2034
74,626
1.98
183
182
The Tomorrow Companies, Inc.
December 14, 2022
December 14, 2032
26,124
1.70
Sub-Total: SaaS (0.2%)*
2,118
3,103
27
April 13, 2033
85,644
7.89
May 28, 2031
1,773
169.24
30
882
340.11
Total Axiom Space, Inc.
August 9, 2032
19,290
144
June 18, 2034
69,726
1.91
280
December 29, 2027
572,656
4.87
1,772
1,445
(7)(9)(10)
March 3, 2032
221,280
2.75
256
Sub-Total: Space Technology (0.1%)*
2,695
2,119
July 21, 2033
622,353
2.02
332
156
April 11, 2024
April 11, 2034
392,157
254
322,013
Total Macrofab, Inc.
714
428
44,470
1.99
Sub-Total: Supply Chain Technology (0.0%)*
784
528
July 14, 2033
874,527
408
133
December 14, 2026
Preferred Stock
328,369
1.29
(13)(17)
February 23, 2027
25,653
March 16, 2027
30,784
April 18, 2027
282,192
September 29, 2022
September 29, 2027
410,462
218
April 30, 2024
April 30, 2034
41,275
4.34
95
Sub-Total: Transportation Technology (0.0%)*
721
267
Total: Warrant Investments- United States (2.5%)*
29,673
37,109
Warrant Investments- Canada
August 27, 2026
63,175
15.83
(10)(13)
June 8, 2027
24,123
20.73
614
Sub-Total: Construction Technology (0.0%)*
Total: Warrant Investments- Canada (0.0%)*
Warrant Investments- Europe
Preferred Series D-3
11,771
149.01
130
325
(10)(13)(17)
Sub-Total: Information (0.0%)*
August 22, 2032
71,203
21.79
113
Sub-Total: Space Technology (0.0%)*
Total: Warrant Investments- Europe (0.0%)*
243
328
Total: Warrant Investments- (2.5%)*
30,530
37,437
Shares / Principal
Equity Investments- United States
Equity
February 25, 2022
50,000
757,297
506
810
1,006
864
Sub-Total: Artificial Intelligence & Automation (0.1%)*
611,246
Preferred Series 6
565
3,892,485
5,500
Convertible Note
3,966
2,196
(16)(20)
Total Vertical Communications, Inc.
viaPhoton Inc.
May 23, 2024
740,000
SAFE Note
4,836
3,131
4,383,497
351
3,401,678
Preferred Series BB
1,333
6,633,486
3,129,887
1,253
92
4,621
256,291
Preferred Series B-1
774
August 17, 2021
3,320
Sub-Total: Consumer Products & Services (0.1%)*
1,000
Dynamics, Inc.
17,726
390
2,810,235
Preferred Series C-1 Preferred
20,147
300,285
4,023
1,370
24,023
21,517
May 9, 2023
44,725
June 20, 2023
64,654
(10)(17)
Sub-Total: Finance and Insurance (1.5%)*
25,413
22,525
June 28, 2021
7,595
Intelligent Brands, Inc. (f.k.a. Pruvit Ventures, Inc.)
30,357
537
Sub-Total: Food and Agriculture Technologies (0.0%)*
1,037
Equity Investments- United States, Continued
7,807,499
1,652
3,657,487
1,314
133,766,138
2,916
5,882
April 6, 2023
87,087
542
65,614
Preferred Series E-1
389
July 5, 2022
2,035
397
February 15, 2023
1,966
405
393
739
790
Sub-Total: Green Technology (0.5%)*
1,739
7,603
August 3, 2023
72,338
373
June 3, 2022
499,999
101
April 29, 2024
617,890
129
116
Total Emerald Cloud Lab, Inc.
629
August 19, 2021
32,416
7,000,000
3,450
Preferred Series P
3,170
3,219
Total WorkWell Prevention & Care Inc.
6,720
Sub-Total: Healthcare Technology (0.0%)*
8,149
675
May 27, 2022
37,920
July 29, 2023
21,730
October 10, 2023
6,332
January 12, 2024
12,205
May 6, 2024
4,117
June 9, 2024
2,617
May 20, 2024
126,641
110
275
Sub-Total: Industrials (0.0%)*
-
Preferred
4,858
5,611
(7)(10)(17)(20)
EPT 16 LLC
Trinity Capital Adviser, LLC
1,504
(10)(20)
Sub-Total: Multi-Sector Holdings (0.7%)*
8,859
11,115
30,458
2,956,224
250
Total Knockaway Inc.
750
August 6, 2021
74,406
March 16, 2023
Total Orchard Technologies, Inc.
Maxwell Financial Labs, Inc
January 22, 2021
135,641
147
229,972
365
Total Maxwell Financial Labs, Inc
865
2,615
11,533
509
136,388
579
July 5, 2023
108,088
Sub-total: SaaS (0.1%)*
1,325
1,298
April 5, 2023
13,685
Series C Prime Preferred
64,223
600
900
August 11, 2021
3,624
569
53,154
Preferred A-4
510
December 11, 2023
31,831
Preferred B-1
800
815
Sub-total: Space Technology (0.1%)*
2,175
January 30, 2024
247,173
Preferred C-1 Preferred
297
Sub-total: Supply Chain Technology (0.0%)*
Total: Equity Investments- United States (3.4%)*
63,961
51,499
Equity Investments- Canada
24,418
194,329
Series 2 Seed
660
Total: Equity Investments- Canada (0.0%)*
1,160
Total: Equity Investments (3.5%)*
65,121
52,159
Total Investment in Securities (94.6%)*
1,470,378
Cash and Cash Equivalents
Goldman Sachs Financial Square Government Institutional Fund
5,803
Other cash accounts
40,299
Cash and Cash Equivalents (3.1%)*
Total Portfolio Investments and Cash and Cash Equivalents (97.7% of total assets)
1,516,480
1,470,917
* Value as a percent of net assets
32
Net change in
Unrealized
Fair Value at
Gross
Realized
(Depreciation)/
Interest and
December 31, 2023
Additions (1)
Reductions (2)
Gain/(Loss)
Appreciation
Dividend Income
For the Six Months Ended June 30, 2024
Control Investments
11,386
551
(898
544
11,583
679
3Q GoFor Holdings, LP
4,222
988
(7,458
6,164
97
16,745
131
(150
17,584
922
WorkWell Prevention and Care Inc.
Total Control Investments
1,670
(8,506
Affiliate Investments
EPT 16, LLC
6,660
1,503
5,187
423
16,945
Total Affiliate Investments
15,848
Total Control and Affiliate Investments
44,196
17,518
9,581
58,873
2,494
2,383
2,502
2,528
2,684
2,803
2,832
450
467
5,517
5,772
5,833
6,964
7,220
7,202
5,164
5,320
5,303
5,812
5,905
5,876
4,442
4,507
22,382
22,972
22,888
Stratifyd, Inc.
September 3, 2021
Variable interest rate Prime + 7.8% or Floor rate 11.0%; EOT 4.8%
4,457
4,592
4,369
Sub-total: Artificial Intelligence & Automation (2.5%)*
32,356
33,336
33,090
Fixed interest rate 11.4%; EOT 8.0%
268
469
June 17, 2021
July 1, 2024
Fixed interest rate 14.9%; EOT 8.0%
562
767
849
348
Fixed interest rate 18.3%; EOT 8.0%
165
207
247
1,275
1,791
2,015
July 15, 2020
Fixed interest rate 9.8%; EOT 6.0%
88
4,355
4,731
4,648
4,872
4,792
5,150
5,073
23,623
24,433
24,028
29,752
(8)(9)(10)(14)
Sub-total: Biotechnology (4.3%)*
54,898
55,976
55,795
12,750
15,406
April 1, 2027
Variable interest rate Prime + 6.6% or Floor rate 9.9%; EOT 5.0%
15,330
14,209
Sub-total: Connectivity (2.3%)*
27,750
30,736
29,615
294
Fixed interest rate 10.4%; EOT 11.5%
497
1,315
1,441
1,402
2,071
2,305
2,224
May 1, 2024
Fixed interest rate 8.4%; EOT 9.5%
(18)
233
403
4,975
4,967
4,921
5,010
9,896
9,977
1,531
1,610
13,611
13,919
14,023
1,944
1,996
15,555
15,915
16,038
5,031
5,099
3,928
4,033
8,959
9,132
2,817
2,719
Fixed interest rate 12.0%; EOT 3.8%
8,170
8,928
8,721
5,515
23,625
23,106
23,226
Sub-total: Consumer Products & Services (6.1%)*
80,314
81,498
80,578
9,591
10,376
10,137
Core Scientific, Inc.
700
759
Fixed interest rate 10.7%; EOT 5.0%
10,132
10,437
11,406
December 13, 2021
January 1, 2025
Fixed interest rate 10.5%; EOT 5.0%
3,753
3,853
4,225
February 9, 2022
March 1, 2025
8,018
8,179
9,026
Total Core Scientific, Inc.
22,577
23,169
25,416
Sub-total: Digital Assets Technology and Services (2.7%)*
32,168
33,545
35,553
5,834
6,144
5,841
2,000
2,103
1,971
7,834
8,247
7,812
5,581
1,863
7,444
Sub-total: Education Technology (1.2%)*
17,834
18,747
15,256
25,130
24,993
15,071
15,096
40,000
40,201
40,089
11,686
7,210
7,012
3,125
3,141
3,153
Variable interest rate Prime + 6.3% or Floor rate 10.5%; EOT 2.8% ⁽⁸⁾
6,250
6,270
6,356
15,625
15,637
16,105
25,048
25,614
Petal Card, Inc.
Variable interest rate Prime + 7.5% or Floor rate 11.0%+PIK Interest Rate 1.0%; EOT 11.0%
10,358
9,372
8,256
(8)(15)
7,250
6,560
5,779
July 27, 2023
Variable interest rate Prime + 7.5% or Floor rate 11.75%+PIK Interest Rate 4.25%; EOT 0.0%
20,853
17,203
15,068
Total Petal Card, Inc.
38,461
33,135
29,103
1,235
1,265
13,655
13,901
13,898
Sub-total: Finance and Insurance (9.8%)*
137,351
132,280
128,667
19,878
20,510
20,166
4,964
5,105
5,032
9,992
34,842
35,607
35,190
Variable interest rate SOFR 30 Day Forward + 10.0% or Floor rate 1.0%
8,660
7,947
5,521
(8)(15)(18)
Fixed interest rate 9.6%; EOT 7.5%
63
194
191
356
421
1,026
1,162
1,141
255
276
682
678
2,959
3,381
3,334
12,414
12,816
13,002
(9)(14)
January 8, 2021
Fixed interest rate 9.1%; EOT 8.5%
Fixed interest rate 9.3%; EOT 11.5%
5,176
6,143
5,771
Fixed interest rate 12.6%; EOT 11.5%
8,101
8,244
13,345
14,912
14,129
Variable interest rate Prime + 9.5% or Floor rate 11.8%; EOT 5.8%
9,518
10,609
10,545
Fixed interest rate 9.1%; EOT 10.0%
76
137
1,718
Total The Fynder Group, Inc.
1,676
1,913
1,853
Sub-total: Food and Agriculture Technologies (6.4%)*
83,414
87,185
83,574
527
621
606
648
818
261
5,181
5,202
5,442
6,037
6,298
6,515
March 17, 2020
Fixed interest rate 9.0%; EOT 12.5%
October 27, 2020
Fixed interest rate 9.2%; EOT 12.5%
195
November 19, 2020
Fixed interest rate 9.1%; EOT 12.5%
180
December 29, 2020
317
302
March 25, 2021
687
December 1, 2021
Fixed interest rate 8.8%; EOT 12.5%
737
Fixed interest rate 8.9%; EOT 12.5%
1,400
1,581
1,481
729
686
June 13, 2022
Fixed interest rate 9.5%; EOT 12.5%
999
1,110
1,045
August 24, 2022
Fixed interest rate 11.1%; EOT 12.5%
426
409
November 10, 2022
Fixed interest rate 11.6%; EOT 12.5%
364
392
383
Fixed interest rate 12.1%; EOT 12.5%
June 29, 2023
Fixed interest rate 12.7%; EOT 12.5%
694
709
Total Dandelion Energy, Inc.
8,259
7,886
1,373
1,492
1,469
9,965
11,373
11,457
11,434
2,826
2,884
2,885
2,921
2,934
5,742
5,805
5,819
4,489
4,926
4,695
2,288
6,777
7,404
7,078
2,849
2,993
19,061
19,434
18,995
19,364
38,056
38,798
28,579
29,068
28,286
Variable interest rate Prime + 7.3% or Floor rate 10.5% + PIK Interest Rate 4.3%; EOT 3.0%
14,766
14,871
(9)(14)(15)
Variable interest rate Prime + 7.25% or Floor rate 13.5%; EOT 3.0%
7,232
21,000
21,968
22,103
130,054
131,099
131,518
Healthcare Technology **
2,302
3,018
2,953
3,010
3,075
4,107
7,117
7,182
2,623
2,575
3,680
3,670
4,942
5,029
11,333
11,274
12,316
12,315
Variable interest rate Prime + 4.48% or Floor rate 9.98% +PIK Fixed Interest Rate 1.5%; EOT 3.5%
9,144
9,146
9,324
Variable interest rate Prime + 4.48% or Floor rate 9.98% + PIK Fixed Interest Rate 1.5%; EOT 3.5%
3,033
2,985
3,009
2,948
15,186
15,079
15,442
5,072
4,785
15,086
15,160
9,924
30,082
29,869
Sub-total: Healthcare Technology (6.1%)*
78,835
79,445
79,535
41
30,508
30,120
Sub-total: Human Resource Technology (2.3%)*
Fixed interest rate 9.1%; EOT 9.0%
1,453
1,763
Fixed interest rate 9.0%; EOT 9.0%
754
896
801
2,207
2,659
2,394
6,500
6,469
Sub-total: Industrials (0.7%)*
8,707
9,128
8,863
9,919
9,021
4,402
4,437
4,463
3,059
4,209
3,557
11,500
11,804
11,644
11,995
12,264
5,983
6,114
17,978
18,378
Sub-total: Marketing, Media, and Entertainment (3.6%)*
46,961
48,347
47,063
11,719
11,842
Delphinus Medical Technologies, Inc.
June 22, 2027
4,500
4,470
4,680
19,845
20,461
Variable interest rate Prime + 6.0% or Floor rate 14.3%; EOT 4.0%
5,909
6,161
14,888
15,062
11,138
11,650
Sub-total: Medical Devices (5.3%)*
68,750
67,969
69,856
7,704
Sub-total: Multi-Sector Holdings (0.6%)*
2,717
2,928
2,913
3,896
4,168
4,182
3,119
3,321
3,360
3,831
4,056
4,140
3,224
3,472
2,140
2,244
2,319
18,927
20,114
20,386
5,234
4,433
21,222
21,253
January 31, 2024
Variable interest rate SOFR 30 Day Forward + 10.0% or Floor rate 11.8%; EOT 0.0% ⁽⁸⁾
22,958
22,989
14,843
14,909
March 11, 2021
Variable interest rate Prime + 7.5% or Floor rate 11.0%; EOT 4.0%
4,083
4,230
July 23, 2021
11,211
11,554
11,368
August 2, 2022
12,701
12,569
27,794
28,485
28,093
Sub-total: Real Estate Technology (6.9%)*
91,950
91,951
90,810
January 20, 2020
February 1, 2020
127
125
March 26, 2020
April 17, 2020
Fixed interest rate 7.3%; EOT 11.5%
139
306
242
399
955
1,245
1,204
1,465
2,339
2,277
November 1, 2028
Variable interest rate Prime + 4.0% or Floor rate 12.5%; EOT 0.0%
29,030
Sub-total: SaaS (2.4%)*
31,465
31,369
31,307
12,558
12,744
12,904
25,439
25,306
277
278
2,940
2,933
2,955
2,141
2,135
3,835
3,828
3,923
945
935
983
870
867
912
2,696
2,687
2,808
1,361
1,355
1,398
15,065
15,017
15,420
715
755
1,311
1,364
1,806
1,815
1,808
1,020
998
4,852
4,932
4,867
Fixed interest rate 12.5%; EOT 1.0%
70,000
68,422
Fixed interest rate 12.5%; EOT 0.0%
39,999
Total Rocket Lab USA, Inc.
110,000
108,421
4,441
4,531
4,403
Sub-total: Space Technology (13.1%)*
171,916
171,084
171,321
44
19,696
19,990
Sub-total: Supply Chain Technology (1.5%)*
March 31, 2024
6,012
6,014
5,053
2,405
2,022
3,006
3,607
5,055
30,060
30,062
25,275
8,900
8,785
406
400
321
9,406
9,300
9,106
4,757
Sub-total: Transportation Technology (3.0%)*
44,466
44,423
39,138
Total: Debt Securities- United States (90.8%)*
1,196,893
1,206,026
1,189,353
45
10,659
11,055
4,091
(8)(10)(15)(18)
2,045
Variable interest rate Prime + 7.0% or Floor rate 10.3%
1,785
669
(8)(10)(14)(15)(18)
17,773
18,367
6,805
Sub-total: Construction Technology (0.5%)*
GoFor Industries, Inc.
January 21, 2022
Variable interest rate Prime + 8.8% or Floor rate 12.0%; EOT 2.5%
9,570
9,385
(8)(10)(18)(20)
Sub-total: Supply Chain Technology (0.3%)*
27,343
27,752
11,027
8,139
9,171
8,981
625
684
673
899
970
958
1,498
1,602
1,590
11,161
12,427
12,202
Sub-total: Industrials (0.9%)*
9,565
9,495
Sub-total: Space Technology (0.7%)*
Total: Debt Securities- Europe (1.7%)*
20,700
21,992
21,697
Total: Debt Securities (93.3%)(19)*
1,244,936
1,255,770
1,222,077
220
September 3, 2031
Preferred Series B-2
106,719
2.53
550
197
Sub-Total: Biotechnology (0.0%)*
2,673
2,697
375
94
585
455
1,741,313
516
Sub-Total: Consumer Products & Services (0.2%)*
3,178
2,422
48
28,732
228
March 10, 2024
17,000
10.59
209,198
November 27, 2029
250,268
1.32
January 11, 2021
January 11, 2031
135,835
August 6, 2031
111,555
1.60
June 20, 2033
402,434
1,523
July 27, 2033
1,760,651
4,679
234,421
3.88
1,706
484
597
Sub-Total: Finance and Insurance (0.2%)*
5,729
196
174
102
13,618
586
688
40,516
3,535
73
2,745
4,809
1,326
1,047
3,029
338
891
310
444
Sub-Total: Green Technology (0.4%)*
5,672
4,365
103
628
3,467
4,095
164
172
Sub-Total: Healthcare Technology (0.1%)*
1,573
4,667
January 14, 2024
21,492
11,145
7,085
342,857
437
200
1,357
Sub-total: Industrials (0.1%)*
293
201
0.75
190
Sub-Total: Marketing, Media, and Entertainment (0.0%)*
463
297,988
Sub-Total: Medical Devices (0.0%)*
748
464
852.70
(11)
677
51,110
733
730
593
861
2,063
2,406
96,847
1,122
31,398
237
728,835
2,255
Sub-Total: Space Technology (0.3%)*
3,001
3,804
333
795,785
Total: Warrant Investments- United States (2.4%)*
29,387
32,824
11,573
622
Total: Warrant Investments- Europe (0.1%)*
703
Total: Warrant Investments- (2.4%)*
30,244
33,527
746
795
Sub-Total: Connectivity (0.1%)*
4,466
1,907
352
4,622
January 12, 2023
2,361
445
1,007
722
Series D
501
504
Sub-Total: Finance and Insurance (0.1%)*
1,390
1,005
75,958
230
1,530
1,293
2,542
5,365
602
590
1,192
Sub-Total: Green Technology (0.6%)*
7,396
304
199,537
327
8,020
145
69
3,302
3,631
Sub-Total: Multi-Sector Holdings (0.3%)*
355
143
2,250
211
825
Preferred Series C Prime
456
756
1,621
1,634
(14)(17)(20)
January 17, 2023
Total 3Q GoFor Holdings, LP
Total: Equity Investments- United States (1.5%)*
32,802
19,576
Total: Equity Investments (1.5%)*
33,302
Total Investment in Securities (97.3%)*
1,319,316
3,088
Cash and Cash Equivalents (0.4%)*
Total Portfolio Investments and Cash and Cash Equivalents (97.6% of total assets)
1,324,077
1,279,941
** Where appropriate, certain current year industry classifications may have been revised to more precisely reflect the business of the Company's investments.
For the Year Ended December 31, 2023
11,879
1,717
(1,655
(555
2,116
7,521
(3,799
(131
17,274
(550
(399
1,997
37,313
2,637
(2,205
(4,884
4,179
FemTec Health, Inc.
(2,328
27,051
11,006
1,025
27,380
38,841
13,643
(4,533
22,496
5,204
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Organization and Basis of Presentation
Trinity Capital Inc. (“Trinity Capital” and, together with its subsidiaries, the “Company”) is a specialty lending company focused on providing debt, including loans and equipment financings, to growth-stage companies, including venture-backed companies and companies with institutional equity investors. Trinity Capital was formed on August 12, 2019 as a Maryland corporation and commenced operations on January 16, 2020. Prior to January 16, 2020, Trinity Capital had no operations, except for matters relating to its formation and organization as a business development company (“BDC”).
Trinity Capital is an internally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Trinity Capital has elected to be treated, currently qualifies, and intends to continue to qualify annually as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes.
On September 27, 2019, Trinity Capital was initially capitalized with the issuance of 10 shares of its common stock for $150 to its sole stockholder.
On January 16, 2020, Trinity Capital completed a private offering of shares of its common stock (the “Private Common Stock Offering”) pursuant to which it issued and sold 8,333,333 shares of its common stock for total aggregate gross proceeds of approximately $125.0 million, inclusive of an over-allotment option that was exercised in full on January 29, 2020.
Concurrent with the initial closing of the Private Common Stock Offering, the Company completed a private debt offering (the “144A Note Offering” and together with the Private Common Stock Offering, the “Private Offerings”), pursuant to which it issued and sold $125.0 million in aggregate principal amount of the Company's unsecured 7.00% Notes due 2025 (the “2025 Notes”), inclusive of the over-allotment option that was exercised in full on January 29, 2020.
On January 16, 2020, Trinity Capital completed a series of transactions, the Private Offerings, and the acquisition of Trinity Capital Investment, LLC, Trinity Capital Fund II, L.P. (“Fund II”), Trinity Capital Fund III, L.P., Trinity Capital Fund IV, L.P., and Trinity Sidecar Income Fund, L.P. (collectively, the “Legacy Funds”) through mergers of the Legacy Funds with and into Trinity Capital as well as Trinity Capital’s acquisition of Trinity Capital Holdings, LLC (“Trinity Capital Holdings”) (collectively, the “Formation Transactions”).
Trinity Capital’s common stock began trading on the Nasdaq Global Select Market on January 29, 2021, under the symbol “TRIN” in connection with its initial public offering of shares of its common stock (“IPO”).
Basis of Presentation
The Company’s interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, the unaudited financial results included herein contain all adjustments, consisting solely of normal accruals, considered necessary for the fair statement of the results for the interim period included herein. The current period’s consolidated results of operations are not necessarily indicative of results that may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on March 6, 2024. As an investment company, the Company follows accounting and reporting guidance determined by the Financial
Accounting Standards Board (“FASB”), in Accounting Standards Codification, as amended (“ASC”) 946, Financial Services – Investment Companies (“ASC 946”).
Principles of Consolidation
Under ASC 946, the Company is precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolio company is another investment company. An exception to this general principle occurs if the Company holds a controlling interest in an operating company that provides all or substantially all of its services directly to the Company or to its portfolio companies. None of the portfolio investments made by the Company qualify for this exception. Therefore, the Company’s investment portfolio is carried on the Consolidated Statements of Assets and Liabilities at fair value, as discussed further in “Note 3 - Investments,” with any adjustments to fair value recognized as “Net change in unrealized appreciation/(depreciation) from investments” on the Consolidated Statements of Operations.
The Company’s consolidated operations include the activities of its wholly owned subsidiaries, Trinity Funding 1, LLC (“TF1”), and TrinCap Funding, LLC (“TCF”). TF1 was formed on August 14, 2019, as a Delaware limited liability company with Fund II as its sole equity member. On January 16, 2020, in connection with the Formation Transactions, Trinity Capital acquired TF1 through Fund II and became a party to, and assumed, a $300 million credit agreement with Credit Suisse AG (the “Credit Suisse Credit Facility”) through TF1 which matured on January 8, 2022 in accordance with its terms. TCF was formed on August 5, 2021, as a Delaware limited liability company with Trinity Capital as its sole equity member for purposes of securing lending in conjunction with a $350 million credit agreement, as amended, with KeyBank National Association (“KeyBank”) (such credit facility, the “KeyBank Credit Facility”). TF1 and TCF are special purpose bankruptcy-remote entities and are separate legal entities from Trinity Capital. Any assets conveyed to TF1 or TCF are not available to creditors of the Company or any other entity other than TF1’s or TCF’s respective lenders. TF1 and TCF are consolidated for financial reporting purposes and in accordance with GAAP, and the portfolio investments held by these subsidiaries, if any, are included in the Company’s consolidated financial statements and recorded at fair value. All intercompany balances and transactions have been eliminated. As part of the Formation Transactions, Trinity Capital acquired 100% of the equity interests of Trinity Capital Holdings. There has been no activity in Trinity Capital Holdings since acquisition.
In accordance with Rule 10-01(b)(1) of Regulation S-X, as amended, the Company must determine which of its unconsolidated controlled subsidiaries, if any, are considered “significant subsidiaries.” In evaluating these unconsolidated controlled subsidiaries, there are two significance tests utilized per Rule 1-02(w) of Regulation S-X to determine if any of the Company’s investments or unconsolidated controlled subsidiaries are considered significant: the investment test and the income test. As of June 30, 2024 and December 31, 2023, none of the Company’s investments or unconsolidated controlled subsidiaries met either of these two significance tests.
On December 5, 2022, the Company entered into a joint venture agreement with certain funds and accounts managed by a specialty credit manager (collectively, the “JV Partner”) to co-manage Senior Credit Corp 2022 LLC (the “JV”). The JV invests in secured loans and equipment financings to growth-stage companies that have been originated by the Company. The Company and the JV Partner committed to initially contribute $21.4 million and $150.0 million, respectively, of capital in the form of 8.5% notes and preferred equity in the JV. The JV is capitalized as investment transactions are completed and all portfolio decisions and generally all other actions in respect of the JV must be approved by the board of managers of the JV consisting of an equal number of representatives of the Company and the JV Partner. Capital contributions are called from each JV member on a pro-rata basis based on their total capital commitments, with 70% of each such capital contribution invested in the JV’s 8.5% notes and the remaining 30% invested in the JV's preferred equity. As of June 30, 2024, the Company's and the JV Partner's ownership of the JV was 12.5% and 87.5%, respectively.
The Company has agreed to offer the JV the opportunity to purchase up to 40% in dollar amount, but not less than 25% in dollar amount, of the entire amount of each secured loan and equipment financing advance originated by the Company during the period commencing on September 1, 2022 and ending on June 5, 2026. The JV is required to pay the Company a fee equal to 100 basis points of the total principal amount of each loan or equipment
61
financing advance acquired by the JV from the Company, with 50% of the fee for each such particular loan or advance payable by the JV to the Company within two business days of the date of such acquisition or advance and the remaining 50% payable in equal monthly installments over 24 months following the date of such acquisition or advance. In addition, the JV shall pay the Company an administrative agent fee equal to 75 basis points of the daily average aggregate value of the JV's outstanding loans and equipment financings.
As permitted under Regulation S-X and consistent with the guidance in ASC 946-810-45-3, the Company 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 the Company. As the Company’s representatives do not comprise the majority of the board of managers of the JV and the Company does not hold a majority of the economic interests in the JV, the Company does not consolidate the JV in its financial statements.
As of June 30, 2024, the Company contributed $16.2 million of capital to the JV, which consisted of a debt investment of $11.3 million and an equity investment of $4.9 million. As of December 31, 2023, the Company contributed $11.0 million of capital to the JV, which consisted of a debt investment of $7.7 million and an equity investment of $3.3 million. As of June 30, 2024 and December 31, 2023, the Company's unfunded commitment was $5.2 million and $10.4 million, respectively.
As of June 30, 2024 and December 31, 2023, the JV's total investment portfolio on a fair value basis was $230.3 million and $151.6 million, respectively. During the three and six months ended June 30, 2024, the Company received $42.0 million and $94.4 million in net proceeds from the sale of investments to the JV, respectively. During the year ended December 31, 2023, the Company received $146.2 million in net proceeds from the sale of investments to the JV.
During the three and six months ended June 30, 2024, the Company earned approximately $0.8 million and $1.7 million, respectively, for originations and administrative agent fees which are recognized as fee income on the Consolidated Statements of Operations. During the three and six months ended June 30, 2023, the Company earned approximately $0.7 million and $1.1 million, respectively, for originations and administrative agent fees which are recognized as fee income on the Consolidated Statements of Operations. As of June 30, 2024 and December 31, 2023, the Company had approximately $1.1 million and $0.8 million, respectively, in unsettled receivables due from the JV that were included in other assets in the accompanying Consolidated Statements of Assets and Liabilities.
Trinity Capital Adviser LLC
The Company formed Trinity Capital Adviser LLC, a Delaware limited liability company (the “Adviser Sub”), on March 16, 2023 as a wholly owned subsidiary of the Company. The Company was granted exemptive relief by the SEC that permits the Company to organize, acquire, wholly own and operate the Adviser Sub as an investment adviser registered under the Investment Advisers Act of 1940 Act, as amended (the “Advisers Act”). The Adviser Sub may provide investment advisory and related services to one or more investment vehicles (the “Adviser Funds”) with ownership by one or more unrelated third-party investors (“External Parties”) and receives fee income for such services. The Adviser Sub commenced operations on June 28, 2024.
Because the Adviser Sub is not an investment company as defined in ASC 946 and provides investment advisory services exclusively to the Adviser Funds with ownership by one or more External Parties, pursuant to ASC 946, the Adviser Sub is accounted for as a portfolio investment of the Company held at fair value and is not included as a consolidated subsidiary in the Company’s consolidated financial statements.
The Adviser Sub has entered into an investment management agreement with EPT 16 LLC and may enter into additional investment management agreements with other Adviser Funds in the future, pursuant to which the Adviser Sub receives management fees and/or incentive fees based on the assets under management and the performance of the Adviser Funds, respectively. With respect to such fee income, the Adviser Sub expects to declare and pay dividend distributions to the Company. During the three and six months ended June 30, 2024 and 2023, no dividend distributions were declared and paid by the Adviser Sub to the Company.
62
On June 28, 2024, the Company and a specialty credit manager (the “Class A Member”) funded a portion of their respective capital commitments to commence the operations of a credit fund, EPT 16 LLC (“EPT 16”), a Delaware limited liability company. EPT 16 has acquired and intends to acquire, hold and, as applicable, dispose of investments that have been originated by the Company. The Company and the Class A Member had capital commitments to EPT 16 in the amount of $10.0 million and $50.0 million, respectively. As of June 30, 2024, the Company's and the Class A Member’s ownership percentages were 16.7% and 83.3%, respectively. EPT 16 has entered into an investment management agreement with the Adviser Sub, pursuant to which the Adviser Sub will earn certain base management and incentive fees in exchange for providing advisory services to EPT 16.
As permitted under Regulation S-X and consistent with the guidance in ASC 946-810-45-3, the Company 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 the Company. As the Company does not substantially wholly own the investment company subsidiary, the Company does not consolidate EPT 16 in its financial statements.
As of June 30, 2024, the Company had contributed $4.0 million of capital to EPT 16. As of June 30, 2024, the Company's unfunded commitment was $6.0 million and there were no unfunded commitments as of December 31, 2023. On June 28, 2024, the Company sold $24.0 million of investments to EPT 16, resulting in a $0.5 million realized gain. As of June 30, 2024, EPT 16’s total investment portfolio on a fair value basis was $24.0 million.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ materially from these estimates.
Investment Transactions
Loan originations are recorded on the date of the legally binding commitment. Realized gains or losses are recorded using the specific identification method as the difference between the net proceeds received, excluding prepayment fees, if any, and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized, and include investments written off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment fair values as of the last business day of the reporting period and also includes the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.
Valuation of Investments
The most significant estimate inherent in the preparation of the Company’s consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded.
The Company’s investments are carried at fair value in accordance with the 1940 Act and ASC 946 and measured in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and provides disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that each of the portfolio investments is sold in a hypothetical transaction in the principal or, as applicable, most advantageous market using market participant assumptions as of the measurement date. Market participants are defined as buyers and sellers in the principal
market that are independent, knowledgeable and willing and able to transact. The Company values its investments at fair value as determined in good faith pursuant to a consistent valuation policy by the Company’s Board of Directors (the “Board”) in accordance with the provisions of ASC 820 and the 1940 Act.
The SEC adopted Rule 2a-5 under the 1940 Act (“Rule 2a-5”), which establishes a framework for determining fair value in good faith for purposes of the 1940 Act. As adopted, Rule 2a-5 permits boards of directors to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. The SEC also adopted Rule 31a-4 under the 1940 Act (“Rule 31a-4”), which provides the recordkeeping requirements associated with fair value determinations. While the Company's Board has not elected to designate a valuation designee, the Company has adopted certain revisions to its valuation policies and procedures to comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.
While the Board is ultimately and solely responsible for determining the fair value of the Company’s investments, the Company has engaged independent valuation firms, on a discretionary basis, to provide the Company with valuation assistance with respect to its investments. Specifically, on a quarterly basis, the Company identifies portfolio investments with respect to which an independent valuation firm assists in valuing such investments. The Company selects these portfolio investments based on a number of factors, including, but not limited to, the potential for material fluctuations in valuation results, size, credit quality and the time lapse since the last valuation of the portfolio investment by an independent valuation firm.
Investments recorded on the Company’s Consolidated Statements of Assets and Liabilities are categorized based on the inputs to the valuation techniques as follows:
Level 1 — Investments whose values are based on unadjusted quoted prices for identical assets in an active market that the Company has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).
Level 2 — Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment.
Level 3 — Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment.
Given the nature of lending to venture capital-backed growth-stage companies, 99.2%, based on fair value, of the Company’s investments in these portfolio companies are considered Level 3 assets under ASC 820 because there is no known or accessible market or market index for these investment securities to be traded or exchanged. Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur. The Company uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis, and investment valuation procedures. This system takes into account both quantitative and qualitative factors of the portfolio companies. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
Debt Securities
The debt securities identified on the Consolidated Schedule of Investments are secured loans and equipment financings made to growth-stage companies. For portfolio investments in debt securities for which the Company has determined that third-party quotes or other independent pricing are not available, the Company generally estimates the fair value based on the assumptions that hypothetical market participants would use to value the investment in a current hypothetical sale using an income approach.
In its application of the income approach to determine the fair value of debt securities, the Company bases its assessment of fair value on projections of the discounted future free cash flows that the security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the security, as set forth in the associated loan and equipment financing agreements, as well as market yields and the financial position and credit risk of the portfolio company (the “Hypothetical Market Yield Method”). The discount rate applied to the future cash flows of the security is based on the calibrated yield implied by the terms of the Company’s investment adjusted for changes in market yields and performance of the subject company. The Company’s estimate of the expected repayment date of its loans and equipment financings securities is either the maturity date of the instrument or the anticipated pre-payment date, depending on the facts and circumstances. The Hypothetical Market Yield Method also considers changes in leverage levels, credit quality, portfolio company performance, market yield movements, and other factors. If there is deterioration in credit quality or if a security is in workout status, the Company may consider other factors in determining the fair value of the security, including, but not limited to, the value attributable to the security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.
Equity Securities and Warrants
Often the Company is issued warrants by issuers as yield enhancements. These warrants are recorded as assets at estimated fair value on the grant date. The Company determines the cost basis of the warrants or other equity securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity securities received. Depending on the facts and circumstances, the Company generally utilizes a combination of one or several forms of the market approach and contingent claim analyses (a form of option analysis) to estimate the fair value of the securities as of the measurement date and determines the cost basis using a relative fair value methodology. As part of its application of the market approach, the Company estimates the enterprise value of a portfolio company utilizing customary pricing multiples, based on the development stage of the underlying issuers, or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations that are assessed to be indicative of fair value of the respective portfolio company. If appropriate, based on the facts and circumstances, the Company performs an allocation of the enterprise value to the equity securities utilizing a contingent claim analysis and/or other waterfall calculation by which it allocates the enterprise value across the portfolio company’s securities in order of their preference relative to one another.
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The carrying amounts of the Company’s financial instruments, consisting of cash, investments, receivables, payables, and other liabilities, approximate the fair values of such items due to the short-term nature of these instruments. Refer to “Note 4 – Fair Value of Financial Instruments” for further discussion.
Cash, cash equivalents and restricted cash consist of funds deposited with financial institutions and short-term (original maturity of three months or less) liquid investments in money market deposit accounts. Cash equivalents are classified as Level 1 assets and are valued using the net asset value (“NAV”) per share of the money market fund. As of June 30, 2024 and December 31, 2023, cash and cash equivalents consisted of $46.1 million and $4.8 million, respectively, of which $5.8 million and $3.1 million, respectively, was held in the Goldman Sachs Financial Square Government Institutional Fund. Cash held in demand deposit accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and therefore is subject to credit risk. All of the Company’s cash deposits are held at large, established, high credit quality financial institutions, and management believes that the risk of loss associated with any uninsured balances is remote. As of June 30, 2024 and December 31, 2023, the Company did not have any restricted cash.
Other Assets
Other assets generally consist of fixed assets net of accumulated depreciation, leasehold improvements net of accumulated depreciation, right-of-use assets, prepaid expenses, escrow receivables, deferred offering costs, and security deposits for operating leases.
Escrow Receivables
Escrow receivables are collected in accordance with the terms and conditions of the escrow agreement. Escrow balances are typically distributed over a period of one year and may accrue interest during the escrow period. Escrow balances are measured for collectability on at least a quarterly basis and fair value is determined based on the amount of the estimated recoverable balances and the contractual maturity date. As of June 30, 2024 and December 31, 2023, there were no material past due escrow receivables. The escrow receivables balance as of June 30, 2024, and December 31, 2023 totaled $2.4 million and $2.4 million, respectively, and was measured at fair value and held in accordance with ASC 820.
Equity Offering Costs
Equity offering costs consist of fees and costs incurred in connection with the sale of the Company’s common stock, including legal, accounting and printing fees. These costs are deferred at the time of incurrence and are subsequently charged as a reduction to capital when the offering takes place or as shares are issued. Equity offering costs are periodically reviewed and expensed if the related registration is no longer active.
Security Deposits
Security deposits are collected upon funding equipment financings and are applied in lieu of regular payments at the end of the term.
Debt Financing Costs
The Company records costs related to the issuance of debt obligations as deferred debt financing costs. These costs are deferred and amortized using the straight-line method over the stated maturity life of the obligations. Debt financing costs related to secured or unsecured notes are netted with the outstanding principal balance on the Company’s Consolidated Statements of Assets and Liabilities. Debt financing costs related to the KeyBank Credit Facility are recorded as deferred credit facility costs on the Company’s Consolidated Statements of Assets and Liabilities.
Income Recognition
Interest and Dividend Income
The Company recognizes interest income on an accrual basis and recognizes it as earned in accordance with the contractual terms of the loan agreement to the extent that such amounts are expected to be collected. Original issue discount (“OID”) initially includes the estimated fair value of detachable warrants obtained in conjunction with the origination of debt securities and is accreted into interest income over the term of the loan as a yield enhancement based on the effective yield method. In addition, the Company may also be entitled to an end-of-term (“EOT”) payment. EOT payments to be paid at the termination of the debt agreements are accreted into interest income over the contractual life of the debt based on the effective yield method. When a portfolio company pre-pays their indebtedness prior to the scheduled maturity date, the acceleration of the unaccreted OID and EOT payment is recognized as interest income.
The Company has a limited number of debt investments in its portfolio that contain a payment-in-kind (“PIK”) provision. Contractual PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on an accrual basis to the extent such amounts are expected to be collected. The Company will generally cease accruing PIK interest if there is insufficient value to support the accrual or management does not expect the portfolio company to be able to pay all principal and interest due. The Company recorded $1.5 million and $5.5 million in PIK interest income during the three and six months ended June 30, 2024, respectively, and $2.2 million and $3.3 million in PIK interest income during the three and six months ended June 30, 2023, respectively.
Income related to application or origination payments, including facility commitment fees, net of related expenses and generally collected in advance, is amortized into interest income over the contractual life of the loan.
The Company recognizes nonrecurring fees and additional OID and EOT payment received in consideration for contract modifications commencing in the quarter relating to the specific modification.
The Company records dividend income on an accrual basis to the extent amounts are expected to be collected. Dividend income is recorded when dividends are declared by the portfolio company or at such other time that an obligation exists for the portfolio company to make a distribution. The Company recorded $0.3 million and $0.5 million in dividend income during the three and six months ended June 30, 2024, respectively, and no dividend income was recorded during the three and six months ended June 30, 2023.
Fee and Other Income
The Company recognizes one-time fee income, including, but not limited to, structuring fees, prepayment penalties, and exit fees related to a change in ownership of the portfolio company, as other income when earned. These fees are generally earned when the portfolio company enters into an equipment financing arrangement or pays off their outstanding indebtedness prior to the scheduled maturity. In addition, fee income may include fees for originations and administrative agent services rendered by the Company to the JV. Such fees are earned in the period that the services are rendered.
Non-Accrual Policy
When a debt security becomes 90 days or more past due, or if management otherwise does not expect that principal, interest, and other obligations due will be collected in full, the Company will generally place the debt security on non-accrual status and cease recognizing interest income on that debt security until all principal and interest due has been paid or the Company believes the borrower has demonstrated the ability to repay its current and future contractual obligations. Any uncollected interest is reversed from income in the period that collection of the interest receivable is determined to be doubtful. However, the Company may make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection.
As of June 30, 2024, loans to three portfolio companies and equipment financings to one portfolio company were on non-accrual status, with a total cost of approximately $55.6 million, and a total fair value of approximately $24.0 million, or 1.8%, of the fair value of the Company’s debt investment portfolio. As of December 31, 2023, loans to three portfolio companies and equipment financings to two portfolio companies were on non-accrual status, with a total cost of approximately $60.8 million, and a total fair value of approximately $43.2 million, or 3.5%, of the fair value of the Company’s debt investment portfolio.
Net Realized Gains / (Losses)
Realized gains / (losses) are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net proceeds exclude any prepayment penalties, exit fees, and OID and EOT acceleration. Prepayment penalties and exit fees received at the time of sale or redemption are included in fee income on the Consolidated Statements of Operations. OID and EOT acceleration is included in interest income on the Consolidated Statements of Operations.
Net Change in Unrealized Appreciation / (Depreciation)
Net change in unrealized appreciation / (depreciation) reflects the net change in the fair value of the investment portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.
Stock-Based Compensation
The Company has issued and may, from time to time, issue restricted stock to its officers and employees under the 2019 Trinity Capital Inc. Long Term Incentive Plan and to its non-employee directors under the Trinity Capital
67
Inc. 2019 Non-Employee Director Restricted Stock Plan. The Company accounts for its stock-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation – Stock Compensation. Accordingly, for restricted stock awards, the Company measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as stock-based compensation expense over the requisite service period, which is generally the vesting term.
The Company has also adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on stock-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. Accordingly, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Additionally, the Company has elected to account for forfeitures as they occur.
Earnings Per Share
The Company's earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic earnings per share is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average number of common shares outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Trinity Capital’s equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued and the additional shares of common stock were dilutive. Diluted EPS, if any, reflects the potential dilution from the assumed conversion of the Company’s 6.00% Convertible Notes due 2025 (the “Convertible Notes”).
Income Taxes
The Company has elected to be treated, currently qualifies, and intends to continue to qualify annually as a RIC under Subchapter M of the Code for U.S. federal tax purposes. In order to maintain its treatment as a RIC, the Company is generally required to distribute at least annually to its stockholders at least the sum of 90% of its investment company taxable income (which generally includes its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its net tax-exempt income (if any). The Company generally will not be subject to U.S. federal income tax on these distributed amounts but will pay U.S. federal income tax at corporate rates on any retained amounts.
The Company evaluates tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC 740, Income Taxes (“ASC 740”), as modified by ASC 946. Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, would be recorded as tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. The Company has no material uncertain tax positions as of June 30, 2024 and December 31, 2023. All the Company’s tax returns remain subject to examination by U.S. federal and state tax authorities.
Based on federal excise distribution requirements applicable to RICs, the Company will be subject to a 4% nondeductible federal excise tax on undistributed taxable income and gains unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income or gain realized, but not distributed, in the preceding years. For this purpose, however, any ordinary income or capital gain net income retained by the Company and on which the Company paid corporate income tax is considered to have been distributed. The Company, at its discretion, may determine to carry forward taxable income or gain and pay a 4% excise tax on the amount by which it falls short of this calendar-year distribution requirement. If the Company chooses to do so, this generally will increase expenses and reduce the amount available to be distributed to stockholders. The Company will accrue excise tax on estimated undistributed taxable income and capital gains as required on an annual basis.
Distributions
Distributions to common stockholders are recorded on the record date. The amount of taxable income to be paid out as a distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Capital gains, if any, are distributed at least annually, although the Company may decide to retain all or some of those capital gains for investment and pay U.S. federal income tax at corporate rates on those retained amounts. If the Company chooses to do so, this generally will increase expenses and reduce the amount available to be distributed to stockholders.
Note 3. Investments
The Company provides debt, including loans and equipment financings, to growth-stage companies, including venture capital-backed companies and companies with institutional equity investors, primarily in the United States. The Company’s investment strategy includes making investments consisting primarily of term loans and equipment financings, and, to a lesser extent, working capital loans, equity, and equity-related investments. In addition, the Company may obtain warrants or contingent exit fees at funding from many of its portfolio companies.
The Company’s debt securities primarily consist of direct investments in interest-bearing secured loans and equipment financings to privately held companies based in the United States. Secured loans are generally secured by a blanket first lien or a blanket second lien on the assets of the portfolio company. Equipment financings typically include a specific asset lien on mission-critical assets as well as a second lien on the assets of the portfolio company. These debt securities typically have a term of between three and five years from the original investment date. Certain of the debt securities are “covenant-lite” loans, which generally are loans that do not have a complete set of financial maintenance covenants and have covenants that are incurrence-based, meaning they are only tested and can only be breached following an affirmative action of the borrower rather than by a deterioration in the borrower’s financial condition. The equipment financings in the investment portfolio generally have fixed interest rates. The secured loans in the investment portfolio generally have floating interest rates subject to interest rate floors. Both equipment financings and secured loans generally include an EOT payment.
The specific terms of each debt security vary depending on the creditworthiness of the portfolio company and the projected value of the financed assets. Companies with stronger creditworthiness may receive an initial period of lower financing factor, which is analogous to an interest-only period on a traditional term loan. Equipment financings may include upfront interim payments and security deposits. Equipment financing arrangements have various structural protections, including customary default penalties, information and reporting rights, material adverse change or investor abandonment provisions, consent rights for any additions or changes to senior debt, and, as needed, intercreditor agreements with cross-default provisions to protect the Company’s second lien positions.
Warrant Investments
In connection with the Company’s debt investments, the Company may receive warrants in the portfolio company. Warrants received in connection with a debt investment typically include a potentially discounted contract price to exercise, and thus, as a portfolio company appreciates in value, the Company may achieve additional investment return from this equity interest. The warrants typically contain provisions that protect the Company as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In certain cases, the Company may also obtain follow-up rights in connection with these equity interests, which allow the Company to participate in future financing rounds.
Equity Investments
In specific circumstances, the Company may seek to make direct equity investments in situations where it is appropriate to align the interests of the Company with key management and stockholders of the portfolio company, and to allow for participation in the appreciation in the equity values of the portfolio company. These equity investments are generally made in connection with debt investments. The Company seeks to maintain fully diluted equity positions in its portfolio companies of 5% to 50% and may have controlling equity interests in some instances.
Portfolio Composition
The Company’s portfolio investments are in companies conducting business in a variety of industries. Industry classifications have been updated to a preferred presentation and the prior year has been amended to conform with the new preferred presentation. The following table summarizes the composition of the Company’s portfolio investments by industry at cost and fair value and as a percentage of the total portfolio as of June 30, 2024 and December 31, 2023 (dollars in thousands):
Fair Value
Industry
Amount
%
192,794
13.1
195,073
13.8
139,399
10.6
133,344
10.5
159,558
10.9
162,521
11.4
138,510
143,279
11.2
130,465
8.9
131,174
9.2
68,717
5.2
70,320
5.5
117,617
8.0
117,330
8.2
185,384
14.1
186,335
14.6
107,841
7.3
108,048
7.6
85,683
6.5
83,722
6.6
107,640
107,704
34,732
2.6
34,435
2.7
94,552
6.4
87,608
6.1
94,878
7.2
91,344
85,024
5.8
80,449
5.6
89,038
6.8
84,917
77,964
5.3
71,322
5.0
90,967
6.9
88,707
7.0
56,264
3.8
56,990
4.0
56,173
4.3
55,810
4.4
43,975
3.0
44,429
3.1
49,145
3.7
47,526
42,230
2.9
41,990
31,609
2.1
30,443
31,142
2.4
30,595
33,091
2.3
30,294
18,975
1.4
15,285
1.2
29,440
2.0
30,087
34,257
34,440
42,871
28,178
45,024
3.4
39,532
28,029
1.9
28,176
30,414
24,556
Multi-Sector Holdings (1)
20,194
22,450
1.6
0.8
0.9
21,212
21,254
1.5
36,191
34,219
16,298
1.1
16,943
21,995
1.7
23,113
1.8
0.5
2.5
2.8
24,647
5,397
0.4
24,141
6,813
100.0
The geographic composition of the Company's investment portfolio is determined by the location of the corporate headquarters of the portfolio company. The following table summarizes the composition of the Company’s portfolio investments by geographic region of the United States and other countries at cost and fair value and as a percentage of the total portfolio as of June 30, 2024 and December 31, 2023 (dollars in thousands):
Geographic Region
United States:
Northeast
461,767
31.3
453,432
31.9
392,739
29.8
383,008
29.9
West
414,646
28.2
408,773
28.7
468,917
35.5
464,909
36.5
South
181,050
12.3
184,644
13.0
169,014
12.8
172,746
13.5
Mountain
168,390
11.5
156,736
11.0
118,126
9.0
110,681
8.7
Southeast
101,458
97,525
43,878
3.3
42,129
Midwest
78,692
5.4
71,950
64,535
4.9
56,945
4.5
International:
Western Europe
17,534
17,345
22,235
22,400
Canada
26,647
11,960
28,866
2.2
The following table summarizes the composition of the Company’s portfolio investments by investment type at cost and fair value and as a percentage of the total portfolio as of June 30, 2024 and December 31, 2023 (dollars in thousands):
Investment
Secured Loans
1,040,808
70.8
1,002,621
70.4
918,836
69.7
885,299
69.5
Equipment Financings
333,919
22.7
332,598
23.3
336,934
25.5
336,778
26.4
Warrants
Certain Risk Factors
In the ordinary course of business, the Company manages a variety of risks, including market risk, credit risk and liquidity risk. The Company identifies, measures and monitors risk through various control mechanisms, including investment limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.
Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.
The Company’s investments are generally comprised of securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.
The Company’s investments consist of growth-stage companies, many of which have relatively limited operating histories and may experience variation in operating results. Many of these companies conduct business in regulated industries and could be affected by changes in government regulations. Most of the Company’s borrowers will need additional capital to satisfy their continuing working capital needs and other requirements, and in many instances, to service the interest and principal payments on the debt.
Note 4. Fair Value of Financial Instruments
ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and provides disclosure requirements for fair value measurements. The Company accounts for its investments at fair value in accordance with ASC 820. As of June 30, 2024 and December 31, 2023, the Company’s portfolio investments consisted primarily of investments in secured loans and equipment financings. The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.
In accordance with ASC 820, the Company has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3). See “Note 2 – Summary of Significant Accounting Policies.”
As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
The fair value determination of each portfolio investment categorized as Level 3 requires one or more of the following unobservable inputs:
The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s investments, are (i) earnings before interest, tax, depreciation, and amortization (“EBITDA”) and revenue multiples (both projected and historic), and (ii) volatility assumptions. Significant increases (decreases) in EBITDA and revenue multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. Similarly, significant increases (decreases) in volatility inputs in isolation would result in a significantly higher (lower) fair value assessment. Conversely, significant increases (decreases) in weighted average cost of capital inputs in isolation would result in a significantly lower (higher) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.
The Company’s assets measured at fair value by investment type on a recurring basis as of June 30, 2024 were as follows (in thousands):
Fair Value Measurements at Reporting Date Using
Quoted Prices
Significant
in Active
Other
Markets for
Observable
Unobservable
Identical Assets
Inputs
Measured at
Assets
(Level 1)
(Level 2)
(Level 3)
Net Asset Value(1)
35,992
41,684
9,611
Total Investments at fair value
1,412,895
Escrow Receivables (2)
2,441
46,966
1,415,336
1,473,358
The Company’s assets measured at fair value by investment type on a recurring basis as of December 31, 2023 were as follows (in thousands):
2,326
31,201
15,150
1,268,428
5,556
1,270,869
1,282,382
The methodology for determining the fair value of the Company’s investments is discussed in “Note 2 – Summary of Significant Accounting Policies”. The significant unobservable input used in the fair value measurement of the Company’s escrow receivables is the amount recoverable at the contractual maturity date of the escrow receivable. The following table provides a summary of the significant unobservable inputs used to measure the fair value of the Level 3 portfolio investments as of June 30, 2024.
Fair Value as of
Valuation Techniques/
Weighted
Investment Type
(in thousands)
Methodologies
Inputs (1)
Range
Average (2)
Debt investments
1,011,999
Discounted Cash Flows
Hypothetical Market Yield
11.4% - 57.3%
16.7
256,934
Cost approximates fair value (6)
n/a
22,405
Transaction Precedent (7)
Transaction Price
32,546
Scenario Analysis
Probability Weighting of Alternative Outcomes
1.0% - 80.0%
Debt investment in the JV
Enterprise Value (8)
Equity investments
Market Approach
Revenue Multiple (3)
0.4x - 10.6x
3.6
x
Volatility (5)
43.9% - 93.5%
54.7
Risk-Free Interest Rate
4.4% - 5.1%
4.6
Estimated Time to Exit (in years)
1.0 - 4.3
0.6x - 11.1x
Company Specific Adjustment (4)
34.6% - 125.5%
60.6
4.7
0.9 - 4.8
Total Level 3 Investments
The following table provides a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of December 31, 2023.
858,870
11.6% - 34.6%
17.3
253,250
97,573
5.0% - 100.0%
0.4x - 15.0x
44.2% - 131.3%
62.5
3.0% - 4.8%
1.0 - 4.0
33.3% - 131.3%
68.8
2.9% - 4.8%
1.0 - 4.8
The following table provides a summary of changes in the fair value of the Company’s Level 3 debt, including loans and equipment financings (collectively “Debt”), equity, warrant and escrow receivables portfolio investments for the six months ended June 30, 2024 (in thousands):
Type of Investment
Debt
Fair Value as of December 31, 2023
Purchases, net of deferred fees
455,187
2,465
6,359
464,011
Non-cash conversions (1)
(20,000
24,146
(4,146
Transfers into/(out of) Level 3 (2)
(28,315
Proceeds from sales and paydowns
(298,519
(254
(811
(299,584
Accretion of OID, EOT, and PIK payments
15,508
Net realized gain/(loss)
(4,905
(86
(633
(5,624
Net change in unrealized appreciation/(depreciation)
(5,814
263
4,022
(1,529
Fair Value as of June 30, 2024
Net change in unrealized appreciation/(depreciation) on Level 3 investments still held as of June 30, 2024
(14,572
(736
(799
(16,107
78
The following table provides a summary of changes in the fair value of the Company’s Level 3 debt, including loans and equipment financings (collectively “Debt”), equity, warrant and escrow receivables portfolio investments for the year ended December 31, 2023 (in thousands):
Fair Value as of December 31, 2022
1,048,829
13,245
30,989
1,095,504
613,853
4,676
8,670
627,199
Non-cash conversion (1)
(500
538
(17
Transfers into/(out of) of Level 3 (2)
(7
(468,760
(461
(2,705
(471,926
Accretion of OID and EOT payments
32,953
(15,292
(13,546
(28,071
10,994
10,698
(6,496
Net change in unrealized appreciation/(depreciation) on Level 3 investments still held as of December 31, 2023
(8,420
(2,501
(6,987
(17,908
Fair Value of Financial Instruments Carried at Cost
As of June 30, 2024 and December 31, 2023, the carrying value of the KeyBank Credit Facility was approximately $254.7 million and $213.0 million, respectively. The carrying value of the KeyBank Credit Facility as of June 30, 2024 and December 31, 2023 approximates the fair value, which was estimated using a relative market yield approach with Level 3 inputs.
As of June 30, 2024 and December 31, 2023, the carrying value of the 2025 Notes was approximately $151.5 million and $180.5 million, respectively, net of unamortized deferred financing costs of $1.0 million and $2.0 million, respectively. The 2025 Notes have a fixed interest rate as discussed in “Note 5 – Borrowings.” The fair value of the 2025 Notes as of June 30, 2024 and December 31, 2023 was approximately $152.9 million and $183.4 million, respectively, based on the market closing price of the 2025 Notes, which trade on the Nasdaq Global Select Market under the symbol “TRINL”.
As of June 30, 2024 and December 31, 2023, the carrying value of the Convertible Notes was approximately $49.1 million and $48.8 million, respectively, net of unamortized deferred financing costs and discount of $0.9 million and $1.2 million, respectively. The Convertible Notes have a fixed interest rate as discussed in “Note 5 – Borrowings.” The fair value of the Company’s Convertible Notes as of June 30, 2024 and December 31, 2023 was approximately $50.4 million and $50.6 million, respectively, which was estimated using a relative market yield approach with Level 3 inputs.
As of June 30, 2024 and December 31, 2023, the carrying value of the 4.375% Notes due 2026 (the “August 2026 Notes”) was approximately $123.8 million and $123.5 million, respectively, net of unamortized deferred financing costs and discount of $1.2 million and $1.5 million, respectively. The August 2026 Notes have a fixed interest rate as discussed in “Note 5 – Borrowings.” The fair value of the Company’s August 2026 Notes as of June 30, 2024, and December 31, 2023, was approximately $112.1 million and $111.5 million, respectively, which was estimated using a relative market yield approach with Level 3 inputs.
As of June 30, 2024, and December 31, 2023, the carrying value of the Company’s 4.25% Notes due 2026 (the “December 2026 Notes”) was approximately $74.1 million, and $73.9 million, respectively, net of unamortized
deferred financing fees of $0.9 million and $1.1 million, respectively. The December 2026 Notes have a fixed interest rate as discussed in “Note 5 – Borrowings.” The fair value of the Company’s December 2026 Notes as of June 30, 2024 and December 31, 2023 was approximately $67.4 million and $66.8 million, respectively, which was estimated using a relative market yield approach with Level 3 inputs.
As of June 30, 2024, the carrying value of the Company's 7.875% Notes due 2029 (the “March 2029 Notes”) was approximately $111.8 million, net of unamortized deferred financing fees of $3.2 million. The March 2029 Notes have a fixed interest rate as discussed “Note 5 – Borrowings.” The fair value of the Company's March 2029 Notes as of June 30, 2024 was approximately $115.5 million, based on the market closing price of the March 2029 Notes, which trade on the Nasdaq Global Select Market under the symbol “TRINZ”. The March 2029 Notes began trading on July 1, 2024 and there was no fair value as of December 31, 2023.
Note 5. Borrowings
On October 27, 2021, TCF, a wholly owned subsidiary of the Company, as borrower, and the Company, as servicer, entered into a credit agreement (as amended, the “KeyBank Credit Agreement”) with the lenders from time-to-time party thereto, KeyBank, as administrative agent and syndication agent, and Wells Fargo, National Association, as collateral custodian and paying agent.
The KeyBank Credit Facility includes a commitment of $350.0 million from KeyBank and other banks and allows the Company, through TCF, to borrow up to $400.0 million. Borrowings under the KeyBank Credit Agreement generally bear interest at a rate equal to Adjusted Term SOFR plus 2.85% to 3.25%, subject to the number of eligible loans in the collateral pool. The KeyBank Credit Facility provides for a variable advance rate of up to 60% on eligible term loans and up to 64% on eligible equipment finance loans.
The KeyBank Credit Facility includes a three-year revolving period and a two-year amortization period and matures on October 27, 2026, unless extended. Such credit facility is collateralized by all investment assets held by TCF. The KeyBank Credit Agreement contains representations and warranties and affirmative and negative covenants customary for secured financings of this type, including certain financial covenants such as a consolidated tangible net worth requirement and a required asset coverage ratio.
The KeyBank Credit Agreement also contains customary events of default (subject to certain grace periods, as applicable), including but not limited to the nonpayment of principal, interest or fees; breach of covenants; inaccuracy of representations or warranties in any material respect; voluntary or involuntary bankruptcy proceedings; and change of control of the borrower without the prior written consent of KeyBank.
During the three months ended June 30, 2024, the Company borrowed $192.0 million and made repayments of $127.3 million under the KeyBank Credit Facility. During the six months ended June 30, 2024, the Company borrowed $340.0 million and made repayments of $298.3 million under the KeyBank Credit Facility. The Company incurred approximately $3.6 million of financing costs in connection with the KeyBank Credit Facility that were capitalized and deferred using the straight-line method over the life of the facility. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs related to the KeyBank Credit Facility were $1.8 million and $2.1 million, respectively. As of June 30, 2024 and December 31, 2023, the Company had a borrowing availability of approximately $95.3 million and $137.0 million, respectively.
The summary information regarding the KeyBank Credit Facility is as follows (dollars in thousands):
Stated interest expense
4,508
4,783
9,351
8,651
215
Total interest and amortization of deferred financing costs
4,723
4,987
9,771
9,060
Weighted average effective interest rate
9.4
8.6
9.3
8.4
Weighted average outstanding balance
200,452
232,143
210,769
214,724
For additional information regarding the KeyBank Credit Facility, see “Note 14. Subsequent Events.”2025 Notes
Concurrent with the completion of the Private Common Stock Offering, on January 16, 2020, the Company completed its offering of $105.0 million in aggregate principal amount of the unsecured 2025 Notes in reliance upon the available exemptions from the registration requirements of the Securities Act (the “144A Note Offering”). Keefe, Bruyette & Woods, Inc. (“KBW”), as the initial purchaser, exercised in full its option to purchase or place additional 2025 Notes and on January 29, 2020, the Company issued and sold an additional $20.0 million in aggregate principal amount of the 2025 Notes. As a result, the Company issued and sold a total of $125.0 million in aggregate principal amount of the 2025 Notes pursuant to the 144A Note Offering.
Concurrent with the closing of the 144A Note Offering, on January 16, 2020, the Company entered into a registration rights agreement for the benefit of the purchasers of the 2025 Notes in the 144A Note Offering. Pursuant to the terms of this registration rights agreement, the Company filed with the SEC a registration statement, which was initially declared effective on October 20, 2020, registering the public resale of the 2025 Notes by the holders thereof that elected to include their 2025 Notes in such registration statement.
The 2025 Notes were issued pursuant to an Indenture dated as of January 16, 2020 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (together with its successor in interest, U.S. Bank Trust Company, National Association, the “Trustee”), and a First Supplemental Indenture, dated as of January 16, 2020 (the “First Supplemental Indenture” and together with the Base Indenture, the “2025 Notes Indenture”), between the Company and the Trustee. The 2025 Notes mature on January 16, 2025 (the “Maturity Date”), unless repurchased or redeemed in accordance with their terms prior to such date. The 2025 Notes are redeemable, in whole or in part, at any time, or from time to time, at the Company’s option, on or after January 16, 2023 at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of redemption. The holders of the 2025 Notes do not have the option to have the notes repaid or repurchased by the Company prior to the Maturity Date.
On July 22, 2022, the Company issued $50.0 million in aggregate principal amount of the 2025 Notes in an additional issuance of such 2025 Notes. On July 27, 2022, the underwriters exercised, in full, their option to purchase from the Company an additional $7.5 million in aggregate principal amount of the 2025 Notes solely to cover over-allotments in accordance with the Underwriting Agreement. The 2025 Notes issued pursuant to this offering are treated as a single series with the existing 2025 Notes under the 2025 Notes Indenture (the “Existing 2025 Notes”) and have the same terms as the Existing 2025 Notes (other than issue date and issue price). The 2025 Notes have the same CUSIP number and are fungible and rank equally.
In connection with the additional issuance of the 2025 Notes, the 2025 Notes began trading on the Nasdaq Global Select Market under the symbol “TRINL” on July 29, 2022.
The 2025 Notes bear interest at a fixed rate of 7.00% per year payable quarterly on March 15, June 15, September 15, and December 15 of each year, commencing on March 15, 2020. The 2025 Notes are direct, general unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated.
On May 17, 2024 (the “May Redemption”), the Company redeemed $30.0 million in aggregate principal amount of the $182.5 million in aggregate principal amount of the then outstanding 2025 Notes. As of June 30, 2024, the outstanding aggregate principal amount of the 2025 Notes was $152.5 million.
Aggregate offering costs in connection with the 2025 Notes issuance, including the underwriters' discount and commissions, were approximately $7.8 million, which were capitalized and deferred. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs related to the 2025 Notes were $1.0 million and $2.0 million, respectively.
The components of interest expense and related fees for the 2025 Notes are as follows (in thousands):
2,937
3,194
6,131
6,388
483
982
997
3,420
3,687
7,113
7,385
8.1
167,665
182,500
175,082
August 2026 Notes
On August 24, 2021, the Company issued and sold $125.0 million in aggregate principal amount of its unsecured August 2026 Notes under its shelf Registration Statement on Form N-2. The August 2026 Notes were issued pursuant to the Base Indenture and a Third Supplemental Indenture, dated as of August 24, 2021 (together with the Base Indenture, the “August 2026 Notes Indenture”), between the Company and the Trustee. The August 2026 Notes mature on August 24, 2026, unless repurchased or redeemed in accordance with their terms prior to such date. The August 2026 Notes are redeemable, in whole or in part, at any time, or from time to time, at the Company’s option, at a redemption price equal to the greater of (1) 100% of the principal amount of the August 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the August 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable treasury rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any August 2026 Notes on or after July 24, 2026, the redemption price for the August 2026 Notes will be equal to 100% of the principal amount of the August 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, if a change of control repurchase event (as defined in the August 2026 Notes Indenture) occurs prior to the maturity date of the August 2026 Notes or the Company’s redemption of all outstanding August 2026 Notes, the Company will be required, subject to certain conditions, to make an offer to the holders thereof to repurchase for cash some or all of the August 2026 Notes at a repurchase price equal to 100% of the principal amount of the August 2026 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.
The August 2026 Notes bear interest at a fixed rate of 4.375% per year payable semiannually on February 15 and August 15 of each year, commencing on February 15, 2022. The August 2026 Notes are direct, general
unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated.
Aggregate offering costs in connection with the August 2026 Notes issuance, including the underwriters’ discount and commissions, were approximately $2.9 million, which were capitalized and deferred. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs related to the August 2026 Notes were $1.2 million and $1.5 million, respectively.
The components of interest expense and related fees for the 2026 Notes are as follows (in thousands):
1,367
2,734
288
1,511
3,023
4.8
125,000
March 2029 Notes
On March 28, 2024, the Company issued and sold $115.0 million in aggregate principal amount of its unsecured March 2029 Notes under its shelf Registration Statement on Form N-2, which amount includes the underwriters' exercise, in full, of their option to purchase an additional $15.0 million in aggregate principal amount of the March 2029 Notes.
The March 2029 Notes were issued pursuant to the Base Indenture and a Fifth Supplemental Indenture, dated as of March 28, 2024 (together with the Base Indenture, the “March 2029 Notes Indenture”), between the Company and the Trustee. The March 2029 Notes mature on March 30, 2029, unless repurchased or redeemed in accordance with their terms prior to such date. The March 2029 Notes are redeemable, in whole or in part, at any time, or from time to time, at the Company's option on or after March 30, 2026 upon not less than 30 days’ nor more than 60 days’ written notice prior to the date fixed for redemption thereof, at a redemption price equal to 100% of the outstanding principal amount of the March 2029 Notes, plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to, but excluding, the date fixed for redemption. In addition, if a change of control repurchase event (as defined in the March 2029 Notes Indenture) occurs prior to the maturity date of the March 2029 Notes, unless the Company has exercised its right to redeem the March 2029 Notes in full, holders will have the right, at their option, to require the Company to repurchase for cash some or all of the March 2029 Notes at a repurchase price equal to 100% of the principal amount of the March 2029 Notes being repurchased, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.
The March 2029 Notes bear interest at a fixed rate of 7.875% per year payable quarterly on March 30, June 30, September 30 and December 30 of each year, commencing on June 30, 2024. The March 2029 Notes are direct, general unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated.
The March 2029 Notes began trading on the Nasdaq Global Select Market under the symbol “TRINZ” on April 1, 2024.
Aggregate offering costs in connection with the March 2029 Notes issuance, including the underwriters’ discount and commissions, were approximately $3.2 million, which were capitalized and deferred. As of June 30, 2024, unamortized deferred financing costs related to the March 2029 Notes were $3.2 million. There were no unamortized deferred financing costs as of December 31, 2023.
The components of interest expense and related fees for the March 2029 Notes are as follows (in thousands):
2,264
167
2,431
2,512
8.5
115,000
59,396
December 2026 Notes
On December 15, 2021, the Company issued and sold $75.0 million in aggregate principal amount of its unsecured December 2026 Notes under its shelf Registration Statement on Form N-2. The December 2026 Notes were issued pursuant to the Base Indenture and a Fourth Supplemental Indenture, dated as of December 15, 2021 (together with the Base Indenture, the “December 2026 Notes Indenture”), between the Company and the Trustee. The December 2026 Notes mature on December 15, 2026, unless repurchased or redeemed in accordance with their terms prior to such date. The December 2026 Notes are redeemable, in whole or in part, at any time, or from time to time, at the Company’s option, at a redemption price equal to the greater of (1) 100% of the principal amount of the December 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the December 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable treasury rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any December 2026 Notes on or after November 15, 2026, the redemption price for the December 2026 Notes will be equal to 100% of the principal amount of the December 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, if a change of control repurchase event (as defined in the December 2026 Notes Indenture) occurs prior to the maturity date of the December 2026 Notes or the Company’s redemption of all outstanding December 2026 Notes, the Company will be required, subject to certain conditions, to make an offer to the holders thereof to repurchase for cash some or all of the December 2026 Notes at a repurchase price equal to 100% of the principal amount of the December 2026 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.
The December 2026 Notes bear interest at a fixed rate of 4.25% per year payable semiannually on June 15 and December 15 of each year, commencing on June 15, 2022. The December 2026 Notes are direct, general unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated.
Aggregate offering costs in connection with the December 2026 Notes issuance, including the underwriters’ discount and commissions, were approximately $1.9 million, which were capitalized and deferred. As of June 30, 2024 and December 31, 2023, unamortized deferred financing costs related to the December 2026 Notes were $0.9 million and $1.1 million, respectively.
The components of interest expense and related fees for the December 2026 Notes are as follows (in thousands):
797
1,594
890
1,786
1,780
75,000
6.00% Convertible Notes due 2025
On December 11, 2020, the Company completed a private offering (the “Private Convertible Note Offering”) of $50.0 million in aggregate principal amount of its unsecured Convertible Notes in reliance upon the available exemptions from the registration requirements of the Securities Act. KBW acted as the initial purchaser and placement agent in connection with the Private Convertible Note Offering pursuant to a purchase/placement agreement dated December 4, 2020, by and between the Company and KBW.
The Convertible Notes were issued pursuant to the Base Indenture and a Second Supplemental Indenture, dated as of December 11, 2020 (the “Second Supplemental Indenture” and together with the Base Indenture, the “Convertible Notes Indenture”), between the Company and the Trustee. Concurrent with the closing of the Convertible Note Offering, on December 11, 2020, the Company entered into a registration rights agreement for the benefit of the holders of the Convertible Notes and the shares of common stock issuable upon conversion thereof. Aggregate offering costs in connection with the Convertible Note Offering, including the initial purchaser and placement agent discount and commissions, were approximately $1.9 million, which were capitalized and deferred.
The Convertible Notes bear interest at a fixed rate of 6.00% per year, subject to additional interest upon certain events, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. If an investment grade rating is not maintained with respect to the Convertible Notes, additional interest of 0.75% per annum will accrue on the Convertible Notes until such time as the Convertible Notes have received an investment grade rating of “BBB-” (or its equivalent) or better. The rating remained at investment grade as of June 30, 2024. The Convertible Notes mature on December 11, 2025 (the “Convertible Notes Maturity Date”), unless earlier converted or repurchased in accordance with their terms.
Holders may convert their Convertible Notes, at their option, at any time on or prior to the close of business on the business day immediately preceding the Convertible Notes Maturity Date. The conversion rate was initially 66.6667 shares of the Company’s common stock, per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $15.00 per share of common stock). Effective immediately after the close of business on June 28, 2024, the conversion rate changed to 79.2226 shares of the Company’s common stock, per $1,000 principal amount of the Convertible Notes (equivalent to a conversion price of approximately $12.62 per share of common stock) as a result of a certain cash dividend of the Company. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events, further described in the Convertible Note Indenture, that occur prior to the Convertible Notes Maturity Date, the Company will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances. Upon conversion of the Convertible Notes, the Company will pay or deliver, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at the Company’s election, per $1,000 principal amount of the Convertible Notes, equal to the then existing conversion rate.
At the Company’s option, it may cause holders to convert all or a portion of the then outstanding principal amount of the Convertible Notes plus accrued but unpaid interest, at any time on or prior to the close of business on the business day immediately preceding the Convertible Notes Maturity Date, if the closing sale price of the Company’s common stock for any 30 consecutive trading days exceeds 120% of the conversion price, as may be adjusted. Upon such conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at the Company’s election, per $1,000 principal amount of the Convertible Notes, equal to the then existing conversion rate, and a forced conversion make-whole payment (as defined in the Second Supplemental Indenture), if any, in cash. Otherwise, the Company may not redeem the Convertible Notes at its option prior to maturity.
In addition, if the Company undergoes a fundamental change (as defined in the Second Supplemental Indenture), holders may require the Company to repurchase for cash all or part of such holders’ Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Convertible Notes are direct unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated, and senior in right of payment to all of the Company’s future indebtedness or other obligations that are expressly subordinated, or junior, in right of payment to the Convertible Notes.
The Convertible Notes are accounted for in accordance with ASC 470-20, Debt Instruments with Conversion and Other Options. In accounting for the Convertible Notes, the Company estimated at the time of issuance that the values of the debt and the embedded conversion feature of the Convertible Notes were approximately 99.1% and 0.9%, respectively. The original issue discount of 0.9%, or approximately $0.5 million, attributable to the conversion feature of the Convertible Notes was recorded in “capital in excess of par value” in the Consolidated Statements of Assets and Liabilities as of December 31, 2020.
The components of the carrying value of the Convertible Notes were as follows (in thousands):
Principal amount of debt
Unamortized debt financing cost
(544
(733
Original issue discount, net of accretion
(380
(510
Carrying value of Convertible Notes
The components of interest expense and related fees for the Convertible Notes were as follows (in thousands):
1,500
Amortization of deferred financing costs and original issue discount
Total interest and amortization of deferred financing costs and original issue discount
910
1,819
As of June 30, 2024 and December 31, 2023, the Company was in compliance with the terms of the KeyBank Credit Agreement, the 2025 Notes Indenture, the August 2026 Notes Indenture, the December 2026 Notes Indenture, the March 2029 Notes Indenture and the Convertible Notes Indenture.
Note 6. Commitments and Contingencies
Unfunded Commitments
The Company’s commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans or equipment financings to the Company’s portfolio companies. A portion of these unfunded contractual commitments as of June 30, 2024 and December 31, 2023 are generally dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements contain customary lending provisions that allow the Company relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook for the Company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments as of June 30, 2024 and December 31, 2023 includes only those commitments that are available at the request of the portfolio company and are unencumbered by milestones or additional lending provisions. As of June 30, 2024, the Company had unfunded commitments of $5.2 million and $6.0 million for the JV and EPT 16, respectively, which represented the Company's uncalled capital commitments. As of December 31, 2023, the Company had unfunded commitments of $10.4 million for the JV. There were no unfunded commitments for EPT 16 as of December 31, 2023.
The Company did not have any other off-balance sheet financings or liabilities as of June 30, 2024 or December 31, 2023. The Company will fund its unfunded commitments, if any, from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under its KeyBank Credit Facility) and maintains adequate liquidity to fund its unfunded commitments through these sources.
In the normal course of business, the Company enters into contracts that provide a variety of representations and warranties, and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.
Leases
ASU No. 2016‑02, Leases (Topic 842) (“ASU 2016‑02”) requires that a lessee evaluate its leases to determine whether they should be classified as operating or finance leases. The Company identified significant operating leases for its headquarters in Phoenix, AZ and office spaces in San Diego, CA. The lease for the Company's Phoenix headquarters commenced on July 10, 2021, and was amended on October 31, 2023 to (i) include additional office space and (ii) extend the term of the lease through May 31, 2031. The lease for Suite 200 in the Company's San Diego office commenced on March 10, 2023, and expires on January 31, 2026. The Company entered into a second lease in San Diego for Suite 203, which commenced on June 1, 2024, and expires on November 14, 2025. As of June 30, 2024, the weighted-average remaining lease term for the operating leases was 6.4 years.
The total lease expense incurred for the three and six months ended June 30, 2024 was $0.3 million and $0.6 million, respectively, and for the three and six months ended June 30, 2023 was approximately $0.2 million and $0.3 million, respectively. As of June 30, 2024 and December 31, 2023, the right of use assets related to the office operating leases were $5.4 million and $5.3 million, respectively, and the lease liabilities were $5.7 million and $5.4 million, respectively. As of June 30, 2024 and December 31, 2023, the weighted-average discount rate determined for the operating lease liabilities was 8.62% and 8.60%, respectively.
The following table shows future minimum payments under the Company’s operating leases as of June 30, 2024 (in thousands):
For the Years Ended December 31,
2025
1,255
2026
943
2027
950
2028
974
Thereafter
2,420
The Company may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. As of June 30, 2024, there were no material legal matters or material litigation pending of which the Company is aware.
Note 7. Stockholders' Equity
The Company authorized 200,000,000 shares of its common stock with a par value of $0.001 per share. On September 27, 2019, the Company was initially capitalized by the issuance of 10 shares of its common stock for an aggregate purchase price of $150 to its sole stockholder.
Private Common Stock Offerings
On January 16, 2020, the Company completed the Private Common Stock Offering in reliance upon the available exemptions from the registration requirements of the Securities Act. As a result, the Company issued and sold a total of 7,000,000 shares of its common stock for aggregate net proceeds of approximately $105.0 million. The related over-allotment option was exercised in full on January 29, 2020, pursuant to which the Company issued and sold an additional 1,333,333 shares of its common stock for gross proceeds of approximately $20.0 million. As a result, the Company issued and sold a total of 8,333,333 shares of its common stock pursuant to the Private Common Stock Offering for aggregate net proceeds of approximately $114.4 million, net of offering costs of approximately $10.6 million.
Concurrent with the closing of the Private Common Stock Offering, on January 16, 2020, the Company entered into a registration rights agreement for the benefit of the purchasers of shares of its common stock in such offering and the certain of the investors in the Legacy Funds (the “Legacy Investors”) that received shares of its common stock in connection with the Formation Transactions that were not the Company’s directors, officers and affiliates. Pursuant to the terms of this registration rights agreement, the Company no longer has any registration obligations with respect to such shares because (i) such shares may be sold by any such stockholder in a single transaction without registration pursuant to Rule 144 under the Securities Act, (ii) the Company has been subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, for a period of at least 90 days and is current in the filing of all such required reports and (iii) such shares have been listed for trading on the Nasdaq Global Select Market.
Formation Transactions
On January 16, 2020, immediately following the initial closings of the Private Offerings, the Company used the proceeds from the Private Offerings to complete the Formation Transactions, pursuant to which the Company acquired the Legacy Funds and Trinity Capital Holdings. As consideration for the Legacy Funds, the Company issued 9,183,185 shares of common stock at $15.00 per share for a total value of approximately $137.7 million and paid approximately $108.7 million in cash to certain of the Legacy Investors. As consideration for all of the equity
interests in Trinity Capital Holdings, the Company issued 533,332 shares of its common stock at $15.00 per share for a total value of approximately $8.0 million and paid approximately $2.0 million in cash.
Initial Public Offering
On February 2, 2021, the Company completed its initial public offering of 8,006,291 shares of common stock at a price of $14.00 per share, inclusive of the underwriters’ option to purchase additional shares, which was exercised in full. The Company’s common stock began trading on the Nasdaq Global Select Market on January 29, 2021, under the symbol “TRIN.” Proceeds from this offering were primarily used to pay down a portion of the Company's existing indebtedness outstanding under the Credit Suisse Credit Facility.
ATM Program
On November 9, 2021, the Company established an at-the-market equity program (the “ATM Program”), pursuant to which the Company can issue and sell, from time to time, up to $50.0 million in aggregate offering price of shares of its common stock by any method permitted by law and deemed to be part of an “at-the-market” offering (as defined in Rule 415 under the Securities Act). On December 1, 2023, the Company entered into new equity distribution agreements to (i) increase the maximum aggregate offering price of shares of its common stock to be sold through the ATM Program to $145.7 million and (ii) add one additional sales agent to the ATM Program.
The Company generally uses net proceeds from the ATM Program to make investments in accordance with its investment objective and investment strategy and for general corporate purposes.
During the three months ended June 30, 2024, the Company issued and sold 3,224,708 shares of its common stock at a weighted-average price of $14.79 per share and raised $46.9 million of net proceeds after deducting deferred offering costs and commissions to the sales agents on shares sold under the ATM Program. During the six months ended June 30, 2024, the Company issued and sold 4,877,340 shares of its common stock at a weighted-average price of $14.81 per share and raised $71.2 million of net proceeds after deducting deferred offering costs and commissions to the sales agents on shares sold under the ATM Program.
During the year ended December 31, 2023, the Company issued and sold 4,976,061 shares of its common stock at a weighted-average price of $14.53 per share and raised $70.8 million of net proceeds after deducting commissions to the sales agent on shares sold under the ATM Program.
For additional information regarding the ATM Program, see “Note 14. Subsequent Events.”
Stock Repurchase Program
On November 14, 2022, the Company and its Board authorized a program for the purpose of repurchasing up to $25.0 million of the Company's common stock (the “Repurchase Program”). Under the Repurchase Program, the Company may, but is not obligated to, repurchase its outstanding common stock in the open market from time to time, provided that the Company complies with the prohibitions under its Rule 38a-1 Compliance Manual and Rule 17j-1 Code of Ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market, volume, and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act, as amended. The Repurchase Program was not renewed by the Board and expired on November 11, 2023.
The Company did not repurchase shares of its outstanding common stock during the three and six months ended June 30, 2024. During the year ended December 31, 2023, the Company repurchased 91,691 shares of its outstanding common stock at a weighted average price of $10.91. The repurchased shares were immediately canceled and thus the Company holds no treasury stock.
Equity Offerings
On April 7, 2022, the Company issued 2,754,840 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $18.15 per share, resulting in net proceeds to the Company of approximately $47.9 million, after deducting discounts and commissions and offering expenses. In addition, the underwriters exercised their option to purchase an additional 413,226 shares of common stock, resulting in additional net proceeds to the Company of $7.2 million, after deducting discounts, commissions and offering expenses.
On August 18, 2022, the Company issued 3,587,736 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $15.33 per share, resulting in net proceeds to the Company of approximately $53.3 million, after deducting discounts and commissions and offering expenses. In addition, the underwriters exercised their option in part to purchase an additional 132,168 shares of common stock, resulting in additional net proceeds to the Company of $2.0 million, after deducting discounts, commissions and offering expenses.
On August 8, 2023, the Company issued 5,190,312 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $14.45 per share, resulting in net proceeds to the Company of approximately $72.5 million, after deducting discounts and commissions and offering expenses. In addition, the underwriters exercised their option in part to purchase an additional 500,000 shares of common stock, resulting in additional net proceeds to the Company of $6.9 million, after deducting discounts, commissions and offering expenses.
Distribution Reinvestment Plan
The Company’s amended and restated distribution reinvestment plan (“DRIP”) provides for the reinvestment of distributions in the form of common stock on behalf of its stockholders, unless a stockholder has elected to receive distributions in cash. As a result, if the Company declares a cash distribution, its stockholders who have not “opted out” of the DRIP by the opt out date will have their cash distribution automatically reinvested into additional shares of the Company’s common stock. The share requirements of the DRIP may be satisfied through the issuance of common shares or through open market purchases of common shares by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of the Company’s common stock on the valuation date determined for each distribution by the Board.
The Company’s DRIP is administered by its transfer agent on behalf of the Company’s record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in the Company’s DRIP but may provide a similar distribution reinvestment plan for their clients. During the three months ended June 30, 2024, the Company issued 22,578 shares of common stock for a total of approximately $0.3 million under the DRIP. During the six months ended June 30, 2024, the Company issued 46,034 shares of common stock for a total of approximately $0.7 million under the DRIP.
During the year ended December 31, 2023, the Company issued 165,962 shares of common stock for a total of approximately $2.2 million under the DRIP.
90
The following table summarizes distributions declared and/or paid by the Company since inception:
DeclarationDate
Type
RecordDate
PaymentDate
Per ShareAmount
May 7, 2020
Quarterly
May 29, 2020
June 5, 2020
August 10, 2020
August 21, 2020
November 9, 2020
December 4, 2020
December 30, 2020
January 15, 2021
March 23, 2021
March 31, 2021
April 16, 2021
0.28
June 15, 2021
July 15, 2021
September 13, 2021
December 16, 2021
January 14, 2022
March 15, 2022
April 15, 2022
0.40
Supplemental
0.15
0.42
September 15, 2022
0.45
December 15, 2022
December 30, 2022
January 13, 2023
0.46
March 14, 2023
March 31, 2023
0.47
June 14, 2023
0.48
0.05
September 13, 2023
September 30, 2023
December 14, 2023
0.50
March 14, 2024
April 15, 2024
June 13, 2024
July 15, 2024
7.68
Note 8. Equity Incentive Plans
2019 Long Term Incentive Plan
The Company’s Board initially adopted and approved the 2019 Trinity Capital Inc. Long Term Incentive Plan (as amended, the “2019 Long Term Incentive Plan”) on October 17, 2019 and the Company’s stockholders approved the 2019 Long Term Incentive Plan on June 17, 2021 at the Company’s 2021 Annual Meeting of Stockholders, with the 2019 Long Term Incentive Plan becoming effective on June 17, 2021. The Company’s Board adopted and approved Amendment No. 1 to the 2019 Trinity Capital Inc. Long-Term Incentive Plan on April 23, 2024 to, among other things, increase the total number of shares available for issuance under the 2019 Long Term Incentive Plan by 5,800,000 shares (from 3,600,000 shares to 9,400,000 shares) and the Company’s stockholders approved such amendment on June 12, 2024 at the Company’s 2024 Annual Meeting of Stockholders, with such amendment becoming effective on June 12, 2024. Under the 2019 Long Term Incentive Plan, awards of restricted stock, incentive stock options and non-statutory stock options (together with incentive stock options, “Options”) may be granted to certain of the Company’s executive officers, employee directors and other employees (collectively, the “Employee Participants”) in accordance with the SEC exemptive order the Company received on May 27, 2021 (the “SEC Exemptive Order”). While the 2019 Long Term Incentive Plan contemplates grants of restricted stock, restricted stock units, Options, dividend equivalent rights, performance awards and other stock-based awards to the Employee Participants, the Company only sought and received exemptive relief from the SEC pursuant to the SEC Exemptive Order to grant awards of restricted stock and Options. As a result, the Company will only grant awards of such securities under the 2019 Long Term Incentive Plan. The Employee Participants will have the right to receive dividends on such awarded restricted stock, unless and until the restricted stock is forfeited.
Subject to certain adjustments under the 2019 Long Term Incentive Plan, the maximum aggregate number of shares of the Company’s common stock authorized for issuance under the 2019 Long Term Incentive Plan is
91
9,400,000 shares. The 2019 Long Term Incentive Plan is to be administered by the Compensation Committee of the Board (the “Compensation Committee”) in accordance with the terms of the 2019 Long Term Incentive Plan. The 2019 Long Term Incentive Plan will terminate on the day prior to the tenth anniversary of the date it was initially adopted by the Board, unless terminated sooner by action of the Board or the Compensation Committee, as applicable.
For additional information regarding the 2019 Long Term Incentive Plan, please refer to the Company’s Current Reports on Form 8-K filed with the SEC on June 23, 2021 and June 14, 2024, and the Company’s definitive proxy statement filed with the SEC on April 26, 2024. The following table summarizes issuances, vesting, and retirement of shares under the plan as well as the fair value of granted stock for the six months ended June 30, 2024 and 2023 (dollars in thousands).
Weighted Average
Grant Date Fair Value
Unvested as of Beginning of Period
1,326,891
14.56
1,041,721
16.98
Shares Granted
753,051
14.80
783,100
12.85
Shares Vested and Forfeited
(427,979
14.57
(319,342
16.96
Unvested as of Ending of Period
1,651,963
14.67
1,505,479
14.84
Fair Value of Granted Stock
10,063
Compensation cost recognized
5,242
3,970
As of June 30, 2024, there was approximately $23.0 million of total unrecognized compensation costs related to the non-vested restricted stock awards. These costs are expected to be recognized over a weighted average period of 2.9 years. As of December 31, 2023, there was approximately $17.1 million of total unrecognized compensation costs related to non-vested restricted stock awards. These costs were expected to be recognized over a weighted average period of 2.5 years.
2019 Restricted Stock Plan
The Company’s Board initially adopted and approved the Trinity Capital Inc. 2019 Non-Employee Director Restricted Stock Plan (as amended, the “2019 Restricted Stock Plan”) on October 17, 2019 and the Company’s stockholders approved the 2019 Restricted Stock Plan on June 17, 2021 at the Company’s 2021 Annual Meeting of Stockholders, with the 2019 Restricted Stock Plan becoming effecting on June 17, 2021. The Company’s Board adopted and approved Amendment No. 1 to the Trinity Capital Inc. 2019 Non-Employee Director Restricted Stock Plan on April 23, 2024 to increase the total number of shares available for issuance under the 2019 Restricted Stock Plan by 60,000 shares (from 60,000 shares to 120,000 shares) and the Company’s stockholders approved such amendment on June 12, 2024 at the Company’s 2024 Annual Meeting of Stockholders, with such amendment becoming effective on June 12, 2024. The 2019 Restricted Stock Plan provides for grants of restricted stock awards (“Non-Employee Director Awards”) to the Company’s non-employee directors (the “Non-Employee Director Participants”), which are directors who are not “interested persons” of the Company (as such term is defined in Section 2(a)(19) of the 1940 Act) in accordance with the SEC Exemptive Order. The Non-Employee Director Participants will have the right to receive dividends on such awarded restricted stock, unless and until the restricted stock is forfeited.
Subject to certain adjustments under the 2019 Restricted Stock Plan, the total number of shares of the Company’s common stock that may be subject to Non-Employee Director Awards is 120,000 shares. The 2019 Restricted Stock Plan is to be administered by the Compensation Committee, subject to the discretion of the Board. The 2019 Restricted Stock Plan will terminate on the day prior to the tenth anniversary of the date it was approved by the Company’s stockholders, unless terminated sooner by action of the Board.
For additional information regarding the 2019 Restricted Stock Plan, please refer to the Company’s Current Reports on Form 8-K, filed with the SEC on June 23, 2021 and June 14, 2024, and the Company’s definitive proxy statement filed with the SEC on April 26, 2024. The following table summarizes issuances, vesting, and retirement of shares under the plan as well as the fair value of granted stock for the six months ended June 30, 2024 and 2023 (dollars in thousands).
Unvested as of Beginning of Period,
13.16
13,540
14.77
14.99
(15,196
(13,540
Unvested as of Ending of Period,
As of June 30, 2024, there was approximately $0.2 million of total unrecognized compensation costs related to non-vested restricted stock awards. These costs are expected to be recognized over a twelve-month period. As of December 31, 2023, there was approximately $0.1 million of total unrecognized compensation costs related to non-vested restricted stock awards. These costs are expected to be recognized over a six-month period.
Note 9. Earnings Per Share
The following table sets forth the computation of the basic and diluted earnings per common share for the three and six months ended June 30, 2024 and 2023 (in thousands except shares and per share information):
Earnings per common share - basic
Numerator for basic earnings per share
Denominator for basic weighted average shares
Earnings/(Loss) per common share - basic
Earnings per common share - diluted
Numerator for increase in net assets per share
Adjustment for interest expense, fees, and deferred financing costs on Convertible Notes
Numerator for diluted earnings per share
31,738
20,792
47,162
44,185
Adjustment for dilutive effect of Convertible Notes
3,902,715
3,666,795
Denominator for diluted weighted average shares
Earnings/(Loss) per common share - diluted
In certain circumstances, at the Company's election, the Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, which can be dilutive to common stockholders. Diluted earnings (loss) available to each share of common stock outstanding during the reporting period included any additional shares of common stock that would be issued if all potentially dilutive securities were exercised. In accordance with ASU 2020-06, the Company is required to disclose diluted EPS using the if-converted method that assumes conversion of convertible securities at the beginning of the reporting period and is intended to show the maximum dilution effect to common stockholders regardless of how the conversion can occur.
Note 10. Income Taxes
The Company has elected to be treated, currently qualifies, and intends to continue to qualify annually as, a RIC under Subchapter M of the Code for U.S. federal tax purposes. In order to maintain its treatment as a RIC, the Company is generally required to distribute at least annually to its stockholders at least the sum of 90% of its investment company taxable income (which generally includes its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its net tax-exempt income (if any). The Company generally will not be subject to U.S. federal income tax on these distributed amounts, but will pay U.S. federal income tax at corporate rates on any retained amounts.
The amount of taxable income to be paid out as a distribution is determined by the Board each quarter and is generally based upon the annual earnings estimated by management of the Company. Net capital gains, if any, are distributed at least annually, although the Company may decide to retain all or some of those capital gains for investment and pay U.S. federal income tax at corporate rates on those retained amounts. If the Company chooses to do so, this generally will increase expenses and reduce the amount available to be distributed to stockholders. In the event the Company’s taxable income (including any net capital gains) for a fiscal year falls below the amount of distributions declared and paid with respect to that year, however, a portion of the total amount of those distributions may be deemed a return of capital for tax purposes to the Company’s stockholders.
Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the 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 June 30, 2024, $0.6 million and $1.3 million, respectively, was recorded for U.S. federal excise tax. For the three and six months ended June 30, 2023, $0.7 million and $1.3 million, respectively, was recorded for U.S. federal excise tax.
The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments for federal income tax purposes as of June 30, 2024 and December 31, 2023 (in thousands):
Tax Cost of Investments (1)
1,515,961
1,325,006
Unrealized appreciation
41,947
36,468
Unrealized depreciation
(86,991
(81,534
(45,044
(45,066
Note 11. Financial Highlights
The following presents financial highlights (in thousands except share and per share information):
Per Share Data: (1)
Net asset value, beginning of period
13.15
Net investment income
Net realized and unrealized gains/(losses) on investments (2)
(0.13
0.02
Offering costs
(0.02
(0.01
Effect of shares issued and repurchased (3)
0.03
(0.18
Distributions (4)
(1.02
(1.00
Total increase/(decrease) in net assets
(0.07
Net asset value, end of period
Shares outstanding, end of period
Weighted average shares outstanding
Total return based on net asset value (5)(9)
Total return based on market value (6)(9)
32.1
Ratio/Supplemental Data:
Per share market value at end of period
14.14
13.26
Net assets, end of period
Ratio of total expenses to average net assets (10)
16.8
19.8
Ratio of net investment income to average net assets (10)
16.4
17.8
Ratio of interest and credit facility expenses to average net assets (10)
9.9
Portfolio turnover rate (7)(9)
24.7
Asset coverage ratio (8)
188.1
172.5
Senior Securities
Information about the Company’s senior securities (including debt securities and other indebtedness) is shown in the following table as of June 30, 2024, and December 2023, 2022, 2021 and 2020. No senior securities were outstanding as of December 31, 2019.
Class and Period
Total Amount Outstanding Exclusive of TreasurySecurities (1) (in thousands)
Asset Coverage per Unit (2)
Involuntary Liquidating Preference per Unit (3)
Average Market Value per Unit (4)
Credit Suisse Credit Facility
June 30, 2024 (Unaudited)
December 31, 2023(5)
December 31, 2022(5)
135,000
1,770
1,881
1,947
187,500
1,741
81,000
2025 Notes
152,500
1,009
Convertible Notes
1,013
772,200
645,500
620,000
466,000
310,000
Note 12. Related Party Transactions
During the three and six months ended June 30, 2024 and the year ended December 31, 2023, certain related parties received distributions from the Company relating to their shares held. Refer to “Note 7 – Stockholder’s Equity” for further details on the Company’s DRIP and the distributions declared. During the three and six months ended June 30, 2024 and the year ended December 31, 2023, the Company’s directors and executive officers and certain employees received restricted stock awards under the 2019 Long Term Incentive Plan and the 2019 Restricted Stock Plan. Refer to “Note 8 – Equity Incentive Plans” for further details on the Company’s stock-based compensation plans.
The Company has entered into indemnification agreements with its directors and executive officers. The indemnification agreements are intended to provide the Company’s directors and executive officers the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that the Company shall indemnify the director or executive officer who is a party to the agreement, or an “Indemnitee,” including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Maryland law and the 1940 Act.
The Company and its executives and directors are covered by directors and officers insurance. In addition, each of our directors and officers have entered into an indemnification agreement with us pursuant to which our directors and officers are indemnified by us to the maximum extent permitted by Maryland law subject to the restrictions of the 1940 Act.
On December 5, 2022, the Company and the JV Partner formed an unconsolidated joint venture to co-invest with the Company. Refer to “Note 1 – Organization and Basis of Presentation” for further details on the Company’s investment in the JV.
On March 16, 2023, the Company formed the Adviser Sub, an unconsolidated wholly owned subsidiary of the Company that provides investment management services to EPT 16 LLC and may enter into additional management agreements with other Adviser Funds in the future. Refer to “Note 1 – Organization and Basis of Presentation” for further details.
On June 28, 2024, the Company and the Class A Member funded a portion of their respective capital commitments to commence operations of EPT 16. EPT 16 has acquired and intends to acquire, hold and as applicable, dispose of investments that have been originated by the Company. Refer to “Note 1 – Organization and Basis of Presentation” for further details on EPT 16.
Note 13. Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This change is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures and providing new disclosure requirements for entities with a single reportable segment, among other new disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance with respect to the consolidated financial statements and disclosures.
Note 14. Subsequent Events
The Company’s management evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Except as noted below, there have been no subsequent events that occurred during such period that would require recognition or disclosure.
For the period from July 1, 2024 to August 6, 2024, the Company issued and sold 1,497,621 shares of its common stock at a weighted-average price of $14.07 per share and raised $20.8 million of net proceeds after deducting commissions to the sales agents on shares sold under the ATM Program.
September 2029 Notes
On July 19, 2024, the Company issued and sold $100.0 million in aggregate principal amount of its unsecured 7.875% Notes due 2029 (the “September 2029 Notes”) under its shelf Registration Statement on Form N-2. On August 1, 2024, the Company issued and sold an additional $15.0 million in aggregate principal amount of the September 2029 Notes pursuant to the exercise in full of the underwriters’ option to purchase additional September 2029 Notes to cover overallotments.
The September 2029 Notes were issued pursuant to the Base Indenture and a Sixth Supplemental Indenture, dated as of July 19, 2024, between the Company and the Trustee. The September 2029 Notes mature on September 30, 2029, unless repurchased or redeemed in accordance with their terms prior to such date. The September 2029 Notes are redeemable, in whole or in part, at any time, or from time to time, at the Company's option on or after September 30, 2026 upon not less than 30 days’ nor more than 60 days’ written notice prior to the date fixed for redemption thereof, at a redemption price equal to 100% of the outstanding principal amount of the September 2029 Notes, plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to, but excluding, the date fixed for redemption.
The September 2029 Notes bear interest at a fixed rate of 7.875% per year payable quarterly on March 30, June 30, September 30 and December 30, commencing on September 30, 2024. The September 2029 Notes are direct, general unsecured obligations of the Company and rank pari passu, or equal in right of payment, with all of the Company’s existing and future unsecured indebtedness or other obligations that are not so subordinated. The September 2029 Notes began trading on the Nasdaq Global Select Market under the symbol “TRINI” on July 22, 2024.
On August 2, 2024, TCF, as borrower, and the Company, as servicer, entered into an amendment (the “Sixth Amendment”) to the KeyBank Credit Agreement related to the KeyBank Credit Facility. Among other changes, the
Sixth Amendment (i) increased the commitment amount available for borrowing under the KeyBank Credit Facility from $350 million to $440 million and permits the Company to request an increased amount of commitments from a total of up to $400 million to a total of up to $690 million in maximum capacity, subject to certain provisions, (ii) extended the maturity date from October 27, 2026 to July 27, 2029, and (iii) replaced the variable advance rate of up to 60% on eligible term loans and up to 64% on eligible equipment finance loans with a variable advance rate of up to 62% on eligible first lien loans and up to 47% on eligible second lien loans.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Except where the context suggests otherwise, the terms “we,” “us,” “our,” and “the Company” refer to Trinity Capital Inc. and its consolidated subsidiaries. The information contained in this section should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10‑Q.
Forward-Looking Statements
This quarterly report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors discussed under Item 1A. “Risk Factors” of Part II of this quarterly report and Item 1A. "Risk Factors" of Part I of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on March 6, 2024, including but not limited to the following:
Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the SEC. Any forward-looking statements in this Quarterly Report on Form 10-Q should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this quarterly report. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Because we are an investment company, the forward-looking statements and projections contained in this quarterly report are excluded from the safe harbor protections provided by Section 27A(b)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995).
Overview
We are a specialty lending company providing debt, including loans and equipment financings, to growth-stage companies, including venture capital-backed companies and companies with institutional equity investors. We are an internally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. We have elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. As a BDC and a RIC, we are required to comply with certain regulatory requirements.
Our investment objective is to generate current income and, to a lesser extent, capital appreciation through our investments. We seek to achieve our investment objective by making investments consisting primarily of term loans and equipment financings and, to a lesser extent, working capital loans, equity and equity-related investments. In addition, we may obtain warrants or contingent exit fees at funding from many of our portfolio companies, providing an additional potential source of investment returns. We generally are required to invest at least 70% of our total assets in qualifying assets in accordance with the 1940 Act but may invest up to 30% of our total assets in non-qualifying assets, as permitted by the 1940 Act.
We target investments in growth-stage companies, which are typically private companies, including venture-backed companies and companies with institutional equity investors. We define “growth-stage companies” as companies that have significant ownership and active participation by sponsors, such as institutional investors or private equity firms, and expected annual revenues of up to $100 million. Subject to the requirements of the 1940 Act, we are not limited to investing in any particular industry or geographic area and seek to invest in under-financed segments of the private credit markets.
Our loans generally may have initial interest-only periods of up to 24 months, and our equipment financings generally begin amortizing immediately. Our loans and equipment financings generally have a total term of up to 60 months. These investments are typically secured by a blanket first position lien, a specific asset lien on mission-critical assets and/or a blanket second position lien. We may also make a limited number of direct equity and equity-related investments in conjunction with our debt investments. We target growth-stage companies that have recently issued equity to raise cash to offset potential cash flow needs related to projected growth, have achieved positive cash flow to cover debt service, or have institutional investors committed to providing additional funding. A loan or equipment financing may be structured to tie the amortization of the loan or equipment financing to the portfolio company’s projected cash balances while cash is still available for operations. As such, the loan or equipment financing may have a reduced risk of default. We believe that the amortizing nature of our investments will mitigate risk and significantly reduce the risk of our investments over a relatively short period. We focus on protecting and recovering principal in each investment and structure our investments to provide downside protection.
Our History
Trinity Capital Inc. was incorporated under the general corporation laws of the State of Maryland on August 12, 2019 and commenced operations on January 16, 2020. Prior to January 16, 2020, we had no operations, except for matters relating to our formation and organization as a BDC.
On January 16, 2020, through a series of transactions, we acquired Trinity Capital Investment, LLC, Trinity Capital Fund II, L.P., Trinity Capital Fund III, L.P., Trinity Capital Fund IV, L.P., and Trinity Sidecar Income Fund, L.P. (collectively, the "Legacy Funds") and all of their respective assets, including their respective investment portfolios, as well as Trinity Capital Holdings, LLC, a holding company whose subsidiaries managed and/or had the right to receive fees from certain of the Legacy Funds. In order to complete these transactions, we used a portion of the proceeds from our private equity offering and private debt offering that occurred on January 16, 2020.
On February 2, 2021, we completed our initial public offering of 8,006,291 shares of our common stock at a price of $14.00 per share, inclusive of the underwriters’ option to purchase additional shares, which was exercised in full. Our common stock began trading on the Nasdaq Global Select Market on January 29, 2021 under the symbol “TRIN.” Proceeds from this offering were primarily used to pay down a portion of our existing indebtedness outstanding.
On December 5, 2022, the Company entered into a joint venture agreement with certain funds and accounts managed by a specialty credit manager (collectively, the “JV Partner”) to co-manage Senior Credit Corp 2022 LLC (the “JV”). The JV invests in secured loans and equipment financings to growth-stage companies that have been originated by the Company. To achieve these goals, the Company has agreed to offer the JV the opportunity to purchase up to 40% in dollar amount, but not less than 25% in dollar amount, of the entire amount of each secured loan and equipment financing advance originated by the Company during the period commencing on September 1, 2022 and ending on June 5, 2026.
On March 17, 2023, the Company formed an unconsolidated wholly owned subsidiary, Trinity Capital Adviser LLC (“Adviser Sub”). The Company was granted exemptive relief by the SEC that permits the Company to organize, acquire, wholly own and operate the Adviser Sub as an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Adviser Act”). The Adviser Sub may provide investment advisory and related services to one or more investment vehicles (the “Adviser Funds”) in the future with ownership by one or more unrelated third-party investors (“External Parties”) and receive fee income for such services.
On June 28, 2024, the Company and a specialty credit manager (the “Class A Member”) funded a portion of their respective capital commitments to commence operations of a credit fund, EPT 16 LLC (“EPT 16”), a Delaware limited liability company. EPT 16 has acquired and intends to acquire, hold and, as applicable, dispose of investments that have been originated by the Company.
Critical Accounting Estimates and Policies
The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ materially. Our critical accounting estimates, including those relating to valuation of investments and income recognition, are described below. Please refer to “Note 2 – Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of our significant accounting policies.
The most significant estimate inherent in the preparation of the Company’s consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. The Company’s investments are carried at fair value in accordance with the 1940 Act and Accounting Standards Codification (“ASC”) 946, Financial Services — Investment Companies (“ASC 946”) and measured in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value,
establishes a framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and provides disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that each of the portfolio investments is sold in a hypothetical transaction in the principal or, as applicable, most advantageous market using market participant assumptions as of the measurement date. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. The Company values its investments at fair value as determined in good faith by the Company’s Board of Directors (the “Board”) in accordance with the provisions of ASC 820 and the 1940 Act.
The SEC adopted Rule 2a-5 under the 1940 Act ("Rule 2a-5"), which establishes a framework for determining fair value in good faith for purposes of the 1940 Act. As adopted, Rule 2a-5 permits boards of directors to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. The SEC also adopted Rule 31a-4 under the 1940 Act (“Rule 31a-4”), which provides the recordkeeping requirements associated with fair value determinations. While the Company's Board has not elected to designate a valuation designee, the Company has adopted certain revisions to its valuation policies and procedures to comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.
While the Board is ultimately and solely responsible for determining the fair value of the Company’s investments, the Company has engaged independent valuation firms to provide the Company with valuation assistance with respect to its investments. The Company engages independent valuation firms on a discretionary basis. Specifically, on a quarterly basis, the Company identifies portfolio investments with respect to which an independent valuation firm assists in valuing certain investments. The Company selects these portfolio investments based on a number of factors, including, but not limited to, the potential for material fluctuations in valuation results, size, credit quality and the time lapse since the last valuation of the portfolio investment by an independent valuation firm.
Investments recorded on our Consolidated Statements of Assets and Liabilities are categorized based on the inputs to the valuation techniques as follows:
Given the nature of lending to venture capital-backed growth-stage companies, substantially all of the Company’s investments in these portfolio companies are considered Level 3 assets under ASC 820 because there is no known or accessible market or market indexes for these investment securities to be traded or exchanged. The Company uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures. This system takes into account both quantitative and qualitative factors of the portfolio companies. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The carrying amounts of the Company’s financial instruments, consisting of cash, investments, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.
The Company recognizes interest income on an accrual basis and recognizes it as earned in accordance with the contractual terms of the loan agreement to the extent that such amounts are expected to be collected. Original issue discount (“OID”) initially includes the estimated fair value of detachable warrants obtained in conjunction with the origination of debt securities, and is accreted into interest income over the term of the loan as a yield enhancement based on the effective yield method. Interest income from payment-in-kind ("PIK") represents contractually deferred interest added to the loan balance recorded on an accrual basis to the extent such amounts are expected to be collected.
In addition, the Company may also be entitled to an end-of-term (“EOT”) payment. EOT payments to be paid at the termination of the debt agreement are accreted into interest income over the contractual life of the debt based on the effective yield method. When a portfolio company pre-pays their indebtedness prior to the scheduled maturity date, the acceleration of the unaccreted OID and EOT is recognized as interest income.
Income related to application or origination payments, including facility commitment fees, net of related expenses and generally collected in advance, are accreted into interest income over the contractual life of the loan. The Company recognizes nonrecurring fees and additional OID and EOT received in consideration for contract modifications commencing in the quarter relating to the specific modification.
The Company records dividend income on an accrual basis to the extent amounts are expected to be collected. Dividend income is recorded when dividends are declared by the portfolio company or at such other time that an obligation exists for the portfolio company to make a distribution. The Company recorded $0.3 and $0.5 million, respectively, in dividend income during the three and six months ended June 30, 2024 and no dividend income was recorded during the three and six months ended June 30, 2023.
Portfolio Composition and Investment Activity
As of June 30, 2024, our investment portfolio had an aggregate fair value of approximately $1,424.8 million and was comprised of approximately $1,002.6 million in secured loans, $332.6 million in equipment financings, and $89.6 million in equity and warrants, across 136 portfolio companies. As of December 31, 2023, our investment portfolio had an aggregate fair value of approximately $1,275.2 million and was comprised of approximately $885.3 million in secured loans, $336.8 million in equipment financings, and $53.1 million in equity and warrants, across 120 portfolio companies.
A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments are shown in the following table as of June 30, 2024 and December 31, 2023:
104
The following table shows the composition of our investment portfolio by geographic region at cost and fair value as a percentage of total investments as of June 30, 2024 and December 31, 2023. The geographic composition is determined by the location of the corporate headquarters of the portfolio company.
United States
Set forth below is a table showing the industry composition of our investment portfolio at cost and fair value as a percentage of total investments as of June 30, 2024 and December 31, 2023:
As of June 30, 2024 and December 31, 2023, the debt, including loans and equipment financings, in our portfolio had a weighted average time to maturity of approximately 3.1 and 3.2 years, respectively. Additional information regarding our portfolio is set forth in the Consolidated Schedule of Investments and the related notes thereto included with this Quarterly Report on Form 10-Q.
Concentrations of Credit Risk
Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount. Industry and sector concentrations will vary from period to period based on portfolio activity.
As of June 30, 2024 and December 31, 2023, the Company’s ten largest portfolio companies represented approximately 27.4% and 31.6%, respectively, of the total fair value of the Company’s investments in portfolio companies. As of June 30, 2024 and December 31, 2023, the Company had seven and four portfolio companies, respectively, that represented 5% or more of the Company’s net assets.
Investment Activity
During the six months ended June 30, 2024, we invested approximately $349.3 million in 18 new portfolio companies, approximately $114.9 million in 23 existing portfolio companies, and approximately $9.2 million in the
multi-sector holdings, excluding deferred fees. During the six months ended June 30, 2024, we received an aggregate of $328.9 million in proceeds from repayments and sales of our investments, including proceeds of approximately $83.7 million from early repayments on our debt investments and $153.2 million sales of investments.
During the year ended December 31, 2023, we invested approximately $414.3 million in 17 new portfolio companies, approximately $216.5 million in 25 existing portfolio companies, and approximately $11.0 million in the JV, excluding deferred fees. During the year ended December 31, 2023, we received an aggregate of $471.9 million in proceeds from repayments and sales of our investments, including proceeds of approximately $326.6 million from early repayments on our debt investments and sales of debt investments.
The following table provides a summary of the changes in the investment portfolio for the six months ended June 30, 2024 and the year ended December 31, 2023 (in thousands):
Year Ended
Beginning Portfolio, at fair value
1,094,386
469,567
632,754
Non-cash conversion
Principal payments received on investments
(91,916
(142,113
Proceeds from early debt repayments
(83,739
(169,745
Sales of investments
(153,223
(160,068
15,509
15,063
Ending Portfolio, at fair value
The level of our investment activity can vary substantially from period to period depending on many factors, including the amount of debt, including loans and equipment financings, and equity capital required by growth-stage companies, the general economic environment and market conditions and the competitive environment for the types of investments we make.
Portfolio Asset Quality
Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding loans and equipment financings. Our portfolio management team monitors and, when appropriate, recommends changes to the investment risk ratings. Our investment committee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Board and its audit committee.
107
For our investment risk rating system, we review seven different criteria and, based on our review of such criteria, we assign a risk rating on a scale of 1 to 5, as set forth in the following illustration.
The following table shows the distribution of our secured loan and equipment financing investments on the 1 to 5 investment risk rating scale range at fair value as of June 30, 2024 and December 31, 2023 (dollars in thousands):
Investment Risk Rating
Investments at
Percentage of
Scale Range
Designation
Total Portfolio
4.0 - 5.0
Very Strong Performance
70,183
40,584
3.0 - 3.9
Strong Performance
306,187
22.9
277,867
2.0 - 2.9
Performing
886,030
66.4
805,730
65.9
1.6 - 1.9
Watch
53,449
56,740
1.0 - 1.5
Default/Workout
8,035
0.6
33,452
Total Debt Investments excluding Senior Credit Corp 2022 LLC
1,323,884
99.2
1,214,373
99.4
.
Senior Credit Corp 2022 LLC (1)
Total Debt Investments
As of both June 30, 2024 and December 31, 2023, our debt investments had a weighted average risk rating score of 2.7.
Debt Investments on Non-Accrual Status
When a debt security becomes 90 days or more past due, or if our management otherwise does not expect that principal, interest, and other obligations due will be collected in full, we will generally place the debt security on non-accrual status and cease recognizing interest income on that debt security until all principal and interest due has been paid or we believe the borrower has demonstrated the ability to repay its current and future contractual obligations. Any uncollected interest is reversed from income in the period that collection of the interest receivable
is determined to be doubtful. However, we may make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection.
As of June 30, 2024, loans to three portfolio companies and equipment financings to one portfolio company were on non-accrual status with a total cost of approximately $55.6 million, and a total fair value of approximately $24.0 million, or 1.8%, of the fair value of the Company’s debt investment portfolio. As of December 31, 2023, loans to three portfolio companies and equipment financings to two portfolio companies were on non-accrual status with a total cost of approximately $60.8 million, and a total fair value of approximately $43.2 million, or 3.5%, of the fair value of the Company’s debt investment portfolio.
Results of Operations
The following discussion and analysis of our results of operations encompasses our consolidated results for the three and six months ended June 30, 2024 and 2023.
Investment Income
The following table sets forth the components of investment income (in thousands). The components of investment income have been updated to a preferred presentation and the prior year has been amended to conform with the new preferred presentation.
Stated interest income
41,827
33,785
79,667
66,435
Amortization of OID and EOT
6,065
5,825
12,375
11,220
Acceleration of OID and EOT
2,243
2,755
4,086
PIK interest income
1,452
2,164
5,543
3,319
Prepayment penalty and related fees
495
Dividend income
Other fee income
2,309
3,370
2,223
For the three and six months ended June 30, 2024, total investment income was approximately $54.6 million and $105.1 million, respectively, which represents an approximate effective yield of 16.0% and 15.9%, respectively, on the average investments during the year. For the three and six months ended June 30, 2023, total investment income was approximately $46.0 and $87.6 million, respectively, which represents an approximate effective yield of 16.2% and 15.6%, respectively, on the average investments during the year. The increase in investment income for the three and six months ended June 30, 2024 is due to higher interest income and amortization of OID and EOT based on an increased principal value of income producing debt investments.
Operating Expenses and Excise Taxes
Our operating expenses are comprised of interest and fees on our borrowings, employee compensation, professional fees, general and administrative expenses, and excise taxes. Our operating expenses totaled approximately $27.9 million and $23.9 million for the three months ended June 30, 2024 and 2023, respectively, and $53.2 million and $46.2 million for the six months ended June 30, 2024 and 2023, respectively. The increase in our operating expenses for the three and six months ended June 30, 2024 is discussed with respect to each component of such expenses below.
Interest Expense and Other Debt Financing Costs
Our interest expense and other debt financing costs are primarily comprised of interest and fees related to our secured borrowings, the 7.00% Notes due 2025 (the “2025 Notes”), the 4.375% Notes due 2026 (the “August 2026 Notes”), the 4.25% Notes due 2026 (the “December 2026 Notes”), the 7.875% Notes due 2029 (the “March 2029
Notes”), and the 6.00% Convertible Notes due 2025 (the “Convertible Notes”). Interest expense and other debt financing costs on our borrowings totaled approximately $13.9 million and $12.0 million for the three months ended June 30, 2024 and 2023, respectively, and $26.0 million and $23.1 million for the six months ended June 30, 2024 and 2023, respectively. Our weighted average effective interest rate, comprised of interest and amortization of fees and discount, was approximately 7.6% and 7.2% for the three months ended June 30, 2024 and 2023, respectively, and 7.5% and 7.1% for the six months ended June 30, 2024 and 2023, respectively. The increase in interest expense for the three and six months ended June 30, 2024 was primarily due to increased borrowings and increased base rate under our credit facility with KeyBank, National Association (the “KeyBank Credit Facility”).
Employee Compensation and Benefits
Employee compensation and benefits totaled approximately $9.9 million and $8.4 million for the three months ended June 30, 2024 and 2023, respectively, and $19.8 million and $16.0 million for the six months ended June 30, 2024 and 2023, respectively. The increase in employee compensation expenses for the three and six months ended June 30, 2024 relates primarily to the increased variable compensation related to a higher headcount and stock-based compensation. As of June 30, 2024 and 2023, the Company had 83 and 61 employees, respectively.
Professional Fees Expenses
Professional fees expenses, consisting of legal fees, accounting fees, third-party valuation fees, and talent acquisition fees, totaled approximately $1.3 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively, and $2.1 million and $2.8 million for the six months ended June 30, 2024 and 2023, respectively. The decrease in professional fees expenses for the three and six months ended June 30, 2024 resulted primarily from a decrease in legal fees, third-party valuation fees and other consulting fees.
General and Administrative Expenses
General and administrative expenses include insurance premiums, rent, state taxes and various other expenses related to our ongoing operations. Our general and administrative expenses totaled approximately $2.1 million and $1.5 million for the three months ended June 30, 2024 and 2023, respectively, and $4.0 million and $3.0 million for the six months ended June 30, 2024 and 2023, respectively. The increase in general and administrative expenses for the three and six months ended June 30, 2024 was primarily due to additional office rent and related expenses.
Excise Taxes
Our excise taxes totaled approximately $0.6 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively, and $1.3 million and $1.3 million for the six months ended June 30, 2024 and 2023, respectively.
Net Investment Income
For the three months ended June 30, 2024 and 2023, we recognized approximately $54.6 million and $46.0 million, respectively, in total investment income as compared to approximately $27.9 million and $23.9 million, respectively, in total expenses, including excise tax expense, resulting in net investment income of $26.7 million and $22.1 million, respectively. For the six months ended June 30, 2024 and 2023, we recognized approximately $105.1 million and $87.6 million, respectively, in total investment income as compared to approximately $53.2 million and $46.2 million, respectively, in total expenses including excise tax expense, resulting in net investment income of $51.9 million and $41.4 million, respectively.
Net Realized Gains and Losses
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written off during the period.
During the six months ended June 30, 2024, our gross realized gains primarily consisted of the repayment of one equipment financing and the sale of one equity position. Our gross realized losses primarily consisted of the sale of one equity position, the repayment of one debt position and the conversion of debt positions in three portfolio companies. During the six months ended June 30, 2023, our gross realized gains primarily consisted of the repayment of one loan, one equipment financing, and one warrant, and our gross realized losses primarily consisted of the exit of our debt and equity positions in two portfolio companies.
The net realized gains (losses) from the sales, repayments, or exits of investments for the three and six months ended June 30, 2024 and 2023 were comprised of the following (in thousands):
Net realized gain/(loss) on investments:
Gross realized gains
4,282
3,262
8,559
3,800
Gross realized losses
(10,770
(29,873
(13,695
(30,776
Total net realized gains/(losses) on investments
Net Change in Unrealized Appreciation / (Depreciation) from Investments
Net change in unrealized appreciation/(depreciation) from investments primarily reflects the net change in the fair value of the investment portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.
Net unrealized appreciation and depreciation on investments for the three and six months ended June 30, 2024 and 2023 is comprised of the following (in thousands):
Gross unrealized appreciation
12,462
11,321
21,080
21,638
Gross unrealized depreciation
(21,024
(13,613
(37,093
(21,819
Net unrealized appreciation/(depreciation) reclassified related to net realized gains or losses
19,135
26,688
14,586
28,097
Total net unrealized gains/(losses) on investments
During the three months ended June 30, 2024, our net unrealized appreciation totaled approximately $10.6 million, which included net unrealized depreciation of $0.2 million from our warrant investments, net unrealized appreciation of $4.2 million from our equity investments and net unrealized appreciation of $6.6 million from our debt investments.
During the six months ended June 30, 2024, our net unrealized depreciation totaled approximately $1.4 million, which included net unrealized appreciation of $3.6 million from our warrant investments, net unrealized appreciation of $0.8 million from our equity investments and net unrealized depreciation of $5.8 million from our debt investments.
During the three months ended June 30, 2023, our net unrealized appreciation totaled approximately $24.4 million, which included net unrealized appreciation of $11.5 million from our warrant and equity investments and net unrealized appreciation of $12.9 million from our debt investments.
During the six months ended June 30, 2023, our net unrealized appreciation totaled approximately $27.9 million, which included net unrealized appreciation of $6.8 million from our warrant and equity investments and net unrealized appreciation of $21.1 million from our debt investments.
Net Increase (Decrease) in Net Assets Resulting from Operations
Net increase in net assets resulting from operations during the three and six months ended June 30, 2024, totaled approximately $30.8 million and $45.3 million, respectively. Net increase in net assets resulting from operations during the three and six months ended June 30, 2023, totaled approximately $19.9 million and $42.4 million, respectively.
Net Increase (Decrease) in Net Assets Resulting from Operations and Earnings Per Share
For the three months ended June 30, 2024, basic and diluted net increase in net assets per common share were $0.61 and $0.59, respectively. For the six months ended June 30, 2024, basic and diluted net increase in net assets per common share were $0.94 and $0.90, respectively.
For the three months ended June 30, 2023, basic and diluted net decrease in net assets per common share were $0.55 and $0.52, respectively. For the six months ended June 30, 2023, basic and diluted net increase in net assets per common share were $1.19 and $1.13, respectively.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from the net proceeds of offerings of our securities, including our “at-the-market” offering, the 2025 Notes offering, the Convertible Notes offering, the August 2026 Notes offering, the December 2026 Notes offering and the March 2029 Notes offering, borrowings under the KeyBank Credit Facility, and cash flows from our operations, including investment sales and repayments, as well as income earned on investments and cash equivalents. Our primary use of our funds includes investments in portfolio companies, payments of interest on our outstanding debt, and payments of fees and other operating expenses we incur. We also expect to use our funds to pay distributions to our stockholders. We have used, and expect to continue to use, our borrowings, including under the KeyBank Credit Facility or any future credit facility, as well as proceeds from the turnover of our portfolio, to finance our investment objectives and activities.
From time to time, we may enter into additional credit facilities, increase the size of our existing KeyBank Credit Facility, or issue additional securities in private or public offerings. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions, and other factors.
During the six months ended June 30, 2024, we experienced a net increase in cash and cash equivalents in the amount of $41.3 million, which is the net result of $144.8 million of cash provided by financing activities, offset by $103.3 million of cash used in operating activities and $0.2 million of cash used in investing activities. During the six months ended June 30, 2023, we experienced a net increase in cash and cash equivalents in the amount of $1.7 million, which is the net result of $15.4 million of cash used in operating activities and $1.4 million of cash used in investing activities, offset by $18.5 million of cash provided by financing activities.
As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $46.1 million and $4.8 million, respectively, of which $5.8 million and $3.1 million, respectively, was held in the Goldman Sachs Financial Square Government Institutional Fund. Cash held in demand deposit accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and therefore is subject to credit risk. All of the Company’s cash deposits are held at large established high credit quality financial institutions, and management believes that the risk of loss associated with any uninsured balances is remote.
As of June 30, 2024 and December 31, 2023, we had approximately $95.3 million and $137.0 million, respectively, of available borrowings under the KeyBank Credit Facility, subject to its terms and regulatory requirements. Cash and cash equivalents, taken together with available borrowings under the KeyBank Credit Facility, as of June 30, 2024, are expected to be sufficient for our investing activities and to conduct our operations in the near term and long term.
Refer to “Note 5 – Borrowings” and “Note 14 – Subsequent Events” in the notes to our consolidated financial statements included in this Quarterly Report on Form 10-Q and “—Recent Developments” for additional information, including a discussion of our borrowings.
Asset Coverage Requirements
In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%. On September 27, 2019, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) and our initial stockholder approved the application to us of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, we are permitted to potentially borrow $2 for investment purposes of every $1 of investor equity. As of June 30, 2024, our asset coverage ratio was approximately 188.1% and our asset coverage ratio per unit was approximately $1,881. As of December 31, 2023, our asset coverage ratio was approximately 194.7% and our asset coverage ratio per unit was approximately $1,947.
Commitments and Off-Balance Sheet Arrangements
The Company has entered into a capital commitment with each of the JV and EPT 16 to fund capital contributions through June 2026 in the amount of $21.4 million and $10.0 million, respectively. As of June 30, 2024, unfunded commitments were $5.2 million and $6.0 million for the JV and EPT 16, respectively. As of December 31, 2023, unfunded commitments were $10.4 million for the JV and there were no unfunded commitments for EPT 16. The Company did not have any other off-balance sheet financings or liabilities as of June 30, 2024 or December 31, 2023.
The Company’s commitments and contingencies consist primarily of unfunded commitments to extend credit in the form of loans to the Company’s portfolio companies. A portion of these unfunded contractual commitments as of June 30, 2024 and December 31, 2023 are dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements with its portfolio companies generally contain customary lending provisions that allow the Company relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook for the company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments includes only those which are available at the request of the portfolio company and unencumbered by milestones. As of June 30, 2024 and December 31, 2023, the Company did not have any outstanding unfunded commitments. The Company will fund future unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the KeyBank Credit Facility).
Contractual Obligations
A summary of our contractual payment obligations as of June 30, 2024, is as follows:
Payments Due by Period
Less than 1
year
1 - 3 years
4 - 5 years
After 5 years
Operating Leases
3,148
1,965
1,429
Total Contractual Obligations
153,128
507,848
116,965
779,370
We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. All distributions will be paid at the discretion of the Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as the Board may deem relevant from time to time.
Price Range of Common Stock
Our common stock began trading on the Nasdaq Global Select Market (“Nasdaq”) on January 29, 2021 under the symbol “TRIN” in connection with our IPO, which closed on February 2, 2021. Prior to our IPO, the shares of our common stock were offered and sold in transactions exempt from registration under the Securities Act. As such, there was no public market for shares of our common stock during year ended December 31, 2020. Since our IPO, our common stock has traded at prices both above and below our net asset value per share.
The following table sets forth the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock reported on Nasdaq, the closing sales price as a premium (discount) to net asset value and the dividends declared by us in each fiscal quarter since we began trading on Nasdaq. On August 6, 2024, the last reported closing sales price of our common stock on Nasdaq was $14.08 per share, which represented a premium of approximately 7.3% to our net asset value per share of $13.12 as of June 30, 2024. As of August 6, 2024, we had approximately 55 stockholders of record, which does not include stockholders for whom shares are held in nominee or “street” name.
Price Range
High
Low
High Sales Price Premium (Discount) to Net Asset Value(2)
Low Sales Price Premium (Discount) to Net Asset Value(2)
Cash Dividend Per Share(3)
Year Ending December 31, 2024
Third Quarter (through August 6, 2024)
*
14.74
13.75
Second Quarter
15.26
14.03
16.3
First Quarter
12.88
15.08
13.68
17.1
6.2
Year Ending December 31, 2023
Fourth Quarter
15.40
13.33
1.0
Third Quarter
13.17
15.29
16.1
(4)
13.91
11.36
(13.6
13.07
14.26
10.91
9.1
(16.5
Year Ending December 31, 2022
13.82
10.24
5.1
(22.1
13.74
16.28
12.07
18.5
(12.2
14.62
19.44
14.27
33.0
(2.4
0.57
15.15
20.11
17.00
32.7
12.2
Not determined at time of filing.
Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. At times, our shares of common stock have traded at prices both above and below our net asset value per share. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share.
Related Party Transactions
Certain members of management as well as employees of the Company hold shares of the Company’s stock.
We have entered into indemnification agreements with our directors and executive officers. The indemnification agreements are intended to provide our directors and executive officers with the maximum indemnification permitted under Maryland law and the 1940 Act. Each indemnification agreement provides that we shall indemnify the director or executive officer who is a party to the agreement, or an “Indemnitee,” including the advancement of legal expenses, if, by reason of his or her corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding, to the maximum extent permitted by Maryland law and the 1940 Act.
Refer to “Note 12 – Related Party Transactions” included in the notes to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.Recent DevelopmentsATM Program
For the period from July 1, 2024 to August 6, 2024, the Company issued and sold 1,497,621 shares of its common stock at a weighted-average price of $14.07 per share and raised $20.8 million of net proceeds after deducting commissions to the sales agents on shares sold under the ATM Program.September 2029 Notes
On July 19, 2024, the Company issued and sold $100.0 million in aggregate principal amount of its unsecured 7.875% Notes due 2029 (the “September 2029 Notes”) under its shelf Registration Statement on Form N-2. On August 1, 2024, the Company issued and sold an additional $15.0 million in aggregate principal amount of the September 2029 Notes pursuant to the exercise in full of the underwriters’ option to purchase additional September 2029 Notes from the Company to cover overallotments.
On August 2, 2024, TrinCap Funding, LLC (“TCF”), a wholly owned special purpose subsidiary of the Company, as borrower, and the Company, as servicer, entered into an amendment (the “Sixth Amendment”) to the Credit Agreement, dated as of October 27, 2021 (as amended, the “KeyBank Credit Agreement”), related to the KeyBank Credit Facility. Among other changes, the Sixth Amendment (i) increased the commitment amount available for borrowing under the KeyBank Credit Facility from $350 million to $440 million and permits the Company to request an increased amount of commitments from a total of up to $400 million to a total of up to $690 million in maximum capacity, subject to certain provisions, (ii) extended the maturity date from October 27, 2026 to July 27, 2029, and (iii) replaced the variable advance rate of up to 60% on eligible term loans and up to 64% on eligible equipment finance loans with a variable advance rate of up to 62% on eligible first lien loans and up to 47% on eligible second lien loans.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including valuation risk and interest rate risk. Uncertainty with respect to the economic effects of the overall market conditions has introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below.
Valuation Risk
Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.
In accordance with Rule 2a-5, our Board periodically assesses and manages material risks associated with the determination of the fair value of our investments.
Interest Rate Risk
Interest rate sensitivity and risk refer to the change in earnings that may result from changes in the level of interest rates. To the extent that we borrow money to make investments, including under the KeyBank Credit Facility or any future financing arrangement, our net investment income will be affected by the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of borrowing funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates, including as a result of inflation, will not have a material adverse effect on our net investment income. Inflation is likely to continue in the near to medium-term, particularly in the United States and Europe, with the possibility that monetary policy may tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins.
As of June 30, 2024, approximately 69.9% of our debt investments based on outstanding principal balance represented floating-rate investments based on Prime or SOFR, and approximately 30.1% of our debt investments based on outstanding principal balance represented fixed rate investments. In addition, borrowings under the KeyBank Credit Facility are subject to floating interest rates based on SOFR, generally bearing interest at a rate of the Adjusted Term SOFR Reference Rate plus 2.85% to 3.25%, subject to the number of eligible debt investments in the collateral pool.
Based on our Consolidated Statements of Operations as of June 30, 2024, the following table shows the annualized impact on net income of hypothetical base rate changes in the Prime Rate on our debt investments (considering interest rate floors for floating-rate instruments) and the hypothetical base rate changes in the SOFR on our KeyBank Credit Facility, assuming that there are no changes in our investment and borrowing structure (in thousands):
Interest
Net
Income
Expense
Income/(Loss)
Up 300 basis points
26,321
7,641
18,680
Up 200 basis points
17,548
5,094
12,454
Up 100 basis points
8,774
2,547
6,227
Down 100 basis points
(7,432
(2,547
(4,885
Down 200 basis points
(12,269
(5,094
(7,175
Down 300 basis points
(16,432
(7,641
(8,791
Currency Risk
Any investments we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved. As of June 30, 2024, we had four foreign domiciled portfolio companies. Our exposure to currency risk related to these debt investments is minimal as payments from such portfolio companies are received in U.S. dollars. No other investments as of June 30, 2024 were subject to currency risk.
Hedging
We do not currently engage in any hedging activities. However, we may, in the future, hedge against interest rate and currency exchange rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. We may also borrow funds in local currency as a way to hedge our non-U.S. denominated investments.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) under the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three and six months ended June 30, 2024 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
We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
Investing in our securities involves a number of significant risks. In addition to the other information set forth in this Quarterly Report on Form 10-Q, including the risk factors set forth below, you should carefully consider the risk factors discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the SEC on March 6, 2024, all of which could materially affect our business, financial condition and/or results of operations. Although the risks described below and in our other SEC filings referenced above represent the principal risks associated with an investment in us, they are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, might materially and adversely affect our business, financial condition and/or results of operations.
Other than as described below, during the three months ended June 30, 2024, there have been no material changes to the risk factors discussed in our SEC filings referenced above. Our executive officers and employees, through the Adviser Sub, may manage other investment funds that operate in the same or a related line of business as we do, and may invest in such funds, which may result in significant conflicts of interest.
Our executive officers and employees, through the Adviser Sub, may manage other investment funds or assets for other clients that operate in the same or a related line of business as we do, and which funds may be invested in by us and/or our executive officers and employees. Accordingly, they may have obligations to, or pecuniary interests in, such other entities, and the fulfillment of such obligations may not be in the best interests of us or our stockholders and may create conflicts of interest.
We may make co-investments with other funds or clients advised by the Adviser Sub in accordance with applicable allocation policies, the 1940 Act and any exemptive relief granted by the SEC, if any. We have applied for co-investment exemptive relief from the SEC that would require, among other things, that we and the Adviser Sub consider whether each such investment opportunity is appropriate for us and the Adviser Sub’s advised funds or clients and, if it is appropriate, to propose an allocation of the investment opportunity between us and such other parties. Our relationship with the Adviser Sub may require us to commit resources to achieving the investment objectives of such other funds or clients advised by the Adviser Sub, while such resources were previously solely devoted to achieving our investment objective. Our investment objective and investment strategies may be very similar to those of such funds or clients advised by the Adviser Sub, and it is likely that an investment may be appropriate for both us and such funds or clients advised by the Adviser Sub. As a consequence, it may be more difficult for us to maintain or increase the size of our investment portfolio in the future. Although we will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in any applicable exemptive order issued by the SEC, we may face conflicts in allocating investment opportunities between us and other funds or clients managed by the Adviser Sub. Because the Adviser Sub may receive performance-based fee compensation from other funds or clients it manages, this may provide the Company and the Adviser Sub an incentive to allocate opportunities to other funds or clients the Adviser Sub manages, instead of us. We and the Adviser Sub have implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be unable to participate in certain investments based upon such allocation policy.
Investments in the Adviser Funds in the form of loans may create conflicts of interests.
We may make investments in the Adviser Funds in the form of loans, which may create conflicts of interests. For example, prior to the receipt by the Adviser Funds of capital contributions from investors for which a capital call notice has or will be given, we may provide loan financing to such Adviser Funds to fund such amounts on a temporary basis in order to permit the Adviser Funds to invest in a target portfolio company within the applicable time constraints prior to the receipt by the Adviser Funds of a capital call in respect of such investment. In addition, we may provide loan financing to the Adviser Funds to cover start-up and initial operating costs prior to the receipt by the Adviser Funds of a capital call in respect of such expenses. The provision of debt financing to the Adviser Funds may cause conflicts of interest, including in situations where our interest as a lender to the Adviser Funds conflicts with the interest of holders of third-party equity interests.
Through the Adviser Sub, we expect to derive revenues from managing third-party funds pursuant to investment management agreements that may be terminated, which could negatively impact our operating results.
We expect to derive our revenues related to the Adviser Sub primarily from dividend income, which we expect the Adviser Sub to pay from net profits generated from advisory fees charged to the funds advised by the Adviser Sub. Such funds may be established with different fee structures, including management fees payable at varying rates and carried interest or performance fees that are payable at varying hurdle rates. Investment advisory, carried interest, and performance fee revenues can be adversely affected by several factors, including market factors, third-party investor preferences, and our Adviser Sub’s performance and track record. A reduction in revenues of our Adviser Sub, without a commensurate reduction in expenses, could adversely affect our Adviser Sub’s business as well as our revenues and results of operations derived from the Adviser Sub. The terms of fund investment management agreements generally give the manager of the fund and the fund itself the right to terminate the investment management agreement in certain circumstances. With respect to funds that are not exempt from registration under the 1940 Act, the fund’s investment management agreement must be approved annually by (a) such fund’s board of directors or by the vote of a majority of such fund’s stockholders and (b) the majority of the independent members of such fund’s board of directors and, in certain cases, by its stockholders, as required by law. The funds’ investment management agreements can also be terminated by the majority of such fund’s stockholders. Termination of any such investment management agreements would reduce the fees we earn from the relevant funds or other clients through the Adviser Sub, which could have a material adverse effect on our results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Dividend Reinvestment Plan
On July 15, 2024, pursuant to its amended and restated distribution reinvestment plan, the Company issued 23,559 shares of its common stock, at a price of $14.15 per share, to stockholders of record as of June 28, 2024 that did not opt out of the Company’s amended and restated distribution reinvestment plan in order to satisfy the reinvestment portion of the Company’s distribution. This issuance was not subject to the registration requirements of the Securities Act. See “Item 1. Consolidated Financial Statements – Note 7. Stockholder’s Equity – Distribution Reinvestment Plan” for more information.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended June 30, 2024, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10‑Q or hereby incorporated by reference to exhibits previously filed with the SEC:
ExhibitNumber
Description of Exhibits
Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 30, 2023).
3.2
Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on January 16, 2020).
4.1
Sixth Supplemental Indenture, dated as of July 19, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed July 19,2024).
4.2
Form of 7.875% Note due 2029 (included as part of and incorporated by reference to Exhibit 4.1 hereto).
10.1#
Amendment No. 1 to the 2019 Trinity Capital Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 14, 2024).
10.2#
Amendment No. 1 to the Trinity Capital Inc. 2019 Non-Employee Director Restricted Stock Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 14, 2024).
10.3
Sixth Amendment to Credit Agreement, dated as of August 2, 2024, relating to the KeyBank Credit Facility, by and among Trinity Capital Inc., as servicer, TrinCap Funding, LLC, as borrower, KeyBank National Association, as administrative agent and syndication agent, Wells Fargo, National Association, as collateral custodian and paying agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 5, 2024).
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document with Embedded Linkbase Documents
Cover Page formatted as Inline XBRL and contained in Exhibit 101
* Filed herewith
** Furnished herewith
# Management contract or compensatory plan or arrangement.
122
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 7, 2024
By:
/s/ Kyle Brown
Kyle Brown
Chief Executive Officer, President and Chief
Investment Officer
(Principal Executive Officer)
/s/ Michael Testa
Michael Testa
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)