Statements contained herein, other than historical facts, may constitute "forward-looking statements." These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as "may," "might," "believe," "will," "provided," "anticipate," "future," "could," "growth," "plan," "intend," "expect," "should," "would," "if," "seek," "possible," "potential," "likely" or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For a discussion of factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading "Risk Factors" in Part I, Item 1A. of our most recent Annual Report filed on Form 10-K.

We may experience fluctuations in our operating results due to a number of factors, including the return on our equity investments, the interest rates payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Overview
We have elected to be regulated as a business development company ("BDC") and we are classified as a non-diversified closed-end management investment company under the Investment Company Act of 1940. As a BDC, we are subject to numerous regulations and restrictions. Unlike most investment companies, we are, and intend to continue to be, taxed as a general business corporation under the Internal Revenue Code of 1986.

We seek to invest in companies operating in the U.S. energy infrastructure sector, primarily in privately-held and micro-cap public companies focused on the midstream and downstream segments, and to a lesser extent the upstream and coal and aggregates segments. Companies in the midstream segment of the energy infrastructure sector engage in the business of transporting, processing or storing natural gas, natural gas liquids, crude oil, refined petroleum products and renewable energy resources. Companies in the downstream segment of the energy infrastructure sector engage in distributing or marketing such commodities, and companies in the upstream segment of the energy infrastructure sector engage in exploring, developing, managing or producing such commodities. The energy infrastructure sector also includes producers and processors of coal and aggregates, two business segments that also are eligible for master limited partnership ("MLP") status. We seek to invest in companies in the energy infrastructure sector that generally produce stable cash flows as a result of their fee-based revenues and proactive hedging programs which help to limit direct commodity price risk.

Performance Review and Investment Outlook Our third quarter produced mixed results. From a market value perspective, our stock price improved, closing at $5.74 per share on August 31, 2009 compared to $4.45 per share at May 31, 2009. Our total return for the nine months ended August 31, 2009 based on market value, assuming reinvestment of quarterly distributions, was 20.55 percent.

Our net asset value, however, declined this quarter from $8.91 per share at May 31, 2009 to $8.76 per share at August 31, 2009. The fair value of High Sierra Energy, LP and International Resource Partners LP, increased this quarter due in part to improved operating performance and/or peer multiples. The fair value of Mowood, LLC also increased this quarter, and the company continues to explore strategic alternatives based on growth opportunities at its Timberline subsidiary. The fair value of Abraxas Energy Partners, L.P. ("Abraxas Energy"), Quest Midstream Partners, L.P. ("Quest Midstream") and VantaCore Partners, L.P. ("VantaCore") decreased this quarter due to company and/or market-specific issues. The fair value of VantaCore was adversely affected by its decision to reduce its quarterly cash distribution to common unitholders and to suspend its distribution to certain subordinated unitholders in light of reduced distributable cash flow projections in 2009. Quest Midstream and Abraxas announced intentions to merge or recombine with their respective affiliated public entities, which would likely provide liquidity for our investments in the future. On October 6, 2009, Quest Resources Corp. (NASDAQ: QRCP) and Quest Energy Partners, L.P. (NASDAQ: QELP) filed a Form S-4 Registration Statement to recombine with Quest Midstream as the newly formed PostRock Energy Corporation, which is expected to be listed on the NASDAQ under the symbol "PSTR." The recombination is subject to the satisfaction of a number of conditions, including the arrangement of one or more satisfactory credit lines for the newly formed company, the approval of the transaction by the unitholders of the three existing entities, and consents from each entity's existing lenders. On October 5, 2009, Abraxas Petroleum Corp. (NASDAQ: AXAS) ("Abraxas Petroleum") closed the merger with Abraxas Energy. Under the terms of the merger agreement, we will receive 4.25 shares of Abraxas Petroleum in exchange for each common unit of Abraxas Energy we own, which equates to approximately 1,946,377 Abraxas Petroleum shares. These shares are subject to an initial 90 day lock-up period followed by a multi-year staggered lock-up period.

As of August 31, 2009, the value of our investment portfolio (excluding short-term investments) was $78,274,585 including equity investments of $69,474,585 and debt investments of $8,800,000 across the following segments of the energy infrastructure sector:

                         Allocation of Portfolio Assets
                          August 31, 2009 (Unaudited)
   (Percentages based on fair value of total investment portfolio, excluding
                            short-term investments)

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                                                                                                                                                                                                                Current
                                                                                                                                                                   Amount                                      Yield on
Name of Portfolio                                                            Nature of its                                                Securities              Invested              Fair Value              Amount
Company (Segment)                                                          Principal Business                                             Held by Us            (in millions)        (in millions) (1)        Invested(2)
Abraxas Energy Partners, L.P.            Natural gas and oil exploitation and development in the Rocky Mountain, Mid-Continent,      Common Units              $           7.6      $               2.3            0.0 %
   (Upstream)(3)                         Permian Basin and Gulf Coast regions of the United States

Eagle Rock Energy Partners, L.P.         Gatherer and processor of natural gas in north, south and east Texas and Louisiana and      Common Units                          2.1                      0.5            0.7
   (Upstream/Midstream)                  producer and developer of upstream and mineral assets located in 17 states                  (Freely Tradable and
                                                                                                                                     Restricted)

EV Energy Partners, L.P. (Upstream)      Acquirer, producer and developer of oil and gas properties in the Appalachian Basin,        Common Unit                           2.7                      1.7            8.7
                                         the Monroe field in Louisiana, Michigan, the Austin Chalk, South Central Texas, the
                                         Permian Basin, the San Juan Basin and the Mid-continent area

High Sierra Energy, LP (Midstream)       Marketing, processing, storage and transportation of hydrocarbons and processing and        Common Units                         24.8                     22.9           10.6
                                         disposal of oilfield produced water with operations primarily in Colorado, Wyoming,
                                         Oklahoma, Florida and Mississippi

High Sierra Energy GP, LLC               General Partner of High Sierra Energy, LP                                                   Equity Interest                       2.0                      1.7            2.8
   (Midstream)(4)

                                                                                                                                                                                                                Current
                                                                                                                                                                    Amount                                     Yield on
Name of Portfolio                                                           Nature of its                                                 Securities               Invested              Fair Value             Amount
Company (Segment)                                                         Principal Business                                              Held by Us             (in millions)        (in millions) (1)       Invested(2)
International Resource Partners LP      Operator of both metallurgical and steam coal mines and related assets in Central           Class A Units                          10.0                      9.8              8.0
   (Coal)                               Appalachia

LONESTAR Midstream Partners, LP         LONESTAR Midstream Partners, LP sold its assets to Penn Virginia Resource Partners,         Class A Units                           3.0                      1.9              N/A
   (Midstream)(5)                       L.P (PVR) in July 2008. LONESTAR has no continuing operations, but currently holds
                                        rights to receive future payments from PVR relative to the sale

LSMP GP, LP (Midstream)(5)              Indirectly owns General Partner of LONESTAR Midstream Partners, LP                          GP LP Units                             0.1                      0.3              N/A

Mowood, LLC (Midstream/                 Natural gas distribution in central Missouri and landfill gas to energy projects            Equity interest                         5.0                      7.5              9.0
   Downstream)(6)

                                                                                                                                    Subordinated Debt                       8.8                      8.8              9.0

Quest Midstream Partners, L.P.          Operator of natural gas gathering pipelines in the Cherokee Basin and interstate            Common Units                           22.2                      4.4              0.0
   (Midstream)(3)                       natural gas transmission pipelines in Oklahoma, Kansas and Missouri

VantaCore Partners LP                   Acquirer and operator of aggregate companies, with quarry and asphalt operations in         Common Units and                       18.4                     16.5              9.6
   (Aggregates)                         Clarksville, Tennessee and sand and gravel operations located near Baton Rouge,             Incentive Distribution
                                        Louisiana                                                                                   Rights

                                                                                                                                                                $         106.7      $              78.3

(1) Fair value as of August 31, 2009.
(2) The current yield has been calculated by annualizing the most recent distribution during the period and dividing by the amount invested in the underlying security. Actual distributions to us are based on each company's available cash flow and are subject to change.
(3) Currently non-income producing.
(4) Includes original purchase of 3 percent equity interest, sale of 0.6274 percent equity interest in July 2007 and subsequent capital calls.
(5) LONESTAR Midstream Partners, LP sold its assets to Penn Virginia Resource Partners, L.P in July 2008. LONESTAR has no continuing operations, but currently holds rights to receive future payments from PVR relative to the sale. The cost basis and the fair value of the LONESTAR and LSMP GP, LP units as of August 31, 2009 are related to the potential receipt of those future payments. Since this investment is not deemed to be "active", the yield is not meaningful and we have excluded it from our weighted average yield to cost on investments as described below in Results of Operations.
(6) Current yield represents an equity distribution on our invested capital. We expect that, pending cash availability, such equity distributions will recur on a quarterly basis at or above such yield.

Portfolio Company Monitoring
Our Adviser monitors each portfolio company to determine progress relative to meeting the company's business plan and to assess the company's strategic and tactical courses of action. This monitoring may be accomplished by attendance at Board of Directors meetings, ad hoc communications with company management, the review of periodic operating and financial reports, an analysis of relevant reserve information and capital expenditure plans, and periodic consultations with engineers, geologists, and other experts. The performance of each private portfolio company is also periodically compared to performance of similarly sized companies with comparable assets and businesses to assess performance relative to peers. Our Adviser's monitoring activities are expected to provide it with information that will enable us to monitor compliance with existing covenants, to enhance our ability to make qualified valuation decisions, and to assist our evaluation of the nature of the risks involved in each individual investment. In addition, these monitoring activities should enable our Adviser to diagnose and manage the common risk factors held by our total portfolio, such as sector concentration, exposure to a single financial sponsor, or sensitivity to a particular geography.

As part of the monitoring process, our Adviser continually assesses the risk profile of each of our private investments. We intend to disclose, as appropriate, those risk factors that we deem most relevant in assessing the risk of any particular investment. Such factors may include, but are not limited to, the investment's current cash distribution status, compliance with loan covenants, operating and financial performance, changes in the regulatory environment or other factors that we believe are useful in determining overall investment risk.

On June 30, 2009, Abraxas entered into a definitive merger agreement with Abraxas Petroleum Corp. The merger is expected to result in a borrowing base sufficient for one tranche of debt, eliminating Abraxas' second lien debt. However, the merger is expected to result in the permanent discontinuation of distributions as well as a more exploration oriented risk profile. Abraxas Petroleum Corp. has scheduled a special meeting of stockholders on October 5, 2009 to vote on the proposed merger. If approved, the merger is anticipated to be completed in the third quarter of 2009. However, the merger is subject to various conditions set forth in the Merger Agreement and it is possible that certain factors could result in the merger being completed at a later time, or not at all. If the merger is not completed, Abraxas, under its current loan agreements, would be faced with significant debt amortization payments due to the maturity of its second lien debt which would most likely preclude its ability to pay distributions until the second lien debt was paid off or refinanced. See Recent Developments for a discussion of the results of the special meeting of stockholders held on October 5, 2009.

High Sierra Energy, LP ("High Sierra")
High Sierra is a holding company with diversified midstream energy assets focused on the processing, transportation, storage and marketing of hydrocarbons. The company's businesses include a natural gas liquids logistics and transportation business in Colorado, natural gas gathering and processing operations in Louisiana, a natural gas storage facility in Mississippi, an ethanol terminal in Nevada, crude and natural gas liquids trucking businesses in Kansas and Colorado, businesses providing crude oil gathering, transportation and marketing services, primarily focused in the Mid-Continent, Western and Gulf Coast regions, water treatment transportation and disposal businesses serving oil and gas producers in Wyoming and Oklahoma, and two asphalt processing, packaging and distribution terminals in Florida. We hold board of directors' observation rights for High Sierra.

High Sierra increased its quarterly cash distribution from $0.61 per unit to $0.63 per unit this quarter. Through June 2009, year-to-date overall performance against budgeted EBITDA (before mark-to-market gains and losses and before minority interests) has been mixed by operating segment, but is near budget in the aggregate, enabling High Sierra to increase its distribution and maintain a strong cash position. Depressed natural gas prices and high basis differentials in certain of the areas served by the company's water handling operations have continued to dampen drilling and production activities, thereby resulting in revenues and EBITDA for these segments that is below budget. Shortfalls in the water operations have been partially offset however, by the strong performance of the company's energy marketing businesses, including the natural gas and natural gas liquids segments. Monroe Gas Storage, High Sierra's Mississippi-based natural gas storage facility joint venture, continues to make progress toward completion. The storage facility is offering limited injection and withdrawal services as it continues development activities. In August 2009, High Sierra extended its marketing segment's revolving credit facility which, together with the earlier expansion of its corporate revolver, further reduces our concerns regarding the company's liquidity position.

International Resource Partners LP ("IRP") IRP 's surface and underground coal mine operations in southern West Virginia are comprised of metallurgical and steam coal reserves, a coal washing and preparation plant, rail load-out facilities and a sales and marketing subsidiary. We hold board of director's observation rights for IRP.

While metallurgical coal pricing and demand have shown some improvement, they remain below levels seen in 2008. IRP's operating results continue to exceed budgeted levels. Year-to-date EBITDA through July 31, 2009 was ahead of budget, largely on the strength of results posted by the company's sales and marketing arm. This, combined with the company's strong cash position resulting from last year's record results, enabled the company to maintain a stable balance sheet position in spite of the challenging coal environment. Metallurgical coal markets showed some improvement during the quarter, as North American and certain overseas steel production increased over the prior quarter. Because steam coal demand has continued to be depressed due to a moderate cooling season and reduced industrial electricity demand, management remains focused on prudently reducing its production costs where possible, and dynamically adjusting its mining plan to suit current conditions. IRP remains in compliance with its bank covenants.

Mowood, LLC ("Mowood")
Mowood is a holding company whose assets include Omega Pipeline, LLC ("Omega") and Timberline Energy, LLC ("Timberline"). Omega is a natural gas local distribution company located on the Fort Leonard Wood military base in south central Missouri. Omega serves the natural gas and propane needs of Fort Leonard Wood and other customers in the surrounding area. Timberline is an owner and developer of projects that convert landfill gas to energy. We currently hold a seat on Mowood's board of directors.

Quest Midstream Partners, L.P. ("Quest") Quest was formed by the spin-off of Quest Resource Corporation's (NASDAQ: QRCP) midstream coal bed methane natural gas gathering assets in the Cherokee Basin. Quest owns more than 2,000 miles of natural gas gathering pipelines (primarily serving Quest Energy Partners, L.P (NASDAQ: QELP)., an affiliate) and over 1,100 miles of interstate natural gas transmission pipelines in Oklahoma, Kansas and Missouri. We hold a seat on Quest's board of directors.

On July 6, 2009, Quest announced it entered into a definitive merger agreement pursuant to which it would recombine with Quest Resources Corp and Quest Energy Partners. The transaction would result in a new publicly-traded company which is not expected to pay distributions. Under the terms of the merger agreement, current Quest equity holders would own approximately 44 percent of the new company. The new company's strategy will be to pursue efficient development of unconventional resource plays, including coalbed methane in the Cherokee Basin of southeast Kansas and northeast Oklahoma and the Marcellus Shale in the Appalachian Basin. The merger would change the risk profile of our investment from primarily a gathering company to an integrated company that has increased drilling risk and commodity exposure. If the recombination does not close, we believe Quest would be able to operate profitably for the remainder of 2009, but would face significant operational risk created by a lower gathering rate in 2010 and significant financial pressures on QELP, its primary customer, and QRCP. Quest remains in compliance with its bank covenants. See Recent Developments for an update on the recombination.

VantaCore Partners LP ("VantaCore")
VantaCore was formed to acquire companies in the aggregate industry and currently owns a quarry and asphalt plant in Clarksville, Tennessee and sand and gravel operations located near Baton Rouge, Louisiana. We hold a seat on VantaCore's board of directors.

VantaCore reduced its quarterly cash distribution to $0.475 per unit, the minimum quarterly distribution, a decrease of five percent from the prior quarter and from last year. In our view, the distribution reduction, together with a suspension in the quarterly distribution to certain of the subordinated unit holders, was a prudent and proactive step taken in view of the difficult operating environment in certain of VantaCore's markets. VantaCore's business is closely linked to the level of commercial construction and infrastructure spending in the two major territories it serves. Due to the weakened economy and difficult credit environment, base line construction spending in these sectors has been significantly reduced, resulting in lower than anticipated revenues. In Clarksville, the lower level of baseline activity has been partially offset by some major projects, including the new Dow/Hemlock semiconductor plant. Vantacore's Southern Aggregates division, which serves parts of Louisiana, has been slower to recover, in part due to significant regional price competition. Vantacore has responded to these challenges by implementing cost saving initiatives, prudently reducing capital spending and making the aforementioned adjustments to its distribution. VantaCore remains in compliance with its bank covenants.

Results of Operations

Comparison of the Three and Nine Months Ended August 31, 2009 and August 31, 2008
Investment Income: Investment income totaled $777,486 and $1,095,539 for the three and nine months ended August 31, 2009, respectively. This represents an increase of $330,750 as compared to the three months ended August 31, 2008, and a decrease of $1,203,007 as compared to the nine months ended August 31, 2008. The increase as compared to the three months ended August 31, 2008 is generally attributable to a smaller percentage of return of capital on distributions from investments. The year-over-year decrease is primarily related to a reduction in distributions received from investments this fiscal year. The weighted average yield to cost on our investment portfolio (excluding short-term investments) as of August 31, 2009 was 6.5 percent, as compared to 8.8 percent at August 31, 2008. The decrease in the weighted average yield to cost is related to the suspension or reduction of distributions from portfolio companies this fiscal year, most notably Abraxas and Quest.

Net Expenses: Net expenses totaled $669,570 and $2,160,252 for the three and nine months ended August 31, 2009. This represents a decrease of $143,197 and $2,165,686, respectively, as compared to the three and nine months ended August 31, 2008. The decrease is primarily related to elimination of the capital gain incentive fee accrual, a decrease in leverage costs and a decrease in base management fees payable to the Adviser as a result of the lower value of the investment portfolio.

Distributable Cash Flow: Our portfolio generates cash flow to us from which we . . .