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Item 1A. Risk Factors

2021-02-25 compared with 2020-02-27 · 750 added, 478 removed, 757 unchanged (62% of the section changed)

Risk Factors.

Investing in our securities involves a number of significant risks.

You should carefully consider these risk factors, together with all of the

other information included in this Annual Report and other reports and documents filed by us with the SEC.

The risks set out below are not the only risks we face.

Additional risks and uncertainties not presently known to us or not presently deemed

material by us may also impair our operations and performance.

If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

In such case, our net asset

value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and

in our securities involves a number of significant risks.

You should carefully consider these risk factors, together with all of the other information included in this Annual Report and other reports and documents filed by us with the SEC.

set out below are not the only risks we face.

Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance.

If any of the following events occur, our business,

financial condition, results of operations and cash flows could be materially and adversely affected.

In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

SUMMARY OF RISK FACTORS

The following is a summary of

the principal risks that you should carefully consider before investing in our securities.

These and other risk factors are described more fully in this Item 1A.

Risk Factors.

Risks Relating to Our Business and Structure

We operate in a highly competitive market for investment opportunities, which could reduce returns and result in

We may have potential conflicts of interest related to obligations that our investment advisor may have to other

We may have conflicts related to other arrangements with our investment advisor.

The Funds are licensed by the SBA, and, therefore, are subject to SBA regulations.

SBA regulations limit the amount of SBA-guaranteed debt that may be

borrowed by an SBIC.

Changes relating to the LIBOR calculation process may adversely affect the value of our portfolio of

LIBOR-indexed, floating-rate debt securities.

Global economic, political and market conditions may adversely affect our business, results of operations and

financial condition, including our revenue growth and profitability.

Events outside of our control, including public health crises such as the ongoing

COVID-19 pandemic, may negatively affect our results of operations and financial performance.

We are currently operating in a period of capital markets disruption and economic uncertainty.

We may not be able to pay you distributions, our distributions may not grow over time, a portion of distributions

paid to you may be a return of capital, and investors in our debt securities may not receive all of the interest income to which they are entitled.

We may choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the

cash you receive.

Due to the COVID-19 pandemic or other disruptions in the economy, we may

not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility.

Internal and external cyber threats, as well as other disasters, could impair our ability to conduct business

Public health threats may affect the market for the 2023 Notes, the February 2024 Notes and the November 2024

Notes, impact the businesses in which we invest and affect our business, operating results and financial condition.

Risks Relating

to Our Investments

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Our investments in portfolio companies may be risky, and we could lose all or part of our investment.

The lack of liquidity in our investments may adversely affect our business.

We may not have the funds to make additional investments in our portfolio companies which could impair the value

of our portfolio.

Defaults by our portfolio companies will harm our operating results.

We are a non-diversified investment company within the meaning of the

therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

Risks Relating to Our Common Stock

Shares of closed-end investment companies, including business development

companies, frequently trade at a discount to their net asset value.

If, in the future, we sell common stock at a discount to our net asset value per share, stockholders who do not

participate in such sale will experience immediate dilution in an amount that may be material.

Our net asset value may have changed significantly since our last valuation.

The market price of our securities may fluctuate significantly.

Sales of substantial amounts of our common stock may have an adverse effect on the market price of our common

Risks Relating to Our Business and Structure

We are dependent upon our investment advisors managing members and our executive officers for our future success.

investment advisor was to lose any of its managing members or we lose any of our executive officers, our ability to achieve our investment objective could be significantly harmed.

If our investment advisor was to

lose any of its managing members or we lose any of our executive officers, our ability to achieve our investment objective could be significantly harmed.

We depend on the investment expertise, skill and network of business contacts of the managing members of our investment advisor, who evaluate,

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We may also borrow from banks and other lenders or issue additional senior securities including preferred stock and debt securities in the future.

If the value of our assets increases, then leveraging would

cause the net asset value attributable to our common stock to increase more sharply than it would have had we not used leverage.

Conversely, if the value of our assets decreases, leveraging would

cause net asset value to decline more sharply than it otherwise would have had we not leveraged.

Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would

without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed.

If the value of our assets increases, then leveraging would cause the net asset value

attributable to our common stock to increase more sharply than it would have had we not used leverage.

Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had

we not leveraged.

Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to

decline more sharply than it would have had we not borrowed.

Such a decline could negatively affect our ability to make distributions to our stockholders.

generally considered a speculative investment technique.

Our ability to achieve our investment objectives may depend in part on our

ability to achieve additional leverage on favorable terms by borrowing from the SBA, banks or other lenders, and there can be no assurance that such additional leverage can in fact be achieved.

As a BDC, we are generally required to meet a coverage ratio at least equal to 200.0% (or 150.0% on and after April 29, 2020) of total

assets to total borrowings and other senior securities, which include all of our borrowings (other than the Funds SBA leverage under the terms of SEC exemptive relief) and any preferred stock we may issue in the future.

If this ratio declines

below 200.0% (or 150% on and after April 29, 2020), we may not be able to incur additional debt and may need to sell a portion of our investments to repay some debt when it is disadvantageous to do so, and we may not be able to make

distributions to our stockholders.

The following table illustrates the effect of leverage on returns from an investment in our common

stock assuming various annual returns, net of expenses.

Leverage is generally considered a speculative investment technique.

Our ability to achieve our investment objectives may depend in part on our ability to

achieve additional leverage on favorable terms by borrowing from the SBA, banks or other lenders, and there can be no assurance that such additional leverage can in fact be achieved.

As a BDC, we are generally required to meet a coverage ratio at least equal to 150.0% of total assets to total borrowings and other senior

securities, which include all of our borrowings (other than the Funds SBA leverage under the terms of SEC exemptive relief) and any preferred stock we may issue in the future.

If this ratio declines below 150.0%, we may not be able to incur

additional debt and may need to sell a portion of our investments to repay some debt when it is disadvantageous to do so, and we may not be able to make distributions to our stockholders.

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net

The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

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Assumes $875.7 million in total assets, $147.0 million in outstanding SBA debentures,

$25.0 million in borrowings under the Credit Facility (as defined below), $182.3 million oustanding of our Public Notes, $412.3 million in net assets as of December 31, 2019, and an average cost of funds of 4.665%.

$0.0 million in borrowings under the Credit Facility (as defined below), $307.3 million oustanding of our Notes, $410.8 million in net assets as of December 31, 2020, and an average cost of funds of 4.680%.

Legislation that took effect in 2018 would allow us to incur additional leverage.

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ratio effective as of April 29, 2020.

At present time, we do not intend to seek stockholder approval to reduce our asset coverage requirement.

Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital.

As we use leverage to partially

finance our investments, our stockholders will experience increased risks of investing in our securities.

If the value of our assets increases, then leveraging would cause the NAV attributable to our common stock to increase more sharply than it

would have had we not leveraged.

Leverage magnifies the potential for loss on investments in our indebtedness and on invested

equity capital.

As we use leverage to partially finance our investments, our stockholders will experience increased risks of investing in our securities.

If the value of our assets increases, then leveraging would cause the NAV attributable to our

common stock to increase more sharply than it would have had we not leveraged.

Conversely, if the value of our assets decreases, leveraging would cause NAV to decline more sharply than it otherwise would have had we not leveraged our business.

Similarly, any increase in our income in excess of

interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we

not borrowed.

Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income

to decline more sharply than it would have had we not borrowed.

Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments, or other payments related to our securities.

Increased leverage may also cause a downgrade of our credit rating.

generally considered a speculative investment technique.

Increased leverage may also cause

a downgrade of our credit rating.

Leverage is generally considered a speculative investment technique.

All of our portfolio investments are recorded at fair value as determined in good faith by our board

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A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms.

Furthermore, many of our competitors are not subject to the regulatory restrictions that the

1940 Act imposes on us as a BDC or the source of income, asset diversification and distribution requirements we must satisfy to maintain our RIC status.

The competitive pressures we face may have a material adverse effect on our business, financial

condition and results of operations.

As a result of this existing and potentially increasing competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make

investments that are consistent with our investment objective.

Our management and incentive fee structure may create incentives for our investment

advisor that are not fully aligned with the interests of our stockholders and may encourage our investment advisor to make speculative investments.

Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source of

income, asset diversification and distribution requirements we must satisfy to maintain our RIC status.

The competitive pressures we face may have a material adverse effect on our business, financial condition and results of operations.

of this existing and potentially increasing competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment

Our management and incentive fee structure may create incentives for our investment advisor that are

not fully aligned with the interests of our stockholders and may encourage our investment advisor to make speculative investments.

The management and incentive fees paid to our investment advisor are based on our total assets (other than cash or cash equivalents but

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interest rates.

If that were to occur, our increase in net earnings, if any, would likely be significantly smaller than the relative increase in the Advisers income incentive fee resulting from such a general increase in interest rates.

If that were to occur, our increase in net earnings, if any, would likely be significantly smaller than the relative increase in the investment advisors income incentive fee resulting from such a general increase in interest

We may have potential conflicts of interest related to obligations that our investment advisor may

have to other clients.

Currently, the Company, the Funds, Fidus Credit Opportunities, L.P.

and Fidus Equity Opportunities Fund,

Currently, the Company, the Funds, Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P.,

and Fidus Equity Fund I, L.P.

are the only investment vehicles managed by our investment advisor.

The Investment Advisory Agreement does not limit our investment advisors ability to act as an investment advisor to other funds, including other BDCs, or other investment

advisory clients.

To the extent our investment advisor acts as an investment advisor to other funds or clients, including Fidus Credit Opportunities, L.P.

and Fidus Equity Opportunities Fund, L.P., we may have conflicts of interest with our

investment advisor or its other clients that elect to invest in similar types of securities as those in which we invest.

Members of our investment advisors investment committee serve or may serve as officers, directors or principals of

entities that operate in the same or a related line of business as we do, or of investment funds or other investment vehicles managed by our investment advisor.

In serving in these multiple capacities, they may have obligations to other clients or

investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders.

Our investment advisor will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable

over time and consistent with an allocation policy approved by our board of directors.

To the extent our investment advisor forms

affiliates, including Fidus Credit Opportunities, L.P.

and Fidus Equity Opportunities Fund, L.P., we may co-invest on a concurrent basis with such affiliates, subject to compliance with applicable regulations

and regulatory guidance and our allocation procedures.

While we may co-invest with investment entities managed by our investment advisor or its affiliates, to the extent permitted by the 1940 Act and the rules

and regulations thereunder, the 1940 Act imposes significant limits on co-investment.

On January 4, 2017, the SEC granted us relief sought in an exemptive application that expands our ability to co-invest in portfolio companies with certain of our affiliates managed by our investment advisor in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as

regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the Order).

Pursuant to the Order, we are permitted to co-invest with our affiliates if a

required majority (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that

(1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, and (2) the

transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

We intend to co-invest, subject to the conditions included in the Order.

Our investment advisor or its investment committee may, from time to time, possess material non-public

information, limiting our investment discretion.

The investment professionals of our investment advisor may serve as directors of,

or in a similar capacity with, companies in which we invest, the securities of which are purchased or sold on our behalf.

In the event that material non-public information is obtained with respect to such

companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of

such companies, and this prohibition may have an adverse effect on us.

We may have conflicts related to other arrangements with our investment

We entered into a license agreement with Fidus Partners, LLC under which Fidus Partners, LLC granted us a non-exclusive (provided that there is not a change in control of Fidus Partners, LLC), royalty-free license to use the name Fidus. Some of the members of our investment advisors investment

The Investment Advisory Agreement does not limit our investment advisors ability to act as an investment advisor to other funds, including other

BDCs, or other investment advisory clients.

To the extent our investment advisor acts as an investment advisor to other funds or clients, including Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P., and Fidus Equity Fund I,

L.P., we may have conflicts of interest with our investment advisor or its other clients that elect to invest in similar types of securities as those in which we invest.

Members of our investment advisors investment committee serve or may

serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds or other investment vehicles managed by our investment advisor.

In serving in these multiple capacities,

they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders.

Our investment advisor will seek to allocate investment opportunities among eligible

accounts in a manner that is fair and equitable over time and consistent with an allocation policy approved by our board of directors.

the extent our investment advisor forms affiliates, including Fidus Credit Opportunities, L.P., Fidus Equity Opportunities Fund, L.P., and Fidus Equity Fund I, L.P., we may co-invest on a concurrent basis with

such affiliates, subject to compliance with applicable regulations and regulatory guidance and our allocation procedures.

While we may co-invest with investment entities managed by our investment advisor or

its affiliates, to the extent permitted by the 1940 Act and the rules and regulations thereunder, the 1940 Act imposes significant limits on co-investment.

On January 4, 2017, the SEC granted us relief

sought in an exemptive application that expands our ability to co-invest in portfolio companies with certain of our affiliates managed by our investment advisor in a manner consistent with our investment

objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the Order).

Pursuant to the Order, we are permitted to co-invest with our affiliates if a required majority (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or

our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

co-invest, subject to the conditions included in the Order.

Our investment advisor or its investment

committee may, from time to time, possess material non-public information, limiting our investment discretion.

The investment professionals of our investment advisor may serve as directors of, or in a similar capacity with, companies in which we invest,

the securities of which are purchased or sold on our behalf.

In the event that material non-public information is obtained with respect to such companies, or we become subject to trading restrictions under the

internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on

We may have conflicts related to other arrangements with our investment advisor.

We entered into a license agreement with Fidus Partners, LLC under which Fidus Partners, LLC granted us a

non-exclusive (provided that there is not a change in control of Fidus Partners, LLC), royalty-free license to use the name Fidus. Some of the members of our investment advisors investment

committee and the senior origination professionals of our investment advisor are members of Fidus Partners, LLC.

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SBICs regulatory capital or $175.0 million, whichever is less.

For three or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million.

If the Funds borrow the maximum amount from

the SBA and thereafter require additional capital, our cost of capital may increase, and there is no assurance that we will be able to obtain additional financing on acceptable terms.

For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million.

If the Funds borrow the maximum amount from the

SBA and thereafter require additional capital, our cost of capital may increase, and there is no assurance that we will be able to obtain additional financing on acceptable terms.

Moreover, the Funds current status as SBICs does not automatically assure that they will continue to receive funding through the SBA

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regulators and governmental authorities in various jurisdictions are ongoing.

Actions by ICE Benchmark Administration, regulators or law

enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined.

Actions by the ICE Benchmark Administration, regulators or

law enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined.

Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based

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banks to submit LIBOR rates after 2021.

It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021.

We have exposure to LIBOR,

including in financial instruments that mature after 2021.

We have exposure to LIBOR, including in financial instruments that mature after 2021.

Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities.

In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, in conjunction with the Alternative Reference Rates

Committee, a steering committee comprised of large U.S.

The Company intends to

monitor the developments with respect to the scheduled phasing out of LIBOR after 2021 and work with its portfolio companies and lenders to ensure such transition away from LIBOR will have minimal impact on its financial condition, but can provide

no assurances regarding the impact of the discontinuation of LIBOR.

In the United States, the Federal Reserve Board and the Federal

Reserve Bank of New York, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities called the Secured

Overnight Financing Rate (SOFR).

The Federal Reserve Bank of New York began publishing SOFR in 2018.

Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at

this time is uncertain.

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have

an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.

dollar LIBOR with a new index calculated by

short-term repurchase agreements, backed by Treasury securities called the Secured Overnight Financing Rate (SOFR).

The Federal Reserve Bank of New York began publishing SOFR in April 2018.

In addition, on March 25, 2020, the U.K.

Financial Conduct Authority stated that, although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing

of many firms transition planning, and the U.K.

Financial Conduct Authority will continue to assess the impact of the COVID-19 outbreak on transition timelines and update the marketplace as soon as

Furthermore, on November 30, 2020, the Intercontinental Exchange, Inc.

(ICE) announced that the ICE Benchmark Administration Limited, a wholly owned subsidiary of ICE and the administrator of LIBOR, announced its plan to

extend the date that most U.S.

LIBOR values would cease being computed from December 31, 2021 to June 30, 2023.

Despite this extension of the U.S.

LIBOR transition deadline for certain LIBOR values, U.S.

regulators continue to urge

financial institutions to stop entering into new LIBOR transactions by the end of 2021.

Although SOFR appears to be the preferred

replacement rate for U.S.

dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom

or elsewhere or, whether the COVID-19 outbreak will have further effect on LIBOR transition plans.

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could

have an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of

Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.

The SEC has proposed a new rule under the 1940 Act that would govern the use of derivatives (defined to include any swap, security-based swap,

futures contract, forward contract, option or any similar instrument) as well as financial commitment transactions (defined to include reverse repurchase agreements, short sale borrowings and any firm or standby commitment agreement or similar

agreement) by BDCs.

Under the proposed rule, a BDC would be required to comply with one of two alternative portfolio limitations and manage the risks associated with derivatives transactions and financial commitment transactions by segregating

certain assets.

Furthermore, a BDC that engages in more than a limited amount of derivatives transactions or that uses complex derivatives would be required to establish a formalized derivatives risk management program.

If the SEC adopts this rule

in the form proposed, our ability to enter into transactions involving such instruments may be hindered, which could have an adverse effect on our business, financial condition and results of operations.

Through comprehensive new global regulatory regimes impacting derivatives ( e.g.

, the Wall Street Reform and Consumer Protection Act of

2010 (Dodd-Frank Act), European Market Infrastructure Regulation (EMIR), Markets in Financial Investments Regulation (MIFIR)/Markets in Financial Instruments Directive (MIFID II)), certain over-the-counter derivatives transactions in which we may engage are either now or will soon be subject to various requirements, such as mandatory central clearing of

transactions which include additional margin requirements and in certain cases trading on electronic platforms, pre-and post-trade transparency reporting requirements and mandatory bi-lateral exchange of initial margin for non-cleared swaps.

The Dodd-Frank Act also created new categories of regulated market participants, such as swap dealers,

security-based swap dealers, major swap participants, and major security-based swap participants who are subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and

other regulatory requirements.

The EU and some other jurisdictions are implementing similar requirements.

Because these requirements are new and evolving (and some of the rules are not yet final), their ultimate impact remains unclear.

However, even

if the Company itself is not located in a particular jurisdiction or directly subject to the jurisdictions derivatives regulations, we may still be impacted to the extent we enter into a derivatives transaction with a regulated market

participant or counterparty that is organized in that jurisdiction or otherwise subject to that jurisdictions derivatives regulations.

Based on information available as of the date of this annual report on Form 10-K, the effect of such requirements will be likely to (directly or indirectly) increase our overall costs of entering into derivatives transactions.

In particular, new margin requirements, position limits and

significantly higher capital charges resulting from new global capital regulations, even if not directly applicable to us, may cause an increase in the pricing of derivatives transactions entered into by market participants to whom such requirements

apply or affect our overall ability to enter into derivatives transactions with certain counterparties.

Such new global capital regulations and the need to satisfy the various requirements by counterparties are resulting in increased funding costs,

increased overall transaction costs, and significantly affecting balance sheets, thereby resulting in changes to financing terms and potentially impacting our ability to obtain financing.

Administrative costs, due to new requirements such as

registration, recordkeeping, reporting, and compliance, even if not directly applicable to us, may also be reflected in our derivatives transactions.

New requirements to trade certain derivatives transactions on electronic trading platforms and

trade reporting requirements may lead to (among other things) fragmentation of the markets, higher transaction costs or reduced availability of derivatives, and/or a reduced ability to hedge, all of which could adversely affect the performance of

certain of our trading strategies.

In addition, changes to derivatives regulations may impact the tax and/or accounting treatment of certain derivatives, which could adversely impact us.

In November 2020, the SEC adopted new rules regarding the ability of a BDC (or a registered investment company) to use derivatives and other

transactions that create future payment or delivery obligations.

BDCs that use derivatives would be subject to a value-at-risk leverage limit, certain other derivatives

risk management program and testing requirements and requirements related to board reporting.

These new requirements would apply unless the BDC qualified as a limited derivatives user, as defined in the SECs adopted rules.

that enters into reverse repurchase agreements or similar financing transactions would need to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions could either (i) comply with

the asset coverage requirements of the Section 18 of the 1940 Act when engaging in reverse repurchase agreements or (ii) choose to treat such agreements as derivative transactions under the adopted rule.

Under the adopted rule, a BDC may

enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have

sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due.

If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives

transaction subject to the requirements of the rule.

Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.

Global economic, political and market conditions may adversely affect our business, results of operations and financial condition, including our revenue

growth and profitability.

The current worldwide financial market situation, as well as various social and political tensions in

the United States and around the world, may contribute to increased market volatility, may have long-term effects on the U.S.

and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.

and global capital markets experienced extreme volatility and disruption during the economic downturn that began in mid-2007, and the U.S.

economy was in a recession for several consecutive calendar

quarters during the same period.

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service

their sovereign debt obligations.

Risks resulting from such debt crisis, including any austerity measures taken in exchange for bailout of certain nations, and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental

impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of

financial institutions generally.

In June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (Brexit), and, subsequently, on

March 29, 2017, the U.K.

government began the formal process of leaving the European Union.

The United Kingdom formally left the European Union on January 31, 2020 and immediately entered a transition period set to expire on

December 31, 2020.

Brexit has created political and economic uncertainty and instability in the global markets (including currency and credit markets) and especially in the United Kingdom and European Union, and this uncertainty and instability

may last indefinitely.

The implications of the United Kingdoms withdrawal from the European Union are unclear at present.

There is also continued concern about national-level support for the Euro and the accompanying coordination of fiscal and

wage policy among European Economic and Monetary Union member countries.

In addition, the fiscal and monetary policies of foreign nations, such as Russia and China, may have a severe impact on the worldwide and U.S.

financial markets.

The current state of the economy and financial markets of the U.S., United Kingdom, China and other several countries in the European Union increases

the likelihood of adverse effects on our financial position and results of operations.

Due to federal budget deficit concerns,

S&P downgraded the federal governments credit rating from AAA to AA+ for the first time in history on August 5, 2011.

Further downgrades or warnings by S&P or other rating agencies, and the U.S.

governments credit and

deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt portfolio and our ability to access the debt markets on favorable terms.

addition, a decreased U.S.

government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the value of our common stock.

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which

created concerns about the ability of certain nations to continue to service their sovereign debt obligations.

Risks resulting from such debt crisis and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental impact

on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally.

In the second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from continued selloff of shares

trading in Chinese markets.

In addition, in August 2015, Chinese authorities sharply devalued Chinas currency.

Since then, the Chinese capital markets have continued to experience periods of instability.

In June 2016, British voters passed a

referendum to exit the European Union leading to heightened volatility in global markets and foreign currencies.

These market and economic disruptions have affected, and may in the future affect, the U.S.

capital markets, which could adversely

affect our business, financial condition or results of operations.

In October 2014, the Federal Reserve announced that it was concluding

its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserves holdings of long-term securities, suggesting that key economic indicators, such as the unemployment rate, had showed

signs of improvement since the inception of the program.

It is unclear what effect, if any, the conclusion of the Federal Reserves bond-buying program will have on the value of our investments.

Additionally, since December 2015, the Federal

Reserve has continued to raise the Federal Funds Rate and has announced its intention to continue to raise the federal funds rate over time.

These developments, along with the U.S.

governments credit and deficit concerns, the European

sovereign debt crisis and the economic slowdown in China, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

We and our portfolio companies are subject to regulation by laws at the U.S.

federal, state and local

These laws and regulations, as well as their interpretation, could change from time to time, including as the result of interpretive guidance or other directives from the U.S.

President and others in the executive branch, and new laws,

regulations and interpretations could also come into effect.

Any such new or changed laws or regulations could have a material adverse effect on our business, and political uncertainty could increase regulatory uncertainty in the near term.

The effects of legislative and regulatory proposals directed at the financial services industry or affecting taxation, could negatively impact

the operations, cash flows or financial condition of us and our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our

business or the business of our portfolio companies.

In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of business and could be subject to civil fines and criminal

Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the

traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation.

While it cannot be known at this time whether any regulation will be

implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the

regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.

2018, the President of the United States signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which increased from $50 billion to $250 billion the asset threshold for designation of systemically

important financial institutions or SIFIs subject to enhanced prudential standards set by the Federal Reserve Board, staggering application of this change based on the size and risk of the covered bank holding company.

May 30, 2018, the Federal Reserve Board voted to consider changes to the Volcker Rule that would loosen compliance requirements for all banks.

The effect of this change and any further rules or regulations are and could be complex and far-reaching, and the change and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory

supervision of us or otherwise adversely affect our business, financial condition and results of operations.

Although we cannot predict

the impact, if any, of these changes to our business, they could adversely affect our business, financial condition, operating results and cash flows.

Until we know what policy changes are made and how those changes impact business and the business

of our competitors over the long term, we will not know if, overall, it will benefit from them or be negatively affected by them.

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising

direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service their sovereign debt obligations.

Risks resulting from such debt crisis, including any austerity measures taken in exchange for

bailout of certain nations, and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain

countries and the financial condition of financial institutions generally.

On January 31, 2020, the United Kingdom (the UK) ended its membership in the European Union (Brexit).

Under the terms of the withdrawal agreement

negotiated and agreed between the UK and the European Union, the UKs departure from the European Union was followed by a transition period (the Transition Period), which ran until December 31, 2020 and during which the UK

continued to apply European Union law and was treated for all material purposes as if it were still a member of the European Union.

On December 24, 2020, the European Union and UK governments signed a trade deal that became provisionally

effective on January 1, 2021 and that now governs the relationship between the UK and European Union (the Trade Agreement).

The Trade Agreement implements significant regulation around trade, transport of goods and travel

restrictions between the UK and the European Union.

Notwithstanding the foregoing, the longer-term economic, legal, political and social implications of Brexit are unclear at this stage and are likely to continue to lead to ongoing political and

economic uncertainty and periods of increased volatility in both the UK and in wider European markets for some time.

In particular, Brexit could lead to calls for similar referendums in other European jurisdictions, which could cause increased

economic volatility in the European and global markets.

This mid- to long-term uncertainty could have adverse effects on the economy generally and on our ability to earn attractive returns.

In particular,

currency volatility could mean that our returns are adversely affected by market movements and could make it more difficult, or more expensive, for us to execute prudent currency hedging policies.

Potential decline in the value of the British Pound

and/or the Euro against other currencies, along with the potential further downgrading of the UKs sovereign credit rating, could also have an impact on the performance of certain investments made in the UK or Europe.

Events outside of our control, including public health crises such as the ongoing COVID-19 pandemic, may

negatively affect our results of operations and financial performance.

Periods of market volatility have occurred and could

continue to occur in response to pandemics or other events outside of our control.

These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies.

For example, the COVID-19 pandemic has delivered a shock to the global economy.

This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and

economies affected thereby, including a recession and a steep increase in unemployment in the United States.

With respect to the U.S.

credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things:

(i) government imposition of various forms of shelter-in-place orders and the closing of non-essential businesses, resulting in significant

disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these

effects are hoped to be temporary, some effects could be persistent or even permanent;

(ii) increased draws by borrowers on revolving lines of credit;

(iii) increased requests by borrowers for amendments and waivers of their credit

agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;

(iv) volatility and disruption of these markets including greater volatility in pricing

and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues;

and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets

and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses.

While several countries, as well as certain states, counties and cities in the United States, have relaxed initial public health restrictions

with the view to partially or fully reopening their economies, many cities have since experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic.

surges have led to the re-introduction of such restrictions and business shutdowns in certain states in the United States and globally and could continue to lead to the

re-introduction of such restrictions elsewhere.

Health advisors warn that recurring COVID-19 outbreaks will continue if reopening is pursued too soon or in the wrong

manner, which may lead to the re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools,

retail stores and other public venues).

Additionally, as of late December 2020, travelers from the United States are not allowed to visit Canada, Australia or the majority of countries in Europe, Asia, Africa and South America.

These continued

travel restrictions may prolong the global economic downturn.

In addition, although the Federal Food and Drug Administration authorized vaccines produced by Pfizer-BioNTech and Moderna for emergency use

starting in December 2020, it remains unclear how quickly the vaccines will be distributed nationwide and globally or when herd immunity will be achieved and the restrictions that were imposed to slow the spread of the virus will be

lifted entirely.

The delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.

Even after the COVID-19 pandemic subsides, the U.S.

economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a

prolonged recession in the United States and other major markets.

This outbreak is having, and any future outbreaks could have, an adverse impact on the

markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to

borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.

As of the date of this annual

report on Form 10-K, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental

actions will have or the full potential impact on us and our portfolio companies.

Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and

severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of

which are beyond our control.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies,

loan non-accruals, problem assets, and bankruptcies may increase.

In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity

of loan guarantors could decline, impairing their ability to honor commitments to us.

An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could

result in increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations.

Additionally, oil prices collapsed to an 18-year low on

supply glut concerns, as shutdowns across the global economy sharply reduced oil demand while Saudi Arabia and Russia engaged in a price war.

Central banks and governments have responded with liquidity injections to ease the strain on financial

systems and stimulus measures to buffer the shock to businesses and consumers.

These measures have helped stabilize certain portions of the financial markets over the short term, but volatility will likely remain elevated until the health crisis

itself is under control (via fewer new cases, lower infection rates and/or verified treatments).

There are still many unknowns and new information is incoming daily, compounding the difficulty of modeling outcomes for epidemiologists and economists

We cannot be certain as to the duration or magnitude of the economic impact of the

COVID-19 pandemic in the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary, suggested, or mandated

by law) and corresponding declines in economic activity that may negatively impact the U.S.

economy and the markets for the various types of goods and services provided by U.S.

middle market companies.

Depending on the duration, magnitude and

severity of these conditions and their related economic and market impacts, certain portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default on their financial obligations to us

and their other lenders.

We will also be negatively affected if our operations and effectiveness or the operations and effectiveness of a

portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.

Any public health emergency, including the COVID-19 pandemic or any outbreak of other

existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments.

Our valuations, and particularly valuations of

private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of

the COVID-19 pandemic and the resulting measures taken in response thereto.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

We are currently operating in a period of capital markets disruption and economic uncertainty.

capital markets have experienced extreme volatility and disruption following the global outbreak of

COVID-19 that began in December 2019.

The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure of offices,

businesses, schools, retail stores and other public venues.

Businesses are also implementing similar precautionary measures.

Such measures, as well as the general uncertainty surrounding the dangers and impact of

COVID-19, have created significant disruption in supply chains and economic activity.

The impact of COVID-19 has led to significant volatility and declines in the global

public equity markets and it is uncertain how long this volatility will continue.

As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are

increasingly uncertain and difficult to assess.

Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn.

Disruptions in the capital markets caused by

the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets.

These and future market

disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows.

Unfavorable economic conditions also would be expected to increase our funding costs, limit our

access to the capital markets or result in a decision by lenders not to extend credit to us.

These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our

operating results and the fair values of our debt and equity investments.

In addition, due to the outbreak in the United States, certain

personnel of our investment advisor are currently working remotely, which may introduce additional operational risk to us.

Staff members of certain of our other service providers may also work remotely during the

COVID-19 outbreak.

An extended period of remote working could lead to service limitations or failures that could impact us or our performance.

Further, current market conditions resulting from the COVID-19 pandemic may make it difficult for us

to obtain debt capital on favorable terms and any failure to do so could have a material adverse effect on our business.

The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and

conditions than what we would otherwise expect, including being at a higher cost in rising rate environments.

If we are unable to raise debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from

leverage and we may be limited in our ability to make or fund commitments to portfolio companies.

An inability to obtain indebtedness could have a material adverse effect on our business, financial condition or results of operations.

We may experience fluctuations in our quarterly operating results.

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having to dispose of certain investments quickly in order to prevent the loss of RIC tax treatment.

Because most of our investments will be in private or

thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses.

The annual distribution requirement applicable to RICs will be

satisfied if we timely distribute at least 90.0% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis.

In addition, we will be subject to a 4.0%

nondeductible U.S.

federal excise tax to the extent that we do not satisfy certain additional minimum distribution requirements on a calendar-year basis.

We will be subject, to the extent we use debt financing, to certain asset coverage ratio

requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making annual distributions necessary to maintain our tax treatment as a RIC.

If we are unable to

obtain cash from other sources, we may fail to maintain our tax treatment as a RIC and, thus, may be subject to U.S.

federal corporate income tax on our entire taxable income without regard to any distributions made by us.

If we fail to maintain our

tax treatment as a RIC for any reason and become subject to U.S.

corporate income tax, the resulting tax liability could substantially reduce our net assets, the amount of income available for distributions to stockholders and the amount of our

distributions and the amount of funds available for new investments.

Because most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices

and may result in substantial losses.

The annual distribution requirement applicable to RICs will be satisfied if we timely distribute at least 90.0% of our net ordinary income and net short-term capital gains in excess of net long-term capital

losses, if any, to our stockholders on an annual basis.

In addition, we will be subject to a 4.0% nondeductible U.S.

federal excise tax to the extent that we do not satisfy certain additional minimum distribution requirements on a calendar-year

We will be subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making

annual distributions necessary to maintain our tax treatment as a RIC.

If we are unable to obtain cash from other sources, we may fail to maintain our tax treatment as a RIC and, thus, may be subject to U.S.

federal corporate income tax on our

entire taxable income without regard to any distributions made by us.

If we fail to maintain our tax treatment as a RIC for any reason and become subject to U.S.

corporate income tax, the resulting tax liability could substantially reduce our net

assets, the amount of income available for distributions to stockholders and the amount of our distributions and the amount of funds available for new investments.

Such a failure could have a material adverse effect on us and our stockholders.

4 unchanged sentences

Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this

annual report on Form 10-K.

In addition, due to the asset coverage test applicable to us as a BDC, in the future, we may be limited in our ability to make distributions.

All distributions will be made at the

discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of RIC tax treatment, compliance with applicable BDC regulations, SBA regulations, state corporate laws affecting the distribution of

corporate assets and such other factors as our board of directors may deem relevant from time to time.

We cannot assure you that we will make distributions to our stockholders in the future.

If we issue debt securities in the future, the above-referenced restrictions on distributions may also inhibit our ability to make required

interest payments to holders of any such debt securities, which may cause a default under the terms of our then-existing debt agreements.

Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties

under the terms of our then-existing debt agreements.

When we make quarterly distributions, we will be required to determine the extent

to which such distributions are paid out of current and accumulated earnings and profits, recognized capital gain or capital.

To the extent there is a return of capital, an investor gets his or her own invested capital returned to him or her, but

reduced by the amount of the Companys expenses and any sales load he or she may have paid.

annual report on Form 10-K, including the COVID-19 pandemic described above.

For example, if the temporary closure of many corporate offices, retail stores, and

manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time, it could result

in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our stockholders.

If we violate certain covenants under our existing or future credit facilities or other leverage, we may be

limited in our ability to make distributions.

All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of RIC tax treatment, compliance with applicable BDC

regulations, SBA regulations, state corporate laws affecting the distribution of corporate assets and such other factors as our board of directors may deem relevant from time to time.

We cannot assure you that we will make distributions to our

stockholders in the future.

The above-referenced restrictions on distributions may also inhibit our ability to make

required interest payments to holders of our debt securities, which may cause a default under the terms of our then-existing debt agreements.

Such a default could materially increase our cost of raising capital, as well as cause us to incur

penalties under the terms of our then-existing debt agreements.

When we make quarterly distributions, we will be required to determine

the extent to which such distributions are paid out of current and accumulated earnings and profits, recognized capital gain or capital.

To the extent there is a return of capital, an investor gets his or her own invested capital returned to him or

her, but reduced by the amount of the Companys expenses and any sales load he or she may have paid.

In addition, investors will be required to reduce their basis in our stock for U.S.

federal income tax purposes.

We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.

federal income tax purposes, we are required to include in our income certain amounts that we have not yet received in

cash, such as OID, which may arise if we receive warrants in connection with the making of a loan or in other circumstances, and contractual PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan

Such OID, or increases in loan balances as a result of contracted PIK arrangements, will be included in our income before we receive any corresponding cash payments.

We also may be required to include in our income certain other amounts that

we will not receive in cash.

Since in certain cases we may be required to recognize income before or without receiving cash representing

such income, we may have difficulty meeting the requirement to distribute on an annual basis at least 90.0% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our tax treatment

In such a case, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities to satisfy the annual distribution

requirements.

In such circumstances, if we are unable to obtain such cash from other sources, we may fail to maintain our tax treatment as a RIC and thus be subject to corporate-level U.S.

We may choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive.

Under certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by the IRS, a RIC may treat a

distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be

distributed to all stockholders must be at least 20% of the aggregate declared distribution.

If too many stockholders elect to receive their distributions in cash, we must allocate the cash available for distribution among the shareholders electing

to receive cash (with the balance of the distribution paid in shares of our common stock).

If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such

dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital

gain dividend) to the extent of our current and accumulated earnings and profits for U.S.

federal income tax purposes.

As a result, a U.S.

stockholder may be required to pay tax with respect to such dividends in excess of any cash received.

stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale.

Furthermore, with respect to non-U.S.

stockholders, we may be required to withhold U.S.

respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.

If a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put

downward pressure on the trading price of our stock.

Due to the COVID-19 pandemic or other disruptions in

the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility.

As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under

subchapter M of the Code.

In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital

gains in excess of realized net long-term capital losses).

If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income and net capital gains (i.e., realized

net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders.

We will be subject to a 4% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year

at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year,

and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax.

Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year.

In particular, if we

pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal income tax

purposes as if it were paid on December 31 of the current year.

In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid during the following taxable year that will allow us to maintain

our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S.

federal income tax.

See We will be subject to

corporate-level U.S.

federal income tax if we are unable to maintain our tax treatment as a RIC under Subchapter M of the Code.

portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

Our investment advisor will not be under any

obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never receive as a result of a default by an entity on the obligation that resulted in the accrual of such income.

That part of the

incentive fee payable by us that relates to our net investment income will be computed and paid on income that may include interest that has been accrued but not yet received in cash, such as market discount, debt instruments with PIK interest,

preferred stock with PIK dividends and zero coupon securities.

To the extent the we invest in OID instruments, including PIK loans, zero coupon bonds, and

debt securities with attached warrants, investors will be exposed to the risks associated with the inclusion of such non-cash income in taxable and accounting income prior to receipt of cash, including the

Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the

following year.

For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021.

If we choose to pay a spillover dividend, we will incur the 4% U.S.

federal excise tax on some or all of the distribution.

Due to the COVID-19 pandemic or other disruptions in

the economy, we anticipate that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.

For example, we anticipate that we will not be able to increase our

In addition, we may reduce our dividends and/or defer our dividends to the following taxable year.

If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S.

federal excise tax

on such amounts.

To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed above under We may choose to pay dividends in our own

stock, in which case you may be required to pay tax in excess of the cash you receive.

We may have difficulty paying our required

distributions if we recognize income before, or without, receiving cash representing such income.

federal income tax

purposes, we are required to include in our income certain amounts that we have not yet received in cash, such as OID, which may arise if we receive warrants in connection with the making of a loan or in other circumstances, and contractual PIK

interest, which represents contractual interest added to the loan balance and due at the end of the loan term.

Such OID, or increases in loan balances as a result of contracted PIK arrangements, will be included in our income before we receive any

corresponding cash payments.

We also may be required to include in our income certain other amounts that we will not receive in cash.

Since in certain cases we may be required to recognize income before or without receiving cash representing such income, we may have

difficulty meeting the requirement to distribute on an annual basis at least 90.0% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our tax treatment as a RIC.

In such a case,

we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities to satisfy the annual distribution requirements.

circumstances, if we are unable to obtain such cash from other sources, we may fail to maintain our tax treatment as a RIC and thus be subject to corporate-level U.S.

federal income tax.

See We will be subject to corporate-level U.S.

income tax if we are unable to maintain our tax treatment as a RIC under Subchapter M of the Code.

If a portfolio company defaults

on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

Our investment advisor will not be under any obligation to reimburse us

for any part of the incentive fee it received that was based on accrued income that we never receive as a result of a default by an entity on the obligation that resulted in the accrual of such income.

That part of the incentive fee payable by us

that relates to our net investment income will be computed and paid on income that may include interest that has been accrued but not yet received in cash, such as market discount, debt instruments with PIK interest, preferred stock with PIK

dividends and zero coupon securities.

To the extent we invest in OID instruments, including PIK loans, zero coupon bonds, and debt

securities with attached warrants, investors will be exposed to the risks associated with the inclusion of such non-cash income in taxable and accounting income prior to receipt of cash, including the

following risks:

6 unchanged sentences

an election to defer PIK interest payments by adding them to principal increases our gross assets and, thus,

increases future base management fees to the Adviser and, because interest payments will then be payable on a larger principal amount, the PIK election also increases the Advisers future income incentive fees at a compounding rate;

increases future base management fees to the investment advisor and, because interest payments will then be payable on a larger principal amount, the PIK election also increases the investment advisors future income incentive fees at a

compounding rate;

market prices of OID instruments are more volatile because they are affected to a greater extent by interest rate

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the deferral of interest on a PIK loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan;

OID creates the risk of non-refundable cash payments to the Adviser based

on non-cash accruals that may never be realized;

OID creates the risk of non-refundable cash payments to the investment

advisor based on non-cash accruals that may never be realized;

federal income tax purposes, we will be required to make distributions of OID income to shareholders

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If we continue to meet certain requirements, including source-of-income, asset

diversification and distribution requirements, and if we continue to be regulated as a BDC, we will continue to qualify to be taxed as a RIC and therefore will not have to pay U.S.

federal corporate income tax on income that we timely distribute to

our stockholders, allowing us to substantially reduce or eliminate our corporate-level income tax liability.

As a BDC, we are generally required to meet a coverage ratio of total assets to total senior securities, which includes all of our

borrowings (other than SBA leverage) and any preferred stock we may issue in the future, of at least 200.0% (or 150% on and after April 29, 2020) at the time we issue any debt or preferred stock.

This requirement limits the amount of our

Because we will continue to need capital to grow our investment portfolio, this limitation may prevent us from incurring debt or issuing preferred stock and require us to raise additional equity at a time when it may be disadvantageous to

While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity

financing will be available to us on favorable terms, or at all.

diversification and distribution requirements, and if we continue to be regulated as a BDC, we will continue to qualify to be taxed as a RIC and therefore will not have to pay corporate-level U.S.

federal income tax on income that we timely

distribute to our stockholders, allowing us to substantially reduce or eliminate our corporate-level income tax liability.

As a BDC, we are generally required to meet a coverage ratio of total assets to total senior securities, which includes all of

our borrowings (other than SBA leverage) and any preferred stock we may issue in the future, of at least 150.0% at the time we issue any debt or preferred stock.

This requirement limits the amount of our leverage.

Because we will continue to need

capital to grow our investment portfolio, this limitation may prevent us from incurring debt or issuing preferred stock and require us to raise additional equity at a time when it may be disadvantageous to do so.

While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing

will be available to us on favorable terms, or at all.

If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value could decline.

In addition, as a BDC, we

generally are not permitted to issue equity securities priced below net asset value without stockholder approval.

At our Annual Stockholders Meeting on June 19, 2019, our stockholders voted to allow us to issue common stock at a price below net

asset value per share for a period of one year ending on the earlier of June 19, 2020 or the date of our 2020 Annual Meeting of Stockholders.

We expect to present to our stockholders a similar proposal at our 2020 Annual Meeting of

Stockholders.

The maximum number of shares issuable below net asset value pursuant to the authority granted by our stockholders that could result in such dilution is limited to 25.0% of FICs then outstanding common stock immediately prior to

each such sale.

We do not intend to issue shares of our common stock below net asset value unless our board of directors determines that it would be in our stockholders best interests to do so.

The level of net asset value dilution that could

result from such an offering is not limited.

Our board of directors may change our investment objective, operating policies and strategies without

prior notice or stockholder approval, the effects of which may be adverse.

Our board of directors has the authority, except as

otherwise provided by the 1940 Act, to modify or waive certain of our operating policies and strategies without prior notice and without stockholder approval.

Under Maryland law, we also cannot be dissolved without prior stockholder approval except

by judicial action.

In addition, as a BDC, we generally are not

permitted to issue equity securities priced below net asset value without stockholder approval.

At our Annual Stockholders Meeting on June 4, 2020, our stockholders voted to allow us to issue common stock at a price below net asset value per

share for a period of one year ending on the earlier of June 20, 2021 or the date of our 2021 Annual Meeting of Stockholders.

We expect to present to our stockholders a similar proposal at our 2021 Annual Meeting of Stockholders.

number of shares issuable below net asset value pursuant to the authority granted by our stockholders that could result in such dilution is limited to 25.0% of FICs then outstanding common stock immediately prior to each such sale.

intend to issue shares of our common stock below net asset value unless our board of directors determines that it would be in our stockholders best interests to do so.

The level of net asset value dilution that could result from such an

offering is not limited.

Our board of directors may change our investment objective, operating policies and strategies without prior notice or

stockholder approval, the effects of which may be adverse.

Our board of directors has the authority, except as otherwise provided

by the 1940 Act, to modify or waive certain of our operating policies and strategies without prior notice and without stockholder approval.

Under Maryland law, we also cannot be dissolved without prior stockholder approval except by judicial action.

In addition, upon approval of a majority of our stockholders, we may elect to withdraw our status as a BDC.

If we, or Fund I, decide to withdraw our election, or if we otherwise fail to maintain our qualification, as a BDC, we

may be subject to the substantially greater regulation under the 1940 Act as a closed-end investment company.

Compliance with such regulations would significantly decrease our operating flexibility, and could

significantly increase our costs of doing business.

If we, or Fund I, decide to withdraw our election, or if we otherwise fail to maintain our qualification, as a BDC, we may be subject to the

substantially greater regulation under the 1940 Act as a closed-end investment company.

Compliance with such regulations would significantly decrease our operating flexibility, and could significantly increase

our costs of doing business.

We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results or the value of our common stock.

Nevertheless, any such

changes could adversely affect our business and impair our ability to make distributions.

Regulations governing our operation as a BDC affect our

ability to raise, and the way in which we raise, additional capital which may have a negative effect on our growth.

will require capital to operate and grow.

Nevertheless, any such changes could adversely

affect our business and impair our ability to make distributions.

Regulations governing our operation as a BDC affect our ability to raise, and the

way in which we raise, additional capital which may have a negative effect on our growth.

Our business will require capital to

operate and grow.

We may acquire such additional capital from the following sources:

Senior Securities.

Currently we, through the Funds, issue debt securities guaranteed by the SBA and have access to funds under a revolving credit facility.

In the future, we may issue debt securities or preferred stock and/or borrow money from banks or other financial

institutions, which we refer to collectively as senior securities.

Currently we, through the

Funds, issue debt securities guaranteed by the SBA and have access to funds under a revolving credit facility.

In the future, we may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we

refer to collectively as senior securities.

As a result of issuing senior securities, we will be exposed to additional risks, including, but not limited to, the following:

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Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

Presidential Administration may make substantial changes to financial regulation, as well as

fiscal and tax policies that may adversely affect our business.

The Republican Party currently controls the executive branch and

the Senate portion of the legislative branch of government, which we believe increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S.

financial markets.

Areas subject to potential change,

amendment or repeal include the Wall Street Reform and Consumer protection Act of 2010 (Dodd-Frank Act) and the authority of the Federal Reserve and the Financial Stability Oversight Council.

The United States may also potentially

withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States.

We cannot predict which, if any, of these actions will be taken or, if taken, their effect on the financial

stability of the United States.

Such actions could have a significant adverse effect on our business, financial condition and results of operations.

We cannot predict the duration of the effects related to these or similar events in the future on

economy and securities markets or on our investments.

We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in

The current U.S.

presidential administration has called for significant changes to U.S.

trade, healthcare,

immigration, foreign and government regulatory policy.

In this regard, there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels.

Recent events have

created a climate of heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications.

There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy.

extent the U.S.

Congress or the current administration implements changes to U.S.

policy, those changes may impact, among other things, the U.S.

and global economy, international trade and relations, unemployment, immigration, corporate taxes,

healthcare, the U.S.

regulatory environment, inflation and other areas.

Although we cannot predict the impact, if any, of these changes to business, they could adversely affect our business, financial condition, operating results and cash flows.

Until we know what policy changes are made and how those changes impact business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Uncertainty about U.S.

Presidential Administration initiatives could negatively impact our business, financial condition and results of operations.

The current administration has called for significant changes to U.S.

government has recently called for significant changes to U.S.

trade, healthcare, immigration, foreign and government

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and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

Tax reform could have a negative effect on the Company.

On December 22, 2017, tax reform legislation commonly referred to as the Tax Cuts and Jobs Act was signed into law.

This legislation makes

significant changes to the U.S.

federal income tax rules applicable to both individuals and entities, including permanently reducing the U.S.

federal corporate income tax rate, reducing the maximum U.S.

federal individual income tax rate (effective

for taxable years 2018 through 2025), restricting the deductibility of interest expense, and changing the rules regarding the calculation of net operating loss deductions that may be used to offset taxable income.

There is uncertainty as to the

impact of this legislation on us, the entities in which we invest, or an investment in our securities.

A particular area identified as subject to potential change, amendment or repeal includes the Dodd-Frank Act, including the Volcker Rule and

various swaps and derivatives regulations, credit risk retention requirements and the authorities of the Federal Reserve, the Financial Stability Oversight Council and the SEC.

Given the uncertainty associated with the manner in which and whether

the provisions of the Dodd-Frank Act will be implemented, repealed, amended, or replaced, the full impact such requirements will have on our business, results of operations or financial condition is unclear.

The changes resulting from the Dodd-Frank

Act or any changes to the regulations already implemented thereunder may require us to invest significant management attention and resources to evaluate and make necessary changes in order to comply with new statutory and regulatory requirements.

Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact our business, results of operations or financial condition.

While we cannot predict what effect any changes in the laws or regulations or

their interpretations would have on us as a result of recent financial reform legislation, these changes could be materially adverse to us and our stockholders.

Legislative or other actions relating to taxes could have a negative effect on the Company.

Legislative or other actions relating to taxes could have a negative effect on the Company and its investors.

The rules dealing

federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S.

Treasury Department.

We cannot predict with certainty how any changes in the tax laws might affect the Company,

its investments or its investors.

New legislation and any U.S.

Treasury regulations, administrative interpretations or court decisions interpreting such legislation could

significantly and negatively affect the Companys ability to qualify for tax treatment as a RIC or the U.S.

Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect the Companys ability to qualify for

tax treatment as a RIC or the U.S.

federal income tax consequences to the Company and its investors of such qualification, or could have other adverse consequences.

are urged to consult with your tax advisor with respect to the impact of this legislation and the status of any other regulatory or administrative developments and proposals and their potential effect on your investment in our securities.

Changes in laws or regulations governing our operations may adversely affect our business or cause us

to alter our business strategy.

You are urged to consult with your tax advisor with respect to the impact of the

status of any legislative, regulatory or administrative developments and proposals and their potential effect on your investment in our securities.

There is uncertainty surrounding potential legal, regulatory and policy changes by new presidential administrations in the United States that may

directly affect financial institutions and the global economy.

As a result of the November 2020 elections in the United States,

the Democratic Party gained control of both the Presidency and the Senate from the Republican Party.

Therefore, changes in federal policy, including tax policies, and at regulatory agencies are expected to occur over time through policy and

personnel changes, which may lead to changes involving the level of oversight and focus on the financial services industry or the tax rates paid by corporate entities.

The nature, timing and economic and political effects of potential changes to the

current legal and regulatory framework affecting financial institutions remain highly uncertain.

Uncertainty surrounding future changes may adversely affect our operating environment and therefore our business, financial condition, results of

operations and growth prospects.

Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our

business strategy.

We are subject to regulation at the local, state and federal level.

New legislation may be enacted

or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect.

In addition, any

change to the SBAs current debenture program could have a significant impact on our ability to obtain low-cost leverage and, therefore, our competitive advantage over other funds.

New legislation may be enacted or new

interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect.

In addition, any change to

the SBAs current debenture program could have a significant impact on our ability to obtain low-cost leverage and, therefore, our competitive advantage over other funds.

Legal, tax and regulatory changes could occur that may adversely affect us.

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These restrictions could limit or prohibit us from making certain attractive investments that we might otherwise make absent such restrictions.

Our investment advisor can resign on 60 days notice, and we may not be able to find a suitable replacement within that time, resulting in a

disruption in our operations that could adversely affect our financial condition, business and results of operations.

investment advisor has the right, under the Investment Advisory Agreement, to resign at any time upon not less than 60 days written notice, whether we have found a replacement or not.

If our investment advisor resigns, we may not be able to

find a new investment advisor and administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all.

If we are unable to do so quickly, our

operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline.

addition, investment activities are likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by our investment advisor and its affiliates.

Even if we are

able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our financial

condition, business and results of operations.

Our investment advisor can resign from its role as our administrator under the Administration

Agreement, and we may not be able to find a suitable replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our investment advisor can resign on 60 days notice, and we may not be able to find a suitable

replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our investment advisor has the right, under the Investment Advisory Agreement, to resign at any time upon not less than 60 days written

notice, whether we have found a replacement or not.

If our investment advisor resigns, we may not be able to find a new investment advisor and administrator or hire internal management with similar expertise and ability to provide the same or

equivalent services on acceptable terms within 60 days, or at all.

If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay

distributions are likely to be adversely affected and the market price of our shares may decline.

In addition, investment activities are likely to suffer if we are unable to identify and reach an agreement with a single institution or group of

executives having the expertise possessed by our investment advisor and its affiliates.

Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our

investment objective may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.

Our investment advisor can resign from its role as our administrator under the Administration Agreement, and we may not be able to find a suitable

replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our investment advisor also has the right to resign under the Administration Agreement, whether we have found a replacement or not.

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may adversely affect our financial condition, business and results of operations.

Efforts to comply with the Sarbanes-Oxley Act will involve

significant expenditures, and non-compliance with the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

As a publicly-traded company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting

requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and other rules implemented by the SEC.

Section 404 of the Sarbanes-Oxley Act requires that public companies evaluate and report on their systems of internal control over

financial reporting.

In addition, our independent registered public accounting firm must report on managements evaluation of those controls.

In future periods, we may identify deficiencies in our system of internal controls over financial

reporting that may require remediation.

There can be no assurances that any such future deficiencies identified may not be material weaknesses that would be required to be reported in future periods.

Internal and external cyber threats, as well as other disasters, could impair our ability to conduct business effectively.

The occurrence of a disaster, such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural

catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to communicate or conduct business, negatively impacting our operations and financial

This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data.

Internal and external cyber threats, as well as other disasters,

could impair our ability to conduct business effectively.

The occurrence of a disaster, such as a cyber-attack against us or

against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, failure of our disaster recovery systems, or consequential employee error, could have an adverse effect on our ability to communicate or

conduct business, negatively impacting our operations and financial condition.

This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the

availability, integrity, or confidentiality of our data.

We depend heavily upon computer systems to perform necessary business functions.

Despite our implementation of a variety of security measures,

our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical and electronic

break-ins or unauthorized tampering, malware and computer virus attacks, or system failures and disruptions.

If one or more of these events occurs, it could potentially jeopardize the confidential,

proprietary, and other information processed, stored in, and transmitted through our computer systems and networks.

Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses, litigation,

regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and remediation.

Despite our implementation of a variety of security measures, our computer systems, networks, and data, like those of other companies, could be subject to cyber-attacks and unauthorized access, use, alteration, or destruction, such as from physical

and electronic break-ins or unauthorized tampering, malware and computer virus attacks, or system failures and disruptions.

If one or more of these events occurs, it could potentially jeopardize the

confidential, proprietary, and other information processed, stored in, and transmitted through our computer systems and networks.

Such an attack could cause interruptions or malfunctions in our operations, which could result in financial losses,

litigation, regulatory penalties, client dissatisfaction or loss, reputational damage, and increased costs associated with mitigation of damages and remediation.

If unauthorized parties gain access to such information and technology systems, they

may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to stockholders (and their beneficial owners) and material nonpublic information.

The systems we have implemented to

manage risks relating to these types of events could prove to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately secure private information.

Breaches such as

those involving covertly introduced malware, impersonation of authorized users and industrial or other espionage may not be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing

them from being addressed appropriately.

The failure of these systems or of disaster recovery plans for any reason could cause significant interruptions in our and our investment advisors operations and result in a failure to maintain the

security, confidentiality or privacy of sensitive data, including personal information relating to stockholders, material nonpublic information and other sensitive information in our possession.

A disaster or a disruption in the infrastructure that supports our business, including a

disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our

business without interruption.

Our disaster recovery programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption.

In addition, insurance and other safeguards might only partially reimburse us for our

losses, if at all.

Third parties with which we do business may also be sources of cybersecurity or other technological risk.

We outsource certain functions and

these relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information.

While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may

result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.

certain functions and these relationships allow for the storage and processing of our information, as well as client, counterparty, employee, and borrower information.

While we engage in actions to reduce our exposure resulting from outsourcing,

ongoing threats may result in unauthorized access, loss, exposure, destruction, or other cybersecurity incident that affects our data, resulting in increased costs and other consequences as described above.

In addition, cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring

companies to notify individuals of data security breaches involving certain types of personal data.

If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to

investors, regulatory intervention or reputational damage.

We and our service providers are currently impacted by quarantines and similar

measures being enacted by governments in response to the global COVID-19 pandemic, which are obstructing the regular functioning of business workforces (including requiring employees to work from external

locations and their homes).

Policies of extended periods of remote working, whether by us or by our Service Providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above.

Remote working

environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic.

Accordingly, the risks described above

are heightened under current conditions.

Public health threats may affect the market for the 2023 Notes, the February 2024 Notes and the November

2024 Notes, impact the businesses in which we invest and affect our business, operating results and financial condition.

health threats, such as COVID-19 or any other illness, have and may continue to disrupt the operations of the businesses in which we invest.

Such threats can create economic and political uncertainties and can

contribute to global economic instability.

A public health threat poses the risk that our portfolio companies may have significantly reduced or be prevented from conducting business activities for an unknown period of time, including shutdowns that

may be requested or mandated by governmental authorities.

We cannot estimate the impact that a public health threat could have on our portfolio companies, but it could disrupt their businesses and their ability to make interest

or dividend payments and decrease the overall value of our investments which adversely impact our business, financial condition or results of operations.

Additionally, as a result of the volatile market conditions that may result from

public health threats, such as COVID-19 or any other illness, we cannot provide any assurance that the 2023 Notes, the February 2024 Notes and the November 2024 Notes will trade at a favorable price.

Risks Relating to Our Investments

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susceptible to economic slowdowns or recessions (including industry specific downturns) and may be unable to repay our debt investments during these periods.

Therefore, our non-performing assets are likely to

increase and the value of our portfolio is likely to decrease during these periods.

Adverse economic conditions may decrease the value of collateral securing some of our debt investments and the value of our equity investments.

Economic slowdowns or

recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets.

Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by

lenders not to extend credit to us.

The recent global outbreak of COVID-19 has

disrupted economic markets, and the prolonged economic impact is uncertain.

Many manufacturers of goods in China and other countries in Asia have seen a downturn in production due to the suspension of business and temporary closure of factories in

an attempt to curb the spread of the illness.

As the impact of COVID-19 spreads to other parts of the world, similar impacts may occur with respect to affected countries.

In the past, instability in the global

capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market

and the failure of major domestic and international financial institutions.

In particular, in past periods of instability, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial

firms declined, impairing their capital positions and abilities to lend and invest.

In addition, continued uncertainty surrounding the negotiation of trade deals between Britain and the European Union following the United Kingdoms exit from

the European Union and uncertainty between the United States and other countries, including China, with respect to trade policies, treaties, and tariffs, among other factors, have caused disruption in the global markets.

There can be no assurance

that market conditions will not worsen in the future.

In an economic downturn, we may have non-performing

assets or non-performing assets may increase, and the value of our portfolio is likely to decrease during these periods.

Adverse economic conditions may also decrease the value of any collateral securing some

of our debt investments and the value of our equity investments.

Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets.

Unfavorable economic conditions also could increase

our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.

These events could prevent us from increasing our investments and harm our operating results.

A portfolio companys failure to satisfy financial or operating covenants imposed by us

or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio companys ability to meet its obligations

under the loans and debt securities that we hold.

We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.

The occurrence of recessionary conditions and/or negative developments in the domestic and international credit markets may significantly

affect the markets in which we do business, the value of our investments, and our ongoing operations, costs and profitability.

Any such unfavorable economic conditions, including rising interest rates, may also increase our funding costs, limit our

access to capital markets or negatively impact our ability to obtain financing, particularly from the debt markets.

In addition, any future financial market uncertainty could lead to financial market disruptions and could further impact our ability

to obtain financing.

These events could limit our investment originations, limit our ability to grow and negatively impact our operating results and financial condition.

Terrorist attacks, acts of war, or natural disasters may affect any market for our common stock, impact the businesses in which we invest and harm our

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regarding such portfolio company.

We may not have the funds to make additional investments in our portfolio companies which could impair the value

of our portfolio.

After our initial investment in a portfolio company, we may be called upon from time to time to provide

additional funds to such company or have the opportunity to increase our investment through the exercise of a warrant to purchase common stock.

We may not have the funds to make additional investments in our portfolio companies which could impair

the value of our portfolio.

After our initial investment in a portfolio company, we may be called upon from time to time to

provide additional funds to such company or have the opportunity to increase our investment through the exercise of a warrant to purchase common stock.

There is no assurance that we will make, or will have sufficient funds to make, follow-on investments.

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advisors allocation policy.

Portfolio companies may incur debt that ranks equally with, or senior to, our investments in such

We will invest primarily in second lien and subordinated debt as well as equity issued by lower middle-market

The portfolio companies generally have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest.

By their terms, such senior debt instruments may entitle the holders to receive payment

of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest.

Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a

portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution.

After repaying such senior creditors, such portfolio

company may not have any remaining assets to use for repaying its obligation to us.

In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding

such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

circumstances where our debt investments could be subordinated to claims of other creditors or could be subject to lender liability claims.

Even though we may have structured certain of our investments as senior loans, if one of our portfolio companies were to go bankrupt, depending

on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize our debt investment and subordinate all or a portion of our claim to that of

other creditors.

We may also be subject to lender liability claims for actions taken by us with respect to a borrowers business or instances where we exercise control over the borrower.

It is possible that we could become subject to a

lenders liability claim, including as a result of actions taken in rendering significant managerial assistance.

Second priority liens on

collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens.

If there is a default, the value of the collateral may not be sufficient to repay in full both the first

priority creditors and us.

Certain loans we make to portfolio companies are and will be secured on a second priority basis by the

same collateral securing senior secured debt of such companies.

The first priority liens on the collateral secure the portfolio companys obligations under any outstanding senior debt and may secure certain other future debt that may be

permitted to be incurred by the company under the agreements governing the loans.

The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any

realization of the collateral to repay their obligations in full before us.

Portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

We will invest primarily in second lien and subordinated debt as well as equity issued by lower middle-market companies.

portfolio companies generally have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest.

By their terms, such senior debt instruments may entitle the holders to receive payment of interest or

principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest.

Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company,

holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution.

After repaying such senior creditors, such portfolio company may not

have any remaining assets to use for repaying its obligation to us.

In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in

the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

There may be circumstances

where our debt investments could be subordinated to claims of other creditors or could be subject to lender liability claims.

though we may have structured certain of our investments as senior loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to

that portfolio company, a bankruptcy court might recharacterize our debt investment and subordinate all or a portion of our claim to that of other creditors.

We may also be subject to lender liability claims for actions taken by us with respect to a

borrowers business or instances where we exercise control over the borrower.

It is possible that we could become subject to a lenders liability claim, including as a result of actions taken in rendering significant managerial assistance.

Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first

priority liens.

If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.

Certain loans we make to portfolio companies are and will be secured on a second priority basis by the same collateral securing senior secured

debt of such companies.

The first priority liens on the collateral secure the portfolio companys obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the company under

the agreements governing the loans.

The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any realization of the collateral to repay their

obligations in full before us.

In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors.

be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first

priority liens on the collateral.

If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral,

will only have an unsecured claim against the companys remaining assets, if any.

The rights we may have with respect to the

collateral securing the loans we make to portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements entered into with the holders of senior debt.

Under an intercreditor

agreement, at any time that obligations having the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect to the collateral will be at the direction of the holders of the obligations secured by

the first priority liens:

There can be no assurance that the proceeds, if any,

from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral.

If such proceeds

are not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the

companys remaining assets, if any.

The rights we may have with respect to the collateral securing the loans we make to portfolio

companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements entered into with the holders of senior debt.

Under an intercreditor agreement, at any time that obligations having the benefit

of the first priority liens are outstanding, any of the following actions that may be taken in respect to the collateral will be at the direction of the holders of the obligations secured by the first priority liens:

the ability to cause the commencement of enforcement proceedings against the collateral;

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We may not have the ability to control or direct such actions, even if our rights are adversely affected.

We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.

We may hold the debt securities of leveraged companies that may, due to the significant volatility of

such companies, enter into bankruptcy proceedings.

Leveraged companies may experience bankruptcy or similar financial distress.

The bankruptcy process has a number of significant

inherent risks.

The bankruptcy process has a number of significant inherent risks.

Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors.

A bankruptcy filing by an issuer may adversely and permanently affect the issuer.

the proceeding is converted to a liquidation, the value of the issuer may not equal the liquidation value that was believed to exist at the time of the investment.

The duration of a bankruptcy proceeding is also difficult to

predict, and a creditors return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective.

The administrative costs in

connection with a bankruptcy proceeding are frequently high and would be paid out of the debtors estate prior to any return to creditors.

Because the standards for classification of claims under bankruptcy law are vague, our influence with

respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment.

In the early stages of the bankruptcy process, it is often

difficult to estimate the extent of, or even to identify, any contingent claims that might be made.

A bankruptcy filing by an issuer

may adversely and permanently affect the issuer.

If the proceeding is converted to a liquidation, the value of the issuer may not equal the liquidation value that was believed to exist at the time of the investment.

The duration of a bankruptcy

proceeding is also difficult to predict, and a creditors return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective.

The administrative costs in connection with a

bankruptcy proceeding are frequently high and would be paid out of the debtors estate prior to any return to creditors.

Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class

of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment.

In the early stages of the bankruptcy process, it is often difficult to estimate

the extent of, or even to identify, any contingent claims that might be made.

In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial.

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a result, we may have difficulty meeting the annual distribution requirement necessary to maintain our tax treatment as a RIC.

We do not expect to control many of our portfolio companies.

We do not expect to control many of our portfolio companies, even though we may have board representation or board observation rights, and the

debt agreements may contain certain restrictive covenants.

As a result, we are subject to the risk that a portfolio company in which we invest may make business decisions with which we disagree and the management of such company, as representatives

of the holders of the companys common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.

Due to the lack of liquidity for our investments in private companies in the lower middle-market, we may

not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation.

As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.

We are a non-diversified investment company within the meaning of the 1940 Act;

therefore we are not limited

with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single

To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial

condition or the markets assessment of the issuer and the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment.

Additionally, while we are not targeting any specific industries, our investments may be concentrated in relatively few industries.

As a result, a downturn in any particular industry in which we are invested could also significantly impact the

aggregate returns we realize.

We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company.

Beyond the asset diversification requirements applicable to RICs, we do not have fixed guidelines

for diversification, and our investments could be concentrated in relatively few portfolio companies.

Prepayments of our debt investments by our

portfolio companies could adversely impact our results of operations and reduce our return on equity.

We are subject to the risk

that the investments we make in our portfolio companies may be repaid prior to maturity.

When this occurs, we will generally reinvest these proceeds in temporary investments (cash equivalents), pending future investments in new portfolio companies.

These temporary investments will typically have substantially lower yields than the debt being repaid, and we could experience significant delays in reinvesting these amounts.

In addition, any future investment of such amounts in a new portfolio

company may also be at lower yields than the investment that was repaid.

As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally,

prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common stock.

realize gains from our equity investments.

Certain investments that we have made in the past and may make in the future include

warrants or other equity or equity-related securities.

do not expect to control many of our portfolio companies.

We do not expect to control many of our portfolio companies, even though

we may have board representation or board observation rights, and the debt agreements may contain certain restrictive covenants.

As a result, we are subject to the risk that a portfolio company in which we invest may make business decisions with

which we disagree and the management of such company, as representatives of the holders of the companys common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.

Due to the lack of liquidity for

our investments in private companies in the lower middle-market, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation.

As a result, a portfolio company may make

decisions that could decrease the value of our portfolio holdings.

We are a non-diversified investment

company within the meaning of the 1940 Act;

therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, which

means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer.

To the extent that we assume large positions in the securities of a small number of issuers, our net

asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the markets assessment of the issuer and the aggregate returns we realize may be significantly

adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment.

Additionally, while we are not targeting any specific industries, our investments may be concentrated in relatively few

As a result, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.

We may also be more susceptible to any single economic or regulatory occurrence than a

diversified investment company.

Beyond the asset diversification requirements applicable to RICs, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity.

occurs, we will generally reinvest these proceeds in temporary investments (cash equivalents), pending future investments in new portfolio companies.

These temporary investments will typically have substantially lower yields than the debt being

repaid, and we could experience significant delays in reinvesting these amounts.

In addition, any future investment of such amounts in a new portfolio company may also be at lower yields than the investment that was repaid.

As a result, our results

of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market

price of our common stock.

We may not realize gains from our equity investments.

Certain investments that we have made in the past and may make in the future include warrants or other equity or equity-related securities.

Typically we make non-control equity investments in portfolio companies.

Our goal is to realize gains upon our disposition of such equity interests.

However, the equity interests we receive may not appreciate in value and, in fact, may decline in value.

We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business,

recapitalization or public offering, which would allow us to sell the underlying equity interests.

However, the equity interests we receive may not appreciate

in value and, in fact, may decline in value.

We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the

underlying equity interests.

We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer.

We may be unable to

exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the

disposition of any equity interests may not be sufficient to offset any other losses we experience.

If our primary investments are deemed not to be

qualifying assets, we could be precluded from investing in our desired manner or deemed to be in violation of the 1940 Act.

order to maintain our status as a BDC, we may not acquire any assets other than qualifying assets unless, at the time of and after giving effect to such acquisition, at least 70.0% of our total assets are qualifying assets.

that most of the investments that we may acquire in the future will constitute qualifying assets.

However, we may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of

the 1940 Act.

If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs and be precluded from making follow-on investments in

existing portfolio companies (which could result in the dilution of our position) or required to dispose of investments at inappropriate times in order to come into compliance with the 1940 Act.

If we need to dispose of such investments quickly, it

could be difficult to dispose of such investments on favorable terms.

We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss.

Any such outcomes would have a

material adverse effect on our business, financial condition, results of operations and cash flows.

Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against

us and/or expose us to claims of private litigants.

If we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act.

registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act, which would significantly decrease our operating flexibility.

We may be unable to exercise these put rights for the consideration provided in our investment

documents if the issuer is in financial distress.

Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other

losses we experience.

If our primary investments are deemed not to be qualifying assets, we could be precluded from investing in our desired manner

or deemed to be in violation of the 1940 Act.

In order to maintain our status as a BDC, we may not acquire any assets other than

qualifying assets unless, at the time of and after giving effect to such acquisition, at least 70.0% of our total assets are qualifying assets.

We believe that most of the investments that we may acquire in the future will constitute

qualifying assets.

However, we may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act.

If we do not invest a sufficient portion of our assets in

qualifying assets, we could violate the 1940 Act provisions applicable to BDCs and be precluded from making follow-on investments in existing portfolio companies (which could result in the dilution of our

position) or required to dispose of investments at inappropriate times in order to come into compliance with the 1940 Act.

If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms.

may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss.

Any such outcomes would have a material adverse effect on our business, financial condition, results of

operations and cash flows.

Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants.

If we do not maintain

our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act.

As a registered closed-end investment company,

we would be subject to substantially more regulatory restrictions under the 1940 Act, which would significantly decrease our operating flexibility.

The disposition of our investments may result in contingent liabilities.

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We are generally prohibited from

engaging in mergers and other business combinations with stockholders that beneficially own 10.0% or more of the voting power of our outstanding voting stock, or with their affiliates, for five years after the most recent date on which such

stockholders became the beneficial owners of 10.0% or more of the voting power of our outstanding voting stock and thereafter unless our directors and stockholders approve the business combination in the prescribed manner.

See Description of

Our Capital StockBusiness Combinations. Maryland law may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.

We have also adopted measures that may make it difficult for a third party to obtain control

of us, including provisions of our charter authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series and to cause the issuance of additional shares of our stock, including preferred stock.

addition, we have adopted a classified board of directors.

mergers and other business combinations with stockholders that beneficially own 10.0% or more of the voting power of our outstanding voting stock, or with their affiliates, for five years after

the most recent date on which such stockholders became the beneficial owners of 10.0% or more of the voting power of our outstanding voting stock and thereafter unless our directors and stockholders approve the business combination in the prescribed

See Description of Our Capital Stock - Business Combinations. Maryland law may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.

We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our charter

authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series and to cause the issuance of additional shares of our stock, including preferred stock.

In addition, we have adopted a classified board

of directors.

A classified board may render a change in control of us or removal of our incumbent management more difficult.

These provisions, as well as other provisions of our charter and bylaws, may

delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

Our business and

operation could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price.

These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a

change in control that might otherwise be in the best interests of our stockholders.

Our business and operation could be negatively affected if we

become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price.

In the past, following periods of volatility in the market price of a companys securities, securities class action litigation has often

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors