What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-01 compared with 2020-02-27 · 410 added, 293 removed, 485 unchanged (59% of the section changed)

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For the Year Ended December 31,

The amount of each per share distribution has been retroactively adjusted to reflect the Reverse Stock Split as discussed in Note 3 to our

consolidated financial statements.

Includes a $0.36 per share special cash distribution that was paid on December 3, 2018.

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repurchase up to $200 in the aggregate of our outstanding common stock in the open market at prices below the then current net asset value per share.

The timing, manner, price and amount of any share repurchases will be determined by us, based upon

the evaluation of economic and market conditions, our stock price, applicable legal and regulatory requirements and other factors.

On November 19, 2019, the program was extended through December 19, 2020 or until the aggregate repurchase

amount that has been approved by our board of directors has been expended.

The program may be suspended, extended, modified or discontinued at any time.

During the year ended December 31, 2019, the Company repurchased 25,151,675 shares

of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $6.08 (totaling $153).

During the period from January 1, 2020 to February 26, 2020, the Company repurchased 2,933,435

shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $6.25 (totaling $18).

During the year ended December 31, 2020, the Company repurchased 2,823,750 shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions

paid) of $16.71 (totaling $47).

During the year ended

December 31, 2019, the Company repurchased 6,287,919 shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $24.30

(totaling $153).

The program has concluded since the aggregate repurchase amount that was approved by the Companys board of directors has been expended.

The number of shares repurchased and the average price per share amounts have been retroactively adjusted to reflect the Reverse Stock Split as discussed below.

As previously disclosed, certain affiliates of the owners of the Advisor committed $100 to a $350 investment vehicle that may invest from

time to time in shares of the Company.

In June 2020, that investment vehicle entered into a written trading plan with a third party broker in accordance with Rule 10b5-1 and Rule

10b-18 promulgated under the Exchange Act, or the Affiliated Purchaser Program, to facilitate the purchase of shares of our common stock pursuant to the terms and conditions of such plan.

The Affiliated

Purchaser Program provides for the purchase of up to $100 worth of shares of our common stock, subject to the limitations provided therein.

During the year ended December 31, 2020, the Affiliated Purchaser Program purchased 3,921,610 shares of common stock at an average price per share (inclusive of commissions paid) of $15.51 (totaling

The table below provides information concerning purchases of our shares of common stock by or on behalf of the Company

or any affiliated purchaser, as defined by Rule 10b-18(a)(3) promulgated under the Exchange Act during the quarterly period ended December 31, 2020.

Dollar amounts in the table below and the

related notes are presented in millions, except for share and per share amounts.

Share and per share amounts in the table below have been retroactively adjusted to reflect the Reverse Stock Split.

Average Price

Total Number of

Shares Purchased as

Part of Publicly

Maximum Number

(or Approximate

Dollar Value) of

Shares that May

Be Purchased Under

October 1, 2020 through October 31, 2020

November 1, 2020 through November 30, 2020

December 1, 2020 through December 31, 2020

Amount includes commissions paid.

Includes amounts pursuant to the Affiliated Purchaser Program.

Stock Performance Graph

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under the Securities Act.

The following graph shows a comparison from

April 16, 2014 (the date our shares of common stock commenced trading on the NYSE) through December 31, 2019 of the cumulative total return for our common stock, the S&P 500 Index, the Russell 2000 Financial Services Index

and the Wells Fargo ®

The graph assumes that $100 was invested at the market close on April 16,

2014 in our common stock, the S&P 500 Index, the Russell 2000 Financial Services Index and the Wells Fargo ®

BDC Index, is based on historical stock prices and assumes all dividends or distributions are reinvested on the respective dividend or distribution payment dates without commissions.

The stock price performance reflected by the following graph is

not necessarily indicative of future stock price performance.

The following graph shows a comparison from April 16, 2014

(the date our shares of common stock commenced trading on the NYSE) through December 31, 2020 of the cumulative total return for our common stock, the S&P 500 Index, the Russell 2000 Financial Services Index and the Wells Fargo ®

The graph assumes that $100 was invested at the market close on April 16, 2014 in our common stock,

the S&P 500 Index, the Russell 2000 Financial Services Index and the Wells Fargo ®

BDC Index, is based on

historical stock prices and assumes all dividends or distributions are reinvested on the respective dividend or distribution payment dates without commissions.

The stock price performance reflected by the following graph is not necessarily

indicative of future stock price performance.

Selected Financial Data.

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Our consolidated financial

statements for the year ended December 31, 2019 were audited by Deloitte & Touche LLP, our independent registered public accounting firm, while our consolidated financial statements for the years ended December 31, 2018, 2017,

statements for the years ended December 31, 2020 and 2019 were audited by Deloitte & Touche LLP, our independent registered public accounting firm, while our consolidated financial statements for the years ended December 31, 2018,

2017, and 2016 were audited by RSM US LLP, our former independent registered public accounting firm.

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The per share data was derived by using the weighted average shares outstanding during the applicable period.

The share information utilized

to determine per share data has been retroactively adjusted to reflect the Reverse Stock Split.

The per share data for distributions reflect the actual amount of distributions paid per share during the applicable period.

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competition in our markets and general economic conditions.

As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods.

The total return calculations set forth above

represent the total return on our investment portfolio during the applicable period and do not represent an actual return to stockholders.

As a result of these factors, results for any previous period should not be

relied upon as being indicative of performance in future periods.

The total return calculations set forth above represent the total return on our investment portfolio during the applicable period

and do not represent an actual return to stockholders.

The total return based on market value for each period presented was calculated based on the change in market price during the applicable

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Total portfolio investments for the year ended December 31, 2018 include investments acquired at fair value of $4,168 in connection with

the 2018 Merger.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

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our future operating results;

our business prospects and the prospects of the companies in which we may invest;

our business prospects and the prospects of the companies in which we may invest, including our and their ability to achieve our respective objectives

as a result of the current COVID-19 pandemic;

the impact of the investments that we expect to make;

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the dependence of our future success on the general economy and its effect on the industries in which we may invest;

general economic and political trends and other external factors, including the current COVID-19 pandemic and

related disruptions caused thereby;

our use of financial leverage;

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the tax status of the enterprises in which we may invest;

In addition, words such as anticipate, believe,

expect and intend indicate a forward-looking statement, although not all forward-looking statements include these words.

The forward-looking statements contained in this annual report on Form

10-K involve risks and uncertainties.

Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including those factors set forth in

Risk Factors. Factors that could cause actual results to differ materially include:

the 2021 Merger, the likelihood the 2021 Merger is completed and the anticipated timing of their completion.

In addition, words such as anticipate, believe, expect and intend indicate a

forward-looking statement, although not all forward-looking statements include these words.

The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties.

actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including those factors set forth in Item 1A.

Risk Factors. Factors that could cause actual results to differ

materially include:

changes in the economy;

risks associated with possible disruption in our operations or the economy generally due to terrorism or natural

risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or

future changes in laws or regulations and conditions in our operating areas;

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within our portfolio, such as an event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.

We pursue our investment objective by investing primarily in the debt of middle market U.S.

We pursue our investment objective by investing primarily in the debt of middle market

companies with a focus on originated transactions sourced through the network of the Advisor and its affiliates.

We define direct originations as any investment where the Companys investment adviser, sub-adviser or their affiliates had negotiated the terms of the transaction beyond just the price, which, for example, may include negotiating financial

covenants, maturity dates or interest rate terms.

These directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club,

or similar transactions.

These direct originations include investments originated by FB Income Advisor, GDFM or their affiliates.

Our portfolio is comprised primarily of investments in senior secured loans and second

lien secured loans of private middle market U.S.

We define direct originations as any investment where the Companys investment adviser,

sub-advsier or their affiliates had negotiated the terms of the transaction beyond just the price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms.

directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar transactions.

These direct originations

include investments originated by FB Income Advisor, GDFM or their affiliates.

Our portfolio is comprised primarily of

investments in senior secured loans and second lien secured loans of private middle market U.S.

companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S.

Although we do not expect a significant portion of our portfolio to be

comprised of subordinated loans, there is no limit on the amount of such loans in which we may invest.

We may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market

transactions in the OTC market or directly from our target companies as primary market or directly originated investments.

In connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional

consideration.

We may also purchase or otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants that may be converted into or exchanged for common stock or other equity or the

cash value of common stock or other equity, including through a co-investment with a financial sponsor or possibly the restructuring of an investment.

In addition, a portion of our portfolio may be comprised

of corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps.

The Advisor will seek to tailor our investment focus as market conditions evolve.

Depending on market conditions,

we may increase or decrease our exposure to less senior portions of the capital structures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of loans, bonds or other securities reflects a lower

value than deemed warranted by the Advisors fundamental analysis.

Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor

with the broader investment community and may include event driven investments, anchor orders and structured products.

senior secured loans, second lien secured loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally have stated terms of up to ten years, but the

expected average life of such securities is generally three to four years.

Although we do not expect a

significant portion of our portfolio to be comprised of subordinated loans, there is no limit on the amount of such loans in which we may invest.

We may purchase interests in loans or make other debt investments, including investments in senior

secured bonds, through secondary market transactions in the OTC market or directly from our target companies as primary market or directly originated investments.

In connection with our debt investments, we may on occasion receive equity interests

such as warrants or options as additional consideration.

We may also purchase or otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants that may be converted into or exchanged

for common stock or other equity or the cash value of common stock or other equity, including through a co-investment with a financial sponsor or possibly the restructuring of an investment.

In addition, a

portion of our portfolio may be comprised of corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps.

The Advisor will seek to tailor our investment focus as market

conditions evolve.

Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital structures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of

loans, bonds or other securities reflects a lower value than deemed warranted by the Advisors fundamental analysis.

Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a

particular company or an industry being out of favor with the broader investment community and may include event driven investments, anchor orders and structured products.

The senior secured loans, second lien secured loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally

have stated terms of up to ten years, but the expected average life of such securities is generally three to four years.

However, we may invest in loans and securities with any maturity or duration.

Our debt investments may be rated by a NRSRO and, in such case, generally will carry a rating

below investment grade (rated lower than Baa3 by Moodys or lower than BBB- by S&P).

We may invest without limit in debt or other securities of any rating, as well as debt or

other securities that have not been rated by a NRSRO.

Our debt investments may be rated by a NRSRO and,

in such case, generally will carry a rating below investment grade (rated lower than Baa3 by Moodys or lower than BBB- by S&P).

We may invest without limit in debt or other

securities of any rating, as well as debt or other securities that have not been rated by a NRSRO.

Corporate Capital Trust, Inc.

On December 19, 2018, we completed the 2018 Merger.

Pursuant to the Merger Agreement, CCT was first merged with and into Merger Sub, with

CCT as the surviving corporation, and, immediately following such merger, CCT was then merged with and into the Company, with the Company as the surviving company.

In accordance with the terms of the Merger Agreement, at the time of the transactions

contemplated by the Merger Agreement, each outstanding share of CCT common stock was converted into the right to receive 2.3552 shares of our common stock.

As a result, we issued an aggregate of approximately 292,324,670 shares of our common stock

to former CCT stockholders.

Pursuant to the 2018 Merger Agreement, CCT was first

merged with and into Merger Sub, with CCT as the surviving corporation, and, immediately following such merger, CCT was then merged with and into the Company, with the Company as the surviving company.

In accordance with the terms of the 2018 Merger

Agreement, at the time of the transactions contemplated by the 2018 Merger Agreement, each outstanding share of CCT common stock was converted into the right to receive 2.3552 shares of our common stock.

As a result, we issued an aggregate of

approximately 292,324,670 shares of our common stock to former CCT stockholders.

Following the consummation of the 2018 Merger, we entered into the investment advisory agreement, which replaced the prior investment advisory agreement.

The principal measure of our financial performance is net

increase in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation or depreciation on investments and net

unrealized gain or loss on foreign currency.

exchange ratio amounts in the foregoing do not reflect the Reverse Stock Split.

Pending Merger with FSKR

On November 23, 2020, we entered into an Agreement and Plan of Merger, or the 2020 Merger Agreement with FS KKR Capital Corp II., a

Maryland corporation, or FSKR, and together with FSK, the Funds, Rocky Merger Sub, Inc., a Maryland corporation and wholly-owned subsidiary of FSK, or Merger Sub and the Advisor.

The 2020 Merger Agreement provides that, subject to the conditions set forth in the 2020 Merger Agreement, Merger Sub will merge with and

into FSKR, with FSKR continuing as the surviving company and as a wholly-owned subsidiary of FSK, or the First Merger, and, immediately thereafter, FSKR will merge with and into the Company, with the Company continuing as the surviving company, or

together with the First Merger, the 2021 Merger.

The board of directors of each Fund has approved the 2021 Merger, with the participation throughout by, and the unanimous support of, its respective independent directors.

The parties to the 2020

Merger Agreement intend the 2021 Merger to be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

In the 2021 Merger, each share of FSKRs common stock issued and outstanding

immediately prior to the effective time of the First Merger will be converted into a number of shares of the Companys common stock equal to an exchange ratio to be determined in connection with the closing of the 2021 Merger, or the Exchange

The Exchange Ratio will equal the net asset value per share of FSKRs common stock, respectively (determined no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021 Merger), divided by the net

asset value per share of the Companys common stock (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021 Merger).

Holders of the FSKRs common stock may receive

fractional shares or cash in lieu of fractional shares, at the election of the Company.

The 2020 Merger Agreement contains

representations, warranties and covenants, including, among others, covenants relating to the operation of each of the Funds and the Advisors businesses during the period prior to the closing of the 2021 Merger.

The Funds have agreed to

convene and hold meetings of their respective stockholders for the purpose of obtaining the required approvals of the Funds stockholders, respectively, and have agreed to recommend that their stockholders approve their respective proposals.

The 2020 Merger Agreement provides that the board of directors of each Fund may not solicit proposals relating to alternative

transactions, or, subject to certain exceptions, enter into discussions or negotiations or provide information in connection with any proposal for an alternative transaction.

However, each of the Funds may, subject to certain conditions, change its

recommendation to their respective stockholders, terminate the 2020 Merger Agreement and enter into an agreement with respect to a superior alternative proposal if the board of directors of such Fund determines in its reasonable good faith judgment,

after consultation with its outside legal counsel, that the failure to take such action would be reasonably likely to breach its standard of conduct under applicable law (taking into account any changes to the 2020 Merger Agreement proposed by the

Consummation of the 2021 Merger, which is currently anticipated to occur during the second or third quarter of

2021, is subject to certain closing conditions, including (1) requisite approvals of the Funds stockholders, (2) the absence of certain legal impediments to the consummation of the 2021 Merger, (3) effectiveness of the

registration statement on Form N-14, which includes a joint proxy statement of the Funds and a prospectus of the Company, or the Proxy Statement, (4) subject to certain exceptions, the accuracy of the

representations and warranties and compliance with the covenants of each party to the 2020 Merger Agreement and (5) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act

of 1976, as amended).

The 2020 Merger Agreement also contains certain termination rights in favor of each Fund including if

the 2021 Merger is not completed on or before November 23, 2021 or if the requisite approvals of the applicable Funds stockholders are not obtained.

The 2020 Merger Agreement also provides that, upon the termination of the 2020 Merger

Agreement under certain circumstances, a third party may be required to pay FSKR a termination fee of approximately $90.8, or a third party may be required to pay FSK a termination fee of approximately $126.2.

In connection with the 2021 Merger, the Company is seeking stockholder approval to amend the Companys investment advisory agreement

to (a) reduce FSKs income incentive fee rate from 20% to 17.5% and (b) remove the total return lookback provision applicable to the subordinated incentive fee on income.

The Advisor has also agreed to waive income incentive fees in

the amount of $15 per quarter for the first six full fiscal quarters of operations following the 2021 Merger for a total waiver of $90.

The principal

measure of our financial performance is net increase in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation

or depreciation on investments and net unrealized gain or loss on foreign currency.

Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses.

Net realized gain or loss on investments is the

difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions.

Net realized gain

or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations.

Net unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including

the respective unrealized gain or loss on foreign currency for those foreign denominated investments.

Net unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency

fluctuations.

We principally generate revenues in the form of interest income on the debt investments we hold.

In addition, we

generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and

performance-based fees.

realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign

denominated investment transactions.

Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations.

Net unrealized appreciation or depreciation on investments is the net change in

the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments.

Net unrealized gain or loss on foreign currency is the net change in the value of receivables

or accruals due to the impact of foreign currency fluctuations.

We principally generate revenues in the form of interest income on the debt investments

In addition, we generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting

fees, prepayment fees and performance-based fees.

We may also generate revenues in the form of dividends and other distributions on the equity or other securities we hold.

Our primary operating expenses include the payment of management

and incentive fees and other expenses under the investment advisory agreement and the administration agreement, interest expense from financing arrangements and other

indebtedness, and other expenses necessary for our operations.

The management and incentive fees compensate the Advisor for its work in identifying, evaluating, negotiating, executing, monitoring

and servicing our investments.

The Advisor oversees our

day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory

affairs activities, and other administrative services.

The Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are

required to maintain and preparing reports for our stockholders and reports filed with the SEC.

In addition, the Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and

dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

and incentive fees and other expenses under the investment advisory agreement and the administration agreement, interest expense from financing arrangements and other indebtedness, and other expenses necessary for our operations.

The management and

incentive fees compensate the Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

The Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal

services, investor relations, certain government and regulatory affairs activities, and other administrative services.

The Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which

includes being responsible for the financial records that we are required to maintain and preparing reports for our stockholders and reports filed with the SEC.

In addition, the Advisor assists us in calculating our net asset value, overseeing the

preparation and filing of tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Pursuant to the administration agreement, we reimburse the Advisor for expenses necessary to perform services related to our

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books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

Portfolio Investment

Activity for the Years Ended December 31, 2019 and 2018

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the years ended

COVID-19 Developments

The rapid spread of the

COVID-19 pandemic, and associated impacts on the U.S.

and global economies, has negatively impacted, and is likely to continue to negatively impact, the business operations of some of our portfolio companies.

We cannot at this time fully predict the continued impact of COVID-19 on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our

portfolio companies operating results or our own results of operations or financial condition.

We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly

limit business operations if subjected to prolonged economic distress.

These developments could result in a decrease in the value of our investments.

COVID-19 has already had adverse effects on our investment income and we expect that such adverse effects will continue for some time.

These adverse effects may

require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments.

In addition, disruptions in the capital markets have resulted in illiquidity in certain

market areas.

These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows.

Unfavorable economic conditions caused by

COVID-19 can also be expected to increase our funding costs and limit our access to the capital markets.

These events have limited our investment originations, which is likely to continue for the immediate

future, and have also had a material negative impact on our operating results.

We will continue to carefully monitor the

impact of the COVID-19 pandemic on our business and the business of our portfolio companies.

Because the full effects of the COVID-19 pandemic are not capable of being

known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows.

We do, however, expect that it will continue to have a negative impact on

our business and the financial condition of certain of our portfolio companies.

Portfolio Investment Activity for the Years Ended

December 31, 2020 and 2019

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the years ended December 31, 2020 and 2019:

For the Year Ended

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Strategic Credit Opportunities Partners, LLC

Purchases and new investments for the year ended December 31, 2018 include investments acquired at fair value of $4,168 in connection with the

The following table summarizes the composition of our investment portfolio at cost and

fair value as of December 31, 2019 and 2018:

The following table summarizes the composition of our investment portfolio at cost and fair value as of

December 31, 2020 and 2019:

December 31, 2020

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divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

For the year ended December 31, 2019, our total return based on net asset value was 7.14% and our total

return based on market value was 33.80%.

For the year ended December 31, 2020, our total return based on net asset value was (9.69)% and our

total return based on market value was (19.73)%.

For the year ended December 31, 2019, our total return based on net asset value was 7.14% and our total return based on market value was 33.80%.

See footnotes 7 and 8 to the table included in Note 12

to our audited consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

See footnotes 7 and 8 to the table included in

Note 12 to our audited consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

Direct Originations

We define Direct Originations as any investment where the Advisor or its affiliates negotiates the terms of the transaction beyond just the price, which, for example, may include negotiating financial

covenants, maturity dates or interest rate terms.

These Direct Originations include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar

transactions.

The following table presents certain selected information regarding our Direct Originations as of December 31, 2019 and 2018:

define Direct Originations as any investment where the Advisor or its affiliates negotiates the terms of the transaction beyond just the price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms.

These Direct Originations include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar transactions.

The following table presents certain

selected information regarding our Direct Originations as of December 31, 2020 and 2019:

Characteristics of All Direct Originations held in Portfolio

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December 31, 2020

December 31, 2018

Investment Rating

The amount of the portfolio in each grading category may vary substantially from period to period

resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities.

In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in

investment values.

Percentage of

Historically, the Adviser has rated its investment in SCJV as a 2 on the investment rating scale.

As of December 31, 2020, the Advisor

evaluates its investment in SCJV by rating each individual loan in SCJVs portfolio on a look-through basis.

The Advisor has re-evaluated its portfolio as of December 31, 2019 and has updated the

investment rating scale in the table above in order to be in accordance with the current methodology.

amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities.

In addition, changes in

the grade of investments may be made to reflect our expectation of performance and changes in investment values.

Results of Operations

Comparison of the Years Ended December 31, 2020, 2019 and 2018

Our investment income for the years ended December 31, 2019, 2018 and 2017 was as follows:

Our investment income for the years ended December 31, 2020,

2019 and 2018 was as follows:

Year Ended December 31,

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As such, fee income is generally dependent on new Direct Origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

The increase in investment income during the year ended December 31, 2019 compared to the year ended December 31, 2018 can be

primarily attributed to the increase in investments as a result of the Merger.

The decrease in interest and fee income during

the year ended December 31, 2018 compared to the year ended December 31, 2017 can be primarily attributed to the placement of certain assets on non-accrual and net sales and repayment activity during

the year ended December 31, 2018 and the repayment of certain large investments during the year ended December 31, 2017, partially offset by the increase in interest income from the acquired CCT assets for the last twelve days of the year.

The increase in PIK interest income during the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the restructuring of certain assets into assets with a higher PIK interest rate and an increase

The increase in dividend income during the year ended December 31, 2018 compared to the year ended

December 31, 2017 was primarily due to a one-time dividend paid in respect of one of our investments during the year ended December 31, 2018.

The decrease in interest income during the year ended December 31, 2020 compared to the year ended December 31, 2019 can

primarily be attributed to the repayment of higher yielding assets replaced by lower yielding assets, the impact of the decline in LIBOR on our floating rate investments and the increase in our investment in Strategic Credit Opportunities Partners,

LLC during the year ended December 31, 2020.

A portion of each of these factors was impacted by the current COVID-19 pandemic.

The increase in dividend income during the year ended December 31, 2020 compared to the year ended December 31, 2019 can be primarily attributed to the increase in dividends paid in respect to

our investment in Strategic Credit Opportunities Partners, LLC during the year ended December 31, 2020, compared to the year ended December 31, 2019.

The increase in investment income during the year ended December 31, 2019 compared to the year ended December 31, 2018 can be primarily attributed to the increase in investments as a result of

the 2018 Merger.

Our operating expenses, together with excise taxes, for the years ended December 31, 2020, 2019 and 2018 were as follows:

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Total net expenses, including excise taxes

Other expenses during the years ended December 31, 2018 include $1 of breakage fees associated with the paydown of certain debt

facilities during the period.

The following table reflects selected expense ratios as a percent of average

net assets for the years ended December 31, 2019, 2018 and 2017:

Other expenses during the years ended December 31, 2020 and 2018 include $1 and $1, respectively, of breakage fees associated with the

paydown of certain debt facilities during the period.

The following table reflects selected expense ratios

as a percent of average net assets for the years ended December 31, 2020, 2019 and 2018:

Year Ended December 31,

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Ratio data may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets.

The increase in expenses during the year ended December 31, 2019 compared to the year ended December 31,

2018 can primarily be attributed to the increased management fee as a result of the higher asset base from the Merger and increased interest expense resulting from the higher debt outstanding due to the Merger.

The increase in expense ratios during the year ended December 31, 2020 compared to the year ended

December 31, 2019 can be primarily attributed to mark to market declines across the portfolio resulting in a lower asset base partially offset by the decrease in expenses during the year ended December 31, 2020.

The increase in expenses during the year ended December 31, 2019 compared to the year ended December 31, 2018 can primarily be

attributed to the increased management fee as a result of the higher asset base from the 2018 Merger and increased interest expense resulting from the higher debt outstanding due to the 2018 Merger.

Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods

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share), $410 ($3.16 per share) and $205 ($3.28 per share) for the years ended December 31, 2020, 2019 and 2018, respectively.

The increase in net investment income for the year December 31, 2019 compared to December 31, 2018 can be

attributed to higher income as discussed above.

The increase in net investment income for the year December 31, 2018

compared to December 31, 2017 can be attributed to lower income as discussed above, offset by lower expenses during the year ended December 31, 2018 resulting from lower management and incentive fees.

The decrease in net investment income during the year ended December 31, 2020 compared to the year ended December 31, 2019 can primarily be attributed to lower investment income during the year

ended December 31, 2020 as discussed above, partially offset by lower expenses.

The increase in net investment income for the year December 31, 2019 compared to December 31, 2018 can be attributed to higher income as discussed

Net Realized Gains or Losses

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Net change in unrealized appreciation (depreciation) on foreign currency forward contracts

Net change in unrealized appreciation (depreciation) on secured borrowing

Net change in unrealized gain (loss) on foreign currency

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During the year ended December 31, 2020, the net change in unrealized appreciation (depreciation) on

our investments was primarily driven by mark to market declines in certain debt investments.

During the year ended December 31, 2018, the net change in unrealized appreciation (depreciation) on our investments was primarily due to the decrease

in valuation of certain of our equity/other investments, as well as the recognition of fair value of investments after the allocation of purchase price discount was applied to the fair value of CCTs investments in connection with the

During the year ended December 31, 2017, the net change in unrealized appreciation (depreciation) on our investments was primarily driven by the conversion of unrealized depreciation to realized losses combined with depreciation

of certain equity positions.

our investments was driven primarily by mark to market declines across the portfolio resulting from uncertainty related to the current COVID-19 pandemic.

During the year ended December 31, 2019, the net

change in unrealized appreciation (depreciation) on our investments was primarily driven by mark to market declines in certain debt investments.

During the year ended December 31, 2018, the net change in unrealized appreciation (depreciation)

on our investments was primarily due to the decrease in valuation of certain of our equity/other investments, as well as the recognition of fair value of investments after the allocation of purchase price discount was applied to the fair value of

CCTs investments in connection with the 2018 Merger.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the years ended December 31, 2019, 2018 and 2017, the net increase in net assets resulting from operations was $246 ($0.47 per

share), $569 ($2.26 per share) and $182 ($0.74 per share), respectively.

For the years ended December 31, 2020, 2019 and 2018, the net increase (decrease) in net assets resulting from

operations was $(405) ($(3.26) per share), $246 ($1.90 per share) and $569 ($9.05 per share), respectively.

This Results

of Operations section should be read in conjunction with COVID-19 Developments above.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2019, we had $106 in cash and foreign currency, which we or our wholly-owned financing subsidiaries held in

custodial accounts, and $637 in borrowings available under our financing arrangements, subject to borrowing base and other limitations.

As of December 31, 2019, we also had broadly syndicated investments and opportunistic investments

that could be sold to create additional liquidity.

As of December 31, 2019, we had unfunded debt investments with aggregate unfunded commitments of $438.0, unfunded equity/other commitments of $240.1 and unfunded commitments of $385.2 of

Strategic Credit Opportunities Partners, LLC.

We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments, as well as principal

repayments and proceeds from sales of our investments.

To seek to enhance our returns, we also employ

leverage as market conditions permit and at the discretion of the Advisor, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act.

Prior to June 14, 2019,

in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing.

Effective June 15, 2019, our asset coverage requirement applicable to

senior securities was reduced from 200% to 150%.

As of December 31, 2019, the aggregate amount outstanding of the senior securities issued by us was $4.2 billion.

As of December 31, 2020, we had $191 in cash and foreign

currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $1,040 in borrowings available under our financing arrangements, subject to borrowing base and other limitations.

As of December 31, 2020, we

also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity.

As of December 31, 2020, we had unfunded debt investments with aggregate unfunded commitments of $228.4, unfunded

equity/other commitments of $142.9 and unfunded commitments of $65.8 of Strategic Credit Opportunities Partners, LLC.

We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need

We currently generate cash primarily from cash flows from fees, interest and dividends

earned from our investments, as well as principal repayments and proceeds from sales of our investments.

To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of the Advisor, but in no event will

leverage employed exceed the maximum amount permitted by the 1940 Act.

Prior to June 14, 2019, in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least

200% after such borrowing.

Effective June 15, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%.

As of December 31, 2020, the aggregate amount outstanding of the senior securities

issued by us was $4.0 billion.

As of December 31, 2020, our asset coverage was 177%.

Financing Arrangements.

Prior to investing in securities of portfolio companies, we invest the cash received

from fees, interest and dividends earned from our investments and principal repayments and proceeds from sales of our investments primarily in cash, cash equivalents, including money market funds, U.S.

government securities, repurchase agreements

and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

See Financing Arrangements.

Prior to investing in securities of portfolio companies, we invest the cash received from fees, interest and dividends earned from our investments and principal repayments and proceeds from sales of our

investments primarily in cash, cash equivalents, including money market funds, U.S.

government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC

election and our election to be taxed as a RIC.

This Financial Condition, Liquidity and Capital Resources section

should be read in conjunction with COVID-19 Developments above.

Financing Arrangements

The following table presents summary information

with respect to our outstanding financing arrangements as of December 31, 2019:

The following table presents summary information with respect to our outstanding financing arrangements as of

December 31, 2020:

As of December 31, 2020

Type of Arrangement

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L+1.75% - 2.00% (1)(3)

Locust Street Credit Facility (1)

Revolving Credit Facility

September 28, 2022

December 2, 2023

Senior Secured Revolving Credit Facility (2)

Revolving Credit Facility

L+1.75% - 2.00% (3)

November 7, 2024

-2.00% (1)(4)

December 23, 2025

4.750% Notes due 2022 (6)

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February 1, 2025

8.625% Notes due 2025 (6)

Unsecured Notes

3.400% Notes due 2026 (6)

Unsecured Notes

January 15, 2026

2019-1 Notes (2)(7)

Collateralized Loan Obligation

L+1.70% - 2.50% (6)

July 15, 2030

January 15, 2031

LIBOR is subject to a 0% floor.

The carrying amount outstanding under the facility approximates its fair value.

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outstanding indebtedness of the Company.

Amount includes borrowing in Euros, Canadian dollars, pound sterling and Australian dollars.

Amount includes borrowing in Euros, Canadian dollars, pounds sterling and Australian dollars.

Euro balance outstanding of 164 has been

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rate of CAD $1.00 to $0.78 as of December 31, 2020 to reflect total amount outstanding in U.S.

Pound sterling balance outstanding of £100 has been converted to U.S.

Pounds sterling balance outstanding of £111 has been converted to U.S.

dollars at an exchange rate of £1.00 to $1.37 as of

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outstanding in U.S.

As of December 31, 2019, the fair value of the 4.750% notes, the 5.000% notes, the 4.625% notes and the 4.125% notes was approximately

$467, $250, $416 and $478, respectively.

As of December 31, 2020, the fair value of the 4.750% notes, the 5.000% notes, the 4.625% notes, the 4.125% notes, the 8.625% notes and

the 3.400% notes was approximately $468, $245, $422, $490, $285 and $994 respectively.

These valuations are considered Level 2 valuations within the fair value hierarchy.

As of December 31, 2019, there were $299.4 of Class A-1 notes outstanding at L+1.70% and

$52.3 of Class A-2 notes outstanding at L+2.50%.

See Note 9 to

our consolidated financial statements included herein for additional information regarding our financing arrangements.

RIC Status and

Distributions

As of December 31, 2020, there were $281.4 of Class A-1R notes outstanding at L+1.85%, $20.5 of Class A-2R notes outstanding at

L+2.25%, $32.4 of Class B-1R notes outstanding at L+2.60% and $17.4 of Class B-2R notes outstanding at 3.011%.

See Note 9 to our consolidated financial statements included herein for additional

information regarding our financing arrangements.

RIC Status and Distributions

We have elected to be subject to tax as a RIC under Subchapter M of the Code.

In order to qualify for RIC

tax treatment, we must, among other things, make distributions of an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for distributions paid, each tax year.

As long as the

distributions are declared by the

later of the fifteenth day of the ninth month following the close of a tax year or the due date of the tax return for such tax year, including extensions, distributions paid up to twelve months

after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year.

We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC tax status each tax

We are also subject to a 4% nondeductible federal excise tax on certain undistributed income unless we make distributions in a timely manner to our stockholders generally of an amount at least equal to the sum of (1) 98% of our net ordinary

income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains in excess of capital losses, or capital gain net income (adjusted for

certain ordinary losses), for the one-year period ending October 31 of that calendar year and (3) any net ordinary income and capital gain net income for the preceding years that were not distributed

during such years and on which we paid no U.S.

In order to qualify for RIC tax treatment, we must, among

other things, make distributions of an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for distributions paid, each tax year.

As long as the distributions are declared by the later of

the fifteenth day of the ninth month following the close of a tax year or the due date of the tax return for such tax year, including extensions, distributions paid up to twelve months after the current tax year can be carried back to the prior tax

year for determining the distributions paid in such tax year.

We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC tax status each tax year.

We are also subject to a 4% nondeductible federal excise tax

on certain undistributed income unless we make distributions in a timely manner to our stockholders generally of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the

calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains in excess of capital losses, or capital gain net income (adjusted for certain ordinary losses), for the

one-year period ending October 31 of that calendar year and (3) any net ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we

federal income tax.

Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid

during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our stockholders, on December 31 of the calendar year in which the distribution was declared.

We can offer no assurance that we

will achieve results that will permit us to pay any cash distributions.

If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or

if distributions are limited by the terms of any of our borrowings.

Subject to applicable legal restrictions and the sole

discretion of our board of directors, we intend to authorize, declare and pay regular cash distributions on a quarterly basis.

We will calculate each stockholders specific distribution amount for the period using record and declaration dates

and each stockholders distributions will begin to accrue on the date that shares of our common stock are issued to such stockholder.

From time to time, we may also pay special interim distributions in the form of cash or shares of our common

stock at the discretion of our board of directors.

Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following

calendar year, will be treated as if it had been paid by us, as well as received by our stockholders, on December 31 of the calendar year in which the distribution was declared.

We can offer no assurance that we will achieve results that will

permit us to pay any cash distributions.

If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by

the terms of any of our borrowings.

Subject to applicable legal restrictions and the sole discretion of our board of

directors, we intend to authorize, declare and pay regular cash distributions on a quarterly basis.

We will calculate each stockholders specific distribution amount for the period using record and declaration dates and each stockholders

distributions will begin to accrue on the date that shares of our common stock are issued to such stockholder.

From time to time, we may also pay special interim distributions in the form of cash or shares of our common stock at the discretion of

our board of directors.

During certain periods, our distributions may exceed our earnings.

result, it is possible that a portion of the distributions we make may represent a return of capital.

A return of capital generally is a return of a stockholders investment rather than a return of earnings or gains derived from our investment

Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders.

No portion of the distributions paid during the tax years ended

December 31, 2019, 2018 or 2017 represented a return of capital.

We intend to continue to make our regular distributions

in the form of cash, out of assets legally available for distribution, except for those stockholders who receive their distributions in the form of shares of our common stock under our distribution reinvestment plan.

Any distributions reinvested

under the plan will nevertheless remain taxable to a U.S.

The following table reflects the cash distributions per

share that we have declared on our common stock during the years ended December 31, 2019, 2018 and 2017:

As a result, it is possible that a

portion of the distributions we make may represent a return of capital.

A return of capital generally is a return of a stockholders investment rather than a return of earnings or gains derived from our investment activities.

statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders.

No portion of the distributions paid during the tax years ended December 31, 2020, 2019 or 2018

represented a return of capital.

We intend to continue to make our regular distributions in the form of cash, out of assets

legally available for distribution, except for those stockholders who receive their distributions in the form of shares of our common stock under our distribution reinvestment plan.

Any distributions reinvested under the plan will nevertheless

remain taxable to a U.S.

The following table reflects the cash distributions per share that we have declared on

our common stock during the years ended December 31, 2020, 2019 and 2018:

For the Year Ended December 31,

The amount of each per share distribution has been retroactively adjusted to reflect the Reverse Stock Split as discussed in Note 3 to our

unaudited consolidated financial statements included herein.

Includes a $0.36 per share special cash distribution that was paid on December 3, 2018.

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Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting periods.

Management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in

forming the estimates and judgments, giving due consideration to materiality.

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the

reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Management has utilized available information, including our past history, industry

standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality.

Actual results may differ from these estimates.

In addition, other companies may utilize different estimates, which may impact the comparability of our results of

operations to those of companies in similar businesses.

Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements.

describe our most significant accounting policies in Note 2.

In addition, other companies may utilize different

estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies

is integral to understanding our financial statements.

We describe our most significant accounting policies in Note 2.

Summary of Significant Accounting Policies in our consolidated financial statements.

Critical accounting policies are those that require the application of managements

most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

We evaluate our critical accounting estimates and

judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions.

We have identified one of our accounting policies, valuation of portfolio investments, as critical because it

involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on

our reported results of operations or financial condition.

As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below.

Critical accounting policies are

those that require the application of managements most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions.

We have identified one of our accounting policies, valuation of portfolio

investments, specifically the valuation of Level 3 investments, as critical because it involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and

assumptions could have a material impact on our reported results of operations or financial condition.

As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in

addition to those discussed below.

Valuation of Portfolio Investments

We determine the net asset value of our investment portfolio each quarter.

Securities are valued at fair value as determined in good faith by our board of directors.

In connection with that determination,

the Advisor provides our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and

forecasts, and valuations prepared by independent third-party valuation services.

ASC Topic 820 issued by the FASB clarifies

the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition.

ASC Topic 820 defines fair value as the

price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes

the inputs used in measuring fair value.

Securities are valued at fair value as determined in good faith

by our board of directors.

In connection with that determination, the Advisor provides our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of

like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent third-party valuation services.

ASC Topic 820 issued by the FASB clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and

annual periods subsequent to initial recognition.

ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

These tiers include:

Level 1, defined as observable inputs such as quoted prices in active markets;

Level 2, which includes inputs such as quoted prices for similar securities in active markets and

quoted prices for identical securities where there is little or no activity in the market;

and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process

each quarter, as described below:

which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market;

and Level 3, defined as unobservable inputs for which little or

no market data exists, therefore requiring an entity to develop its own assumptions.

With respect to investments for which

market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

our quarterly fair valuation process begins by the Advisor providing financial and operating information with respect to each portfolio company or

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Determination of fair value involves subjective judgments and estimates.

Accordingly, the notes to our consolidated financial statements

refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements.

In making its determination of fair value, our board of directors may use any approved

independent third-party pricing or valuation services.

However, our board of directors is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information

obtained from the Advisor or any approved independent third-party valuation or pricing service that our board of directors deems to be reliable in determining fair value under the circumstances.

Below is a description of factors that the Advisor,

any approved independent third-party valuation services and our board of directors may consider when determining the fair value of our investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest

rates, call features, put features and other relevant terms of the debt.

For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value.

Other factors that may be

considered include the borrowers ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.

For convertible debt securities, fair value generally approximates the fair value of

the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price.

the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements.

In making its determination of fair value,

our board of directors may use any approved independent third-party pricing or valuation services.

However, our board of directors is not required to determine fair value in accordance with the valuation provided by any single source, and may use

any relevant data, including information obtained from the Advisor or any approved independent third-party valuation or pricing service that our board of directors deems to be reliable in determining fair value under the circumstances.

description of factors that the Advisor, any approved independent third-party valuation services and our board of directors may consider when determining the fair value of our investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest

rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt.

For investments without readily available market prices, we may incorporate these factors into discounted cash

flow models to arrive at fair value.

Other factors that may be considered include the borrowers ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the

quality of collateral securing our debt investments.

For convertible debt securities, fair value generally approximates the

fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price.

To value such an option, a standard option pricing model may be used.

Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value.

Our board of directors,

in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value.

All of these factors may be subject to adjustments based upon

the particular circumstances of a portfolio company or our actual investment position.

For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.

The Advisor, any approved independent third-party valuation services and our board of directors may also consider private

merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value.

The Advisor, any

approved independent third-party valuation services and our board of directors may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due

to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of directors, in consultation with the Advisor and any approved independent third-party

valuation services, if applicable, may consider relevant in assessing fair value.

Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market

directors, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value.

All of these factors may be subject to adjustments

based upon the particular circumstances of a portfolio company or our actual investment position.

For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other

What changed 10-K

Item 5. Market for Registrant’s Common Equity