What changed in this filing

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Item 1. Business

2023-05-10 compared with 2022-05-11 · 76 added, 82 removed, 477 unchanged (25% of the section changed)

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Michael LiCalsi, our general counsel and secretary, also serves as the Administrator’s president, general counsel, and secretary, as well as the executive vice president of administration of the Adviser.

Gladstone and Terry Lee Brubaker, our vice chairman and chief operating officer, also serve on the board of directors of the Adviser, the board of managers of the Administrator, and as executive officers of the Adviser and the Administrator.

Gladstone and Terry Lee Brubaker, our chief operating officer, also serve on the board of directors of the Adviser, the board of managers of the Administrator, and as executive officers of the Adviser and the Administrator.

The Administrator employs, among others, our chief financial officer and treasurer, chief valuation officer, chief compliance officer, general counsel and secretary and their respective staffs.

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To achieve our investment objectives, our investment strategy is to invest

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in several categories of debt and equity securities, with individual investments in a particular portfolio company generally totaling up to $75 million, although investment size may vary, depending upon our total assets or available capital at the time of investment.

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We have amended all outstanding loan agreements with our portfolio companies to include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist.

Assuming that SOFR replaces LIBOR and is appropriately adjusted to equate to one-month LIBOR, we expect that there should be minimal impact on our operations.

Assuming that the Secured Overnight Financing Rate ("SOFR") replaces LIBOR and is appropriately adjusted to equate to one-month LIBOR, we expect that there should be minimal impact on our operations.

Subsequent to March 31, 2023, certain of our existing investments have been transitioned from LIBOR to SOFR.

We seek debt instruments that pay interest monthly or, at a minimum, quarterly, and which may include a yield enhancement such as a success fee or, to a lesser extent, deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity.

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• Secured First Lien Debt Securities:

We seek to invest a portion of our assets in first lien secured debt securities also known as senior loans, senior term loans, lines of credit and senior notes.

Using its assets as collateral, the borrower typically uses first lien secured debt to cover a substantial portion of the funding needs of the business.

We seek to invest a portion of our assets in secured first lien debt securities also known as senior loans, senior term loans, lines of credit and senior notes.

Using its assets as collateral, the borrower typically uses secured first lien debt to cover a substantial portion of the funding needs of the business.

These debt securities usually take the form of first priority liens on all, or substantially all, of the assets of the business.

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• Secured Second Lien Debt Securities:

We seek to invest a portion of our assets in second lien secured debt securities, which may also be referred to as subordinated loans, subordinated notes and mezzanine loans.

These second lien secured debt securities rank junior to the borrower’s first lien secured debt securities and may be secured by second priority liens on all or a portion of the assets of the business.

Additionally, we may receive other yield enhancements in addition to or in lieu of success fees, such as warrants to buy common and preferred stock or limited liability interests, in connection with these second lien secured debt securities.

We seek to invest a portion of our assets in secured second lien debt securities, which may also be referred to as subordinated loans, subordinated notes and mezzanine loans.

These secured second lien debt securities rank junior to the borrower’s secured first lien debt securities and may be secured by second priority liens on all or a portion of the assets of the business.

• Preferred and Common Equity/Equivalents:

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In many cases, we will own a significant portion of the equity of the businesses in which we invest.

Because the majority of the loans in our portfolio consist of term debt in private companies that typically cannot or will not expend the resources to have their debt securities rated by a credit rating agency, we expect that most, if not all, of the debt securities we acquire will be unrated.

We expect that most, if not all, of the debt securities we acquire will not be rated by a rating agency.

Investors should assume that these loans would be rated below what is considered “investment grade” quality.

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As of March 31, 2023, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states across 14 different industries with an aggregate fair value of $753.5 million.

Our investments in Bassett Creek Services, Inc.

(“Bassett Creek”), Old World Christmas, Inc.

(“Old World”), Counsel Press, Inc.

(“Counsel Press”), Brunswick Bowling Products, Inc.

("Brunswick"), and Schylling, Inc.

("Schylling") represented our five largest portfolio investments at fair value and collectively comprised $272.7 million, or 38.1%, of our total investment portfolio at fair value as of March 31, 2022.

Our investments in Old World Christmas, Inc.

(“Old World”), Horizon Facilities Services, Inc.

("Horizon"), Dema/Mai Holdings, Inc.

("Dema/Mai"), Nocturne Luxury Villas, Inc.

("Nocturne"), and Brunswick Bowling Products, Inc.

("Brunswick") represented our five largest portfolio investments at fair value and collectively comprised $322.3 million, or 42.8%, of our total investment portfolio at fair value as of March 31, 2023.

The following table summarizes our investments by security type as of March 31, 2023 and 2022:

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$ 720,630 100.0 % $ 753,543 100.0 % $ 669,248 100.0 % $ 714,396 100.0 %

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Our investments at fair value consisted of the following industry classifications as of March 31, 2023 and 2022:

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Home and Office Furnishings, Housewares, and Durable Consumer Products 143,685 19.1 % 125,440 17.6 %

Buildings and Real Estate 60,571 8.0 % — — %

Hotels, Motels, Inns, and Gaming 58,713 7.8 % 37,923 5.3 %

Leisure, Amusement, Motion Pictures, and Entertainment 47,616 6.3 % 46,514 6.5 %

Healthcare, Education, and Childcare 37,445 5.0 % 39,252 5.5 %

Hotels, Motels, Inns, and Gaming 37,923 5.3 % — — %

Telecommunications 32,467 4.6 % 15,582 2.5 %

Mining, Steel, Iron and Non-Precious Metals 25,998 3.5 % 24,250 3.4 %

Chemicals, Plastics, and Rubber 24,891 3.3 % 26,618 3.7 %

Aerospace and Defense 22,215 2.8 % 25,296 3.5 %

Mining, Steel, Iron and Non-Precious Metals 24,250 3.4 % — — %

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 20,088 2.7 % 13,823 1.9 %

Telecommunications 18,987 2.5 % 32,467 4.6 %

Cargo Transport 14,707 2.0 % 14,533 2.0 %

Diversified/Conglomerate Manufacturing 9,646 1.3 % 14,064 2.0 %

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 13,823 1.9 % 14,199 2.2 %

Personal and Non-Durable Consumer Products (Manufacturing Only) 5,315 0.8 % 60,852 9.6 %

Beverage, Food, and Tobacco — — % 15,519 2.4 %

Other < 2.0% 27 0.0 % 6,813 1.0 %

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Northeast $ 266,612 35.4 % $ 194,100 27.2 %

West 197,989 26.3 % 158,607 22.2 %

South 171,056 22.7 % 188,978 26.4 %

Midwest 117,886 15.6 % 172,711 24.2 %

West 158,607 22.2 % 160,581 25.3 %

Total investments

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If the prospective portfolio company passes this initial screening and the IOI is accepted by the prospective company, the investment professionals will seek approval to issue a letter of intent (“LOI”) from the Adviser’s investment committee, which currently is composed of Messrs.

Gladstone, Brubaker, and Dullum, as well as Jonathan Sateri and Laura Gladstone, who were both appointed to the investment committee effective October 18, 2021.

If this LOI is issued, then the Adviser and Gladstone Securities, LLC (“Gladstone Securities”) (collectively, the “Due Diligence Team”) will conduct a due diligence

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investigation and create a detailed profile summarizing the prospective portfolio company’s historical financial statements, industry, competitive position and management team and analyzing its conformity to our general investment criteria.

Gladstone, Brubaker, and Dullum, as well as Jonathan Sateri and Laura Gladstone.

If this LOI is issued, then the Adviser and Gladstone Securities, LLC (“Gladstone Securities”) (collectively, the “Due Diligence Team”) will conduct a due diligence investigation and create a detailed profile summarizing the prospective portfolio company’s historical financial statements, industry, competitive position and management team and analyzing its conformity to our general investment criteria.

The investment professionals then present this profile to the Adviser’s investment committee, which must approve each investment.

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The Due Diligence Team conducts what we believe are extensive due diligence investigations of our prospective portfolio companies and investment opportunities.

The due diligence investigation may begin with a review of publicly available information followed by in-depth business analysis, including some or all of the following:

The due diligence investigation typically begins with a review of publicly available information followed by in-depth business analysis, including some or all of the following:

• A review of the prospective portfolio company’s historical and projected financial information, including a quality of earnings analysis;

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The investment committee then determines whether to pursue the potential investment.

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closing of an investment, additional due diligence may be conducted on our behalf by attorneys, independent accountants, and other outside advisers, as appropriate.

Prior to the closing of an investment, additional due diligence may be conducted on our behalf by attorneys, independent accountants, and other outside advisers, as appropriate.

We also rely on the long-term relationships that the Adviser’s investment professionals have with leveraged buyout funds, investment bankers, commercial bankers, private equity sponsors, attorneys, accountants, and business brokers.

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Gladstone and Brubaker also have principal management responsibility for the Adviser as its executive officers, and have worked together at the Gladstone Companies for more than 20 years.

Brubaker has over 25 years of experience in

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acquisitions and operations of companies.

Brubaker has over 25 years of experience in acquisitions and operations of companies.

These five individuals dedicate a significant portion of their time to managing our investment portfolio.

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In addition, we have access to the resources and expertise of the Adviser’s investment professionals and support staff who possess a broad range of transactional, financial, managerial, and investment skills.

See the additional discussion regarding management of portfolio companies by our Adviser below under “ —Ongoing Management of Investments and Portfolio Company Relationships .”

Increased Access to Investment Opportunities Developed Through Extensive Research Capability and Network of Contacts

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We are not subject to many of the regulatory limitations that govern traditional lending institutions, such as banks.

As a result, we are flexible in selecting and structuring investments, adjusting investment criteria and transaction structures and, in some cases, the types of securities in which we invest, thereby affording us a competitive advantage of providing both, equity and debt financing, which may limit uncertainty related to the close of the transaction and the risk of refinancing during periods of market yield

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We believe that this approach enables the Adviser to develop a financing structure which best fits the investment and growth profile of the underlying business and yields attractive investment opportunities that will continue to generate current income and capital gain potential throughout the economic cycle, including during turbulent periods in the capital markets.

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(iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties;

and (iv) a primary role in interviewing, vetting and

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negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members.

and (iv) a primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members.

The Adviser non-contractually, unconditionally, and irrevocably credits 100% of any fees received for such services against the base management fee that we would otherwise be required to pay to the Adviser, as discussed below in “— Transactions with Related Parties – Investment Advisory and Management Agreement – Base Management Fee;” however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees is retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser, primarily related to the valuation of portfolio companies.

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Valuation Process

The following is a general description of our investment valuation policy (the “Policy”) (which has been approved by our Board of Directors) that the professionals of the Adviser and Administrator, with oversight and direction from our chief valuation officer, an employee of the Administrator that reports directly to our Board of Directors (collectively, the “Valuation Team”), use each quarter to determine the fair value of our investment portfolio.

In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing and determining, in good faith, the fair value of our investments for which market quotations are not readily available based on the Policy.

The Board of Directors has approved investment valuation policies and procedures pursuant to Rule 2a-5 (the “Policy”) and, in July 2022, designated the Adviser to serve as the Board of Directors’ valuation designee (“Valuation Designee”) under the 1940 Act.

The following is a general description of the Policy that the professionals of the Adviser and Administrator, with oversight and direction from our chief valuation officer, an employee of the Administrator that reports directly to our Board of Directors (collectively, the “Valuation Team”), use each quarter to determine the fair value of our investment portfolio.

In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for the good faith fair value determination of our investments for which market quotations are not readily available based on the Policy and overseeing the Valuation Designee.

The Adviser values our investments in accordance with the requirements of the 1940 Act and accounting principles generally accepted in the U.S.

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• obtaining fair value quotes or utilizing valuation inputs from third party valuation firms;

• using techniques, such as total enterprise value, yield analysis, market quotes and other factors, including:

• using techniques, such as total enterprise value, yield analysis, market quotes and other factors, including but not limited to:

the nature and realizable value of the collateral, including external parties’ guaranties;

any relevant offers or letters of intent to acquire the portfolio company;

timing of expected repayments;

and the markets in which the portfolio company operates.

• Preliminary valuation conclusions are then discussed amongst the Valuation Team and with our management and documented for review by our Board of Directors.

Written valuation recommendations and supporting material are sent to the Board of Directors in advance of the quarterly meetings.

• The Valuation Committee of the Board of Directors (comprised entirely of independent directors) meets to review the valuation recommendations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, determines whether the Valuation Team’s recommended fair value is reasonable in light of the Policy, and reviews other facts and circumstances.

Then, the Valuation Committee and chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors, so that the full Board of Directors may review and determine in good faith the fair value of investments in accordance with the Policy.

Fair value determinations and supporting material are sent to the Board of Directors in advance of its quarterly meetings.

• The Valuation Committee of the Board of Directors (comprised entirely of independent directors) meets to review the valuation determinations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy and reviews other facts and circumstances.

Then, the Valuation Committee and chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors, so that the full Board of Directors may review the Valuation Designee's determination of the fair value of such investments in accordance with the Policy.

Fair value measurements of our investments may involve subjective judgment and estimates.

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Our valuation policies, procedures and processes are more fully described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Investment Valuation.”

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Transactions with Related Parties

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• 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Rate but is less than 2.1875% of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter;

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• 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.

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The entire portfolio’s aggregate unrealized capital depreciation, if any, equals the sum of the deficit between the fair value of each investment security as of the applicable calculation date and the original cost of such investment security.

As of and during the year ended March 31, 2022, capital gains-based incentive fees of $5.3 million were contractually due and paid to the Adviser.

As of and for the year ended March 31, 2021, no capital gains-based incentive fees were contractually due and paid to the Adviser.

As of and for the years ended March 31, 2023 and 2021, no capital gains-based incentive fees were contractually due and paid to the Adviser.

As of and for the year ended March 31, 2022, capital gains-based incentive fees of $5.3 million were contractually due and paid to the Adviser.

In accordance with GAAP, accrual of the capital gains-based incentive fee is determined as if our investments had been liquidated at their fair values as of the end of the reporting period.

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There can be no assurance that any such unrealized capital appreciation will be realized in the future.

Accordingly, a GAAP accrual is calculated at the end of the reporting period based on (i) cumulative aggregate realized capital gains since our inception, plus (ii) the entire portfolio’s aggregate unrealized capital appreciation, if any, less (iii) cumulative aggregate realized capital losses since our inception, less (iv) the entire portfolio’s aggregate unrealized capital depreciation, if any.

inception, less (iv) the entire portfolio’s aggregate unrealized capital depreciation, if any.

If such amount is positive at the end of a reporting period, a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of capital gains-based incentive fees accrued in all prior years, is recorded, regardless of whether such amount is contractually due under the terms of the Advisory Agreement.

If such amount is negative, then there is no accrual for such period and prior period accruals are reversed, as appropriate.

During the years ended March 31, 2022 and 2021, we recorded capital gains-based incentive fees of $18.3 million and $5.0 million, respectively.

During the year ended March 31, 2023, we recorded a reversal of capital gains-based incentive fees of $0.3 million.

During the years ended March 31, 2022 and 2021, we recorded capital gains-based incentive fees of $18.3 million and $5.0 million, respectively.

Loan Servicing Fee Pursuant to Credit Facility

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Accordingly, these loan servicing fees are 100% non-contractually, unconditionally, and irrevocably credited back to us by the Adviser.

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Administration Agreement

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estate or gift tax.

Stockholders are urged to consult their tax advisors regarding their particular situations and the possible applicable of federal, state, local, non-U.S.

or other tax laws, and any proposed tax law changes.

For purposes of this summary, a “U.S.

stockholder” is a beneficial owner of stock that is for U.S.

federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation, or other entity treated as a corporation for U.S.

federal income tax purposes, created or organized in or under the laws of the United States or any state thereof of the District of Columbia;

• a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more U.S.

persons (as defined in the Code) have the authority to control all of its substantial decisions, or if the trust has a valid election in effect under applicable U.S.

Treasury regulations to be treated as a domestic trust for U.S.

federal income tax purposes;

• an estate, the income of which is subject to U.S.

federal income taxation regardless of its source.

To qualify for treatment as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90% of our taxable ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (“Investment Company Taxable Income”).

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government securities or the securities of other regulated investment companies) of (i) one issuer, (ii) two or more issuers that are controlled by us and are engaged in the same or similar or related trades or businesses, and (iii) one or more qualified publicly-traded partnerships.

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Failure to Qualify as a RIC

If we are unable to qualify for treatment as a RIC, we would be subject to U.S.

If we were to fail to meet the income, diversification, or distribution tests described above, we could in some cases cure such failure, including by paying a fund-level tax, paying interest, making additional distributions, or disposing of certain assets.

If we were ineligible to or otherwise did not cure such failure, or were otherwise unable to qualify for treatment as a RIC, we would be subject to U.S.

federal income tax on all of our taxable income at the regular corporate income tax rate and would be subject to any applicable state and local taxes, even if we distributed all of our Investment Company Taxable Income to our stockholders.

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For the calendar years ended December 31, 2022, 2021 and 2020, we incurred $1.3 million, $0.7 million and $0.5 million, respectively, in excise taxes.

As of March 31, 2022, our capital loss carryforward was $0.

As of March 31, 2023, there was no capital loss carryforward.

Taxation of Our U.S.

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federal income tax purposes, distributions to our stockholders attributable to our Investment Company Taxable Income generally will be taxable as ordinary income to our stockholders to the extent of our current or accumulated earnings and profits.

We first allocate our earnings and profits to distributions to our preferred stockholders and then to distributions to our common stockholders based on priority in our capital structure.

Any distributions in excess of our earnings and profits will first be treated as a return of capital to the extent of the stockholder’s adjusted basis in his or her shares of stock and thereafter as capital gain.

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stockholders generally are eligible for the 50% dividends received deduction with respect to dividends received from us, but only to the extent such amount is attributable to dividends received by us from taxable domestic corporations.

A RIC that has two or more classes of stock generally is required to allocate to each class proportionate amounts of each type of its income (such as ordinary income, capital gains, qualified dividend income and dividends qualifying for the dividends-received deduction) based upon the percentage of total distributions paid to each class for the tax year.

Accordingly, we intend to allocate capital gain distributions, distributions of qualified dividend income, and distributions qualifying for the dividends-received deduction, if any, between our common shares and preferred shares in proportion to the total distributions paid to each class with respect to such tax year.

Any distribution declared by us in October, November or December of any calendar year, payable to our stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it were paid by us and received by our stockholders on December 31 of the previous year.

In addition, we may elect (in accordance with Section 855(a) of the Code) to relate a distribution back to the prior taxable year if we (1) declare such distribution prior to the later of the extended due date for filing our return for that taxable year or the 15 th day of the ninth month following the close of the taxable year, (2) make the election in that return, and (3) distribute the amount in the 12-month period following the close of the taxable year but not later than the first regular distribution payment of the same type following the declaration.

Any such election will not alter the general rule that a stockholder will be treated as receiving a distribution in the taxable year in which the distribution is made, subject to the October, November,

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December rule described above.

For the fiscal year ended March 31, 2023, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $21.4 million of the first distributions paid to common stockholders in the fiscal year ending March 31, 2024 as having been paid in the fiscal year ended March 31, 2023.

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The plan agent purchases shares in the open market in connection with the obligations under the plan.

We do not have a dividend reinvestment plan for our preferred stockholders.

We may distribute our net long-term capital gains, if any, in cash or elect to retain some or all of such gains, pay taxes at the U.S.

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For the years ended March 31, 2023, 2022 and 2021, we did not elect to retain long-term capital gains and to treat them as deemed distributions to common stockholders.

For the year ended March 31, 2020, we elected to retain $38.0 million, or $1.15 per common share of net long-term capital gains and to treat them as a deemed distribution to common stockholders.

We incurred $8.0 million, or $0.24 per common share for the year ended March 31, 2020 of U.S.

federal income taxes on behalf of common stockholders related to the retention of capital gains, which is included in Taxes on deemed distribution of long-term capital gains on our accompanying Consolidated Statements of Operations .

Sale of Our Shares

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However, any capital loss arising from the sale or disposition of shares of our stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares.

All or a portion of any loss realized upon a taxable disposition of shares will be disallowed under the Code’s “wash sale” rule if other substantially identical shares are purchased within 30 days before or after the disposition.

In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

Under the tax laws in effect as of the date of this filing, individual U.S.

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federal income tax, or backup withholding, from all taxable distributions to any non-corporate U.S.

stockholder (i) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding, or (ii) with respect to whom the Internal Revenue Service (“IRS”) notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to

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notices to that effect.

An individual’s taxpayer identification number is generally his or her social security number.

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stockholder’s federal income tax liability, provided that proper information is provided to the IRS.

The Foreign Account Tax Compliance Act imposes a U.S.

federal withholding tax on certain types of payments made to “foreign financial institutions” and certain other non-U.S.

entities unless certain due diligence, reporting, withholding, and certification obligation requirements are satisfied.

Sections 1471-1474 of the Code and the U.S.

Treasury and IRS guidance issued thereunder or, collectively, FATCA, generally require that we obtain information sufficient to identify the status of each shareholder under FATCA or under an applicable intergovernmental agreement, or IGA, between the United States and a foreign government.

If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, we may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays.

The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or capital gain dividends we pay.

If a payment is subject to FATCA withholding, we are required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., interest-related dividends).

In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not financial institutions unless the foreign entity certifies that it does not have a greater than 10% U.S.

owner or provides the withholding agent with identifying information on each greater than 10% U.S.

Depending on the status of a non-U.S.

stockholder and the status of the intermediaries through which they hold their shares, non-U.S.

stockholders could be subject to this 30% withholding tax with respect to distributions on their shares and proceeds from the sale of their shares.

Under certain circumstances, a non-U.S.

stockholder might be eligible for refunds or credits of such taxes.

Information Reporting

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In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a vote of a majority of outstanding "voting securities,” as defined in the 1940 Act.

We intend to conduct our business so as to retain our status as a BDC.

A BDC may use capital provided by public stockholders and from other sources to make long-term investments in private companies.

A BDC provides stockholders the ability to retain the liquidity of a publicly-traded stock, while sharing in the possible benefits, if any, of investing in primarily privately owned companies.

In general, a BDC must have been organized and have its principal place of business in the U.S.

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(iii) it has total assets of not more than $4 million and capital and surplus of not less than $2 million;

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(iv) it does not have any class of securities listed on a national securities exchange;

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In either case, we may only issue such senior securities if such class of senior securities, after such issuance, has an asset coverage, as defined in Section 18(h) of the 1940 Act, of at least 150%.

As of March 31, 2023, our asset coverage on our senior securities representing indebtedness was 244.7%.

In addition, our ability to pay dividends or distributions (other than dividends payable in our common stock) to holders of any class of our capital stock would be restricted if our senior securities representing indebtedness fail to have an asset coverage of at least 150% (measured at the time of declaration of such distribution and accounting for such distribution).

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Below is a summary of the principal risk factors associated with an investment in our securities.

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furnishe d by us with the SEC for a more detailed discussion of the principal risks, as well as certain other risks that you should carefully consider before deciding to invest in our securities.

In addition to the below, you should carefully consider the information included in “ Risk Factors ”, beginning on page 20 of this Annual Report, together with all of the other information included in this Annual Report and the other reports and documents filed or furnishe d by us with the SEC for a more detailed discussion of the principal risks, as well as certain other risks that you should carefully consider before deciding to invest in our securities.

• Global economic and political conditions could negatively impact our business, results of operations, cash flows and financial condition.

• Volatility in the capital markets may make it more difficult to raise capital and may adversely affect the valuations of our investments.

• Our business has been, and in the future could be further, adversely affected by the COVID-19 pandemic and related government actions.

• We may experience fluctuations in our quarterly and annual results based on the impact of inflation in the U.S.

• Changes in interest rates may negatively impact our investments and have an adverse effect on our business, financial condition, results of operations, and cash flows.

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• Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results.

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Code of Ethics

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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 1. Business