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Item 1A. Risk Factors

2020-11-10 compared with 2019-11-13 · 733 added, 706 removed, 333 unchanged (81% of the section changed)

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

If that happens, the trading price of our securities and the net asset value

(NAV) of our common stock could decline, and you may lose all or part of your investment.

The risk factors described below are the principal risk factors associated with an investment in our securities as well as those factors generally

associated with an investment company with investment objectives, investment policies, capital structure or trading markets similar to ours.

If that happens, the trading price of our securities and NAV could decline, and

you may lose all or part of your investment.

The risk factors described below are the principal risk factors associated with an investment in our securities as well as those factors generally associated with an investment company with investment

objectives, investment policies, capital structure or trading markets similar to ours.

Risks Related to the Economy

Market conditions

could negatively impact our business, results of operations, cash flows and financial condition.

The market in which we operate is affected by a

number of factors that are largely beyond our control but can nonetheless have a potentially significant, negative impact on us.

Market conditions could negatively impact our business, results of operations, cash flows and financial condition.

The market in which we operate is affected by a number of factors that are largely beyond our control but can nonetheless have a potentially significant,

negative impact on us.

These factors include, among other things:

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loans, and the timing and amount of servicer advances;

the impact of COVID-19 generally and on the economy, the capital markets

and our portfolio companies, including the measures taken by governmental authorities to address it;

the actual and perceived state of the economy and public capital markets generally;

amendments or repeals of legislation, or changes in regulations or regulatory interpretations thereof, and

transitions of government, including uncertainty regarding any of the foregoing;

the impact of potential changes to the Code;

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Given the volatility and dislocation that the capital markets

have experienced from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise capital.

We may in the future have difficulty accessing debt and equity capital, and a severe disruption in the global

financial markets or deterioration in credit and financing conditions could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

In addition, significant changes in the capital markets have had,

and may in the future have, a negative effect on the valuations of our investments and on the potential for

liquidity events involving our investments.

have experienced from time to time, including during the current recession, many BDCs have faced, and may in the future face, a challenging environment in which to

raise capital.

We may in the future have difficulty accessing debt and equity capital, and a severe disruption in the global financial markets or deterioration in credit and financing conditions

could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

In addition, significant changes in the capital markets have had, and may in the future have, a negative effect on the valuations of

our investments and on the potential for liquidity events involving our investments.

Additionally, volatility in the U.S.

repo market may affect other financial markets worldwide.

An inability to raise capital, and any required sale of

our investments for liquidity purposes or failure of our portfolio companies to realize liquidity events, could have a material adverse impact on our business, financial condition, results of operations, or cash flows.

An inability to raise capital, and any required sale of our

investments for liquidity purposes or failure of our portfolio companies to realize liquidity events, could have a material adverse impact on our business, financial condition, results of operations, or cash flows.

Volatility of oil and natural gas prices could impair certain of our portfolio companies operations and ability to satisfy obligations to their

respective lenders and investors, including us, which could negatively impact our financial condition.

Our portfolio includes a concentration of

companies related to the oil and gas industry with the fair value of these investments representing approximately $24.7 million, or 5.5% of our total portfolio at fair value as of September 30, 2020.

These businesses provide services to

oil and gas companies and are indirectly impacted by the prices of, and demand for, oil and natural gas, which have from time to time experienced volatility, including significant decline in prices, and such volatility could continue or increase in

A substantial or extended decline in oil and natural gas demand or prices may adversely affect the business, financial condition, cash flows, liquidity or results of operations of these portfolio companies and might impair their ability

to meet capital expenditure obligations and financial commitments.

Any decline in oil prices, especially for a prolonged period, could therefore have a material adverse effect on our business, financial condition and results of operations.

Our business may be adversely affected by the current coronavirus pandemic and related government actions.

As of the date of this Annual Report, there is a continuing outbreak of a novel and highly contagious form of coronavirus.

The World Health Organization

has declared the disease (COVID-19) it causes to constitute a pandemic.

The outbreak of COVID-19 has resulted in numerous deaths,

adversely impacted global commercial activity and contributed to significant volatility in certain equity and debt markets.

In response to the COVID-19 pandemic, many countries, including the U.S., reacted by

instituting quarantines, prohibiting travel and ordering the closure of offices, businesses, schools, retail stores and other public venues.

Businesses also implemented similar precautionary measures.

Such measures, as well as the general

uncertainty surrounding the dangers and impact of COVID-19, created significant disruptions in and continue to adversely impact economic activity, particularly in the transportation, hospitality, tourism,

entertainment and certain other industries.

As COVID-19 cases resurge, certain governments have (and others in the future may) reinstitute such measures, which could further exacerbate the adverse

impacts on economic activity.

As a result of these and other factors, the COVID-19 pandemic, and any future

public health emergency or the threat thereof, could have a significant adverse impact on us and our portfolio companies and could adversely affect our ability to fulfill our investment objectives.

The extent of the impact of COVID-19, or any public health emergency, on our operational and financial performance

will depend on many factors, including the duration and scope of such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergencies on overall supply and demand, goods

and services, investor liquidity, consumer confidence and levels of economic activity and the extend of its disruption to important global, regional and local supply chains and economic markets, all of which are highly uncertain and cannot be

The effects of a public health emergency may materially and adversely impact the value and performance of our investments, our ability to source, manage and divest investments and our ability to achieve our investment objectives, all of

which could result in significant losses to us.

In addition, our operations and our Advisers operations may be significantly impacted, or even temporarily or permanently halted, as a result of government quarantine measures, voluntary

and precautionary restrictions on travel or meetings and other factors related to a public health emergency, including its potential adverse impact on the health of our Advisers personnel.

Public health threats, including the COVID-19 pandemic, may adversely impact the businesses in which

we invest and affect our business, operating results and financial condition.

Public health threats, such

as COVID-19 or any other illness, may disrupt the operations of the businesses in which we invest.

Such threats can create economic and political uncertainties and can contribute to global

economic instability.

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

or mandated by governmental authorities, or that they may experience disruptions in their supply chains or decreased consumer demand.

When governments ease restrictions, certain of our portfolio companies may experience increases in health and

safety expenses, payroll costs and other operating expenses.

These adverse economic impacts may decrease the value of the collateral securing our loans in such portfolio companies, as well as the value of our equity investments.

In addition, these

adverse impacts could cause certain of our portfolio companies to have difficulty meeting their debt service requirements, which in turn could lead to an increase in defaults, and/or could diminish the ability of certain of our portfolio companies

to engage in liquidity events.

These negative impacts on our portfolio companies and their performance may reduce the interest income we receive and/or increase realized and unrealized losses related to our investments, which may, in turn, adversely

impact our business, financial condition or results of operations

Risks Related to Interest Rates

Market interest rates may have an effect on the value of our securities.

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Decreases in credit

spreads on debt that pays a floating rate of return would have an impact on the income generation of our floating rate assets.

spreads on debt that pays a

floating rate of return would have an impact on the income generation of our floating rate assets.

Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise.

Trading prices tend to

fluctuate more for fixed rate securities that have longer maturities.

There can be no guarantee the Federal Reserve Board (the Fed) will raise rates at a gradual pace, or at all, nor can there be any assurance that markets will not

adversely react to rate increases.

Trading prices tend to fluctuate more for fixed rate securities that have longer maturities.

There can be no guarantee the Federal Reserve Board (the Fed) will raise rates at a gradual pace, or at all, nor can there be any assurance that

markets will not adversely react to rate increases.

An increase in interest rates could have a negative effect on our investments, which could negatively impact our operating results, financial condition, and cash flows.

Conversely, if interest rates decline, borrowers may refinance their loans at lower interest rates, which could shorten the average life of the loans and

reduce the associated returns on the investment, as well as require our Adviser and its investment professionals to incur management time and expense to re-deploy such proceeds, including on terms that may not be as favorable as our existing loans.

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

The majority of our portfolio companies are in industries that are directly impacted by inflation, such as consumer goods and services and manufacturing.

portfolio companies may not be able to pass on to customers increases in their costs of operations which could greatly affect their operating results, impacting their ability to service our loans.

In addition, any projected future decreases in our

portfolio companies operating

results due to inflation could adversely impact the fair value of those investments.

Any decreases in the fair value of our investments could result in future unrealized losses and therefore

reduce our NAV.

Volatility of oil and natural gas prices could impair certain of our portfolio companies operations and ability to satisfy

obligations to their respective lenders and investors, including us, which could negatively impact our financial condition.

Our portfolio includes a

concentration of companies related to the oil and gas industry with the fair value of these investments representing approximately $35.1 million, or 8.7% of our total portfolio at fair value as of September 30, 2019.

These businesses provide

services to oil and gas companies and are indirectly impacted by the prices of, and demand for, oil and natural gas, which have from time to time experienced volatility, including significant decline in prices, and such volatility could continue or

increase in the future.

their ability to meet capital expenditure obligations and financial commitments.

Any decline in oil prices, especially for a prolonged period, could therefore have a material adverse effect on our business, financial condition and results of

As a result of the decision by the Fed to decrease the target range for the federal funds rate in response to

the COVID-19 pandemic, interest rates have recently decreased.

A substantial portion of our debt investments have variable interest rates that reset periodically and are generally based on LIBOR.

Accordingly, reduced interest rates will result in a decrease in our total investment income unless offset by interest rate floors or an increase in the spread of our debt investments with variable interest rates.

Most of our variable rate loans are

subject to interest rate floors, which are currently in effect given the low interest rate environment.

A near term increase in interest rates, that is not in excess of our interest rate floors, could result in an increase in the interest

expense that we pay on our borrowings with no corresponding increase in interest income and thus, lower overall net investment income.

In addition, our net investment income could decrease if there is no reduction or credit to the base management or

incentive fees that we pay to the Adviser.

In addition, when interest rates decline, borrowers may refinance their loans at lower interest rates, which could shorten the average life of the loans and reduce the associated returns on the investment,

as well as require the Adviser and its investment professionals to incur management time and expense to re-deploy such proceeds, including on terms that may not be as favorable as our existing loans.

The interest rates of some of our term loans to our portfolio companies are priced using a spread over LIBOR, which may be phased out in the future.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the

interest rate on loans globally.

In general, our investments in debt securities have a term of five to seven years, accrue interest at variable rates based on LIBOR and, to a lesser extent, at fixed rates.

As of September 30, 2020, based on the

total principal balance of debt outstanding, our portfolio consisted of approximately 78.1% of loans at variable rates with floors and approximately 21.9% at fixed rates.

As a result of concerns about the accuracy of the calculation of LIBOR, a number of British Bankers Association (the BBA) member banks

entered into settlements with certain regulators and law enforcement agencies with respect to the alleged manipulation of LIBOR.

Actions by the BBA, regulators or law enforcement agencies as a result of these or future events, may result in changes

to the manner in which LIBOR is determined (to the extent it continues beyond 2021).

Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of

LIBOR-indexed, floating-rate debt securities and our borrowings.

On July 27, 2017, the United Kingdoms Financial Conduct Authority, which

regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

It is unclear if at that time whether or not LIBOR will cease to exist or new methods of calculating LIBOR will be established such that it continues to exist after

The Fed, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, announced replacement of U.S.

dollar LIBOR with a new index calculated by short-term repurchase

agreements, backed by U.S.

Treasury securities, called the Secured Overnight Financing Rate (SOFR).

The first publication of SOFR was released in April 2018.

Whether or not SOFR, or another alternative reference rate, attains market

traction as a LIBOR replacement tool remains in question, and the future of LIBOR at this time is uncertain.

The effect of the establishment of

alternative reference rates or any other reforms to LIBOR or other reference rates (including whether LIBOR will continue to be an acceptable market benchmark) cannot be predicted at this time, and the transition away from LIBOR and other current

reference rates to alternative reference rates is complex and could have a material adverse effect on our business, financial condition and results of operations.

Factors such as the pace of the transition to replacement or reformed rates, the

specific terms and parameters for and market acceptance of any alternative reference rate, prices of and the liquidity of trading markets for

products based on alternative reference rates, and our ability to transition and develop appropriate systems and analytics for one or more alternative reference rates could also have a material

adverse effect on our business, financial condition and results of operations.

We typically invest in transactions involving acquisitions, buyouts and

recapitalizations of companies, which will subject us to the risks associated with change in control transactions.

Our strategy, in part, includes

making debt and minority equity investments in companies in connection with acquisitions, buyouts, and recapitalizations, which subjects us to the risks associated with change in control transactions.

Change in control transactions often present a

number of uncertainties.

Companies undergoing change in control transactions often face challenges retaining key employees and maintaining relationships with customers and suppliers.

While we hope to avoid many of these difficulties by participating

in transactions where the management team is retained and by conducting thorough due diligence in advance of our decision to invest, if our portfolio companies experience one or more of these problems, we may not realize the value that we expect in

connection with our investments, which would likely harm our operating results, financial condition, and cash flows.

A change in interest rates may

adversely affect our profitability and our hedging strategy may expose us to additional risks.

We anticipate using a combination of equity and

long-term and short-term borrowings to finance our investment activities.

As a result, a portion of our income will depend upon the spread between the rate at which we borrow funds and the rate at which we loan these funds.

An increase or decrease

in interest rates could reduce the spread between the rate at which we invest and the rate at which we borrow, and thus, adversely affect our profitability if we have not appropriately hedged against such event.

Alternatively, interest rate hedging

arrangements may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio.

As of September 30,

2020, based on the total principal balance of debt outstanding, our portfolio consisted of approximately 78.1% of loans at variable rates with floors and approximately 21.9% at fixed rates.

As of September 30, 2020, we did not have any hedging arrangement, such as interest rate hedges.

While hedging activities may insulate us against adverse

fluctuations in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio.

Adverse developments resulting from changes in interest rates or any future hedging

transactions could have a material adverse effect on our business, financial condition and results of operations.

Our ability to receive payments pursuant to an interest rate cap agreement is linked to the ability of the counter-party to that

agreement to make the required payments.

To the extent that the counter-party to the agreement is unable to pay pursuant to the terms of the agreement, we may lose the hedging protection of the arrangement.

Also, the fair value of certain of our debt investments is based, in part, on the current market yields or interest rates of similar securities.

interest rates could have a significant impact on our determination of the fair value of these debt investments.

In addition, a change in interest rates could also have an impact on the fair value of any hedging arrangements then in effect that

could result in the recording of unrealized appreciation or depreciation in future periods.

Therefore, adverse developments resulting from changes in interest rates could have a material adverse effect on our business, financial condition, results

of operations, and cash flows.

Refer to Quantitative and Qualitative Disclosures About Market Risk for additional information on interest rate fluctuations.

Risks Related to Our Investments

We operate in a highly competitive market for investment opportunities.

There has been increased competitive pressure in the BDC and investment company marketplace for first and second lien secured debt, resulting in lower yields

for increasingly riskier investments.

A large number of entities compete with us and make the types of investments that we seek to make in lower middle market companies.

We compete with public and private buyout funds, commercial and investment

banks, commercial financing companies, and, to the extent that they provide an alternative form of financing, hedge funds.

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources

We operate in

a highly competitive market for investment opportunities.

There has been increased competitive pressure in the BDC and investment company marketplace

for first and second lien secured debt, resulting in lower yields for increasingly riskier investments.

A large number of entities

compete with us and make the types of investments that we seek to make in lower middle market companies.

We compete with public and private buyout funds, commercial and investment banks,

commercial financing companies, and, to the extent that they provide an alternative form of financing, hedge funds.

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we

For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us.

In addition, some of our competitors may have higher risk tolerances or different risk assessments, which would

allow them to consider a wider variety of investments and establish more relationships than us.

In addition, some of our competitors may have higher risk tolerances or different risk assessments, which would allow them

to consider a wider variety of investments and establish more relationships than us.

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

The competitive pressures

we face could have a material adverse effect on our business, financial condition and results of operations.

Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time and we

can offer no assurance that we will be able to identify and make investments that are consistent with our investment objectives.

We do not seek to compete based on the interest rates we offer, and we believe that some of our competitors may make

loans with interest rates that will be comparable to or lower than the rates we offer.

The competitive pressures we face

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

Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time and we can

offer no assurance that we will be able to identify and make investments that are consistent with our investment objectives.

We do not seek to compete based on the interest rates we offer, and we believe that some of our competitors may make loans

with interest rates that will be comparable to or lower than the rates we offer.

We may lose investment opportunities if we do not match our competitors pricing, terms, and structure.

However, if we match our competitors pricing,

terms, and structure, we may experience decreased net interest income and increased risk of credit loss.

Our investments in lower middle market

companies are extremely risky and could cause you to lose all or a part of your investment.

Investments in lower middle market companies are subject

to a number of significant risks including the following:

Lower middle market companies are likely to have greater exposure to economic downturns than larger

Our portfolio companies may have fewer resources than larger businesses, and thus any economic downturns or recessions are more likely to have a material adverse effect on them and the end markets in which they operate.

If one of our

portfolio companies is adversely impacted by a recession, its ability to repay our loan or engage in a liquidity event, such as a sale, recapitalization or initial public offering would be diminished.

However, if we match our competitors pricing, terms,

and structure, we may experience decreased net interest income and increased risk of credit loss.

Our investments in lower middle market companies are

extremely risky and could cause you to lose all or a part of your investment.

Investments in lower middle market companies are subject to a number of

significant risks including the following:

Lower middle market companies are likely to have greater exposure to economic downturns, including the current

recession, than larger businesses.

Our portfolio companies may have fewer resources than larger businesses, and thus any economic downturns or recessions, including the current recession, are more likely to have a material adverse effect on them

and the end markets in which they operate.

If one of our portfolio companies is adversely impacted by a recession, its ability to repay our loan or engage in a liquidity event, such as a sale, recapitalization or initial public offering would be

Lower middle market companies may have limited financial resources and may not be able to repay the loans we

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A borrowers ability to repay its loan may be adversely affected by numerous factors, including the failure to meet its business plan, a downturn in its

industry, or negative economic conditions.

Deterioration in a borrowers financial condition and prospects usually will be accompanied by deterioration in the value of any collateral and a reduction in the likelihood of us realizing on any

guaranties we may have obtained from the borrowers management.

As of September 30, 2019, loans to two portfolio companies were on non-accrual status with an aggregate debt cost basis of approximately $8.5 million, or 2.2% of the cost

basis of all debt investments in our portfolio.

While we are working with these portfolio companies to improve their profitability and cash flows, there can be no assurance that our efforts will prove successful.

Although we will sometimes seek

to be the senior, secured lender to a borrower, in some of our loans we expect to be subordinated to a senior lender, and our interest in any collateral would, accordingly, likely be subordinate to another lenders security interest.

industry, or negative economic conditions, including those created by the current COVID-19 pandemic.

Deterioration in a borrowers financial condition and prospects usually will be accompanied by

deterioration in the value of any collateral and a reduction in the likelihood of us realizing on any guaranties we may have obtained from the borrowers management.

As of September 30, 2020, loans to one portfolio company were on non-accrual status with an aggregate debt cost basis of approximately $7.2 million, or 1.6% of the cost basis of all debt investments in our portfolio.

While we are working with these portfolio companies to

improve their profitability and cash flows, there can be no assurance that our efforts will prove successful.

Although we will sometimes seek to be the senior, secured lender to a borrower, in some of our loans we expect to be subordinated to a

senior lender, and our interest in any collateral would, accordingly, likely be subordinate to another lenders security interest.

Lower middle market companies typically have narrower product lines and smaller market shares than large

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Lower middle market companies may be highly leveraged.

Some of our portfolio companies may be highly

leveraged, which may have adverse consequences to these companies and to us as an investor.

These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies ability to finance their

future operations and capital needs.

Some of our portfolio companies may be

highly leveraged, which may have adverse consequences to these companies and to us as an investor.

These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies ability to finance

their future operations and capital needs.

As a result, these companies flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited.

Further, a leveraged companys income

and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

Further, a leveraged companys

income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

Lower middle market companies may operate in regulated industries or provide services to governments.

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which could lead to delayed payments for services or subject the company to changing payment and reimbursement rates or other terms.

Because the majority of the loans we make and equity securities we receive when we make loans are not publicly traded, there is uncertainty regarding the

value of our privately held securities that could adversely affect our determination of our NAV.

The majority of our portfolio investments are, and we

expect will continue to be, in the form of securities that are not publicly traded.

Because the majority of the loans we make and equity securities we receive when we make loans are not publicly

traded, there is uncertainty regarding the value of our privately held securities.

The majority of our portfolio investments are, and we expect will

continue to be, in the form of securities that are not publicly traded.

The fair value of securities and other investments that are not publicly traded may not be readily determinable.

Our Board of Directors has 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.

Our Board of Directors reviews valuation recommendations that are provided by the Valuation

In valuing our investment portfolio, several techniques are used, including, a total enterprise value approach, a yield analysis, market quotes, and independent third party assessments.

Currently, ICE Data Pricing and Reference Data, LLC

provides estimates of fair value on our proprietary debt investments and we use another independent valuation firm to provide valuation inputs for our significant equity investments, including earnings multiple ranges, as well as other information.

In addition to these techniques, other factors are considered when determining fair value of our investments, including:

Our Board of Directors has 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.

Our Board of Directors reviews valuation recommendations that are provided by the Valuation Team.

valuing our investment portfolio, several techniques are used, including, a total enterprise value approach, a yield analysis, market quotes, and independent third party assessments.

Currently, ICE Data Pricing and Reference Data, LLC provides

estimates of fair value on our proprietary debt investments and we use another independent valuation firm to provide valuation inputs for our significant equity investments, including earnings multiple ranges, as well as other information.

addition to these techniques, other factors are considered when determining fair value of our investments, including:

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

any relevant offers or letters

of intent to acquire the portfolio company;

any relevant offers or letters of

intent to acquire the portfolio company;

and the markets in which the portfolio company operates.

For additional information on our valuation policies, procedures and processes, refer to Note 2 Summary of Significant Accounting

Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

Fair value measurements of

our investments may involve subjective judgments and estimates and due to the inherent uncertainty of determining these fair values, the determination of fair value may fluctuate from period to period.

Additionally, changes in the market environment

and other events that may occur over the life of the investment may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.

Further, such investments are generally subject to legal

and other restrictions on resale or otherwise are less liquid than publicly traded securities, and any investments that include OID or PIK interest may have unreliable valuations because their continuing accruals require ongoing judgments about the

For additional information on our valuation policies, procedures and processes, refer to Note 2 Summary of Significant Accounting Policies

in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

Fair value measurements of our

investments may involve subjective judgments and estimates and due to the inherent uncertainty of determining these fair values, the determination of fair value may fluctuate from period to period.

Additionally, changes in the market environment and

other events that may occur over the life of the investment may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.

Further, such investments are generally subject to legal and

other restrictions on resale or otherwise are less liquid than publicly traded securities, and any investments that include OID or PIK interest may have unreliable valuations because their continuing accruals require ongoing judgments about the

collectability of their deferred payments and the value of their underlying collateral.

If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which it is

Our NAV would be adversely affected if the fair value of our investments that are approved by our Board of

Directors are higher than the values that we ultimately realize upon the disposal of such securities.

The valuation process for certain of our

portfolio holdings creates a conflict of interest.

A substantial portion of our portfolio investments are made in the form of securities for which

market quotations are not readily available.

Our NAV would be adversely affected if the fair value of our investments that are approved by our Board of Directors are higher than the values

that we ultimately realize upon the disposal of such securities.

The valuation process for certain of our portfolio holdings creates a conflict of

A substantial portion of our portfolio investments are made in the form of securities for which market quotations are not readily available.

As a result, our Board of Directors determines the fair value of these securities in good faith pursuant to the Policy.

In connection with that determination, the Valuation Team prepares portfolio company

valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company.

The participation of the Advisers investment professionals in our valuation process, and the

pecuniary interest in the Adviser by Mr.

Gladstone, may result in a conflict of interest as the management fees that we pay the Adviser are based on our total assets less uninvested cash or cash equivalents from borrowings, and adjusted

appropriately for any share issuances or repurchases during the period.

The lack of liquidity of our privately held investments may adversely affect

our business.

In connection with that determination, the Valuation Team prepares portfolio company valuations based upon the most recent

portfolio company financial statements available and projected financial results of each portfolio company.

The participation of the Advisers investment professionals in our valuation process, and the pecuniary interest in the Adviser by

Gladstone, may result in a conflict of interest as the management fees that we pay the Adviser are based on our total assets less uninvested cash or cash equivalents from borrowings, and adjusted appropriately for any share issuances or

repurchases during the period.

The lack of liquidity of our privately held investments may adversely affect our business.

We will generally make investments in private companies whose securities are not traded in any public market.

Substantially all of the

investments we presently hold and the investments we expect to acquire in the future are, and will be, subject to legal and other restrictions on resale and will otherwise be less liquid than publicly traded securities.

The illiquidity of our

investments may make it difficult for us to quickly obtain cash equal to the value at which we record our investments if the need arises.

This could cause us to miss important investment opportunities.

In addition, if we are required to liquidate

all or a portion of our portfolio quickly, we may record substantial realized losses upon liquidation.

We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we, the Adviser, or our

respective officers, employees or affiliates have material non-public information regarding such portfolio company.

Due to the uncertainty inherent in

valuing these securities, the Valuation Teams determinations of fair value may differ materially from the values that could be obtained if a ready market for these securities existed.

Our NAV could be materially affected if the Valuation

Teams determinations regarding the fair value of our investments that are ultimately approved by our Board of Directors are materially different from the values that we ultimately realize upon our disposal of such securities.

discussion regarding risks associated with determinations made by the Adviser is found in the risk factor The valuation process for certain of our portfolio holdings creates a conflict of interest.

When we are a debt or minority equity investor in a portfolio company, which we expect will generally be the case, we may not be in a position to control

the entity, and its management may make decisions that could decrease the value of our investment.

We anticipate that most of our investments will

continue to be either debt or minority equity investments in our portfolio companies.

Therefore, we generally will not be involved in the day-to-day operations and decision making of our portfolio companies, even though we may have board observation

rights and our debt agreement may contain certain restrictive covenants.

As a result, we are and will remain subject to the risk that a portfolio company may make business decisions with which we disagree, and the shareholders and management of such

company may take risks or otherwise act in ways that do not serve our best interests.

Substantially all of the investments we presently

hold and the investments we expect to acquire in the future are, and will be, subject to legal and other restrictions on resale and will otherwise be less liquid than publicly traded securities.

The illiquidity of our investments may make it

difficult for us to quickly obtain cash equal to the value at which we record our investments if the need arises.

This could cause us to miss important investment

opportunities.

In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may record substantial realized losses upon liquidation.

We may also face other

restrictions on our ability to liquidate an investment in a portfolio company to the extent that we, the Adviser, or our respective officers, employees or affiliates have material non-public information

regarding such portfolio company.

Due to the uncertainty inherent in valuing these securities, the Valuation Teams determinations of fair value may

differ materially from the values that could be obtained if a ready market for these securities existed.

Our NAV could be materially affected if the Valuation Teams determinations regarding the fair value of our investments that are ultimately

approved by our Board of Directors are materially different from the values that we ultimately realize upon our disposal of such securities.

Additional discussion regarding risks associated with determinations made by the Adviser is found in the

risk factor The valuation process for certain of our portfolio holdings creates a conflict of interest.

When we are a debt or

minority equity investor in a portfolio company, which we expect will generally be the case, we may not be in a position to control the entity, and its management may make decisions that could decrease the value of our investment.

We anticipate that most of our investments will continue to be either debt or minority equity investments in our portfolio companies.

Therefore, we generally

will not be involved in the day-to-day operations and decision making of our portfolio companies, even though we may have board observation rights and our debt agreement

may contain certain restrictive covenants.

As a result, we are and will remain subject to the risk that a portfolio company may make business decisions with which we disagree, and the shareholders and management of such company may take risks or

otherwise act in ways that do not serve our best interests.

As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.

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invest in syndicated loans, which are loans made by a larger group of investors whose investment objectives may not be completely aligned with ours.

As of September 30, 2019, syndicated loans made up approximately 12.9% of our portfolio at

As of September 30, 2020, syndicated investments made up approximately 8.3% of our portfolio at

cost, or $40.8 million.

We therefore are subject to the risk that other lenders in these investments may make decisions that could decrease the value of our portfolio holdings.

The interest rates of some of our term loans to our portfolio companies are priced using a spread over LIBOR,

which may be phased out in the future.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely

used as a reference for setting the interest rate on loans globally.

In general, our investments in debt securities have a term of five to seven years, accrue interest at variable rates based on LIBOR and, to a lesser extent, at fixed rates.

September 30, 2019, based on the total principal balance of debt outstanding, our portfolio consisted of approximately 87.7% of loans at variable rates with floors and approximately 12.3% at fixed rates.

As a result of concerns about the accuracy of the calculation of LIBOR, a number of British Bankers Association (the BBA) member banks

entered into settlements with certain regulators and law enforcement agencies with respect to the alleged manipulation of LIBOR.

Actions by the BBA, regulators or law enforcement agencies as a result of these or future events, may result in changes

to the manner in which LIBOR is determined.

Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities and

our borrowings.

In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or

the value of our portfolio of LIBOR-indexed, floating-rate debt securities and our borrowings.

On July 27, 2017, the United Kingdoms Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the

It is unclear if at that time whether or not LIBOR will cease to exist or new methods of calculating LIBOR will be established such that it continues to exist after 2021.

The Fed, in conjunction with the Alternative Reference Rates

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

financial institutions, announced replacement of U.S.

dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by U.S.

Treasury securities, called the Secured

Overnight Financing Rate (SOFR).

The first publication of SOFR was released in April 2018.

Whether or not SOFR, or another alternative reference rate, attains market traction as a LIBOR replacement tool remains in question, and the

future of LIBOR at this time is uncertain.

The effect of the establishment of alternative reference rates or any other reforms to LIBOR or other

reference rates (including whether LIBOR will continue to be an acceptable market benchmark) cannot be predicted at this time, and the transition away from LIBOR and other current reference rates to alternative reference rates is complex and could

have a material adverse effect on our business, financial condition and results of operations.

Factors such as the pace of the transition to replacement or reformed rates, the specific terms and parameters for and market acceptance of any

alternative reference rate, prices of and the liquidity of trading markets for products based on alternative reference rates, and our ability to transition and develop appropriate systems and analytics for one or more alternative reference rates

could also have a material adverse effect on our business, financial condition and results of operations.

We typically invest in transactions

involving acquisitions, buyouts and recapitalizations of companies, which will subject us to the risks associated with change in control transactions.

Our strategy, in part, includes making debt and minority equity investments in companies in connection with acquisitions, buyouts, and recapitalizations, which

subjects us to the risks associated with change in control transactions.

Change in control transactions often present a number of uncertainties.

Companies undergoing change in control transactions often face challenges retaining key employees and

maintaining relationships with customers and suppliers.

While we hope to avoid many of these difficulties by participating in transactions where the management team is retained and by conducting thorough due diligence in advance of our decision to

invest, if our portfolio companies experience one or more of these problems, we may not realize the value that we expect in connection with our investments, which would likely harm our operating results, financial condition, and cash flows.

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

companies and/or we could be subject to lender liability claims.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies and/or we could be subject to lender

liability claims.

We invest primarily in debt securities issued by our portfolio companies.

cases portfolio companies will be permitted to have other debt that ranks equally with, or senior to, the debt securities in which we invest.

By their terms, such debt instruments may provide that the holders thereof are entitled to receive payment

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

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

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

In addition, even

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

portfolio company, a bankruptcy court might re-characterize our debt investments and subordinate all, or a portion, of our claims to that of other creditors.

After repaying such senior creditors, such portfolio company may not have any

remaining assets to use to repay its obligation to us.

We may also be subject to lender liability claims for actions taken by us with respect to a borrowers business, in instances in which we exercised control over the borrower or as a

result of actions taken in rendering significant managerial assistance.

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

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

Prepayments of our

investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

In addition to risks

associated with delays in investing our capital, we are also subject to the risk that investments we make in our portfolio companies may be repaid prior to maturity.

For the year ended September 30, 2019, we received unscheduled repayments of

investments totaling $112.8 million.

We will generally first use any proceeds from prepayments to repay any borrowings outstanding on our Credit Facility.

In the event that funds remain after repayment of our outstanding borrowings, then we will

generally reinvest these proceeds in government securities, pending their future investment in new debt and/or equity securities.

These government securities will typically have substantially lower yields than the debt securities being prepaid and

we could experience significant delays in reinvesting these amounts.

As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally,

prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common stock.

Our portfolio is

concentrated in a limited number of companies and industries, which subjects us to an increased risk of significant loss if any one of these companies does not repay us or if the industries experience downturns.

As of September 30, 2019, we had investments in 53 portfolio companies, of which there were five investments that comprised approximately $135.5 million,

or 33.6% of our total investment portfolio, at fair value.

A consequence of a concentration in a limited number of investments is that the aggregate returns we realize may be substantially adversely affected by the unfavorable performance of a small

number of such investments or a substantial write-down of any one investment.

Beyond our regulatory and income tax diversification requirements, we do not have fixed guidelines for industry concentration and our investments could potentially be

concentrated in relatively few industries.

In addition, while we do not intend to invest 25.0% or more of our total assets in a particular industry or group of industries at the time of investment, it is possible that as the values of our portfolio

companies change, one industry or a group of industries may comprise in excess of 25.0% of the value of our total assets.

As a result, a downturn in an industry in which we have invested a significant portion of our total assets could have a

materially adverse effect on us.

In some cases portfolio companies will be permitted to

have other debt that ranks equally with, or senior to, the debt securities in which we invest.

By their terms, such debt instruments may provide that the holders thereof are entitled to receive payment of interest and principal on or before the

dates on which we are entitled to receive payments in respect of the debt securities in which we invest.

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

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

In addition, even though we have structured some of our investments as

senior loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt investments and subordinate all, or a portion, of our claims to that of other creditors.

After repaying such senior creditors, such portfolio company may not have any remaining assets to use

to repay its obligation to us.

We may also be subject to lender liability claims for actions taken by us with respect to a borrowers business, in instances in which we exercised control over the borrower or as a result of actions taken in

rendering significant managerial assistance.

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

an insolvency, liquidation, dissolution, reorganization, or bankruptcy of a portfolio company.

Prepayments of our investments by our portfolio companies could adversely impact our results of operations and

reduce our return on equity.

In addition to risks associated with delays in investing our capital, we are also subject to the risk that investments we

make in our portfolio companies may be repaid prior to maturity.

For the year ended September 30, 2020, we received unscheduled repayments of investments totaling $70.3 million.

We will generally first use any proceeds from prepayments to

repay any borrowings outstanding on our Credit Facility.

In the event that funds remain after repayment of our outstanding borrowings, then we will generally reinvest these proceeds in government securities, pending their future investment in new

debt and/or equity securities.

These government securities will typically have substantially lower yields than the debt securities being prepaid and we could experience significant delays in reinvesting these amounts.

As a result, our results of

operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.

Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market

price of our common stock.

Our portfolio is concentrated in a limited number of companies and industries, which subjects us to an increased risk of

significant loss if any one of these companies does not repay us or if the industries experience downturns.

As of September 30, 2020, we had

investments in 48 portfolio companies, of which our five largest investments comprised approximately $130.3 million, or 28.9% of our total investment portfolio, at fair value.

A consequence of a concentration in a limited number of investments

is that the aggregate returns we realize may be substantially adversely affected by the unfavorable performance of a small number of such investments or a substantial write-down of any one investment.

Beyond our regulatory and income tax

diversification requirements, we do not have fixed guidelines for industry concentration and our investments could potentially be concentrated in relatively few industries.

In addition, while we do not intend to invest 25.0% or more of our total

assets in a particular industry or group of industries at the time of investment, it is possible that as the values of our portfolio companies change, one industry or a group of industries may comprise in excess of 25.0% of the value of our total

As of September 30, 2020, our largest industry concentrations of our total investments at fair value were in diversified/conglomerate service companies, representing 20.6%;

telecommunications companies,

representing 11.4%;

and healthcare, education and childcare

companies, representing 9.8%.

Therefore, we are susceptible to the economic circumstances in these industries, and a downturn in one or more of these industries could have a material adverse

effect on our results of operations and financial condition.

healthcare, education, and childcare companies, representing

and diversified/conglomerate manufacturing companies, representing 9.8%.

Therefore, we are susceptible to the economic circumstances in these industries, and a downturn in one or more of these industries could have a material adverse effect

on our results of operations and financial condition.

The disposition of our investments may result in contingent liabilities.

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extent that any such representations turn out to be inaccurate or with respect to certain potential liabilities.

These arrangements may result in contingent liabilities that ultimately yield funding obligations that must be satisfied through

our return of certain distributions previously made to us.

Portfolio company litigation or other litigation or claims against us or our personnel

could result in additional costs and the diversion of management time and resources.

In the course of investing in and providing significant

managerial assistance to certain of our portfolio companies, certain persons employed by the Adviser may serve as directors on the boards of such companies.

To the extent that litigation arises out of our investments in these companies or otherwise,

even if without merit, we or such employees may be named as defendants in such litigation, which could result in additional costs, including defense costs, and the diversion of management time and resources.

Additionally, other litigations or claims

against us or our personnel could result in additional costs, including defense costs, and the diversion of management time and resources.

We may be unable to accurately estimate our exposure to litigation risk if we record balance sheet reserves

for probable loss contingencies.

As a result, any reserves we establish to cover any settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results of operations, financial

condition, or cash flows.

While we believe we would have valid defenses to potential claims brought due to our investment in any portfolio company, and

will defend any such claims vigorously, we may nevertheless expend significant amounts of money in defense costs and expenses.

Further, if we enter into settlements or suffer an adverse outcome in any litigation, we could be required to pay

significant amounts.

In addition, if any of our portfolio companies become subject to direct or indirect claims or other obligations, such as defense costs or damages in litigation or settlement, our investment in such companies could diminish in

value and we could suffer indirect losses.

These arrangements may result in contingent liabilities that ultimately yield funding obligations that must be satisfied through our

return of certain distributions previously made to us.

Portfolio company litigation or other litigation or claims against us or our personnel could

result in additional costs and the diversion of management time and resources.

In the course of investing in and providing significant managerial

assistance to certain of our portfolio companies, certain persons employed by the Adviser may serve as directors on the boards of such companies.

To the extent that litigation arises out of our investments in these companies or otherwise, even if

without merit, we or such employees may be named as defendants in such litigation, which could result in additional costs, including defense costs, and the diversion of management time and resources.

Additionally, other litigations or claims against

us or our personnel could result in additional costs, including defense costs, and the diversion of

management time and resources.

We may be unable to accurately estimate our exposure to litigation risk if we record balance sheet reserves for probable loss contingencies.

As a result, any

reserves we establish to cover any settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results of operations, financial condition, or cash flows.

While we believe we would have valid defenses to potential claims brought due to our investment in any portfolio company, and will defend any such claims

vigorously, we may nevertheless expend significant amounts of money in defense costs and expenses.

Further, if we enter into settlements or suffer an adverse outcome in any litigation, we could be required to pay significant amounts.

In addition, if

any of our portfolio companies become subject to direct or indirect claims or other obligations, such as defense costs or damages in litigation or settlement, our investment in such companies could diminish in value and we could suffer indirect

Further, these matters could cause us to expend significant management time and effort in connection with assessment and defense of any claims.

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We will have a continuing need for capital to finance our investments.

As of September 30, 2019, we had $66.9 million in borrowings, at cost, outstanding

under our Credit Facility, which provides for maximum borrowings of $190.0 million, with a revolving period end date of January 15, 2021.

Our Credit Facility permits us to fund additional loans and investments as long as we are within the

conditions set forth in the credit agreement.

Our Credit Facility contains covenants that require our wholly-owned subsidiary, Business Loan, to maintain its status as a separate legal entity, prohibit certain significant corporate transactions

(such as mergers, consolidations, liquidations or dissolutions) and restrict material changes to our credit and collection policies without lenders consent.

The Credit Facility also limits distributions to our stockholders on a fiscal year

basis to the sum of our net investment income, net capital gains and amounts deemed to have been paid during the prior year in accordance with Section 855(a) of the Code.

We are also subject to certain limitations on the type of loan

investments we can make, including restrictions on geographic concentrations, sector concentrations, loan size, interest rate type, payment frequency and status, average life and lien property.

Our Credit Facility further requires us to comply with

other financial and operational covenants, which obligate us to, among other things, maintain certain financial ratios, including asset and interest coverage, and a minimum number of 25 obligors in the borrowing base.

Additionally, we are subject to

a performance guaranty that requires us to maintain (i) a minimum net worth (defined in our Credit Facility to include our mandatorily redeemable preferred stock) of $205.0 million plus 50.0% of all equity and subordinated debt raised after

May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed after May 1, 2015, which equates to $270.1 million as of September 30, 2019, (ii) asset coverage with respect to senior securities representing

indebtedness of at least 150%, in accordance with Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act, and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of September 30,

2019, and as defined in the performance guaranty of our Credit Facility, we were in compliance with all of our Credit Facility covenants;

As of September 30, 2020, we had $128.0 million in borrowings, at cost,

outstanding under our Credit Facility, which provides for maximum borrowings of $180.0 million, with a revolving period end date of July 15, 2021 (the Revolving Period End Date).

Our Credit Facility permits us to fund

additional loans and investments as long as we are within the conditions set forth in the credit agreement.

Our Credit Facility contains covenants that require our wholly-owned subsidiary, Business Loan, to maintain its status as a separate legal

entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict material changes to our credit and collection policies without lenders consent.

The Credit Facility also

limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts deemed to have been paid during the prior year in accordance with Section 855(a) of the Code.

subject to certain limitations on the type of loan investments we can make, including restrictions on geographic concentrations, sector concentrations, loan size, interest rate type, payment frequency and status, average life and lien property.

Credit Facility further requires us to comply with other financial and operational covenants, which obligate us to, among other things, maintain certain financial ratios, including asset and interest coverage, and a minimum number of 25 obligors in

the borrowing base.

Additionally, we are required to maintain (i) a minimum net worth of $205.0 million plus 50.0% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or

redeemed after May 1, 2015, which equates to $269.5 million as of September 30, 2020, (ii) asset coverage with respect to senior securities representing indebtedness of at least 150%, in accordance with Section 18 of

the 1940 Act, as modified by Section 61 of the 1940 Act, and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of September 30, 2020, and as defined in our Credit Facility, we were in compliance with all of

our Credit Facility covenants;

however, our continued compliance depends on many factors, some of which are beyond our control.

Given the continued uncertainty in the capital markets, the cumulative unrealized depreciation in our portfolio may increase in future periods and threaten

our ability to comply with the minimum net worth covenant and other covenants under our Credit Facility.

Our failure to satisfy these covenants could result in foreclosure by our lenders, which would accelerate our repayment obligations under the

facility and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders.

Given the continued uncertainty in the capital markets, the cumulative unrealized depreciation in our portfolio

may increase in future periods and threaten our ability to comply with the minimum net worth covenant and other covenants under our Credit Facility.

Our failure to satisfy these covenants could result in foreclosure by our lenders, which would

accelerate our repayment obligations under the facility and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders.

Any inability to renew, extend or replace our Credit Facility on terms favorable to us, or at all, could adversely impact our liquidity and ability to fund

new investments or maintain distributions to our stockholders.

The revolving period end date of our Credit Facility is January 15, 2021 (the

Revolving Period End Date) and if our Credit Facility is not renewed or extended by the Revolving Period End Date, all principal and interest will be due and payable on or before April 15, 2022.

Subject to certain terms and

conditions, our Credit Facility may be expanded to a total of $265.0 million through the addition of other lenders to the facility.

However, if additional lenders are unwilling to join the facility on its terms, we will be unable to expand the

facility and thus will continue to have limited availability to finance new investments under our Credit Facility.

There can be no guarantee that we will be able to renew, extend or replace our Credit Facility upon its Revolving Period End Date on

terms that are favorable to us, if at all, including with respect to any LIBOR replacement rate.

Our ability to expand our Credit Facility, and to obtain replacement financing at or before the Revolving Period End Date, will be constrained by

then-current economic conditions affecting the credit markets.

In the event that we are not able to expand our Credit Facility, or to renew, extend or refinance our Credit Facility by the Revolving Period End Date, this could have a material adverse

effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC under the Code.

If our Credit Facility is not renewed or extended by the Revolving Period End Date, all

principal and interest will be due and payable on or before April 15, 2022.

Subject to certain terms and conditions, our Credit Facility may be expanded to a total of $265.0 million through the addition of other lenders to the facility.

However, if additional lenders are unwilling to join the facility on its terms, we will be unable to expand the facility and thus will continue to have limited availability to finance new investments under our Credit Facility.

There can be no

guarantee that we will be able to renew, extend or replace our Credit Facility upon its Revolving Period End Date on terms that are favorable to us, if at all, including with respect to any LIBOR replacement rate.

Our ability to expand our

Credit Facility, and to obtain replacement financing at or before the Revolving Period End Date, will be constrained by then-current economic conditions affecting the credit markets.

In the event that we are not able to expand our Credit Facility,

or to renew, extend or refinance our Credit Facility by the Revolving Period End Date, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our

ability to qualify as a RIC under the Code.

If we are unable to secure replacement financing, we may be forced to sell certain assets on disadvantageous

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results of operations.

Such circumstances would also increase the likelihood that we would be required to redeem some or all of our outstanding mandatorily redeemable preferred stock, which could potentially require us to sell more assets.

addition to selling assets, or as an alternative, we may issue equity in order to repay amounts outstanding under our Credit Facility.

Depending on the trading prices of our common stock, such an equity offering could have a substantial dilutive

impact on our existing stockholders interest in our earnings, assets and voting interest in us.

If we are not able to renew, extend or refinance our Credit Facility prior to its maturity, it could result in significantly higher interest rates

and related charges and may impose significant restrictions on the use of borrowed funds to fund investments or maintain distributions to stockholders.

In addition to selling assets, or as an alternative, we may issue equity in order to repay amounts outstanding under our Credit Facility.

Depending on the trading prices of our common stock, such an equity offering could have

a substantial dilutive impact on our existing stockholders interest in our earnings, assets and voting interest in us.

If we are not able to renew, extend or refinance our Credit Facility prior to its maturity, it could result in significantly

higher interest rates and related charges and may impose significant restrictions on the use of borrowed funds to fund investments or maintain distributions to stockholders.

Our business plan is dependent upon external financing, which is constrained by the limitations of the 1940 Act.

We sold 1,843,943 and 2,341,296 common shares under our at-the-market program during the years ended September 30, 2019 and 2018, respectively.

Additionally, we completed a public debt offering of $57.5 million aggregate principal amount of the 2023 Notes, inclusive of the overallotment, in November 2018.

Most recently, in October 2019, we completed a public debt offering of $38.8 million

aggregate principal amount of the 2024 Notes, inclusive of the overallotment.

We sold 1,220,927 and 1,843,943 common shares under our at-the-market program

during the years ended September 30, 2020 and 2019, respectively.

Additionally, we completed a public debt offering of $38.8 million aggregate principal amount of the 2024 Notes in October 2019 and a public debt offering of

$57.5 million aggregate principal amount of the 2023 Notes, inclusive of the overallotment option, in November 2018.

However, there can be no assurance that we will be able to raise capital through issuing equity or debt in the near future.

Our business requires a substantial amount of

cash to operate and grow.

business requires a substantial amount of cash to operate and grow.

We may acquire such additional capital from the following sources:

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A decrease in the value of our investments will have a greater

impact on the value of our common stock to the extent that we have borrowed money to make investments.

There is a possibility that the costs of borrowing could exceed the income we receive on the investments we make with such borrowed funds.

addition, our ability to pay distributions, issue senior securities or repurchase shares of our common stock would be restricted if the asset coverage on each of our senior securities is not at least 150%.

If the aggregate value of our assets

declines, we might be unable to satisfy that 150% requirement.

To satisfy the 150% asset coverage requirement in the event that we are seeking to pay a distribution, we might either have to (i) liquidate a portion of our loan portfolio to repay

a portion of our indebtedness or (ii) issue common stock.

This may occur at a time when a sale of a portfolio asset may be disadvantageous, or when we have limited access to capital markets on agreeable terms.

In addition, any amounts that we

use to service our indebtedness or for offering expenses will not be available for distributions to stockholders.

Furthermore, if we have to issue common stock at below NAV per common share, any non-participating stockholders will be subject to

dilution, as described below.

Pursuant to Section 61(a)(2) of the 1940 Act, we are permitted, under specified conditions, to issue multiple classes of senior securities representing indebtedness. However, pursuant to

Section 18(c) of the 1940 Act, we are permitted to issue only one class of senior securities that are stock.

on the value of our common stock to the extent that we have borrowed money to make investments.

There is a possibility that the costs of borrowing could exceed the income we receive on the

investments we make with such borrowed funds.

In addition, our ability to pay distributions, issue senior securities or repurchase shares of our common stock would be restricted if the asset coverage on each of our senior securities is not at least

If the aggregate value of our assets declines, we might be unable to satisfy that 150% requirement.

To satisfy the 150% asset coverage requirement in the event that we are seeking to pay a distribution, we might either have to

(i) liquidate a portion of our loan portfolio to repay a portion of our indebtedness or (ii) issue common stock.

This may occur at a time when a sale of a portfolio asset may be disadvantageous, or when we have limited access to capital

markets on agreeable terms.

In addition, any amounts that we use to service our indebtedness or for offering expenses will not be available for distributions to stockholders.

Furthermore, if we have to issue common stock at below NAV per common

share, any non-participating stockholders will be subject to dilution, as described below.

Pursuant to Section 61(a)(3) of the 1940 Act, we are permitted to issue multiple classes of senior

securities representing indebtedness. However, pursuant to Section 18(c) of the 1940 Act, we are permitted to issue only one class of senior securities that are stock.

Common and Convertible Preferred Stock.

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decrease and our existing common stockholder may experience dilution.

In addition, under the 1940 Act, we will generally not be able to issue additional

shares of our common stock at a price below NAV per common share to purchasers, other than to our existing stockholders through a rights offering, without first obtaining the approval of our

stockholders and our independent directors.

If we were to sell shares of our common stock below our then-current NAV per common share, such sales would result in an immediate dilution to the NAV per common share.

This dilution would occur as a

result of the sale of shares at a price below the then-current NAV per share of our common stock and a proportionately greater decrease in a stockholders interest in our earnings and assets and voting percentage than the increase in our assets

resulting from such issuance.

For example, if we issue and sell an additional 10.0% of our common stock at a 5.0% discount to NAV, a stockholder who does not participate in that offering for its proportionate interest will suffer NAV dilution of up

to 0.5% or $5 per $1,000 of NAV.

This imposes constraints on our ability to raise capital when our common stock is trading below NAV per common share, as it generally has in previous years.

As noted above, the 1940 Act prohibits the issuance of

multiple classes of senior securities that are stock. As a result, we would be prohibited from issuing convertible preferred stock to the extent that such a security was deemed to be a separate class of stock from our outstanding Series

2024 Term Preferred Stock.

We financed certain of our investments with borrowed money and capital from the issuance of senior

securities, which will magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.

The use of leverage,

including through the issuance of senior securities that are debt or stock, magnifies the potential for gain or loss on amounts invested, and, if we incur additional leverage as permitted by the SBCAA, this potential will be further magnified.

September 30, 2019, we incurred leverage through the Credit Facility, shares of our mandatorily redeemable preferred stock, and the 2023 Notes.

In October 2019, we redeemed all oustanding shares of our mandatorily redeemable preferred stock and

issued the 2024 Notes.

In addition, under the 1940 Act, we will generally not be able to issue additional shares of our common stock at a price below NAV per common share to purchasers, other than to

our existing stockholders through a rights offering, without first obtaining the approval of our stockholders and our independent directors.

If we were to sell shares of our common stock below our then-current NAV per common share, such sales would

result in an immediate dilution to the NAV per common share.

This dilution would occur as a result of the sale of shares at a price below the then-current NAV per share of our common stock and a proportionately greater decrease in a

stockholders interest in our earnings and assets and voting percentage than the increase in our assets resulting from such issuance.

For example, if we issue and sell an additional 10.0% of our common stock at a 5.0% discount to NAV, a

stockholder who does not participate in that offering for its proportionate interest will suffer NAV dilution of up to 0.5% or $5 per $1,000 of NAV.

This imposes constraints on our ability to raise capital when our common stock is trading below NAV

per common share, as it generally has in previous years.

As noted above, the 1940 Act prohibits the issuance of multiple classes of senior securities that are stock.

We financed certain of our investments with borrowed money and capital from the issuance of senior securities, which will magnify the potential for gain or

loss on amounts invested and may increase the risk of investing in us.

The use of leverage, including through the issuance of senior securities that

are debt or stock, magnifies the potential for gain or loss on amounts invested, and, if we incur additional leverage, this potential will be further magnified.

As of September 30, 2020, we incurred leverage through the Credit Facility, the

2023 Notes, and the 2024 Notes.

From time to time, we intend to incur additional leverage to the extent permitted under the 1940 Act.

The use of leverage is generally considered a speculative investment technique and increases the risks associated with

investing in our securities.

The use of leverage is generally considered a speculative investment technique and increases the risks associated

with investing in our securities.

In the future, we may borrow from, and issue senior securities, to banks and other lenders.

Holders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common

stockholders, and we would expect such holders to seek recovery against our assets in the event of a default.

Holders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our

common stockholders, and we would expect such holders to seek recovery against our assets in the event of a default.

Assumed Return on Our Portfolio

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common stock as of September 30, 2020.

Based on $426.1 million in total assets, $66.9 million drawn on our Credit Facility (at cost), $51.8 million in aggregate liquidation preference of our Series 2024 Term Preferred Stock, $57.5 million

in our 2023 Notes payable (at cost), and $249.3 million in net assets, each as of September 30, 2019.

Based on the outstanding

balance on our Credit Facility of $66.9 million at cost, as of September 30, 2019, the effective annual interest rate of 5.6% as of that date, aggregate liquidation preference of our Series 2024 Term Preferred Stock of $51.8 million, and $57.5

million of 2023 Notes payable at cost, our investment portfolio at fair value would have had to produce an annual return of at least 2.5% to cover annual interest payments on the outstanding debt and dividends on our Series 2024 Term Preferred

A change in interest rates may adversely affect our profitability and our hedging strategy may expose us to

additional risks.

We anticipate using a combination of equity and long-term and short-term borrowings to finance our investment activities.

result, a portion of our income will depend upon the spread between the rate at which we borrow funds and the rate at which we loan these funds.

An increase or decrease in interest rates could reduce the spread between the rate at which we invest

and the rate at which we borrow, and thus, adversely affect our profitability if we have not appropriately hedged against such event.

Alternatively, interest rate hedging arrangements may limit our ability to participate in the benefits of lower

interest rates with respect to the hedged portfolio.

As of September 30, 2019, based on the total principal balance of debt outstanding, our

portfolio consisted of approximately 87.7% of loans at variable rates with floors and approximately 12.3% at fixed rates.

As of September 30, 2019,

we did not have any hedging arrangement, such as interest rate hedges.

While hedging activities may insulate us against adverse fluctuations in interest rates, they may also limit our ability to participate in the benefits of lower interest rates

with respect to the hedged portfolio.

Adverse developments resulting from changes in interest rates or any future hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

to receive payments pursuant to an interest rate cap agreement is linked to the ability of the counter-party to that agreement to make the required payments.

To the extent that the counter-party to the agreement is unable to pay pursuant to the

terms of the agreement, we may lose the hedging protection of the arrangement.

Also, the fair value of certain of our debt investments is based, in part,

on the current market yields or interest rates of similar securities.

A change in interest rates could have a significant impact on our determination of the fair value of these debt investments.

In addition, a change in interest rates could also

have an impact on the fair value of any hedging arrangements then in effect that could result in the recording of unrealized appreciation or depreciation in future periods.

Therefore, adverse developments resulting from changes in interest rates

could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Refer to Quantitative and Qualitative Disclosures About Market Risk for additional information on interest rate

fluctuations.

Based on $459.2 million in total assets, $128.0 million drawn on our Credit Facility (at cost), $57.5 million in our 2023 Notes payable (at cost), $38.8 million in our 2024 Notes

payable (at cost), and $233.7 million in net assets, each as of September 30, 2020.

Based on an aggregate outstanding

indebtedness of $224.3 million at cost as of September 30, 2020 and the effective annual cash interest rate of 4.3% as of that date, our investment portfolio at fair value would have had to produce an annual return of at least 2.1% to

cover annual interest payments on the outstanding debt.

Risks Related to Our Regulation and Structure

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For the year ended September 30, 2020, we recognized $0.3 million of OID income and the unamortized balance of OID investments as of September 30, 2020 totaled $0.6 million.

As of September 30, 2019, we had four investments which had

a PIK interest component and we recorded PIK interest income of $1.4 million during the year ended September 30, 2019.

We collected $0 in PIK interest in cash for the year ended September 30, 2019.

Additionally, we must meet asset

diversification and income source requirements at the end of each calendar quarter.

As of September 30, 2020, we had seven investments

which had a PIK interest component and we recorded PIK interest income of $2.6 million during the year ended September 30, 2020.

We collected $0.1 million in PIK interest in cash for the year ended September 30, 2020.

Additionally, we must meet asset diversification and income source requirements at the end of each calendar quarter.

If we fail to meet these tests, we may need to quickly dispose of certain investments to prevent the loss of RIC status.

Since most of our investments will be

illiquid, such dispositions, if even possible, may not be made at prices advantageous to us and may result in substantial losses.

If we fail to qualify as a RIC as of a calendar quarter or annually for any reason and become fully subject to U.S.

federal corporate income tax, the resulting corporate taxes could substantially

reduce our net assets, the amount of income available for distribution, and the actual amount distributed.

Such a failure would have a material adverse effect on us and our common stock.

of our investments will be illiquid, such dispositions, if even possible, may not be made at prices advantageous to us and may result in substantial losses.

If we fail to qualify as a RIC as of a calendar quarter or annually for any reason and

become fully subject to U.S.

federal corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the actual amount distributed.

Such a failure would have a

material adverse effect on us and our common stock.

Refer to Business Material U.S.

Federal Income

Tax ConsiderationsRIC Status for additional information regarding asset coverage ratio and RIC requirements.

Some of our debt investments

may include success fees that would generate payments to us if the business is ultimately sold.

Because the satisfaction of these success fees, and the ultimate payment of these fees, is uncertain, we generally only recognize them as income when the

payment is received.

Success fee amounts are characterized as ordinary income for tax purposes and, as a result, we are required to distribute such amounts to our stockholders in order to maintain RIC status.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC or be precluded from investing according to

our current business strategy.

As a BDC, we may not acquire any assets other than qualifying assets unless, at the time of and after giving effect to

such acquisition, at least 70% of our total assets, exclusive of Operating Assets, are qualifying assets, as defined in Section 55(a) of the 1940 Act.

Federal Income Tax Considerations RIC Status for additional information regarding asset coverage ratio and RIC requirements.

Some of our debt investments may include success fees that would generate payments to us if the business is ultimately sold.

Because the satisfaction of these

success fees, and the ultimate payment of these fees, is uncertain, we generally only recognize them as income when the payment is received.

Success fee amounts are characterized as ordinary income for tax purposes and, as a result, we are required

to distribute such amounts to our stockholders in order to maintain RIC status.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC

or be precluded from investing according to our current business strategy.

As a BDC, we may not acquire any assets other than qualifying assets

unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets, exclusive of Operating Assets, are qualifying assets, as defined in Section 55(a) of the 1940 Act.

We believe that most of the investments that we may acquire in the future will constitute qualifying assets.

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If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable

As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to

dispose of investments at disadvantageous times in order to come into compliance with the 1940 Act.

If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms.

We may not be able to

find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss.

Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash

our position) or could require us to dispose of investments at disadvantageous times in order to come into compliance with the 1940 Act.

If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on

favorable terms.

We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss.

Any such outcomes would have a material adverse effect on our business, financial

condition, results of operations and cash flows.

If we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act.

a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act, which would significantly decrease our operating flexibility.

Refer to BusinessRegulation as a

BDCQualifying Assets for additional information regarding qualifying assets.

Changes in laws or regulations governing our operations,

or changes in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies are subject to regulation by laws at the local, state and federal levels.

These laws and regulations, as well as their

interpretation, may be changed from time to time.

Accordingly, any change in these laws or regulations, or their interpretation, or any failure by us or our portfolio companies to comply with these laws or regulations may adversely affect our

For additional information regarding the regulations to which we are subject, see BusinessMaterial U.S.

Federal Income Tax Considerations and BusinessRegulation as a BDC .

As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the

1940 Act, which would significantly decrease our operating flexibility.

Refer to Business Regulation as a BDC Qualifying Assets for additional information regarding qualifying assets.

We are subject to restrictions that may discourage a change of control.

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with the term of the directors in each class expiring every third year.

At each annual meeting of stockholders, the successors to the class of directors whose term expires at

such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election.

After election, a director may

only be removed by our stockholders for cause.

Election of directors for staggered terms with limited rights to remove directors makes it more difficult for a hostile bidder to acquire control of us.

The existence of this provision may negatively

impact the price of our securities and may discourage third-party bids to acquire our securities.

This provision may reduce any premiums paid to stockholders in a change in control transaction.

Certain provisions of Maryland law applicable to us prohibit business combinations with:

At each annual meeting of stockholders, the successors to the class of directors whose term expires at such meeting will be elected to hold office for a term expiring at the

annual meeting of stockholders held in the third year following the year of their election.

After election, a director may only be removed by our stockholders for cause.

Election of directors for staggered terms with limited rights to remove

directors makes it more difficult for a hostile bidder to acquire control of us.

The existence of this provision may negatively impact the price of our securities and may discourage third-party bids to acquire our securities.

This provision may

reduce any premiums paid to stockholders in a change in control transaction.

Certain provisions of Maryland law applicable to us prohibit business

combinations with:

any person who beneficially owns 10.0% or more of the voting power of our common stock (an interested

stockholder);

an affiliate of ours who at any time within the two-year period prior to the date in question was an interested

an affiliate of ours who at any time within the two-year period prior to

the date in question was an interested stockholder;

an affiliate of an interested stockholder.

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Thereafter, any

two-thirds of the votes entitled to be cast by holders of our common stock other than shares held by the interested stockholder.

These requirements could have the effect of inhibiting a change in control even if a change in control were in our

stockholders interest.

These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that someone becomes an interested stockholder.

business combination with the interested stockholder must be recommended by our Board of Directors and approved by the affirmative vote of at least 80.0% of the votes entitled to be cast by holders of our outstanding shares of common stock and two-thirds of the votes entitled to be cast by holders of our common stock other than shares held by the interested stockholder.

These requirements could have the effect of inhibiting a change in control even if a

change in control were in our stockholders

These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that someone becomes an

interested stockholder.

Our articles of incorporation permit our Board of Directors to issue up to 50.0 million shares of capital stock.

In addition, our Board of Directors,

without any action by our stockholders, may amend our articles of incorporation from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that we have authority to issue.

Board of Directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or

conditions of redemption of any such stock.

Thus, our Board of Directors could authorize the issuance of preferred stock with terms and conditions that could have a priority as to distributions and amounts payable upon liquidation over the rights of

the holders of our common stock, which it did in connection with our issuance of approximately 2.1 million shares of Series 2024 Term Preferred Stock.

Preferred stock could also have the effect of delaying, deferring or preventing a change in

control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

We may not be permitted to declare a dividend or make any distribution to stockholders or repurchase shares until such time as we satisfy the asset

coverage tests under the provisions of the 1940 Act that apply to BDCs.

As a BDC, we have the ability to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after each issuance of

senior securities.

addition, our Board of Directors, without any action by our stockholders, may amend our articles of incorporation from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that

we have authority to issue.

Our Board of Directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions,

qualifications and terms or conditions of redemption of any such stock.

Thus, our Board of Directors could authorize the issuance of preferred stock with terms and conditions that could have a priority as to distributions and amounts payable upon

liquidation over the rights of the holders of our common stock.

Preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale

of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

We may not be permitted to declare a

dividend or make any distribution to stockholders or repurchase shares until such time as we satisfy the asset coverage tests under the provisions of the 1940 Act that apply to BDCs.

As a BDC, we have the ability to issue senior securities only in

amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after each issuance of senior securities.

If the value of our assets declines, we may be unable to satisfy this test.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our debt at a

time when such sales and/or repayments may be disadvantageous.

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

and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.

As a result of the annual distribution requirement to qualify as a RIC, we may need to periodically access the

capital markets to raise cash to fund new investments.

We may issue senior securities representing indebtedness, including borrowing money from banks or other financial institutions or senior securities that are stock, such

as our mandatorily redeemable preferred stock, only in amounts such that our asset coverage on each senior

security, as defined in the 1940 Act, equals at least 150% after each such incurrence or issuance.

If that happens, we may be required to sell

a portion of our investments and, depending on the nature of our leverage, repay a portion of our debt at a time when such sales and/or repayments may be disadvantageous.

Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for

investment purposes, which may have a negative effect on our growth.

As a result of the annual distribution requirement to qualify as a RIC, we may need to periodically access the capital markets to raise cash to fund new investments.

senior securities representing indebtedness, including borrowing money from banks or other financial institutions or senior securities that are stock, such as our previously redeemed mandatorily redeemable preferred stock,

only in amounts such that our asset coverage on each senior security, as defined in the 1940 Act, equals at least 150% after each such incurrence or issuance.

Further, we may not be permitted to declare a dividend or make any distribution to our

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Marcotte for their experience, skills and networks.

Our executive officers and the employees of the Adviser allocate some, and in some cases a material portion, of their time to businesses and

activities that are not related to our business.

We have no separate facilities and are completely reliant on the Adviser, which has significant discretion as to the implementation and execution of our business strategies and risk management

We are subject to the risk of discontinuation of the Advisers operations or termination of the Advisory Agreement and the risk that, upon such event, no suitable replacement will be found.

We believe that our success depends to a

significant extent upon the Adviser and that discontinuation of its operations or the loss of its key management personnel could have a material adverse effect on our ability to achieve our investment objectives.

Our success depends on the Advisers ability to attract and retain qualified personnel in a competitive environment.

The Adviser experiences competition in attracting and retaining qualified personnel, particularly investment professionals and senior executives, and we may be

unable to maintain or grow our business if we cannot attract and retain such personnel.

The Advisers ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not

limited to, its ability to offer competitive wages, benefits and professional growth opportunities.

The Adviser competes with investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies for

qualified personnel, many of which have greater resources than us.

Our executive officers and the employees of the Adviser allocate some, and

in some cases a material portion, of their time to businesses and activities that are not related to our business.

We have no separate facilities and are completely reliant on the Adviser, which

has significant discretion as to the implementation and execution of our business strategies and risk management practices.

We are subject to the risk of discontinuation of the Advisers operations or termination of the Advisory Agreement and

the risk that, upon such event, no suitable replacement will be found.

We believe that our success depends to a significant extent upon the Adviser and that discontinuation of its operations or the loss of its key management personnel could have a

material adverse effect on our ability to achieve our investment objectives.

Our success depends on the Advisers ability to attract and retain

qualified personnel in a competitive environment.

The Adviser experiences competition in attracting and retaining qualified personnel, particularly

investment professionals and senior executives, and we may be unable to maintain or grow our business if we cannot attract and retain such personnel.

The Advisers ability to attract and retain personnel with the requisite credentials,

experience and skills depends on several factors including its ability to offer competitive wages, benefits and professional growth opportunities.

The Adviser competes with investment funds (such as private equity funds and mezzanine funds) and

traditional financial services companies for qualified personnel, many of which have greater resources than us.

Searches for qualified personnel may divert managements time from the operation of our business.

Strain on the existing personnel resources of the Adviser, in the event

that it is unable to attract experienced investment professionals and senior executives, could have a material adverse effect on our business.

Adviser can resign on 60 days notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

The Adviser has the right to resign under the Advisory Agreement at any time upon not less than 60 days written notice, whether we have found a

replacement or not.

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

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

If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and

results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our common stock may decline.

In addition, the coordination of our internal management and investment activities is likely

to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Adviser and its affiliates.

Even if we are able to retain comparable management, whether internal or

external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash

The Advisers liability is limited under the Advisory Agreement, and we are required to indemnify our investment adviser against certain

liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account.

The Adviser has not

assumed any responsibility to us other than to render the services described in the Advisory Agreement, and it will not be responsible for any action of our Board of Directors in declining to follow the Advisers advice or recommendations.

Pursuant to the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser will not be liable to us for their acts under the

Advisory Agreement, absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement.

We have agreed to indemnify, defend

and protect the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser with respect to all damages, liabilities, costs and expenses arising out of or

otherwise based upon the performance of any of the Advisers duties or obligations under the Advisory Agreement or otherwise as an investment adviser for us, and not arising out of willful misfeasance, bad faith or gross negligence in the

performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement.

These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting

for its own account.

Strain on the existing personnel

resources of the Adviser, in the event that it is unable to attract experienced investment professionals and senior executives, could have a material adverse effect on our business.

The Adviser can resign on 60 days notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our

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

The Adviser has the right to resign under the

Advisory Agreement at any time upon not less than 60 days written notice, whether we have found a replacement or not.

If the Adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar

expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all.

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

operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our common stock may decline.

In addition, the coordination of our internal management and investment activities is likely to suffer

if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Adviser and its affiliates.

Even if we are able to retain comparable management, whether internal or external,

the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

The Advisers liability is limited under the Advisory Agreement, and we are required to indemnify our investment adviser against certain liabilities,

which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account.

The Adviser has not assumed any

responsibility to us other than to render the services described in the Advisory Agreement, and it will not be responsible for any action of our Board of Directors in declining to follow the Advisers advice or recommendations.

Pursuant to the

Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser will not be liable to us for their acts under the Advisory Agreement,

absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement.

We have agreed to indemnify, defend and protect the

Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser with respect to all damages, liabilities, costs and expenses arising out of or otherwise based

upon the performance of any of the Advisers duties or obligations under the Advisory

Agreement or otherwise as an investment adviser for us, and not arising out of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless

disregard of their duties and obligations under the Advisory Agreement.

These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account.

Our incentive fee may induce the Adviser to make certain investments, including speculative investments.

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investment income for that quarter (before deducting incentive compensation, net operating losses and certain other items) above a threshold return for that quarter.

When calculating our incentive compensation, our pre-incentive fee net investment

income excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our statement of operations for that quarter.

Thus, we may be required to pay the Adviser incentive

compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

For additional information on incentive compensation under the Advisory Agreement with the Adviser, see

BusinessTransactions with Related Parties.

We may be required to pay the Adviser incentive compensation on income accrued, but not yet received in cash.

That part of the incentive fee payable by us that relates to our net investment income is computed and paid on income that may include interest that

has been accrued but not yet received in cash, such as debt instruments with PIK interest or OID.

If a portfolio company defaults on a loan, it is possible that such accrued interest previously used in the calculation of the incentive fee will

become uncollectible.

Consequently, we may make incentive fee payments on income accruals that we may not collect in the future and with respect to which we do not have a clawback right against the Adviser.

Our OID investments totaled $36.5 million

as of September 30, 2019, at cost, which are all syndicated loan investments.

For the year ended September 30, 2019, we recognized $0.1 million of OID income and the unamortized balance of OID investments as of September 30, 2019

totaled $0.8 million.

As of September 30, 2019, we had four investments which had a PIK interest component and we recorded PIK interest income of $1.4 million during the year ended September 30, 2019.

We collected $0 in PIK interest in

cash for the year ended September 30, 2019.

The Advisers failure to identify and invest in securities that meet our investment criteria or

perform its responsibilities under the Advisory Agreement would likely adversely affect our ability for future growth.

Our ability to achieve our

investment objectives will depend on our ability to grow, which in turn will depend on the Advisers ability to identify and invest in securities that meet our investment criteria.

Accomplishing this result on a cost-effective basis will be

largely a function of the Advisers structuring of the investment process, its ability to provide competent and efficient services to us, and our access to financing on acceptable terms.

The Advisers senior management team has substantial

responsibilities under the Advisory Agreement.

In order to grow, the Adviser will need to hire, train, supervise, and manage new employees successfully.

Any failure to manage our future growth effectively would likely have a material adverse effect

on our business, financial condition, and results of operations.

There are significant potential conflicts of interest, including with the Adviser,

which could impact our investment returns.

Our executive officers and directors, and the officers and directors of the Adviser, serve or may serve as

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

Accordingly, they may have obligations to investors in those entities, the fulfillment

of which might not be in our or our stockholders best interests.

When calculating our incentive compensation, our

pre-incentive fee net investment income excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our statement of operations

for that quarter.

Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

For additional information on incentive

compensation under the Advisory Agreement with the Adviser, see Business Transactions with Related Parties.

required to pay the Adviser incentive compensation on income accrued, but not yet received in cash.

That part of the incentive fee payable by us that

relates to our net investment income is computed and paid on income that may include interest that has been accrued but not yet received in cash, such as debt instruments with PIK interest or OID.

If a portfolio company defaults on a loan, it is

possible that such accrued interest previously used in the calculation of the incentive fee will become uncollectible.

Consequently, we may make incentive fee payments on income accruals that we may not collect in the future and with respect to

which we do not have a clawback right against the Adviser.

Our OID investments totaled $22.4 million as of September 30, 2020, at cost, which are all syndicated loan investments.

For the year ended September 30, 2020, we recognized

$0.3 million of OID income and the unamortized balance of OID investments as of September 30, 2020 totaled $0.6 million.

As of September 30, 2020, we had seven investments which had a PIK interest component and we recorded PIK

interest income of $2.6 million during the year ended September 30, 2020.

We collected $0.1 million in PIK interest in cash for the year ended September 30, 2020.

The Advisers failure to identify and invest in securities that meet our investment criteria or perform its responsibilities under the Advisory

Agreement would likely adversely affect our ability for future growth.

Our ability to achieve our investment objectives will depend on our ability to

grow, which in turn will depend on the Advisers ability to identify and invest in securities that meet our investment criteria.

Accomplishing this result on a cost-effective basis will be largely a function of the Advisers structuring of

the investment process, its ability to provide competent and efficient services to us, and our access to financing on acceptable terms.

The Advisers senior management team has substantial responsibilities under the Advisory Agreement.

to grow, the Adviser will need to hire, train, supervise, and manage new employees successfully.

Any failure to

manage our future growth effectively would likely have a material adverse effect on our business, financial condition, and results of operations.

There are significant potential conflicts of interest, including with the Adviser, which could impact our investment returns.

Our executive officers and directors, and the officers and directors of the Adviser, serve or may serve as officers, directors, or principals of entities that

operate in the same or a related line of business as we do or of investment funds managed by our affiliates.

Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our

stockholders best interests.

For example, Mr.

Gladstone, our chairman and chief executive officer, is the chairman of the board and chief executive officer of each of the Gladstone Companies.

addition, Mr.

Brubaker, our vice chairman and chief operating officer, is the vice chairman and chief operating officer of each of the Gladstone Companies.

In addition, Mr.

Brubaker, our vice

chairman and chief operating officer, is the vice chairman and chief operating officer of each of the Gladstone Companies.

Marcotte is an executive managing director of the Adviser.

Moreover, the

Adviser may establish or sponsor other investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target.

Adviser generally has broad authority to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts and intends to direct investment

opportunities to us or the Affiliated Public Fund with the investment strategy that most closely fits the investment opportunity.

Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other

entities it manages.

As a result, it is possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser.

In certain circumstances, we may make investments in a portfolio company in which one of our affiliates has or will have an investment, subject to

satisfaction of any regulatory restrictions and, where required, to the prior approval of our Board of Directors.

Moreover, the Adviser may establish or sponsor other

investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target.

While the Adviser generally has broad authority

to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts and intends to direct investment opportunities to us or the Affiliated Public

Fund with the investment strategy that most closely fits the investment opportunity.

Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other entities it manages.

As a result, it is

possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser.

circumstances, we may make investments in a portfolio company in which one of our affiliates has or will have an investment, subject to satisfaction of any regulatory restrictions and, where required, to the prior approval of our Board of Directors.

As of September 30, 2020, our Board of Directors has approved the following types of co-investment transactions:

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we do not control.

We may pursue such transactions only if (i) the portfolio company is

not controlled by us or any of our affiliates, (ii) the portfolio company satisfies the tenant underwriting criteria of Gladstone Commercial, and (iii) the transaction is approved by a

majority of our independent directors and a majority of the independent directors of Gladstone Commercial.

We expect that any such negotiations between Gladstone Commercial and our portfolio companies would result in lease terms consistent with the

terms that the portfolio companies would be likely to receive were they not portfolio companies of ours.

We may pursue such transactions only if (i) the portfolio company is not controlled by us or any of our affiliates, (ii) the portfolio company satisfies the tenant underwriting criteria of Gladstone Commercial, and

(iii) the transaction is approved by a majority of our independent directors and a majority of the independent directors of Gladstone Commercial.

We expect that any such negotiations between Gladstone Commercial and our portfolio companies

would result in lease terms consistent with the terms that the portfolio companies would be likely to receive were they not portfolio companies of ours.

We may invest simultaneously with our affiliate Gladstone Investment in senior loans in the broadly syndicated

market whereby neither we nor any affiliate has the ability to dictate the terms of the loans.

Pursuant to the Co-Investment Order, under certain circumstances, we may co-invest with Gladstone Investment and

any future BDC or closed-end management investment company that is advised by the Adviser (or sub-advised by the Adviser if it controls the fund), or any combination of the foregoing, subject to the conditions included therein.

Certain of our officers, who are also officers of the Adviser, may from time to time serve as directors of certain of our portfolio

If an officer serves in such capacity with one of our portfolio companies, such officer will owe fiduciary duties to stockholders of the portfolio company, which duties may from time to time conflict with the interests of our

Pursuant to the Co-Investment Order, under certain circumstances, we may co-invest with Gladstone Investment and any future BDC or closed-end management investment company that is advised by the Adviser (or

sub-advised by the Adviser if it controls the fund), or any combination of the foregoing, subject to the conditions included therein.

Certain of our officers, who are also officers of the Adviser, may from time to time serve as directors of certain of our portfolio companies.

If an officer

serves in such capacity with one of our portfolio companies, such officer will owe fiduciary duties to stockholders of the portfolio company, which duties may from time to time conflict with the interests of our stockholders.

In the course of our investing activities, we will pay base management and incentive fees to the Adviser and will reimburse the Administrator for certain

expenses it incurs.

As a result, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might

achieve through our investors themselves making direct investments.

result of this arrangement, there may be times when the management team of the Adviser has interests that differ from those of our stockholders, giving rise to a conflict.

In addition, as a BDC,

we make available significant managerial assistance to our portfolio companies and provide other services to such portfolio companies.

While, neither we nor the Adviser currently receives fees in connection with managerial assistance, the Adviser

and Gladstone Securities have, at various times, provided other services to certain of our portfolio companies and received fees for these other services as discussed in BusinessOngoing Management of Investments and Portfolio Company

RelationshipsManagerial Assistance and Services .

The Adviser is not obligated to provide a credit of the base management fee or

incentive fee, which could negatively impact our earnings and our ability to maintain our current level of distributions to our stockholders.

Advisory Agreement provides for a base management fee based on our total assets and an incentive fee which consists of two parts:

an income-based incentive fee and a capital gains-based incentive fee.

Our Board of Directors has historically accepted

and may accept in the future quarterly or annual non-contractual, unconditional and irrevocable credits to reduce the annual base management fee.

Further, our Board of Directors has accepted on a quarterly

basis non-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common

stockholders.

In the course of our investing activities, we will pay base management and incentive fees to the Adviser and will reimburse the

Administrator for certain expenses it incurs.

As a result, investors in our common stock will invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of

return than one might achieve through our investors themselves making direct investments.

As a result of this arrangement, there may be times when the management team of the Adviser has interests that differ from those of our stockholders, giving

rise to a conflict.

In addition, as a BDC, we make available significant managerial assistance to our portfolio companies and provide other services to such portfolio companies.

While, neither we nor the Adviser currently receives fees in connection

with managerial assistance, the Adviser and Gladstone Securities have, at various times, provided other services to certain of our portfolio companies and received fees for these other services as discussed in BusinessOngoing

Management of Investments and Portfolio Company RelationshipsManagerial Assistance and Services .

The Adviser is not obligated to

provide a credit of the base management fee or incentive fee, which could negatively impact our earnings and our ability to maintain our current level of distributions to our stockholders.

The Advisory Agreement provides for a base management fee based on our total assets and an incentive fee which consists of two parts:

an income-based incentive

fee and a capital gains-based incentive fee.

Our Board of Directors has historically accepted and may accept in the future quarterly or annual non-contractual, unconditional and irrevocable credits to reduce the annual base management fee.

our Board of Directors has accepted on a quarterly basis non-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to

common stockholders.

Any waived fees may not be recouped by the Adviser in the future.

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We are dependent upon informal relationships with investment bankers, business brokers and traditional lending institutions to provide us with deal flow.

fail to maintain our relationship with such funds or institutions, or

if we fail to establish strong referral relationships with other funds, we will not be able to grow our portfolio of investments and fully execute our business plan.

we fail to maintain our relationship with such funds or institutions, or if we fail to establish strong referral relationships with other funds, we will not be able to grow our portfolio of investments and fully execute our business plan.

Our base management fee may induce the Adviser to incur leverage.

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Investment in Our Securities

We may experience fluctuations in our quarterly and annual operating results.

We may experience fluctuations in our quarterly and annual operating results due to a number of factors, including, among others, variations in our investment

income, the interest rates payable on the debt securities we acquire, the default rates on such securities, variations in and the timing of the recognition of realized and unrealized gains or losses, the level of our expenses, the degree to which we

encounter competition in our markets, and general economic conditions, including the impacts of inflation.

The majority of our portfolio companies are in industries that are directly impacted by inflation, such as manufacturing and consumer goods

and services.

Our portfolio companies may not be able to pass on to customers increases in their costs of production which could greatly affect their operating results, impacting their ability to repay our loans.

In addition, any projected future

decreases in our portfolio companies operating results due to inflation could adversely impact the fair value of those investments.

Any decreases in the fair value of our investments could result in future realized and unrealized losses and

therefore reduce our net assets resulting from operations.

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

There is a risk that you may not receive distributions or that distributions may not grow over time.

We intend to distribute at least 90.0% of our investment company taxable income to our stockholders on a quarterly basis by There is a risk that you

may not receive distributions or that distributions may not grow over time.

We intend to distribute at least 90.0% of our Investment Company Taxable

Income to our stockholders by paying monthly distributions.

We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.

we expect to retain some or all net realized long-term capital gains by first offsetting them with realized capital losses, and secondly through a deemed distribution to supplement our equity capital and support the growth of our portfolio, although

We intend to distribute at least 90.0% of our Investment Company Taxable Income to our stockholders by paying monthly distributions.

We cannot assure you that

we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.

Furthermore, we

expect to retain some or all net realized long-term capital gains by first offsetting them with realized capital losses, and secondly through a deemed distribution to supplement our equity capital and support the growth of our portfolio, although

our Board of Directors may determine in certain cases to distribute these gains to our common stockholders.

In addition, our Credit Facility restricts the amount of distributions we are permitted to make.

We cannot assure you that we will achieve

investment results or maintain a tax status that will allow or require any specified level of cash distributions.

Investing in our securities may

involve an above average degree of risk.

The investments we make in accordance with our investment objectives may result in a higher amount of risk

than alternative investment options and a higher risk of volatility or loss of principal.

Our investments in portfolio companies may be highly speculative, and therefore, an investment in our securities may not be suitable for someone with lower

risk tolerance.

cannot assure you that we will achieve investment results or maintain a tax status that will allow or require any specified level of cash distributions.

Investing in our securities may involve an above average degree of risk.

The investments we make in accordance with our investment objectives may result in a higher amount of risk than alternative investment options and a higher

risk of volatility or loss of principal.

Our investments in portfolio companies may be highly speculative, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

Distributions to our stockholders have included and may in the future include a return of capital.

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Shares of closed-end investment companies frequently trade at a discount to NAV per common share.

Since our inception, our common stock has at times

traded above NAV, and at times below NAV per share.

This characteristic of shares of closed-end investment companies is separate and distinct from the risk that our NAV per share will decline.

As with any stock, the price of our common stock

will fluctuate with market conditions and other factors.

Since our inception,

our common stock has at times traded above NAV, and at times below NAV per share.

This characteristic of shares of closed-end investment companies is separate and distinct from the risk that our NAV per share

will decline.

As with any stock, the price of our common stock will fluctuate with market conditions and other factors.

If shares are sold, the price received may be more or less than the original investment.

Whether investors will realize gains or losses upon the sale of shares of our common stock

will not depend directly upon our NAV, but will depend upon the market price of the shares at the time of sale.

Since the market price of our common stock will be affected by such factors as the relative demand for and supply of the shares in

the market, general market and economic conditions and other factors beyond our control, we cannot predict whether the shares will trade at, below, or above our NAV.

Whether investors will realize

gains or losses upon the sale of shares of our common stock will not depend directly upon our NAV, but will depend upon the market price of the shares at the time of sale.

Since the market price of our common stock will be affected by such

factors as the relative demand for and supply of the shares in the market, general market and economic conditions and other factors beyond our control, we cannot predict whether the shares will trade at, below, or above our NAV.

Under the 1940 Act, we are generally not able to issue additional shares of our common stock at a price below NAV per share to purchasers other than our

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restrict our ability to grow and adversely impact our ability to increase or maintain our distributions.

Common stockholders may incur dilution if we

sell shares of our common stock in one or more offerings at prices below the then-current NAV per share of our common stock.

Absent stockholder

approval, we are not able to access the capital markets in an offering at prices below the then-current NAV per share due to restrictions applicable to BDCs under the 1940 Act.

Should we decide to issue shares of common stock at a price below NAV

per share in the future, we will seek the requisite approval of our stockholders at such time.

If we were to sell shares of our common stock below NAV

per share, such sales would result in an immediate dilution to the NAV per share.

This dilution would occur as a result of the sale of shares at a price below the then-current NAV per share of our common stock and a proportionately greater decrease

in a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance.

The greater the difference between the sale price and the NAV per share at the time of the offering,

the more significant the dilutive impact would be.

Because the number of shares of common stock that could be so

issued and the timing of any issuance is not currently known, the actual dilutive effect, if any, cannot be currently predicted.

However, if, for example, we sold an additional 10.0% of our

common stock at a 5.0% discount to NAV, a stockholder who did not participate in that offering for its proportionate interest would suffer NAV dilution of up to 0.5% or $5 per $1,000 of NAV.

Common stockholders may incur dilution if we sell shares of our common stock in one or more offerings at

prices below the then-current NAV per share of our common stock.

Absent stockholder approval, we are not able to access the capital markets in an

offering at prices below the then-current NAV per share due to restrictions applicable to BDCs under the 1940 Act.

Should we decide to issue shares of common stock at a price below NAV per share in the future, we will seek the requisite approval of

our stockholders at such time.

If we were to sell shares of our common stock below NAV per share, such sales would result in an immediate dilution to the

NAV per share.

This dilution would occur as a result of the sale of shares at a price below the then-current NAV per share of our common stock and a proportionately greater decrease in a stockholders interest in our earnings and assets and

voting interest in us than the increase in our assets resulting from such issuance.

The greater the difference between the sale price and the NAV per share at the time of the offering, the more significant the dilutive impact would be.

number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect, if any, cannot be currently predicted.

However, if, for example, we sold an additional 10.0% of our common

stock at a 5.0% discount to NAV, a stockholder who did not participate in that offering for its proportionate interest would suffer NAV dilution of up to 0.5% or $5 per $1,000 of NAV.

Risks Related to the 2023 Notes and 2024 Notes

The 2023 Notes and 2024 Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the

future and will rank pari passu with, or equal to, all outstanding and future unsecured indebtedness issued by us and our general liabilities (total liabilities, less debt).

The 2023 Notes and 2024 Notes are not secured by any of our assets or any of the assets of our subsidiaries.

As a result, the 2023 Notes and 2024 Notes are

subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets

securing such indebtedness.

In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the

assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2023 Notes and 2024 Notes.

In addition, the 2023 Notes and 2024

Notes rank pari passu with, or equal to, all outstanding and future unsecured indebtedness issued by us and our general liabilities (total liabilities, less debt).

2023 Notes and 2024 Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future and will rank pari passu with, or equal to, all outstanding and future unsecured indebtedness

issued by us and our general liabilities (total liabilities, less debt).

The 2023 Notes and 2024 Notes are not secured by any of our assets or any of

the assets of our subsidiaries.

As a result, the 2023 Notes and 2024 Notes are subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to

which we subsequently grant security) to the extent of the value of the assets securing such indebtedness.

In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and

the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders

of the 2023 Notes and 2024 Notes.

In addition, the 2023 Notes and 2024 Notes rank pari passu with, or equal to, all outstanding and future unsecured indebtedness issued by us and our general liabilities (total liabilities, less debt).

The 2023 Notes and 2024 Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

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As of September 30, 2020, there was $128.0 million outstanding under the Credit Facility.

Borrowings under the Credit Facility are the obligation of Business Loan, and are structurally senior to the 2023 Notes and 2024 Notes.

addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the 2023 Notes and 2024 Notes.

Borrowings under the Credit Facility are the obligation of Business Loan, and are structurally senior to the 2023

Notes and 2024 Notes.

In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the 2023 Notes and 2024 Notes.

The indentures under which the 2023 Notes and 2024 Notes were issued contain limited protection for holders of the Notes.

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issue securities or otherwise incur additional indebtedness or other obligations, including (1) any

indebtedness or other obligations that would be equal in right of payment to the 2023 Notes and 2024 Notes, (2) any indebtedness or other obligations that would be secured and therefore effectively rank

senior in right of payment to the 2023 Notes to the extent of the values of the assets securing such debt, (3) our indebtedness that is guaranteed by one or more of our subsidiaries and

which therefore is structurally senior to the 2023 Notes and 2024 Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank

structurally senior to the 2023 Notes and 2024 Notes with respect to the assets of our subsidiaries, other than, with respect to the 2023 Notes, an incurrence of indebtedness or other obligation that would cause a violation of

Section 18(a)(1)(A) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time or any successor provisions thereto, whether or not we continue to be subject to such provisions of the 1940

Act, and, with respect to the 2024 Notes, an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, whether or not we

continue to be subject to such provisions of the 1940 Act, which generally prohibit us incurring additional debt or issuing additional debt or preferred securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after

such incurrence or issuance;

Notes to the extent of the values of the assets securing such debt, (3) our indebtedness that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the 2023 Notes and 2024 Notes and (4) securities,

indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the 2023 Notes and 2024 Notes with respect to the assets of our

subsidiaries, other than, with respect to the 2023 Notes, an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by such provisions of Section 61(a) of the 1940 Act as may be

applicable to us from time to time or any successor provisions thereto, whether or not we continue to be subject to such provisions of the 1940 Act, and, with respect to the 2024 Notes, an incurrence of indebtedness or other obligation that would

cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, which generally prohibit us incurring

additional debt or issuing additional debt or preferred securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after such incurrence or issuance;

pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities

ranking junior in right of payment to the 2023 Notes and 2024 Notes, including preferred stock and any subordinated indebtedness, other than, with respect to the 2023 Notes, dividends, purchases, redemptions or payments that would cause our asset

relief granted by the SEC to another BDC (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in

Section 18(a)(1)(B) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time in order to maintain the BDCs status as a RIC under Subchapter M of the Code, and, with respect to the

2024 Notes, dividends, purchases, redemptions or payments that would cause our asset coverage to fall below the threshold specified in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, giving

effect to any no-action relief granted by the SEC to another BDC and upon which we may reasonably rely (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution

notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act in order to maintain the BDCs status as a RIC under Subchapter M of the Code;

coverage to fall below the threshold specified in Section 18(a)(1)(B) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time or any successor provisions, giving effect to any no-action relief granted by the SEC to another BDC (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash

dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time in order to maintain the BDCs

status as a RIC under Subchapter M of the Code, and, with respect to the 2024 Notes, dividends, purchases, redemptions or payments that would cause our asset coverage to fall below the threshold specified in Section 18(a)(1)(B) as modified by

Section 61(a)(2) of the 1940 Act or any successor provisions, giving effect to any no-action relief granted by the SEC to another BDC and upon which we may reasonably rely (or to us if we determine to

seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by

Section 61(a)(2) of the 1940 Act in order to maintain the BDCs status as a RIC under Subchapter M of the Code;

sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or

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Our ability to recapitalize, incur additional debt

(including additional debt that matures prior to the maturity of the 2023 Notes and 2024 Notes), and take a number of other actions that are not limited by the terms of the 2023

Notes and 2024 Notes may have important consequences for you as a holder of the 2023 Notes or 2024 Notes, including making it more difficult for us to satisfy our obligations with respect to the

2023 Notes and 2024 Notes or negatively affecting the trading value of the 2023 Notes and 2024 Notes.

Other debt we issue or incur in the future could

contain more protections for its holders than the indentures and the 2023 Notes and 2024 Notes, including additional covenants and events of default.

The issuance or incurrence of any such debt with incremental protections could affect the market

for trading levels and prices of the 2023 Notes and 2024 Notes.

If we default on our obligations to pay our other indebtedness, we may not be able to

make payments on the 2023 Notes and 2024 Notes.

Any default under the agreements governing our indebtedness, including a default under the Credit

Facility or other indebtedness to which we may be a party, that is not waived by the required lenders or holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal and interest on the 2023 Notes and

2024 Notes and substantially decrease the market value of such notes.

If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on our indebtedness, or if

we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness.

In the event of

such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future

could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation.

If our operating performance declines, we may in the future need

to refinance or restructure our debt, including the 2023 Notes and 2024 Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or other

debt that we may incur in the future to avoid being in default.

(including additional debt that matures prior to the maturity of the 2023 Notes and 2024 Notes), and take a number of other actions that are not limited by the terms of the 2023 Notes and 2024 Notes may have important consequences for you as a

holder of the 2023 Notes or 2024 Notes, including making it more difficult for us to satisfy our obligations with respect to the 2023 Notes and 2024 Notes or negatively affecting the trading value of the 2023 Notes and 2024 Notes.

Other debt we issue or incur in the future could contain more protections for its holders than the indentures and the 2023 Notes and 2024 Notes, including

additional covenants and events of default.

The issuance or incurrence of any such debt with incremental protections could affect the market for trading levels and prices of the 2023 Notes and 2024 Notes.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the 2023 Notes and 2024 Notes.

Any default under the agreements governing our indebtedness, including a default under the Credit Facility or other indebtedness to which we may be a party,

that is not waived by the required lenders or holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal and interest on the 2023 Notes and 2024 Notes and substantially decrease the market value of

If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on our indebtedness, or if we otherwise fail to comply with the various covenants,

including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness.

In the event of such default, the holders of such indebtedness could

elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease

making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation.

If our operating performance declines, we may in the future need to refinance or restructure our debt, including

the 2023 Notes and 2024 Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or other debt that we may incur in the future to avoid

being in default.

If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the 2023 Notes, the 2024 Notes or our other debt.

our covenants under the Credit Facility or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders.

If this occurs, we would be in default under the Credit Facility or other debt, the lenders or

holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation.

If we are unable to repay debt, lenders having secured obligations, including the lenders under the Credit Facility, could proceed against

the collateral securing the debt.

Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the 2023 Notes, 2024 Notes or the Credit Facility or under any future

credit facility is accelerated, we may be unable to repay or finance the amounts due.

An active trading market for the 2023 Notes or 2024 Notes may

not exist, which could limit your ability to sell the 2023 Notes or 2024 Notes or affect the market price of the 2023 Notes or 2024 Notes.

provide any assurances that an active trading market for the 2023 Notes or the 2024 Notes will exist in the future or that holders will be able to sell their 2023 Notes or the 2024 Notes.

Even if an active trading market does exist, the 2023 Notes

or the 2024 Notes may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general economic conditions, our financial condition, performance and

prospects and other factors.

To the extent an active trading market does not exist, the liquidity and trading price for the 2023 Notes or the 2024 Notes may be harmed.

Accordingly, holders of the 2023 Notes or the 2024 Notes may be required to bear

the financial risk of an investment in the 2023 Notes or the 2024 Notes for an indefinite period of time.

We may choose to redeem the 2023 Notes or

2024 Notes when prevailing interest rates are relatively low.

On or after November 1, 2020, with respect to the 2023 Notes, and November 1,

2021, with respect to the 2024 Notes, we may choose to redeem such notes from time to time, especially if prevailing interest rates are lower

than the rate borne by the 2023 Notes or the 2024 Notes.

If prevailing rates are lower at the time of redemption, and we redeem the 2023 Notes or the 2024 Notes, you likely would not be able to

reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the 2023 Notes or the 2024 Notes being redeemed.

Our redemption right also may adversely impact your ability to sell the 2023

Notes or the 2024 Notes as the optional redemption date or period approaches.

A downgrade, suspension or withdrawal of the credit rating assigned by a

rating agency to us or our securities, could cause the liquidity or market value of the 2023 Notes or 2024 Notes to decline significantly.

rating assigned to us, the 2023 Notes or the 2024 Notes represents an assessment by the assigning rating agency of our ability to pay our debts when due.

Consequently, real or anticipated changes in our credit ratings will generally affect the

market value of the 2023 Notes and the 2024 Notes.

These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the 2023 Notes or the 2024 Notes.

Credit ratings are paid for by the issuer and are not a

recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion.

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.

Maintaining our network security is of critical importance

because our systems store highly confidential financial models and portfolio company information.

Although we have implemented, and will continue to implement, security measures, our technology platform may be vulnerable to intrusion, computer

viruses or similar disruptive problems caused by cyber-attacks.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources or those of our portfolio companies.

These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our portfolio companies for purposes of misappropriating assets, stealing confidential

information, corrupting data or causing operational disruption.

The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection

and insurance costs, litigation and damage to our business relationships or those of our portfolio companies.

As our and our portfolio companies reliance on technology has increased, so have the risks posed to our information systems, both

internal and those provided to us by third-party service providers, and the information systems of our portfolio companies.

We have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions,

but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, operations or confidential information will not

be negatively impacted by such an incident.

In addition, any such incident, disruption or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory

penalties, disrupt our operations, and damage our and our Advisers reputations, resulting in a loss of confidence in our services and our Advisers services, which could adversely affect our business.

We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market

price of our common stock and our ability to pay dividends.

Our business is dependent on our and third parties communications and information

Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities.

Our financial, accounting, data

processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our

If we breach our covenants under the Credit Facility or

other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders.

If this occurs, we would be in default under the Credit Facility or other debt, the lenders or holders could exercise their rights as described

above, and we could be forced into bankruptcy or liquidation.

If we are unable to repay debt, lenders having secured obligations, including the lenders under the Credit Facility, could proceed against the collateral securing the debt.

Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the 2023 Notes, 2024 Notes or the Credit Facility or under any future credit facility is accelerated, we may be

unable to repay or finance the amounts due.

An active trading market for the 2023 Notes or 2024 Notes may not exist, which could limit your ability to

sell the 2023 Notes or 2024 Notes or affect the market price of the 2023 Notes or 2024 Notes.

An active trading market for the 2023 Notes or the 2024

Notes may not exist in the future and holders may not be able to sell their 2023 Notes or the 2024 Notes.

Even if an active trading market does exist, the 2023 Notes or the 2024 Notes may trade at a discount from their initial offering price

depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general economic conditions, our financial condition, performance and prospects and other factors.

To the extent an active trading market does not

exist, the liquidity and trading price for the 2023 Notes or the 2024 Notes may be harmed.

Accordingly, holders of the 2023 Notes or the 2024 Notes may be required to bear the financial risk of an investment in the 2023 Notes or the 2024 Notes for

an indefinite period of time.

We may choose to redeem the 2023 Notes or 2024 Notes when prevailing interest rates are relatively low.

On or after November 1, 2020, with respect to the 2023 Notes, and November 1, 2021, with respect to the 2024 Notes, we may choose to redeem such

notes from time to time, especially if prevailing interest rates are lower than the rate borne by the 2023 Notes or the 2024 Notes.

If prevailing rates are lower at the time of redemption, and we redeem the 2023 Notes or the 2024 Notes, you likely

would not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the 2023 Notes or the 2024 Notes being redeemed.

Our redemption right also may adversely impact your ability

to sell the 2023 Notes or the 2024 Notes as the optional redemption date or period approaches.

A downgrade, suspension or withdrawal of the credit rating

assigned by a rating agency to us or our securities, could cause the liquidity or market value of the 2023 Notes or 2024 Notes to decline significantly.

Any credit rating assigned to us, the 2023 Notes or the 2024 Notes represents an assessment by the assigning rating agency of our ability to pay our debts

Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the 2023 Notes and the 2024 Notes.

These credit ratings may not reflect the potential impact of risks relating to the structure or

marketing of the 2023 Notes or the 2024 Notes.

Credit ratings are paid for by the issuer and are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion.

General Risk Factors

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.

Maintaining our network security is of

critical importance because our systems store highly confidential financial models and portfolio company information.

Although we have implemented, and will continue to implement, security measures, our technology platform may be vulnerable to

intrusion, computer viruses or similar disruptive problems caused by cyber-attacks.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources or those of our

portfolio companies.

stealing confidential information, corrupting data or causing operational disruption.

The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased

cybersecurity protection and insurance costs, litigation and damage to our business relationships or those of our portfolio companies.

As our and our portfolio companies reliance on technology has increased, so have the risks posed to our

information systems, both internal and those provided to us by third-party service providers, and the information systems of our portfolio companies.

implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent

of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident.

In addition, any such incident,

disruption or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations, and damage our and our Advisers

reputations, resulting in a loss of confidence in our services and our Advisers services, which could adversely affect our business.

dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

Our business is dependent on our and third parties communications and information systems.

Any failure or interruption of those systems, including as a

result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities.

Our financial, accounting, data processing, backup or other operating systems and facilities may fail to

operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business.

There could be:

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ability to pay dividends to our stockholders.

Changes in laws or regulations governing our operations, or changes in the interpretation thereof, and

any failure by us to comply with laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies are

subject to regulation by laws at the local, state and federal levels.

These laws and regulations, as well as their interpretation, may be changed from time to time.

Accordingly, any change in these laws or regulations, or their interpretation, or

any failure by us or our portfolio companies to comply with these laws or regulations may adversely affect our business.

For additional information regarding the regulations to which we are subject, see BusinessMaterial U.S.

Income Tax Considerations and BusinessRegulation as a BDC .

We may experience fluctuations in our quarterly and

annual operating results.

We may experience fluctuations in our quarterly and annual operating results due to a number of factors, including, among

others, variations in our investment income, the interest rates payable on the debt securities we acquire, the default rates on such securities, variations in and the timing of the recognition of realized and unrealized gains or losses, the level of

our expenses, the degree to which we encounter competition in our markets, and general economic conditions, including the impacts of the COVID-19 pandemic.

The majority of our portfolio companies are in

industries that are directly impacted by inflation, such as manufacturing and consumer goods and services.

Our portfolio companies may not be able to pass on to customers increases in their costs of production which could greatly affect their

operating results, impacting their ability to repay our loans.

In addition, any projected future decreases in our portfolio companies operating results due to inflation could adversely impact the fair value of those investments.

Any decreases

in the fair value of our investments could

result in future realized and unrealized losses and therefore reduce our net assets resulting from operations.

As a result of these factors, results for any period should not be relied upon as

being indicative of performance in future periods.

UNRESOLVED STAFF COMMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors