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Item 1A. Risk Factors

2025-03-03 compared with 2024-02-29 · 1540 added, 1396 removed, 369 unchanged (89% of the section changed)

Investing in our shares

of common stock involves a number of significant risks.

Before you invest in our shares of common stock, you should be aware of various

risks, including those described below.

Investing in our shares of common stock involves

a number of significant risks.

Before you invest in our shares of common stock, you should be aware of various risks, including those

described below.

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

Additional risks and uncertainties not

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

If any of the following events

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

In such case,

our 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 us as well as those factors generally associated with an investment company with investment objectives,

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

Additional risks and uncertainties not presently known to us

or not presently deemed material by us may also impair our business, operations and performance.

If any of the following events occur,

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

In such case, our

NAV and the trading price of our securities 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 us as well as those factors generally associated with an investment

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

Summary of Principal Risk Factors

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Some of the risks involved in investing in our shares of common stock

Principal Risks Relating to Our Business

and Structure

have a limited operating history and may not replicate the historical results achieved by other entities managed by members of the Advisor’s

investment committee, the Advisor or its affiliates.

● We use leverage pursuant to borrowings under credit facilities and

issuances of senior unsecured notes to finance our investments and changes in interest rates will affect our cost of capital and net investment

Principal Risks Relating to Our Business and

have a limited operating history and our Advisor and its affiliates have limited experience advising BDCs and may not replicate the historical

results achieved by other entities managed by members of the Advisor’s investment committee, the Advisor or its affiliates.

use leverage pursuant to borrowings under credit facilities and issuances of senior unsecured notes to finance our investments and changes

in interest rates will affect our cost of capital and net investment income.

depend upon our Advisor and Administrator for our success and upon their access to the investment professionals and partners of Kayne

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

will be subject to corporate-level income tax if we are unable to qualify as a RIC.

● We finance our investments with borrowings under credit facilities

and issuances of senior unsecured notes, which will magnify the potential for gain or loss on amounts invested and may increase the risk

of investing in us.

● Adverse developments in the credit markets may impair our ability to

enter into new credit facilities or our ability to issue senior unsecured notes.

will be subject to corporate-level income tax if we are unable to continue to qualify as a RIC.

finance our investments with borrowings under credit facilities and issuances of senior unsecured notes, which will magnify the potential

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

developments in the credit markets may impair our ability to enter into new credit facilities or our ability to issue senior unsecured

majority of our portfolio investments are recorded at fair value as determined in good faith by our Advisor and, as a result, there may

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affect us and the value of our shares of common stock.

are highly dependent on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively

affect the value of our shares of common stock and our ability to pay distributions.

● We and our portfolio companies and service providers may be subject

to cybersecurity risks and our business could be adversely affected by changes to data protection laws and regulations.

are highly dependent on information systems, and cybersecurity risks and cyber incidents may adversely affect our business or the business

of our portfolio companies, which may, in turn, negatively affect the value of our shares of common stock and our ability to pay distributions.

of shares of our common stock by us under our open market repurchase program, including the Company Rule 10b5-1 Plan, may result

in the price of shares of our common stock being higher than the price that otherwise might exist in the open market and are subject

to our ability to finance such repurchases.

Principal Risks Relating to Our Investments

interest rates could affect the value of our investments and make it more difficult for portfolio companies to make periodic payments

on their loans.

are subject to risks associated with the current interest rate environment, and rising interest rates could affect the value of our investments

and make it more difficult for portfolio companies to make periodic payments on their loans.

business is dependent on bank relationships and recent strain on the banking system may adversely impact us.

invest in highly leveraged companies, which could cause us to lose all or a part of our investment in those companies.

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

prospective portfolio companies may prepay loans, which may reduce our yields if capital returned cannot be invested in transactions

are subject to risks associated with our investments in unitranche secured loans and securities, including the potential loss of all

or part of such investments.

● Our investments in securities that are rated below investment

“junk bonds”) may be risky and we could lose all or part of our investments.

Defaults by our portfolio companies, including defaults relating to collateral, will harm our operating results.

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

● Our portfolio companies may prepay loans, which may reduce our yields if capital returned cannot be invested in transactions

with equal or greater expected yields.

Our prospective portfolio companies may be unable to repay or refinance outstanding principal on their loas at or prior to maturity.

portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity.

portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant

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is no assurance that portfolio company management will be able to operate their companies in accordance with our expectations.

investments in the Trading Companies & Distributors industry face considerable uncertainties including significant regulatory

Risks Relating to Our Common Stock

● There is no public market for our shares of common stock, and we cannot

assure you that a market for our shares of common stock will develop in the future.

● Prior to the IPO, there has been no public market for our

shares of common stock, and we cannot assure you that a market for our shares of common stock will develop or remain active, or that

the market price of our shares of common stock will not decline at some point following the IPO.

Our share of common stock price may

be volatile and may fluctuate substantially.

of substantial amounts of our shares of common stock in the public market may have an adverse effect on the market price of our shares

of common stock.

and liquidity in our shares may be limited and our shares may trade below their NAV.

extended periods of capital market disruption and instability, there is a risk that you may not receive distributions or that our distributions

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Risks Relating to Our Business and Structure

We have a limited operating history and

may not replicate the historical results achieved by other entities managed by members of the Advisor’s investment committee, the

Advisor or its affiliates.

We commenced operations in

February 2021.

We are subject to all of the business risks and uncertainties associated with any new business, including the risk that

we will not achieve our investment objective, that we will not qualify or maintain our qualification to be treated as a RIC, and that

the value of your investment could decline substantially.

The 1940 Act and the Code

impose numerous constraints on the operations of BDCs and RICs that do not apply to certain other investment vehicles managed by our Advisor

and its affiliates.

BDCs are required, for example, to invest at least 70% of their total assets primarily in securities of U.S.

or thinly traded public companies, cash, cash equivalents, U.S.

government securities and other high-quality debt instruments that mature

in one year or less from the date of investment.

Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income,

asset diversification and distribution requirements.

Our Advisor has a limited operating history under these constraints, which may hinder

our ability to take advantage of attractive investment opportunities and to achieve our investment objective.

Furthermore, our investments

may differ from those of existing accounts that are or have been managed by members of the Advisor’s investment committee, the Advisor

or affiliates of the Advisor.

We cannot assure you that we will replicate the historical results achieved for other KAPC funds managed

by members of the Advisor’s investment committee, and we caution you that our investment returns could be substantially lower than

the returns achieved by them in prior periods.

Additionally, all or a portion of the prior results may have been achieved in particular

market conditions, which may never be repeated.

Moreover, current or future market volatility and regulatory uncertainty may have an adverse

impact on our future performance.

We have a limited operating history and may

not replicate the historical results achieved by other entities managed by members of the Advisor’s investment committee, the Advisor

or its affiliates.

We commenced operations in February 2021 with private

investors as shareholders, and then we completed our IPO in 2024.

We are subject to all of the business risks and uncertainties associated

with any new business, including the risk that we will not achieve our investment objective, that we will not qualify or maintain our

qualification to be treated as a RIC, and that the value of your investment could decline substantially.

The 1940 Act and the Code impose numerous constraints

on the operations of BDCs and RICs that do not apply to certain other investment vehicles managed by our Advisor and its affiliates.

are required, for example, to invest at least 70% of their total assets primarily in securities of U.S.

private or thinly traded public

companies, cash, cash equivalents, U.S.

government securities and other high-quality debt instruments that mature in one year or less

from the date of investment.

Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification

and distribution requirements.

Our Advisor has a limited operating history under these constraints, which may hinder our ability to take

advantage of attractive investment opportunities and to achieve our investment objective.

Furthermore, our investments may differ from those

of existing accounts that are or have been managed by members of the Advisor’s investment committee, the Advisor or affiliates of

We cannot assure you that we will replicate the historical results achieved for other KAPC funds managed by members of the

Advisor’s investment committee, and we caution you that our investment returns could be substantially lower than the returns achieved

by them in prior periods.

Additionally, all or a portion of the prior results may have been achieved in particular market conditions,

which may never be repeated.

Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our

future performance.

We use leverage pursuant to borrowings under

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interest rates could have a material adverse effect on our net investment income.

See “ Risks Relating to Our Investments—Rising

interest rates could affect the value of our investments and make it more difficult for portfolio companies to make periodic payments

on their loans .”

In periods of rising interest

rates, our cost of funds will increase because we expect that the interest rates on the majority of amounts we borrow will be floating,

which could reduce our net investment income to the extent any of our debt investments have fixed interest rates.

We may use interest

rate risk management techniques in an effort to limit our exposure to interest rate fluctuations.

Such techniques may include various

interest rate hedging activities to the extent permitted by the 1940 Act and applicable commodities laws.

These activities may limit

our ability to benefit from lower interest rates with respect to hedged borrowings.

Adverse developments resulting from changes in interest

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

“ Risks Relating to Our Investments—We may be subject to risks under hedging transactions and our ability to enter into

transactions involving derivatives and financial commitment transactions may be limited.

See “ Risks Relating to Our Investments—We

are subject to risks associated with the current interest rate environment, and rising interest rates could affect the value of our investments

and make it more difficult for portfolio companies to make periodic payments on their loans .”

In periods of rising interest rates, our cost

of funds will increase because we expect that the interest rates on the majority of amounts we borrow will be floating, which could reduce

our net investment income to the extent any of our debt investments have fixed interest rates.

We may use interest rate risk management

techniques in an effort to limit our exposure to interest rate fluctuations.

Such techniques may include various interest rate hedging

activities to the extent permitted by the 1940 Act and applicable commodities laws.

These activities may limit our ability to benefit

from lower interest rates with respect to hedged borrowings.

Adverse developments resulting from changes in interest rates or hedging

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

Relating to Our Investments—We are subject to risks under hedging transactions and our ability to enter into transactions involving

derivatives and financial commitment transactions may be limited.

Downgrades of the U.S.

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Congress takes legislative action to further extend or defer it.

The impact of the increased

debt ceiling and/or downgrades to the U.S.

government’s sovereign credit rating or its perceived creditworthiness could adversely

affect the U.S.

and global financial markets and economic conditions.

The impact of the increased debt ceiling and/or downgrades

government’s sovereign credit rating or its perceived creditworthiness could adversely affect the U.S.

and global financial

markets and economic conditions.

Absent further quantitative easing by the U.S.

Federal Reserve,

these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt

markets on favorable terms.

In addition, disagreement over the federal budget has caused the U.S.

federal government to shut down for

periods of time.

Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition

and results of operations.

The alternative reference rates that have

replaced LIBOR in our credit arrangements and other financial instruments may not yield the same or similar economic results as LIBOR

over the life of such transactions.

The London Interbank Offered

Rate (“LIBOR”) is an index rate that historically was widely used in lending transactions and was a common reference rate

for setting the floating interest rate on private loans.

LIBOR was typically the reference rate used in floating-rate loans extended to

our portfolio companies.

The ICE Benchmark Administration

(“IBA”) (the entity that is responsible for calculating LIBOR) ceased providing overnight, one, three, six and twelve months

USD LIBOR tenors on June 30, 2023.

In addition, the United Kingdom’s Financial Conduct Authority (“FCA”), which oversees the

IBA, now prohibits entities supervised by the FCA from using LIBOR, including USD LIBOR, except in very limited circumstances.

In the United States, the

SOFR is the preferred alternative rate for LIBOR.

SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S.

securities, and is based on directly observable U.S.

Treasury-backed repurchase transactions.

SOFR is published by the Federal Reserve

Bank of New York each U.S.

Government Securities Business Day, for transactions made on the immediately preceding U.S.

Government Securities

Business Day.

Alternative reference rates that may replace LIBOR, including SOFR for USD transactions, may not yield the same or similar

economic results as LIBOR over the lives of such transactions.

All of our loans that referenced LIBOR have been

amended to reference the forward-looking term rate published by CME Group Benchmark Administration Limited based on the secured overnight

financing rate (“CME Term SOFR”).

CME Term SOFR rates are forward-looking rates that are derived by compounding projected

overnight SOFR rates over one, three, and six months taking into account the values of multiple consecutive, executed, one-month and three-month

CME Group traded SOFR futures contracts and, in some cases, over-the-counter SOFR Overnight Indexed Swaps as an indicator of CME Term

SOFR reference rate values.

CME Term SOFR and the inputs on which it is based are derived from SOFR.

Because CME Term SOFR is a relatively

new market rate, there will likely be no established trading market for credit agreements or other financial instruments when they are

issued, and an established market may never develop or may not be liquid.

Market terms for instruments referencing CME Term SOFR rates

may be lower than those of later-issued CME Term SOFR indexed instruments.

Similarly, if CME Term SOFR does not prove to be widely used,

the trading price of instruments referencing CME Term SOFR may be lower than those of instruments indexed to indices that are more widely

There can be no guarantee

that SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of investors in loans

referencing SOFR.

If the manner in which SOFR or CME Term SOFR is calculated is changed, that change may result in a reduction of the

amount of interest payable on such loans and the trading prices of the SOFR Loans.

In addition, there can be no guarantee that loans referencing

SOFR or CME Term SOFR will continue to reference those rates until maturity or that, in the future, our loans will reference benchmark

rates other than CME Term SOFR.

Should any of these events occur, our loans, and the yield generated thereby, could be affected.

Specifically,

the anticipated yield on our loans may not be fully realized and our loans may be subject to increased pricing volatility and market risk.

Federal Reserve, these developments could cause interest

rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

disagreement over the federal budget has caused the U.S.

federal government to shut down for periods of time.

Continued adverse political

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

We depend upon our Advisor and Administrator

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opportunities, could adversely affect our business.

Our portfolio is subject to

management risk because it is actively managed.

Our Advisor applies investment techniques and risk analyses in making investment decisions

for us, but there can be no guarantee that they will produce the desired results.

We depend upon, and intend to rely significantly on,

the Advisor’s and its affiliates’ relationships with private equity sponsors, financial intermediaries, direct lending institutions

and other counterparties that are active in our markets.

We do not have any internal

management capacity or employees.

We depend upon Kayne Anderson’s key personnel for our future success and upon their access to

certain individuals and investment opportunities to execute on our investment objective.

In particular, we depend on the diligence, skill

and network of business contacts of our portfolio managers, who evaluate, negotiate, structure, close and monitor our investments.

individuals manage a number of investment vehicles on behalf of Kayne Anderson and, as a result, do not devote all of their time to managing

us, which could negatively impact our performance.

Furthermore, these individuals do not have long-term employment contracts with Kayne

Anderson, although they do have equity interests and other financial incentives to remain with Kayne Anderson.

We also depend on the senior

management of Kayne Anderson.

The departure of any of our portfolio managers or the senior management of Kayne Anderson could have a material

adverse effect on our ability to achieve our investment objective.

In addition, we can offer no assurance that our Advisor will remain

our investment advisor or that we will continue to have access to Kayne Anderson’s industry contacts and deal flow.

This could have

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

We depend on the diligence,

skill and network of business contacts of the professionals available to our Administrator to carry out the administrative functions necessary

for us to operate, including the ability to select and engage sub-administrators and third-party service providers.

We can offer no assurance,

however, that the professionals of the Administrator will continue to provide administrative services to us.

Our portfolio is subject to management risk because

it is actively managed.

Our Advisor applies investment techniques and risk analyses in making investment decisions for us, but there can

be no guarantee that they will produce the desired results.

We depend upon, and intend to rely significantly on, the Advisor’s and

its affiliates’ relationships with private equity sponsors, financial intermediaries, direct lending institutions and other counterparties

that are active in our markets.

We do not have any internal management capacity or

We depend upon Kayne Anderson’s key personnel for our future success and upon their access to certain individuals and

investment opportunities to execute on our investment objective.

In particular, we depend on the diligence, skill and network of business

contacts of our portfolio managers, who evaluate, negotiate, structure, close and monitor our investments.

These individuals manage a

number of investment vehicles on behalf of Kayne Anderson and, as a result, do not devote all of their time to managing us, which could

negatively impact our performance.

Furthermore, these individuals do not have long-term employment contracts with Kayne Anderson, although

they do have equity interests and other financial incentives to remain with Kayne Anderson.

We also depend on the senior management of

Kayne Anderson.

The departure of any of our portfolio managers or the senior management of Kayne Anderson could have a material adverse

effect on our ability to achieve our investment objective.

In addition, we can offer no assurance that our Advisor will remain our investment

advisor or that we will continue to have access to Kayne Anderson’s industry contacts and deal flow.

Furthermore, if the Advisor

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

We depend on the diligence, skill and network of business

contacts of the professionals available to our Administrator to carry out the administrative functions necessary for us to operate, including

the ability to select and engage sub-administrators and third-party service providers.

We can offer no assurance, however, that the professionals

of the Administrator will continue to provide administrative services to us.

This could have a material adverse effect on our financial

condition, results of operations and cash flows.

Our financial condition, results of operations

and cash flows depend on our ability to manage our business and future growth effectively.

Our ability to achieve our

investment objective depends on our ability to manage our business and grow, which depends, in turn, on the Advisor’s ability to

identify, invest in and monitor companies that meet our investment selection criteria.

Accomplishing this result on a cost-effective basis

is largely a function of the Advisor’s structuring of the investment process, its ability to provide competent, attentive and efficient

services to us and our access to financing on acceptable terms.

The management team of the Advisor has substantial responsibilities under

our Investment Advisor Agreement.

We can offer no assurance that any current or future employees of the Advisor will contribute effectively

to the work of, or remain associated with, the Advisor.

We caution you that the principals of our Advisor or Administrator may also be

called upon to provide and currently do provide managerial assistance to portfolio companies and other investment vehicles, including

other BDCs, which are managed by affiliates of the Advisor.

Our ability to achieve our investment objective depends

on our ability to manage and grow our business, which depends, in turn, on the Advisor’s ability to identify, invest in and monitor

companies that meet our investment selection criteria.

Accomplishing this result on a cost-effective basis is largely a function of the

Advisor’s structuring of the investment process, its ability to provide competent, attentive and efficient services to us and our

access to financing on acceptable terms.

The management team of the Advisor has substantial responsibilities under our Investment Advisor

We can offer no assurance that any current or future employees of the Advisor will contribute effectively to the work of, or

remain associated with, the Advisor.

We caution you that the principals of our Advisor or Administrator may also be called upon to provide

and currently do provide managerial assistance to portfolio companies and other investment vehicles, including other BDCs, which are managed

by affiliates of the Advisor.

Such demands on their time may distract them or slow our rate of investment.

Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results

of operations.

The Advisor may frequently be required to

make investment analyses and decisions on an expedited basis in order to take advantage of investment opportunities, and our Advisor may

not have knowledge of all circumstances that could impact an investment by the Company.

Investment analyses and decisions

by the Advisor may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities, and the

Advisor may not have knowledge of all circumstances that could adversely affect an investment by us.

Moreover, there can be no assurance

that our due diligence processes will uncover all relevant facts that would be material to an investment decision.

Before making an investment,

we will assess the strength of the underlying assets and other factors that we believe are material to the performance of the investment.

In making the assessment and otherwise conducting customary due diligence, we will rely on the resources available to us and, in some

cases, an investigation by third parties.

Any failure to manage our future

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

The Advisor may frequently be required to make

investment analyses and decisions on an expedited basis in order to take advantage of investment opportunities, and our Advisor may not

have knowledge of all circumstances that could impact an investment by the Company.

Investment analyses and decisions by the Advisor may

frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities, and the Advisor may not have

knowledge of all circumstances that could adversely affect an investment by us.

Moreover, there can be no assurance that our due diligence

processes will uncover all relevant facts that would be material to an investment decision.

Before making an investment, we will assess

the strength of the underlying assets and other factors that we believe are material to the performance of the investment.

In making the

assessment and otherwise conducting customary due diligence, we will rely on the resources available to us and, in some cases, an investigation

by third parties.

This process is particularly important and highly subjective.

We may make investments in,

or loans to, companies which are not subject to public company reporting requirements including requirements regarding preparation of

financial statements and our portfolio companies may utilize divergent reporting standards that may make it difficult for the Advisor

to accurately assess the prior performance of a portfolio company.

We will, therefore, depend upon the compliance by investment companies

with their contractual reporting obligations.

As a result, the evaluation of potential investments and our ability to perform due diligence

on, and effectively monitor investments, may be impeded, and we may not realize the returns which we expect on any particular investment.

In the event of fraud by any company in which we invest or with respect to which we make a loan, we may suffer a partial or total loss

of the amounts invested in that company.

There are significant potential conflicts

of interest that could affect our investment returns, including conflicts related to obligations the Advisor’s investment committee,

We may make investments in, or loans to, companies

that are not subject to public company reporting requirements including requirements regarding preparation of financial statements, and

our portfolio companies may utilize divergent reporting standards that may make it difficult for the Advisor to accurately assess the

prior performance of a portfolio company.

We will, therefore, depend upon the compliance by investment companies with their contractual

reporting obligations.

As a result, the evaluation of potential investments and our ability to perform due diligence on and effectively

monitor investments may be impeded, and we may not realize the returns that we expect on any particular investment.

In the event of fraud

by any company in which we invest or with respect to which we make a loan, we may suffer a partial or total loss of the amounts invested

in that company.

There are significant potential conflicts of

interest that could affect our investment returns, including conflicts related to obligations the Advisor’s investment committee,

the Advisor or its affiliates have to other clients and conflicts related to fees and expenses of such other clients, the valuation process

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given to us may differ from those rendered to their other clients.

As a result of our arrangements

with the Advisor and its affiliates and the Advisor’s investment committee, there may be times when the Advisor or such persons

have interests that differ from those of our stockholders, giving rise to a conflict of interest.

In particular, the following

conflicts of interest may arise, among others:

As a result of our arrangements with the Advisor and

its affiliates and the Advisor’s investment committee, there may be times when the Advisor or such persons have interests that differ

from those of our stockholders, giving rise to a conflict of interest.

In particular, the following conflicts of interest

may arise, among others:

members of the Advisor’s investment committee serve or may serve as officers, directors or principals of entities that operate

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allocations, or permit affiliates of the Advisor to receive origination and other transaction fees;

of Kayne Anderson and its affiliates may serve on the boards of directors of and advise companies which may compete with our portfolio

Moreover, these other funds, separate accounts and other vehicles managed by Kayne Anderson and its affiliates may pursue

investment opportunities that may also be suitable for us;

● the participation of the Advisor’s investment professionals in

our valuation process could result in a conflict of interest as the Advisor’s base management fee is based, in part, on our fair

market value of investments including assets purchased with borrowings under credit facilities and issuances of senior unsecured notes,

excluding cash, U.S.

government securities and commercial paper instruments maturing within one year of purchase, and our incentive fees

will be based, in part, on unrealized gains and losses.

Additionally, the incentive

fee payable by us to the Advisor may create an incentive for the Advisor to cause us to realize capital gains or losses that may not be

in the best interests of us or our stockholders.

Under the incentive fee structure, the Advisor benefits when we recognize capital gains

and, because the Advisor determines when an investment is sold, the Advisor controls the timing of the recognition of such capital gains.

Our Board is charged with protecting our stockholders’ interests by monitoring how the Advisor addresses these and other conflicts

of interest associated with its management services and compensation.

The part of the management

and incentive fees payable to Advisor that relates to our net investment income is computed and paid on income that may include interest

income that has been accrued but not yet received in cash, such as market discount, debt instruments with paid-in-kind (“PIK”)

interest, preferred stock with PIK dividends, zero coupon securities, and other deferred interest instruments and may create an incentive

for the Advisor to make investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation

arrangements.

This fee structure may be considered to give rise to a conflict of interest for the Advisor to the extent that it may encourage

the Advisor to favor debt financings that provide for deferred interest, rather than current cash payments of interest.

Under these investments,

we will accrue the interest over the life of the investment, but we will not receive the cash income from the investment until the end

of Kayne Anderson and its affiliates may serve on the boards of directors of and advise companies that may compete with our portfolio

Moreover, other funds, separate accounts and other vehicles managed by Kayne Anderson and its affiliates may pursue investment

opportunities that may also be suitable for us;

participation of the Advisor’s investment professionals in our valuation process could result in a conflict of interest as the

Advisor’s base management fee is based, in part, on our fair market value of investments including assets purchased with borrowings

under credit facilities and issuances of senior unsecured notes, excluding cash, U.S.

government securities and commercial paper instruments

maturing within one year of purchase, and our incentive fees will be based, in part, on unrealized gains and losses.

Additionally, the incentive fee payable by us to the

Advisor may create an incentive for the Advisor to cause us to realize capital gains or losses that may not be in the best interests of

us or our stockholders.

Under the incentive fee structure, the Advisor benefits when we recognize capital gains and, because the Advisor

determines when an investment is sold, the Advisor controls the timing of the recognition of such capital gains.

Our Board is charged

with protecting our stockholders’ interests by monitoring how the Advisor addresses these and other conflicts of interest associated

with its management services and compensation.

The part of the management and incentive fees payable

to Advisor that relates to our net investment income is computed and paid on income that may include interest income that has been accrued

but not yet received in cash, such as market discount, debt instruments with paid-in-kind (“PIK”) interest, preferred stock

with PIK dividends, zero coupon securities, and other deferred interest instruments and may create an incentive for the Advisor to make

investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangements.

This fee structure may be considered to give rise to a conflict of interest for the Advisor to the extent that it may encourage the Advisor

to favor debt financings that provide for deferred interest, rather than current cash payments of interest.

Under these investments, we

will accrue the interest over the life of the investment, but we will not receive the cash income from the investment until the end of

Our net investment income used to calculate the income portion of our investment fee, however, includes accrued interest.

The Advisor may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but for the

opportunity to continue to earn the fees even when the issuers of the deferred interest securities would not be able to make actual cash

payments to us on such securities.

This risk could be increased because the Advisor is not obligated to reimburse us for any fees received

even if we subsequently incur losses or never receive in cash the deferred income that was previously accrued.

The Advisor seeks to allocate

investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy.

However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term, and there can

be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

The Advisor’s investment committee,

the Advisor or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Principals of the Advisor

and its affiliates and members of the Advisor’s investment committee may serve as directors of, or in a similar capacity with, companies

in which we invest, the securities of which are purchased or sold on our behalf.

In the event that material nonpublic information is obtained

with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or

as a result of applicable law or regulations (for example, the antifraud provisions for the federal securities laws), we could be prohibited

for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

The Investment Advisory Agreement and the

Administration Agreement were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated

with an unaffiliated third party.

The Investment Advisory Agreement

and the Administration Agreement were negotiated between related parties.

Consequently, their terms, including fees payable to the Advisor,

may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

For example, certain accounts managed by

the Advisor have lower management, incentive or other fees than those charged under the Investment Advisory Agreement and/or a reduced

ability to recover expenses and overhead than may be recovered by the Administrator under the Administration Agreement.

In addition, we

may choose not to enforce, or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain

our ongoing relationship with the Advisor, the Administrator and their respective affiliates.

Any such decision, however, would breach

our fiduciary obligations to our stockholders.

Advisor may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but for the opportunity

to continue to earn the fees even when the issuers of the deferred interest securities would not be able to make actual cash payments

to us on such securities.

This risk could be increased because the Advisor is not obligated to reimburse us for any fees received even

if we subsequently incur losses or never receive in cash the deferred income that was previously accrued.

The Advisor seeks to allocate investment opportunities

among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy.

However, we can offer

no assurance that such opportunities will be allocated to us fairly or equitably in the short term, and there can be no assurance that

we will be able to participate in all investment opportunities that are suitable to us.

The Advisor’s investment committee, the

Advisor or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Principals of the Advisor and its affiliates and members

of the Advisor’s investment committee may serve as directors of, or in a similar capacity with, companies in which we invest, the

securities of which are purchased or sold on our behalf.

In the event that material nonpublic information is obtained with respect to

such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of

applicable law or regulations (for example, the antifraud provisions for the federal securities laws), we could be prohibited for a period

of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

The Investment Advisory Agreement and the Administration

Agreement were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with an

unaffiliated third party.

The Investment Advisory Agreement and the Administration

Agreement were negotiated between related parties.

Consequently, their terms, including fees payable to the Advisor, may not be as favorable

to us as if they had been negotiated with an unaffiliated third party.

For example, certain accounts managed by the Advisor have lower

management, incentive or other fees than those charged under the Investment Advisory Agreement and/or a reduced ability to recover expenses

and overhead than may be recovered by the Administrator under the Administration Agreement.

In addition, we may choose not to enforce,

or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain our ongoing relationship

with the Advisor, the Administrator and their respective affiliates.

Any such decision, however, would breach our fiduciary obligations

to our stockholders.

We generally may make investments that could

give rise to a conflict of interest and our ability to enter into transactions with our affiliates will be restricted.

We, along with our Advisor

and certain of its affiliates, have obtained exemptive relief from the SEC to permit us to invest alongside certain entities and accounts

advised by the Advisor and its affiliates subject to certain conditions.

Pursuant to such exemptive

relief, and subject to certain conditions, we are permitted to co-invest in the same security with our affiliates in a manner that is

consistent with our investment objective, investment strategy, regulatory consideration and other relevant factors.

If opportunities arise

that would otherwise be appropriate for us and an affiliate to purchase different securities in the same issuer, our Advisor will need

to decide which account will proceed with such investment.

Our Advisor’s investment allocation policy incorporates the conditions

of exemptive relief to seek to ensure that investment opportunities are allocated in a manner that is fair and equitable.

However, although

the Advisor endeavors to fairly allocate investment opportunities in the long-run, we can offer no assurance that investment opportunities

will be allocated to us fairly or equitably in the short-term.

We do not expect to invest

in, or hold securities of, companies that are controlled by our affiliates’ other clients.

If our affiliates’ other client

or clients gain control over one of our portfolio companies, this may create conflicts of interest and subject us to certain restrictions

under the 1940 Act.

As a result of these conflicts and restrictions our Advisor may be unable to implement our investment strategies as

effectively as they could have in the absence of such conflicts or restrictions.

For example, as a result of a conflict or restriction,

our Advisor may be unable to engage in certain transactions that they would otherwise pursue.

In order to avoid these conflicts and restrictions,

our Advisor may choose to exit these investments prematurely and, as a result, we may forgo positive returns associated with such investments.

In addition, to the extent that another client holds a different class of securities than us as a result of such transactions, our interests

We, along with our Advisor and certain of its affiliates,

have obtained exemptive relief from the SEC to permit us to invest alongside certain entities and accounts advised by the Advisor and

its affiliates subject to certain conditions.

Pursuant to such exemptive relief, and subject to

certain conditions, we are permitted to co-invest in the same security with our affiliates in a manner that is consistent with our investment

objective, investment strategy, regulatory consideration and other relevant factors.

If opportunities arise that would otherwise be appropriate

for us and an affiliate to purchase different securities in the same issuer, our Advisor will need to decide which account will proceed

with such investment.

Our Advisor’s investment allocation policy incorporates the conditions of exemptive relief to seek to ensure

that investment opportunities are allocated in a manner that is fair and equitable.

However, although the Advisor endeavors to fairly

allocate investment opportunities in the long run, we can offer no assurance that investment opportunities will be allocated to us fairly

or equitably in the short term.

We do not expect to invest in, or hold securities

of, companies that are controlled by our affiliates’ other clients.

If our affiliates’ other client or clients gain control

over one of our portfolio companies, this may create conflicts of interest and subject us to certain restrictions under the 1940 Act.

As a result of these conflicts and restrictions our Advisor may be unable to implement our investment strategies as effectively as it

could have in the absence of such conflicts or restrictions.

For example, as a result of a conflict or restriction, our Advisor may be

unable to engage in certain transactions that it would otherwise pursue.

In order to avoid these conflicts and restrictions, our Advisor

may choose to exit these investments prematurely and, as a result, we may forgo positive returns associated with such investments.

addition, to the extent that another client holds a different class of securities than us as a result of such transactions, our interests

may not be aligned.

Our ability to enter into transactions with our affiliates may be restricted.

In situations where co-investment

with affiliates’ other clients is not permitted under the 1940 Act and related rules, existing or future staff guidance, or the

terms and conditions of exemptive relief that have been granted to our Advisor and its affiliates by the SEC, our Advisor will need to

decide which client or clients will proceed with the investment.

Generally, we will not have an entitlement to make a co-investment in

these circumstances and, to the extent that another client elects to proceed with the investment, we will not be permitted to participate.

Moreover, except in certain circumstances, we will be unable to invest in any issuer in which an affiliate’s other client holds

a controlling interest.

In situations where co-investment with affiliates’

other clients is not permitted under the 1940 Act and related rules, existing or future staff guidance, or the terms and conditions of

exemptive relief that have been granted to our Advisor and its affiliates by the SEC, our Advisor will need to decide which client or

clients will proceed with the investment.

Generally, we will not have an entitlement to make a co-investment in these circumstances and,

to the extent that another client elects to proceed with the investment, we will not be permitted to participate.

Moreover, except in

certain circumstances, we will be unable to invest in any issuer in which an affiliate’s other client holds a controlling interest.

These restrictions may limit the scope of investment opportunities that would otherwise be available to us.

We will be prohibited under

the 1940 Act from participating in certain transactions with certain affiliates of ours without the prior approval of a majority of our

independent directors and, in some cases, the SEC.

Any person that owns, directly or indirectly, 5% or more of our outstanding voting

securities will be our affiliate for purposes of the 1940 Act, and we will generally be prohibited from buying or selling any securities

from or to such affiliate on a principal basis, absent the prior approval of our Board and, in some cases, the SEC.

The 1940 Act also

prohibits certain “joint” transactions with certain affiliates of ours, which in certain circumstances could include investments

in the same portfolio company (whether at the same or different times to the extent the transaction involves a joint investment), without

prior approval of our Board and, in some cases, the SEC.

If a person acquires more than 25% of our voting securities, we will be prohibited

from buying or selling any security from or to such person or certain of that person’s affiliates, or entering into prohibited joint

transactions with such persons, absent the prior approval of the SEC.

Similar restrictions limit our ability to transact business with

our officers or directors or their affiliates.

The SEC has interpreted the

BDC regulations governing transactions with affiliates to prohibit certain “joint transactions” involving entities that share

a common investment advisor.

As a result of these restrictions, we may be prohibited from buying or selling any security from or to any

portfolio company that is controlled by a fund managed by the Advisor or their respective affiliates except under certain circumstances

or without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to us.

We operate in a highly competitive market

for investment opportunities, which could reduce returns and result in losses.

There will be competition

for investments from numerous other potential investors, many of which will have significant financial resources.

As a result, there can

be no guarantee that a sufficient quantity of suitable investment opportunities for us will be found, that investments on favorable terms

can be negotiated, or that we will be able to fully realize the value of our investments.

Competition for investments may have the effect

of increasing our costs and expenses or otherwise decreasing returns generated on underlying investments, thereby reducing our investment

A number of entities compete

with us to make the types of investments that we plan to make in middle market companies, including BDCs, traditional commercial banks,

private investment funds, regional banking institutions, small business investment companies, investment banks and insurance companies.

Additionally, with increased competition for investment opportunities, alternative investment vehicles such as hedge funds may seek to

invest in areas they have not traditionally invested in or from which they had withdrawn during the economic downturn, including investing

in middle market companies.

We will compete with public and private funds, commercial and investment banks, commercial financing companies

and, to the extent they provide an alternative form of financing, private equity and hedge funds.

Many of our competitors are substantially

larger and have considerably greater financial, technical and marketing resources than we do.

For example, we believe some of our competitors

may have 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 could allow them to consider a wider variety of investments and establish more relationships than

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

the source of income, asset diversification and distribution requirements we must satisfy to qualify and maintain our qualification as

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

and we may not be able to identify and make investments that are consistent with our investment objective.

With respect to the investments

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

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

With respect to all investments, we may lose some 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, lower yields and increased risk of credit loss.

Although our Advisor allocates

opportunities in accordance with its allocation policy, allocations to other accounts managed or sponsored by our Advisor or its affiliates

reduce the amount and frequency of opportunities available to us and may not be in the best interests of us and our stockholders.

The competitive pressures

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

We will be prohibited under the 1940 Act from participating

in certain transactions with certain affiliates of ours without the prior approval of a majority of our independent directors and, in

some cases, the SEC.

Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities will be our affiliate

for purposes of the 1940 Act, and we will generally be prohibited from buying or selling any securities from or to such affiliate on a

principal basis, absent the prior approval of our Board and, in some cases, the SEC.

The 1940 Act also prohibits certain “joint”

transactions with certain affiliates of ours, which in certain circumstances could include investments in the same portfolio company (whether

at the same or different times to the extent the transaction involves a joint investment), without prior approval of our Board and, in

some cases, the SEC.

If a person acquires more than 25% of our voting securities, we will be prohibited from buying or selling any security

from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons,

absent the prior approval of the SEC.

Similar restrictions limit our ability to transact business with our officers or directors or their

The SEC has interpreted the BDC regulations governing

transactions with affiliates to prohibit certain “joint transactions” involving entities that share a common investment advisor.

As a result of these restrictions, we may be prohibited from buying or selling any security from or to any portfolio company that is controlled

by a fund managed by the Advisor or their respective affiliates except under certain circumstances or without the prior approval of the

SEC, which may limit the scope of investment opportunities that would otherwise be available to us.

We operate in a highly competitive market for

investment opportunities, which could reduce returns and result in losses.

There will be competition for investments from numerous

other potential investors, many of which will have significant financial resources.

As a result, there can be no guarantee that a sufficient

quantity of suitable investment opportunities for us will be found, that investments on favorable terms can be negotiated, or that we

will be able to fully realize the value of our investments.

Competition for investments may have the effect of increasing our costs and

expenses or otherwise decreasing returns generated on underlying investments, thereby reducing our investment returns.

A number of entities compete with us to make the types

of investments that we plan to make in middle market companies, including BDCs, traditional commercial banks, private investment funds,

regional banking institutions, small business investment companies, investment banks and insurance companies.

Additionally, with increased

competition for investment opportunities, alternative investment vehicles such as hedge funds may seek to invest in areas they have not

traditionally invested in or from which they had withdrawn during the economic downturn, including investing in middle market companies.

We will compete with public and private funds, commercial and investment banks, commercial financing companies and, to the extent they

provide an alternative form of financing, private equity and hedge funds.

Many of our competitors are substantially larger and have considerably

greater financial, technical and marketing resources than we do.

For example, we believe some of our competitors may have 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 could allow them to consider a wider variety of investments and establish more relationships than we do.

Furthermore, many of our

competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source of income, asset diversification

and distribution requirements we must satisfy to qualify and maintain our qualification as a RIC.

As a result of this competition, we

may from time to time not be able to take advantage of attractive investment opportunities, and we may not be able to identify and make

investments that are consistent with our investment objective.

With respect to the investments we make, we do not

seek to compete based primarily on the interest rates we offer, and we believe that some of our competitors may make loans with interest

rates that will be lower than the rates we offer.

With respect to all investments, we may lose some 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, lower yields and increased risk of credit loss.

Although our Advisor allocates opportunities

in accordance with its allocation policy, allocations to other accounts managed or sponsored by our Advisor or its affiliates reduce the

amount and frequency of opportunities available to us and may not be in the best interests of us and our stockholders.

The competitive pressures we face may have a material

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

We will be subject to corporate-level income

tax if we are unable to qualify as a RIC.

We have elected, and intend

to qualify annually thereafter, to be treated for U.S.

tax if we are unable to continue to qualify as a RIC.

We have elected, and intend to qualify annually thereafter,

to be treated for U.S.

federal income tax purposes as a RIC under Subchapter M of the Code;

no assurance can be given that we will be able to qualify for and maintain RIC tax treatment.

In order to qualify, and maintain qualification,

as a RIC under the Code, we must meet certain source-of-income, asset diversification and distribution requirements.

The distribution

requirement for a RIC is satisfied if we distribute to our stockholders dividends for U.S.

federal income tax purposes of an amount generally

at least equal to the sum of 90% of our investment company taxable income, which is generally our net ordinary income plus the excess

of our net short-term capital gains in excess of our net long-term capital losses, determined without regard to any deduction for dividends

paid, and 90% of our net tax-exempt interest income, if any, to our stockholders on an annual basis.

We are subject, to the extent we

use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements

that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC.

If we are unable to obtain

cash from other sources, we may fail to be subject to tax as a RIC and, thus, may be subject to corporate-level income tax.

as a RIC, we must also meet certain asset diversification requirements at the end of each quarter of our taxable year.

Failure to meet

these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualification

however, no assurance can be given that we

will be able to qualify for and maintain RIC tax treatment.

In order to qualify, and maintain qualification, as a RIC under the Code,

we must meet certain source-of-income, asset diversification and distribution requirements.

The distribution requirement for a RIC is

satisfied if we distribute to our stockholders dividends for U.S.

federal income tax purposes of an amount generally at least equal to

the sum of 90% of our investment company taxable income, which is generally our net ordinary income plus the excess of our net short-term

capital gains in excess of our net long-term capital losses, determined without regard to any deduction for dividends paid, and 90% of

our net tax-exempt interest income, if any, to our stockholders on an annual basis.

We are subject, to the extent we use debt financing,

to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under

certain circumstances, restrict us from making distributions necessary to continue to qualify as a RIC.

If we are unable to obtain cash

from other sources, we may fail to be subject to tax as a RIC and, thus, may be subject to corporate-level income tax.

To continue to

qualify as a RIC, we must also meet certain asset diversification requirements at the end of each quarter of our taxable year.

to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of our qualification

Because a significant portion of our investments are in private or thinly traded public companies, any such dispositions could

5 unchanged sentences

would have a material adverse effect on us and our stockholders.

We may be subject to risks that may arise

in connection with the rules under ERISA related to investment by ERISA Plans.

We intend to operate so that

we will be an appropriate investment for employee benefit plans subject to Employee Retirement Income Security Act of 1974, as amended

We will use reasonable efforts to conduct the Company’s affairs so that the assets of the Company will not

be deemed to be “plan assets” for purposes of ERISA.

Accordingly, there may be constraints on our ability to make or dispose

of investments at optimal times (or to make certain investments at all).

We may have difficulty paying our required

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

federal income tax

purposes, we include in income certain amounts that we have not yet received in cash, such as the accretion of original issue discount

This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through

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

which could be significant relative to our overall investment activities or increases in loan balances as a result of contracted PIK arrangements,

is included in income before we receive any corresponding cash payments.

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

that we do not receive in cash.

We may be subject to risks that may arise in

connection with the rules under ERISA related to investment by ERISA Plans.

We intend to operate so that we will be an appropriate

investment for employee benefit plans subject to Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

will use reasonable efforts to conduct our affairs so that our assets will not be deemed to be “plan assets” for purposes

Accordingly, there may be constraints on our ability to make or dispose of investments at optimal times (or to make certain

investments at all).

We may have difficulty paying our required distributions

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

federal income tax purposes, we include in

income certain amounts that we have not yet received in cash, such as the accretion of original issue discount (“OID”).

may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest,

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

Such OID, which could be significant

relative to our overall investment activities or increases in loan balances as a result of contracted PIK arrangements, is included in

income before we receive any corresponding cash payments.

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

not receive in cash.

We may be also subject to the following risks associated with PIK and OID investments:

The interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the deferred payments are due in cash at the maturity of the loan;

The interest rates on PIK loans are higher to reflect the time-value of money on deferred interest payments and the higher credit risk of borrowers who may need to defer interest payments;

Market prices of OID instruments are more volatile because they are affected to a greater extent by interest rate changes than instruments that pay interest periodically in cash;

PIK instruments may have unreliable valuations because the accruals require judgments about ultimate collectability of the deferred payments and the value of the associated collateral;

Use of PIK and OID securities may provide certain benefits to our Advisor including increasing management fees.

We may be required under the tax laws to make distributions of OID income to stockholders without receiving any cash.

Such required cash distributions may have to be paid from borrowings, offering proceeds or the sale of our assets;

The required recognition of OID, including PIK, interest for U.S.

federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of our taxable income that must, nevertheless, be distributed in cash to investors to avoid it being subject to corporate level taxation.

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 market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero

coupon securities.

If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued

interest previously used in the calculation of the incentive fee will become uncollectible, and the Advisor will have no obligation to

refund any fees it received in respect of such accrued income.

Since in certain cases we may

recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement in a given

taxable year to distribute to our stockholders dividends for U.S.

federal income tax purposes an amount at least equal to the sum of

90% of our investment company taxable income, determined without regard to any deduction for dividends paid, and 90% of our net tax-exempt

interest income, if any, to our stockholders to qualify and maintain our ability to be subject to tax as a RIC.

In such a case, we may

have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new

investment originations to meet these distribution requirements.

If we are not able to obtain such cash from other sources, we may fail

to qualify as a RIC and thus be subject to corporate-level income tax.

Regulations governing our operation as a

BDC affect our ability to, and the way in which we, raise additional capital.

interest payments deferred on a PIK loan are subject to the risk that the borrower may default when the deferred payments are due in

cash at the maturity of the loan;

interest rates on PIK loans are higher to reflect the time-value of money on deferred interest payments and the higher credit risk of

borrowers who may need to defer interest payments;

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

pay interest periodically in cash;

instruments may have unreliable valuations because the accruals require judgments about ultimate collectability of the deferred payments

and the value of the associated collateral;

of PIK and OID securities may provide certain benefits to our Advisor including increasing management fees;

may be required under the tax laws to make distributions of OID income to stockholders without receiving any cash.

Such required cash

distributions may have to be paid from borrowings, offering proceeds or the sale of our assets;

required recognition of OID, including PIK, interest for U.S.

federal income tax purposes may have a negative impact on liquidity, because

it represents a non-cash component of our taxable income that must, nevertheless, be distributed in cash to investors to avoid it being

subject to corporate level taxation.

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 market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities.

If a portfolio

company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the

calculation of the incentive fee will become uncollectible, and the Advisor will have no obligation to refund any fees it received in

respect of such accrued income.

Since in certain cases we may recognize income before

or without receiving cash representing such income, we may have difficulty meeting the requirement in a given taxable year to distribute

to our stockholders dividends for U.S.

federal income tax purposes an amount at least equal to the sum of 90% of our investment company

taxable income, determined without regard to any deduction for dividends paid, and 90% of our net tax-exempt interest income, if any,

to our stockholders to qualify and maintain our ability to be subject to tax as a RIC.

In such a case, we may have to sell some of our

investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations

to meet these distribution requirements.

If we are not able to obtain such cash from other sources, we may fail to qualify as a RIC and

thus be subject to corporate-level income tax.

Regulations governing our operation as a BDC

affect our ability to, and the way in which we, raise additional capital.

As a BDC, the necessity of raising additional capital exposes

17 unchanged sentences

In addition, if the value

of the Company’s assets decreases, leverage will cause the Company’s net asset value to decline more sharply than it otherwise

would have without leverage or with lower leverage.

Similarly, any decrease in the Company’s revenue would cause its net income

to decline more sharply than it would have if the Company had not borrowed or had borrowed less under the credit facilities.

In the absence of an event

of default, no person or entity from which we borrow money has a veto right or voting power over our ability to set policy, make investment

decisions or adopt investment strategies.

If we issue preferred stock, which is another form of leverage, the preferred stock would rank

“senior” to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters

and might have other rights, preferences or privileges more favorable than those of our common stockholders, and the issuance of preferred

stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price

for holders of our common stock or otherwise be in the best interest of our common stockholders.

Holders of our common stock will directly

or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue.

In addition, any interests

of preferred stockholders may not necessarily align with the interests of holders of our shares of common stock, and the rights of holders

of shares of preferred stock to receive distributions would be senior to those of holders of shares of common stock.

We do not, however,

anticipate issuing preferred stock in the next 12 months.

We are not generally able

to issue and sell our shares of common stock at a price below NAV per share.

We may, however, sell our shares of common stock, or warrants,

options or rights to acquire our shares of common stock, at a price below the then-current NAV per share of our common stock if our Board

determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale.

case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board,

closely approximates the market value of such securities (less any distributing commission or discount).

If we raise additional funds

by issuing common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of

our stockholders at that time will decrease, and holders of our common stock might experience dilution.

We finance our investments with borrowings

under credit facilities and issuances of senior unsecured notes, 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 magnifies the potential for

gain or loss on amounts invested.

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

associated with investing in our securities.

The amount of leverage that we employ will depend on the Advisor’s and our Board’s

assessment of market and other factors at the time of any proposed borrowing.

We cannot assure you that we will be able to obtain credit

at all or on terms acceptable to us.

For example, due to the interplay of the 1940 Act restrictions on principal and joint transactions

of our assets decreases, leverage will cause our net asset value to decline more sharply than it otherwise would have without leverage

or with lower leverage.

Similarly, any decrease in our revenue would cause its net income to decline more sharply than it would have if

we had not borrowed or had borrowed less under the credit facilities.

In the absence of an event of default, no person or

entity from which we borrow money has a veto right or voting power over our ability to set policy, make investment decisions or adopt

investment strategies.

If we issue preferred stock, which is another form of leverage, the preferred stock would rank “senior”

to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other

rights, preferences or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have

the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of

our common stock or otherwise be in the best interest of our common stockholders.

Holders of our common stock will directly or indirectly

bear all of the costs associated with offering and servicing any preferred stock that we issue.

In addition, any interests of preferred

stockholders may not necessarily align with the interests of holders of our shares of common stock, and the rights of holders of shares

of preferred stock to receive distributions would be senior to those of holders of shares of common stock.

We do not, however, anticipate

issuing preferred stock in the next 12 months.

We are not generally able to issue and sell our shares

of common stock at a price below NAV per share.

We may, however, sell our shares of common stock, or warrants, options or rights to acquire

our shares of common stock, at a price below the then-current NAV per share of our common stock if our Board determines that such sale

is in the best interests of us and our stockholders, and if our stockholders approve such sale.

In any such case, the price at which our

securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market

value of such securities (less any distributing commission or discount).

If we raise additional funds by issuing common stock or senior

securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will

decrease, and holders of our common stock might experience dilution.

We finance our investments with borrowings under

credit facilities and issuances of senior unsecured notes, 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 magnifies the potential for gain

or loss on amounts invested.

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

with investing in our securities.

The amount of leverage that we employ will depend on the Advisor’s and our Board’s assessment

of market and other factors at the time of any proposed borrowing.

We cannot assure you that we will be able to obtain credit at all or

on terms acceptable to us.

For example, due to the interplay of the 1940 Act restrictions on principal and joint transactions and the

risk retention rules adopted pursuant to Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”),

23 unchanged sentences

and any increase in the base management fee payable to the Advisor.

As a BDC, we generally are required to meet a

coverage ratio of total assets to total borrowings and other senior securities, which include our borrowings under our credit facilities

and issuances of senior unsecured notes and any preferred stock that we may issue in the future (although we do not anticipate issuing

preferred stock in the next 12 months).

As a BDC, we generally are required to meet a coverage

ratio of total assets to total borrowings and other senior securities, which include our borrowings under our credit facilities and issuances

of senior unsecured notes and any preferred stock that we may issue in the future (although we do not anticipate issuing preferred stock

in the next 12 months).

The current asset coverage ratio applicable to the Company is 150%.

If this ratio were to decline

below the then applicable minimum asset coverage ratio, we would be unable to incur additional debt and could be required to sell a portion

of our investments to repay some debt when it is disadvantageous to do so.

This could have a material adverse effect on our operations,

and we may not be able to make distributions in amounts sufficient to maintain our status as a RIC, or at all.

Provisions in our credit facilities and

our senior unsecured notes contain various covenants, which, if not complied with, could accelerate our repayment obligations under such

facilities, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions.

Our Credit Facilities (as defined herein) are

backed by all or a portion of our loans and securities on which the lenders have a security interest.

We may pledge up to 100% of our

assets and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with the lenders pursuant

If this ratio were to decline below the then

applicable minimum asset coverage ratio, we would be unable to incur additional debt and could be required to sell a portion of our investments

to repay some debt when it is disadvantageous to do so.

This could have a material adverse effect on our operations, and we may not be

able to make distributions in amounts sufficient to maintain our status as a RIC, or at all.

Provisions in our credit facilities and our

senior unsecured notes contain various covenants, which, if not complied with, could accelerate our repayment obligations under such facilities,

thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions.

Our Credit Facilities (as defined herein) are backed

by all or a portion of our loans and securities on which the lenders have a security interest.

We may pledge up to 100% of our assets

and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with the lenders pursuant

to our Credit Facilities.

42 unchanged sentences

the amounts due.

Adverse developments in the credit markets

may impair our ability to enter into new credit facilities or our ability to issue senior unsecured notes.

Following the passage of Dodd-Frank 2010, many

commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity.

In addition, in an

effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited

routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating

the maturity of existing lending facilities.

To the extent these circumstances arise again in the future, it may be difficult for us to

finance the growth of our investments on acceptable economic terms, or at all, and one or more of our credit facilities could be accelerated

by the lenders.

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 and such failure would decrease our operating flexibility.

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 are qualifying assets.

In the future, we believe

that most of our investments will constitute qualifying assets.

However, we may be precluded from investing in what we believe are attractive

investments if such investments are not qualifying assets for purposes of the 1940 Act.

If we do not invest a sufficient portion of our

assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs.

As a result of such violation, specific rules

under the 1940 Act would significantly decrease our operating flexibility and 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

inappropriate times in order to come into compliance with the 1940 Act.

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

difficult to dispose of such investments on favorable terms.

We may not be able to find a buyer for such investments and, even if we do

find a buyer, we may have to sell the investments at a substantial loss.

Any such outcomes would have a material adverse effect on our

business, financial condition, results of operations and cash flows.

The majority of our portfolio investments

are recorded at fair value as determined in good faith by our Advisor and, as a result, there may be uncertainty as to the value of our

portfolio investments.

The majority of our portfolio

investments take the form of securities for which no market quotations are readily available.

The fair value of securities and other investments

that are not publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith

by our Advisor, including to reflect significant events affecting the value of our securities.

Adverse developments in the credit markets may

impair our ability to enter into new credit facilities or our ability to issue senior unsecured notes.

Following the passage of Dodd-Frank, many commercial

banks and other financial institutions stopped lending or significantly curtailed their lending activity.

In addition, in an effort to

stem losses and reduce their exposure to segments of the economy deemed to be high risk, some financial institutions limited routine refinancing

and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity

of existing lending facilities.

To the extent these circumstances arise again in the future, it may be difficult for us to finance the

growth of our investments on acceptable economic terms, or at all, and one or more of our credit facilities could be accelerated by the

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

and such failure would decrease our operating flexibility.

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 are

qualifying assets.

In the future, we believe that most of our investments

will constitute qualifying assets.

However, we may be precluded from investing in what we believe are attractive investments if such investments

are not qualifying assets for purposes of the 1940 Act.

If we do not invest a sufficient portion of our assets in qualifying assets, we

could violate the 1940 Act provisions applicable to BDCs.

As a result of such violation, specific rules under the 1940 Act would significantly

decrease our operating flexibility and 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 inappropriate times in order to

come into compliance with the 1940 Act.

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

on favorable terms.

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

at a substantial loss.

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

and cash flows.

The majority of our portfolio investments are

recorded at fair value as determined in good faith by our Advisor and, as a result, there may be uncertainty as to the value of our portfolio

The majority of our portfolio investments take the

form of securities for which no market quotations are readily available.

The fair value of securities and other investments that are not

publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our Advisor,

including to reflect significant events affecting the value of our securities.

As discussed in more detail under “ Management’s

9 unchanged sentences

of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information.

Our Level 3 investments will

typically consist of instruments for which a liquid trading market does not exist.

The fair value of these instruments may not be readily

determinable.

We will value these instruments in accordance with valuation procedures adopted by our Advisor.

We intend to use the services

of an independent valuation firm to review the fair value of certain instruments prepared by our Advisor.

At least once annually, the

valuation for each portfolio investment for which a market quote is not readily available will be reviewed by an independent valuation

The types of factors that the Advisor may consider in fair value pricing of our investments include, where relevant:

and realizable value of any collateral;

the company’s ability to make interest payments, amortization payments (if any) and other

fixed charges;

the company’s historical and projected financial results;

Our Level 3 investments will typically consist of

instruments for which a liquid trading market does not exist.

The fair value of these instruments may not be readily determinable.

will value these instruments in accordance with valuation procedures adopted by our Advisor.

We intend to use the services of an independent

valuation firm to review the fair value of certain instruments prepared by our Advisor.

At least once annually, the valuation for each

portfolio investment for which a market quote is not readily available will be reviewed by an independent valuation firm.

factors that the Advisor may consider in fair value pricing of our investments include, where relevant:

the nature and realizable value

of any collateral;

the company’s ability to make interest payments, amortization payments (if any) and other fixed charges;

company’s historical and projected financial results;

the markets in which the company does business;

the estimated

enterprise value of the company based on comparisons to publicly-traded securities, on discounted cash flows and other valuation methodologies;

changes in the interest rate environments and the credit markets generally that may affect the price at which similar investments may

the estimated enterprise value

of the company based on comparisons to publicly-traded securities, on discounted cash flows and other valuation methodologies;

in the interest rate environments and the credit markets generally that may affect the price at which similar investments may be made;

and other relevant factors.

Because such valuations, and particularly valuations of non-traded instruments and private companies,

are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates.

The determination of fair value

by our Advisor may differ materially from the values that would have been used if a liquid trading market for these instruments existed.

Because such valuations, and particularly valuations of non-traded instruments and private companies, are

inherently uncertain, they may fluctuate over short periods of time and may be based on estimates.

The determination of fair value by

our Advisor may differ materially from the values that would have been used if a liquid trading market for these instruments existed.

Our NAV could be adversely affected if the determinations regarding the fair value of our investments were materially higher than the

values that we ultimately realize upon the disposal of such investments.

We adjust quarterly (or as

otherwise may be required by the 1940 Act in connection with the issuance of our shares) the valuation of our portfolio to reflect our

Advisor’s determination of the fair value of each investment in our portfolio.

Any changes in fair value are recorded in our consolidated

statement of operations as net change in unrealized appreciation or depreciation.

We adjust quarterly (or as otherwise may be required

by the 1940 Act in connection with the issuance of our shares) the valuation of our portfolio to reflect our Advisor’s determination

of the fair value of each investment in our portfolio.

Any changes in fair value are recorded in our consolidated statement of operations

as net change in unrealized appreciation or depreciation.

New or modified laws or regulations governing

our operations and government intervention in the credit markets generally may adversely affect our business.

We and our portfolio companies

are subject to regulation by laws at the U.S.

We and our portfolio companies are subject to regulation

by laws at the U.S.

federal, state and local levels.

These laws and regulations, as well as their interpretation,

may change from time to time, including as the result of interpretive guidance or other directives from the U.S.

President and others

in the executive branch, and new laws, regulations and interpretations may also come into effect.

Any such new or changed laws or regulations

could have a material adverse effect on our business.

In particular, Dodd-Frank has impacted many aspects of the financial services industry,

and it requires the development and adoption of many implementing regulations over several years.

The SEC has adopted final rules for

over 60 mandatory rulemaking provisions under Dodd-Frank, with several additional rules proposed but not yet adopted.

While the ultimate

impact of Dodd-Frank on us and our portfolio companies may not be known for an extended period of time, Dodd-Frank, including the interpretation

of the rules implementing its provisions and any future rules that may be adopted, along with other legislative and regulatory proposals

directed at the financial services industry or affecting taxation that may be proposed in the future, may negatively impact the operations,

cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify

the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio

In addition, the central banks

and, in particular, the U.S.

Federal Reserve, have taken unprecedented steps since the financial crises of 2008-2009, the COVID-19 global

pandemic and in response to inflationary pressures.

On the other hand, recent governmental intervention could mean that the willingness

of governmental bodies to take additional extraordinary action is diminished.

It is impossible to predict if, how, and to what extent

the United States and other governments would further intervene in credit markets.

As a result, in the event of near-term major market

disruptions, like those caused by the COVID-19 pandemic, there might be only limited additional government intervention, resulting in

correspondingly greater market dislocation and materially greater market risk.

Additionally, changes to the

laws and regulations governing our operations, including those associated with RICs, may cause us to alter our investment strategy in

order to avail ourselves of new or different opportunities or result in the imposition of corporate-level taxes on us.

Such changes could

result in material differences to our strategies and plans and may shift our investment focus from the areas of expertise of the Advisor

to other types of investments in which the Advisor may have little or no expertise or experience.

Any such changes, if they occur, could

have a material adverse effect on our results of operations and the value of your investment.

If we invest in commodity interests in the

future, the Advisor may determine not to use investment strategies that trigger additional regulation by the U.S.

Commodity Futures Trading

Commission (the “CFTC”), or may determine to operate subject to CFTC regulation, if applicable.

If we or the Advisor were

to operate subject to CFTC regulation, we may incur additional expenses and would be subject to additional regulation.

In addition, certain regulations

applicable to debt securitizations implementing credit risk retention requirements that have taken effect in both the U.S.

and in Europe

may adversely affect or prevent us from entering into any future securitization transaction.

The impact of these risk retention rules

on the loan securitization market are uncertain, and such rules may cause an increase in our cost of funds under or may prevent us from

completing any future securitization transactions.

These laws and regulations, as well as their interpretation, may change from time

to time, including as the result of interpretive guidance or other directives from the U.S.

President and others in the executive branch,

and new laws, regulations and interpretations may also come into effect.

Any such new or changed laws or regulations could have a material

adverse effect on our business.

In particular, Dodd-Frank has impacted many aspects of the financial services industry, and it requires

the development and adoption of many implementing regulations over several years.

The SEC has adopted final rules for over 60 mandatory

rulemaking provisions under Dodd-Frank, with several additional rules proposed but not yet adopted.

While the ultimate impact of Dodd-Frank

on us and our portfolio companies may not be known for an extended period of time, Dodd-Frank, including the interpretation of the rules

implementing its provisions and any future rules that may be adopted, along with other legislative and regulatory proposals directed at

the financial services industry or affecting taxation that may be proposed in the future, may negatively impact the operations, cash flows

or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory

supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies.

In addition, the central banks and, in particular,

Federal Reserve, have taken unprecedented steps since the financial crises of 2008-2009 and the COVID-19 global pandemic and

in response to inflationary pressures.

On the other hand, recent governmental intervention could mean that the willingness of governmental

bodies to take additional extraordinary action is diminished.

It is impossible to predict if, how, and to what extent the United States

and other governments would further intervene in credit markets.

As a result, in the event of near-term major market disruptions, like

those caused by the COVID-19 pandemic, there might be only limited additional government intervention, resulting in correspondingly greater

market dislocation and materially greater market risk.

Additionally, changes to the laws and regulations

governing our operations, including those associated with RICs, may cause us to alter our investment strategy in order to avail ourselves

of new or different opportunities or result in the imposition of corporate-level taxes on us.

Such changes could result in material differences

to our strategies and plans and may shift our investment focus from the areas of expertise of the Advisor to other types of investments

in which the Advisor may have little or no expertise or experience.

Any such changes, if they occur, could have a material adverse effect

on our results of operations and the value of your investment.

If we invest in commodity interests in the future, the Advisor may determine

not to use investment strategies that trigger additional regulation by the U.S.

Commodity Futures Trading Commission (the “CFTC”),

or may determine to operate subject to CFTC regulation, if applicable.

If we or the Advisor were to operate subject to CFTC regulation,

we may incur additional expenses and would be subject to additional regulation.

In addition, certain regulations applicable to

debt securitizations implementing credit risk retention requirements that have taken effect in both the U.S.

and in Europe may adversely

affect or prevent us from entering into any future securitization transaction.

The impact of these risk retention rules on the loan securitization

market are uncertain, and such rules may cause an increase in our cost of funds under or may prevent us from completing any future securitization

transactions.

On October 21, 2014, U.S.

risk retention rules adopted pursuant to Section 941 of Dodd-Frank,

Risk Retention Rules, were issued.

Risk Retention Rules require the sponsor (directly or through a majority-owned

affiliate) of a debt securitization subject to such rules, such as collateralized loan obligations, in the absence of an exemption, to

retain an economic interest in the credit risk of the assets being securitized in the form of an eligible horizontal residual interest,

an eligible vertical interest, or a combination thereof, in accordance with the requirements of the U.S.

risk retention rules adopted pursuant to Section 941 of Dodd-Frank, or the U.S.

Risk Retention

Rules, were issued.

Risk Retention Rules require the sponsor (directly or through a majority-owned affiliate) of a debt securitization

subject to such rules, such as collateralized loan obligations, in the absence of an exemption, to retain an economic interest in the

credit risk of the assets being securitized in the form of an eligible horizontal residual interest, an eligible vertical interest, or

a combination thereof, in accordance with the requirements of the U.S.

Risk Retention Rules.

Risk Retention Rules became effective December 24, 2016.

Given the more attractive financing costs associated with these types of debt

securitization as opposed to other types of financing available (such as traditional senior secured facilities), this would, in turn,

increase our financing costs.

Any associated increase in financing costs would ultimately be borne by our common stockholders.

On May 24, 2018, the Economic

Growth, Regulatory Relief, and Consumer Protection Act was enacted, which left the architecture and core features of Dodd-Frank intact

but significantly recalibrated applicability thresholds, revised various post-crisis regulatory requirements, and provided targeted regulatory

relief to certain financial institutions.

Among the most significant of its amendments to Dodd-Frank were a substantial increase in the

$50 billion asset threshold to $250 billion for automatic regulation of bank holding companies (“BHCs”) as “systemically

important financial institutions” an exemption from the Volcker Rule for insured depository institutions with less than $10 billion

in consolidated assets and lower levels of trading assets and liabilities, as well as amendments to the liquidity leverage ratio and supplementary

leverage ratio requirements.

In addition, effective October 1, 2020, the U.S.

Federal Reserve, SEC and other federal agencies modified

their regulations under the Volcker Rule to loosen the restrictions on financial institutions.

The effects of these and any further rules

or regulations that may be enacted by the Biden administration or future administrations, are and could be complex and far-reaching, and

the change and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or financial condition,

impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition

and results of operations.

Over the last several years,

there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising

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

While it cannot be known at this

time whether any regulation will be implemented or what form it will take, increased regulation of non-bank credit extension could negatively

impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or

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

Ongoing implementation of,

or changes in, including changes in interpretation or enforcement of, laws and regulations could impose greater costs on us and on financial

services companies and impact the value of assets we hold and our business, financial condition and results of operations.

uncertainty regarding legislation and regulations affecting the financial services industry or taxation could also adversely impact our

business or the business of our portfolio companies.

If we do not comply with applicable laws and regulations, we could lose any licenses

that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.

Risk Retention Rules became effective

December 24, 2016.

Given the more attractive financing costs associated with these types of debt securitization as opposed to other types

of financing available (such as traditional senior secured facilities), this would, in turn, increase our financing costs.

Any associated

increase in financing costs would ultimately be borne by our common stockholders.

On May 24, 2018, the Economic Growth, Regulatory Relief,

and Consumer Protection Act was enacted, which left the architecture and core features of Dodd-Frank intact but significantly recalibrated

applicability thresholds, revised various post-crisis regulatory requirements, and provided targeted regulatory relief to certain financial

institutions.

Among the most significant of its amendments to Dodd-Frank were a substantial increase in the $50 billion asset threshold

to $250 billion for automatic regulation of bank holding companies (“BHCs”) as “systemically important financial institutions,”

an exemption from the Volcker Rule for insured depository institutions with less than $10 billion in consolidated assets and lower levels

of trading assets and liabilities, and amendments to the liquidity leverage ratio and supplementary leverage ratio requirements.

effective October 1, 2020, the U.S.

Federal Reserve, SEC and other federal agencies modified their regulations under the Volcker Rule

to loosen the restrictions on financial institutions.

The effects of these and any further rules or regulations that may be enacted by

the federal government are and could be complex and far-reaching, and the change and any future laws or regulations or changes thereto

could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision

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

Over the last several years, there also has been an

increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some

portion of the non-bank financial sector will be subject to new regulation.

While it cannot be known at this time whether any regulation

will be implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations,

cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect

our business, financial condition and results of operations.

Ongoing implementation of, or changes in, including

changes in interpretation or enforcement of, laws and regulations could impose greater costs on us and on financial services companies

and impact the value of assets we hold and our business, financial condition and results of operations.

In addition, uncertainty regarding

legislation and regulations affecting the financial services industry or taxation could also adversely impact our business or the business

of our portfolio companies.

If we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for

the conduct of our business and may be subject to civil fines and criminal penalties.

Our Board may change our investment objective,

operating policies and strategies without prior notice or stockholder approval, and we may temporarily deviate from our regular investment

Our Board has the authority,

except as otherwise provided in the 1940 Act, to modify or waive our investment objective and certain of our operating policies and strategies

without prior notice and without stockholder approval.

However, absent stockholder approval, we may not change the nature of our business

so as to cease to be, or withdraw our election as, a BDC.

We cannot predict the effect any changes to our current investment objective,

operating policies and strategies would have on our business, operating results and the price value of our common stock.

Nevertheless,

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

The Advisor can resign on 60 days’

notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could

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

The Advisor has the right

to resign under the Investment Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found

a replacement or not.

If the Advisor resigns, we may not be able to find a new investment advisor 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 business, financial condition, results of operations and cash flows

as well as our ability to pay distributions are likely to be adversely affected and the value of our shares may decline.

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 Advisor and its affiliates.

Even if we are able

to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our

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

of operations and cash flows.

We will incur significant costs as a

result of being registered under the Exchange Act.

We will incur legal, accounting and other

expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered

under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and

other rules implemented by the SEC.

to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act would

adversely affect us and the value of our shares of common stock.

We are required to comply with certain requirements

of the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC but will not have to comply with certain requirements

until we have been registered under the Exchange Act for a specified period of time or cease to be an “emerging growth company.”

Upon registering our shares of common stock under the Exchange Act,

we will be subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC, and our management will be

required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.

required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and

disclose changes in our internal control over financial reporting.

As a result, we expect to incur significant additional expenses that

may negatively impact our financial performance and our ability to make distributions.

This process will also result in a diversion of

management’s time and attention.

We do not know when our evaluation, testing and remediation actions will be completed or its impact

on our operations.

In addition, we may be unable to ensure that the process is effective or that our internal control over financial reporting

is or will be effective.

In the event that we are unable to come into and maintain compliance with the Sarbanes-Oxley Act and related

rules, we and the value of our securities would be adversely affected.

Our Board has the authority, except as otherwise provided

in the 1940 Act, to modify or waive our investment objective and certain of our operating policies and strategies without prior notice

and without stockholder approval.

However, absent stockholder approval, we may not change the nature of our business so as to cease to

be, or withdraw our election as, a BDC.

We cannot predict the effect any changes to our current investment objective, operating policies

and strategies would have on our business, operating results and the price value of our common stock.

Nevertheless, any such changes could

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

The Advisor can resign on 60 days’ notice,

and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely

affect our financial condition, business and results of operations.

The Advisor has the right to resign under the Investment

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

If the Advisor

resigns, we may not be able to find a new investment advisor 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 business, financial condition, results of operations and cash flows as well as our ability to pay distributions

are likely to be adversely affected and the value of our shares 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 Advisor and its affiliates.

Even if we are able to retain comparable management, whether

internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional

costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

We incur significant costs as a result of being registered under

the Exchange Act.

We incur legal, accounting and other expenses, including

costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act,

as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act and other rules implemented

Efforts to comply with the Exchange Act and

the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance will adversely affect us and the value of our shares

of common stock.

As a public entity, we are subject to the reporting

requirements of the Exchange Act and requirements of the Sarbanes-Oxley Act.

These requirements may place a strain on our systems

and resources.

The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial

The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial

reporting, which are discussed below.

We have implemented procedures,

processes, policies and practices for the purpose of addressing such standards and requirements applicable to public companies.

Our management

will be required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.

will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate

and disclose changes in our internal control over financial reporting.

As a result, we expect to incur significant additional annual expenses

related to these steps and, among other things, directors’ and officers’ liability insurance, director fees, reporting requirements

of the SEC, expenses associated with corporate governance requirements, transfer agent fees, additional administrative expenses payable

to the Administrator to compensate them for hiring additional accounting, legal and administrative personnel, increased auditing and legal

fees and similar expenses.

This process will also result in a diversion of management’s time and attention.

We do not know when

our evaluation, testing and remediation actions will be completed or its impact on our operations.

In addition, we may be unable to ensure

that the process is effective or that our internal control over financial reporting is or will be effective.

In the event that we are

unable to come into and maintain compliance with the Sarbanes-Oxley Act and related rules, we and the value of our securities would be

adversely affected.

Our independent registered public

accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the date we

are no longer an emerging growth company under the JOBS Act.

Because we do not currently have comprehensive documentation of our internal

control and have not yet tested our internal control in accordance with Section 404 of the Sarbanes-Oxley Act, we cannot conclude,

as required by Section 404, that we do not have a material weakness in our internal control or a combination of significant deficiencies

that could result in the conclusion that we have a material weakness in our internal control.

If we are not able to implement the applicable

requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our operations, financial reporting

or financial results could be adversely affected.

Matters impacting our internal controls may cause us to be unable to report our financial

information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC, and result in

a breach of the covenants under the agreements governing any of our financing arrangements.

There could also be a negative reaction in

the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.

Confidence in the reliability

of our financial statements could also suffer if we or our independent registered public accounting firm were to report a material weakness

in our internal controls over financial reporting.

This could materially adversely affect us.

Our internal control over financial

reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the

circumvention or overriding of controls, or fraud.

Even effective internal controls can provide only reasonable assurance with respect

to the preparation and fair presentation of financial statements.

If we fail to maintain the adequacy of our internal controls, including

any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and

operating results could be harmed and we could fail to meet our financial reporting obligations.

We are highly dependent on information systems,

1 unchanged sentence

turn, negatively affect the value of our shares of common stock and our ability to pay distributions.

Our business depends on the

communications and information systems of our Advisor and its affiliates, our portfolio companies and third-party service providers.

systems are subject to potential cybersecurity attacks and incidents, including through adverse events that threaten the confidentiality,

integrity or availability of our information resources.

Cyber hacking could also cause significant disruption and harm to the companies

in which we invest.

Additionally, digital and network technologies (collectively, “cyber networks”) might be at risk of cyberattacks

that could potentially seek unauthorized access to digital systems for purposes such as misappropriating sensitive information, corrupting

data or causing operational disruption.

Cyberattacks might potentially be carried out by persons using techniques that could range from

efforts to electronically circumvent network security or overwhelm websites to intelligence gathering and social engineering functions

aimed at obtaining information necessary to gain access.

These attacks could involve gaining unauthorized access to our information systems

for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption and result

in 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, any of which could, in turn, have a material adverse effect

on our operating results and negatively affect the value of our securities and our ability to pay distributions to our stockholders.

As our reliance on technology

has increased, so have the risks posed to our information systems, both internal and those provided by the Advisor and third-party service

In addition, we and the Advisor currently or in the future are expected to routinely transmit and receive personal, confidential

and proprietary information by email and other electronic means.

We and the Advisor may not be able to ensure secure capabilities with

all of our clients, vendors, service providers, counterparties and other third parties to protect the confidentiality of the information.

In addition, we, the Advisor

and many of our third-party service providers currently have work from home policies.

Such a policy of remote working could strain our

technology resources and introduce operational risks, including heightened cybersecurity risks and other risks described above.

working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.

is no assurance that any efforts to mitigate cybersecurity risks undertaken by us or our Advisor will be effective.

Network, system, application

and data breaches as a result of cybersecurity risks or cyber incidents could result in operational disruptions or information misappropriation

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

There may be trademark risk, as we do not

own the Kayne Anderson name.

We do not own the Kayne Anderson

name, but we are permitted to use it as part of our corporate name pursuant to a license agreement with the Advisor.

Use of the name by

other parties or the termination of the license agreement may harm our business.

Our business depends on the communications and information

systems of our Advisor and its affiliates, our portfolio companies and third-party service providers.

These systems are subject to potential

cybersecurity attacks and incidents, including through adverse events that threaten the confidentiality, integrity or availability of

our information resources.

Cyber hacking could also cause significant disruption and harm to the companies in which we invest.

Additionally,

digital and network technologies might be at risk of cyberattacks that could potentially seek unauthorized access to digital systems for

purposes such as misappropriating sensitive information, corrupting data or causing operational disruption.

Cyberattacks might potentially

be carried out by persons using techniques that could range from efforts to electronically circumvent network security or overwhelm websites

to intelligence gathering and social engineering functions aimed at obtaining information necessary to gain access.

These attacks could

involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information,

corrupting data or causing operational disruption and result in 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,

any of which could, in turn, have a material adverse effect on our operating results and negatively affect the value of our securities

and our ability to pay distributions to our stockholders.

As our reliance on technology has increased, so have

the risks posed to our information systems, both internal and those provided by the Advisor and third-party service providers.

we and the Advisor currently or in the future are expected to routinely transmit and receive personal, confidential and proprietary information

by email and other electronic means.

We and the Advisor may not be able to ensure secure capabilities with all of our clients, vendors,

service providers, counterparties and other third parties to protect the confidentiality of the information.

In addition, we, the Advisor and many of our third-party

service providers currently have work from home policies.

Such a policy of remote working could strain our technology resources and introduce

operational risks, including heightened cybersecurity risks and other risks described above.

Remote working environments may be less secure

and more susceptible to hacking attacks, including phishing and social engineering attempts.

There is no assurance that any efforts to

mitigate cybersecurity risks undertaken by us or our Advisor will be effective.

Network, system, application and data breaches as a result

of cybersecurity risks or cyber incidents could result in operational disruptions or information misappropriation that could have a material

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

Purchases of shares of our common

stock by us under our open market repurchase program, including the Company Rule 10b5-1 Plan, may result in the price of shares of

our common stock being higher than the price that otherwise might exist in the open market and are subject to our ability to finance such

Our Board has authorized us to repurchase

shares of our common stock through an open-market share repurchase program for up to $100 million in the aggregate of shares of our

common stock within one year of the closing of the IPO.

Pursuant to such authorization and concurrently with the closing of the IPO, we

entered into the Company 10b5-1 Plan to acquire up to $100 million in the aggregate of shares of our Common Stock, in accordance

with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act, and will otherwise be subject

to applicable law, including Regulation M, which may prohibit purchases under certain circumstances.

These activities may have the effect

of maintaining the market price of shares our Common Stock or retarding a decline in the market price of the shares of our Common Stock,

and, as a result, the price of our shares of Common Stock may be higher than the price that otherwise might exist in the open market.

In addition, we may further borrow

under credit facilities and/or issue senior unsecured notes in the future in order to finance repurchases of shares.

We can offer no assurance

that we will be successful in obtaining suitable debt investments to finance purchases under the Company 10b5-1 Plan.

Whether purchases

will be made under the Company 10b5-1 Plan and how much will be purchased at any time is uncertain, dependent on prevailing market prices,

trading volumes and our ability to finance repurchases, all of which we cannot predict.

There may be trademark risk, as we do not own

the Kayne Anderson name.

We do not own the Kayne Anderson name, but we are

permitted to use it as part of our corporate name pursuant to a license agreement with the Advisor.

Use of the name by other parties or

the termination of the license agreement may harm our business.

Risks Relating to Our Investments

Rising interest rates could affect the value

of our investments and make it more difficult for portfolio companies to make periodic payments on their loans.

Interest rate risk refers

to the risk of market changes in interest rates.

We are subject to risks associated with the

current interest rate environment, and rising interest rates could affect the value of our investments and make it more difficult for

portfolio companies to make periodic payments on their loans.

Interest rate risk refers to the risk of market changes

in interest rates.

Interest rate changes affect the value of debt.

In general, rising interest rates will

negatively impact the price of fixed rate debt, and falling interest rates will have a positive effect on price.

Adjustable-rate debt

also reacts to interest rate changes in a similar manner, although generally to a lesser degree.

Interest rate sensitivity is generally

larger and less predictable in debt with uncertain payment or prepayment schedules.

Further, rising interest rates make it more difficult

for borrowers to repay debt, which could increase the risk of payment defaults.

Any failure of one or more portfolio companies to repay

or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following an

increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations

and cash flows.

During any period of higher-than-normal

levels of inflation, such as the current inflationary environment, interest rates typically increase.

Higher interest rates will increase

the cost of our borrowings and may reduce returns to stockholders (including resulting in lower dividend payments by us).

response to rising risk-free interest rates, market participants could require higher rates of interest on the types of loans and credit

investments that we own, which would decrease the value of those investments.

In an effort to control inflation, the Federal

Open Market Committee, the committee within the U.S.

Federal Reserve that sets domestic monetary policy, raised the target range for the

federal funds rate eleven times since March 2022 and to a current range of 5.25% to 5.50% as of January 2024.

Federal Reserve

has signaled that further increases could continue to happen.

Rising rates generally have a negative impact on income-oriented investments

such as those in which we invest and could be adversely impacted by these actions.

There is no assurance that the actions being taken

Federal Reserve will improve the outlook for long-term inflation or whether they might result in a recession.

could lead to declined employment, global demand destruction and/or business failures, which may result in a decline in the value of our

In addition, increased interest rates could increase our cost of borrowing and reduce the return on leverage to common stockholders.

In general, rising interest rates will negatively impact the price

of fixed rate debt, and falling interest rates will have a positive effect on price.

Adjustable-rate debt also reacts to interest rate

changes in a similar manner, although generally to a lesser degree.

Interest rate sensitivity is generally larger and less predictable

in debt with uncertain payment or prepayment schedules.

Further, rising interest rates make it more difficult for borrowers to repay debt,

which could increase the risk of payment defaults.

Any failure of one or more portfolio companies to repay or refinance its debt at or

prior to maturity or the inability of one or more portfolio companies to make ongoing payments following an increase in contractual interest

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

During any period of higher-than-normal levels of

inflation, such as the current inflationary environment, interest rates typically increase.

Higher interest rates will increase the cost

of our borrowings and may reduce returns to stockholders (including resulting in lower dividend payments by us).

Further, in response

to rising risk-free interest rates, market participants could require higher rates of interest on the types of loans and credit investments

that we own, which would decrease the value of those investments.

In an effort to control inflation, the U.S.

Reserve Board (the “Fed”) has sharply raised interest rates in recent years, and they remain near their highest levels in

over twenty years.

Other central banks globally have implemented similar rate increases.

A wide variety of factors can cause interest

rates to rise (e.g., central bank monetary policies, inflation rates, or general economic conditions).

Although recently both the Fed

and other central banks globally have begun lowering rates, there is no certainty that further reductions will occur.

There is no assurance

that the actions being taken by the Fed will improve the outlook for long-term inflation or whether they might result in a recession.

A recession could lead to declined employment, global demand destruction and/or business failures, which may result in a decline in the

value of our portfolio.

In addition, increased interest rates could increase our cost of borrowing and reduce the return on leverage to

common stockholders.

Our business is dependent on bank relationships

and recent strain on the banking system may adversely impact us.

The financial markets recently

have encountered volatility associated with concerns about the balance sheets of banks, especially small and regional banks, which may

have significant losses associated with investments that make it difficult to fund demands to withdraw deposits and other liquidity needs.

Although the federal government has announced measures to assist these banks and protect depositors, some banks have already been impacted

and others may be materially and adversely impacted.

Our business is dependent on bank relationships and we are proactively monitoring

the financial health of such bank relationships.

Continued strain on the banking system may adversely impact our business, financial condition

and results of operations.

To the extent that our portfolio companies work with banks that are negatively impacted by the foregoing, such

portfolio companies’ ability to access their own cash, cash equivalents and investments may be threatened.

In addition, such affected

portfolio companies may not be able to enter into new banking arrangements or credit facilities or receive the benefits of their existing

banking arrangements or facilities.

Any such developments could harm our business, financial condition, and operating results, and prevent

us from fully implementing our investment plan.

Continued strain on the banking system may adversely impact our business, financial condition

and results of operations.

Limitations of investment due diligence

expose us to investment risk.

Our due diligence may not

reveal all of a portfolio company’s liabilities and may not reveal other weaknesses in its business.

We can offer no assurance that

our due diligence processes will uncover all relevant facts that would be material to an investment decision.

Before making an investment

in, or a loan to, a company, the Advisor will assess the strength and skills of a company’s management and other factors that it

believes are material to the performance of the investment.

In making the assessment and

otherwise conducting customary due diligence, the Advisor will rely on the resources available to it and, in some cases, an investigation

by third parties.

This process is particularly important and highly subjective with respect to newly organized entities because there

may be little or no information publicly available about the entities.

We may make investments in,

or loans to, companies which are not subject to public company reporting requirements including requirements regarding preparation of

financial statements and our portfolio companies may utilize divergent reporting standards that may make it difficult for the Advisor

to accurately assess the prior performance of a portfolio company.

We will, therefore, depend upon the compliance by investment companies

with their contractual reporting obligations.

As a result, the evaluation of potential investments and our ability to perform due diligence

on, and effectively monitor investments, may be impeded, and we may not realize the returns which we expect on any particular investment.

In the event of fraud by any company in which we invest or with respect to which we make a loan, we may suffer a partial or total loss

of the amounts invested in that company.

We invest in highly leveraged companies,

which could cause us to lose all or a part of our investment in those companies.

Investment in leveraged companies

involves a number of significant risks.

Leveraged companies in which we invest may have limited financial resources and may be unable

to meet their obligations under their debt securities that we hold.

Such developments may be accompanied by a deterioration in the value

of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment.

In addition, leveraged companies may experience bankruptcy or similar financial distress that may adversely and permanently affect the

issuer, in addition to risks associated with the duration and administrative costs of bankruptcy proceedings.

Smaller leveraged companies

and middle market companies also may have less predictable operating results and may require substantial additional capital to support

their operations, finance their expansion or maintain their competitive position.

Middle market companies may have limited financial resources,

may have difficulty accessing the capital markets to meet future capital needs and may be unable to meet their obligations under their

debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood

of our realizing any guarantees we may have obtained in connection with our investment.

In addition, such companies typically have shorter

operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable

to competitors’ actions and market conditions, as well as general economic downturns.

Middle market companies are also more likely

to depend on the management talents and efforts of a small group of persons, and the death, disability, resignation or termination of

one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us.

The debt that we invest in

is typically not rated by any rating agency, but we believe that if such investments were rated, they would be below investment grade

(rated lower than “Baa3” by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than

“BBB-” by Standard & Poor’s Ratings Services), which under the guidelines established by these entities is an indication

of having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

that are rated below investment grade are sometimes referred to as “high yield bonds” or “junk bonds.” Therefore,

our investments will result in an above average amount of risk and volatility or loss of principal.

The financial markets recently have encountered volatility

associated with concerns about the balance sheets of banks, especially small and regional banks, which may have significant losses associated

with investments that make it difficult to fund demands to withdraw deposits and other liquidity needs.

Although the federal government

has announced measures to assist these banks and protect depositors, some banks have already been impacted and others may be materially

and adversely impacted.

Our business is dependent on bank relationships and we are proactively monitoring the financial health of such

bank relationships.

Continued strain on the banking system may adversely impact our business, financial condition and results of operations.

To the extent that our portfolio companies work with banks that are negatively impacted by the foregoing, such portfolio companies’

ability to access their own cash, cash equivalents and investments may be threatened.

In addition, such affected portfolio companies may

not be able to enter into new banking arrangements or credit facilities or receive the benefits of their existing banking arrangements

or facilities.

Any such developments could harm our business, financial condition, and operating results, and prevent us from fully implementing

our investment plan.

Continued strain on the banking system may adversely impact our business, financial condition and results of operations.

Limitations of investment due diligence expose

us to investment risk.

Our due diligence may not reveal all of a portfolio

company’s liabilities and may not reveal other weaknesses in its business.

We can offer no assurance that our due diligence processes

will uncover all relevant facts that would be material to an investment decision.

Before making an investment in, or a loan to, a company,

the Advisor will assess the strength and skills of a company’s management and other factors that it believes are material to the

performance of the investment.

In making the assessment and otherwise conducting

customary due diligence, the Advisor will rely on the resources available to it and, in some cases, an investigation by third parties.

This process is particularly important and highly subjective with respect to newly organized entities because there may be little or no

information publicly available about those entities.

We may make investments in, or loans to, companies

that are not subject to public company reporting requirements including requirements regarding preparation of financial statements, and

our portfolio companies may utilize divergent reporting standards that may make it difficult for the Advisor to accurately assess the

prior performance of a portfolio company.

We will, therefore, depend upon the compliance by investment companies with their contractual

reporting obligations.

As a result, the evaluation of potential investments and our ability to perform due diligence on and effectively

monitor investments may be impeded, and we may not realize the returns which we expect on any particular investment.

In the event of fraud

by any company in which we invest or with respect to which we make a loan, we may suffer a partial or total loss of the amounts invested

in that company.

We invest in highly leveraged companies, which

could cause us to lose all or a part of our investment in those companies.

Investment in leveraged companies involves a number

of significant risks.

Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations

under their debt securities that we hold.

Such developments may be accompanied by a deterioration in the value of any collateral and a

reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment.

leveraged companies may experience bankruptcy or similar financial distress that may adversely and permanently affect the issuer, in addition

to risks associated with the duration and administrative costs of bankruptcy proceedings.

Smaller leveraged companies and middle market companies

also may have less predictable operating results and may require substantial additional capital to support their operations, finance their

expansion or maintain their competitive position.

Middle market companies may have limited financial resources, may have difficulty accessing

the capital markets to meet future capital needs and may be unable to meet their obligations under their debt securities that we hold,

which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees

we may have obtained in connection with our investment.

In addition, such companies typically have shorter operating histories, narrower

product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions

and market conditions, as well as general economic downturns.

Middle market companies are also more likely to depend on the management

talents and efforts of a small group of persons, and the death, disability, resignation or termination of one or more of these persons

could have a material adverse impact on our portfolio company and, in turn, on us.

The debt that we invest in is typically not rated

by any rating agency, but we believe that if such investments were rated, they would be below investment grade (rated lower than “Baa3”

by Moody’s Investors Service, lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard &

Poor’s Ratings Services), which under the guidelines established by these rating entities is an indication of having predominantly

speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

Bonds that are rated below

investment grade are sometimes referred to as “high yield bonds” or “junk bonds.” Therefore, our investments

will result in an above average amount of risk and volatility or loss of principal.

We are subject to risks associated with our

investments in unitranche secured loans and securities, including the potential loss of all or part of such investments.

We invest in unitranche secured

loans, which are a combination of senior secured and junior secured debt in the same facility.

Unitranche secured loans provide all of

the debt needed to finance a leveraged buyout or other corporate transaction, both senior and junior, but generally in a first-lien position,

while the borrower generally pays a blended, uniform interest rate rather than different rates for different tranches.

Unitranche secured

debt generally requires payments of both principal and interest throughout the life of the loan.

Generally, we expect these securities

to carry a blended yield that is between senior secured and junior debt interest rates.

Unitranche secured loans provide a number of advantages

for borrowers, including the following:

simplified documentation, greater certainty of execution and reduced decision-making complexity

throughout the life of the loan.

In some cases, a portion of the total interest may accrue or be paid in kind.

Because unitranche secured

loans combine characteristics of senior and junior financing, unitranche secured loans have risks similar to the risks associated with

senior secured and second-lien loans and junior debt in varying degrees according to the combination of loan characteristics of the unitranche

secured loan.

Our investments in securities that are rated

below investment grade (i.e.

“junk bonds”) may be risky and we could lose all or part of our investments.

We invest in securities that

are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated.

Below investment

grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the

issuer’s capacity to pay interest and repay principal.

They may also be difficult to value and illiquid.

The major risks of below

investment grade securities include:

Below investment grade securities

may be issued by less creditworthy issuers.

Issuers of below investment grade securities may have a larger amount of outstanding debt

relative to their assets than issuers of investment grade securities.

In the event of an issuer’s bankruptcy, claims of other creditors

may have priority over the claims of holders of below investment grade securities, leaving few or no assets available to repay holders

of below investment grade securities.

Prices of below investment grade

securities are subject to extreme price fluctuations.

Adverse changes in an issuer’s industry and general economic conditions may

have a greater impact on the prices of below investment grade securities than on other higher-rated fixed-income securities.

Issuers of below investment

grade securities may be unable to meet their interest or principal payment obligations because of an economic downturn, specific issuer

developments, or the unavailability of additional financing.

Below investment grade securities

frequently have redemption features that permit an issuer to repurchase the security from us before it matures.

If the issuer redeems

below investment grade securities, we may have to invest the proceeds in securities with lower yields and may lose income.

Below investment grade securities

may be less liquid than higher-rated fixed-income securities, even under normal economic conditions.

There are fewer dealers in the below

investment grade securities market, and there may be significant differences in the prices quoted by the dealers.

Judgment may play a

greater role in valuing these securities and we may be unable to sell these securities at an advantageous time or price.

We may incur expenses to the extent necessary to seek

recovery upon default or to negotiate new terms with a defaulting issuer.

Defaults by our portfolio companies, including

defaults relating to collateral, will harm our operating results.

A portfolio company’s

failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination

of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize such company’s

ability to meet its obligations under the debt securities that we hold.

We may incur expenses to the extent necessary to seek recovery

upon default or to negotiate new terms with a defaulting portfolio company.

In addition, lenders in certain cases can be subject to lender

liability claims for actions taken by them when they become too involved in the borrower’s business or exercise control over a borrower.

It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we render managerial

assistance to the borrower.

A portfolio company’s failure to satisfy financial

or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure

on its assets, which could trigger cross-defaults under other agreements and jeopardize such company’s ability to meet its obligations

under the debt securities that we hold.

We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new

terms with a defaulting portfolio company.

In addition, lenders in certain cases can be subject to lender liability claims for actions

taken by them when they become too involved in the borrower’s business or exercise control over a borrower.

It is possible that

we could become subject to a lender’s liability claim, including as a result of actions taken if we render managerial assistance

to the borrower.

Moreover, some of the loans in which we may invest may be “covenant-lite” loans.

We use the term

“covenant-lite” loans to refer generally to loans that do not have a complete set of financial maintenance covenants.

“covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based,

which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration

in the borrower’s financial condition.

Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer

rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with

financial maintenance covenants.

We use the term “covenant-lite”

loans to refer generally to loans that do not have a complete set of financial maintenance covenants.

Generally, “covenant-lite”

loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they

are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s

financial condition.

Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower

and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance

Certain debt investments that we make in portfolio

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remaining assets, if any.

We may also make unsecured debt investments in

portfolio companies in the form of borrowings under credit facilities or issuances of senior unsecured notes, meaning that such investments

will not benefit from any interest in collateral of such companies.

Liens on such portfolio companies’ collateral, if any, will

secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted

to be incurred by the portfolio company under its secured debt agreements.

The holders of obligations secured by such liens will generally

control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in

full before us.

In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the

availability of buyers and other factors.

There can be no assurance that the proceeds, if any, from sales of such collateral would be

sufficient to satisfy our unsecured debt obligations after payment in full of all secured debt obligations.

If such proceeds were not

sufficient to repay the outstanding secured debt obligations, then our unsecured claims would rank equally with the unpaid portion of

such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights we may have with

respect to the collateral securing any junior priority loans we make in our portfolio companies may also be limited pursuant to the terms

of one or more intercreditor agreements that we enter into with the holders of senior debt.

Under such an intercreditor agreement, at

any time that senior obligations are outstanding, we may forfeit certain rights with respect to the collateral to the holders of these

senior obligations.

These rights may include the right to commence enforcement proceedings against the collateral, the right to control

the conduct of such enforcement proceedings, the right to approve amendments to collateral documents, the right to release liens on the

collateral and the right to waive past defaults under collateral documents.

We may not have the ability to control or direct such actions,

even if as a result our rights as junior lenders are adversely affected.

The lack of liquidity and price decline

in our investments may adversely affect our business, including by reducing our NAV through increased net unrealized depreciation.

We may invest in companies

that are experiencing financial difficulties, which difficulties may never be overcome.

Our investments will be illiquid in most cases,

and there can be no assurance that we will be able to realize on such investments in a timely manner.

A substantial portion of our investments

in leveraged companies are and will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly

traded public securities.

We may also make unsecured debt investments in portfolio

companies in the form of borrowings under credit facilities or issuances of senior unsecured notes, meaning that such investments will

not benefit from any interest in collateral of such companies.

Liens on such portfolio companies’ collateral, if any, will secure

the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be

incurred by the portfolio company under its secured debt agreements.

The holders of obligations secured by such liens will generally control

the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before

In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability

of buyers and other factors.

There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to

satisfy our unsecured debt obligations after payment in full of all secured debt obligations.

If such proceeds were not sufficient to

repay the outstanding secured debt obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’

claims against the portfolio company’s remaining assets, if any.

The rights we may have with respect to the collateral

securing any junior priority loans we make in our portfolio companies may also be limited pursuant to the terms of one or more intercreditor

agreements that we enter into with the holders of senior debt.

Under such an intercreditor agreement, at any time that senior obligations

are outstanding, we may forfeit certain rights with respect to the collateral to the holders of these senior obligations.

may include the right to commence enforcement proceedings against the collateral, the right to control the conduct of such enforcement

proceedings, the right to approve amendments to collateral documents, the right to release liens on the collateral and the right to waive

past defaults under collateral documents.

We may not have the ability to control or direct such actions, even if as a result our rights

as junior lenders are adversely affected.

The lack of liquidity and price decline in our

investments may adversely affect our business, including by reducing our NAV through increased net unrealized depreciation.

We may invest in companies that are experiencing financial

difficulties, which difficulties may never be overcome.

Our investments will be illiquid in most cases, and there can be no assurance

that we will be able to realize on such investments in a timely manner.

A substantial portion of our investments in leveraged companies

are and will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly traded public securities.

The illiquidity of these investments may make it difficult for us to sell such investments if the need arises.

As a BDC, we are required

to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our Advisor.

As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value

of our investments:

the enterprise value of the portfolio company;

the nature and realizable value of any collateral;

the company’s ability to make interest payments, amortization payments (if any) and other fixed charges;

call features, put features and other relevant terms of the debt security;

the company’s historical and projected financial results;

the markets in which the portfolio company does business;

changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the future and other relevant factors.

In addition, if we are required

to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded

our investments.

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

we, the Advisor or any of its affiliates have material nonpublic information regarding such portfolio company.

In addition, we generally

expect to invest in securities, instruments and assets that are not, and are not expected to become, publicly traded.

We will generally

not be able to sell securities publicly unless the sale is registered under applicable securities laws, or unless an exemption from such

registration requirements is available.

In certain cases, we may also

be prohibited by contract from selling an investment for a period of time or otherwise be restricted from disposing of the investment.

Furthermore, certain types of investments expected to be made may require a substantial length of time to realize a return or fully liquidate.

When an external event such

as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate

our valuation.

We record decreases in the market values or fair values of our investments as unrealized depreciation.

Declines in prices

and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio.

The effect of all

of these factors on our portfolio may reduce our NAV by increasing net unrealized depreciation in our portfolio.

Depending on market conditions,

we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material

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

Further, in connection with the disposition of

an investment in a portfolio company, we may be required to make representations about the business and financial affairs of the portfolio

company, or may be responsible for the contents of disclosure documents under applicable securities laws.

We may also be required to indemnify

the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents turn out to be incorrect,

inaccurate or misleading.

These arrangements may result in contingent liabilities, for which we may establish reserves or escrows.

we can offer no assurance that we will adequately reserve for our contingent liabilities and that such liabilities will not have an adverse

effect on us.

Such contingent liabilities might ultimately have to be funded by proceeds, including the return of capital, from our other

Our prospective portfolio companies may

prepay loans, which may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.

The loans in our investment

portfolio may be prepaid at any time, generally with little advance notice.

Whether a loan is prepaid will depend both on the continued

positive performance of the portfolio company and the existence of favorable financing market conditions that allow such company the ability

to replace existing financing with less expensive capital.

As market conditions change, we do not know when, and if, prepayment may be

possible for each portfolio company.

In some cases, the prepayment of a loan may reduce our achievable yield if the capital returned cannot

be invested in transactions with equal or greater expected yields, which could have a material adverse effect on our business, financial

condition and results of operations.

Our prospective portfolio companies may

be unable to repay or refinance outstanding principal on their loans at or prior to maturity.

We have a maturity policy between three to six

years for our debt investments.

The portfolio companies in which we expect to invest may be unable to repay or refinance outstanding principal

on their loans at or prior to maturity.

This risk and the risk of default is increased to the extent that the loan documents do not require

the portfolio companies to pay down the outstanding principal of such debt prior to maturity.

As a result, once our investments mature,

we will need to seek new investments for such capital.

Any failure of one or more portfolio companies

to repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following

As a BDC, we are required to carry our investments

at market value or, if no market value is ascertainable, at fair value as determined in good faith by our Advisor.

As part of the valuation

process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:

enterprise value of the portfolio company;

nature and realizable value of any collateral;

company’s ability to make interest payments, amortization payments (if any) and other fixed charges;

features, put features and other relevant terms of the debt security;

company’s historical and projected financial results;

markets in which the portfolio company does business;

in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made

in the future and other relevant factors.

In addition, if we are required to liquidate all or

a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments.

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

or any of its affiliates have material nonpublic information regarding such portfolio company.

In addition, we generally expect to invest in securities,

instruments and assets that are not, and are not expected to become, publicly traded.

We will generally not be able to sell securities

publicly unless the sale is registered under applicable securities laws, or unless an exemption from such registration requirements is

In certain cases, we may also be prohibited by contract

from selling an investment for a period of time or otherwise be restricted from disposing of the investment.

Furthermore, certain types

of investments expected to be made may require a substantial length of time to realize a return or fully liquidate.

When an external event such as a purchase transaction,

public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation.

record decreases in the market values or fair values of our investments as unrealized depreciation.

Declines in prices and liquidity in

the corporate debt markets may result in significant net unrealized depreciation in our portfolio.

The effect of all of these factors

on our portfolio may reduce our NAV by increasing net unrealized depreciation in our portfolio.

Depending on market conditions, we could

incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect

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

Further, in connection with the disposition of an

investment in a portfolio company, we may be required to make representations about the business and financial affairs of the portfolio

company, or we may be responsible for the contents of disclosure documents under applicable securities laws.

We may also be required to

indemnify the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents turn out

to be incorrect, inaccurate or misleading.

These arrangements may result in contingent liabilities, for which we may establish reserves

However, we can offer no assurance that we will adequately reserve for our contingent liabilities and that such liabilities

will not have an adverse effect on us.

Such contingent liabilities might ultimately have to be funded by proceeds, including the return

of capital, from our other investments.

Our portfolio companies may prepay loans, which

may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.

The loans in our investment portfolio may be prepaid

at any time, generally with little advance notice.

Whether a loan is prepaid will depend both on the continued positive performance of

the portfolio company and the existence of favorable financing market conditions that allow such company the ability to replace existing

financing with less expensive capital.

As market conditions change, we do not know when, and if, prepayment may be possible for each portfolio

In some cases, the prepayment of a loan may reduce our achievable yield if the capital returned cannot be invested in transactions

with equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of

Our portfolio companies may be unable to repay

or refinance outstanding principal on their loans at or prior to maturity.

We have a maturity policy between three to six years

for our debt investments.

The portfolio companies in which we invest may be unable to repay or refinance outstanding principal on their

loans at or prior to maturity.

This risk and the risk of default are increased to the extent that the loan documents do not require the

portfolio companies to pay down the outstanding principal of such debt prior to maturity.

As a result, once our investments mature, we

will need to seek new investments for such capital.

Any failure of one or more portfolio companies to

repay or refinance its debt at or prior to maturity or the inability of one or more portfolio companies to make ongoing payments following

an increase in contractual interest rates could have a material adverse effect on our business, financial condition, results of operations

and cash flows.

Our investments in portfolio companies may

expose us to environmental risks.

We may invest in companies

engaged in the ownership (direct or indirect), operation, management or development of real properties that may contain hazardous or toxic

substances, and, therefore, may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental

fines and liabilities for injuries to persons and property.

The existence of any such material environmental liability could have a material

adverse effect on the results of operations, cash flow and share price of any such portfolio company.

As a result, our investment performance

could suffer substantially.

There can be no guarantee

that all costs and risks regarding compliance with environmental laws and regulations can be identified.

New and more stringent environmental

and health and safety laws, regulations and permit requirements or stricter interpretations of current laws or regulations could impose

substantial additional costs on portfolio investment or potential investments.

Compliance with such current or future environmental requirements

does not ensure that the operations of the portfolio investments will not cause injury to the environment or to people under all circumstances

or that the portfolio investments will not be required to incur additional unforeseen environmental expenditures.

Moreover, failure to

comply with any such requirements could have a material adverse effect on an investment, and we can offer no assurance that the portfolio

investments will at all times comply with all applicable environmental laws, regulations and permit requirements.

Our investments in portfolio companies may expose

us to environmental risks.

We may invest in companies engaged in the ownership

(direct or indirect), operation, management or development of real properties that may contain hazardous or toxic substances, and, therefore,

may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines and liabilities

for injuries to persons and property.

The existence of any such material environmental liability could have a material adverse effect

on the results of operations, cash flow and share price of any such portfolio company.

As a result, our investment performance could suffer

substantially.

There can be no guarantee that all costs and risks

regarding compliance with environmental laws and regulations can be identified.

New and more stringent environmental and health and safety

laws, regulations and permit requirements or stricter interpretations of current laws or regulations could impose substantial additional

costs on portfolio investment or potential investments.

Compliance with such current or future environmental requirements does not ensure

that the operations of the portfolio investments will not cause injury to the environment or to people under all circumstances or that

the portfolio investments will not be required to incur additional unforeseen environmental expenditures.

Moreover, failure to comply

with any such requirements could have a material adverse effect on an investment, and we can offer no assurance that the portfolio investments

will at all times comply with all applicable environmental laws, regulations and permit requirements.

We are a non-diversified investment company

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in securities of a single issuer.

We are classified as a non-diversified

investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion

of our assets that we may invest in securities of a single issuer.

To the extent that we assume large positions in the securities of a

small number of issuers, our NAV may fluctuate to a greater extent than that of a diversified investment company as a result of changes

in the financial condition or the market’s assessment of the issuer.

We are classified as a non-diversified investment

company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our

assets that we may invest in securities of a single issuer.

To the extent that we assume large positions in the securities of a small

number of issuers, our NAV may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the

financial condition or the market’s assessment of the issuer.

We may also be more susceptible to any single economic or regulatory

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its obligations under any of its debt instruments or if there is a downturn in a particular industry.

Our portfolio may be concentrated

in a limited number of portfolio companies and industries.

As a result, the aggregate returns we realize may be significantly and adversely

affected if a small number of investments perform poorly or if we need to write down the value of any one investment.

Additionally, while

we are not targeting any specific industries, our investments may be concentrated in relatively few industries.

For example, although

we may classify the industries of our portfolio companies by end-market (such as health market or business services) and not by the products

or services (such as software) directed to those end-markets, some of our portfolio companies may principally provide software products

or services, which exposes us to downturns in that sector.

As a result, a downturn in any particular industry in which we are invested

could also significantly impact the aggregate returns we realize.

Our failure to make follow-on investments

in our portfolio companies could impair the value of our portfolio.

Following an initial investment

in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in seeking

increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;

exercise warrants, options or convertible securities that were acquired in the original or subsequent financing;

preserve or enhance the value of our investment.

We have discretion to make

follow-on investments, subject to the availability of capital resources.

Failure on our part to make follow-on investments may, in some

circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity

for us to increase our participation in a successful portfolio company.

Even if we have sufficient capital to make a desired follow-on

investment, we may elect not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other

opportunities or because of regulatory or other considerations.

Our ability to make follow-on investments may also be limited by the Advisor’s

allocation policy.

Our portfolio may be concentrated in a limited number

of portfolio companies and industries.

As a result, the aggregate returns we realize may be significantly and adversely affected if a

small number of investments perform poorly or if we need to write down the value of any one investment.

Additionally, while we are not

targeting any specific industries, our investments may be concentrated in relatively few industries.

For example, although we may classify

the industries of our portfolio companies by end-market (such as health market or business services) and not by the products or services

(such as software) directed to those end-markets, some of our portfolio companies may principally provide software products or services,

which exposes us to downturns in that sector.

As a result, a downturn in any particular industry in which we are invested could also significantly

impact the aggregate returns we realize.

Our failure to make follow-on investments in

our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company,

we may make additional investments in that portfolio company as “follow-on” investments, in seeking to:

or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;

warrants, options or convertible securities that were acquired in the original or subsequent financing;

or enhance the value of our investment.

We have discretion to make follow-on investments,

subject to the availability of capital resources.

Failure on our part to make follow-on investments may, in some circumstances, jeopardize

the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our

participation in a successful portfolio company.

Even if we have sufficient capital to make a desired follow-on investment, we may elect

not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because

of regulatory or other considerations.

Our ability to make follow-on investments may also be limited by the Advisor’s allocation

Because we generally do not hold controlling

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management will be able to operate their companies in accordance with our expectations.

To the extent that we do not

hold controlling equity interests in portfolio companies, we will have a limited ability to protect our position in such portfolio companies.

We may also co-invest with third parties through partnerships, joint ventures or other entities.

Such investments may involve risks in

connection with such third-party involvement, including the possibility that a third-party co-investor may have economic or business interests

or goals that are inconsistent with ours or may be in a position to take (or block) action in a manner contrary to our investment objective.

In those circumstances where such third parties involve a management group, such third parties may receive compensation arrangements relating

to such investments, including incentive compensation arrangements.

Furthermore, the day-to-day

operations of each portfolio company in which we invest will be the responsibility of that portfolio company’s management team.

Although we will be responsible for monitoring the performance of each investment and generally intend to invest in portfolio companies

operated by strong management, there can be no assurance that the existing management team, or any successor, will be able to operate

any such portfolio company in accordance with our expectations.

There can be no assurance that a portfolio company will be successful

in retaining key members of its management team, the loss of whom could have a material adverse effect on us.

Although we generally intend

to invest in companies with strong management, there can be no assurance that the existing management of such companies will continue

to operate a company successfully.

To the extent that we do not hold controlling equity

interests in portfolio companies, we will have a limited ability to protect our position in such portfolio companies.

We may also co-invest

with third parties through partnerships, joint ventures or other entities.

Such investments may involve risks in connection with such

third-party involvement, including the possibility that a third-party co-investor may have economic or business interests or goals that

are inconsistent with ours or may be in a position to take (or block) action in a manner contrary to our investment objective.

circumstances where such third parties involve a management group, such third parties may receive compensation arrangements relating to

such investments, including incentive compensation arrangements.

Furthermore, the day-to-day operations of each portfolio

company in which we invest will be the responsibility of that portfolio company’s management team.

Although we will be responsible

for monitoring the performance of each investment and generally intend to invest in portfolio companies operated by strong management,

there can be no assurance that the existing management team, or any successor, will be able to operate any such portfolio company in accordance

with our expectations.

There can be no assurance that a portfolio company will be successful in retaining key members of its management

team, the loss of whom could have a material adverse effect on us.

Although we generally intend to invest in companies with strong management,

there can be no assurance that the existing management of such companies will continue to operate a company successfully.

Our portfolio companies may incur debt that

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to service their debt obligations to us.

We may invest a portion of

our capital in second lien and subordinated loans issued by our portfolio companies.

Our portfolio companies may have, or be permitted

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

Such subordinated investments are

subject to greater risk of default than senior obligations as a result of adverse changes in the financial condition of the obligor or

in general economic conditions.

If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged,

and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to

service all of its debt obligations.

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

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

These debt instruments would usually prohibit the portfolio companies from paying interest on or repaying our investments in the

event of and during the continuance of a default under such debt.

Also, in the event of insolvency, liquidation, dissolution, reorganization

or bankruptcy of a portfolio company, holders of securities 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.

After repaying senior creditors,

the portfolio company may not have any remaining assets to use for repaying its obligation to us where we are junior creditor.

case of debt ranking equally with debt securities in which we invest, we would have to share any distributions on an equal and ratable

basis with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of

the relevant portfolio company.

Additionally, certain loans

that we make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such

The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior

debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing

The holders of obligations secured by first priority liens on the collateral will generally control the liquidation of, and

be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us.

In addition, the

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

There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan

obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral.

If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then

we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio

company’s remaining assets, if any.

We may make unsecured loans

to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies.

Liens on a portfolio

company’s collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure

certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements.

The holders of obligations

secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral

to repay their obligations in full before us.

In addition, the value of such collateral in the event of liquidation will depend on market

and economic conditions, the availability of buyers and other factors.

There can be no assurance that the proceeds, if any, from sales

of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all loans secured by collateral.

If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with

the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights we may have with

respect to the collateral securing any junior priority loans we make to our portfolio companies may also be limited pursuant to the terms

of one or more intercreditor agreements that we enter into with the holders of senior debt.

Under a typical intercreditor agreement, at

any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be

taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens:

the ability to cause the commencement of enforcement proceedings against the collateral;

the ability to control the conduct of such proceedings;

the approval of amendments to collateral documents;

releases of liens on the collateral;

waivers of past defaults under collateral documents.

We may not have the ability

to control or direct such actions, even if our rights as junior lenders are adversely affected.

We may invest a portion of our capital in second lien

and subordinated loans issued by our portfolio companies.

Our portfolio companies may have, or be permitted to incur, other debt that

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

Such subordinated investments are subject to greater risk of

default than senior obligations as a result of adverse changes in the financial condition of the obligor or in general economic conditions.

If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity

ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt obligations.

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

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

These debt instruments would usually

prohibit the portfolio companies from paying interest on or repaying our investments in the event of and during the continuance of a default

under such debt.

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

of securities 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.

After repaying senior creditors, the portfolio company may not have any remaining

assets to use for repaying its obligation to us where we are junior creditor.

In the case of debt ranking equally with debt securities

in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the

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

Additionally, certain loans that we make to portfolio

companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies.

The first priority

liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain

other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans.

of obligations secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive

proceeds from, any realization of the collateral to repay their obligations in full before us.

In addition, the value of the collateral

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

no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured

by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral.

If such proceeds

were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent

not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining

assets, if any.

We may make unsecured loans to portfolio companies,

meaning that such loans will not benefit from any interest in collateral of such companies.

Liens on a portfolio company’s collateral,

if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that

is permitted to be incurred by the portfolio company under its secured loan agreements.

The holders of obligations secured by such liens

will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their

obligations in full before us.

In addition, the value of such collateral in the event of liquidation will depend on market and economic

conditions, the availability of buyers and other factors.

There can be no assurance that the proceeds, if any, from sales of such collateral

would be sufficient to satisfy our unsecured loan obligations after payment in full of all loans secured by collateral.

If such proceeds

were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion

of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights we may have with respect to the collateral

securing any junior priority loans we make to our portfolio companies may also be limited pursuant to the terms of one or more intercreditor

agreements that we enter into with the holders of senior debt.

Under a typical intercreditor agreement, at any time that obligations that

have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral

will be at the direction of the holders of the obligations secured by the first priority liens:

ability to cause the commencement of enforcement proceedings against the collateral;

ability to control the conduct of such proceedings;

approval of amendments to collateral documents;

of liens on the collateral;

of past defaults under collateral documents.

We may not have the ability to control or direct such

actions, even if our rights as junior lenders are adversely affected.

The disposition of our investments may result

in contingent liabilities.

A significant portion of our

investments will involve private securities.

In connection with the disposition of an investment in private securities, we may be required

to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the

sale of a business.

We may also be required to indemnify the purchasers of such investment to the extent that any such representations

turn out to be inaccurate or with respect to potential liabilities.

These arrangements may result in contingent liabilities that ultimately

result in funding obligations that we must satisfy through our return of distributions previously made to us.

A significant portion of our investments will involve

private securities.

In connection with the disposition of an investment in private securities, we may be required to make representations

about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business.

may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate

or with respect to potential liabilities.

These arrangements may result in contingent liabilities that ultimately result in funding obligations

that we must satisfy through our return of distributions previously made to us.

The Advisor’s and Administrator’s

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to act in a riskier manner when acting on our behalf than it would when acting for its own account.

We may be subject to risks under hedging

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

We may engage in hedging transactions in the form

of interest rate swaps, caps, collars and floors, intended to limit our exposure to interest rate fluctuations to the limited extent such

transactions are permitted under the 1940 Act and applicable commodities laws.

Engaging in hedging transactions would entail additional

risks to our stockholders.

In addition, we are subject to legislation that

may limit our ability to enter into such transactions.

For example, in August 2022, Rule 18f-4 under the 1940 Act, regarding the ability

of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations

We are subject to risks under hedging transactions

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

Although we do not engage in hedging transactions

as a principal investment strategy, we may engage in hedging transactions in the form of interest rate swaps, caps, collars and floors,

intended to limit our exposure to interest rate fluctuations to the limited extent such transactions are permitted under the 1940 Act

and applicable commodities laws.

Engaging in hedging transactions would entail additional risks to our stockholders.

In addition, we are subject to legislation that may

limit our ability to enter into such transactions.

For example, in August 2022, Rule 18f-4 under the 1940 Act, regarding the ability of

a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations

(except reverse repurchase agreements and similar financing transactions), became effective.

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

Though we do not engage in hedging transactions as a principal investment strategy, collectively, these requirements may limit our ability

We intend to operate under the limited derivatives user exemption of Rule 18f-4 and have adopted written policies and procedures

reasonably designed to manage our derivatives risk pursuant to Rule 18f-4.

Collectively, these requirements may limit our ability

to use derivatives and/or enter into certain other financial contracts.

In each such case, we generally

would seek to hedge against fluctuations of the relative values of our portfolio positions from changes in market interest rates.

against a decline in the values of our portfolio positions would not eliminate the possibility of fluctuations in the values of such positions

or prevent losses if the values of the positions declined.

However, such hedging could establish other positions designed to gain from

those same developments, thereby offsetting the decline in the value of such portfolio positions.

Such hedging transactions could also

limit the opportunity for gain if the values of the underlying portfolio positions increased.

Moreover, it might not be possible to hedge

against an exchange rate or interest rate fluctuation that was so generally anticipated that we would not be able to enter into a hedging

transaction at an acceptable price.

We qualify as a “limited derivatives user,” and as

a result the requirements applicable to us under Rule 18f-4 may limit our ability to use derivatives and enter into certain other

financial contracts.

However, if we fail to qualify as a limited derivatives user and become subject to the additional requirements under

Rule 18f-4, compliance with such requirements may increase cost of doing business, which could have a material adverse effect on

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

Future legislation or rules may modify how we treat derivatives

and other financial arrangements for purposes of our compliance with the leverage limitations of the 1940 Act and, therefore, may increase

or decrease the amount of leverage currently available to us under the 1940 Act, which may be materially adverse to us and our stockholders.

In each such case, we generally would seek to hedge

against fluctuations of the relative values of our portfolio positions from changes in market interest rates.

Hedging against a decline

in the values of our portfolio positions would not eliminate the possibility of fluctuations in the values of such positions or prevent

losses if the values of the positions declined.

However, such hedging could establish other positions designed to gain from those same

developments, thereby offsetting the decline in the value of such portfolio positions.

Such hedging transactions could also limit the

opportunity for gain if the values of the underlying portfolio positions increased.

Moreover, it might not be possible to hedge against

an exchange rate or interest rate fluctuation that was so generally anticipated that we would not be able to enter into a hedging transaction

at an acceptable price.

Use of a hedging transaction could involve counterparty credit risk.

The success of any hedging

transactions we may enter into will depend on our ability to correctly predict movements in interest rates.

Therefore, while we may enter

into hedging transactions to seek to reduce interest rate risks, unanticipated changes in interest rates could result in poorer overall

investment performance than if we had not engaged in any such hedging transactions.

In addition, the degree of correlation between price

movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged could vary.

for a variety of reasons, we might not seek to (or be able to) establish a perfect correlation between the hedging instruments and the

portfolio holdings being hedged.

Any such imperfect correlation could prevent us from achieving the intended hedge and expose us to risk

Our ability to engage in hedging transactions may also be adversely affected by rules adopted by the CFTC.

We may not realize gains from our equity

When we invest in loans, we

may acquire warrants or other equity securities of portfolio companies as well.

The success of any hedging transactions we may enter

into will depend on our ability to correctly predict movements in interest rates.

Therefore, while we may enter into hedging transactions

to seek to reduce interest rate risks, unanticipated changes in interest rates could result in poorer overall investment performance than

if we had not engaged in any such hedging transactions.

In addition, the degree of correlation between price movements of the instruments

used in a hedging strategy and price movements in the portfolio positions being hedged could vary.

Moreover, for a variety of reasons,

we might not seek to (or be able to) establish a perfect correlation between the hedging instruments and the portfolio holdings being

Any such imperfect correlation could prevent us from achieving the intended hedge and expose us to risk of loss.

Our ability to

engage in hedging transactions may also be adversely affected by rules adopted by the CFTC.

We may not realize gains from our equity investments.

When we invest in loans, we may acquire warrants or

other equity securities of portfolio companies as well.

We may also invest in equity securities directly.

extent we hold equity investments, we will seek to dispose of them and realize gains upon our disposition of them.

However, the equity

interests we receive may not appreciate in value and may decline in value.

As a result, we may not be able to realize gains from our equity

interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses

we experience.

To the extent we hold equity

investments, we will seek to dispose of them and realize gains upon our disposition of them.

However, the equity interests we receive

may not appreciate in value and may decline in value.

As a result, we may not be able to realize gains from our equity interests, and

any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

To the extent that we borrow under credit facilities

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our assets, reduce cash available to service our debt or for distribution to our stockholders, and result in losses.

The use of leverage in the form of borrowings

under credit facilities and issuances of senior unsecured notes increases the volatility of investments by magnifying the potential for

gain or loss on invested equity capital.

Since we use leverage in the form of borrowings under credit facilities and issuances of senior

unsecured notes to partially finance our investments, you will experience increased risks of investing in our securities.

of our assets decreases, leveraging will cause NAV to decline more sharply than it otherwise would if we had not borrowed under the credit

facilities and issued senior unsecured notes.

Similarly, any decrease in our income would cause net income to decline more sharply than

it would have if we had not borrowed under the credit facilities and issued senior unsecured notes.

Such a decline could negatively affect

our ability to service our debt or make distributions to our stockholders.

The use of leverage in the form of borrowings under

credit facilities and issuances of senior unsecured notes increases the volatility of investments by magnifying the potential for gain

or loss on invested equity capital.

Since we use leverage in the form of borrowings under credit facilities and issuances of senior unsecured

notes to partially finance our investments, you will experience increased risks of investing in our securities.

If the value of our assets

decreases, leveraging will cause NAV to decline more sharply than it otherwise would if we had not borrowed under the credit facilities

and issued senior unsecured notes.

Similarly, any decrease in our income would cause net income to decline more sharply than it would

have if we had not borrowed under the credit facilities and issued senior unsecured notes.

Such a decline could negatively affect our

ability to service our debt or make distributions to our stockholders.

In addition, our stockholders will bear the burden of any increase

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to our Advisor.

The amount of borrowings under credit facilities

and issuances of senior unsecured notes depends on our Advisor’s and our Board’s assessment of market and other factors at

the time of any proposed borrowing under credit facilities and issuances of senior unsecured notes.

The amount of borrowings under credit facilities and

issuances of senior unsecured notes depends on our Advisor’s and our Board’s assessment of market and other factors at the

time of any proposed borrowing under credit facilities and issuances of senior unsecured notes.

We can offer no assurance that leveraged

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which may result in losses.

We are subject to risks associated with

our investment and trading of liquid credit (i.e., broadly syndicated loans).

From time to time, we may invest in liquid credit (i.e., broadly syndicated

loans) that may be traded in public or institutional financial markets for which there is a more active market than some of our other

These investments may expose us to various risks, including with respect to liquidity, price volatility, interest rate risk,

ability to restructure in the event of distress, credit risks and less protective issuing documentation, than is the case with the loans

to middle market companies that comprise nearly all of our debt investments.

Certain of these instruments may

be fixed rate assets, thereby exposing us to interest rate risk in the valuation of such investments.

Additionally, the financial markets

in which these assets may be traded are subject to significant volatility (including due to macroeconomic conditions), which may impact

the value of such investments and our ability to sell such instruments without incurring losses.

We are subject to risks associated with our

investment and trading of liquid credit (i.e., broadly syndicated loans).

From time to time, we may invest in liquid credit

(i.e., broadly syndicated loans) that may be traded in public or institutional financial markets for which there is a more active market

than some of our other investments.

These investments may expose us to various risks, including with respect to liquidity, price volatility,

interest rate risk, ability to restructure in the event of distress, credit risks and less protective issuing documentation, than is the

case with the loans to middle market companies that comprise nearly all of our debt investments.

Certain of these instruments

may be fixed rate assets, thereby exposing us to interest rate risk in the valuation of such investments.

Additionally, the financial

markets in which these assets may be traded are subject to significant volatility (including due to macroeconomic conditions), which may

impact the value of such investments and our ability to sell such instruments without incurring losses.

The foregoing may result in volatility

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and any gains that we realize may not be sufficient to offset any other losses we experience.

Our investments in the Trading

Companies & Distributors industry face considerable uncertainties including significant regulatory challenges.

Our investments in portfolio companies that operate

in the Trading Companies & Distributors industry represent approximately 15.1% of our total portfolio as of December 31, 2024.

Portfolio companies in the Trading Companies & Distributors industry are subject to many risks, including the negative impact

of regulation, a competitive marketplace, decreased consumer demand and supply-chain disruptions.

In recent years, supply-chain disruptions

and global trade policies have had a negative impact on these industries and as Trading Companies & Distributors represent a

significant portion of our investments, such adverse business and/or economic conditions have also impacted our portfolio.

Adverse economic,

business, or regulatory developments affecting the Trading Companies & Distributors industry, including trade policies, treaties

and tariffs between the United States and other countries, could have a negative impact on the value of our investments in portfolio

companies operating in this industry, and therefore could negatively impact our business and results of operations.

Risks Relating to Our Common Stock

There is no public market

for our shares of common stock, and no market for our shares of our common stock may develop in the future.

There is no existing trading market for our shares

of common stock, and no market for our shares of common stock may develop in the future.

If developed, any such market may not be sustained.

In the absence of a trading market, holders of our shares of common stock may be unable to liquidate an investment in our shares.

There are restrictions on the ability of

holders of our Common Stock to transfer shares in excess of the restrictions typically associated with a private offering of securities

under Regulation D and other exemptions from registration under the Securities Act, and these additional restrictions could further limit

the liquidity of an investment in our shares of common stock and the price at which holders may be able to sell the shares.

We are relying on an exemption from registration under the Securities

Act and state securities laws in offering our shares of common stock pursuant to the Subscription Agreements.

As such, absent an effective

registration statement covering our Common Stock, such shares may be resold only in transactions that are exempt from the registration

requirements of the Securities Act and with our prior consent.

Our Common Stock has limited transferability which could delay, defer or

prevent a transaction or a change of control of the Company that might involve a premium price for our securities or otherwise be in the

best interest of our stockholders.

Certain provisions of the DGCL, our certificate of incorporation,

bylaws, and actions of our Board could deter takeover attempts and have an adverse impact on the value of common stock.

The General Corporation Law of the State of Delaware, as amended (the

“DGCL”), contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of

our directors.

Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of

our directors and officers.

These provisions and others which we may adopt also may have the effect of deterring hostile takeovers or

delaying changes in control or management.

Prior to the IPO, there was

no public market for our shares of common stock, and we cannot assure you that a market for our shares of common stock will develop or

continue, or that the market price of our shares of common stock will not decline at some point following the IPO.

Our share of common

stock price may be volatile and may fluctuate substantially.

Our shares of common stock are listed

on the New York Stock Exchange under the symbol “KBDC.” We cannot assure you that a trading market will develop for our

shares of common stock or, if one develops, that the trading market can be sustained.

In addition, we cannot predict the prices at which

our shares of common stock will trade.

Shares of companies offered in an initial public offering often trade at a discount to the initial

offering price due to underwriting discounts and commissions and related offering expenses.

Also, shares of closed-end investment companies,

including BDCs, frequently trade at a discount from their net asset value and our shares may also be discounted in the market.

This characteristic

of closed-end investment companies is separate and distinct from the risk that our net asset value per share may decline.

We cannot predict

whether our shares of common stock will trade at, above or below net asset value.

The risk of loss associated with this characteristic

of closed-end management investment companies may be greater for investors expecting to sell shares of common stock purchased in this

offering soon after the IPO.

In addition, if our shares of common stock trade below its net asset value per share, we will generally not

be able to sell additional shares of common stock to the public at its market price without first obtaining the approval of a majority

of our stockholders (including a majority of our unaffiliated stockholders) and our independent directors for such issuance.

The market price and liquidity of

the market for our shares of common stock may be significantly affected by numerous factors, some of which are beyond our control and

may not be directly related to our operating performance.

These factors include:

● significant volatility in the market price and trading volume of securities of BDCs or other companies

in the sector in which we operate, which are not necessarily related to the operating performance of these companies;

● changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs;

● loss of RIC status;

● changes in earnings or variations in operating results;

● changes in the value of our portfolio of investments;

● any shortfall in revenue or net income or any increase in losses from levels expected by investors or

securities analysts;

● departure of key personnel from our Advisor;

● operating performance of companies comparable to us;

● general economic trends and other external factors;

● loss of a major funding source.

Sales of substantial amounts of

our shares of common stock in the public market may have an adverse effect on the market price of our shares of common stock.

Upon completion of the IPO, we had

71,116,459 shares of common stock outstanding.

The shares of common stock sold in the IPO are freely tradable without restriction or limitation

under the Securities Act.

Any shares purchased in the IPO

or owned by our affiliates, as defined in the Securities Act, are subject to the public information, manner of sale and volume limitations

of Rule 144 under the Securities Act.

The remaining shares of common stock outstanding upon the completion of the IPO are “restricted

securities” under the meaning of Rule 144 promulgated under the Securities Act and may only be sold if such sale is registered

under the Securities Act or exempt from registration, including the exemption under Rule 144.

In addition, shares owned by certain

of our stockholders are subject to lock-up restrictions.

Following the IPO and the expiration

of applicable lock-up periods, subject to applicable securities laws, sales of substantial amounts of our shares of common stock, or the

perception that such sales could occur, could adversely affect the prevailing market prices for our shares of common stock.

If this occurs,

it could impair our ability to raise additional capital through the sale of equity securities should we desire to do so.

We cannot predict

what effect, if any, future sales of securities, or the availability of securities for future sales, will have on the market price of

our shares of common stock prevailing from time to time.

Trading and liquidity in our shares

may be limited and our shares may trade below our NAV.

We cannot assure you that a public

trading market can be sustained.

Shares of companies offered in an initial public offering often trade at a discount to the initial offering

price due to underwriting discounts and related offering expenses.

Also, shares of closed-end investment companies and BDCs frequently

trade at a discount from their NAV.

This characteristic of closed-end investment companies is separate and distinct from the risk

that our NAV per share may decline.

We cannot predict whether our shares of common stock will trade at, above or below NAV.

Certain provisions of the DGCL, our certificate

of incorporation, bylaws, and actions of our Board could deter takeover attempts and have an adverse impact on the value of common stock.

The General Corporation Law of the State of Delaware,

as amended (the “DGCL”), contains provisions that may discourage, delay or make more difficult a change in control of us or

the removal of our directors.

Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification

of our directors and officers.

These provisions and others which we may adopt also may have the effect of deterring hostile takeovers

or delaying changes in control or management.

We are subject to Section 203 of the DGCL, the application of which is subject to any applicable

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to acquire control of us and increase the difficulty of consummating such an offer.

We have also adopted measures that may make it difficult for a third

party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors in three

classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors to classify

or reclassify shares of our preferred stock in one or more classes or series, and to cause the issuance of additional shares of our stock.

These provisions, as well as other provisions in our certificate of incorporation and bylaws, may delay, defer or prevent a transaction

or a change in control in circumstances that could give our stockholders the opportunity to realize a premium of the NAV of our shares

of common stock.

During extended periods of capital market disruption and instability,

there is a risk that you may not receive distributions or that our distributions may not grow over time and a portion of our distributions

may be a return of capital.

We intend to make periodic distributions to our stockholders out of

assets legally available for distribution.

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.

Our ability to pay distributions might be adversely

affected by the impact of one or more of the risk factors described in this Annual Report on Form 10-K.

Due to the asset coverage

test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions.

We have also adopted measures that may make it difficult

for a third party to obtain control of us, including provisions of our certificate of incorporation that classify our Board of Directors

in three classes serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our Board of Directors

to classify or reclassify shares of our preferred stock in one or more classes or series, and to cause the issuance of additional shares

of our stock.

These provisions, as well as other provisions in our certificate of incorporation and bylaws, may delay, defer or prevent

a transaction or a change in control in circumstances that could give our stockholders the opportunity to realize a premium of the NAV

of our shares of common stock.

During extended periods of capital market disruption

and instability, there is a risk that you may not receive distributions or that our distributions may not grow over time and a portion

of our distributions may be a return of capital.

We intend to make periodic distributions to our stockholders

out of assets legally available for distribution.

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.

Our ability to pay distributions might

be adversely affected by the impact of one or more of the risk factors described in this Annual Report on Form 10-K.

Due to the asset

coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions.

If we declare a distribution

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upon the future sale of our Common Stock.

A return of capital distribution may cause a stockholder to recognize

a capital gain from the sale of our Common Stock even if the stockholder sells its shares for less than the original purchase price.

A return of capital distribution may cause a stockholder

to recognize a capital gain from the sale of our Common Stock even if the stockholder sells its shares for less than the original purchase

Investing in our Common Stock may involve an above average degree

The investments we make in accordance with our investment objective

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 involve higher levels of risk, and therefore, an investment in our shares may not be suitable for someone with

lower risk tolerance.

In addition, our Common Stock is intended for long-term investors who can accept the risks of investing primarily

in illiquid loans and other debt or debt-like instruments and should not be treated as a trading vehicle.

A stockholder’s interest in us will be diluted if we issue

additional shares, which could reduce the overall value of an investment in us.

Our stockholders do not have preemptive rights to any shares of common

stock we issue in the future.

To the extent that we issue additional equity interests at or below NAV your percentage ownership interest

in us may be diluted.

In addition, depending upon the terms and pricing of any future and the value of our investments, you may also experience

dilution in the book value and fair value of your shares of common stock.

Under the 1940 Act, we generally are prohibited from issuing or selling

our shares of common stock at a price below NAV per share, which may be a disadvantage as compared with certain public companies.

however, sell our shares of common stock, or warrants, options, or rights to acquire our shares of common stock, at a price below the

current NAV of our shares of common stock if our Board of Directors determines that such sale is in our best interests and the best interests

of our stockholders, and our stockholders, including a majority of those stockholders that are not affiliated with us, approve such sale.

In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination

of our Board of Directors, closely approximates the fair value of such securities (less any distributing commission or discount).

raise additional funds by issuing our shares of common stock or senior securities convertible into, or exchangeable for, our shares of

common stock, then the percentage ownership of our stockholders at that time will decrease and you will experience dilution.

In the event that we enter into a Subscription Agreement with one or

more investors after the Initial Closing, each such investor will be required to make Catch-up Purchases on one or more dates

to be determined by us.

Each Catch-up Purchase will dilute the ownership percentage of all investors whose subscriptions were

accepted at previous closings.

As a result, each subsequent closing after the Initial Closing will result in existing stockholders experiencing

dilution as a result of Catch-up Purchases.

In addition, distributions declared in cash payable to stockholders

that are participants in our DRIP will generally be automatically reinvested in our shares of common stock.

As a result, stockholders

that do not participate in our DRIP may experience dilution over time.

We may be subject to risks that arise from newly enacted federal

tax legislation and our stockholders may receive our shares of Common Stock as dividends, which could result in adverse tax consequences

The Inflation Reduction Act of 2022, among other things, introduced

a 15% book minimum tax on larger corporations, a 1% excise tax on stock buybacks and increased investment in the Internal Revenue Service

(the “IRS”) to aid in the enforcement of tax laws.

The impact of such legislation, as well as federal tax legislation proposed

but not yet enacted, on us, our stockholders and entities in which we may invest is uncertain.

Prospective investors are urged to consult

their tax advisors regarding the effects of the new legislation on an investment in us.

In order to satisfy the annual distribution requirement applicable

to RICs, we will have the ability to declare a large portion of a dividend in our shares of common stock instead of in cash.

a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend) and certain requirements are met, the

entire distribution will be treated as a dividend for U.S.

The investments we make in accordance with our investment

objective 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 involve higher levels of risk, and therefore, an investment in our shares may not be suitable for

someone with lower risk tolerance.

In addition, our Common Stock is intended for long-term investors who can accept the risks of investing

primarily in illiquid loans and other debt or debt-like instruments and should not be treated as a trading vehicle.

A stockholder’s interest in us will be

diluted if we issue additional shares, which could reduce the overall value of an investment in us.

Our stockholders do not have preemptive rights to

any shares of common stock we issue in the future.

To the extent that we issue additional equity interests at or below NAV your percentage

ownership interest in us may be diluted.

In addition, depending upon the terms and pricing of any future and the value of our investments,

you may also experience dilution in the book value and fair value of your shares of common stock.

Under the 1940 Act, we generally are prohibited from

issuing or selling our shares of common stock at a price below NAV per share, which may be a disadvantage as compared with certain public

We may, however, sell our shares of common stock, or warrants, options, or rights to acquire our shares of common stock, at

a price below the current NAV of our shares of common stock if our Board of Directors determines that such sale is in our best interests

and the best interests of our stockholders, and our stockholders, including a majority of those stockholders that are not affiliated with

us, approve such sale.

In any such case, the price at which our securities are to be issued and sold may not be less than a price that,

in the determination of our Board of Directors, closely approximates the fair value of such securities (less any distributing commission

or discount).

If we raise additional funds by issuing our shares of common stock or senior securities convertible into, or exchangeable

for, our shares of common stock, then the percentage ownership of our stockholders at that time will decrease and you will experience

In addition, distributions declared in cash payable

to stockholders that are participants in our DRIP will generally be automatically reinvested in our shares of common stock.

stockholders that do not participate in our DRIP may experience dilution over time.

We may be subject to risks that arise from newly

enacted federal tax legislation and our stockholders may receive our shares of Common Stock as dividends, which could result in adverse

tax consequences to them.

The Inflation Reduction Act of 2022, among other things,

introduced a 15% book minimum tax on larger corporations, a 1% excise tax on stock buybacks and increased investment in the Internal Revenue

Service (the “IRS”) to aid in the enforcement of tax laws.

The impact of such legislation, as well as federal tax legislation

proposed but not yet enacted, on us, our stockholders and entities in which we may invest is uncertain.

Prospective investors are urged

to consult their tax advisors regarding the effects of the new legislation on an investment in us.

In order to satisfy the annual distribution requirement

applicable to RICs, we will have the ability to declare a large portion of a dividend in our shares of common stock instead of in cash.

As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend) and certain requirements are

met, the entire distribution will be treated as a dividend for U.S.

federal income tax purposes.

As a result, a stockholder generally would be

subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner

as a cash dividend, even though most of the dividend was paid in our shares of common stock.

We currently do not intend to pay dividends

in our shares of common stock.

We may in the future determine to issue preferred stock, which

could adversely affect the value of shares of Common Stock.

The issuance of preferred stock with dividend or conversion rights,

liquidation preferences or other economic terms favorable to the holders of preferred stock could make an investment in shares of Common

Stock less attractive.

As a result, a stockholder generally

would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the

same manner as a cash dividend, even though most of the dividend was paid in our shares of common stock.

We currently do not intend to

pay dividends in our shares of common stock.

We may in the future determine to issue preferred

stock, which could adversely affect the value of shares of Common Stock.

The issuance of preferred stock with dividend or conversion

rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could make an investment in shares

of Common Stock less attractive.

In addition, the dividends on any preferred stock we issue must be cumulative.

Payment of dividends and repayment

of the liquidation preference of preferred stock must take preference over any distributions or other payments to holders of Common Stock,

and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation

in excess of their stated preference (other than convertible preferred stock that converts into shares of Common Stock).

under the 1940 Act, preferred stock would constitute a “senior security” for purposes of the 150% asset coverage test.

do not currently anticipate issuing preferred stock.

Payment of dividends and

repayment of the liquidation preference of preferred stock must take preference over any distributions or other payments to holders of

Common Stock, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any

income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into shares of Common

In addition, under the 1940 Act, preferred stock would constitute a “senior security” for purposes of the 150% asset

coverage test.

We do not currently anticipate issuing preferred stock.

General Risk Factors

2 unchanged sentences

condition and results of operations.

The current worldwide financial

markets situation, as well as various social and political tensions in the United States and around the world (including wars and other

forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes

and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide

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

For example, the COVID-19

pandemic adversely impacted global commercial activity and contributed to significant volatility in financial markets.

In addition, the large-scale

invasion of Ukraine by Russia, and resulting market volatility, could adversely affect our business, financial condition or results of

In response to the conflict between Russia and Ukraine, the U.S.

and other countries have imposed sanctions or other restrictive

actions against Russia.

The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact

on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial

condition, cash flows and results of operations.

The severity and duration of the conflict and its impact on global economic and market

conditions are impossible to predict.

In addition, sanctions could also result in Russia taking counter measures or retaliatory actions

which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting

private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.

In addition, the political

reunification of China and Taiwan, over which China continues to claim sovereignty, is a highly complex issue that has included threats

of invasion by China.

Any escalation of hostility between China and/or Taiwan would likely have a significant adverse impact not only

on the value of investments in both countries, but also on economies and financial markets globally.

In addition, the recent outbreak of hostilities in the Middle East

and escalating tensions in the region may create volatility and disruption of global markets.

We do not currently have portfolio investments with direct exposure

to the Middle East, China, Taiwan, Russia or Ukraine.

Political, social and economic uncertainty,

including uncertainty related to the COVID-19 pandemic, creates and exacerbates risks.

Social, political, economic and other conditions

and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will occur that create uncertainty

The current worldwide financial markets situation,

as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict,

terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health

epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets,

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

For example, ongoing armed conflicts between Russia and Ukraine in

Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market

disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States.

In addition, the current political

climate has intensified concerns about trade tariffs and a potential trade war between the United States and certain foreign countries,

including China, Mexico and Canada, among others.

These consequences may trigger a significant reduction in international trade, shortages

or oversupply of certain manufactured goods, substantial price increases or decreases of goods, inflationary pressures, and possible failure

of individual companies and/or large segments of the foreign export industry with a potentially negative impact on the value of our investments.

In addition, the political reunification of China

and Taiwan, over which China continues to claim sovereignty, is a highly complex issue that has included threats of invasion by China.

Any escalation of hostility between China and/or Taiwan would likely have a significant adverse impact not only on the value of investments

in both countries, but also on economies and financial markets globally.

We do not currently have portfolio investments with direct exposure to

the Middle East, China, Taiwan, Russia or Ukraine, but because of the increasing interconnectedness of global economies and financial

markets, events in these regions could negatively affect the value of our investments.

Political, social and economic uncertainty creates

and exacerbates risks.

Social, political, economic and other conditions and

events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will occur that create uncertainty

and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which companies

10 unchanged sentences

We do not currently have portfolio investments with direct exposure to the Middle East, China, Taiwan, Russia or Ukraine,

Uncertainty can result in

or coincide with, among other things:

but because of the increasing interconnectedness of global economies and financial markets, events in these regions could negatively affect

the value of our investments.

Uncertainty can result in or coincide with, among

other things:

increased volatility in the financial markets for securities, derivatives, loans, credit and currency;

a decrease in the reliability of market prices and difficulty in valuing assets (including portfolio company assets);

greater fluctuations

in spreads on debt investments and currency exchange rates;

a decrease in the

reliability of market prices and difficulty in valuing assets (including portfolio company assets);

greater fluctuations in spreads on

debt investments and currency exchange rates;

increased risk of default (by both government and private obligors and issuers);

further social, economic, and political instability;

social, economic, and political instability;

nationalization of private enterprise;

greater governmental involvement in the economy

or in social factors that impact the economy;

changes to governmental regulation and supervision of the loan, securities, derivatives

and currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations

greater governmental involvement in the economy or

in social factors that impact the economy;

changes to governmental regulation and supervision of the loan, securities, derivatives and

currency markets and market participants and decreased or revised monitoring of such markets by governments or self-regulatory organizations

and reduced enforcement of regulations;

10 unchanged sentences

and/or enforcing legal judgments.

For example, the COVID-19

pandemic led to disruptions in local, regional, national and global markets and economies.

For example, the COVID-19 pandemic led to disruptions

in local, regional, national and global markets and economies.

With respect to the U.S.

credit markets (in

particular for middle market loans), this outbreak resulted in the following among other things:

(i) significant disruption to the businesses

of many middle market loan borrowers including supply chains, demand and practical aspects of their operations, as well as lay-offs of

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

(iii) increased requests by borrowers for amendments and waivers

of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing

at the maturity dates of their loans;

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

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

and (v) rapidly evolving proposals and/or

actions by state and federal governments to address problems experienced by the markets and by businesses and the economy in general which

were not necessarily adequate to address the problems faced by the loan market and middle market businesses.

Although many of these conditions

have improved or resolved over the course of the pandemic, similar consequences could occur in the future as a result of new variants

of the virus or other infectious diseases.

The COVID-19 outbreak has had, and any future outbreaks could have, an adverse impact on the

markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate

loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions

taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment

by us and returns to us, among other things.

Recurring COVID-19 outbreaks, including as a result of new variants of the virus, have led

to the re-introduction of public health restrictions in certain states in the United States and globally and could continue to lead to

the re-introduction of such restrictions elsewhere.

It is impossible to determine the scope of any future outbreaks, how long any such

outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us

and our portfolio companies in which we invest.

Although it is impossible

to predict the precise nature and consequences of these events, or of any political or policy decisions and regulatory changes occasioned

by emerging events or uncertainty on applicable laws or regulations that impact us and our targeted investments, it is clear that these

types of events are impacting and will, for at least some time, continue to impact us and our targeted investments and, in certain instances,

the impact will be adverse and profound.

If public health uncertainties

and market disruptions continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies

may increase.

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

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

An increase in loan delinquencies

and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income which would

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

We will also be negatively

affected if the operations and effectiveness of us or a portfolio company (or any of the key personnel or service providers of the foregoing)

is compromised or if necessary or beneficial systems and processes are disrupted.

credit markets (in particular for middle market

loans), this outbreak resulted in the following among other things:

(i) significant disruption to the businesses of many middle market

loan borrowers including supply chains, demand and practical aspects of their operations, as well as lay-offs of employees;

(ii) increased

draws by borrowers on revolving lines of credit;

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

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

(iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans

during periods of increased volatility, and liquidity issues;

and (v) rapidly evolving proposals and/or actions by state and federal governments

to address problems experienced by the markets and by businesses and the economy in general which were not necessarily adequate to address

the problems faced by the loan market and middle market businesses.

Although many of these conditions have resolved, similar consequences

could occur in the future as a result of new variants of the virus or other infectious diseases.

Any future outbreaks of infectious diseases

could have an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things,

the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers

granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and

quality of loans available for investment by us and returns to us, among other things.

It is impossible to determine the scope of any

future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have

or the full potential impact on us and our portfolio companies in which we invest.

Although it is impossible to predict the precise nature

and consequences of these events, or of any political or policy decisions and regulatory changes occasioned by emerging events or uncertainty

on applicable laws or regulations that impact us and our targeted investments, it is clear that these types of events are impacting and

will, for at least some time, continue to impact us and our targeted investments and, in certain instances, the impact will be adverse

and profound.

If public health uncertainties and market disruptions

continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.

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

could decline, impairing their ability to honor commitments to us.

An increase in loan delinquencies and non-accruals or a decrease in

loan collateral and guarantor net worth could result in increased costs and reduced income which would have a material adverse effect

on our business, financial condition or results of operations.

We will also be negatively affected if the operations

and effectiveness of us or a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if

necessary or beneficial systems and processes are disrupted.

We are subject to risks related to corporate

responsibility.

Our business faces increasing

public scrutiny related to environmental, social and governance (“ESG”) activities.

We risk damage to our brand and reputation

if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate governance and transparency and considering

ESG factors in our investment processes.

Adverse incidents with respect to ESG activities could impact the value of our brand, the cost

of our operations and relationships with investors, all of which could adversely affect our business and results of operations.

Additionally,

new regulatory initiatives related to ESG could adversely affect our business.

Our business faces increasing public scrutiny related

to environmental, social and governance (“ESG”) activities.

We risk damage to our brand and reputation if we fail to act responsibly

in a number of areas, such as environmental stewardship, corporate governance and transparency and considering ESG factors in our investment

Adverse incidents with respect to ESG activities could impact the value of our brand, the cost of our operations and relationships

with investors, all of which could adversely affect our business and results of operations.

Additionally, new regulatory initiatives related

to ESG could adversely affect our business.

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