What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-09-21 compared with 2019-09-23 · 239 added, 200 removed, 291 unchanged (60% of the section changed)

Investing in our common stock involves significant risks.

In addition to the other information contained in the Registration Statement and any accompanying prospectus supplement, stockholders

should consider carefully the following information regarding our common stock.

In addition to the other information contained in the Registration Statement and any accompanying prospectus supplement, stockholders should

consider carefully the following information regarding our common stock.

The risks set out below may not be the only risks we face, but are the risks of which we are presently aware.

If any of the following risks are realized, our business,

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

If any of the following risks are realized, our business, financial

condition and results of operations could be materially and adversely affected.

In such case, our NAV and the price of our common stock could decline, and stockholders may lose all or part of their investment.

4 unchanged sentences

Typically, there is no public market for the securities of the privately held companies in which we invest.

As a result, we value these securities quarterly at fair value based on input from management and our audit committee, with the oversight, review and approval of our Board of Directors.

The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of

a result, we value these securities quarterly at fair value based on input from management and our audit committee, with the oversight, review and approval of our Board of Directors.

Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies.

Because such valuations, and particularly

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

Our determinations of fair value may differ materially from the values that would have

been used if a ready market for these securities existed.

Due to this uncertainty, our fair value determinations may cause our NAV on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our

As a result, investors purchasing our common stock based on an overstated NAV would pay a higher price than the value of our investments might warrant.

Conversely, investors selling shares during a period in which the NAV understates

the value of our investments receive a lower price for their shares than the value of our investments might warrant.

Because such valuations, and particularly valuations of

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

Our determinations of fair value may differ materially from the values that would have been used if a

ready market for these securities existed.

Due to this uncertainty, our fair value determinations may cause our NAV on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments.

result, investors purchasing our common stock based on an overstated NAV would pay a higher price than the value of our investments might warrant.

Conversely, investors selling shares during a period in which the NAV understates the value of our

investments receive a lower price for their shares than the value of our investments might warrant.

Our financial condition and results of operations depend on our ability to effectively manage and deploy capital.

14 unchanged sentences

Our success depends on the continued service of our investment team and the other senior investment professionals available to the Adviser.

We cannot assure you that unforeseen business, medical, personal or other circumstances would

not lead any of the members of the investment team to terminate their relationship with us, and we do not purchase any "key man" insurance to cover the Adviser's personnel.

We cannot assure you that unforeseen business, medical, personal or other circumstances would not

lead any of the members of the investment team to terminate their relationship with us, and we do not purchase any "key man" insurance to cover the Adviser's personnel.

The loss of one or more of the investment team or other senior investment

professionals who serve on the Adviser's investment team could have a material adverse effect on our ability to achieve our investment objectives as well as on our financial condition and results of operations.

In addition, we can offer no

assurance that the Adviser will continue indefinitely as our investment adviser.

In addition, we can offer no assurance

that the Adviser will continue indefinitely as our investment adviser.

We expect the Adviser’s investment team to dedicate significant time to our activities.

3 unchanged sentences

Our growth requires that the Adviser retains and attracts new investment and administrative personnel in a competitive market.

Its ability to attract and retain personnel with the requisite credentials, experience

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

Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and

traditional financial services companies, with which the Adviser competes for experienced personnel have greater resources than the Adviser.

Its ability to attract and retain personnel with the requisite credentials, experience and

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

Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and traditional

financial services companies, with which the Adviser competes for experienced personnel have greater resources than the Adviser.

We are dependent on MacKenzie Capital Management's key personnel for our success.

23 unchanged sentences

The Adviser's compensation could impact our investment returns.

In the course of our investing activities, we pay management and incentive fees to the Adviser and reimburse the Adviser for certain expenses it incurs.

As a result, investors in our common stock invest on a "gross"

basis and receive dividends on a "net" basis after expenses, resulting in a lower rate of return than an investor might achieve through direct investments.

We pay management and incentive fees to the Adviser and reimburse the Adviser for certain expenses it incurs.

As a result, investors in our common stock invest on a "gross" basis and receive dividends on a "net" basis

after expenses, resulting in a lower rate of return than an investor might achieve through direct investments.

There are significant potential conflicts of interest with our Administrator that could impact our investment returns.

2 unchanged sentences

with performing compliance functions, and our allocable portion of the compensation of MacKenzie's chief financial officer and any administrative support staff.

These arrangements create conflicts of interest that our Board of Directors must

continue to monitor.

These arrangements create conflicts of interest that our Board of Directors must continue

There are significant potential conflicts of interest generated from related party transactions that could impact our investment returns.

2 unchanged sentences

benefit the related parties, to our detriment.

To ensure that we do not engage in any transactions with any persons affiliated with us that are prohibited by the 1940 Act, we have implemented certain written policies and procedures, described in

our prospectus contained in the Registration Statement, under "Certain Relationships and Transactions."

Our incentive fee structure and the formula for calculating the management fee may incentivize the Adviser to pursue speculative investments, use leverage when it may be unwise

to do so, or refrain from deleveraging when it would otherwise be appropriate to do so.

The incentive fee payable by us to the Adviser may create an incentive for the Adviser to pursue investments on our behalf that are riskier or more speculative than would be the case in the absence of such

compensation arrangement.

To ensure that we do not engage in any transactions with any persons affiliated with us that are prohibited by the 1940 Act, we have implemented certain written policies and procedures, described in our

prospectus contained in the Registration Statement, under "Certain Relationships and Transactions."

Our incentive fee structure and the formula for calculating the management fee may incentivize the Adviser to pursue speculative investments, use leverage when it may be unwise to

do so, or refrain from deleveraging when it would otherwise be appropriate to do so.

The incentive fee payable to the Adviser is calculated based on a percentage of our return on invested capital.

In addition, the base management fee is based on "Gross Invested Capital", including capital invested in

leveraged assets.

This may encourage the Adviser to use leverage to increase the aggregate amount of and the return on our investments, even when it may not be appropriate to do so, and to refrain from de-levering when it would otherwise be

appropriate to do so.

Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock.

In addition, the Adviser receives the incentive fee based, in part, upon net capital

gains realized on our investments.

In addition, the base management fee is based on "Gross Invested Capital", including capital invested in leveraged assets.

certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our common stock.

In addition, the Adviser receives the incentive fee based, in part, upon net capital gains realized on our

This could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

7 unchanged sentences

will bear our ratable share of any such investment company's expenses, including management and performance fees.

We will also remain obligated to pay management and incentive fees to the Adviser with respect to the assets invested in the

securities and instruments of other investment companies.

With respect to each of these investments, each of our stockholders will bear his or her share of the management and incentive fee of the Adviser as well as indirectly bearing the management

and performance fees and other expenses of any investment companies in which we invest.

A general increase in interest rates will likely have the effect of making it easier for the Adviser to receive incentive fees, without necessarily resulting in an increase in

our net earnings.

We will also remain obligated to pay management and incentive fees to the Adviser with respect to the assets invested in the securities

and instruments of other investment companies.

With respect to each of these investments, each of our stockholders will bear his or her share of the management and incentive fee of the Adviser as well as indirectly bearing the management and

performance fees and other expenses of any investment companies in which we invest.

A general increase in interest rates will likely have the effect of making it easier for the Adviser to receive incentive fees, without necessarily resulting in an increase in our

net earnings.

Any general increase in interest rates typically leads to higher investment returns on our investments.

Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee

hurdle rate and may result in a substantial increase in the amount of incentive fees payable to the Adviser under the Advisory Agreement without any increase in performance on the part of the Adviser.

Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle

rate and may result in a substantial increase in the amount of incentive fees payable to the Adviser under the Advisory Agreement without any increase in performance on the part of the Adviser.

Our Adviser has the right to resign on 120 days' notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that

1 unchanged sentence

Our Adviser has the right, under the Advisory Agreement, to resign at any time upon not less than 120 days' written notice, whether we have found a replacement or not.

If the Adviser resigns, we may not be able to

find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 120 days, or at all.

If the Adviser resigns, we may not be able to find

a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 120 days, or at all.

If we are unable to do so quickly, our operations are likely to

5 unchanged sentences

business and results of operations.

Any failure on our part to maintain our status as a BDC would reduce our operating flexibility.

We have elected to be treated as a BDC under the 1940 Act.

Any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to

claims of private litigants.

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

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

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

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

our costs of doing business.

Regulations governing our operation as a BDC affect our ability to raise additional capital and the way in which we do so.

1 unchanged sentence

may expose us to risks, including the typical risks associated with leverage.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as "senior securities," up to the maximum amount permitted by the 1940

However, we have no current intention to borrow money for investment purposes.

Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940

Act, equals at least 200.0% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities.

If we were to issue senior securities and the value of our assets declines, we may be

unable to satisfy this test.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous.

amounts that we use to service our indebtedness would not be available for dividends to our common stockholders.

Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an

increased risk of loss.

If we issue preferred stock, 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 your best interest.

However, we have no current intention to borrow money for investment purposes, although if we withdraw our BDC election and purchase real estate assets, we would like use leverage to do so.

Under the provisions of the 1940 Act, we are permitted, as a

BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200.0% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of

senior securities.

If we were to issue senior securities and the value of our assets declines, we may be unable to satisfy this test.

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

leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous.

Also, any amounts that we use to service our indebtedness would not be available for dividends to our common stockholders.

Furthermore, as a result of

issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

If we issue preferred stock, 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 your best interest.

If our Stockholders approve the withdrawal of our BDC election, we will

no longer be subject to the limits and restrictions described in this paragraph.

We have and may continue to sell common stock at a price below NAV under certain circumstances.

We may not issue and sell our common stock at a price below NAV per share unless our Board of Directors determines that such sale is in the best interests of the Company and its stockholders, and our stockholders

approve such sale.

Our Board of Directors has so determined on numerous occasions, but has respected the prohibition against issuing stock at a price that, in the determination of our Board of Directors, closely approximates the market value of

such securities (less any distributing commission or discount).

If we continue to raise funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock for a price below NAV, then the percentage

ownership of our stockholders at that time will decrease, and you may experience dilution.

While we are a BDC, we may not issue and sell our common stock at a price below NAV per share unless our Board of Directors determines that such sale is in the best interests of the Company and its stockholders, and

our stockholders approve such sale.

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

If we continue to raise funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock for a price below NAV, then

the percentage ownership of our stockholders at that time will decrease, and you may experience dilution.

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

1 unchanged sentence

We may borrow from and issue senior debt securities to

banks, insurance companies and other lenders in the future, however we have no current intention to borrow for investment purposes.

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

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

If the value of our assets decreases, leveraging would cause NAV to decline more sharply than it would in the absence of

banks, insurance companies and other lenders in the future, however we have no current intention to borrow for investment purposes unless we withdraw our election to be treated as a BDC.

Holders of these senior securities would have fixed dollar

claims on our assets that would be superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default.

If the value of our assets decreases, leveraging would cause NAV to

decline more sharply than it would in the absence of leverage.

Similarly, any decrease in our income would cause net income to decline more sharply than it would in the absence of leverage.

Such a decline could also negatively affect our ability to make dividend payments on our common stock.

is generally considered a speculative investment technique.

Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures.

the management fee payable to the Adviser is based on our Gross Invested Capital, including amounts invested in leveraged assets, the Adviser has a financial incentive to incur leverage which may not be consistent with our stockholders' interests.

Such a decline could also negatively affect our ability to

make dividend payments on our common stock.

Leverage is generally considered a speculative investment technique.

Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic

conditions and competitive pressures.

Moreover, as the management fee payable to the Adviser is based on our Gross Invested Capital, including amounts invested in leveraged assets, the Adviser has a financial incentive to incur leverage which may not

be consistent with our stockholders' interests.

In addition, our common stockholders will bear the burden of any increase in expenses that results from leverage, including any increase in the management fee payable to the Adviser.

As a BDC, we are required to meet an asset coverage ratio, defined generally under the 1940 Act as the ratio of our gross assets (less all liabilities and indebtedness not represented by senior securities) to our

outstanding senior securities, of at least 200.0% after each issuance of senior securities.

If we remain a BDC, we are required to meet an asset coverage ratio, defined generally under the 1940 Act as the ratio of our gross assets (less all liabilities and indebtedness not represented by senior securities) to

our outstanding senior securities, of at least 200.0% after each issuance of senior securities.

If this ratio declines below 200.0% we may not be able to incur additional debt and could be required by law to sell a portion of our investments to repay

3 unchanged sentences

We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

Any debt facility into which we may enter would likely impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans

and investments or to make the distributions required to maintain our status as a REIT under the Code.

investments or to make the distributions required to maintain our status as a REIT under the Code.

We may experience fluctuations in our quarterly results.

9 unchanged sentences

limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series.

Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions

which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest.

The cost of any such reclassification

would be borne by our common stockholders.

Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions which

could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest.

The cost of any such reclassification would be

borne by our common stockholders.

Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock.

For example, holders of preferred stock would vote separately from the holders of

common stock on a proposal to cease operations as a BDC.

For example, holders of preferred stock would vote separately from the holders of common

stock on a proposal to cease operations as a BDC.

In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors.

The issuance of

preferred shares convertible into shares of common stock may also reduce the net income and NAV per share of our common stock upon conversion, provided, that we are only permitted to issue such convertible preferred stock to the extent we comply

with the requirements of Section 61 of the 1940 Act, including obtaining common stockholder approval.

The issuance of preferred shares

convertible into shares of common stock may also reduce the net income and NAV per share of our common stock upon conversion, provided, that we are only permitted to issue such convertible preferred stock to the extent we comply with the requirements

of Section 61 of the 1940 Act, including obtaining common stockholder approval.

These effects, among others, could have an adverse effect on your investment in our common stock.

We currently have no plans to issue preferred

We currently have no plans to issue preferred stock.

Our Board of Directors may change our investment objectives, operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.

Our Board of Directors has the authority to modify or waive our investment objectives, current operating policies, investment criteria and strategies without prior notice and without stockholder approval.

Stockholders will receive notice within 60 days if the Board of Directors decides to change our investment objective.

The principal investment strategies are not fundamental and may be changed without prior

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

However, the effects might be adverse, which could

negatively impact our ability to pay dividends and cause shareholders to lose all or part of their investment.

will receive notice within 60 days if the Board of Directors decides to change our investment objective.

The principal investment strategies are not fundamental and may be changed without prior notice.

cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, NAV, operating results and value of our stock.

However, the effects might be adverse, which could negatively

impact our ability to pay dividends and cause shareholders to lose all or part of their investment.

There is a risk that our stockholders may not receive dividends or that our dividends may not grow over

6 unchanged sentences

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.

In addition, due to the asset coverage

test applicable to us as a BDC, we may be limited in our ability to make distributions.

In addition, so long as we remain subject

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

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

2 unchanged sentences

investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect.

Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause

us to alter our investment strategy to avail ourselves of new or different opportunities.

Such changes could result in material differences to our strategies and plans and may result in our investment focus shifting from the areas of expertise of

the Adviser's investment team to other types of investments in which the investment team may have less expertise or little or no experience.

Thus, any such changes, if they occur, could have a material adverse effect on our results of operations

and the value of your investment.

Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us

to alter our investment strategy to avail ourselves of new or different opportunities.

Such changes could result in material differences to our strategies and plans and may result in our investment focus shifting from the areas of expertise of the

Adviser's investment team to other types of investments in which the investment team may have less expertise or little or no experience.

Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the

value of your investment.

We incur significant costs as a result of being a public company.

4 unchanged sentences

deduction for distributions to our stockholders.

Unless entitled to relief under specific statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status, assuming we

had previously been treated as a REIT.

To renew our REIT qualification at the end of such a four-year period, we would be required to distribute all current and accumulated earnings and profits before the end of the period and the funds available

for satisfying our obligations and for distribution to our stockholders could be significantly reduced.

Unless entitled to relief under specific statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status, assuming we had

previously been treated as a REIT.

satisfying our obligations and for distribution to our stockholders could be significantly reduced.

In addition, we would be subject to the built-in gain tax based upon the values at the time of REIT election.

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

Since we contemplate investing in real estate through partnerships and other REITs, we may have to recognize taxable income attributable to those investments prior to the time we receive cash distributions with

respect to such investments.

to such investments.

As indicated above, in order to benefit from REIT taxation, we need to distribute at least 90.0% of our REIT taxable income.

If we do not receive cash representing such income at the same time as we recognize such

income, we may have difficulty making distributions necessary to benefit from REIT taxation.

If we do not receive cash representing such income at the same time as we recognize such income, we may

have difficulty making distributions necessary to benefit from REIT taxation.

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

6 unchanged sentences

As a result, you will be unable to evaluate any future portfolio company investments prior to purchasing our shares.

Additionally,

our stockholders will have no input with respect to such investment decisions.

Additionally, our

stockholders will have no input with respect to such investment decisions.

These factors increase the uncertainty, and thus the risk, of investing in our shares.

The achievement of our investment objectives cannot be guaranteed.

We may not be successful in locating real estate-related securities suitable for purchase.

While we remain a BDC, we may not be successful in locating real estate-related securities suitable for purchase.

We may not be able to purchase securities at an acceptable price.

Even if suitable securities are located at an acceptable

price, our performance is affected by many factors that are beyond the control of the Adviser, including unpredictable economic and financial events.

Accordingly, we do not guarantee our dividends or the return of your capital.

For example, a

review of the performance of prior funds sponsored by the Adviser reveals that not all such funds were successful, or will be successful, in producing their targeted returns.

Even if suitable securities are

located at an acceptable price, our performance is affected by many factors that are beyond the control of the Adviser, including unpredictable economic and financial events.

Accordingly, we do not guarantee our dividends or the return of your

For example, a review of the performance of prior funds sponsored by the Adviser reveals that not all such funds were successful, or will be successful, in producing their targeted returns.

The indirect ownership of real properties involves numerous risks.

Our investments are primarily in entities that directly or indirectly own real property, real estate joint ventures, or other real property-based investments.

As a result, an investment in us is subject to all risks

inherent in real estate investments.

While we remain a BDC, our investments are primarily in entities that directly or indirectly own real property, real estate joint ventures, or other real property-based investments.

As a result, an investment in us is

subject to all risks inherent in real estate investments.

Among these are the following:

3 unchanged sentences

the lack or uncertainty of availability or high cost of financing, especially in current markets, may adversely affect the ability of the real estate owners to sell their properties and the terms of any such sales;

the availability and cost of financing or refinancing is uncertain, especially in current markets, and may adversely affect the ability of the real estate owners to sell their properties and the terms of any such sales (for example,

some of the REITs in which previous funds have invested have struggled to refinance their existing indebtedness, resulting in a depressed stock price, and, in some cases, causing issuers to file for bankruptcy protection);

of the REITs in which previous funds have invested have struggled to refinance their existing indebtedness, resulting in a depressed stock price, and, in some cases, causing issuers to file for bankruptcy protection);

the real properties may be damaged and suffer losses which are not adequately insured;

4 unchanged sentences

As a result, an investment in the Company is subject to all risks inherent in mortgage loans.

Among these are the

Among these are the following:

We are at risk of defaults by the borrowers on those mortgage loans.

These defaults may be caused by many conditions beyond the control of us or the Adviser, including interest rate levels and local and other economic conditions

affecting real estate values.

These defaults may be caused by many conditions beyond the control of us or the Adviser, including interest rate levels and local and other economic conditions affecting

real estate values.

Our Adviser will not know whether the values of the properties securing the mortgage loans will remain at the levels existing on the dates of origination of those mortgage loans.

If the values of the

underlying properties drop, our risk will increase because of the lower value of the security associated with such loans;

If the values of the underlying properties

drop, our risk will increase because of the lower value of the security associated with such loans;

If an issuer in which we invest relies on originating, holding, or servicing mortgage loans for a significant portion of its income, defaults on such mortgage loans could impair the value of the issuer itself and consequently put our

1 unchanged sentence

Fixed-rate, long-term mortgage loans could yield a return that is lower than the then-current market rates if interest rates rise.

If interest rates decrease, we could be adversely affected to the extent that mortgage loans are

prepaid because we may not be able to generate equivalent returns upon reinvestment of the funds;

Declines in real estate values may induce mortgagors to voluntarily default on their loans, increasing the risk of foreclosure and loss of capital (for example, some of the hotel REITs have just "walked away" from the hotels they

If interest rates decrease, we could be adversely affected to the extent that mortgage loans are prepaid

because we may not be able to generate equivalent returns upon reinvestment of the funds;

Issuers may file for bankruptcy if they cannot meet the demands of their debt service, and bankruptcy judges have wide latitude to modify the terms of indebtedness, which could result in lower than expected returns on our investment;

Delays in liquidating defaulted mortgage loans could reduce our or an issuer's investment returns.

If there are defaults under those mortgage loans, we or the issuer may not be able to repossess and sell the underlying properties

If there are defaults under those mortgage loans, we or the issuer may not be able to repossess and sell the underlying properties quickly.

The resulting time delay could reduce the value of our or the issuer's investment in the defaulted mortgage loans.

An action to foreclose on a property securing a mortgage loan is regulated by state statutes and regulations and

is subject to many of the delays and expenses of other lawsuits if the defendant raises defenses or counterclaims.

Further, given the recent economic events, foreclosure actions may flood the courthouses, causing further delays in

prosecuting such actions.

In the event of default by a mortgagor, these restrictions, among other things, may impede our or an issuer's ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all

amounts due to us or the issuer on the mortgage loan.

An action to foreclose on a property securing a mortgage loan is regulated by state statutes and regulations and is subject to

many of the delays and expenses of other lawsuits if the defendant raises defenses or counterclaims.

Further, given the recent economic events, foreclosure actions may flood the courthouses, causing further delays in prosecuting such actions.

on the mortgage loan.

For example, previous funds managed by the Administrator have invested in a mortgage where the borrower defaulted.

The Administrator began foreclosure proceedings in July 2007, but

did not get a foreclosure sale set until December 2009 due to various circumstances beyond the control of our Adviser.

The Administrator began foreclosure proceedings in July 2007, but did not get a foreclosure sale set

until December 2009 due to various circumstances beyond the control of our Adviser.

Thereafter, the foreclosure was further delayed by a bankruptcy filing that has yet to be resolved.

We do not participate in the management of the real estate owned by our portfolio companies.

The issuers of the securities held by us typically have exclusive management and control of the operation of their real estate portfolios, and we therefore typically rely exclusively on the management capabilities of

such issuers, regardless of whether the Adviser agrees with the decisions of such issuers (though as a BDC, we offer to provide managerial assistance to our portfolio companies).

If the Adviser decides that an action taken by an issuer is contrary

to our interests, we may take legal action to protect our interests.

We could be forced to bear the costs of a challenge or lawsuit, which could be substantial, and there can be no certainty that legal action undertaken to halt any such actions

would be successful.

While we remain a BDC, the issuers of the securities held by us typically have exclusive management and control of the operation of their real estate portfolios, and we therefore typically rely exclusively on the

management capabilities of such issuers, regardless of whether the Adviser agrees with the decisions of such issuers.

If the Adviser decides that an action taken by an issuer is contrary to our interests, we may take legal action to protect our

We could be forced to bear the costs of a challenge or lawsuit, which could be substantial, and there can be no certainty that legal action undertaken to halt any such actions would be successful.

Information on our target securities may be difficult to obtain.

10 unchanged sentences

Publicly traded investments such as REITs present certain market risks that are not present when investing directly in real estate or in private partnerships that own real estate.

The trading price of public

securities can change in response to various factors, not all of which relate to the real estate owned by the entities.

A "bear market" can cause all publicly traded securities to trade at lower prices, even if the fundamental economic factors

driving the value of real estate remain unchanged.

The trading price of public securities

can change in response to various factors, not all of which relate to the real estate owned by the entities.

A "bear market" can cause all publicly traded securities to trade at lower prices, even if the fundamental economic factors driving the value

of real estate remain unchanged.

If the trading price of a public entity is adversely affected by such factors, it can be subject to takeover attempts by opportunistic investors who see the ability to acquire assets below NAV.

Because we may not likely be a significant holder of such securities, there may be little or nothing that we or the Adviser can do to prevent the sale of such entities at prices that are below the estimated NAV of the real estate owned by the

entities, which would adversely affect our performance.

Because we may not be a

significant holder of such securities, there may be little or nothing that we or the Adviser can do to prevent the sale of such entities at prices that are below the estimated NAV of the real estate owned by the entities, which would adversely affect

our performance.

Investments in privately held securities may present more risks than investments in publicly held securities.

24 unchanged sentences

Because of the nature of the market for real estate-related securities, we expect to buy securities from time to time through tender offers.

Federal securities laws impose obligations and requirements upon a party

who undertakes a tender offer.

Federal securities laws impose obligations and requirements upon a party who

undertakes a tender offer.

Sanctions and penalties could be imposed on us if we do not fully comply with these complex requirements.

Further, because of the perceived hostile nature of tender offers, some issuers may respond by taking legal

action against us and our affiliates.

Further, because of the perceived hostile nature of tender offers, some issuers may respond by taking legal action

against us and our affiliates.

We could be forced to bear some of the costs of a suit, which could be substantial, and there can be no certainty that we would be successful in fighting such a suit.

Likewise, we may participate in legal

actions against issuers to force them to provide investor lists when their governing documents so require, but the issuers refuse to comply.

Likewise, we may participate in legal actions

against issuers to force them to provide investor lists when their governing documents so require, but the issuers refuse to comply.

Issuers of securities we own may vote to change the structure of the portfolio company or propose a "roll-up."

8 unchanged sentences

our interests, we may take legal action to protect our interests.

We could be forced to bear the costs of a suit, which could be substantial, and there can be no certainty that legal action undertaken to halt a roll-up by a portfolio company would

be successful.

We could be forced to bear the costs of a suit, which could be substantial, and there can be no certainty that legal action undertaken to halt a roll-up by a portfolio company would be

Our Adviser may experience a substantial delay in identifying and locating suitable investments for us.

1 unchanged sentence

Moreover, once suitable securities are identified, a considerable delay may be experienced in consummating their purchase.

event, corresponding delays would be experienced by us before distributions and allocations are received from our investments.

In such event,

corresponding delays would be experienced by us before distributions and allocations are received from our investments.

We may temporarily invest our cash reserves in volatile securities.

2 unchanged sentences

past few years, some such investments made by other funds managed by the Adviser have declined dramatically in value, making it impossible to recover the cash reserves unless and until the market price of the securities returns to previous levels.

In some cases, REITs have ceased operations, resulting in a loss of capital for such funds.

some cases, REITs have ceased operations, resulting in a loss of capital for such funds.

We may use leverage, including margin accounts.

3 unchanged sentences

Any such borrowing is subject to the leverage limitations under the 1940 Act that are described above.

If our stockholders approve the withdrawal of our BDC election, we will no longer be subject to the limits and restrictions

described in this paragraph.

The FDIC deposit insurance limits may be exceeded.

4 unchanged sentences

We have little or no control over the reporting activities of the issuers of securities we buy.

Our Adviser does not prepare and typically does not review income tax information returns of the issuers of securities

in which we invest.

Our Adviser does not prepare and typically does not review income tax information returns of the issuers of securities in

which we invest.

These issuers have made and will make a number of decisions on such tax matters as the expensing or capitalizing of particular items, the proper period over which capital costs may be depreciated or amortized, the allocation of

1 unchanged sentence

An IRS audit of an issuer's information return may result in the disallowance of certain deductions and may cause audits of your individual returns.

An opinion of counsel generally is not available with respect to these issues, either because they involve factual determinations, or because they involve legal doctrines not fully developed under existing case law.

opinion of counsel generally is not available with respect to these issues, either because they involve factual determinations, or because they involve legal doctrines not fully developed under existing case law.

Our taxable gain or loss will likely be measured by the issuer's tax basis in the real property, rather than by our purchase price for its securities.

14 unchanged sentences

illiquidity of these investments may make it difficult for us to sell these investments when desired.

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 had previously recorded these investments.

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

had previously recorded these investments.

As a result, we do not expect to achieve liquidity in our investments in the near-term.

Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid

because there is usually no established trading market for such investments.

Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because

there is usually no established trading market for such investments.

The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price, and, as a result, we may suffer losses.

15 unchanged sentences

diversified than the portfolios of some larger funds, we are more susceptible to failure if a single investment fails.

Similarly, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform

poorly or if we need to write down the value of any one investment.

We do not intend to concentrate our portfolio on any specific geographic area, however, we may be subjected to a risk of significant loss if there is a downturn in an area in

which a number of our investments are concentrated.

Similarly, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly

or if we need to write down the value of any one investment.

We do not intend to concentrate our portfolio on any specific geographic area, however, we may be subject to a risk of significant loss if there is a downturn in an area in which

a number of our investments are concentrated.

We do not intend to concentrate our portfolio on any specific geographic areas.

However, a downturn in an area in which we are invested could significantly impact the aggregate returns we realize.

portfolio companies hold assets that are heavily concentrated in a single state.

Some of our portfolio

companies hold assets that are heavily concentrated in a single state.

In the table below, we list such investments if they represent 5.0% or higher of the total fair value of our portfolio as of June 30, 2020.

6 unchanged sentences

Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights.

In addition, we may from time to

time make non-control, equity investments in portfolio companies.

In addition, we may from time to time

make non-control, equity investments in portfolio companies.

Our goal is ultimately to realize gains upon our disposition of such equity interests.

However, the value of the equity interests we receive may not appreciate and, in fact, may

However, the value of the equity interests we receive may not appreciate and, in fact, may decline.

Accordingly, we may not be able to realize gains from our equity interests, and any gains that we realize on the disposition may not be sufficient to offset other losses we experience.

We also may be unable to realize any value if a

portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests.

We often seek puts or similar rights to give us the right to sell

our equity securities back to the portfolio company issuer.

We also may be unable to realize any value if a portfolio company

does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests.

We often seek puts or similar rights to give us the right to sell our equity

securities back to the portfolio company issuer.

We may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

Lapses in internal controls including internal control over financial reporting could materially and adversely affect our operations and/or reputation.

In 2016, we identified a material weakness in the manner by which we accounted for the portfolio structuring fee we pay to our Adviser upon the sale of shares, which caused the restatement of the audited financial

statements as of June 30, 2016, and 2015 and for each of the three years in the period ended June 30, 2016.

We corrected the accounting error in our restated financial statements, and instituted measures to more closely monitor our compliance with

However, even diligent compliance efforts cannot assure the absence of accounting errors in the future, and if they occur, investors and others could lose confidence in our consolidated financial statements, which in

turn could limit our ability to raise capital.

Additionally, failure to maintain effective internal controls over financial reporting may negatively impact our operating results and financial condition, impair our ability to timely file our

periodic reports with the SEC, subject us to additional litigation and regulatory actions, and cause us to incur substantial additional costs in future periods to implement remedial measures.

Risk related to our plan to withdraw our election to be treated as a BDC

Following withdrawal of our BDC election, we will no longer be subject to regulation by the 1940 Act.

On October 23, 2020, our stockholders will be asked to approve the proposal to withdraw our election to be regulated as a BDC under the 1940 Act.

If our stockholders approve the withdrawal of our BDC election, we will,

effective upon receipt by the SEC of our application for withdrawal, no longer be regulated as a BDC and will no longer be subject to the regulatory provisions of the 1940 Act, which is designed to protect the interests of investors in investment

companies, including certain laws and regulations related to insurance, custody, capital structure, composition of the Board of Directors, affiliated transactions, leverage limitations, and compensation arrangements.

We may be unable to identify and complete acquisitions of real assets following withdrawal of our BDC election.

Our ability to identify and complete acquisitions of real assets on favorable terms and conditions are subject to the following risks:

we may be unable to acquire a desired asset because of competition from other investors with significant capital, including publicly traded REITs and institutional investment funds;

competition from other investors may significantly increase the purchase price of a desired real asset or result in less favorable terms;

we may not complete the acquisition of a desired real asset even if we have signed an agreement to acquire such real asset because such agreements are subject to customary conditions to closing, including

completion of due diligence investigations to our satisfaction;

we may be unable to finance acquisitions of real assets on favorable terms or at all.

We may not be able to sell our real asset investments quickly.

Investments in real assets are relatively illiquid compared to other investments.

Accordingly, we may not be able to sell real asset investments when we desire or at prices acceptable to us in response to changes in

economic or other conditions.

We may be dependent on external property managers

Following the withdrawal of our BDC election, we may acquire real estate properties, and we may have to rely on property managers for the operation and management of the real estate properties.

Our Adviser has limited experience in direct property acquisitions and management

Our Adviser’s experience mostly relates to acquisition of investment securities.

Its affiliate, Lemon Creek Advisers, LP will advise us on our real estate purchases, but it has less experience in the management and

operation of real estate properties than many more established REIT advisers.

Following withdrawal of our BDC election, we will be dependent upon key personnel of Lemon Creek Advisers, LP for our future success.

Following withdrawal of our BDC election, we anticipate entering into a co-Advisory Agreement with Lemon Creek Advisers, LP to provide full advisory services to us for real asset investments.

We will be dependent on

the diligence, expertise and business relationships of the management of Lemon Creek to implement our strategy of investing in real estate assets.

The departure of one or more investment professionals of Lemon Creek could have a material adverse

effect on our ability to implement this strategy and on the value of our common shares.

There can be no assurance that we will be successful in implementing our strategy following withdrawal of our BDC election.

Risk related to the current COVID-19 Pandemic

The current COVID-19 pandemic, or the future outbreak of other highly infectious or contagious diseases, has and could continue to materially and adversely

impact or disrupt our financial condition, results of operations, cash flows and performance.

Our operating results depend, in large part, on generating revenues from leases to residential or commercial tenants, which in turn requires tenants to generate sufficient income

to pay their rents in a timely manner.

The market and economic challenges created by the COVID-19 pandemic, and measures implemented to prevent its spread, may adversely affect our portfolio companies’ returns and profitability and, as a result, our

ability to make distributions to our stockholders or to realize appreciation in the value of our investments.

The spread of COVID-19 could result in further increases in unemployment, and tenants that experience deteriorating financial conditions as

a result of the pandemic may be unwilling or unable to pay rent in full on a timely basis.

In some cases, the companies in which we have invested may have to restructure tenants’ rent obligations, and they may not be able to do so on terms as

favorable to us as those currently in place.

Numerous state, local, federal, and industry-initiated efforts may also affect property owners' ability to collect rent or enforce remedies for the failure to pay rent.

This may lead to reduction or

cancellation of dividends, which will in turn effect our ability to pay our expenses and to pay dividends to our shareholders.

Until such time as the virus is contained or eradicated and commerce and employment return to more customary levels, we may

experience material reductions in our operating revenue.

The full effects of the COVID-19 pandemic are highly uncertain and cannot be predicted.

The World Health Organization has declared the COVID-19 outbreak to be a pandemic, and the President of the United States declared it a national emergency.

Globally, population movement and trade

have been restricted.

Within the United States, various state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19.

We do not yet know the duration of the

pandemic or all of its future effects, but it has already had negative effects on global health and the world economy.

The full effects of the pandemic and its duration is unknown.

Unresolved Staff Comments

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