What changed in this filing

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Item 1A. Risk Factors

2024-02-28 compared with 2023-03-10 · 808 added, 691 removed, 726 unchanged (67% of the section changed)

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in the below summary list can be found further below.

Dependence Upon Key Personnel of Palmer Square and the Investment Advisor — The success of the Company is highly dependent on the financial and managerial expertise of the Investment Advisor and, in turn, Palmer Square.

Dependence Upon Key Personnel of PSCM and the Investment Advisor — The success of the Company is highly dependent on the financial and managerial expertise of the Investment Advisor and, in turn, PSCM.

Operation in a Highly Competitive Market for Investment Opportunities — The business of investing in assets meeting our investment objective is highly competitive.

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Changes in Interest Rates May Affect Our Cost of Capital and Net Investment Income — Because we borrow money to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds.

Regulations Governing Our Operation as a BDC — Regulations governing our operation as a BDC affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative impact on our growth.

Investments in Leveraged Portfolio Companies — Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold.

Investments in Secured Loans — We cannot guarantee the adequacy of the protection of our interests in secured loans, including the validity or enforceability of the loan and the maintenance of the anticipated priority, and in the event of any default under a secured loan, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the secured loan.

Investments in Mezzanine Debt and Other Junior Securities — Our investments in mezzanine debt and other junior securities are subordinate to senior indebtedness of the applicable company and are subject to greater risk.

Investments in CLOs — CLO vehicles that we invest in are typically very highly levered, and therefore, the junior debt and equity tranches that we invest in are subject to a higher degree of risk of total loss.

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Risks Regarding Distributions — We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.

Risks Relating to Economic Recessions or Downturns — Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in our revenues, net income and assets.

Dependence on Strong Referral Relationships

— We depend upon our Investment Advisor and its affiliates to maintain their relationships with private equity sponsors, placement

agents, investment banks, management groups and other financial institutions, and we expect to rely to a significant extend upon these

relationships to provide us with potential investment opportunities.

Uncertainty Regarding the Value of

Portfolio Investments — The fair value of loans, securities and other investments that are not publicly traded may not be readily

determinable and we will value these investments at fair value as determined in good faith by our Investment Advisor (subject to the

Board’s oversight).

Investment in High Yield Debt with Greater Credit and Liquidity Risk — We invest in high yield debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations or is unrated but of comparable credit quality to obligations rated below investment-grade, and has greater credit and liquidity risk than more highly rated debt obligations.

Risks Related to our Business and Structure

We have a limited operating history.

We began operations on January 23,

2020 and have limited operating history.

As a result, we are subject to all of the business risks and uncertainties associated with any

new business, including the risk that it will not achieve its investment objectives and that the value of your investment could decline

substantially or that the investor will suffer a complete loss of its investment in us.

In addition, neither Palmer

Square nor the Investment Advisor has previously managed a BDC.

The 1940 Act imposes numerous constraints on the operations of BDCs

that generally do not apply to other investment vehicles managed by Palmer Square.

BDCs 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.

securities and other high-quality debt instruments that mature in one year or less from the date of investment.

We, the Investment Advisor

and Palmer Square have limited experience operating or advising under these constraints, which may hinder our ability to take advantage

of attractive investment opportunities and to achieve our investment objective.

We are dependent upon key personnel of Palmer

Square and the Investment Advisor.

Our success is highly dependent

on the financial and managerial expertise of the Investment Advisor and, in turn, Palmer Square.

The individuals may not necessarily continue

to remain employed by Palmer Square.

Although we have attempted to foster a team approach to investing, the loss of key individuals employed

by Palmer Square or our Investment Advisor could have a material adverse effect on our financial condition, performance and ability to

achieve our investment objectives.

The Investment Advisor’s

and Palmer Square’s investment professionals expect to devote such time and attention to the conduct of our business as such business

shall reasonably require.

However, there can be no assurance, for example, that the members of the Investment Advisor or such investment

professionals will devote any minimum number of hours each week to our affairs or that they will continue to be employed by Palmer

In the event that certain employees of the Investment Advisor cease to be actively involved with us, we will be required to rely

on the ability of Palmer Square to identify and retain other investment professionals to conduct our business.

We are dependent upon key personnel of

PSCM and the Investment Advisor.

Pursuant to the Resource Sharing

Agreement between the Investment Advisor and PSCM, PSCM provides the Investment Advisor with experienced investment professionals and

services so as to enable the Investment Advisor to fulfil its obligations under the Advisory Agreement.

Accordingly, our success is highly

dependent on the financial and managerial expertise of the Investment Advisor and, in turn, PSCM.

The individuals may not necessarily

continue to remain employed by PSCM or affiliated with PSCM.

Although we have attempted to foster a team approach to investing, the loss

of key individuals employed by PSCM or affiliated with PSCM or our Investment Advisor, including Christopher D.

Long and Angie K.

could have a material adverse effect on our financial condition, performance and ability to achieve our investment objectives.

we cannot assure you that our Investment Advisor will remain our investment adviser or that we will continue to have access to PSCM or

its investment professionals.

Moreover, the Resource Sharing Agreement may be terminated by either party on 60 days’ notice;

termination of the Resource Sharing Agreement could have a material adverse effect on our financial condition, performance and ability

to achieve our investment objectives.

The Investment Advisor’s and PSCM’s investment professionals

expect to devote such time and attention to the conduct of our business as such business shall reasonably require.

However, there can

be no assurance, for example, that the members of the Investment Advisor or such investment professionals will devote any minimum number

of hours each week to our affairs or that they will continue to be employed by PSCM.

In the event that certain employees of the Investment

Advisor cease to be actively involved with us, we will be required to rely on the ability of PSCM to identify and retain other investment

professionals to conduct our business.

We are dependent on strong referral relationships.

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Our executive officers and directors, our

Investment Advisor, Palmer Square and their affiliates, officers, directors and employees may face certain conflicts of interest.

The employees of Palmer Square

and our Investment Advisor serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or

a related line of business as we do, or of investment funds, accounts, or investment vehicles managed by it and/or its affiliates.

Palmer Square, the Investment Advisor and their affiliates may have other clients with similar, different or competing investment objectives.

Investment Advisor, PSCM and their affiliates, officers, directors and employees may face certain conflicts of interest.

The employees of PSCM and

our Investment Advisor serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or a related

line of business as we do, or of investment funds, accounts, or investment vehicles managed by it and/or its affiliates.

Similarly, PSCM,

the Investment Advisor and their affiliates may have other clients with similar, different or competing investment objectives.

In serving in these multiple

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Our management and incentive fee structure

with our Advisor may create incentives for our Investment Advisor that are not fully aligned with the interests of our stockholders and

may induce our Advisor to make speculative investments.

with our Investment Advisor may create incentives for our Investment Advisor that are not fully aligned with the interests of our stockholders

and may induce our Investment Advisor to make speculative investments.

In the course of our investing

activities, we will pay management and, subsequent to a Listing, incentive fees to the Investment Advisor.

We have entered into an Advisory

Agreement with the Investment Advisor.

Under the incentive fee structure which will be in place subsequent to a Listing, our adjusted

net investment income for purposes thereof will be computed and paid on income that may include interest income that has been accrued

but not yet received in cash.

This fee structure may give rise to a conflict of interest for the Investment Advisor to the extent that

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

The Investment 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 Income Incentive Fee 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, under our Advisory Agreement,

the Investment Advisor is not obligated to reimburse us for incentive fees it receives even if we subsequently incur losses or never receive

in cash the deferred income that was previously accrued.

activities, we pay management and incentive fees to the Investment Advisor.

We have entered into an Advisory Agreement with the Investment

Under the incentive fee structure, our adjusted net investment income for purposes thereof is computed and paid on income that

may include interest income that has been accrued but not yet received in cash.

This fee structure may give rise to a conflict of interest

for the Investment Advisor to the extent that it encourages the Investment Advisor to favor debt financings that provide for deferred

interest, rather than current cash payments of interest.

The Investment 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 Income Incentive Fee 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, under our Advisory Agreement, the Investment Advisor is not obligated to reimburse us for incentive fees it receives even if

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

The valuation process for certain of our

portfolio holdings may create a conflict of interest.

We may make many of our portfolio

investments in the form of loans and securities that are not publicly traded and for which no market based price quotation is available.

As a result, we will determine the fair value of these loans and securities in good faith by the Board or its designee as described elsewhere

in this Annual Report.

Our Board has designated the Investment Advisor as the valuation designee pursuant to Rule 2a-5 under the 1940

In connection with its fair value determination, investment professionals from our Investment Advisor may determine valuations based

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

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

as the Investment Advisor’s base management fee is based, in part, on the value of our total net assets.

We may make portfolio investments

in the form of loans and securities that are not publicly traded and for which no market based price quotation is available.

August 11, 2022, our Board designated the Investment Advisor as our valuation designee.

The participation of the Investment Advisor’s

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

fee is based, in part, on the value of our total net assets.

We operate in a highly competitive market

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

The business of investing in

assets meeting our investment objective is highly competitive.

Competition for investment opportunities includes a growing number of nontraditional

participants, such as hedge funds, senior private debt funds, including BDCs, and other private investors, as well as more traditional

lending institutions and competitors.

Some of these competitors may have access to greater amounts of capital and to capital that may

be committed for longer periods of time or may have different return thresholds than us, and thus these competitors may have advantages

not shared by us.

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 RIC

Increased competition for, or a diminishment in the available supply of, investments suitable for us could result in lower returns

on such investments.

Moreover, the identification of attractive investment opportunities is difficult and involves a high degree of uncertainty.

We may incur significant expenses in connection with identifying investment opportunities and investigating other potential investments

which are ultimately not consummated, including expenses relating to due diligence, transportation, legal expenses and the fees of other

third party advisors.

The business of investing

in assets meeting our investment objective is highly competitive.

Competition for investment opportunities includes a growing number of

nontraditional participants, such as hedge funds, senior private debt funds, including BDCs, and other private investors, as well as more

traditional lending institutions and competitors.

Some of these competitors may have access to greater amounts of capital or may have

different return thresholds than us, and thus these competitors may have advantages not shared by us.

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 RIC status.

Increased competition for, or a diminishment in

the available supply of, investments suitable for us could result in lower returns on such investments.

Moreover, the identification of

attractive investment opportunities is difficult and involves a high degree of uncertainty.

We may incur significant expenses in connection

with identifying investment opportunities and investigating other potential investments which are ultimately not consummated, including

expenses relating to due diligence, transportation, legal expenses and the fees of other third party advisors.

With respect to the investments

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We may need to raise additional capital.

We may need additional capital

to fund new investments and grow our portfolio of investments.

We intend to access the capital markets periodically to issue debt or equity

securities or borrow from financial institutions in order to obtain such additional capital.

Unfavorable economic conditions could increase

our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.

in the availability of new capital could limit our ability to grow.

In addition, we are required to distribute dividends for U.S.

income tax purposes of an amount generally at least equally to 90% of the sum of our net ordinary income and net short-term capital gains

in excess of net long-term capital losses, if any, to our stockholders to qualify and maintain our RIC status.

As a result, these earnings

will not be available to fund new investments.

An inability on our part to access the capital markets successfully could limit our ability

to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect

on the value of our securities.

We may need to raise additional

capital to fund new investments and grow our portfolio of investments.

We intend to access the capital markets periodically to issue debt

or equity securities or borrow from financial institutions in order to obtain such additional capital.

Unfavorable economic conditions

could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.

A reduction in the availability of new capital could limit our ability to grow.

In addition, we are required to distribute dividends for

federal income tax purposes of an amount generally at least equally to 90% of the sum of our net ordinary income and net short-term

capital gains in excess of net long-term capital losses, if any, to our stockholders to qualify and maintain our RIC status.

these earnings will not be available to fund new investments.

An inability on our part to access the capital markets successfully could

limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have

an adverse effect on the value of our securities.

Our investments in PIK interest income may

expose us to risks.

expose us to risks, including a possible increase in incentive fees that are payable by us to the Investment Advisor.

Certain of our debt investments

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in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable by us to

the Investment Advisor after a Listing.

the Investment Advisor.

Our strategy involves a high degree of leverage.

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including interest expenses.

As a BDC, we generally are required to meet a coverage ratio of total

assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue

in the future, of at least 150%.

If this ratio declines below 150%, we will not be able to incur additional debt when it is otherwise

advantageous or necessary for us to do so.

The amount of leverage that we employ will depend on the Investment 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.

As a BDC, we generally are

required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings

and any preferred stock that we may issue in the future, of at least 150%.

If this ratio declines below 150%, we will not be able to incur

additional debt when it is otherwise advantageous or necessary for us to do so.

The amount of leverage that we employ will depend on the

Investment Advisor’s and our Board’s assessment of market and other factors at the time of any proposed borrowing.

assure you that we will be able to obtain credit at all or on terms acceptable to us.

[Illustration.

following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns,

net of expenses.

The calculations in the table below are hypothetical and actual results may be higher or lower than those appearing below.

Assumed Return on Our Portfolio (1)

(net of expenses)

Corresponding net return to common stockholder

(1) Assumes (i) $1.1 billion in total assets as of December 31, 2023,

(ii) $1.1 billion in non-controlled, non-affiliated investments at fair value as of December 31, 2023, (iii) $629.6 million in outstanding

indebtedness as of December 31, 2023, (iv) $462.0 million in net assets as of December 31, 2023 and (iv) weighted average interest rate

of 6.58% on our indebtedness for the twelve months ended December 31, 2023.

Based on outstanding indebtedness of $629.6 million as of December

31, 2023, and the weighted average effective interest rate of 6.58%, our investment portfolio would have had to produce an annual return

of approximately 3.80% to cover annual interest payments on outstanding debt.

We are subject to various covenants under

our credit facilities which, if not complied with, could result in reduced availability and/or mandatory prepayments under our credit

We are subject to various covenants

under our credit facilities which, if not complied with, could result in reduced availability and/or mandatory prepayments under our credit

In the event we default under our credit facilities or any other future borrowing facility, our business could be adversely

affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous prices to us

in order to meet our outstanding payment obligations and/or support working capital requirements under our credit facilities, or such

future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations

and cash flows.

In addition, following any such default, the agent for the lenders under our credit facilities, or such future borrowing

facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and

the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations

We are subject to various

covenants under our credit facilities which, if not complied with, could result in reduced availability and/or mandatory prepayments under

our credit facilities.

In the event we default under our credit facilities or any other future borrowing facility, our business could

be adversely affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous

prices to us in order to meet our outstanding payment obligations and/or support working capital requirements under our credit facilities,

or such future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of

operations and cash flows.

In addition, following any such default, the agent for the lenders under our credit facilities, or such future

borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed

and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations

and cash flows.

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

Our borrowings under the BoA Credit Facility are collateralized by the assets in PS BDC Funding.

The agreements governing the BoA Credit

Facility require us to comply with certain financial and operational covenants.

These covenants include a requirement to maintain a first-prior

security interest in the collateral for the benefit of the lenders under the BoA Credit Facility, maintain various policies and procedures,

and maintain a minimum borrowing base under the BoA Credit Facility.

Our borrowings under the WF Credit Facility are collateralized by

the assets in PS BDC Funding II.

The agreements governing the WF Credit Facility require us to comply with certain financial

and operational covenants.

These covenants include a requirement to maintain a first-prior security interest in the collateral for the

benefit of the lenders under the WF Credit Facility, maintain various policies and procedures, and maintain a minimum borrowing base under

the WF Credit Facility.

Our continued compliance with the covenants under our credit facilities depends on many factors, some of which

are beyond our control.

Changes in interest rates may affect our

cost of capital and net investment income

Our borrowings under the BoA Credit Facility are collateralized by the assets in a special purpose wholly-owned subsidiary, PS BDC Funding.

The agreements governing the BoA Credit Facility require us to comply with certain financial and operational covenants.

These covenants

include a requirement to maintain a first-prior security interest in the collateral for the benefit of the lenders under the BoA Credit

Facility, maintain various policies and procedures, and maintain a minimum borrowing base under the BoA Credit Facility.

Our borrowings

under the line of credit provided to us under the WF Credit Facility are collateralized by the assets in a special purpose wholly owned

subsidiary, PS BDC Funding II.

The agreements governing the WF Credit Facility require us to comply with certain financial and

operational covenants.

These covenants include a requirement to maintain a first-prior security interest in the collateral for the benefit

of the lenders under the WF Credit Facility, maintain various policies and procedures, and maintain a minimum borrowing base under the

WF Credit Facility.

Our continued compliance with the covenants under our credit facilities depends on many factors, some of which are

beyond our control.

Changes in interest

rates may affect our cost of capital and net investment income.

Because we borrow money to

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In periods of rising interest

rates, our cost of funds would increase, which could reduce our net investment income.

rates, our cost of funds could increase, which could reduce our net investment income.

In addition, in a prolonged low interest rate environment,

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rate hedging activities to the extent permitted by the 1940 Act.

Inflation could adversely affect the business,

results of operations and financial condition of our portfolio companies.

Certain of our portfolio companies

are in industries that could be impacted by inflation.

If such portfolio companies are unable to pass any increases in their costs of

operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal

on our loans, particularly if interest rates rise in response to inflation.

In addition, any projected future decreases in our portfolio

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

Any decreases in the fair

value of our investments could result in future realized or unrealized losses and therefore reduce our net increase (decrease) in net

assets resulting from operations.

We are subject to risks associated with

the discontinuation of LIBOR.

On March 5, 2021, the Financial

Conduct Authority (the “FCA”) confirmed its intention to cease publication of (i) one-week and two-month U.S.

tenors after December 31, 2021 and (ii) remaining U.S.

dollar LIBOR tenors after June 30, 2023.

As of January 1, 2022, USD LIBOR is available

in five settings (overnight, one-month, three-month, six-month and 12-month).

The ICE Benchmark Administration (“IBA”) has

stated that it will cease to publish all remaining USD LIBOR settings immediately following their publication on June 30, 2023.

January 1, 2022, all non-USD LIBOR reference rates in all settings ceased to be published.

As an alternative to LIBOR,

Federal Reserve, in conjunction with the Alternative Reference Rates Committee (“ARRC”), a U.S.

convened by the Federal Reserve Board and the Federal Reserve Bank of New York, supports replacing U.S.-dollar LIBOR with the Secured

Overnight Financing Rate (“SOFR”).

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.

Similarly, other jurisdictions have

also proposed their own alternative to LIBOR, including the Sterling Overnight Index Average for Sterling markets, the Euro Short Term

Rate for Euros and Tokyo Overnight Average Rate for Japanese Yens.

Although SOFR appears to be the preferred replacement rate for U.S.

LIBOR, it is unclear if other benchmarks may emerge or if other rates will be adopted outside of the U.S.

Some regulators have prohibited

the use of any LIBOR benchmarks in new contracts and have required that regulated entities transition existing contracts to another benchmark

prior to June 30, 2023.

Although settings of such LIBOR benchmarks may continue to be available, such prohibitions and requirements may

adversely affect the value of floating-rate debt securities in our portfolio or issued by us.

Moreover, at this time, no consensus exists

as to what rate or rates will become accepted alternative to LIBOR.

The transition away from LIBOR

to alternative base rates is complex and could have adverse impacts on our business, financial condition and results of operations, including

as a result of any changes in the pricing of our investments, changes to the documentation for certain of our investments, disputes and

other actions regarding the interpretation of current and prospective loan documentation or modifications to processes and systems.

addition, while some debt investments that are linked to LIBOR may contemplate a scenario where LIBOR is no longer available by providing

or an alternative rate setting methodology, not all instruments may have such provisions and there is significant uncertainty regarding

the effectiveness of any such alternative methodologies.

Beyond these challenges, we anticipate there may be additional risks to our processes

and information systems that will need to be identified and evaluated by us.

Due to the uncertainty of the replacement for LIBOR, the

potential effect of any such event on our business and results of operations cannot yet be determined.

In addition, any further changes

or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which

could have an adverse impact on the market value of any LIBOR-linked securities, loans, and other financial obligations or extensions

of credit we may hold or may be due to us and could have a material adverse effect on our business, financial condition and results of

We may have uncertainty as to the value

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Certain of our investments (other than cash and cash

equivalents) may be classified as Level 3 assets under Topic 820 of the U.S.

equivalents) will be classified as Level 2 assets under Topic 820 of the U.S.

Financial Accounting Standards Board’s Accounting

Standards Codification (“ASC”), as amended, Fair Value Measurements and Disclosures (“ASC 820”).

that our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would price the

asset or liability in question.

We expect that inputs into the determination of fair value of our portfolio investments will require significant

management judgment or estimation.

Even if observable market data are available, such information may be the result of consensus pricing

information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction.

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

The types of factors that the Board may take into account in determining the fair value of our investments generally include, as appropriate,

comparison to publicly-traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value

of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and

its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors.

valuations, and particularly valuations of private securities and private companies, are inherently uncertain, 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 loans and securities existed.

Our net asset value could be adversely affected if our determinations

regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such

loans and securities.

In addition, the method of calculating the base management fee may result in conflicts of interest between the Investment

Advisor, on the one hand, and our stockholders on the other hand, with respect to valuation of investments.

that certain of our portfolio valuations will be based on inputs other than quoted prices which are either directly or indirectly observable,

such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities

in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other

than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value

of derivatives or other assets or liabilities.

Certain other of our investments may be classified as Level 3 under ASC 820, which means

that certain of our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would

price the asset or liability in question.

We expect that inputs into the determination of fair value of our portfolio investments will

require significant management judgment or estimation.

Even if observable market data are available, such information may be the result

of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an

actual transaction.

The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability

of such information.

The types of factors that the Board may take into account in determining the fair value of our investments generally

include, as appropriate, comparison to publicly-traded securities including such factors as yield, maturity and measures of credit quality,

the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability

to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant

Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, 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 loans and securities existed.

Our net asset value could be adversely affected if

our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon

the disposal of such loans and securities.

In addition, the method of calculating the base management fee may result in conflicts of interest

between the Investment Advisor, on the one hand, and our stockholders on the other hand, with respect to valuation of investments.

We will adjust on a quarterly

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realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.

In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Moreover, as of December 31, 2023, 100% of our investments were classified as Level 1 or Level 2, which may cause our NAV to experience

greater fluctuations than funds with a greater proportion of Level 3 assets.

In light of these factors, results for any period should

not be relied upon as being indicative of performance in future periods.

The Board may change our investment objectives,

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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 operating policies and strategies

would have on our business, operating results and the market price of our common stock.

Nevertheless, any such changes could adversely

affect our business and impair our ability to make distributions to our stockholders.

We are subject to risks related to our management

of ESG activities.

Our business faces increasing public scrutiny related to 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.

We cannot predict the effect any changes to our current operating policies and strategies would have

on our business, operating results and the market price of our common stock.

Nevertheless, any such changes could adversely affect our

business and impair our ability to make distributions to our stockholders.

We are subject to risks related to our

management of ESG activities.

Our business faces increasing

public scrutiny related to 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.

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 Investment Advisor and Administrator

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notice, whether we have found a replacement or not.

Similarly, our Administrator has the right under the Administration Agreement to resign

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

If the Investment Advisor

or Administrator were to resign, we may not be able to find a new investment adviser or administrator, as applicable, or hire internal

management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at

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

of operations as well as our ability to pay distributions to our stockholders are likely to be adversely affected.

Moreover, pursuant to the Resource Sharing Agreement, Palmer Square

provides the Investment Advisor with experienced investment professionals and services so as to enable the Investment Advisor to fulfill

its obligations under the Advisory Agreement, and such Resource Sharing Agreement may itself be terminated on 60 days’ notice.

Palmer Square were to so terminate the Resource Sharing Agreement, the Investment Advisor may be required to seek to find an alternate

means of fulfilling its obligations under the Advisory Agreement, or to resign.

We are highly dependent on information systems,

and systems failures or cyber-attacks could significantly disrupt our business, which may, in turn, negatively affect the value of shares

of our common stock and our ability to pay distributions.

Similarly, our Administrator has the right under the Administration Agreement to

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

If the Investment

Advisor or Administrator were to resign, we may not be able to find a new investment adviser or administrator, as applicable, or hire

internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days,

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

and results of operations as well as our ability to pay distributions to our stockholders are likely to be adversely affected.

Moreover, pursuant to the

Resource Sharing Agreement, PSCM provides the Investment Advisor with experienced investment professionals and services so as to enable

the Investment Advisor to fulfill its obligations under the Advisory Agreement, and such Resource Sharing Agreement may itself be terminated

on 60 days’ notice.

If PSCM were to so terminate the Resource Sharing Agreement, the Investment Advisor may be required to seek

to find an alternate means of fulfilling its obligations under the Advisory Agreement, or to resign.

We are highly dependent on information

systems, and systems failures or cyber-attacks could significantly disrupt our business, which may, in turn, negatively affect the value

of shares of our common stock and our ability to pay distributions.

Our business relies on secure

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that renders systems inoperable until ransom is paid, or various other forms of cybersecurity breaches.

Cyber security incidents and cyber-attacks

Cybersecurity incidents and cyber-attacks

have been occurring more frequently and will likely continue to increase.

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Furthermore, cybersecurity continues to be a key priority for regulators around the world, and some jurisdictions

have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.

fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to

investors, regulatory intervention or reputational damage.

have enacted laws requiring companies to notify individuals or the general investing public of data security breaches involving certain

types of personal data, including the SEC, which, on July 26, 2023, adopted amendments requiring the prompt public disclosure of certain

cybersecurity breaches.

If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of

our businesses, liability to investors, regulatory intervention or reputational damage.

Failure to maintain our status as a business

development company would reduce our operating flexibility.

If we do not maintain our status

as a business development company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us

to substantially more regulatory restrictions and correspondingly decrease our operating flexibility.

If we do not maintain our

status as a business development company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject

us to substantially more regulatory restrictions and correspondingly decrease our operating flexibility.

Our charter includes an exclusive forum

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Our charter provides that,

unless we consent in writing to the selection of a different forum, and except for any claims made under the federal U.S.

securities laws,

the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the

District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on

unless we consent in writing to the selection of a different forum, (i) the Circuit Court for Baltimore City, Maryland, or, if that court

does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be, except for any

claims made under the federal U.S.

securities laws, the sole and exclusive forum for (a) any derivative action or proceeding brought on

behalf of the Company, (b) any action asserting a claim of breach of any duty owed by a director or officer or other employee of the Company

to the Company or to the stockholders of the Company or asserting a claim of breach of any standard of conduct set forth in the Maryland

General Corporation Law (the “MGCL”), (c) any action asserting a claim against the Company or any director or officer or other

employee of the Company arising pursuant to any provision of the MGCL, the charter or our bylaws, or (d) any action asserting a claim

against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine.

is uncertainty as to whether a court would enforce such a provision, and investors cannot waive compliance with the federal securities

laws and the rules and regulations thereunder.

In addition, this provision may increase costs for shareholders in bringing a claim against

us or our directors, officers or other agents.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital

stock will be deemed, to the fullest extent permitted by law, to have notice of and consented to these exclusive forum provisions.

exclusive forum selection provision in our charter may limit our stockholders’ ability to obtain a favorable judicial forum for

disputes with us or our directors, officers or other agents, which may discourage lawsuits against us and such persons.

It is also possible

that, notwithstanding such exclusive forum selection provision, a court could rule that such provision is inapplicable or unenforceable.

If this occurred, we may incur additional costs associated with resolving such action in another forum, which could materially adversely

affect our business, financial condition and results of operations.

General Corporation Law, or the “MGCL”, (c) any action asserting a claim against the Company or any director or officer or

other employee of the Company arising pursuant to any provision of the MGCL, the charter or our bylaws, or (d) any action asserting a

claim against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine.

and (ii) the federal district courts of the United States of America shall be the sole and exclusive forum for any claims, suits, actions

or proceedings arising under the federal securities laws.

In addition, this provision may increase costs for shareholders in bringing

a claim against us or our directors, officers or other agents.

Any person or entity purchasing or otherwise acquiring any interest in

shares of our capital stock will be deemed, to the fullest extent permitted by law, to have notice of and consented to these exclusive

forum provisions.

The exclusive forum selection provision in our charter may limit our stockholders’ ability to obtain a favorable

judicial forum for disputes with us or our directors, officers or other agents, which may discourage lawsuits against us and such persons.

It is also possible that, notwithstanding such exclusive forum selection provision, a court could rule that such provision is inapplicable

or unenforceable.

If this occurred, we may incur additional costs associated with resolving such action in another forum, which could

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

We have a limited operating history.

We began operations on January 23,

2020 and have a limited operating history.

As a result, we are subject to all of the business risks and uncertainties associated with

any new business, including the risk that it will not achieve its investment objectives and that the value of your investment could decline

substantially or that the investor will suffer a complete loss of its investment in us.

In addition, neither PSCM (including

the employees of PSCM that serve on the Investment Team) nor the Investment Advisor has managed a BDC prior to our inception.

Act imposes numerous constraints on the operations of BDCs that generally do not apply to other investment vehicles managed by PSCM.

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.

We, the Investment Advisor and PSCM have limited experience operating or advising under these constraints,

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

Risks Related to the 1940 Act

Our ability to enter into transactions with

our affiliates is restricted.

The 1940 Act prohibits or restricts

our ability to engage in certain principal transactions and joint transactions with certain “First Tier” affiliates and “Second

Tier” affiliates.

For example, we are prohibited from buying or selling any security from or to any person who owns more than 25%

of our voting securities or certain of that person’s affiliates (each is a “First Tier” affiliate), or entering into

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

We consider the Investment Advisor and its

affiliates, including Palmer Square, to be “First Tier” affiliates for such purposes.

We are prohibited under the 1940 Act

from participating in certain principal transactions and joint transactions with a “Second Tier” affiliate without the prior

approval of our Independent Directors.

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

be a “Second Tier” affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security

from or to such affiliate without the prior approval of our Independent Directors.

Our ability to enter into transactions

with our affiliates is restricted.

The 1940 Act prohibits or

restricts our ability to engage in certain principal transactions and joint transactions with certain “First Tier” affiliates

and “Second Tier” affiliates.

For example, we are prohibited from buying or selling any security from or to any person who

owns more than 25% of our voting securities or certain of that person’s affiliates (each is a “First Tier” affiliate),

or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.

We consider the Investment

Advisor and its affiliates, including PSCM, to be “First Tier” affiliates for such purposes.

We are prohibited under the 1940

Act from participating in certain principal transactions and joint transactions with a “Second Tier” affiliate without the

prior approval of our Independent Directors.

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

will be a “Second Tier” affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any

security from or to such affiliate without the prior approval of our Independent Directors.

We may, however, invest alongside

Palmer Square’s investment funds, accounts and investment vehicles in certain circumstances where doing so is consistent with our

investment strategy as well as applicable law and SEC staff interpretations.

For example, we may invest alongside such investment funds,

accounts and investment vehicles consistent with guidance promulgated by the SEC staff to purchase interests in a single class of privately

placed securities so long as certain conditions are met, including that the Investment Advisor and Palmer Square, acting on our behalf

and on behalf of such investment funds, accounts and investment vehicles, negotiate no term other than price.

PSCM’s investment funds, accounts and investment vehicles in certain circumstances where doing so is consistent with our investment

strategy as well as applicable law and SEC staff interpretations.

For example, we may invest alongside such investment funds, accounts

and investment vehicles consistent with guidance promulgated by the SEC staff to purchase interests in a single class of privately placed

securities so long as certain conditions are met, including that the Investment Advisor and PSCM, acting on our behalf and on behalf of

such investment funds, accounts and investment vehicles, negotiate no term other than price.

In situations where co-investment

with investment funds, accounts and investment vehicles managed by the Investment Advisor and its affiliates, including Palmer Square,

is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the

different investments could be expected to result in a conflict between our interests and those of these other clients, the Investment

Advisor and Palmer Square will need to decide which client will proceed with the investment.

These restrictions will limit the scope of

investment opportunities that would otherwise be available to us.

with investment funds, accounts and investment vehicles managed by the Investment Advisor and its affiliates, including PSCM, is not permitted

or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the different investments

could be expected to result in a conflict between our interests and those of these other clients, the Investment Advisor and PSCM will

need to decide which client will proceed with the investment.

These restrictions will limit the scope of investment opportunities that

would otherwise be available to us.

We, the Investment Advisor

and Palmer Square have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments

if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed

by Palmer Square in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory

requirements and other pertinent factors.

We believe that co-investment by us and investment funds, accounts and investment vehicles managed

by the Investment Advisor and its affiliates, including Palmer Square, may afford us additional investment opportunities and an ability

to achieve greater diversification.

Accordingly, our exemptive order permits us to invest with these investment funds, accounts and investment

vehicles managed in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the

Our exemptive relief permitting co-investments applies only if our Independent Directors review and approve each co-investment.

The exemptive order imposes other constraints on co-investments that limit the number of instances when we may rely on its protections.

Regulations governing our operation as a

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

Regulations governing our operation

as a BDC affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have

a negative impact on our growth.

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 Act.

We are generally

able to issue senior securities such that our asset coverage, as defined in the 1940 Act, equals at least 150% of gross assets less all

liabilities and indebtedness not represented by senior securities, after each issuance of senior securities.

If the value of our assets

decline, we may be unable to satisfy this test.

If that happens, we may be required to sell a portion of our investments at a time when

such sales may be disadvantageous to use in order to repay a portion of our indebtedness.

and PSCM have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments if our

Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed by

PSCM in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements

and other pertinent factors.

We believe that co-investment by us and investment funds, accounts and investment vehicles managed by the

Investment Advisor and its affiliates, including PSCM, may afford us additional investment opportunities and an ability to achieve greater

diversification.

Accordingly, our exemptive order permits us to invest with these investment funds, accounts and investment vehicles managed

in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the 1940 Act.

Our exemptive

relief permitting co-investments applies only if our Independent Directors review and approve each co-investment.

The exemptive order

imposes other constraints on co-investments that limit the number of instances when we may rely on its protections.

Regulations governing our operation as

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

Regulations governing our

operation as a BDC affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes,

which may have a negative impact on our growth.

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

We are generally able to issue senior securities such that our asset coverage, as defined in the 1940 Act, equals at least

150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities.

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

If that happens, we may be required to sell a portion of our

investments at a time when such sales may be disadvantageous to use in order to repay a portion of our indebtedness.

Risks Related to our Investments

Economic recessions or downturns could impair

our portfolio companies, and defaults by our portfolio companies will harm our operating results.

Economic recessions or downturns could

impair our portfolio companies, and defaults by our portfolio companies will harm our operating results.

Many of the portfolio companies

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limit our access to the capital markets or result in a decision by lenders not to extend credit to us.

These events could prevent us from

increasing our investments and harm our operating results.

These events could prevent us

from increasing our investments and harm our operating results.

A portfolio company’s

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which the portfolio company incurs a substantially higher amount of indebtedness than the level at which it had previously operated.

may have important consequences to these portfolio companies and us as an investor.

For example, the substantial indebtedness of a portfolio

company could (i) limit its ability to borrow money for its working capital, capital expenditures, debt service requirements, strategic

initiatives or other purposes;

(ii) require it to dedicate a substantial portion of its cash flow from operations to the repayment

of its indebtedness, thereby reducing funds available to it for other purposes;

(iii) make it more highly leveraged than some of

its competitors, which may place it at a competitive disadvantage;

or (iv) subject it to restrictive financial and operating covenants,

which may preclude it from favorable business activities or the financing of future operations or other capital needs.

Leverage may have important consequences to these portfolio companies and us as an investor.

For example, the substantial indebtedness

of a portfolio company could (i) limit its ability to borrow money for its working capital, capital expenditures, debt service requirements,

strategic initiatives or other purposes;

(ii) require it to dedicate a substantial portion of its cash flow from operations to the

repayment of its indebtedness, thereby reducing funds available to it for other purposes;

(iii) make it more highly leveraged than

some of its competitors, which may place it at a competitive disadvantage;

or (iv) subject it to restrictive financial and operating

covenants, which may preclude it from favorable business activities or the financing of future operations or other capital needs.

A leveraged portfolio company’s

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in interest rates, a severe downturn in the economy or deterioration in the condition of that portfolio company or its industry.

portfolio company is unable to generate sufficient cash flow to meet all of its obligations, it may take alternative measures (e.g., reduce

or delay capital expenditures, sell assets, seek additional capital, or seek to restructure, extend or refinance indebtedness).

actions may negatively affect our investment in such a portfolio company.

portfolio company is unable to generate sufficient cash flow to meet all of its obligations, it may take alternative measures (e.g.,

reduce or delay capital expenditures, sell assets, seek additional capital, or seek to restructure, extend or refinance indebtedness).

These actions may negatively affect our investment in such a portfolio company.

Investment in leveraged companies

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capital to support their operations, finance their expansion or maintain their competitive position.

The lack of liquidity in our investments

may adversely affect our businesses.

We may acquire a significant

percentage of our portfolio company investments from privately held companies in directly negotiated transactions.

The lack of an established,

liquid secondary market for some of our investments may have an adverse effect on the market value of our investments and on our ability

to dispose of them.

Additionally, our investments may be subject to certain transfer restrictions that may also contribute to illiquidity.

Further, our assets that are typically traded in a liquid market may become illiquid due to events relating to the issuer, market events,

economic conditions or investor perceptions.

Therefore, no assurance can be given that, if we are determined to dispose of a particular

investment held by us, it could dispose of such investment at the prevailing market price.

Our investments in secured loans may nonetheless

expose us to losses from default and foreclosure.

While we may invest in secured

While we invest in secured

loans, they may nonetheless be exposed to losses resulting from default and foreclosure.

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The mezzanine debt and other

junior investments in which we may invest are typically contractually or structurally subordinate to senior indebtedness of the applicable

junior investments in which we may invest are typically contractually or structurally subordinated to senior indebtedness of the applicable

company, or effectively subordinated as a result of being unsecured debt and therefore subject to the prior repayment of secured indebtedness

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holders of the senior indebtedness will likely control the creditor side of such negotiations.

Many issuers of mezzanine debt or other junior

securities are highly leveraged, and their relatively high debt-to-equity ratios create increased risks that their operations might not

generate sufficient cash flow to service their debt obligations.

In addition, many issuers of mezzanine debt or other junior securities

may be in poor financial condition, experiencing poor operating results, having substantial capital needs or negative net worth or be

facing special competitive or product obsolescence problems, and may include companies involved in bankruptcy or other reorganizations

or liquidation proceedings.

Adverse changes in the financial condition of an issuer, general economic conditions, or both, may impair

the ability of such issuer to make payments on the subordinated securities and result in defaults on such securities more quickly than

in the case of the senior obligations of such issuer.

Mezzanine debt and other junior securities may not be publicly traded, and therefore

it may be difficult to obtain information as to the true condition of the issuers.

Finally, the market values of certain of mezzanine

debt and other junior securities may reflect individual corporate developments.

Our investments may include Covenant-Lite

Loans, which may give us fewer rights and subject us to greater risk of loss than loans with financial maintenance covenants.

Many issuers of mezzanine

debt or other junior securities are highly leveraged, and their relatively high debt-to-equity ratios create increased risks that their

operations might not generate sufficient cash flow to service their debt obligations.

In addition, many issuers of mezzanine debt or

other junior securities may be in poor financial condition, experiencing poor operating results, having substantial capital needs or

negative net worth or be facing special competitive or product obsolescence problems, and may include companies involved in bankruptcy

or other reorganizations or liquidation proceedings.

Adverse changes in the financial condition of an issuer, general economic conditions,

or both, may impair the ability of such issuer to make payments on the subordinated securities and result in defaults on such securities

more quickly than in the case of the senior obligations of such issuer.

Mezzanine debt and other junior securities may not be publicly

traded, and therefore it may be difficult to obtain information as to the true condition of the issuers.

Finally, the market values of

certain of mezzanine debt and other junior securities may reflect individual corporate developments.

Our investments include Covenant-Lite Loans,

which give us fewer rights and subject us to greater risk of loss than loans with financial maintenance covenants.

A significant number of high

yield loans in the market, in particular the broadly syndicated loan market, may consist of Covenant-Lite Loans.

A significant portion

of the loans in which we may invest or get exposure to through its investments in CDOs or other types of structured securities may be

deemed to be Covenant-Lite Loans and it is possible that such loans may comprise a majority of our portfolio.

Such loans do not require

the borrower to maintain debt service or other financial ratios and do not include terms which allow the lender to monitor the performance

of the borrower and declare a default if certain criteria are breached.

Ownership of Covenant-Lite Loans may expose us to different risks,

yield loans in the market, in particular the broadly syndicated loan market, consist of Covenant-Lite Loans, which are loans that do not

require the borrower to maintain debt service or other financial ratios and do not include terms which allow the lender to monitor the

performance of the borrower and declare a default if certain criteria are breached.

A significant portion of the loans in which we may

invest or get exposure to through its investments in CDOs or other types of structured securities are Covenant-Lite Loans and it is possible

that such loans may comprise a majority of our portfolio from time to time.

Ownership of Covenant-Lite Loans exposes us to different risks,

including with respect to liquidity, price volatility, ability to restructure loans, credit risks and less protective loan documentation,

than is the case with loans that contain financial maintenance covenants.

In addition, a significant portion of the loans in which we

may invest may be Covenant-Lite Loans.

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 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.

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.

Our prospective portfolio companies may

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of debt with lower cost debt or when the general credit market conditions improve.

Additionally, prepayments could negatively impact our

ability to pay, or the amount of, distributions on our common stock, which could result in a decline in the market price of our shares.

Additionally, prepayments could negatively impact

our ability to pay, or the amount of, distributions on our common stock, which could result in a decline in the market price of our shares.

Our inability to reinvest such proceeds may materially affect the overall performance.

We may invest in high yield debt, which

has greater credit and liquidity risk than more highly rated debt obligations.

We may invest in high yield

debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations

We invest in high yield debt, which has

greater credit and liquidity risk than more highly rated debt obligations.

We invest in high yield debt,

a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations

or is unrated but of comparable credit quality to obligations rated below investment-grade, and has greater credit and liquidity risk

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commercial banks, investment funds and investment banks.

As secondary market trading volumes for bank loans increase, new bank loans are

frequently adopting standardized documentation to facilitate loan trading, which should improve market liquidity.

There can be no assurance,

however, that future levels of supply and demand in bank loan trading will provide an adequate degree of liquidity, that the current period

of illiquidity will not persist or worsen and that the market will not experience periods of significant illiquidity in the future.

addition, we may make investments in stressed or distressed bank loans, which are often less liquid than performing bank loans.

As secondary market trading volumes for bank loans increase, new bank loans

are frequently adopting standardized documentation to facilitate loan trading, which should improve market liquidity.

There can be no

assurance, however, that future levels of supply and demand in bank loan trading will provide an adequate degree of liquidity, that the

current period of illiquidity will not persist or worsen and that the market will not experience periods of significant illiquidity in

In addition, we may make investments in stressed or distressed bank loans, which are often less liquid than performing bank

Compared to securities and

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(ii) leave us unable to timely vote, or otherwise act with respect

to, loans it has agreed to purchase;

to, loans we have agreed to purchase;

(iii) delay us from realizing the proceeds of a sale of a loan;

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from banks or other lenders.

In certain circumstances, loans

may not be deemed to be securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have

the protection of the anti-fraud provisions of the federal securities laws, as would be the case for bonds or stocks.

Instead, in such

cases, lenders generally rely on the contractual provisions in the loan agreement itself, and common-law fraud protections under applicable

We may acquire interests in

bank loans either directly (by way of sale or assignment) or indirectly (by way of participation).

The purchaser of an assignment typically

succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with respect to

the debt obligation;

In certain circumstances,

loans may not be deemed to be securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not

have the protection of the anti-fraud provisions of the federal securities laws, as would be the case for bonds or stocks.

such cases, lenders generally rely on the contractual provisions in the loan agreement itself, and common-law fraud protections under

applicable state law.

We may acquire interests

in bank loans either directly (by way of sale or assignment) or indirectly (by way of participation).

The purchaser of an assignment

typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with

respect to the debt obligation;

however, its rights can be more restricted than those of the assigning institution.

Participation interests in a

portion of a debt obligation typically result in a contractual relationship only with the institution participating out the interest,

Participation interests

in a portion of a debt obligation typically result in a contractual relationship only with the institution participating out the interest,

and not with the borrower.

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The bank loans acquired by us are likely to be below investment-grade.

We may invest in structured products and

such investments may involve significant risks.

We may also invest, to a limited

extent, in structured products, which may include CDOs, CLOs (including the equity tranches thereof), structured notes, and credit-linked

We invest in structured products and such

investments may involve significant risks.

We invest, to a limited extent,

in structured products, which may include CDOs, CLOs (including the equity tranches thereof), structured notes, and credit-linked notes.

These investment entities may be structured as trusts or other types of pooled investment vehicles.

They may also involve the

deposit with or purchase by an entity of the underlying investments and the issuance by that entity of one or more classes of securities

backed by, or representing interests in, the underlying investments or referencing an indicator related to such investments.

CLOs are types of asset-backed securities issued by special purpose vehicles created to reapportion the risk and return characteristics

of a pool of assets.

The underlying pool for a CLO, for example, may include domestic and foreign senior loans, senior unsecured loans,

and subordinate corporate loans.

They may also involve the deposit

with or purchase by an entity of the underlying investments and the issuance by that entity of one or more classes of securities backed

by, or representing interests in, the underlying investments or referencing an indicator related to such investments.

CDOs and CLOs are

types of asset-backed securities issued by special purpose vehicles created to reapportion the risk and return characteristics of a pool

The underlying pool for a CLO, for example, may include domestic and foreign senior loans, senior unsecured loans, and subordinate

corporate loans.

Generally, these are not qualified as eligible portfolio companies.

Investments in the equity tranche

or any similarly situated tranche of a structured product involve a greater degree of risk than investments in other tranches, and such

investments will be the first to bear losses incurred by a structured product.

Investments in the equity tranche or any similarly

situated tranche of a structured product involve a greater degree of risk than investments in other tranches, and such investments will

be the first to bear losses incurred by a structured product.

Our CLO investments are typically highly

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In addition to the general

risks associated with investing in debt securities, CLO vehicles carry additional risks, including, but not limited to:

(i) the possibility

that distributions from collateral securities will not be adequate to make interest or other payments;

(ii) the quality of the collateral

may decline in value or default;

(iii) the fact that our investments in CLO tranches will likely be subordinate to other senior classes

of note tranches thereof;

and (iv) the complex structure of the security may not be fully understood at the time of investment and

may produce disputes with the CLO vehicle or unexpected investment results.

Our net asset value may also decline over time if our principal

recovery with respect to CLO equity investments is less than the price we paid for those investments.

Investments in structured vehicles,

including equity and junior debt instruments issued by CLO vehicles, involve risks, including credit risk and market risk.

interest rates and credit quality may cause significant price fluctuations.

Additionally, changes in the underlying leveraged corporate

loans held by a CLO vehicle may cause payments on the instruments we hold to be reduced, either temporarily or permanently.

investments, particularly the subordinated interests in which we intend to invest, may be less liquid than many other types of securities

and may be more volatile than the leveraged corporate loans underlying the CLO vehicles we intend to target.

Fluctuations in interest

rates may also cause payments on the tranches of CLO vehicles that we hold to be reduced, either temporarily or permanently.

risks associated with investing in debt securities, CLO vehicles carry additional risks, including:

(i) the possibility that distributions

from collateral securities will not be adequate to make interest or other payments;

(ii) the quality of the collateral may decline

in value or default;

(iii) the fact that our investments in CLO tranches will likely be subordinate to other senior classes of note

tranches thereof;

and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce

disputes with the CLO vehicle or unexpected investment results.

Our net asset value may also decline over time if our principal recovery

with respect to CLO equity investments is less than the price we paid for those investments.

Investments in structured

vehicles, including equity and junior debt instruments issued by CLO vehicles, involve risks, including credit risk and market risk.

Changes in interest rates and credit quality may cause significant price fluctuations.

Additionally, changes in the underlying leveraged

corporate loans held by a CLO vehicle may cause payments on the instruments we hold to be reduced, either temporarily or permanently.

Structured investments, particularly the subordinated interests in which we intend to invest, may be less liquid than many other types

of securities and may be more volatile than the leveraged corporate loans underlying the CLO vehicles we intend to target.

in interest rates may also cause payments on the tranches of CLO vehicles that we hold to be reduced, either temporarily or permanently.

The accounting and tax implications

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are reflected in a constant yield to maturity.

Any interests we acquire in

CLO vehicles will likely be thinly traded or have only a limited trading market and may be subject to restrictions on resale.

issued by CLO vehicles are generally not listed on any U.S.

national securities exchange and no active trading market may exist for

the securities of CLO vehicles in which we may invest.

Although a secondary market may exist for our investments in CLO vehicles, the

market for our investments in CLO vehicles may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement

Interests we acquire in CLO

vehicles will likely be thinly traded or have only a limited trading market and may be subject to restrictions on resale.

Securities issued

by CLO vehicles are generally not listed on any U.S.

national securities exchange and no active trading market may exist for the

securities of CLO vehicles in which we may invest.

Although a secondary market may exist for our investments in CLO vehicles, the market

for our investments in CLO vehicles may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

As a result, these types of investments may be more difficult to value.

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Because of the nature of certain of our investments, we could be subject to allegations of lender liability.

In addition, under common law

principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an action

that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages in other

inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations

In addition, under common

law principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an

action that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages

in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations

to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of the other

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in a portfolio company, we may decide to provide additional funds to such portfolio company, in order to:

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;

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;

attempt to preserve or enhance the value of our investment.

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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

concentration of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940

concentration of risk, because we prefer other opportunities or because we are restricted by compliance with BDC requirements of the 1940

Act or the desire to maintain our qualification as a RIC.

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which are subordinated to debt investments and are subject to additional risks.

We expect to make select equity

investments in the common or preferred stock of a company, all of which are subordinated to debt investments.

In addition, when we invest

in first lien secured debt, second lien secured debt or subordinated debt, we may acquire warrants to purchase equity investments from

time to time.

We expect to make select

equity investments in the common or preferred stock of a company, all of which are subordinated to debt investments.

In addition, when

we invest in first lien secured debt, second lien secured debt or subordinated debt, we may acquire warrants to purchase equity investments

from time to time.

Our goal is ultimately to dispose of these equity investments and realize gains upon our disposition of such interests.

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Accordingly, we may not be

able to realize gains from our equity investments, and any gains that we do realize on the disposition of any equity investments may not

be sufficient to offset any other losses we experience.

In addition, many of the equity securities in which we invest may not pay dividends

on a regular basis, if at all.

able to realize gains from our equity investments, and any gains that we do realize on the disposition of any equity investments may

not be sufficient to offset any other losses we experience.

In addition, many of the equity securities in which we invest may not pay

dividends on a regular basis, if at all.

The lack of liquidity in our investments

may adversely affect our businesses.

We may acquire a significant

percentage of our portfolio company investments from privately held companies in directly negotiated transactions.

The lack of an established,

liquid secondary market for some of our investments may have an adverse effect on the market value of our investments and on our ability

to dispose of them.

Additionally, our investments may be subject to certain transfer restrictions that may also contribute to illiquidity.

Further, our assets that are typically traded in a liquid market may become illiquid due to events relating to the issuer, market events,

economic conditions or investor perceptions.

Therefore, no assurance can be given that, if we are determined to dispose of a particular

investment held by us, it could dispose of such investment at the prevailing market price.

Because we generally do not hold controlling

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Due to the potential lack of liquidity of the debt and equity investments

that we expect to hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the

actions of a portfolio company and may therefore suffer a decrease in the value of our investments.

In addition, we may not be

in a position to control any portfolio company by investing in its debt securities.

As a result, we are subject to the risk that a portfolio

company in which we invest may make business decisions with which we disagree and the management of such company, as representatives of

the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.

that we hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of

a portfolio company and may therefore suffer a decrease in the value of our investments.

In addition, we may not be in a position to control any portfolio company

by investing in its debt securities.

As a result, we are subject to the risk that a portfolio company may make business decisions with

which we disagree and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise

act in ways that do not serve our interests as debt investors.

Our portfolio companies could incur debt

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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.

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.

Even where the senior loans

held by us are secured by a perfected lien over a substantial portion of the assets of a portfolio company and its subsidiaries, the portfolio

company and its subsidiaries will often be able to incur a substantial amount of additional indebtedness, which may have an exclusive

lien over particular assets.

For example, debt and other liabilities incurred by non-guarantor subsidiaries of portfolio companies will

be structurally senior to the debt held by us.

Accordingly, any such debt and other liabilities of such subsidiaries would, in the event

of liquidation, dissolution, insolvency, reorganization or bankruptcy of such subsidiary, be repaid in full before any distributions to

an obligor of the loans held by us.

Furthermore, these other assets over which other lenders have a lien may be substantially more liquid

or valuable than the assets over which we have a lien.

held by us are secured by a perfected lien over a substantial portion of the assets of a portfolio company and its subsidiaries, the

portfolio company and its subsidiaries will often be able to incur a substantial amount of additional indebtedness, which may have an

exclusive lien over particular assets.

For example, debt and other liabilities incurred by non-guarantor subsidiaries of portfolio companies

will be structurally senior to the debt held by us.

Accordingly, any such debt and other liabilities of such subsidiaries would, in the

event of liquidation, dissolution, insolvency, reorganization or bankruptcy of such subsidiary, be repaid in full before any distributions

to an obligor of the loans held by us.

Furthermore, these other assets over which other lenders have a lien may be substantially more

liquid or valuable than the assets over which we have a lien.

The rights we may have with

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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

the ability to cause the commencement of enforcement proceedings against the collateral;

the ability to cause the commencement of enforcement proceedings against

the collateral;

the ability to control the conduct of such proceedings;

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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

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.

We may be subject to risk if we invest in

Our portfolio may include debt

We are subject to risks related to investments

Our portfolio includes debt

securities of non-U.S.

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Bankruptcy law and process

jurisdictions may differ substantially from that in the United States, which may result in greater uncertainty as

to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of

In certain developing countries, although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain,

while other developing countries may have no bankruptcy laws enacted, adding further uncertainty to the process for reorganization.

jurisdictions may differ substantially from that in the United States, which may result in greater uncertainty

as to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment

In certain developing countries, although bankruptcy laws have been enacted, the process for reorganization remains highly

uncertain, while other developing countries may have no bankruptcy laws enacted, adding further uncertainty to the process for reorganization.

We may be subject to risks if we engage

in hedging transactions.

We are authorized to use various

investment strategies to hedge interest rate or currency exchange risks.

These strategies are generally accepted as portfolio management

techniques and are regularly used by many investment funds and other institutional investors.

Techniques and instruments may change over

time as new instruments and strategies are developed or regulatory changes occur.

We may use any or all such types of interest rate hedging

transactions and currency hedging transactions at any time and no particular strategy will dictate the use of one transaction rather than

The choice of any particular interest rate hedging transactions and currency hedging transactions will be a function of numerous

variables, including market conditions.

Investments or liabilities of ours may be denominated in currencies other than the U.S.

and hence the value of such investments, or the amount of such liabilities, will depend in part on the relative strength of the U.S.

We may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies

Changes in foreign currency exchange rates may also affect the value of dividends and interest earned as well

as the level of gains and losses realized on the sale of securities.

We are authorized to use

various investment strategies to hedge interest rate or currency exchange risks.

These strategies are generally accepted as portfolio

management techniques and are regularly used by many investment funds and other institutional investors.

Techniques and instruments may

change over time as new instruments and strategies are developed or regulatory changes occur.

We may use any or all such types of interest

rate hedging transactions and currency hedging transactions at any time and no particular strategy will dictate the use of one transaction

rather than another.

The choice of any particular interest rate hedging transactions and currency hedging transactions will be a function

of numerous variables, including market conditions.

Investments or liabilities of ours may be denominated in currencies other than the

dollar, and hence the value of such investments, or the amount of such liabilities, will depend in part on the relative strength

We may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate

between foreign currencies and the U.S.

Changes in foreign currency exchange rates may also affect the value of dividends

and interest earned as well as the level of gains and losses realized on the sale of securities.

The rates of exchange between the U.S.

dollar and other currencies

are affected by many factors, including forces of supply and demand in the foreign exchange markets.

These rates are also affected by

the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors.

We are not obligated to engage in any currency hedging operations, and there can be no assurance as to the success of any hedging operations

that we may implement.

and other currencies are affected by many factors, including forces of supply and demand in the foreign exchange markets.

are also affected by the international balance of payments and other economic and financial conditions, government intervention, speculation

and other factors.

We are not obligated to engage in any currency hedging operations, and there can be no assurance as to the success

of any hedging operations that we may implement.

Although we intend to engage

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having to currently dispose of such investment.

Such defensive hedge transactions may be entered into when we are legally restricted from

selling an investment or when we otherwise determine that it is advisable to decrease our exposure to the risk of a decline in the market

value of an investment.

Such defensive hedge transactions may be entered into when we are legally restricted

from selling an investment or when we otherwise determine that it is advisable to decrease our exposure to the risk of a decline in the

market value of an investment.

Such defensive hedging transactions may expose us to the counterparty’s credit risk.

There also can be no

assurance that we will accurately assess the risk of a market value decline with respect to an investment or enter into an appropriate

defensive hedge transaction to protect against such risk.

Furthermore, we are in no event obligated to enter into any defensive hedge

can be no assurance that we will accurately assess the risk of a market value decline with respect to an investment or enter into an

appropriate defensive hedge transaction to protect against such risk.

Furthermore, we are in no event obligated to enter into any defensive

hedge transaction.

We may from time to time employ various investment programs, including the use of derivatives, short sales, swap transactions,

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In October 2020, the SEC adopted

Rule 18f-4 under the 1940 Act regarding the ability of a BDC to use derivatives and other transactions that create future payment or delivery

Rule 18f-4 under the 1940 Act regarding the ability of a BDC to use derivatives and other transactions that create future payment or

delivery obligations.

Under Rule 18f-4, BDCs that use derivatives are subject to a value-at-risk leverage limit, a derivatives risk management

program and testing requirements and requirements related to board reporting.

These requirements apply unless the BDC qualifies as a “limited

derivatives user,” as defined under Rule 18f-4.

Under Rule 18f-4, a BDC may enter into an unfunded commitment agreement (which may

include delayed draw and revolving loans) that will not be deemed to be a derivatives transaction, such as an agreement to provide financing

to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time it enters into such an agreement, that it

will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each

case as it becomes due.

Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial

These requirements apply unless the BDC qualifies as a

“limited derivatives user,” as defined under Rule 18f-4.

Under Rule 18f-4, a BDC may enter into an unfunded commitment agreement

(which may include delayed draw and revolving loans) that will not be deemed to be a derivatives transaction, such as an agreement to

provide financing to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time it enters into such an

agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment

agreements, in each case as it becomes due.

Collectively, these requirements may limit our ability to use derivatives and/or enter into

certain other financial contracts.

We have adopted updated policies

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with such income being required to be included in an accounting income and taxable income prior to receipt of cash, including the following:

OID instruments and PIK securities may have unreliable valuations because the accretion of OID as interest income and the continuing accruals of PIK securities require judgments about their collectability and the collectability of deferred payments and the value of any associated collateral.

OID instruments may create heightened credit risks because the inducement to the borrower to accept higher interest rates in exchange for the deferral of cash payments typically represents, to some extent, speculation on the part of the borrower.

For accounting purposes, cash distributions to stockholders that include a component of accreted OID income do not come from paid-in capital, although they may be paid from the offering proceeds.

Thus, although a distribution of accreted OID income may come from the cash invested by the stockholders, the 1940 Act does not require that stockholders be given notice of this fact.

The higher interest rates on PIK securities reflects the payment deferral and increased credit risk associated with such instruments and PIK securities generally represent a significantly higher credit risk than coupon loans.

The presence of accreted OID income and PIK interest income create the risk of non-refundable cash payments to the Investment Advisor in the form of incentive fees on income that will be payable subsequent to a Listing based on non-cash accreted OID income and PIK interest income accruals that may never be realized.

Even if accounting conditions are met, borrowers on such securities could still default when our actual collection is expected to occur at the maturity of the obligation.

PIK interest has the effect of generating investment income and increasing the incentive fees that will be payable subsequent to a Listing at a compounding rate.

In addition, the deferral of PIK interest also reduces the loan-to-value ratio at a compounding rate.

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.

OID instruments and PIK securities may have unreliable valuations because

the accretion of OID as interest income and the continuing accruals of PIK securities require judgments about their collectability

and the collectability of deferred payments and the value of any associated collateral.

OID instruments may create heightened credit risks because the inducement

to the borrower to accept higher interest rates in exchange for the deferral of cash payments typically represents, to some extent,

speculation on the part of the borrower.

For accounting purposes, cash distributions to stockholders that include

a component of accreted OID income do not come from paid-in capital, although they may be paid from the offering proceeds.

although a distribution of accreted OID income may come from the cash invested by the stockholders, the 1940 Act does not require

that stockholders be given notice of this fact.

The higher interest rates on PIK securities reflects the payment deferral

and increased credit risk associated with such instruments and PIK securities generally represent a significantly higher credit risk

than coupon loans.

The presence of accreted OID income and PIK interest income create

the risk of non-refundable cash payments to the Investment Advisor in the form of incentive fees on income that will be payable subsequent

to a Listing based on non-cash accreted OID income and PIK interest income accruals that may never be realized.

Even if accounting conditions are met, borrowers on such securities

could still default when our actual collection is expected to occur at the maturity of the obligation.

PIK interest has the effect of generating investment income and increasing

the incentive fees that will be payable subsequent to a Listing at a compounding rate.

In addition, the deferral of PIK interest

also reduces the loan-to-value ratio at a compounding rate.

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.

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 us being subject to corporate level taxation.

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 us being subject to corporate level taxation.

Federal Income Tax and Other Tax Risks

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diversification and distribution requirements.

If we do not maintain our status as a BDC, we may fail to qualify as a RIC and, thus, may

be subject to corporate-level income tax.

The distribution requirement for a RIC is satisfied if we distribute dividends in respect of

each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to

any deduction for dividends paid, to our stockholders.

We are subject 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

If we do not maintain our status as a BDC, we may fail to qualify as a RIC and, thus,

may be subject to corporate-level income tax.

The distribution requirement for a RIC is satisfied if we distribute dividends in respect

of each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard

to any deduction for dividends paid, to our stockholders.

We are subject 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 enable us to be subject to tax as a RIC.

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

To qualify to be subject to 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 tests may result in our having

to dispose of certain investments quickly in order to satisfy these requirements.

Because most of our investments will be in private or

thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses.

we fail to qualify to be subject to tax as a RIC for any reason and become subject to corporate income tax, the resulting corporate taxes

could substantially reduce our net assets, the amount of income available for distributions to our stockholders and the amount of funds

available for new investments.

To qualify to be subject to 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 tests may result in

our having to dispose of certain investments quickly in order to satisfy these requirements.

Because most of our investments will be

in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial

If we fail to qualify to be subject to tax as a RIC for any reason and become subject to corporate income tax, the resulting

corporate taxes could substantially reduce our net assets, the amount of income available for distributions to our stockholders and the

amount of funds available for new investments.

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

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in income before we receive any corresponding cash payments.

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

will not receive in cash.

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

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

we will not receive in cash.

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 at least 90% of our investment company taxable income, determined without regard to any deduction for dividends

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be subject to corporate-level income tax.

If we are not treated as a “publicly

offered regulated investment company,” as defined in the Code, U.S.

stockholders that are individuals, trusts or estates could be

subject to tax as though they received a distribution of some of our expenses.

We cannot assure you that

we will be treated as a publicly offered regulated investment company for all years.

Unless and until we are treated as a “publicly

offered regulated investment company” (within the meaning of Section 67 of the Code) by reason of either (i) shares of our common

stock and our preferred stock (if any) collectively are held by at least 500 persons at all times during a taxable year, (ii) shares of

our common stock are treated as regularly traded on an established securities market or (iii) shares of our common stock are continuously

offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act), each U.S.

stockholder that is an individual,

trust or estate will be treated as having received a dividend from us in the amount of such U.S.

stockholder’s allocable share of

the management fees paid to our Investment Advisor and certain of our other expenses for the calendar year, and these fees and expenses

will be treated as miscellaneous itemized deductions of such U.S.

For taxable years beginning before 2026, miscellaneous

itemized deductions generally are not deductible by a U.S.

stockholder that is an individual, trust or estate.

For taxable years beginning

in 2026 or later, miscellaneous itemized deductions generally are deductible by a U.S.

stockholder that is an individual, trust or estate

only to the extent that the aggregate of such U.S.

stockholder’s miscellaneous itemized deductions exceeds 2% of such U.S.

stockholder’s

adjusted gross income for U.S.

federal income tax purposes, are not deductible for purposes of the alternative minimum tax and are subject

to the overall limitation on itemized deductions under Section 68 of the Code.

We may be subject to withholding of U.S.

income tax on distributions for non-U.S.

We may be required to withhold U.S.

income tax on distributions to non-U.S.

stockholders.

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tax in the hands of a non-U.S.

However, if reported by a RIC,

dividend distributions by the RIC derived from certain interest income (such distributions, “interest-related dividends”)

However, if reported by a

RIC, dividend distributions by the RIC derived from certain interest income (such distributions, “interest-related dividends”)

and certain net short-term capital gains (such distributions, “short-term capital gain dividends”) generally are exempt from

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may have withheld U.S.

federal income tax even if we reported the payment as an interest-related dividend or short-term capital gain

Since our common stock will be subject to significant transfer restrictions, and an investment in our common stock will generally

be illiquid, non-U.S.

federal income tax even if we reported the payment as an interest-related dividend or short-term capital

gain dividend.

Since our common stock will be subject to significant transfer restrictions, and an investment in our common stock will

generally be illiquid, non-U.S.

stockholders whose distributions on our common stock are subject to U.S.

withholding tax may not be able

to transfer their shares of our common stock easily or quickly or at all.

A failure of any portion of

our distributions to qualify for the exemption for interest-related dividends or short-term capital gain dividends would not affect the

treatment of non-U.S.

withholding tax may

not be able to transfer their shares of our common stock easily or quickly or at all.

A failure of any portion

of our distributions to qualify for the exemption for interest-related dividends or short-term capital gain dividends would not affect

the treatment of non-U.S.

stockholders that qualify for an exemption from U.S.

withholding tax on dividends by reason of their special

status (for example, foreign government-related entities and certain pension funds resident in favorable treaty jurisdictions).

Our business may be adversely affected if

we fail to maintain our qualification as a RIC.

withholding tax on dividends by reason of their

special status (for example, foreign government-related entities and certain pension funds resident in favorable treaty jurisdictions).

Our business may be adversely affected

if we fail to maintain our qualification as a RIC.

To maintain RIC tax treatment

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issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same

or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these requirements

may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status.

Because a significant portion

of our investments will be in private companies, and therefore may be relatively illiquid, any such dispositions could be made at disadvantageous

prices and could result in substantial losses.

We may invest in certain debt

and equity investments through taxable subsidiaries and the net taxable income of these taxable subsidiaries will be subject to federal

and state corporate income taxes.

We also may invest in certain foreign debt and equity investments which could be subject to foreign

taxes (such as income tax, withholding, and value added taxes).

If we fail to qualify for or maintain RIC tax treatment for any reason

and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income

available for distribution, and the amount of our distributions.

or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these

requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status.

significant portion of our investments will be in private companies, and therefore may be relatively illiquid, any such dispositions

could be made at disadvantageous prices and could result in substantial losses.

We may invest in certain

debt and equity investments through taxable subsidiaries and the net taxable income of these taxable subsidiaries will be subject to

federal and state corporate income taxes.

We also may invest in certain foreign debt and equity investments which could be subject to

foreign taxes (such as income tax, withholding, and value added taxes).

If we fail to qualify for or maintain RIC tax treatment for any

reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of

income available for distribution, and the amount of our distributions.

There is a risk that you may not receive

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on a quarterly basis 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.

to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this Annual Report.

to the asset coverage test applicable to us under the 1940 Act as a BDC and certain limitations under Maryland law, we may be limited

in our ability to make distributions.

In addition, if we violate certain covenants under our credit facilities, or any future credit or

other borrowing facility, our ability to pay distributions to our stockholders could be limited because we may be required by its terms

to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale

of our current investments to repay amounts outstanding thereunder.

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

Due to the asset coverage test applicable to us under the 1940 Act as a BDC and certain limitations under Maryland law, we may

be limited in our ability to make distributions.

In addition, if we violate certain covenants under our credit facilities, or any future

credit or other borrowing facility, our ability to pay distributions to our stockholders could be limited because we may be required

by its terms to use all payments of interest and principal that we receive from our current investments as well as any proceeds received

from the sale of our current investments to repay amounts outstanding thereunder.

Furthermore, the tax treatment

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

Inflation may adversely affect the business,

results of operations and financial condition of our portfolio companies.

Certain of our portfolio companies are in industries that may be impacted

by inflation.

If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could

adversely affect their operating results and impact their ability to pay interest and principal on our loans, particularly if interest

rates rise in response to inflation.

In addition, any projected future decreases in our portfolio companies’ operating results due

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

Any decreases in the fair value of our investments could result

in future realized or unrealized losses and therefore reduce our net increase (decrease) in net assets resulting from operations.

Events outside of our control, including

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the event has occurred, such as acts of God, fire, flood, earthquakes, outbreaks of an infectious disease, pandemic or any other serious

public health concern, acts of war, terrorism, labor strikes, major plant breakdowns, pipeline or electricity line ruptures, failure of

technology, defective design and construction, accidents, demographic changes, government macroeconomic policies, social instability,

public health concern, acts of war, terrorism, labor strikes, major plant breakdowns, pipeline or electricity line ruptures, failure

of technology, defective design and construction, accidents, demographic changes, government macroeconomic policies, social instability,

Some force majeure events could adversely affect the ability of a party (including us, the Investment Advisor, a portfolio company

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In addition, certain force

majeure events (such as events of war or an outbreak of an infectious disease) could have a broader negative impact on the world economy

and international business activity generally, or in any of the countries in which we invest or in which our portfolio companies operate.

majeure events (such as events of war or an outbreak of an infectious disease, such as the global outbreak of COVID-19) could have a broader

negative impact on the world economy and international business activity generally, or in any of the countries in which we invest or in

which our portfolio companies operate.

Such force majeure events could result in or coincide with:

increased volatility in the global securities, derivatives and currency markets;

increased volatility in the global

securities, derivatives and currency markets;

a decrease in the reliability of market prices and difficulty in valuing assets;

greater fluctuations in currency exchange rates;

risk of default (by both government and private issuers);

further social, economic, and political instability;

nationalization of private

greater governmental involvement in the economy or in social factors that impact the economy;

less governmental regulation

and supervision of the securities markets and market participants and decreased monitoring of the markets by governments or self-regulatory

organizations and reduced enforcement of regulations;

limited, or limitations on, the activities of investors in such markets;

or restrictions on foreign investment, capital controls and limitations on repatriation of invested capital;

inability to purchase and

sell investments or otherwise settle security or derivative transactions (i.e., a market freeze);

fluctuations in currency exchange rates;

increased risk of default (by both government and private issuers);

further social, economic,

and political instability;

nationalization of private enterprise;

greater governmental involvement in the economy or in social factors

that impact the economy;

less governmental regulation and supervision of the securities markets and market participants and decreased

monitoring of the markets by governments or self-regulatory organizations and reduced enforcement of regulations;

limited, or limitations

on, the activities of investors in such markets;

controls or restrictions on foreign investment, capital controls and limitations on repatriation

of invested capital;

inability to purchase and sell investments or otherwise settle security or derivative transactions (i.e., a market

unavailability of currency hedging techniques;

substantial, and in some periods extremely high, rates of inflation, which can last many years and have substantial negative effects on

credit and securities markets as well as the economy as a whole;

substantial, and in some periods extremely high, rates of inflation, which can

last many years and have substantial negative effects on credit and securities markets as well as the economy as a whole;

and difficulties in obtaining and/or enforcing legal judgments.

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of operations.

The COVID-19 pandemic resulted in a period

of capital markets disruption and economic uncertainty.

capital markets experienced

extreme volatility and disruption following the global outbreak of COVID-19.

Some economists and major investment banks have expressed

concern that the continued spread of the virus globally could lead to a prolonged period of world-wide economic downturn.

in the capital markets have in the past increased the spread between the yields realized on risk-free and higher risk securities, resulting

in illiquidity in parts of the capital markets.

Such disruptions and/or illiquidity adversely effected our business, financial condition,

results of operations and cash flows, and future market disruptions and/or illiquidity may again negatively impact us.

Such unfavorable

economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision

by lenders not to extend credit to us.

These events could limit our investment originations, limit our ability to grow and have a material

negative impact on our operating results and the fair values of our debt and equity investments.

We also face an increased risk of investor,

creditor or portfolio company disputes, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19, including

multiple variants thereof, on economic and market conditions.

Global economic, political and market conditions,

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relationship between the U.S.

and China and the conflict between Russia and Ukraine), 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

and China, the conflict in the Red Sea and the conflict between Russia and Ukraine), 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 U.S.

and worldwide.

The impact of downgrades by rating agencies to the U.S.

government’s sovereign credit rating or its perceived

creditworthiness as well as potential government shutdowns and uncertainty surrounding transfers of power could adversely affect the U.S.

government’s sovereign credit

rating or its perceived creditworthiness as well as potential government shutdowns and uncertainty surrounding transfers of power could

adversely affect the U.S.

and global financial markets and economic conditions.

In addition, there will likely

continue to be considerable uncertainty as to the United Kingdom’s post-transition and post-withdrawal framework following its withdrawal

from the European Union (“Brexit”), in particular as to the arrangements which will apply to its relationships with the European

Union and with other countries.

The new Trade and Cooperation Agreement reached between the European Union and the United Kingdom in late

2020 is untested and may lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the United Kingdom

and in wider European and global markets for some time.

The Russian invasion of Ukraine may have

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federal, state and local levels.

These laws and regulations, as well as their interpretation,

may change from time to time, 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.

UNRESOLVED STAFF COMMENTS

Our headquarters are located

at 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.

We believe that our office facilities are suitable and adequate

for our business.

These laws and regulations, as well as their

interpretation, may change from time to time, 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.

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 who 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.

A significant adverse development with one or more national or regional banks, financial

institutions or other participants in the financial or capital markets may spread to others and lead to significant concentrated or market-wide

problems (such as defaults, liquidity problems, impairment charges, additional bank runs and/or losses) for other participants in these

Future developments, including actions taken by the U.S.

Department of Treasury, Federal Deposit Insurance Corporation (“FDIC”)

and Federal Reserve Board, and systemic risk in the U.S.

and global banking sectors and broader economies in general, are difficult to

assess and quantify, and the form and magnitude of such developments or other actions could have an adverse effect on our business, financial

condition and results of operations.

For example, in response to

the rapidly declining financial condition of regional banks Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”),

the California Department of Financial Protection and Innovation (the “CDFPI”) and the New York State Department of Financial

Services (the “NYSDFS”) closed SVB and Signature on March 10, 2023 and March 12, 2023, respectively, and the FDIC

was appointed as receiver for SVB and Signature.

Although the U.S.

Department of the Treasury, the Federal Reserve and the FDIC have taken

measures to stabilize the financial system, uncertainty and liquidity concerns in the broader financial services industry remain.

Additionally,

should there be additional systemic pressure on the financial system and capital markets, we cannot assure you of the response of any

government or regulator, and any response may not be as favorable to industry participants as the measures currently being pursued.

addition, highly publicized issues related to the U.S.

and global capital markets in the past have led to significant and widespread investor

concerns over the integrity of the capital markets.

The situation related to SVB and Signature could in the future lead to further rules

and regulations for public companies, banks, financial institutions and other participants in the U.S.

and global capital markets, and

complying with the requirements of any such rules or regulations may be burdensome.

Even if not adopted, evaluating and responding to

any such proposed rules or regulations could results in increased costs and require significant attention from the Investment Advisor.

Risks Relating to Our Common Stock

Investing in our common stock involves an

above average degree of risk.

The investments we make in

accordance with our investment objectives may result in a higher amount of risk than alternative investment options and a higher risk

of volatility or loss of principal.

Therefore, an investment in shares of our common stock 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.

The market price of our common stock may

fluctuate significantly.

We currently list our common

stock on the NYSE under the symbol “PSBD.” The market price and liquidity of the market for shares of our 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 our sector, which are not necessarily related to the operating performance of these companies;

● price and volume fluctuations in the overall stock market

from time to time;

● the inclusion or exclusion of our stock from certain indices;

● changes in regulatory policies or tax guidelines, particularly

with respect to RICs or BDCs;

● any loss of RIC or BDC status;

● changes in earnings or perceived changes or variations in

operating results;

● changes or perceived changes in the value of our portfolio

of investments;

● changes in accounting guidelines governing valuation of our

● any shortfall in revenue or net income or any increase in

losses from levels expected by investors or securities analysts;

● the inability of our Investment Advisor to employ additional

experienced investment professionals or the departure of any of our Investment Advisor’s key personnel;

● short-selling pressure with respect to shares of our common

stock or BDCs generally;

● future sales of our securities convertible into or exchangeable

or exercisable for our common stock or the conversion of such securities;

● uncertainty surrounding the strength of the U.S.

● operating performance of companies comparable to us;

● general economic trends and other external factors;

● loss of a major funding source.

In the past, following periods

of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that

If our stock price fluctuates significantly, we may be the target of securities litigation in the future.

Securities litigation

could result in substantial costs and divert management’s attention and resources from our business.

We cannot assure you that a market for shares

of our common stock will be maintained or the market price of our shares will trade close to NAV.

We cannot assure you that

a trading market for our common stock can be sustained.

In addition, we cannot predict the prices at which our common stock will trade,

whether at, above or below NAV.

Shares of closed-end investment companies, including BDCs, frequently trade at a discount from NAV, and

our common stock may also be discounted in the market.

This characteristic of closed-end investment companies is separate and distinct

from the risk that our NAV per share may decline.

In addition, if our common stock trades below its NAV, we will generally not be able

to sell additional shares of our common stock to the public at its market price without, among other things, the requisite stockholders’

approval of such a sale.

Sales of substantial amounts of our common

stock in the public market may have an adverse effect on the market price of our common stock.

Subsequent to the IPO, we have 32,552,794 shares of common stock outstanding.

Sales of substantial amounts of our common stock, or the availability of such shares for sale, could adversely affect the prevailing market

prices for our common stock.

If this occurs and continues, it could impair our ability to raise additional capital through the sale of

equity securities should we desire to do so.

Purchases of shares of our common stock

by us under our open market repurchase program, including the Company Rule 10b5-1 Stock Repurchase Plan, and by PSCM, including through

the PSCM Rule 10b5-1 Stock Purchase 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.

Our Board authorized us to

repurchase shares of our common stock through an open-market share repurchase program for up to $20 million in the aggregate of shares

of our common stock through 12 months from the date of the IPO.

Pursuant to such authorization and concurrently with the closing

of the IPO, we entered into the Company Rule 10b5-1 Stock Repurchase Plan to acquire up to $15 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.

In addition, PSCM

will purchase up to $5 million in the aggregate of shares of our common stock in the open market within one year of the date of the

Concurrently with the closing of the IPO, PSCM entered into the PSCM Rule 10b5-1 Stock Purchase Plan to permit the purchase of up

to $2.5 million of our shares of common stock in connection with its purchase commitment.

These activities may have the effect of

maintaining the market price of shares of 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.

We may in the future determine to issue

preferred stock, which could adversely affect the market value of our common stock.

The issuance of shares of preferred

stock with dividend or conversion rights, liquidation preferences or other economic terms more favorable to the holders of preferred stock

than to our common stockholders could adversely affect the market price for our common stock by making an investment in the 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 our common stockholders,

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 common stock).

In addition, under the

1940 Act, participating preferred stock and preferred stock constitutes a “senior security” for purposes of the asset coverage

Provisions of the Maryland General Corporation

Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

The Maryland General Corporation

Law, our charter and our bylaws contain provisions that may discourage, delay or make more difficult a change in control or the removal

of our directors.

We are subject to Subtitle 6 of Title 3 of the Maryland General Corporate Law, the Maryland Business Combination Act,

subject to any applicable requirements of the 1940 Act.

Our Board has adopted a resolution exempting from the Business Combination Act

any business combination between us and any other person, subject to prior approval of such business combination by our Board, including

approval by a majority of our independent directors.

If the resolution exempting business combinations is repealed or our Board does not

approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and increase

the difficulty of consummating such an offer.

We are subject to Subtitle 7 of Title 3 of the Maryland General Corporate Law, the Maryland

Control Share Acquisition Act.

Our bylaws exempt from the Maryland Control Share Acquisition Act acquisitions of our common stock by any

If we amend our bylaws to repeal the exemption from the Control Share Acquisition Act, the Control Share Acquisition Act also

may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.

to give the SEC prior notice should our Board elect to amend our bylaws to repeal the exemption from the Control Share Acquisition Act.

We have also adopted other

measures that may make it difficult for a third party to obtain control of us, including provisions of our charter classifying our Board

in three classes serving staggered three-year terms, and provisions of our charter authorizing our Board to classify or reclassify shares

of our stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our charter, without

stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue.

These provisions, as well

as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be

in the best interests of our stockholders.

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