What changed in this filing

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Item 1A. Risk Factors

2021-11-03 compared with 2021-08-03 · 127 added, 24 removed, 35 unchanged (81% of the section changed)

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in the February 24, 2021 filing of our Annual Report on Form 10-K, which could materially affect our business, financial condition and/or operating results.

The risks described in our Annual

Report are not the only risks facing our Company.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating

Other than the risk factors set forth below, there have been no material changes during the period ended June 30, 2021 to the risk factors discussed in Risk Factors in the February 24, 2021 filing of our Annual Report

on Form 10-K.

The interest rates of our term loans to our portfolio companies that extend beyond 2021 might

be subject to change based on recent regulatory changes.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest

used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally.

We typically use LIBOR as a reference rate in term loans we extend to portfolio companies such that the

interest due to us pursuant to a term loan extended to a partner company is calculated using LIBOR.

The risks described in our Annual Report are not the

only risks facing our Company.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

the risk factors set forth below, there have been no material changes during the period ended September 30, 2021 to the risk factors discussed in Risk Factors in the February 24, 2021 filing of our Annual Report on Form 10-K.

The interest rates of our term loans to our portfolio companies that extend beyond 2021 might be subject to

change based on recent regulatory changes.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending

between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally.

We typically use LIBOR as a reference rate in term loans we extend to portfolio companies such that the interest due to

us pursuant to a term loan extended to a partner company is calculated using LIBOR.

The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.

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(ii) the overnight and 12-month US LIBOR settings would cease to exist after June 30, 2023;

and (iii) the FCA would consult on whether the remaining nine LIBOR settings should continue to

be published on a synthetic basis for a certain period using the FCAs proposed new powers that the UK government is legislating to grant to them.

Central banks and regulators in a number of major jurisdictions (for example, United States,

United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates.

and (iii) the FCA would consult on whether the remaining nine LIBOR settings should continue to be

published on a synthetic basis for a certain period using the FCAs proposed new powers that the UK government is legislating to grant to them.

Central banks and regulators in a number of major jurisdictions (for example, United States, United

Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates.

To identify a successor rate for U.S.

dollar LIBOR, the Alternative

Reference Rates Committee (ARRC), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed.

The ARRC has identified the Secured Overnight Financing Rate (SOFR) as its

preferred alternative rate for LIBOR.

dollar LIBOR, the Alternative Reference

Rates Committee (ARRC), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed.

The ARRC has identified the Secured Overnight Financing Rate (SOFR) as its preferred

alternative rate for LIBOR.

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

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Treasury-backed repurchase transactions.

Although SOFR appears to

be the preferred replacement rate for U.S.

dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States,

United Kingdom or elsewhere or, whether the COVID-19 pandemic will have further effect on LIBOR transition plans.

On July 29, 2021, the ARCC formally

recommended SOFR as its preferred alternative replacement rate for U.S.

dollar LIBOR.

At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be

enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 pandemic will have further effect on LIBOR transition plans.

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the

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adversely affect our business.

The effect of global climate change may impact the operations of our portfolio companies.

There may be evidence of global climate change.

Climate change creates physical and financial risk and some of our portfolio companies may be

adversely affected by climate change.

For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity.

To the extent weather conditions are affected by climate change, energy use could

increase or decrease depending on the duration and magnitude of any changes.

Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their

A decrease in energy use due to weather changes may affect some of our portfolio companies financial condition, through decreased revenues.

Extreme weather conditions in general require more system backup, adding to costs, and can

contribute to increased system stresses, including service interruptions.

Energy companies could also be affected by the potential for lawsuits against or taxes or other regulatory costs imposed on greenhouse gas emitters, based on links drawn

between greenhouse gas emissions and climate change.

In December 2015 the United Nations, of which the U.S.

is a member, adopted a

climate accord (the Paris Agreement) with the long-term goal of limiting global warming and the short-term goal of significantly reducing greenhouse gas emissions.

On November 4, 2016, the past administration announced that

would cease participation in the Paris Agreement with the withdrawal taking effect on November 4, 2020.

However, on January 20, 2021, President Joseph R.

Biden signed an executive order to rejoin the Paris Agreement.

As a result, some of

our portfolio companies may become subject to new or strengthened regulations or legislation, which could increase their operating costs and/or decrease their revenues.

Events outside of our control, including public health crises, could negatively affect our portfolio

companies and our results of our operations.

Periods of market volatility have occurred and could continue to occur in response to

pandemics or other events outside of our control.

These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies.

For example, the

COVID-19 pandemic has delivered a shock to the global economy throughout much of 2020 and 2021.

This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional,

national and global markets and economies affected thereby, including a recession and a steep increase in unemployment in the United States.

With respect to the U.S.

credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is

likely to continue to result in, the following among other things:

(i) government imposition of various forms of shelter-in-place orders and the closing of non-essential businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as

in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent;

(ii) increased draws by borrowers on revolving lines of credit;

(iii) increased

requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans;

(iv) volatility and

disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues;

and (v) rapidly evolving proposals and/or actions by state and federal

governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses.

During the third quarter of 2021, the economic recovery gained significant traction in countries in which comprehensive vaccination programs

have led to the lifting of health and safety restrictions, such as the U.S.

However, other countries encountered more challenging circumstances as a result of slower distribution of vaccines and the spread of new variants, most notably

the Delta variant.

The extent to which the COVID-19 pandemic will continue to affect our business, financial condition, liquidity, our portfolio companies results of operations and by extension our

operating results will depend on future developments, such as the speed and extent of further vaccine distribution and the impact of the Delta variant or other variants that might arise, which are highly uncertain and cannot be predicted.

Additionally, as of September 2021, travelers from the United States are not allowed to visit Australia or certain countries in Europe, Asia, Africa and South America.

These continued travel restrictions may prolong the global economic downturn.

Even after the COVID-19 pandemic subsides, the U.S.

economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially

adversely affected by a prolonged recession in the United States and other major markets.

This outbreak is having, and any future

outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume

and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among

other things.

As of the date of this quarterly report on Form 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or

uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.

Any potential impact to our results of operations will depend to a large extent on future developments and new

information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its

impact, all of which are beyond our control.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies,

loan non-accruals, problem assets, and bankruptcies may increase.

In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan

guarantors could decline, impairing their ability to honor commitments to us.

An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in

increased costs and reduced income which would have a material adverse effect on our business, financial condition or results of operations.

Central banks and governments have responded with liquidity injections to ease the strain on financial

systems and stimulus measures to buffer the shock to businesses and consumers.

These measures have helped stabilize certain portions of the financial markets over the short term, but volatility will likely remain elevated until the health crisis

itself is under control (via fewer new cases, lower infection rates and/or verified treatments).

There are still many unknowns and new information is incoming daily, compounding the difficulty of modeling outcomes for epidemiologists and economists

We cannot be certain as to the duration or magnitude of the economic impact of the

COVID-19 pandemic in the markets in which we and our portfolio companies operate, including with respect to travel restrictions, business closures, mitigation efforts (whether voluntary, suggested, or mandated

by law) and corresponding declines in economic activity that may negatively impact the U.S.

economy and the markets for the various types of goods and services provided by U.S.

middle market companies.

Depending on the duration, magnitude and

severity of these conditions and their related economic and market impacts, certain portfolio companies may suffer declines in earnings and could experience financial distress, which could cause them to default on their financial obligations to us

and their other lenders.

We will also be negatively affected if our operations and effectiveness or the operations

and effectiveness of a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.

Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new

epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments.

Our valuations, and particularly valuations of private

investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not show the complete impact of the COVID-19 pandemic and the resulting measures taken in response thereto.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies operating results.

We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our

Legislative or other actions relating to taxes could have a negative effect on us.

The rules dealing with U.S.

income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.

Treasury Department.

The Biden Administration has proposed significant changes to the existing U.S.

rules, and there are a number of proposals in Congress that would similarly modify the existing U.S.

The likelihood of any such legislation being enacted is uncertain, but new legislation and any U.S.

Treasury regulations, administrative

interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S.

federal income tax consequences to us and our investors of such qualification,

or could have other adverse consequences.

Investors are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our common stock.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not engage in unregistered sales of securities during the quarter ended June 30, 2021.

We did not engage in unregistered sales of securities during the quarter ended September 30, 2021.

Defaults Upon Senior Securities

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors