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. Under the provisions of
the 1940 Act, we are currently permitted to issue “senior securities,” including borrowing money from banks or other
financial institutions, only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150%
(equivalent to $2 of debt outstanding for each $1 of equity) of total assets less all liabilities and indebtedness not
represented by senior securities, after each issuance of senior securities. If we fail to comply with certain disclosure
requirements, our asset coverage ratio under the 1940 Act would be 200%, which would decrease the amount of leverage
we are able to incur. If the value of our assets declines, we may be unable to satisfy the applicable asset coverage ratio. If
that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a
portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service
our indebtedness would not be available for distributions to holders of shares of our Common Stock. If we issue senior
securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.
In the absence of an event of default, no person or entity from which we borrow money has a veto right or voting power
over our ability to set policy, make investment decisions, or adopt investment strategies. If we issue preferred stock, which
is another form of leverage, the preferred stock would rank “senior” to Common Stock in our capital structure, preferred
stockholders would have separate voting rights on certain matters and might have other rights, preferences, or privileges
more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of
delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our
Common Stock or otherwise be in the best interest of our common stockholders. Holders of our Common Stock will
directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue. In
addition, any interests of preferred stockholders may not necessarily align with the interests of holders of our Common
Stock, and the rights of holders of shares of preferred stock to receive distributions would be senior to those of holders of
shares of Common Stock. We do not, however, anticipate issuing preferred stock in the next 12 months.
We are not generally able to issue and sell our Common Stock at a price below net asset value per share. We may,
however, sell our Common Stock, or warrants, options or rights to acquire our Common Stock, at a price below the then-
current net asset value per share of our Common Stock if our Board determines that such sale is in the best interests of us
and our stockholders, and if our stockholders approve such sale. In any such case, the price at which our securities are to be
issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value
of such securities (less any distributing commission or discount). If we raise additional funds by issuing Common Stock or
senior securities convertible into, or exchangeable for, our Common Stock, then the percentage ownership of our
stockholders at that time will decrease, and holders of our Common Stock might experience dilution.
We intend to finance a portion of our investments with borrowed money, which will magnify the potential for gain or
loss on amounts invested and may increase the risk of investing in us.
The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally
considered a speculative investment technique and increases the risks associated with investing in our securities. The
amount of leverage that we employ will be subject to the restrictions of the 1940 Act and the supervision of our Board. At
the time of any proposed borrowing, the amount of leverage we employ will also depend on our Adviser’s assessment of
the market and other factors. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.
For example, due to the interplay of the 1940 Act restrictions on principal and joint transactions and the U.S. risk retention
rules adopted pursuant to Section 941 of the Dodd-Frank Act, as a BDC, we are limited in our ability to enter into any
securitization transactions. We cannot assure you that the SEC or any other regulatory authority will modify such
regulations or provide administrative guidance that would give us greater flexibility to enter into securitizations. We may
issue senior debt securities to banks, insurance companies, and other lenders. Lenders of these senior securities will have
fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such
lenders to seek recovery against our assets in the event of a default. We may pledge up to 100% of our assets, may grant a
security interest in all of our assets, and may pledge the right to make capital calls of stockholders under the terms of any
debt instruments we may enter into with lenders. Under the terms of any credit facility or debt instrument we enter into, we
are likely to be required to comply with certain financial and operational covenants. Failure to comply with such covenants
could result in a default under the applicable credit facility or debt instrument if we are unable to obtain a waiver from the
applicable lender or holder, and such lender or holder could accelerate repayment under such indebtedness and negatively
affect our business, financial condition, results of operations and cash flows. In addition, under the terms of any credit
facility or other debt instrument we enter into, we are likely to be required by its terms to use the net proceeds of any
investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such
