Filed pursuant to Rule 497
File No. 333-205405

PROSPECTUS SUPPLEMENT
(to Prospectus dated August 23, 2016)

$62,500,000

Oxford Lane Capital Corp.

Preferred Stock
2,500,000 Shares, 6.75% Series 2024
Liquidation Preference $25 per Share

 

We are a non-diversified, closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, or the “1940 Act.” Our investment objective is to maximize our portfolio’s total return. We have implemented our investment objective by purchasing portions of equity and junior debt tranches of collateralized loan obligation, or CLO, vehicles. Structurally, CLO vehicles are entities formed to originate and manage a portfolio of loans. The loans within the CLO vehicle are limited to loans which meet established credit criteria and are subject to concentration limitations in order to limit a CLO vehicle’s exposure to a single credit.

An investment in our securities is subject to significant risks and involves a heightened risk of total loss of investment. The price of shares of our preferred stock may be highly volatile. In addition, the residual interests of the CLO securities in which we invest are subject to a high degree of special risks, including: CLO structures are highly complicated and may be subject to disadvantageous tax treatment; CLO vehicles are highly levered and are made up of below investment grade loans in which we typically have a residual interest that is much riskier than the loans that make up the CLO vehicle; and the market price for CLO vehicles may fluctuate dramatically (including dramatic declines during certain periods in 2015 and 2016), which may make portfolio valuations unreliable and negatively impact our net asset value and our ability to make distributions to our stockholders. See “Risk Factors” beginning on page S-18 of this prospectus supplement and page 21 of the accompanying prospectus to read about factors you should consider, including the risk of leverage, before investing in our securities.

We are offering 2,500,000 shares of our 6.75% Series 2024 preferred stock, or the “New Series 2024 Term Preferred Shares.” We will pay monthly dividends on the New Series 2024 Term Preferred Shares at an annual rate of 6.75% of the $25 liquidation preference per share, or $1.6875 per New Series 2024 Term Preferred Share per year, on the last business day of each month, commencing July 31, 2017.

We are required to redeem all of the outstanding New Series 2024 Term Preferred Shares on June 30, 2024 at a redemption price equal to $25 per share plus an amount equal to accumulated but unpaid dividends, if any, to the date of redemption. We cannot effect any amendment, alteration or repeal of our obligation to redeem all of the New Series 2024 Term Preferred Shares on June 30, 2024 without the prior unanimous consent of the holders of New Series 2024 Term Preferred Shares. If we fail to maintain an asset coverage ratio of at least 200% (as described in this prospectus supplement), we will redeem a portion of the outstanding New Series 2024 Term Preferred Shares in an amount at least equal to the lesser of (1) the minimum number of shares of New Series 2024 Term Preferred Shares necessary to cause us to meet our required asset coverage ratio and (2) the maximum number of New Series 2024 Term Preferred Shares that we can redeem out of cash legally available for such redemption. At any time after June 30, 2020, at our sole option, we may redeem the New Series 2024 Term Preferred Shares at a redemption price per share equal to the sum of the $25 liquidation preference per share plus an amount equal to accumulated but unpaid dividends, if any, on the New Series 2024 Term Preferred Shares.

The New Series 2024 Term Preferred Shares will rank pari passu, or equally, in right of payment with our 7.50% Series 2023 Term Preferred Shares or the “2023 Term Preferred Shares,” and 8.125% Series 2024 Term Preferred Shares and all other shares of preferred stock that we may issue in the future, and rank senior in right of payment to all of our common stock.

We have applied to list the New Series 2024 Term Preferred Shares on the NASDAQ Global Select Market and we expect trading to commence thereon within 30 days after the date of initial delivery of the New Series 2024 Term Preferred Shares under the symbol “OXLCM.” Our common stock is traded on the NASDAQ Global Select Market under the symbol “OXLC.” On June 2, 2017, the last sale price of our common stock as reported on NASDAQ Global Select Market was $10.90 per share. Our Series 2023 Term Preferred Shares are traded on the NASDAQ Global Select Market under the symbol “OXLCO.” On June 2, 2017, the last sale price of our Series 2023 Term Preferred Shares as reported on NASDAQ Global Select Market was $25.60 per share. Our 8.125% Series 2024 Term Preferred Shares are traded on the NASDAQ Global Select Market under the symbol “OXLCN.” On June 2, 2017, the last sale price of our 8.125% Series 2024 Term Preferred Shares as reported on NASDAQ Global Select Market was $25.66 per share. The New Series 2024 Term Preferred Shares are not convertible into our common stock or any other security of our company.

We are required to determine the net asset value per share of our common stock on a quarterly basis. Our net asset value per share of our common stock as of March 31, 2017 was $10.20.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Please read this prospectus supplement and the accompanying prospectus before investing in our securities and keep each for future reference. This prospectus supplement and the accompanying prospectus contain important information about us that a prospective investor ought to know before investing in our securities. We file annual, semi-annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission. This information is available free of charge by contacting us at 8 Sound Shore Drive, Suite 255, Greenwich, CT 06830 or by telephone at (203) 983-5275, or on our website at http://www.oxfordlanecapital.com. Information contained on our website is not incorporated by referenced into this prospectus supplement or the accompanying prospectus, and you should not consider information contained on our website to be part of this prospectus supplement or the accompanying prospectus. The Securities and Exchange Commission also maintains a website at http://www.sec.gov that contains information about us.

	Per Share		Total
Public Offering Price	$	25.00	$	62,500,000
Sales Load (Underwriting Discounts and Commissions)	$	0.78125	$	1,953,125
Proceeds, before expenses, to Oxford Lane Capital Corp.(1)	$	24.21875	$	60,546,875

(1) Total expenses of the offering payable by us, excluding underwriting discounts and commissions, are estimated to be $175,000. There will be additional items of value paid in connection with this offering that are viewed by the Financial Regulatory Authority, Inc. as underwriting compensation. Payment of this additional underwriting compensation will reduce the proceeds to us, before expenses. See “Underwriting.”

We have granted the underwriters a 30-day option to purchase up to an additional 375,000 New Series 2024 Term Preferred Shares from us to cover over-allotments, if any. If such option is exercised in full, the public offering price, underwriting discounts and commissions and proceeds, before expenses, to us would be $71,875,000, $2,246,093.75 and $69,628,906.25, respectively. See “Underwriting”.

The underwriters expect to deliver the shares on or about June 14, 2017.

 

Lead Book-Running Manager

Ladenburg Thalmann

Joint Book-Running Managers

BB&T Capital Markets	William Blair

Co-Managers

Wedbush Securities	National Securities Corporation

Prospectus Supplement dated June 6, 2017

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

	Page
About this Prospectus Supplement		S-1
Summary		S-2
The Offering		S-13
Risk Factors		S-18
Cautionary Statement Regarding Forward-Looking Statements		S-21
Use of Proceeds		S-23
Captalization		S-24
Ratio of Earnings to Fixed Charges and Preferred Dividends		S-25
Senior Securities		S-26
Description of the New Series 2024 Term Preferred Stock		S-27
Additional Material U.S. Federal Income Tax Considerations		S-37
Underwriting (Potential Conflicts of Interest)		S-41
Custodian, Transfer Agent, Dividend Disbursing Agent and Redemption and Paying Agent		S-44
Miscellaneous		S-44
Legal Matters		S-45
Experts		S-45
Available Information		S-45
Index to Financial Statements		F-1
Exhibit A: Articles Supplementary Establishing and Fixing the Preferences of Term Preferred Shares		A-1

PROSPECTUS

	Page
Summary		1
Offerings		13
Fees and Expenses		16
Financial Highlights		19
Risk Factors		21
Cautionary Statement Regarding Forward-Looking Statements		42
Use of Proceeds		43
Price Range of Common Stock and Distributions		44
Senior Securities		48
Business		49
Management		58
Portfolio Management		66
Investment Advisory Agreement		69
Administration Agreement		74
Certain Relationships and Transactions		75
Control Persons and Principal Stockholders		76
Regulation as a Registered Closed-End Management Investment Company		78
Determination of Net Asset Value		83
Distribution Reinvestment Plan		85
Material U.S. Federal Income Tax Considerations		86
Description of Securities		94
Description of Our Capital Stock		95
Description of Our Preferred Stock		102
Description of Our Subscription Rights		103

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	Page
Description of Our Debt Securities		104
Plan of Distribution		117
Custodian, Transfer Agent, Dividend Disbursing Agent and Redemption and Paying Agent		119
Brokerage Allocation and Other Practices		119
Legal Matters		119
Experts		119
Available Information		119
Index to Financial Statements		F-1

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ABOUT THIS PROSPECTUS SUPPLEMENT

We have filed with the SEC a registration statement on Form N-2 (File No. 333-205405 and 811-22432) utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration statement was declared effective on August 23, 2016. This document is in two parts. The first part is the prospectus supplement, which describes the terms of this offering of New Series 2024 Term Preferred Shares and also adds to and updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information and disclosure. To the extent the information contained in this prospectus supplement differs from or is additional to the information contained in the accompanying prospectus, you should rely only on the information contained in this prospectus supplement. Please carefully read this prospectus supplement and the accompanying prospectus together with the additional information described under the headings “Available Information” and “Risk Factors” included in this prospectus supplement and the accompanying prospectus before investing in the New Series 2024 Term Preferred Shares.

Neither we nor the underwriters have authorized any dealer, salesman or other person to give any information or to make any representation other than those contained in this prospectus supplement or the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus supplement and the accompanying prospectus do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate, nor do they constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction or to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The information contained in this prospectus supplement and the accompanying prospectus is accurate as of the dates on their respective covers. Our financial condition, results of operations and prospects may have changed since those dates. To the extent required by law, we will amend or supplement the information contained in this prospectus supplement and the accompanying prospectus to reflect any material changes subsequent to the date of this prospectus supplement and the accompanying prospectus and prior to the completion of any offering pursuant to this prospectus supplement and the accompanying prospectus.

The New Series 2024 Term Preferred Shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.

S-1

SUMMARY

The following summary contains basic information about the offering of the New Series 2024 Term Preferred Shares pursuant to this prospectus supplement and the accompanying prospectus. It is not complete and may not contain all the information that is important to you. For a more complete understanding of the offering of shares of the New Series 2024 Term Preferred Shares pursuant to this prospectus supplement, we encourage you to read this entire prospectus supplement and the accompanying prospectus, and the documents to which we have referred in this prospectus supplement and the accompanying prospectus. Together, these documents describe the specific terms of the shares we are offering. You should carefully read the section entitled “Risk Factors” section in this prospectus supplement and the sections entitled “Risk Factors” and “Business” and our financial statements included in the accompanying prospectus.

Except where the context requires otherwise, the terms “Oxford Lane Capital,” the “Company,” the “Fund,” “we,” “us” and “our” refer to Oxford Lane Capital Corp.; “Oxford Lane Management” and “investment adviser” refer to Oxford Lane Management, LLC; “BDC Partners” and “administrator” refer to BDC Partners, LLC; and “Alaric” and “Alaric Compliance Services” refer to Alaric Compliance Services, LLC.

Overview

We are a non-diversified closed-end management investment company that has registered as an investment company under the 1940 Act. Our investment objective is to maximize our portfolio’s risk-adjusted total return.

We have implemented our investment objective by purchasing portions of equity and junior debt tranches of CLO vehicles. Our investment objective also includes warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. Substantially all of the CLO vehicles in which we may invest would be deemed to be investment companies under the 1940 Act but for the exceptions set forth in section 3(c)(1) or section 3(c)(7). Structurally, CLO vehicles are entities formed to originate and manage a portfolio of loans. The loans within the CLO vehicle are limited to loans which meet established credit criteria and are subject to concentration limitations in order to limit a CLO vehicle’s exposure to a single credit. A CLO vehicle is formed by raising various classes or “tranches” of debt (with the most senior tranches being rated “AAA” to the most junior tranches typically being rated “BB” or “B”) and equity. The CLO vehicles which we focus on are collateralized primarily by senior secured loans made to companies whose debt is unrated or is rated below investment grade, or “Senior Loans”, and generally have very little or no exposure to real estate, mortgage loans or to pools of consumer-based debt, such as credit card receivables or auto loans. Below investment grade securities are often referred to as “junk.” We may also invest, on an opportunistic basis, in other corporate credits of a variety of types. We expect that each of our investments will range in size from $5 million to $50 million, although the investment size may vary consistent with the size of our overall portfolio. Oxford Lane Management manages our investments and its affiliate arranges for the performance of the administrative services necessary for us to operate.

The structure of CLO vehicles, which are highly levered, is highly complicated. Since we invest in the residual interests of CLO securities, our investments are riskier than the profile of the Senior Loans by which such CLO vehicles are collateralized. Our investments in CLO vehicles may be riskier and less transparent to us and our stockholders than direct investments in the underlying Senior Loans. Our portfolio of investments may lack diversification among CLO vehicles which may subject us to a risk of significant loss if one or more of these CLO vehicles experience a high level of defaults on its underlying Senior Loans. The CLO vehicles in which we invest have debt that ranks senior to our investment. The market price for CLO vehicles may fluctuate dramatically, which may make portfolio valuations unreliable and negatively impact our net asset value and our ability to make distributions to our stockholders. Our financial results may be affected adversely if one or more of our significant equity or junior debt investments in such CLO vehicles defaults on its payment obligations or fails to perform as we expect.

Our investments in CLO vehicles may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income. Specifically, the CLO vehicles in which we invest generally constitute “passive foreign investment companies,” or “PFICs.” Because we acquire investments in PFICs (including equity tranche investments in CLO vehicles that are PFICs), we may be subject to U.S. federal income tax on a portion of any “excess distribution” or

S-2

gain from the disposition of such investments even if such income is distributed as a taxable dividend by us to our stockholders. See “Risk Factors — Risks Related to Our Investments” beginning on page 21 of the accompanying prospectus to read about factors you should consider before investing in our securities.

For the fiscal year ended March 31, 2017, our total return based on market value was 66.38%. Total return based on market value is calculated assuming that shares of the Fund’s common stock were purchased at the market price as of the beginning of the period, and that distribution, capital gains and other distributions were reinvested as provided for in the Fund’s distribution reinvestment plan, excluding any discounts, and that the total number of shares were sold at the closing market price per share on the last day of the period. The computation does not reflect any sales commission investors may incur in purchasing or selling shares of the Fund. Our total return figures are subject to change and, in the future, may be greater or less than the rates set forth above.

Distributions

In order to be subject to pass-through tax treatment as a regulated investment company, or “RIC,” and to eliminate our liability for corporate-level U.S. federal income tax on the income we distribute to our stockholders, we are required, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the “Code,” to distribute to our stockholders on an annual basis at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

S-3

The following table reflects the cash distributions, including dividends, distributions reinvested and tax returns of capital, if any, per share that we have declared on our common stock to date as well as our quarterly per share net investment income and distributions in excess of net investment income:

Three Months Ended	Record Date		Payment Date		Distributions(1)			GAAP Net Investment Income			Distributions in excess of Net Investment Income
Fiscal 2018
June 30, 2017		June 16, 2017		June 30, 2017	$	0.40		$	—	(3)	$	—	(3)
September 30, 2017		September 15, 2017		September 29, 2017		0.40			—	(3)		—	(3)
Fiscal 2017
March 31, 2017		March 16, 2017		March 31, 2017		0.60			0.46			0.14
December 31, 2016		December 15, 2016		December 30, 2016		0.60			0.38			0.22
September 30, 2016		September 16, 2016		September 30, 2016		0.60			0.37			0.23
June 30, 2016		June 16, 2016		June 30, 2016		0.60			0.30			0.30
Total Fiscal 2017						2.40			1.51			0.89
Fiscal 2016
March 31, 2016		March 16, 2016		March 31, 2016		0.60			0.36			0.24
December 31, 2015		December 16, 2015		December 31, 2015		0.60			0.46			0.14
September 30, 2015		September 30, 2015		October 30, 2015		0.60			0.33			0.27
June 30, 2015		June 16, 2015		June 30, 2015		0.60			0.44			0.16
Total Fiscal 2016						2.40			1.59			0.81
Fiscal 2015
March 31, 2015		March 17, 2015		March 31, 2015		0.60			0.41			0.19
December 31, 2014		December 17, 2014		December 31, 2014		0.60			0.29			0.31
September 30, 2014		September 16, 2014		September 30, 2014		0.60			0.28			0.32
June 30, 2014		June 16, 2014		June 30, 2014		0.60			0.38			0.22
Total Fiscal 2015						2.40			1.36			1.04
Fiscal 2014
March 31, 2014		March 17, 2014		March 31, 2014		0.60			0.29			0.31
		March 17, 2014		March 31, 2014		0.10	(2)		—			—
December 31, 2013		December 17, 2013		December 31, 2013		0.55			0.32			0.23
September 30, 2013		September 16, 2013		September 30, 2013		0.55			0.35			0.20
June 30, 2013		June 14, 2013		June 28, 2013		0.55			0.28			0.27
Total Fiscal 2014						2.35			1.24			1.11
Fiscal 2013
March 31, 2013		March 15, 2013		March 29, 2013		0.55			0.30			0.25
December 31, 2012		December 17, 2012		December 31, 2012		0.55			0.33			0.22
September 30, 2012		September 14, 2012		September 28, 2012		0.55			0.26			0.29
June 30, 2012		June 15, 2012		June 29, 2012		0.55			0.26			0.29
Total Fiscal 2013						2.20			1.15			1.05
Fiscal 2012
March 31, 2012		March 16, 2012		March 30, 2012		0.55			0.33			0.22
December 31, 2011		December 16, 2011		December 30, 2011		0.50			0.26			0.24
September 30, 2011		September 16, 2011		September 30, 2011		0.50			0.28			0.22
June 30, 2011		June 16, 2011		June 30, 2011		0.50			0.32			0.18
Total Fiscal 2012						2.05			1.19			0.86
Fiscal 2011
March 31, 2011		March 21, 2011		April 1, 2011		0.25			0.07			0.18
Total Fiscal 2011						0.25			0.07			0.18
					$	14.85		$	8.11		$	6.74

(1) All of our cash distributions to date were funded from taxable income. The tax characterization of cash distributions for a particular year will not be known until the tax return for that year is finalized.

(2) Represents a special dividend for the fiscal year ended March 31, 2014.

(3) We have not yet reported earnings for this period.

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For the fiscal year ended March 31, 2017, we paid dividends totaling $5,844,609 and $4,102,473 on the Series 2023 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares, respectively. For the fiscal year ended March 31, 2016, we paid dividends totaling $421,888, $7,383,791 and $4,862,802 on the 8.50% Series 2017 Term Preferred Shares, or the “Series 2017 Term Preferred Shares,” the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares, respectively. For the fiscal year ended March 31, 2015, we paid $1,344,083, $5,286,287 and $2,912,844 on the Series 2017 Term Preferred Shares, the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares, respectively. For fiscal year 2014, we paid $1,344,083 and $2,638,151 in preferred dividends on the Series 2017 Term Preferred Shares and the Series 2023 Term Preferred Shares, respectively. For fiscal year 2013, we paid $459,228 in preferred dividends on the Series 2017 Term Preferred Shares. The 2017 Term Preferred Shares were fully redeemed in July 2015.

For accounting purposes the distributions declared on our common stock for the fiscal years ended March 31, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 were in excess of the reported earnings under Generally Accepted Accounting Principles, or “GAAP.” However, as a RIC, earnings and distributions are determined on a tax basis. Furthermore, taxable earnings are determined according to tax regulations and differ from reported income for accounting purposes under GAAP. For the fiscal years ended March 31, 2017, 2016, 2015, 2014, 2013, 2012 and 2011, taxable earnings exceeded our distributions, and there was no tax return of capital for these years.

The tax characterization of distributions for the year ended March 31, 2017 will not be known until the tax return is finalized. To the extent that taxable earnings for any fiscal year are less than the amount of the distributions paid during the year, there would be a tax return of capital to shareholders. Distributions in excess of current and accumulated taxable earnings and profits will generally not be taxable to the shareholders, because a tax return of capital represents a return of a portion of a shareholder’s original investment in our common stock, net of fund fees and expenses, to the extent of a shareholder’s basis in our stock. Generally, a tax return of capital will reduce an investor’s basis in our stock for federal tax purposes, which will result in the shareholder recognizing additional gain (or less loss) when the stock is sold. Assuming that a shareholder holds our stock as a capital asset, any such additional gain would be a capital gain. Shareholders should not assume that the source of all distributions is from our net profits and shareholders may periodically receive the payment of a distribution consisting of a return of capital. The tax character of any distributions will be determined after the end of the fiscal year. Tax matters are very complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of its particular situation. We encourage investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

We have elected to be treated, and intend to continue to qualify annually, as a RIC under Subchapter M of the Code beginning with our 2011 taxable year. To maintain RIC tax treatment, we must, among other things, distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. In order to avoid certain U.S. federal excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of: (1) 98% of our ordinary income for the calendar year; (2) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year; and, (3) 100% of any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. In addition, although we currently intend to distribute realized net capital gains (i.e., net long term capital gains in excess of short term capital losses), if any, at least annually, we may in the future decide to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated as if you had received an actual distribution of the capital gains we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, to the extent that we issue senior securities, we will be prohibited from

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making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

We may make distributions by issuing additional shares of our common stock under our distribution reinvestment plan, unless you elect to receive your dividends and/or long-term capital gains distributions in cash. We reserve the right to purchase shares in the open market in connection with our implementation of the distribution reinvestment plan. See “Distribution Reinvestment Plan” in the accompanying prospectus. If you hold shares in the name of a broker or financial intermediary, you should contact the broker or financial intermediary regarding your election to receive distributions in cash. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

Distribution Policy

Oxford Lane is subject to significant and variable differences between its accounting income under GAAP and its taxable income particularly as it relates to our CLO equity investments. We invest in CLO entities which generally constitute PFICs and which are subject to complex tax rules; the calculation of taxable income attributed to a CLO equity investment can be dramatically different from the calculation of income for financial reporting purposes under GAAP. Taxable income is based upon the distributable share of earnings as determined under tax regulations for each CLO equity investment, which may be consistent with the cash flows generated by those investments (although significant differences are possible), while accounting income is currently based upon an effective yield calculation (this requires the calculation of a yield to expected redemption date based upon an estimation of the amount and timing of future cash flows, including recurring cash flows as well as future principal repayments). The Fund’s final taxable earnings for the fiscal year ended March 31, 2017 will not be known until our tax returns are filed but our experience has been that cash flows from CLO equity investments have historically represented a generally reasonable estimate of taxable earnings; however, we can offer no assurance that will be the case in the future, particularly during periods of market disruption and volatility. There may be significant differences between Oxford Lane Capital’s GAAP earnings and its taxable earnings, particularly related to CLO equity investments where its taxable earnings are based upon the taxable reported earnings provided by the CLO equity positions in which we invest, while GAAP earnings are based are upon an effective yield calculation. In general, the Fund currently expects its taxable earnings to be higher than its reportable GAAP earnings.

While reportable GAAP income from our CLO equity investments for the year ended March 31, 2017 was approximately $55.7 million, we received or were entitled to receive approximately $79.7 million in distributions from our CLO equity investments. While the tax characterization of our distributions for the fiscal year ended March 31, 2017 will not be known until our tax returns are finalized, we do not expect to have a tax return of capital for this period. In general, we currently expect our annual taxable income to be higher than our GAAP earnings on the basis of the difference between cash distributions from CLO equity investments actually received or entitled to be received and the effective yield income calculated under GAAP. Our distribution policy is based upon our estimate of our taxable net investment income.

Oxford Lane Management

Our investment activities are managed by Oxford Lane Management, which is an investment adviser that has registered under the Investment Advisers Act of 1940, or the “Advisers Act.” Under our investment advisory agreement with Oxford Lane Management, which we refer to as our “Investment Advisory Agreement,” we have agreed to pay Oxford Lane Management an annual base management fee based on our gross assets, as well as an incentive fee based on our performance. See “Investment Advisory Agreement” in the accompanying prospectus.

We expect to benefit from the ability of our investment adviser’s team to identify attractive opportunities, conduct diligence on and value prospective investments, negotiate terms where appropriate, and manage and monitor a diversified portfolio although we do not intend to operate as a “diversified” investment company within the meaning of the 1940 Act. Our investment adviser’s senior investment team members have broad investment backgrounds, with prior experience at investment banks, commercial banks, unregistered

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investment funds and other financial services companies, and have collectively developed a broad network of contacts to provide us with our principal source of investment opportunities.

Our investment adviser is led by Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President. Messrs. Cohen and Rosenthal are assisted by Darryl M. Monasebian, Executive Vice President, Debdeep Maji, Senior Managing Director for Oxford Lane Management, and Kevin Yonon, Managing Director for Oxford Lane Management. We consider Messrs. Cohen, Rosenthal, Monasebian, Maji and Yonon to be Oxford Lane Management’s senior investment team.

Messrs. Cohen, Rosenthal, Monasebian, Maji and Yonon together with the other members of Oxford Lane Management’s investment team, have developed an infrastructure that we believe provides Oxford Lane Capital with a competitive advantage in locating and acquiring attractive CLO investments.

Charles M. Royce is a non-managing member of Oxford Lane Management. Mr. Royce serves as Chairman of the Board of Managers of Royce & Associates, LLC, or “Royce & Associates.” From 1972 until 2017, Mr. Royce served as Chief Executive Officer of Royce & Associates. He also manages or co-manages eight of Royce & Associates’ open- and closed-end registered funds. Mr. Royce currently serves on the Board of Trustees of The Royce Funds and Board of Directors of TICC Capital Corp. Mr. Royce is also a non-managing member of TICC Management, LLC, the investment adviser for TICC Capital Corp. Mr. Royce, as a non-managing member of Oxford Lane Management, does not take part in the management or participate in the operations of Oxford Lane Management; however, Mr. Royce may be available from time to time to Oxford Lane Management to provide certain consulting services without compensation. Royce & Associates is a wholly owned subsidiary of Legg Mason, Inc.

In addition, we will reimburse BDC Partners, an affiliate of Oxford Lane Management, our allocable portion of overhead and other expenses incurred by BDC Partners in performing its obligations under an administration agreement by and among us and BDC Partners (the “Administration Agreement”), including rent, the fees and expenses associated with performing administrative functions, and our allocable portion of the compensation of our Chief Financial Officer and any administrative support staff, including accounting personnel. We will also pay the costs associated with the functions performed by our Chief Compliance Officer under the terms of an agreement between us and Alaric Compliance Services, a compliance consulting firm. These arrangements could create conflicts of interest that our Board of Directors must monitor.

Investment Focus

Our investment objective is to maximize our portfolio’s risk-adjusted total return. Our current focus is to seek that return by investing in structured finance investments, specifically the equity and junior debt tranches of CLO vehicles, which are collateralized primarily by a diverse portfolio of Senior Loans, and which generally have very little or no exposure to real estate loans, or mortgage loans or to pools of consumer-based debt, such as credit card receivables or auto loans. Our investment strategy also includes investing in warehouse facilities, which are financing structures intended to aggregate senior loans that may be used to form the basis of a CLO vehicle. As of March 31, 2017, we held debt investments in three different CLO structures and equity investments in approximately 50 different CLO structures, as well as one CLO warehouse facility. We may also invest, on an opportunistic basis, in a variety of other types of corporate credits.

The CLO investments we currently hold in our portfolio generally represent either a residual economic interest, in the case of an equity tranche, or a debt investment collateralized by a portfolio of Senior Loans. The value of our CLO investments generally depend on both the quality and nature of the underlying portfolio it references and also on the specific structural characteristics of the CLO itself.

CLO Structural Elements

Structurally, CLO vehicles are entities formed to originate and manage a portfolio of loans. The loans within the CLO vehicle are generally limited to loans which meet established credit criteria and are subject to concentration limitations in order to limit a CLO vehicle’s exposure to a single credit.

A CLO vehicle is formed by raising multiple “tranches” of debt (with the most senior tranches being rated “AAA” to the most junior tranches typically being rated “BB” or “B”) and equity. As interest payments are received the CLO vehicle makes contractual interest payments to each tranche of debt based on

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their seniority. If there are funds remaining after each tranche of debt receives its contractual interest rate and the CLO vehicle meets or exceeds required collateral coverage levels (or other similar covenants) the remaining funds may be paid to the equity tranche. The contractual provisions setting out this order of payments are set out in detail in the CLO vehicle’s indenture. These provisions are referred to as the “priority of payments” or the “waterfall” and determine any other obligations that may be required to be paid ahead of payments of interest and principal on the securities issued by a CLO vehicle. In addition, for payments to be made to each tranche, after the most senior tranche of debt, there are various tests which must be complied with, which are different for each CLO vehicle.

CLO indentures typically provide for adjustments to the priority of payments in the event that certain cashflow or collateral requirements are not maintained. The collateral quality tests that may divert cashflows in the priority of payments are predominantly determined by reference to the par values of the underlying loans, rather than their current market values. Accordingly, we believe that CLO equity and junior debt investments allow investors to gain exposure to the Senior Loan market on a levered basis without being structurally subject to mark-to-market price fluctuations of the underlying loans. As such, although the current valuations of CLO equity and junior debt tranches are expected to fluctuate based on price changes within the loan market, interest rate movements and other macroeconomic factors, those tranches will generally be expected to continue to receive distributions from the CLO vehicle periodically so long as the underlying portfolio does not suffer defaults, realized losses or other covenant violations sufficient to trigger changes in the waterfall allocations. We therefore believe that an investment portfolio consisting of CLO equity and junior debt investments of this type has the ability to provide attractive risk-adjusted rates of return.

The diagram below is for illustrative purposes only. The CLO structure highlighted below is only a hypothetical structure and structures among CLO vehicles in which we may invest may vary substantially from the hypothetical example set forth below.

The Syndicated Senior Loan Market

We believe that while the syndicated leveraged corporate loan market is relatively large, with Standard and Poor’s estimating the total par value outstanding at approximately $901 billion as of May 30, 2017, this market remains largely inaccessible to a significant portion of investors that are not lenders or approved institutions. The CLO market permits wider exposure to syndicated Senior Loans, but this market is almost exclusively private and predominantly institutional.

The Senior Loan market is characterized by various factors, including:

• Floating rate instruments. A Senior Loan typically contains a floating versus a fixed interest rate, which we believe provides some measure of protection against the risk of interest rate fluctuation. However, all of our CLO investments have many Senior Loans which are subject to interest rate floors and since interest rates on Senior Loans may only reset periodically and the amount of the

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increase following an interest rate reset may be below the interest rate floors of such Senior Loans, our ability to benefit from rate resets following an increase in interest rates may be limited.

• Frequency of interest payments. A Senior Loan typically provides for scheduled interest payments no less frequently than quarterly.

In the current environment, we believe the above attributes seem particularly desirable.

Investment Opportunity

We believe that the market for CLO-related assets continues to provide us with opportunities to generate attractive risk-adjusted returns within our strategies over the long term. We believe that a number of factors support this conclusion, including:

• the long-term and relatively low-cost capital that many CLO vehicles have secured, compared with current asset spreads and associated LIBOR floors have created opportunities to purchase certain CLO equity and junior debt instruments that may produce attractive risk-adjusted returns. Additionally, given that the CLO vehicles we invest in are cash flow-based vehicles, this term financing may be extremely beneficial in periods of market volatility.

• the market to invest in warehouse facilities, which are short and medium-term facilities that are generally expected to form the basis of CLO vehicles (which the Fund may participate in or be repaid by), has created additional attractive risk-adjusted investment opportunities for us.

• investing in CLO securities, and CLO equity instruments and warehouse facilities in particular, requires a high level of research and analysis. We believe that transactions in this market can only be adequately conducted by knowledgeable market participants as this market and these structures tend to be highly specialized.

• the U.S. risk retention requirements imposed for CLO managers under Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act has created some uncertainty in the market in regards to future CLO issuances. Given that certain CLO managers may require capital provider partners to satisfy this requirement, we believe that this may create additional opportunities (and additional risks) for us in the future.

• the U.S. CLO market is relatively large with total assets under management of approximately $450 billion.⁽¹⁾ We estimate that the amount outstanding of the junior-most debt tranches (specifically the tranches originally rated “BB” and “B”) and equity tranches together are approximately $70 billion.⁽²⁾

We continue to review a large number of CLO investment opportunities in the current market environment, and we expect that the majority of our portfolio holdings, over the near to intermediate-term, will continue to be comprised of CLO debt and equity securities, with the more significant focus over the near-term likely to be on CLO equity securities and warehouse facilities.

Summary Risk Factors

The value of our assets, as well as the market price of our securities, will fluctuate. Our investments may be risky, and you may lose all or part of your investment in us. Investing in Oxford Lane Capital involves other risks, including the following:

• our portfolio of investments may lack diversification among CLO vehicles which may subject us to a risk of significant loss if one or more of these CLO vehicles experiences a high level of defaults on its underlying Senior Loans;

• the Senior Loan portfolios of the CLO vehicles in which we will invest may be concentrated in a limited number of industries, which may subject those vehicles, and in turn us, to a risk of

1. As of March 8, 2017. Source: LCD, an offering of S&P Global Market Intelligence.

2. Oxford Lane has estimated this amount based in part on the LCD report (noted in footnote 1 above), dated March 8, 2017.

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significant loss if there is a downturn in a particular industry in which a number of our CLO vehicles’ investments are concentrated;

• the application of the risk retention rules to CLOs may have broader effects on the CLO and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for the Company.

• our financial results may be affected adversely if one or more of our significant equity or junior debt investments in such CLO vehicles defaults on its payment obligations or fails to perform as we expect;

• investing in CLO vehicles, Senior Loans and other high-yield corporate credits involves a variety of risks, any of which may adversely impact our performance;

• the CLO equity market has experienced significant downturns from time to time, which has negatively impacted our net asset value per share and, if those reduced values are realized over time, you may not receive dividends or our dividends may decline or may not grow over time;

• we have a limited operating history as a closed-end investment company;

• our investment portfolio is recorded at fair value, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, its estimate of fair value and, as a result, there will be uncertainty as to the value of our portfolio investments;

• we are dependent upon Oxford Lane Management’s key personnel for our future success;

• our incentive fee structure and the formula for calculating the fee payable to Oxford Lane Management may incentivize Oxford Lane Management to pursue speculative investments, use leverage when it may be unwise to do so, or refrain from de-levering when it would otherwise be appropriate to do so;

• a general increase in interest rates may have the effect of making it easier for our investment adviser to receive incentive fees, without necessarily resulting in an increase in our net earnings;

• a disruption or downturn in the capital markets and the credit markets could impair our ability to raise capital and negatively affect our business;

• regulations governing our operation as a registered closed-end management investment company affect our ability to raise additional capital and the way in which we do so. The raising of debt capital may expose us to risks, including the typical risks associated with leverage;

• we may borrow money and/or issue Preferred Stock to leverage our portfolio, which would magnify the potential for gain or loss on amounts invested and will increase the risk of investing in us;

• we may experience fluctuations in our quarterly results;

• we will be subject to corporate-level U.S. federal income tax if we are unable to maintain our RIC status under Subchapter M of the Code;

• there is a risk that our stockholders may not receive distributions or that our distributions may not grow or may be reduced over time, including on a per share basis as a result of the dilutive effects of this offering;

• common shares of closed-end management investment companies, including Oxford Lane Capital, have in the past frequently traded at discounts to their net asset values, and we cannot assure you that the market price of shares of our common stock will not decline below our net asset value per share;

• our common stock price may be volatile and may decrease substantially;

• any amounts that we use to service our indebtedness or preferred dividends, or that we use to redeem our Preferred Stock, will not be available for distributions to our common stockholders;

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• our common stock is subject to a risk of subordination relative to holders of our debt instruments and holders of our Preferred Stock;

• holders of our Preferred Stock have the right to elect two members of our Board of Directors and class voting rights on certain matters;

• an investment in the New Series 2024 Term Preferred Shares with a fixed interest rate bears interest rate risk;

• a liquid secondary trading market has not developed and may not develop for the New Series 2024 Term Preferred Shares;

• the New Series 2024 Term Preferred Shares are not rated;

• the New Series 2024 Term Preferred Shares bear a risk of early redemption by us;

• claims of holders of the New Series 2024 Term Preferred Shares are subject to a risk of subordination relative to holders of our debt instruments;

• we are subject to risks related to the general credit crisis and related liquidity risks;

• holders of the New Series 2024 Term Preferred Shares bear reinvestment risk;

• holders of the New Series 2024 Term Preferred Shares bear dividend risk; and

• there is a risk of delay in our redemption of the New Series 2024 Term Preferred Shares, and we may fail to redeem such securities as required by their terms.

See “Risk Factors” beginning on page S-18 of this prospectus supplement and on page 21 of the accompanying prospectus. In addition, the other information included in this prospectus supplement and the accompanying prospectus contains a discussion of factors you should carefully consider before deciding to invest in the New Series 2024 Term Preferred Shares.

Operating and Regulatory Structure

Oxford Lane Capital is a Maryland corporation that is a non-diversified closed-end management investment company that has registered as an investment company under the 1940 Act. As a registered closed-end fund, we are required to meet regulatory tests. See “Regulation as a Registered Closed-End Management Investment Company” in the accompanying prospectus. We may also borrow funds to make investments. In addition, we have elected to be treated for U.S. federal income tax purposes, and intend to qualify annually, as a RIC under Subchapter M of the Code. See “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus.

Our investment activities are managed by Oxford Lane Management and supervised by our Board of Directors. Oxford Lane Management is an investment adviser that is registered under the Advisers Act. Under our Investment Advisory Agreement, we have agreed to pay Oxford Lane Management an annual base management fee based on our gross assets as well as an incentive fee based on our performance. See “Investment Advisory Agreement” in the accompanying prospectus. We have also entered into an administration agreement with BDC Partners, which we refer to as the Administration Agreement, under which we have agreed to reimburse BDC Partners for our allocable portion of overhead and other expenses incurred by BDC Partners in performing its obligations under the Administration Agreement, including furnishing us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing us with other administrative services. See “Administration Agreement” in the accompanying prospectus.

BDC Partners also serves as the managing member of Oxford Lane Management. Messrs. Cohen and Rosenthal, in turn, serve as the managing member and non-managing member, respectively, of BDC Partners.

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Recent Developments

On May 8, 2017, the Board of Directors declared the required monthly dividends on our Series 2023 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares, as follows:

	Per Share Dividend Amount Declared		2017 Record Dates		2017 Payable Dates
Series 2023	$	0.15625		June 16, July 17, August 17		June 30, July 31, August 31
Series 2024	$	0.16930		June 16, July 17, August 17		June 30, July 31, August 31

In accordance with their terms, each of Series 2023 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares will pay a monthly dividend at a fixed rate of 7.50% and 8.125%, respectively, of the $25.00 per share liquidation preference, or $1.875 and $2.03125 per share per year, respectively. This fixed annual dividend rate is subject to adjustment under certain circumstances, but will not in any case be lower than 7.50% and 8.125% per year, respectively, for each of the Series 2023 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares.

On May 12, 2017, we filed a second amended and restated application for exemptive relief to permit us to invest on a concurrent basis with affiliates of our investment adviser (the “Order”). On May 19, 2017, the SEC issued a notice regarding its intent to issue the Order (the “Notice”). As stated in the Notice, the Order granting the requested relief will be issued unless the SEC orders a hearing. If no requests for a hearing are submitted to the SEC, we expect the SEC’s exemptive order to be issued on or around June 14, 2017.

On May 23, 2017, we filed a prospectus supplement to increase the size of our common stock “at-the-market” offering to $100,000,000.

Our Corporate Information

Our offices are located at 8 Sound Shore Drive, Suite 255, Greenwich, CT 06830, and our telephone number is (203) 983-5275.

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THE OFFERING

The following is a brief summary of the terms of this offering. For a more complete description of the rights, preferences and other terms of the New Series 2024 Term Preferred Shares, see “Description of the New Series 2024 Term Preferred Stock” in this prospectus supplement.

Issuer

Oxford Lane Capital Corp.

Listing

We have applied to list the New Series 2024 Term Preferred Shares on the NASDAQ Global Select Market and we expect trading to commence thereon within 30 days after the date of initial delivery of the New Series 2024 Term Preferred Shares under the symbol “OXLCM.” Our Series 2023 Term Preferred Shares are currently listed on the NASDAQ Global Select Market under the symbol “OXLCO.” Our 8.125% Series 2024 Term Preferred Shares are currently listed on the NASDAQ Global Select Market under the symbol “OXLCN.” Our common stock is currently listed on the NASDAQ Global Select Market under the symbol “OXLC.”

Securities Offered

2,500,000 shares of 6.75% Series 2024 Term Preferred Shares (2,875,000 shares if the underwriters exercise their over-allotment option in full).

Liquidation Preference

$25 per share, plus accrued but unpaid dividends, if any. In the event of any liquidation, dissolution or winding up of our affairs, holders of the New Series 2024 Term Preferred Shares, pari passu, or equally, with the holders of the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares, will be entitled to receive a liquidation distribution per share equal to $25 per share (which we refer to in this prospectus supplement as the Liquidation Preference), plus an amount equal to all accrued but unpaid dividends, if any, and distributions accumulated to (but excluding) the date fixed for distribution or payment, whether or not earned or declared by us, but excluding interest on any such distribution or payment. See “Description of the New Series 2024 Term Preferred Stock — Liquidation Rights.”

Dividends

The New Series 2024 Term Preferred Shares pay a monthly dividend at a fixed annual rate of 6.75% of the Liquidation Preference, or $1.6875 per share per year, which we refer to as the Fixed Dividend Rate. The Fixed Dividend Rate is subject to adjustment under certain circumstances.

Cumulative cash dividends or distributions on each New Series 2024 Term Preferred Share are payable monthly, when, as and if declared, or under authority granted, by our Board of Directors out of funds legally available for such payment. We will pay monthly dividends on the New Series 2024 Term Preferred Shares offered pursuant to this prospectus supplement, commencing on July 31, 2017.

Ranking

The New Series 2024 Term Preferred Shares are senior securities that constitute capital stock of the Company.

The New Series 2024 Term Preferred Shares rank:

•  

senior to our common stock in priority of payment of

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dividends and as to the distribution of assets upon dissolution, liquidation or the winding-up of our affairs; and

•  

equal in priority with the Series 2023 Term Preferred Shares, the 8.125% Series 2024 Term Preferred Shares and all other future series of Preferred Stock we may issue, which we refer to in this prospectus supplement, collectively with the New Series 2024 Term Preferred Shares, as the Preferred Stock, as well as any other series of Term Preferred Shares (as such term is defined in the Articles Supplementary), or the “Term Preferred Stock,” as to priority of payment of dividends and as to distributions of assets upon dissolution, liquidation or the winding-up of our affairs.

We may issue additional shares of Preferred Stock, but we may not issue additional classes of capital stock that rank senior or junior to the New Series 2024 Term Preferred Shares (other than Common Stock) as to priority of payment of dividends and as to distribution of assets upon dissolution, liquidation or winding-up of our affairs. We may, however, issue additional Preferred Stock only so long as the ratio of (1) the value of total assets less all liabilities and indebtedness not represented by senior securities to (2) the sum of all senior securities representing indebtedness and the outstanding Series 2023 Term Preferred Shares, New Series 2024 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares multiplied by $25 per share is at least 200%. In addition, we may borrow funds from banks and other lenders so long as the ratio of (1) the value of total assets less all liabilities and indebtedness not represented by senior securities to (2) the sum of all senior securities representing indebtedness is at least 300%.

Term Redemption

We are required to redeem all outstanding New Series 2024 Term Preferred Shares on June 30, 2024, or the “Term Redemption Date,” at a redemption price equal to the Liquidation Preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the redemption date. We cannot effect any amendment, alteration or repeal of our obligation to redeem all of the New Series 2024 Term Preferred Shares on June 30, 2024 without the prior unanimous vote or consent of holders of the New Series 2024 Term Preferred Shares. See “Description of the New Series 2024 Term Preferred Stock — Redemption” and “— Voting Rights.”

Mandatory Redemption for Asset Coverage

If we fail to maintain an asset coverage ratio (as defined below) of at least 200% as of the close of business on any Business Day on which asset coverage is required to be calculated, and such failure is not cured by the close of business on the date that is 30 calendar days following such Business Day (referred to in this prospectus supplement as an Asset Coverage Cure Date), then we are required to redeem, within 90 calendar days of the Asset Coverage Cure Date, shares of Preferred Stock

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equal to the lesser of (1) the minimum number of shares of Preferred Stock that will result in our having an asset coverage ratio of at least 200% and (2) the maximum number of shares of Preferred Stock that can be redeemed out of funds legally available for such redemption. Also, at our sole discretion, we may redeem such number of shares of Preferred Stock (including shares of Preferred Stock required to be redeemed) that will result in our having an asset coverage ratio of up to and including 285%. The Preferred Stock to be redeemed may include, at our sole option, any number or proportion of the New Series 2024 Term Preferred Shares and other series of Preferred Stock. If the New Series 2024 Term Preferred Shares are to be redeemed in such an event, they will be redeemed at a redemption price equal to their liquidation preference per share plus accumulated but unpaid dividends, if any, on such liquidation preference (whether or not declared, but excluding, interest on accrued but unpaid dividends, if any) to, but excluding, the date fixed for such redemption.

Asset coverage for purposes of our Preferred Stock is a ratio calculated under Section 18(h) of the 1940 Act. We estimate that, on the Date of Original Issue (as such term is defined in the Articles Supplementary), our asset coverage, based on the composition and value of our portfolio as of March 31, 2017, and after giving effect to (1) the issuance of 2,500,000 New Series 2024 Term Preferred Shares in this offering, (2) the issuance of 221,931 shares of our common stock from April 1, 2017 through June 2, 2017 in an “at-the-market” offering, and (3) the payment of offering costs payable by us of $175,000 in connection with this offering, will be 210%. See “Description of the New Series 2024 Term Preferred Stock — Asset Coverage.”

Optional Redemption

At any time after June 30, 2020, at our sole option, we may redeem, from time to time, the New Series 2024 Term Preferred Shares in whole or in part, out of funds legally available for such redemption, at a price per share equal to the sum of the Liquidation Preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption. See “Description of the New Series 2024 Term Preferred Stock — Redemption — Optional Redemption.” See “Description of the New Series 2024 Term Preferred Stock — Redemption.”

Voting Rights

Except as otherwise provided in our Articles of Amendment and Restatement to the Articles of Incorporation or as otherwise required by law, (1) each holder of Preferred Stock (including the New Series 2024 Term Preferred Shares, the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares) will be entitled to one vote for each share of Preferred Stock held by such holder on each matter submitted to a vote of our stockholders and (2) the holders of all outstanding Preferred Stock and our common stock will vote

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together as a single class; provided that holders of Preferred Stock, voting separately as a class, will elect two of our directors and will be entitled to elect a majority of our directors if we fail to pay dividends on any outstanding shares of Preferred Stock in an amount equal to two full years of dividends and continuing during that period until we correct that failure. Preferred Stock holders will also vote separately as a class on any matter that materially and adversely affects any preference, right or power of holders of Preferred Stock. See “Description of the New Series 2024 Term Preferred Stock — Voting Rights.”

Conversion Rights

The New Series 2024 Term Preferred Shares will have no conversion rights.

Use of Proceeds

We intend to use the net proceeds from this offering (after the payment of estimated expenses of the offering of approximately $175,000) to redeem all of the outstanding 8.125% Series 2024 Term Preferred Shares, which are redeemable commencing June 30, 2017. As of June 2, 2017, the Company had approximately $50.5 million in aggregate principal value outstanding of its 8.125% Series 2024 Term Preferred Shares. The approximately $9.87 million (or approximately $18.95 million if the underwriters exercise their over-allotment option in full) of net proceeds from this offering in excess of the amount required to redeem all of the outstanding 8.125% Series 2024 Term Preferred Shares will be used for acquiring investments in accordance with our investment objective and strategies described in this prospectus supplement, general working capital purposes and/or to redeem a portion of our outstanding Series 2023 Term Preferred Shares. See “Use of Proceeds.”

Leverage

Although we have no current intention to do so, we may borrow funds to make investments. In addition, we may issue additional shares of Preferred Stock, which may be considered a form of leverage, after completion of this offering. As a result, we will be exposed to the risks of leverage, which may be considered a speculative investment technique. In addition, the CLO vehicles in which we invest will be leveraged, which will indirectly expose us to the risks of leverage. The use of leverage magnifies the potential gain and loss on amounts invested and therefore increases the risks associated with investing in our securities. In addition, the costs associated with use of leverage, including any increase in the management fee payable to our investment adviser, Oxford Lane Management, will be borne by our common stockholders. Under the 1940 Act, we are only permitted to incur additional indebtedness to the extent our asset coverage with respect to our outstanding senior securities representing indebtedness, as defined under the 1940 Act, is at least 300% immediately after each such borrowing. In addition, we are only permitted to issue additional Preferred Stock to the extent our asset coverage with respect to such Preferred Stock, as defined under the 1940 Act, which also reflects any outstanding borrowings, is at least

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200% immediately after each such issuance. See “Regulation as a Registered Closed-End Management Investment Company” in the accompanying prospectus.

U.S. Federal Income Taxes

Prospective investors are urged to consult their own tax advisors regarding these matters in light of their personal investment circumstances.

We have elected to be treated for tax purposes, and intend to continue to so qualify each year, as a RIC under Subchapter M of the Code, and we generally do not expect to be subject to U.S. federal income tax.

Risk Factors

Investing in the New Series 2024 Term Preferred Shares involves risks. You should carefully consider the information set forth in the sections of this prospectus supplement and the accompanying prospectus entitled “Risk Factors” before deciding whether to invest in our New Series 2024 Term Preferred Shares. See “Risk Factors” beginning on page S-18 of this prospectus supplement and page 21 of the accompanying prospectus.

Information Rights

During any period in which we are not subject to the reporting requirements of Securities Exchange Act of 1934, as amended, or the Exchange Act, and any New Series 2024 Term Preferred Shares are outstanding, we will provide holders of New Series 2024 Term Preferred Shares, without cost, copies of our annual, semi-annual and quarterly reports, proxy statements and other information that we would have been required to file with the SEC pursuant to the Exchange Act if we were subject to such requirements.

Redemption and Paying Agent

We have entered into an amendment to our Transfer Agency and Service Agreement with Computershare Trust Company, N.A., which we refer to as the Redemption and Paying Agent in this prospectus supplement. Under this amendment, the Redemption and Paying Agent serves as transfer agent and registrar, dividend disbursing agent and redemption and paying agent with respect to the New Series 2024 Term Preferred Shares.

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RISK FACTORS

You should carefully consider the risks described below, and the risks described in “Risk Factors” beginning on page 21 of the accompanying prospectus, before deciding to invest in the New Series 2024 Term Preferred Shares. The risks and uncertainties described below and in the accompanying prospectus are not the only ones we face. Additional risks and uncertainties not presently known to us, or not presently deemed material by us, may also impair our operations and performance and the value of the New Series 2024 Term Preferred Shares. If any of the following risks or the risks described in the accompanying prospectus actually occur, our business, financial condition or results of operations could be materially adversely affected, and the value of the New Series 2024 Term Preferred Shares may be impaired. If that happens, the trading price of the New Series 2024 Term Preferred Shares could decline, and you may lose all or part of your investment.

An investment in Term Preferred Stock with a fixed interest rate bears interest rate risk.

Term Preferred Stock pays dividends at a fixed dividend rate. Prices of fixed income investments vary inversely with changes in market yields. The market yields on securities comparable to the New Series 2024 Term Preferred Shares may increase, which would likely result in a decline in the secondary market price of the New Series 2024 Term Preferred Shares prior to the Term Redemption Date. For additional information concerning dividends on the New Series 2024 Term Preferred Shares, see “Description of the New Series 2024 Term Preferred Stock — Dividends and Dividend Periods.”

A liquid secondary trading market may not develop for the New Series 2024 Term Preferred Shares.

Although the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares are, and the New Series 2024 Term Preferred Shares will be, traded on the NASDAQ Global Select Market, they have and will have a limited trading market. As a result, we cannot predict the trading patterns of the New Series 2024 Term Preferred Shares, and a liquid secondary market may not develop. Holders of the New Series 2024 Term Preferred Shares may be able to sell such shares only at substantial discounts from the Liquidation Preference. There is a risk that the New Series 2024 Term Preferred Shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.

The New Series 2024 Term Preferred Shares are not rated.

We do not intend to have the New Series 2024 Term Preferred Shares rated by any rating agency. Unrated securities usually trade at a discount to similar, rated securities. As a result, there is a risk that the New Series 2024 Term Preferred Shares may trade at a price that is lower than they might otherwise trade if rated by a rating agency.

The New Series 2024 Term Preferred Shares bear a risk of early redemption by us.

We may voluntarily redeem some or all of the New Series 2024 Term Preferred Shares after June 30, 2020 and we may be forced to redeem some or all of the New Series 2024 Term Preferred Shares to meet regulatory requirements and the asset coverage requirements of such shares. Any such redemptions may occur at a time that is unfavorable to holders of the New Series 2024 Term Preferred Shares. We may have an incentive to redeem the New Series 2024 Term Preferred Shares voluntarily before the Term Redemption Date if market conditions allow us to issue other Preferred Stock or debt securities at a rate that is lower than the Fixed Dividend Rate on the New Series 2024 Term Preferred Shares. For further information regarding our ability to redeem the Term Preferred Stock, see “Description of the New Series 2024 Term Preferred Stock — Redemption” and “— Asset Coverage.”

Claims of holders of the New Series 2024 Term Preferred Shares are subject to a risk of subordination relative to holders of our debt instruments.

Rights of holders of New Series 2024 Term Preferred Shares will equal to the rights of holders of Series 2023 Term Preferred Shares and 8.125% Series 2024 Term Preferred Shares. However, rights of holders of the New Series 2024 Term Preferred Shares, the Series 2023 Term Preferred Shares and the 8.125%

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Series 2024 Term Preferred Shares will be subordinated to the rights of holders of our indebtedness. Therefore, dividends, distributions and other payments to holders of Term Preferred Stock in liquidation or otherwise may be subject to prior payments due to the holders of our indebtedness. In addition, under some circumstances the 1940 Act may provide debt holders with voting rights that are superior to the voting rights of holders of the New Series 2024 Term Preferred Shares.

We are subject to risks related to a general credit crisis and related liquidity risks.

General market uncertainty and extraordinary conditions in the credit markets may impact the liquidity of our investment portfolio. In turn, during extraordinary circumstances, this uncertainty could impact our distributions and/or ability to redeem the New Series 2024 Term Preferred Shares in accordance with their terms. Further, there may be market imbalances of sellers and buyers of New Series 2024 Term Preferred Shares during periods of extreme illiquidity and volatility in the credit markets. Such market conditions may lead to periods of thin trading in any secondary market for the New Series 2024 Term Preferred Shares and may make valuation of the New Series 2024 Term Preferred Shares uncertain. As a result, the spread between bid and ask prices is likely to increase significantly such that an investor in the New Series 2024 Term Preferred Shares may have difficulty selling his or her shares. Less liquid and more volatile trading environments could also result in sudden and significant valuation declines in the New Series 2024 Term Preferred Shares.

Holders of the New Series 2024 Term Preferred Shares bear reinvestment risk.

Given the seven-year term and potential for early redemption of the New Series 2024 Term Preferred Shares, holders of such shares may face an increased reinvestment risk, which is the risk that the return on an investment purchased with proceeds from the sale or redemption of the New Series 2024 Term Preferred Shares may be lower than the return previously obtained from the investment in such shares.

Holders of New Series 2024 Term Preferred Shares bear dividend risk.

We may be unable to pay dividends on the New Series 2024 Term Preferred Shares under some circumstances. The Series 2023 Term Preferred Shares are currently subject to redemption by us and the 8.125% Series 2024 Term Preferred Shares will become subject to redemption by us on June 30, 2017. As a result, our redemption of the Series 2023 Term Preferred Shares and 8.125% Series 2024 Preferred Shares (after June 30, 2017) may impact our ability to continue to pay dividends on the New Series 2024 Term Preferred Shares. In addition, the terms of any future indebtedness we may incur could preclude the payment of dividends in respect of equity securities, including the New Series 2024 Term Preferred Shares, under certain conditions.

There is a risk of delay in our redemption of the New Series 2024 Term Preferred Shares, and we may fail to redeem such securities as required by their terms.

We will generally make investments in CLO vehicles whose securities are not traded in any public market. Substantially all of the investments we presently hold and the investments we expect to acquire in the future are, and will be, subject to legal and other restrictions on resale and will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to obtain cash equal to the value at which we record our investments quickly if a need arises. Additionally, our Series 2023 Term Preferred Shares are mandatorily redeemable prior to the Term Redemption Date. If we are unable to obtain sufficient liquidity prior to the Term Redemption Date, we may be forced to engage in a partial redemption or to delay a required redemption. If such a partial redemption or delay were to occur, the market price of the New Series 2024 Term Preferred Shares might be adversely affected.

The application of the risk retention rules to CLOs may have broader effects on the CLO and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for the Company.

Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act added a provision to the Exchange Act, requiring the seller, sponsor or securitizer of a securitization vehicle to retain no less than five percent of the credit risk in assets it sells into a securitization and prohibiting such securitizer from directly or indirectly hedging or otherwise transferring the retained credit risk. The responsible federal

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agencies adopted final rules implementing these restrictions on October 22, 2014. The risk retention rules became effective with respect to CLOs two years after publication in the Federal Register. Under the final rules, the asset manager of a CLO is considered the sponsor of a securitization vehicle and is required to retain five percent of the credit risk in the CLO, which may be retained horizontally in the equity tranche of the CLO or vertically as a five percent interest in each tranche of the securities issued by the CLO. Although the final rules contain an exemption from such requirements for the asset manager of a CLO if, among other things, the originator or lead arranger of all of the loans acquired by the CLO retain such risk at the asset level and, at origination of such asset, takes a loan tranche of at least 20% of the aggregate principal balance, it is possible that the originators and lead arrangers of loans in this market will not agree to assume this risk or provide such retention at origination of the asset in a manner that would provide meaningful relief from the risk retention requirements for CLO managers.

We believe that the U.S. risk retention requirements imposed for CLO managers under Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act has created some uncertainty in the market in regard to future CLO issuance. Given that certain CLO managers may require capital provider partners to satisfy this requirement, we believe that this may create additional opportunities (and additional risks) for us in the future.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectus contain forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements.

The forward-looking statements contained in this prospectus supplement and the accompanying prospectus involve risks and uncertainties, including statements as to:

• our future operating results;

• our business prospects and the prospects of a CLO vehicle’s portfolio companies;

• the impact of investments that we expect to make;

• our contractual arrangements and relationships with third parties;

• the dependence of our future success on the general economy and its impact on the industries in which we invest;

• the ability of a CLO vehicle’s portfolio companies to achieve their objectives;

• our expected financings and investments;

• the adequacy of our cash resources and working capital; and

• the timing of cash flows, if any, from our investments.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

• an economic downturn could impair the ability of a CLO vehicle’s portfolio companies to continue to operate, which could lead to the loss of some or all of our investment in such CLO vehicle;

• a contraction of available credit and/or an inability to access the equity markets could impair our investment activities;

• interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

• currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and

• the risks, uncertainties and other factors we identify in “Risk Factors” in this prospectus supplement and the accompanying prospectus, and elsewhere in this prospectus supplement, the accompanying prospectus and in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus supplement or the accompanying prospectus should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Risk Factors” in this prospectus supplement and the accompanying prospectus and elsewhere in this prospectus supplement and the accompanying prospectus. You should not place undue

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reliance on these forward-looking statements, which apply only as of the respective dates of this prospectus supplement and the accompanying prospectus. However, we will update this prospectus supplement and the accompanying prospectus to reflect any material changes to the information contained herein. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, or the “Securities Act.”

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USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately $60.37 million (or approximately $69.45 million if the underwriters fully exercise their overallotment option), after deducting the payment of underwriting discounts and commissions of $1.95 million (or approximately $2.25 million if the underwriters fully exercise their overallotment option) and estimated offering expenses of $175,000 payable by us.

We intend to use the net proceeds from this offering to redeem all of the outstanding 8.125% Series 2024 Term Preferred Shares, which are redeemable commencing June 30, 2017. As of June 2, 2017, the Company had approximately $50.5 million in aggregate principal value outstanding of its 8.125% Series 2024 Term Preferred Shares. The approximately $9.87 million (or approximately $18.95 million if the underwriters exercise their over-allotment option in full) of net proceeds from this offering in excess of the amount required to redeem all of the outstanding 8.125% Series 2024 Term Preferred Shares will be used for acquiring investments in accordance with our investment objective and strategies described in this prospectus supplement, general working capital purposes and/or to redeem a portion of our outstanding Series 2023 Term Preferred Shares.

We anticipate that substantially all of the net proceeds of this offering will be used for the above purposes within approximately three to six months from the consummation of such offering, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. We cannot assure you we will achieve our targeted investment pace.

Pending such investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities and other high-quality investments that mature in one year or less from the date of investment. The management fee payable by us will not be reduced while our assets are invested in such securities. See “Regulation as a Closed-End Management Investment Company — Temporary Investments” in the accompanying prospectus for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.

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CAPITALIZATION

The following table sets forth:

• the actual capitalization of Oxford Lane Capital at March 31, 2017;

• the as adjusted capitalization of Oxford Lane Capital reflecting the cash from the estimated net proceeds of the sale of 221,931 shares of our common stock from April 1, 2017 to June 2, 2017 under a common stock at-the-market offering; and

• the as further adjusted capitalization of Oxford Lane Capital, reflecting the (i) sale of 2,500,000 shares of our New Series 2024 Term Preferred Shares in this offering at a public offering price of $25 per share, after deducting the underwriting discounts and commissions of approximately $1.95 million and estimated offering expenses of approximately $175,000 payable by us and (ii) repayment of $50.5 million in aggregate principal value of our outstanding 8.125% Series 2024 Term Preferred Shares.

This table should be read in conjunction with “Use of Proceeds” and financial statements and notes thereto included in this prospectus supplement and our “Business” section included in the accompanying prospectus.

	As of March 31, 2017
	Actual			As Adjusted(2)			As Further Adjusted(3)(4)
Assets:
Total assets	$	377,117,936		$	379,499,440		$	389,366,840
Liabilities:
Mandatory redeemable Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 5,636,180 shares issued and outstanding, actual and as adjusted(1); 10,000,000 shares authorized and 6,116,001 shares issued and outstanding, as further adjusted		133,356,883			133,356,883			145,000,345
Other liabilities		11,712,608			11,712,608			11,712,608
Total liabilities		145,069,491			145,069,491			156,712,953
Net Assets	$	232,048,445		$	234,429,949		$	232,653,887
Net Assets consist of:
Paid in capital		328,351,676			330,733,180			330,733,180
Accumulated net realized losses on investments		(56,790,756	)		(56,790,756	)		(56,790,756	)
Net unrealized depreciation on investments		(13,841,066	)		(13,841,066	)		(13,841,066	)
Distributions in excess of net investment income		(25,671,409	)		(25,671,409	)		(27,447,471	)
Total net assets	$	232,048,445		$	234,429,949		$	232,653,887

(1) Actual amount represents 3,616,001 shares of Series 2023 Term Preferred Shares and 2,020,179 shares of 8.125% Series 2024 Term Preferred Shares outstanding as of March 31, 2017.

(2) Increase in assets in the “As Adjusted” column is due to the cash from the estimated net proceeds of the sale of 221,931 shares of our common stock from April 1, 2017 to June 2, 2017 under a common stock at-the-market offering.

(3) Increase in assets in the “As Further Adjusted” column is due to cash from the estimated net proceeds of this offering, as well as capitalized debt issuance costs.

(4) Reflects the repayment of $50.5 million in aggregate principal value of our outstanding 8.125% Series 2024 Term Preferred Shares.

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RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

The following table contains our ratio of earnings to fixed charges and preferred dividends for the periods indicated, computed as set forth below. You should read these ratios of earnings to fixed charges and preferred dividends in connection with our financial statements, including the notes to those statements, included in this prospectus supplement and the accompanying prospectus.

	For the Year Ended March 31, 2017		For the Year Ended March 31, 2016			For the Year Ended March 31, 2015		For the Year Ended March 31, 2014		For The Year Ended March 31, 2013
Earnings to Fixed Charges and Preferred Dividends(1)		10.0		—	(2)		1.3		6.1		46.4

(1) Earnings include net realized and unrealized gains or losses. Net realized and unrealized gains or losses can vary substantially from period to period.

(2) Earnings for the year ended March 31, 2016 were inadequate to cover fixed charges by approximately $71.0 million.

For purposes of computing the ratios of earnings to fixed charges and preferred dividends, earnings represent net increase in net assets resulting from operations plus (or minus) income tax expense (benefit) including excise tax expense plus fixed charges. Fixed charges include interest and amortization of debt issuance costs and one-third of rent expense, which management estimates to represent the interest component of rent expense.

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SENIOR SECURITIES

Information about our senior securities is shown in the following table as of the end of each fiscal year since our formation. The information as of March 31, 2017, 2016, 2015, 2014 and 2013 has been derived from our financial statements that have been audited by an independent registered public accounting firm. The reports of our independent registered public accounting firm covering the total amount of senior securities outstanding as of March 31, 2017, 2016, 2015, 2014 and 2013 is attached as an exhibit to the registration statement of which this prospectus supplement is a part.

Year	Total Amount Outstanding Exclusive of Treasury Securities(1)		Asset Coverage Ratio Per Unit(2)		Involuntary Liquidation Preference Per Unit(3)		Average Market Value Per Unit(4)
Series 2017 Term Preferred Shares(5)
2015	$	15,811,250	$	2.47	$	25	$	1.03
2014	$	15,811,250	$	3.99	$	25	$	1.05
2013	$	15,811,250	$	8.79	$	25	$	1.03
Series 2023 Term Preferred Shares
2017	$	90,400,025	$	2.59	$	25	$	1.01
2016	$	90,638,450	$	1.91	$	25	$	0.97
2015	$	73,869,250	$	2.47	$	25	$	0.98
2014	$	65,744,250	$	3.99	$	25	$	0.94
Series 2024 Term Preferred Shares
2017	$	50,504,475	$	2.59	$	25	$	1.02
2016	$	50,539,775	$	1.91	$	25	$	1.00
2015	$	60,687,500	$	2.47	$	25	$	1.01

(1) Total amount of each class of senior securities outstanding at the end of the period presented.

(2) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities. Asset coverage per unit is expressed in terms of dollar amounts per share.

(3) The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.

(4) The Average Market Value Per Unit is calculated by taking the daily average closing price of the security for the respective period and dividing it by $25 per share to determine a unit price per share consistent with Asset Coverage Per Unit.

(5) On July 24, 2015, we redeemed all issued and outstanding Series 2017 Term Preferred Shares at the Term Redemption Price (as defined below).

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DESCRIPTION OF THE NEW SERIES 2024 TERM PREFERRED STOCK

The following is a brief description of the terms of our Term Preferred Stock, including specific terms of the New Series 2024 Term Preferred Shares. This is not a complete description and is subject to, and entirely qualified by reference to, our Articles of Amendment and Restatement to the Articles of Incorporation, the Articles Supplementary, Appendix A to the Articles Supplementary, Appendix B to the Articles Supplementary and Appendix C to the Articles Supplementary, which will be dated as of June 7, 2017. The final form of Articles Supplementary and Appendix A, Appendix B and Appendix C, thereto are attached to this prospectus supplement and the final Articles Supplementary and Appendix A, Appendix B and Appendix C will be filed with the SEC as an exhibit to our registration statement of which this prospectus supplement and the accompanying prospectus are a part. You may obtain copies of these documents as described under “Available Information.”

General

We are authorized to issue 10,000,000 shares of Term Preferred Stock. We are designating 2,875,000 of these shares as additional New Series 2024 Term Preferred Shares. As of June 2, 2017, we had 3,616,001 shares of the Series 2023 Term Preferred Shares outstanding and 2,020,179 shares of the 8.125% Series 2024 Term Preferred Shares outstanding. Terms of the Term Preferred Stock are set forth in the Articles Supplementary. Terms of the Series 2023 Term Preferred Shares, 8.125% Series 2024 Term Preferred Shares and New Series 2024 Term Preferred Shares are the same as those of the Term Preferred Stock except as set forth in Appendix A, Appendix B and Appendix C to the Articles Supplementary dated as of June 7, 2017.

At the time of issuance, any Term Preferred Stock, including the New Series 2024 Term Preferred Shares, will be fully paid and non-assessable and will have no preemptive, conversion, or exchange rights or rights to cumulative voting. The New Series 2024 Term Preferred Shares will rank equally with shares of the Series 2023 Term Preferred Shares, the 8.125% Series 2024 Term Preferred Shares and all our other Preferred Stock that might be issued in the future, as to payment of dividends and the distribution of our assets upon dissolution, liquidation or winding up of our affairs. The Term Preferred Stock is, and all other Preferred Stock that we may issue in the future will be, senior as to dividends and distributions to the Common Stock. We may issue additional series of Term Preferred Stock or other Preferred Stock in the future.

Except in certain limited circumstances, holders of the Term Preferred Stock will not receive certificates representing their ownership interest in such shares, and the shares of Term Preferred Stock will be represented by a global certificate to be held by the Securities Depository for the Term Preferred Stock. The Depository Trust Company will initially act as Securities Depository with respect to the Term Preferred Stock.

Dividends and Dividend Periods

General.  The holders of the Term Preferred Stock will be entitled to receive cumulative cash dividends and distributions on such shares, when, as and if declared by, or under authority granted by, our Board of Directors out of funds legally available for payment and in preference to dividends and distributions on Common Stock, calculated separately for each dividend period, or the “Dividend Period,” for such Term Preferred Stock at the dividend rate, or the “Dividend Rate,” for such Term Preferred Stock in effect during such Dividend Period, in an amount equal to the Liquidation Preference for such Term Preferred Stock. The Dividend Rate is computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends so declared and payable will be paid to the extent permitted under state law and our Articles of Incorporation, and to the extent available, in preference to and priority over any dividend declared and payable on the Common Stock. If we are unable to distribute the full dividend amount due in a Dividend Period on the New Series 2024 Term Preferred Shares, the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares, the dividends will be distributed on a pro rata basis among the holders of the New Series 2024 Term Preferred Shares, the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares.

Fixed Dividend Rate.  The Fixed Dividend Rate is an annual rate of 6.75% for the New Series 2024 Term Preferred Shares. The Fixed Dividend Rate for Term Preferred Stock may be adjusted in certain circumstances, including upon the occurrence of certain events resulting in a Default Period (as defined below).

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Payment of Dividends and Dividend Periods.  The first Dividend Period for the New Series 2024 Term Preferred Shares will commence on June 14, 2017 and end on July 31, 2017 and each subsequent Dividend Period will be a calendar month (or the portion thereof occurring prior to the redemption of such New Series 2024 Term Preferred Shares). Dividends will be payable monthly in arrears on the Dividend Payment Date — the last Business Day of the month of the Dividend Period and upon redemption of the Term Preferred Stock. Except for the first Dividend Period, dividends with respect to any monthly Dividend Period will be declared and paid to holders of record of Term Preferred Stock as their names shall appear on our registration books at the close of business on the applicable record date, which shall be such date designated by our Board of Directors that is not more than 20, nor less than 10, calendar days prior to such Dividend Payment Date. Dividends with respect to the New Series 2024 Term Preferred Shares offered pursuant to this prospectus supplement will be paid on July 31, 2017 to holders of record of such New Series 2024 Term Preferred Shares as their names appear on our registration books at the close of business on July 17, 2017.

Only holders of Term Preferred Stock on the record date for a Dividend Period will be entitled to receive dividends and distributions payable with respect to such Dividend Period, and holders of Term Preferred Stock who sell shares before such a record date and purchasers of Term Preferred Stock who purchase shares after such a record date should take the effect of the foregoing provisions into account in evaluating the price to be received or paid for such Term Preferred Stock.

Although dividends will accrue and be paid monthly, the record date for holders of Term Preferred Stock entitled to receive dividend payments may vary from month-to-month. We will notify holders of the Term Preferred Stock of each record date by issuance of a quarterly press release.

Mechanics of Payment of Dividends.  Not later than 12:00 noon, New York City time, on a Dividend Payment Date, we are required to deposit with the Redemption and Paying Agent sufficient funds for the payment of dividends in the form of Deposit Securities. Deposit Securities will generally consist of (1) cash or cash equivalents; (2) direct obligations of the United States or its agencies or instrumentalities that are entitled to the full faith and credit of the United States, which we refer to as the U.S. Government Obligations; (3) investments in money market funds registered under the 1940 Act that qualify under Rule 2a-7 under the 1940 Act and certain similar investment vehicles that invest in U.S. Government Obligations or any combination thereof; or (4) any letter of credit from a bank or other financial institution that has a credit rating from at least one ratings agency that is the highest applicable rating generally ascribed by such ratings agency to bank deposits or short-term debt of similar banks or other financial institutions, in each case either that is a demand obligation payable to the holder on any Business Day or that has a maturity date, mandatory redemption date or mandatory payment date, preceding the relevant Redemption Date, Dividend Payment Date or other payment date. We do not intend to establish any reserves for the payment of dividends.

All Deposit Securities paid to the Redemption and Payment Agent for the payment of dividends will be held in trust for the payment of such dividends to the holders of Term Preferred Stock. Dividends will be paid by the Redemption and Payment Agent to the holders of Term Preferred Stock as their names appear on our registration books. Dividends that are in arrears for any past Dividend Period may be declared and paid at any time, without reference to any regular Dividend Payment Date. Such payments are made to holders of Term Preferred Stock as their names appear on our registration books on such date, not exceeding 20 nor less than 10 calendar days preceding the payment date thereof, as may be fixed by our Board of Directors. Any payment of dividends in arrears will first be credited against the earliest accumulated but unpaid dividends. No interest or sum of money in lieu of interest will be payable in respect of any dividend payment or payments on any Term Preferred Stock which may be in arrears. See “— Adjustment to Fixed Dividend Rate — Default Period.”

Upon failure to pay dividends for at least two years, the holders of Term Preferred Stock will acquire certain additional voting rights. See “— Voting Rights” below. Such rights shall be the exclusive remedy of the holders of Term Preferred Stock upon any failure to pay dividends on Term Preferred Stock.

Adjustment to Fixed Dividend Rate — Default Period.  Subject to the cure provisions below, a default period with respect to Term Preferred Stock will commence on a date we fail to deposit the Deposit Securities as required as described above, or the “Default Period.” A Default Period with respect to a Dividend Default

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(as defined in the Articles Supplementary) or a Redemption Default (as defined in the Articles Supplementary) shall end on the Business Day on which, by 12:00 noon, New York City time, an amount equal to all unpaid dividends and any unpaid redemption price shall have been deposited irrevocably in trust in same-day funds with the Redemption and Paying Agent. In the case of a Default (as defined in the Articles Supplementary), the applicable dividend rate for each day during the Default Period will be equal to the Default Rate. The “Default Rate” for any calendar day will be equal to the applicable Dividend Rate in effect on such day plus two percent (2%) per annum.

No Default Period with respect to a Dividend Default or Redemption Default will be deemed to commence if the amount of any dividend or any redemption price due (if such Default is not solely due to our willful failure) is deposited irrevocably in trust, in same-day funds with the Redemption and Paying Agent by 12:00 noon, New York City time, on a Business Day that is not later than three Business Days after the applicable Dividend Payment Date or Redemption Date, together with an amount equal to the Default Rate applied to the amount and period of such non-payment based on the actual number of calendar days comprising such period divided by 360.

Restrictions on Dividend, Redemption, Other Payments and Issuance of Debt

No full dividends and distributions will be declared or paid on Term Preferred Stock for any Dividend Period, or a part of a Dividend Period, unless the full cumulative dividends and distributions due through the most recent dividend payment dates for all outstanding shares of Preferred Stock (including shares of other series of Term Preferred Stock, if any) have been, or contemporaneously are, declared and paid through the most recent dividend payment dates for each share of Preferred Stock. If full cumulative dividends and distributions due have not been paid on all outstanding shares of Preferred Stock of any series, any dividends and distributions being declared and paid on Term Preferred Stock will be declared and paid as nearly pro rata as possible in proportion to the respective amounts of dividends and distributions accumulated but unpaid on the shares of each such series of Preferred Stock on the relevant dividend payment date. No holders of Term Preferred Stock will be entitled to any dividends and distributions in excess of full cumulative dividends and distributions as provided in the Articles Supplementary.

For so long as any shares of Term Preferred Stock are outstanding, we will not: (x) declare any dividend or other distribution (other than a dividend or distribution paid in Common Stock) in respect of the Common Stock, (y) call for redemption, redeem, purchase or otherwise acquire for consideration any such Common Stock, or (z) pay any proceeds of the liquidation of the Company in respect of such Common Stock, unless, in each case, (A) immediately thereafter, we will be in compliance with the 200% asset coverage limitations set forth under the 1940 Act with respect to a class of senior security which is stock, after deducting the amount of such dividend or distribution or redemption or purchasing price or liquidation proceeds, (B) all cumulative dividends and distributions of shares of all series of Term Preferred Stock and all other series of Preferred Stock, if any, ranking on parity with the Term Preferred Stock due on or prior to the date of the applicable dividend, distribution, redemption, purchase or acquisition shall have been declared and paid (or shall have been declared and sufficient funds or Deposit Securities as permitted by the terms of such Preferred Stock for the payment thereof shall have been deposited irrevocably with the applicable paying agent) and (C) we have deposited Deposit Securities with the Redemption and Paying Agent in accordance with the requirements described herein with respect to outstanding Term Preferred Stock of any series to be redeemed pursuant to a Term Redemption (as defined below) or asset coverage mandatory redemption resulting from the failure to comply with the asset coverage requirements as described below for which a Notice of Redemption shall have been given or shall have been required to be given in accordance with the terms described herein on or prior to the date of the applicable dividend, distribution, redemption, purchase or acquisition.

Except as required by law, we will not redeem any shares of Term Preferred Stock unless all accumulated and unpaid dividends and distributions on all outstanding shares of Term Preferred Stock and other series of Preferred Stock, if any, ranking on parity with the Term Preferred Stock with respect to dividends and distributions for all applicable past dividend periods (whether or not earned or declared by us) (x) will have been or are contemporaneously paid or (y) will have been or are contemporaneously declared and Deposit Securities or sufficient funds (in accordance with the terms of such Preferred Stock) for the payment of such dividends and distributions will have been or are contemporaneously deposited with the Redemption and Paying Agent or other applicable paying agent, provided, however, that the foregoing will not prevent the

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purchase or acquisition of outstanding shares of Term Preferred Stock pursuant to an otherwise lawful purchase or exchange offer made on the same terms to holders of all outstanding shares of Term Preferred Stock and any other series of Preferred Stock, if any, for which all accumulated and unpaid dividends and distributions have not been paid.

We may issue debt in one or more classes or series. Under the 1940 Act, we may not (1) declare any dividend with respect to any Preferred Stock if, at the time of such declaration (and after giving effect thereto), our asset coverage with respect to any of our borrowings that are senior securities representing indebtedness (as determined in accordance with Section 18(h) under the 1940 Act), would be less than 200% (or such other percentage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities representing indebtedness of a closed-end investment company as a condition of declaring dividends on its Preferred Stock) or (2) declare any other distribution on the Preferred Stock or purchase or redeem Preferred Stock if at the time of the declaration or redemption (and after giving effect thereto), asset coverage with respect to such borrowings that are senior securities representing indebtedness would be less than 200% (or such higher percentage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities representing indebtedness of a closed-end investment company as a condition of declaring distributions, purchases or redemptions of its shares). “Senior securities representing indebtedness” generally means any bond, debenture, note or similar obligation or instrument constituting a security (other than shares of capital stock) and evidencing indebtedness and could include our obligations under any borrowings. For purposes of determining our asset coverage for senior securities representing indebtedness in connection with the payment of dividends or other distributions on or purchases or redemptions of stock, the term senior security does not include any promissory note or other evidence of indebtedness issued in consideration of any loan, extension or renewal thereof, made by a bank or other person and privately arranged, and not intended to be publicly distributed. The term senior security also does not include any such promissory note or other evidence of indebtedness in any case where such a loan is for temporary purposes only and in an amount not exceeding 5% of the value of our total assets at the time when the loan is made; a loan is presumed under the 1940 Act to be for temporary purposes if it is repaid within 60 calendar days and is not extended or renewed; otherwise such loan is presumed not to be for temporary purposes.

Asset Coverage

If we fail to maintain asset coverage of at least 200% as of the close of business on the last Business Day of a Calendar Quarter, the Term Preferred Stock may become subject to mandatory redemption as provided below. “Asset coverage” means asset coverage of a class of senior security which is a stock, as defined for purposes of Section 18(h) of the 1940 Act as in effect on the date of the Articles Supplementary. For purposes of this determination, no shares of Term Preferred Stock or other Preferred Stock, if any, will be deemed to be outstanding for purposes of the computation of asset coverage if, prior to or concurrently with such determination, either sufficient Deposit Securities or other sufficient funds (in accordance with the terms of such Preferred Stock) to pay the full redemption price for such Preferred Stock (or the portion thereof to be redeemed) will have been deposited in trust with the paying agent for such Preferred Stock and the requisite notice of redemption for such Preferred Stock (or the portion thereof to be redeemed) will have been given or sufficient Deposit Securities or other sufficient funds (in accordance with the terms of such Preferred Stock) to pay the full redemption price for such Preferred Stock (or the portion thereof to be redeemed) will have been segregated by us and our custodian, or Custodian, from our assets, by means of appropriate identification on the Custodian’s books and records or otherwise in accordance with the Custodian’s normal procedures. In such event, the Deposit Securities or other sufficient funds so deposited or segregated will not be included as our assets for purposes of the computation of asset coverage.

Redemption

Term Redemption.  We are required to provide for the mandatory redemption, or the Term Redemption, of all of the New Series 2024 Term Preferred Shares on June 30, 2024 at a redemption price equal to the Liquidation Preference per share plus an amount equal to accumulated but unpaid dividends thereon (whether or not earned or declared but excluding interest thereon) to (but excluding) the Term Redemption Date, which we refer to as the Term Redemption Price.

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Mandatory Redemption for Asset Coverage

Asset Coverage.  If we fail to have asset coverage of at least 200% as provided in the Articles Supplementary and such failure is not cured as of the close of business on the Asset Coverage Cure Date, we will fix a redemption date and proceed to redeem the number of shares of Preferred Stock as described below at a price per share equal to the liquidation price per share of the applicable Preferred Stock, which in the case of the Term Preferred Stock is equal to the Liquidation Preference per share plus accumulated but unpaid dividends and distributions thereon (whether or not earned or declared but excluding interest thereon) to (but excluding) the date fixed for redemption by our Board of Directors. We will redeem out of funds legally available the number of shares of Preferred Stock (which may include at our sole option any number or proportion of Term Preferred Stock) equal to the lesser of (i) the minimum number of shares of Preferred Stock, the redemption of which, if deemed to have occurred immediately prior to the opening of business on the Asset Coverage Cure Date, would result in us having asset coverage of at least 200% and (ii) the maximum number of shares of Preferred Stock that can be redeemed out of funds expected to be legally available in accordance with our Articles of Amendment and Restatement to the Articles of Incorporation and applicable law. Notwithstanding the foregoing sentence, in the event that shares of Preferred Stock are redeemed pursuant to the Articles Supplementary, we may at our sole option, but are not required to, redeem a sufficient number of shares of Term Preferred Stock that, when aggregated with other shares of Preferred Stock redeemed by us, permits us to have with respect to the shares of Preferred Stock (including Term Preferred Stock) remaining outstanding after such redemption, asset coverage on such Asset Coverage Cure Date of as much as 285%. We will effect a redemption on the date fixed by us, which date will not be later than 90 calendar days after the Asset Coverage Cure Date, except that if we do not have funds legally available for the redemption of all of the required number of shares of Term Preferred Stock and other shares of Preferred Stock which have been designated to be redeemed or we otherwise are unable to effect such redemption on or prior to 90 calendar days after the Asset Coverage Cure Date, we will redeem those shares of Term Preferred Stock and other shares of Preferred Stock which we were unable to redeem on the earliest practicable date on which we are able to effect such redemption.

Optional Redemption.  After June 30, 2020 or, any such date, an “Optional Redemption Date,” we may redeem in whole or from time to time in part outstanding New Series 2024 Term Preferred Shares, at a redemption price equal to the Liquidation Preference, plus an amount equal to all unpaid dividends and distributions accumulated to (but excluding) the Optional Redemption Date (whether or not earned or declared by us, but excluding interest thereon) or, the “Optional Redemption Price.”

Subject to the provisions of the Articles Supplementary and applicable law, our Board of Directors will have the full power and authority to prescribe the terms and conditions upon which shares of Term Preferred Stock will be redeemed from time to time.

We may not on any date deliver a notice of redemption to redeem any shares of Term Preferred Stock pursuant to the optional redemption provisions described above unless on such date we have available Deposit Securities for the Optional Redemption Date contemplated by such notice of redemption having a Market Value not less than the amount (including any applicable premium) due to holders of shares of Term Preferred Stock by reason of the redemption of such shares of Term Preferred Stock on such Optional Redemption Date.

Redemption Procedures.  We will file a notice of our intention to redeem with the SEC so as to provide the 30 calendar day notice period contemplated by Rule 23c-2 under the 1940 Act, or such shorter notice period as may be permitted by the SEC or its staff.

If we shall determine or be required to redeem, in whole or in part, shares of a series of Term Preferred Stock, we will deliver a notice of redemption, or a Notice of Redemption, by overnight delivery, by first class mail, postage prepaid or by electronic means to the holders of such series of shares of Term Preferred Stock to be redeemed, or request the Redemption and Paying Agent, on our behalf, to promptly do so by overnight delivery, by first class mail or by electronic means. A Notice of Redemption will be provided not more than 45 calendar days prior to the date fixed for redemption in such Notice of Redemption, which we refer to as the Redemption Date. If fewer than all of the outstanding shares of such series of Term Preferred Stock are to be redeemed pursuant to either the asset coverage mandatory redemption provisions or the optional redemption provisions, the shares of such series of Term Preferred Stock to be redeemed will be selected

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either (1) pro rata among such series of Term Preferred Stock, (2) by lot or (3) in such other manner as our Board of Directors may determine to be fair and equitable. If fewer than all shares of a series of Term Preferred Stock held by any holder are to be redeemed, the Notice of Redemption mailed to such holder shall also specify the number of shares of such series of Term Preferred Stock to be redeemed from such holder or the method of determining such number. We may provide in any Notice of Redemption relating to a redemption contemplated to be effected pursuant to the Articles Supplementary that such redemption is subject to one or more conditions precedent and that we will not be required to effect such redemption unless each such condition has been satisfied. No defect in any Notice of Redemption or delivery thereof will affect the validity of redemption proceedings except as required by applicable law.

If we give a Notice of Redemption, then at any time from and after the giving of such Notice of Redemption and prior to 12:00 noon, New York City time, on the Redemption Date (so long as any conditions precedent to such redemption have been met or waived by us), we will (i) deposit with the Redemption and Paying Agent Deposit Securities having an aggregate Market Value at the time of deposit no less than the redemption price of the shares of such series of Term Preferred Stock to be redeemed on the Redemption Date and (ii) give the Redemption and Paying Agent irrevocable instructions and authority to pay the applicable redemption price to the holders of shares of such series of Term Preferred Stock called for redemption on the Redemption Date. Notwithstanding the foregoing, if the Redemption Date is the Term Redemption Date, then such deposit of Deposit Securities will be made no later than 15 calendar days prior to the Term Redemption Date.

Upon the date of the deposit of Deposit Securities by us for purposes of redemption of shares of a series of Term Preferred Stock, all rights of the holders of such series of Term Preferred Stock so called for redemption shall cease and terminate except the right of the holders thereof to receive the Term Redemption Price, Mandatory Redemption Price or Optional Redemption Price thereof, as applicable (any of the foregoing referred to in this prospectus supplement as the Redemption Price, and such shares of such series of Term Preferred Stock will no longer be deemed outstanding for any purpose whatsoever (other than the transfer thereof prior to the applicable Redemption Date and other than the accumulation of dividends on such stock in accordance with the terms of the such series of Term Preferred Stock up to (but excluding) the applicable Redemption Date). We will be entitled to receive, promptly after the Redemption Date, any Deposit Securities in excess of the aggregate Redemption Price of shares of such series of Term Preferred Stock called for redemption on the Redemption Date. Any Deposit Securities so deposited that are unclaimed at the end of 90 calendar days from the Redemption Date will, to the extent permitted by law, be repaid to us, after which the holders of shares of such series of Term Preferred Stock so called for redemption shall look only to us for payment of the Redemption Price. We will be entitled to receive, from time to time after the Redemption Date, any interest on the Deposit Securities so deposited.

On or after a Redemption Date, each holder of shares of such series of Term Preferred Stock in certificated form (if any) that are subject to redemption will surrender the certificate(s) evidencing such shares of such series of Term Preferred Stock to us at the place designated in the Notice of Redemption and will then be entitled to receive the Redemption Price, without interest, and in the case of a redemption of fewer than all shares of such series of Term Preferred Stock represented by such certificate(s), a new certificate representing shares of such series of Term Preferred Stock that were not redeemed.

If any redemption for which a Notice of Redemption has been provided is not made by reason of the absence of our legally available funds in accordance with the Articles Supplementary and applicable law, such redemption shall be made as soon as practicable to the extent such funds become available. No Redemption Default will be deemed to have occurred if we have failed to deposit in trust with the Redemption and Paying Agent the applicable Redemption Price with respect to any shares where (1) the Notice of Redemption relating to such redemption provided that such redemption was subject to one or more conditions precedent and (2) any such condition precedent has not been satisfied at the time or times and in the manner specified in such Notice of Redemption. Notwithstanding the fact that a Notice of Redemption has been provided with respect to any shares of a series of Term Preferred Stock, dividends may be declared and paid on such shares of such series of Term Preferred Stock in accordance with their terms if Deposit Securities for the payment of the Redemption Price of such shares of such series of Term Preferred Stock shall not have been deposited in trust with the Redemption and Paying Agent for that purpose.

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We may, in our sole discretion and without a stockholder vote, modify the redemption procedures with respect to notification of redemption for a series of Term Preferred Stock, provided that such modification does not materially and adversely affect the holders of such series of Term Preferred Stock or cause us to violate any applicable law, rule or regulation.

Liquidation Rights

In the event of any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, the holders of the New Series 2024 Term Preferred Shares will be entitled to receive, pari passu, or equally, with the holders of the Series 2023 Term Preferred Shares and the 8.125% Series 2024 Term Preferred Shares, out of our assets available for distribution to stockholders, after satisfying claims of creditors but before any distribution or payment will be made in respect of the Common Stock, a liquidation distribution equal to the Liquidation Preference of $25 per share, plus an amount equal to all unpaid dividends and distributions accumulated to (but excluding) the date fixed for such distribution or payment (whether or not earned or declared by us, but excluding interest thereon), and such holders will be entitled to no further participation in any distribution or payment in connection with any such liquidation, dissolution or winding up. If, upon any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, our assets available for distribution among the holders of all Term Preferred Stock, and any other outstanding shares of Preferred Stock, if any, will be insufficient to permit the payment in full to such holders of Term Preferred Stock of the Liquidation Preference plus accumulated and unpaid dividends and distributions and the amounts due upon liquidation with respect to such other shares of Preferred Stock, then the available assets will be distributed among the holders of such Term Preferred Stock and such other series of Preferred Stock ratably in proportion to the respective preferential liquidation amounts to which they are entitled. In connection with any liquidation, dissolution or winding up of our affairs whether voluntary or involuntary, unless and until the Liquidation Preference on each outstanding share of Term Preferred Stock plus accumulated and unpaid dividends and distributions has been paid in full to the holders of Term Preferred Stock, no dividends, distributions or other payments will be made on, and no redemption, repurchase or other acquisition by us will be made by us in respect of, the Common Stock.

Neither the sale of all or substantially all of the property or business of the Company, nor the merger, consolidation or our reorganization into or with any other business or corporation, statutory trust or other entity, nor the merger, consolidation or reorganization of any other business or corporation, statutory trust or other entity into or with us will be a dissolution, liquidation or winding up, whether voluntary or involuntary, for purposes of the provisions relating to liquidation set forth in the Articles Supplementary.

Voting Rights

Except as otherwise provided in our Articles of Incorporation, the Articles Supplementary, or as otherwise required by applicable law, each holder of Term Preferred Stock will be entitled to one vote for each share of Term Preferred Stock held by such holder on each matter submitted to a vote of our stockholders and the holders of outstanding shares of any Preferred Stock, including the Term Preferred Stock, will vote together with holders of Common Stock as a single class. Under applicable rules of NASDAQ, we are currently required to hold annual meetings of stockholders.

In addition, the holders of outstanding shares of any Preferred Stock, including the Term Preferred Stock, will be entitled, as a class, to the exclusion of the holders of all other securities and classes of Common Stock, to elect two of our directors at all times (regardless of the total number of directors serving on the Board of Directors). We refer to these directors as the Preferred Directors. The holders of outstanding shares of Common Stock and Preferred Stock, including Term Preferred Stock, voting together as a single class, will elect the balance of our directors. Under our bylaws, our directors are divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three year term. At each annual meeting of our stockholders, the successors to the class of directors whose term expires at such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. One of the Preferred Directors was re-elected in 2016, and the other Preferred Director will be up for election in 2017.

In the event we owe accumulated dividends (whether or not earned or declared) on our Preferred Stock equal to at least two full years of dividends (and sufficient cash or securities have not been deposited with a

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paying agent for the payment of the accumulated dividends) the number of directors constituting the board will be increased by the number of directors, which we refer to as the New Preferred Directors, that when added to the Preferred Directors will constitute a majority. We will then call a special meeting of shareholders to permit the election of the New Preferred Directors. The term of the New Preferred Directors will last for so long as we are in arrears on our dividends as described above. The ability of the Term Preferred Stockholders to elect the New Preferred Directors will also terminate, subject to reinstatement, once we have a Dividend Payment Date on which we are no longer in arrears on our dividends to the extent described above.

Notwithstanding the foregoing, if (1) at the close of business on any dividend payment date for dividends on any outstanding share of any Preferred Stock, including any outstanding shares of Term Preferred Stock, accumulated dividends (whether or not earned or declared) on the shares of Preferred Stock, including the Term Preferred Stock, equal to at least two full years’ dividends shall be due and unpaid and sufficient cash or specified securities shall not have been deposited with the Redemption and Paying Agent or other applicable paying agent for the payment of such accumulated dividends; or (2) at any time holders of any shares of Preferred Stock are entitled under the 1940 Act to elect a majority of our directors (a period when either of the foregoing conditions exists, a Voting Period), then the number of members constituting our Board of Directors will automatically be increased by the smallest number that, when added to the two directors elected exclusively by the holders of shares of any Preferred Stock, including the Term Preferred Stock, as described above, would constitute a majority of our Board of Directors as so increased by such smallest number; and the holders of the shares of Preferred Stock, including the Term Preferred Stock, will be entitled as a class on a one-vote-per-share basis, to elect such additional directors. The terms of office of the persons who are directors at the time of that election will not be affected by the election of the additional directors. If we thereafter shall pay, or declare and set apart for payment, in full all dividends payable on all outstanding shares of Preferred Stock, including Term Preferred Stock, for all past dividend periods, or the Voting Period is otherwise terminated, (1) the voting rights stated above shall cease, subject always, however, to the revesting of such voting rights in the holders of shares of Preferred Stock upon the further occurrence of any of the events described herein, and (2) the terms of office of all of the additional directors so elected will terminate automatically. Any Preferred Stock, including Term Preferred Stock, issued after the date hereof will vote with Term Preferred Stock as a single class on the matters described above, and the issuance of any other Preferred Stock, including Term Preferred Stock, by us may reduce the voting power of the holders of Term Preferred Stock.

As soon as practicable after the accrual of any right of the holders of shares of Preferred Stock to elect additional directors as described above, we will call a special meeting of such holders and notify the Redemption and Paying Agent and/or such other person as is specified in the terms of such Preferred Stock to receive notice, (i) by mailing or delivery by electronic means or (ii) in such other manner and by such other means as are specified in the terms of such Preferred Stock, a notice of such special meeting to such holders, such meeting to be held not less than 10 nor more than 30 calendar days after the date of the delivery by electronic means or mailing of such notice. If we fail to call such a special meeting, it may be called at our expense by any such holder on like notice. The record date for determining the holders of shares of Preferred Stock entitled to notice of and to vote at such special meeting shall be the close of business on the fifth Business Day preceding the calendar day on which such notice is mailed. At any such special meeting and at each meeting of holders of shares of Preferred Stock held during a Voting Period at which directors are to be elected, such holders, voting together as a class (to the exclusion of the holders of all our other securities and classes of capital stock), will be entitled to elect the number of additional directors prescribed above on a one-vote-per-share basis.

Except as otherwise permitted by the terms of the Articles Supplementary, so long as any shares of Term Preferred Stock are outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of shares of Term Preferred Stock, voting as a separate class, amend, alter or repeal the provisions of the Articles of Amendment and Restatement to the Articles of Incorporation or the Articles Supplementary, whether by merger, consolidation or otherwise, so as to materially and adversely affect any preference, right or power of the Term Preferred Stock or the holders thereof; provided, however, that (i) a change in our capitalization as described under the heading “— Issuance of Additional Preferred Stock” will not be considered to materially and adversely affect the rights and preferences of Term Preferred Stock, and (ii) a

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division of a share of Term Preferred Stock will be deemed to affect such preferences, rights or powers only if the terms of such division materially and adversely affect the holders of Term Preferred Stock. For purposes of the foregoing, no matter shall be deemed to adversely affect any preference, right or power of a share of Term Preferred Stock of such series or the holder thereof unless such matter (i) alters or abolishes any preferential right of such share of Term Preferred Stock, or (ii) creates, alters or abolishes any right in respect of redemption of such Term Preferred Stock (other than as a result of a division of such Term Preferred Stock). So long as any shares of Term Preferred Stock are outstanding, we will not, without the affirmative vote or consent of at least 66 2/3% of the holders of the shares of Term Preferred Stock outstanding at the time, voting as a separate class, file a voluntary application for relief under federal bankruptcy law or any similar application under state law for so long as we are solvent and does not foresee becoming insolvent.

The affirmative vote of the holders of at least a “majority of the shares of Preferred Stock,” including the shares of Term Preferred Stock outstanding at the time, voting as a separate class, will be required (i) to approve us ceasing to be, or to withdraw our election as, a registered investment company, or (ii) to approve any plan of “reorganization” (as such term is defined in Section 2(a)(33) of the 1940 Act) adversely affecting such shares of Preferred Stock. For purposes of the foregoing, the vote of a “majority of the outstanding shares of Preferred Stock” means the vote at an annual or special meeting duly called of (a) 67% or more of such shares present at a meeting, if the holders of more than 50% of such outstanding shares are present or represented by proxy at such meeting, or (b) more than 50% of such outstanding shares, whichever is less.

For purposes of determining any rights of the holders of Term Preferred Stock to vote on any matter, whether such right is created by the Articles Supplementary, by the provisions of the Articles of Incorporation, by statute or otherwise, no holder of Term Preferred Stock will be entitled to vote any shares of Term Preferred Stock and no share of Term Preferred Stock will be deemed to be “outstanding” for the purpose of voting or determining the number of shares required to constitute a quorum if, prior to or concurrently with the time of determination of shares entitled to vote or the time of the actual vote on the matter, as the case may be, the requisite Notice of Redemption with respect to such Term Preferred Stock will have been given in accordance with the Articles Supplementary, and the Redemption Price for the redemption of such shares of Term Preferred Stock will have been irrevocably deposited with the Redemption and Paying Agent for that purpose. No shares of Term Preferred Stock held by us will have any voting rights or be deemed to be outstanding for voting or for calculating the voting percentage required on any other matter or other purposes.

Unless otherwise required by law or the Articles of Incorporation, holders of Term Preferred Stock will not have any relative rights or preferences or other special rights with respect to voting other than those specifically set forth in the “Voting Rights” section of the Articles Supplementary. The holders of shares of Term Preferred Stock will have no rights to cumulative voting. In the event that we fail to declare or pay any dividends on Term Preferred Stock, the exclusive remedy of the holders will be the right to vote for additional directors as discussed above; provided that the foregoing does not affect our obligation to accumulate and, if permitted by applicable law and the Articles Supplementary, pay dividends at the Default Rate as discussed above.

Issuance of Additional Preferred Stock

So long as any shares of Term Preferred Stock are outstanding, we may, without the vote or consent of the holders thereof, authorize, establish and create and issue and sell shares of one or more series of a class of our senior securities representing stock under Section 18 of the 1940 Act, ranking on parity with the Term Preferred Stock as to payment of dividends and distribution of assets upon dissolution, liquidation or the winding up of our affairs, in addition to then outstanding shares of Term Preferred Stock, including additional series of Term Preferred Stock, and authorize, issue and sell additional shares of any such series of Preferred Stock then outstanding or so established and created, including additional Term Preferred Stock, in each case in accordance with applicable law, provided that we will, immediately after giving effect to the issuance of such additional Preferred Stock and to its receipt and application of the proceeds thereof, including to the redemption of Preferred Stock with such proceeds, have asset coverage of at least 200%.

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Actions on Other than Business Days

Unless otherwise provided in the Articles Supplementary, if the date for making any payment, performing any act or exercising any right is not a Business Day, such payment will be made, act performed or right exercised on the next succeeding Business Day, with the same force and effect as if made or done on the nominal date provided therefor, and, with respect to any payment so made, no dividends, interest or other amount will accrue for the period between such nominal date and the date of payment.

Modification

The Board of Directors, without the vote of the holders of Term Preferred Stock, may interpret, supplement or amend the provisions of the Articles Supplementary or any appendix thereto to supply any omission, resolve any inconsistency or ambiguity or to cure, correct or supplement any defective or inconsistent provision, including any provision that becomes defective after the date hereof because of impossibility of performance or any provision that is inconsistent with any provision of any other Preferred Stock.

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ADDITIONAL MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our shares of Term Preferred Stock and serves as a supplement to the discussion in the accompanying prospectus under the heading “Material U.S. Federal Income Tax Considerations.” This summary does not purport to be a complete description of the income tax considerations applicable to such an investment. For example, we have not described tax consequences that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, a trader in securities that elects to use a market-to-market method of accounting for its securities holdings, pension plans and trusts, and financial institutions. This summary assumes that investors hold our Term Preferred Stock as capital assets (within the meaning of the Code). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this prospectus and all of which are subject to change, including through the enactment of comprehensive tax reform currently being debated in the United States possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service (“IRS”) regarding this offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets.

A “U.S. preferred stockholder” generally is a beneficial owner of shares of our Term Preferred Stock who is for U.S. federal income tax purposes:

• A citizen or individual resident of the United States;

• A corporation or other entity treated as a corporation, for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• A trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantive decisions of the trust (or a trust that has made a valid election to be treated as a U.S. trust); or

• An estate, the income of which is subject to U.S. federal income taxation regardless of its source.

A “Non-U.S. preferred stockholder” generally is a beneficial owner of shares of our Term Preferred Stock who is not a U.S. preferred stockholder.

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our Term Preferred Stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder that is a partner of a partnership holding shares of our Term Preferred Stock should consult his, her or its tax advisers with respect to the purchase, ownership and disposition of shares of our Term Preferred Stock.

Tax matters are complicated and the tax consequences to an investor of an investment in our Term Preferred Stock will depend on the facts of his, her or its particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

Election to be Taxed as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders (including preferred stockholders) as dividends. The requirements to qualify as a RIC are described in the accompanying prospectus under the heading “Material U.S. Federal Income Tax Considerations.” The remainder of this discussion assumes that we qualify as a RIC.

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Taxation of U.S. Preferred Stockholders

Distributions by us generally are taxable to U.S. preferred stockholders as ordinary income or capital gains. Distributions of our “investment company taxable income” (which is, generally, our net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to U.S. preferred stockholders to the extent of our current or accumulated earnings and profits. To the extent such distributions paid by us to non-corporate stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations, such distributions (“Qualifying Dividends”) may be eligible for a maximum tax rate of 20%. In this regard, it is anticipated that distributions paid by us will generally not be attributable to dividends and, therefore, generally will not qualify for the 20% maximum rate applicable to Qualifying Dividends. Distributions of our net capital gains (which are generally our realized net long-term capital gains in excess of realized net short-term capital losses) and properly reported by us as “capital gain dividends” will be taxable to a U.S. preferred stockholder as long-term capital gains that are currently taxable at a maximum rate of 20% in the case of individuals, trusts or estates, regardless of the U.S. preferred stockholder’s holding period for his, her or its Term Preferred Stock. Distributions in excess of our earnings and profits first will reduce a U.S. preferred stockholder’s adjusted tax basis in such stockholder’s Term Preferred Stock and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. preferred stockholder.

Any dividend declared by us in October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it had been received by our U.S. preferred stockholders on December 31 of the year in which the dividend was declared.

A U.S. preferred stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise disposes of his, her or its shares of our Term Preferred Stock. The amount of gain or loss will be measured by the difference between such stockholder’s adjusted tax basis in the Term Preferred Stock sold and the amount of the proceeds received in exchange. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held his, her or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our Term Preferred Stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our Term Preferred Stock may be disallowed if other shares of our Term Preferred Stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

Gain or loss, if any, resulting from our redemption of the Term Preferred Stock will generally be taxed as gain or loss from a sale or exchange of the Term Preferred Stock rather than as a dividend, but only if the redemption distribution (a) is deemed not to be essentially equivalent to a dividend, (b) is in complete redemption of a holder’s interest in us, (c) is substantially disproportionate with respect to the holder, or (d) with respect to non-corporate holders, is in partial liquidation of us. For purposes of (a), (b) and (c) above, a U.S. preferred stockholder’s ownership of our common stock will be taken into account.

A portion of the amount received by a U.S. preferred stockholder on either the sale, or our redemption, of the Term Preferred Stock may be characterized as dividend income to the extent it is attributable to declared but unpaid dividends.

The maximum rate of tax on long-term capital gains for non-corporate U.S. preferred stockholders is currently 20%, which is less than the maximum rate of tax as ordinary income for such stockholders. In addition, non-corporate U.S. preferred stockholders that are individuals with income in excess of $200,000 ($250,000 in the case of married individuals filing jointly) and certain estates and trusts are subject to an additional 3.8% tax on their “net investment income,” which generally includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned from trades or businesses). Corporate U.S. preferred stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 35% rate also applied to ordinary income. Non-corporate U.S. preferred stockholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally may

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deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate U.S. preferred stockholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate U.S. preferred stockholders generally may not deduct any net capital losses for a year against ordinary income, but may carry back such losses for three years or carry forward such losses for five years so as to use them as offsets to capital gains.

We or the applicable withholding agent will report to each of our U.S. preferred stockholders, as promptly as possible after the end of each calendar year, the amounts includible in such U.S. preferred stockholder’s taxable income for such year as ordinary income and as long-term capital gain. In addition, the federal tax status of each year’s distributions generally will be reported to the IRS (including the amount of dividends, if any, eligible for the 20% maximum rate). Dividends paid by us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends because our income generally will not consist of dividends. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. preferred stockholder’s particular situation.

We may be required to withhold U.S. federal income tax (“backup withholding”), currently at a rate of 28%, from all distributions to any U.S. preferred stockholder (other than a corporation, a financial institution, or a stockholder that otherwise qualifies for an exemption) (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding (generally on Form W-9) or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual’s taxpayer identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the U.S. preferred stockholder’s U.S. federal income tax liability, provided that proper information is provided to the IRS.

Taxation of Non-U.S. Preferred Stockholders

Whether an investment in our Term Preferred Stock is appropriate for a Non-U.S. preferred stockholder will depend upon that person’s particular circumstances. An investment in our Term Preferred Stock by a Non-U.S. preferred stockholder may have adverse tax consequences. Non-U.S. preferred stockholders should consult their tax advisers before investing in our Term Preferred Stock.

Distributions (whether actual or constructive distributions) of our “investment company taxable income” to Non-U.S. preferred stockholders (including interest income and realized net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if received directly by Non-U.S. preferred stockholders directly) will generally be subject to withholding of federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits unless an applicable exception applies. If the distributions are effectively connected with a U.S. trade or business of the Non-U.S. preferred stockholder, we will not be required to withhold federal tax if the Non-U.S. preferred stockholder complies with applicable certification and disclosure requirements, although the distributions will be subject to U.S. federal income tax at the rates applicable to U.S. persons. (Special certification requirements apply to a Non-U.S. preferred stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their own tax advisers).

In addition, we are generally not required to withhold any amounts with respect to certain distributions to Non-U.S. preferred stockholders to the extent that we properly report such distributions as “interest-related dividends” or “short-term capital gain dividends” and certain other requirements are satisfied. No assurance can be given whether any of our distributions will be reported as eligible for this exemption from withholding tax.

Distributions of our net capital gains to a stockholder that is a Non-U.S. preferred stockholder, and gains realized by a Non-U.S. preferred stockholder upon the sale or redemption of our Term Preferred Stock, will not be subject to U.S. federal income tax unless the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the Non-U.S. preferred stockholder (and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the Non-U.S. preferred stockholder in the United States,) or, in the case of an individual, the Non-U.S. preferred stockholder was present in the United States for 183 days or more during the taxable year and certain other conditions are met. However, to the extent that a redemption or sale of our Term Preferred Stock would be treated as a dividend pursuant to

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the rules discussed above with respect to U.S. preferred stockholders, such amounts will be dividends for purposes of the withholding tax rules discussed above.

For a corporate Non-U.S. preferred stockholder, distributions (both actual and deemed), and gains realized upon the sale or redemption of our Term Preferred Stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable treaty).

A Non-U.S. preferred stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of federal tax, may be subject to information reporting and backup withholding of U.S. federal income tax on dividends unless the Non-U.S. preferred stockholder provides us or the dividend paying agent with an IRS Form W-8BEN, IRS Form W-8BEN-E, or an acceptable substitute form or otherwise meets documentary evidence requirements for establishing that it is a Non-U.S. preferred stockholder or otherwise establishes an exemption from backup withholding.

Legislation commonly referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” generally impose a withholding tax of 30% on (i) U.S. source interest, dividends and other fixed or determinable annual or periodical gains, profits, and income and (ii) payments of gross proceeds from the sale, exchange, redemption, retirement or other taxable disposition occuring after December 31, 2018 of property of a type that can produce U.S. source interest or dividends, in each case, to foreign financial institutions (“FFIs”) unless such FFIs enter into an agreement with the U.S. Treasury to report certain required information with respect to accounts held by U.S. persons (or held by foreign entities that have U.S. persons as substantial owners), or such FFIs reside in a jurisdiction that has entered into an intergovernmental agreement (“IGA”) with the United States to collect and share such information and are in compliance with the terms of such IGA and any enabling legislation or regulations. The information required to be reported includes the identity and taxpayer identification number of each account holder that is a U.S. person and transaction activity within the holder’s account. In addition, subject to certain exceptions, this legislation also imposes a 30% withholding tax on payments to foreign entities that are not FFIs unless such foreign entities certify that they do not have any greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a Non-U.S. preferred stockholder and the status of the intermediaries through which they hold their shares of our Term Preferred Stock, a Non-U.S. preferred stockholder could be subject to this 30% withholding tax with respect to distributions on their shares of our Term Preferred Stock and proceeds from the sale of their shares of our Term Preferred Stock. Under certain circumstances, a Non-U.S. preferred stockholder might be eligible for refunds or credits of such taxes.

Non-U.S. persons should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the shares.

Tax matters are very complicated and the tax consequences to an investor of an investment in our securities will depend on the facts of its particular situation. We encourage investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

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UNDERWRITING

Ladenburg Thalmann & Co. Inc. is acting as representative of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus supplement, each underwriter named below has agreed to purchase jointly, and not severally, and we have agreed to sell to that underwriter, the number of New Series 2024 Term Preferred Shares set forth opposite the underwriter’s name.

Underwriter	New Series 2024 Term Preferred Shares
Ladenburg Thalmann & Co. Inc.		1,851,000
BB&T Capital Markets, a division of BB&T Securities, LLC		138,000
William Blair & Company L.L.C.		184,000
Wedbush Securities Inc.		308,250
National Securities Corporation		18,750
Total		2,500,000

The underwriting agreement provides that the obligations of the underwriters to purchase the New Series 2024 Term Preferred Shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the New Series 2024 Term Preferred Shares (other than those covered by the overallotment option described below) if they purchase any of the New Series 2024 Term Preferred Shares.

The underwriters propose to offer some of the New Series 2024 Term Preferred Shares directly to the public at the public offering price set forth on the cover page of this prospectus supplement and some of the New Series 2024 Term Preferred Shares to dealers at the public offering price less a concession not to exceed $0.50 per New Series 2024 Term Preferred Share. The underwriting discount of $0.78125 per New Series 2024 Term Preferred Share is equal to 3.125% of the initial offering price. If all of the New Series 2024 Term Preferred Shares are not sold at the initial offering price, the representatives may change the public offering price and other selling terms. Investors must pay for any New Series 2024 Term Preferred Shares purchased on or before June 14, 2017. The representatives have advised us that the underwriters do not intend to confirm any sales to any accounts over which they exercise discretionary authority.

The underwriters hold an option, exercisable for 30 days from the date of this prospectus, to purchase up to an additional 375,000 New Series 2024 Term Preferred Shares at the public offering price less the underwriting discount; provided, however, that the price of any such option shares will be reduced by the amount of any distributions declared and payable on the shares sold on the initial closing date but not payable on such option shares. The underwriters may exercise the option solely for the purpose of covering overallotments, if any, in connection with this offering. To the extent such option is exercised, each underwriter must purchase a number of additional New Series 2024 Term Preferred Shares approximately proportionate to that underwriter’s initial purchase commitment.

The Company has agreed that, for a period of 90 days from the date of this prospectus supplement, the Company will not, without the prior written consent of Ladenburg Thalmann & Co. Inc. on behalf of the underwriters, offer, pledge, sell, contract to sell or otherwise dispose of or agree to sell or otherwise dispose of, directly or indirectly or hedge any New Series 2024 Term Preferred Shares or any securities convertible into or exchangeable for New Series 2024 Term Preferred Shares. Ladenburg Thalmann & Co. Inc. in its sole discretion may release any of the securities subject to this lock-up agreement at any time without notice.

The 90-day period in the preceding paragraph will be extended if (i) during the last 17 days of the 90-day period we issue an earnings release or material news or a material event relating to Oxford Lane Capital occurs or (ii) prior to the expiration of the 90-day period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 90-day period, in which case the restrictions described in the preceding sentence will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event.

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We have applied to list the New Series 2024 Term Preferred Shares on the NASDAQ Global Select Market and we expect trading to commence thereon within 30 days after the date of initial delivery of the New Series 2024 Term Preferred Shares under the symbol “OXLCM.” The Series 2023 Term Preferred Shares are listed on the NASDAQ Global Select Market under the symbol “OXLCO.” The 8.125% Series 2024 Term Preferred Shares are listed on the NASDAQ Global Select Market under the symbol “OXLCN.”

The following table shows the underwriting discounts to be paid to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional New Series 2024 Term Preferred Shares. In addition, we have agreed to reimburse Ladenburg Thalmann & Co. Inc. an aggregate amount up to $25,000 for its out-of-pocket accountable expenses (including the reasonable fees and disbursements of its counsel) actually incurred by it in connection with this offering. This offering will conform with the requirements set forth in Financial Industry Regulatory Authority Rule 2310. The sum of all compensation to the underwriters in connection with this offering of New Series 2024 Term Preferred Shares, including the underwriting discount, will not exceed 10% of the total public offering price of the New Series 2024 Term Preferred Shares sold in this offering.

	No Exercise		Full Exercise
Per New Series 2024 Term Preferred Share	$	0.78125	$	0.78125
Total	$	1,953,125	$	2,246,093.75

Oxford Lane Capital and our investment adviser have each agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

Certain underwriters may make a market in the New Series 2024 Term Preferred Shares. No underwriter is, however, obligated to conduct market-making activities and any such activities may be discontinued at any time without notice, at the sole discretion of the underwriter. No assurance can be given as to the liquidity of, or the trading market for, the shares as a result of any market-making activities undertaken by any underwriter. This prospectus supplement and the accompanying prospectus are to be used by any underwriter in connection with the offering and, during the period in which a prospectus must be delivered, with offers and sales of the New Series 2024 Term Preferred Shares in market-making transactions in the over-the-counter market at negotiated prices related to prevailing market prices at the time of the sale.

In connection with the offering, Ladenburg Thalmann & Co. Inc., on behalf of the underwriters, may purchase and sell New Series 2024 Term Preferred Shares in the open market. These transactions may include short sales, syndicate covering transactions and stabilizing transactions. Short sales involve syndicate sales of New Series 2024 Term Preferred Shares in excess of the number of New Series 2024 Term Preferred Shares to be purchased by the underwriters in the offering, which creates a syndicate short position. “Covered” short sales are sales of Series 2024 Term Preferred Shares made in an amount up to the number of New Series 2024 Term Preferred Shares represented by the underwriters’ overallotment option. In determining the source of New Series 2024 Term Preferred Shares to close out the covered syndicate short position, the underwriters will consider, among other things, the price of New Series 2024 Term Preferred Shares available for purchase in the open market as compared to the price at which they may purchase New Series 2024 Term Preferred Shares through the overallotment option. Transactions to close out the covered syndicate short position involve either purchases of New Series 2024 Term Preferred Shares in the open market after the distribution has been completed or the exercise of the overallotment option. The underwriters may also make “naked” short sales of New Series 2024 Term Preferred Shares in excess of the overallotment option. The underwriters must close out any naked short position by purchasing New Series 2024 Term Preferred Shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of bids for or purchases of New Series 2024 Term Preferred Shares in the open market while the offering is in progress.

The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when Ladenburg Thalmann & Co. Inc. repurchase New Series 2024 Term Preferred Shares originally sold by that syndicate member in order to cover syndicate short positions or make stabilizing purchases.

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Any of these activities may have the effect of preventing or retarding a decline in the market price of New Series 2024 Term Preferred Shares. They may also cause the price of New Series 2024 Term Preferred Shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the NASDAQ Global Select Market, or in the over-the-counter market, or otherwise. Trading is expected to commence on the NASDAQ Global Select Market within 30 days after the date of initial delivery of the New Series 2024 Term Preferred Shares. If the underwriters commence any of these transactions, they may discontinue them at any time.

We estimate that our portion of the total expenses of this offering, excluding the underwriting discounts and commissions, will be approximately $175,000. We will pay the filing fees and the reasonable disbursements of counsel for the underwriters incurred in connection with securing any required review and qualification by the Financial Regulatory Authority, Inc. of the terms of this offering.

A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters. The representatives may agree to allocate a number of New Series 2024 Term Preferred Shares to underwriters for sale to their online brokerage account holders. The representatives will allocate shares to underwriters that may make Internet distributions on the same basis as other allocations. In addition, shares may be sold by the underwriters to securities dealers who resell shares to online brokerage account holders.

Potential Conflicts of Interest

Ladenburg Thalmann & Co. Inc. and its affiliates have provided, or may in the future provide, various investment banking, commercial banking, financial advisory, brokerage and other services to us and our affiliates for which services they have received, and may in the future receive, customary fees and expense reimbursement. In connection with our initial public offering of common stock, which was consummated on January 25, 2011, Ladenburg Thalmann & Co. Inc. served as the sole book running manager. We paid underwriting discounts and commissions of $2,555,000 to the underwriters. In connection with our rights offering consummated in August 2011, Ladenburg Thalmann & Co. Inc. served as dealer manager, and we paid fees of $355,163 to Ladenburg Thalmann & Co. Inc. In connection with our rights offering consummated in April 2012, Ladenburg Thalmann & Co. Inc. served as co-dealer manager, and we paid fees of an aggregate of $1,379,549 to the co-dealer managers. In connection with our Series 2017 Term Preferred Shares offering consummated in November 2012, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $711,506 to the joint book-running managers. In connection with our rights offering consummated in February 2013, Ladenburg Thalmann & Co. Inc. served as dealer manager, and we paid fees of an aggregate of $1,462,805 to the dealer manager. In connection with our preferred stock offering consummated in June 2013, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $862,000 to the joint book-running managers. In connection with our 2013 “at the market” offering, which commenced in August 2013, Ladenburg Thalmann & Co. Inc. served as our sales agent, and we agreed to pay Ladenburg Thalmann & Co. Inc. a commission equal to 2.0% of the gross sales price of any shares of our common stock sold through Ladenburg Thalmann & Co. Inc. pursuant to such offering and to reimburse Ladenburg Thalmann & Co. Inc. up to $50,000 for reasonable out-of-pocket expenses. No sales were made pursuant to our 2013 “at the market” offering. In connection with our preferred stock offering consummated in November 2013, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $1,590,993 to the joint book-running managers. In connection with our rights offering that expired on March 3, 2014, Ladenburg Thalmann & Co. Inc. served as co-dealer manager, and we paid fees of an aggregate of $2,734,534 to the co-dealer managers. In connection with our common stock offering consummated in March 2014, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $930,000 to the joint book-running managers. In connection with our preferred stock offering consummated in May 2014, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $1,070,000 to the joint book-running managers. In connection with our “at the market” offering consummated in August 2014, Ladenburg Thalmann & Co. Inc. served as our sales agent, we have agreed to pay Ladenburg Thalmann & Co. Inc. a commission equal to 2.0% of the gross sales price of any shares of our common stock sold through Ladenburg Thalmann & Co. Inc. pursuant to such offering and to reimburse Ladenburg Thalmann & Co. Inc. up to $50,000 for reasonable out-of-pocket expenses. In connection with our preferred stock offering in

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September 2014, Ladenburg Thalmann & Co. Inc. served as a financial advisor, and we paid fees of an aggregate of $61,250 to Ladenburg Thalmann & Co. Inc. In connection with our preferred stock offering in November 2014, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $1,000,000 to the joint book-running managers. In connection with our common stock offering in June 2015, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $1,008,000 to the joint book-running managers. In connection with our Series 2023 Term Preferred Shares offering consummated in June 2015, Ladenburg Thalmann & Co. Inc. served as joint book-running manager, and we paid fees of an aggregate of $1,200,000 to the joint book-running managers. In connection with a common stock “at the market” offering consummated in March 2016, Ladenburg Thalmann & Co. Inc. is serving as our sales agent, and we have agreed to pay Ladenburg Thalmann & Co. Inc. a commission equal to 2.0% of the gross sales price of any shares of our common stock sold through Ladenburg Thalmann & Co. Inc. pursuant to such offering and to reimburse Ladenburg Thalmann & Co. Inc. up to $50,000 for reasonable out-of-pocket expenses. In connection with such common stock “at the market” offering from March 7, 2016 to June 2, 2017 we paid fees of an aggregate of $1,021,213 to Ladenburg Thalmann & Co. Inc. In connection with a Preferred Stock “at the market” offering consumated in March 2017, Ladenburg Thalmann & Co. Inc. is serving as our sales agent, and we have agreed to pay Ladenburg Thalmann & Co. Inc. a commission equal to 2.0% of the gross sales price of any shares of our preferred stock sold through Ladenburg Thalmann & Co. Inc. pursuant to such offering and to reimburse Ladenburg Thalmann & Co. Inc. up to $30,000 for reasonable out-of-pocket expenses.

Ladenburg Thalmann & Co. Inc. and its affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, Ladenburg Thalmann & Co. Inc. and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our company. Ladenburg Thalmann & Co. Inc. and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

The principal business address of Ladenburg Thalmann & Co. Inc. is 277 Park Avenue, 26^th Floor, New York, NY 10172. The principal business address of BB&T Capital Markets, a division of BB&T Securities, LLC, is 901 East Byrd Street, 3^rd Floor, Richmond, Virginia 23219. The principal business address of William Blair & Company, L.L.C. is 222 West Adams Street, Chicago, Illinois 60606.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT
AND REDEMPTION AND PAYING AGENT

Our securities are held under a custody agreement by U.S. Bank National Association. The address of the custodian is One Federal Street, 3^rd Floor, Boston, MA 02110. Computershare Trust Company, N.A. acts as our transfer agent, dividend disbursing agent and redemption and paying agent. The principal business address of our transfer agent is 250 Royall Street, Canton, MA 02021.

MISCELLANEOUS

To the extent that a holder of Term Preferred Stock is directly or indirectly a beneficial owner of more than 10% of any class of our outstanding shares (meaning, for purposes of holders of Term Preferred Stock, more than 10% of our outstanding Preferred Stock), such 10% beneficial owner would be subject to the short-swing profit rules that are imposed pursuant to Section 16 of the Exchange Act (and related reporting requirements). These rules generally provide that such a 10% beneficial owner may have to disgorge any profits made on purchases and sales, or sales and purchases, of our equity securities (including Term Preferred Stock, the Series 2023 Term Preferred Shares, the New Series 2024 Term Preferred Shares, the 8.125% Series 2024 Term Preferred Shares and Common Stock) within any six-month time period. Investors should consult with their own counsel to determine the applicability of these rules.

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LEGAL MATTERS

Certain legal matters in connection with the securities offered hereby will be passed upon for us by Eversheds Sutherland (US) LLP, Washington, DC. Certain legal matters in connection with the offering will be passed upon for the underwriters by Blank Rome LLP, New York, New York.

EXPERTS

The financial statements as of March 31, 2017 and for the year ended March 31, 2017 included in this prospectus supplement have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

AVAILABLE INFORMATION

We have filed with the SEC a registration statement on Form N-2 together with all amendments and related exhibits under the Securities Act. The registration statement contains additional information about us and the securities being offered by this prospectus supplement and the accompanying prospectus.

We are required to file with or submit to the SEC annual, semi-annual and quarterly reports, proxy statements and other information meeting the informational requirements of the Exchange Act. You may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s website at http://www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing to the SEC’s Public Reference Section, Washington, D.C. 20549. This information is also available free of charge by contacting us at Oxford Lane Capital Corp., 8 Sound Shore Drive, Suite 255, Greenwich, CT 06830, by telephone at (203) 983-5275, or on our website at http://www.oxfordlanecapital.com.

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INDEX TO FINANCIAL STATEMENTS

Statement of Assets and Liabilities as of March 31, 2017		F-2
Schedule of Investments as of March 31, 2017		F-3
Statement of Operations for the fiscal year ended March 31, 2017		F-6
Statement of Changes in Net Assets for the fiscal years ended March 31, 2017 and March 31, 2016		F-8
Statement of Cash Flows for the fiscal year ended March 31, 2017		F-8
Notes to Financial Statements		F-10
Report of Independent Registered Public Accounting Firm		F-29

F-1

OXFORD LANE CAPITAL CORP.
 
STATEMENT OF ASSETS AND LIABILITIES

	March 31, 2017
ASSETS
Investments, at fair value (cost: $370,596,525)	$	356,755,459
Cash and cash equivalents		14,017,859
Distributions receivable		5,639,292
Deferred offering costs on common stock		338,110
Interest receivable, including accrued interest purchased		184,512
Prepaid expenses and other assets		106,873
Fee receivable		75,831
Total assets		377,117,936
LIABILITIES
Mandatorily redeemable preferred stock, net of discount and deferred issuance costs (10,000,000 shares authorized, 5,636,180 shares issued and outstanding)		133,356,883
Securities purchased not settled		6,888,651
Incentive fee payable to affiliate		2,458,726
Investment advisory fee payable to affiliate		1,826,412
Accrued expenses		356,546
Accrued offering costs		95,549
Directors’ fees payable		64,750
Administrator expense payable		21,974
Total liabilities		145,069,491
COMMITMENTS AND CONTINGENCIES (Note 9)
NET ASSETS applicable to common stock, $0.01 par value, 90,000,000 shares authorized, and 22,751,432 shares issued and outstanding	$	232,048,445
NET ASSETS consist of:
Paid in capital	$	328,351,676
Accumulated net realized loss on investments		(56,790,756	)
Net unrealized depreciation on investments		(13,841,066	)
Distributions in excess of net investment income		(25,671,409	)
Total net assets	$	232,048,445
Net asset value per common share	$	10.20
Market price per share	$	11.13
Market price premium to net asset value per share		9.12	%

 
 
See Accompanying Notes.

F-2

OXFORD LANE CAPITAL CORP.
 
SCHEDULE OF INVESTMENTS
MARCH 31, 2017

COMPANY(1)/INVESTMENT	INDUSTRY		PRINCIPAL AMOUNT		COST		FAIR VALUE(2)		% OF NET ASSETS
Collateralized Loan Obligation – Debt Investments
Mountain Hawk II CLO, Ltd. CLO secured notes – Class E(3)(4)(6), (LIBOR + 4.80%, due July 20, 2024)		structured finance		$6,000,000		$4,928,825		$4,945,800
OFSI Fund VII, Ltd. CLO secured notes – Class F(3)(4)(6), (LIBOR + 5.65%, due October 18, 2026)		structured finance		5,564,000		4,781,669		5,018,728
Telos CLO 2013-3, Ltd. CLO secured notes – Class F(3)(4)(6), (LIBOR + 5.50%, due January 17, 2024)		structured finance		3,000,000		2,778,856		2,691,900
Total Collateralized Loan Obligation – Debt Investments					$	12,489,350	$	12,656,428		5.45	%
Collateralized Loan Obligation – Equity Investments
AMMC CLO XII, Ltd. CLO subordinated notes(5)(7), (Estimated yield 25.16%, maturity May 10, 2025)		structured finance		$8,428,571		$4,261,720		$3,624,286
Ares XXV CLO Ltd. CLO subordinated notes(5)(7), (Estimated yield 18.81%, maturity January 17, 2024)		structured finance		15,500,000		9,097,532		8,215,000
Ares XXVI CLO Ltd. CLO subordinated notes(5)(7), (Estimated yield 21.95%, maturity April 15, 2025)		structured finance		15,115,000		6,601,735		5,952,275
Ares XXIX CLO Ltd. CLO subordinated notes(5)(7), (Estimated yield 14.40%, maturity April 17, 2026)		structured finance		12,750,000		8,581,719		6,637,548
Ares XLIII CLO, Ltd. CLO preference shares(5)(7)(9)(10), (Estimated yield 14.27%, maturity December 22, 2017)		structured finance		7,000,000		7,000,000		7,000,000
Atrium XII CLO CLO subordinated notes(5)(7), (Estimated yield 19.84%, maturity October 22, 2026)		structured finance		37,762,500		30,292,942		35,874,375
Battalion CLO VII Ltd. CLO subordinated notes(5)(7), (Estimated yield 14.54%, maturity October 17, 2026)		structured finance		24,000,000		17,773,704		12,480,000
Benefit Street Partners CLO V Ltd. CLO preference shares(5)(7), (Estimated yield 24.15%, maturity October 20, 2026)		structured finance		8,000,000		5,273,815		5,324,000
Blue Hill CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 36.15%, maturity January 15, 2026)		structured finance		8,000,000		2,757,769		2,687,623
B&M CLO 2014-1 LTD CLO subordinated notes(5)(7), (Estimated yield 19.04%, maturity April 16, 2026)		structured finance		2,000,000		1,036,097		840,000
Carlyle Global Market Strategies CLO 2013-2, Ltd. CLO subordinated notes(5)(7), (Estimated yield 13.99%, maturity April 18, 2025)		structured finance		9,250,000		6,458,690		5,147,100
Carlyle Global Market Strategies CLO 2014-4, Ltd. CLO subordinated notes(5)(7), (Estimated yield 21.42%, maturity October 15, 2026)		structured finance		12,892,000		9,149,729		9,362,914
CENT CLO 16, L.P. CLO subordinated notes(5)(7), (Estimated yield 36.64%, maturity August 01, 2024)		structured finance		10,500,000		5,663,968		5,985,000
CIFC Funding 2014-III, Ltd. CLO income notes(5)(7), (Estimated yield 22.78%, maturity July 22, 2026)		structured finance		10,000,000		6,133,517		6,300,000
CIFC Funding 2015-I, Ltd. CLO subordinated notes(5)(7), (Estimated yield 17.67%, maturity January 22, 2027)		structured finance		9,750,000		7,644,031		7,800,000

(Continued on next page)

 
 
See Accompanying Notes.

F-3

OXFORD LANE CAPITAL CORP.
 
SCHEDULE OF INVESTMENTS – (continued)
MARCH 31, 2017

COMPANY(1)/INVESTMENT	INDUSTRY		PRINCIPAL AMOUNT		COST		FAIR VALUE(2)		% OF NET ASSETS
Collateralized Loan Obligation – Equity Investments (continued)
Dryden 42 Senior Loan Fund CLO subordinated notes(5)(7), (Estimated yield 17.92%, maturity July 15, 2027)		structured finance		$7,000,000		$6,105,601		$6,020,000
Hull Street CLO Ltd. CLO subordinated notes(5)(7), (Estimated yield 19.93%, maturity October 18, 2026)		structured finance		15,000,000		9,642,258		7,200,000
Ivy Hill Middle Market Credit VII, Ltd. CLO subordinated notes(5)(7), (Estimated yield 16.91%, maturity October 20, 2025)		structured finance		7,000,000		5,527,144		4,907,978
Jamestown CLO III, Ltd. CLO subordinated notes(5)(7), (Estimated yield 28.05%, maturity January 15, 2026)		structured finance		15,575,000		7,763,311		8,566,250
Jamestown CLO IV, Ltd. CLO subordinated notes(5)(7), (Estimated yield 35.82%, maturity July 15, 2026)		structured finance		8,500,000		3,098,985		3,995,000
JFIN CLO 2015-II Ltd. CLO subordinated notes(5)(7), (Estimated yield 21.23%, maturity October 17, 2026)		structured finance		3,750,000		2,900,224		3,008,733
Midocean Credit CLO VI CLO income notes(5)(7)(9), (Estimated yield 19.21%, maturity January 20, 2029)		structured finance		19,700,000		17,547,029		18,124,000
Mountain Hawk II CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 16.86%, maturity July 20, 2024)		structured finance		25,670,000		10,967,712		8,214,400
Mountain Hawk III CLO, Ltd. CLO M notes(8), (Maturity April 18, 2025)		structured finance		2,389,676		—		143,248
Neuberger Berman CLO XII, Ltd. CLO subordinated notes(5)(7)(11), (Estimated yield 10.14%, maturity July 25, 2023)		structured finance		22,200,000		—		—
Neuberger Berman CLO XIII, Ltd. CLO subordinated notes(5)(7), (Estimated yield 12.21%, maturity January 23, 2024)		structured finance		6,255,000		2,415,286		2,001,600
North End CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 41.93%, maturity July 17, 2025)		structured finance		8,500,000		2,027,693		2,022,249
OFSI Fund VII, Ltd. CLO subordinated notes(5)(7), (Estimated yield 14.06%, maturity October 18, 2026)		structured finance		28,840,000		21,558,905		18,169,200
OZLM XIV, Ltd. CLO subordinated notes(5)(7), (Estimated yield 19.53%, maturity January 15, 2029)		structured finance		17,000,000		13,125,812		14,016,291
OZLM IX, Ltd. CLO subordinated notes(5)(7), (Estimated yield 19.50%, maturity January 20, 2027)		structured finance		7,500,000		6,003,577		5,775,000
Parallel 2015-1 Ltd. CLO subordinated notes(5)(7), (Estimated yield 14.31%, maturity July 20, 2027)		structured finance		10,250,000		7,247,957		6,457,500
Race Point IX CLO, Ltd. CLO preferred shares(5)(7), (Estimated yield 18.13%, maturity April 15, 2027)		structured finance		3,785,000		2,176,068		2,172,789
Regatta III Funding Ltd. CLO subordinated notes(5)(7), (Estimated yield 30.83%, maturity April 15, 2026)		structured finance		3,750,000		1,436,892		1,624,380
Shackleton II CLO, Ltd. CLO income notes(5)(7), (Estimated yield 38.35%, maturity October 20, 2023)		structured finance		28,000,000		18,433,349		15,960,000

(Continued on next page)

 
 
See Accompanying Notes.

F-4

OXFORD LANE CAPITAL CORP.
 
SCHEDULE OF INVESTMENTS – (continued)
MARCH 31, 2017

COMPANY(1)/INVESTMENT	INDUSTRY		PRINCIPAL AMOUNT		COST		FAIR VALUE(2)		% OF NET ASSETS
Collateralized Loan Obligation – Equity Investments (continued)
Shackleton 2015-VII CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 19.23%, maturity April 15, 2027)		structured finance		$10,500,000		$8,341,430		$8,005,605
Shackelton 2017-X CLO, Ltd. CLO subordinated notes(5)(7)(9), (Estimated yield 16.64%, maturity April 20, 2029)		structured finance		22,000,000		19,791,674		19,472,024
Sheridan Square CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 45.01%, maturity April 15, 2025)		structured finance		3,300,000		1,410,064		1,382,700
Sound Point CLO VIII, Ltd. CLO subordinated fee notes(8), (Maturity April 15, 2027)		structured finance		224,719		202,247		94,810
Telos CLO 2013-3, Ltd. CLO subordinated notes(5)(7), (Estimated yield 24.70%, maturity January 17, 2024)		structured finance		10,333,334		6,475,938		5,580,000
Telos CLO 2013-4, Ltd. CLO subordinated notes(5)(7), (Estimated yield 33.24%, maturity July 17, 2024)		structured finance		11,350,000		6,680,901		6,565,669
THL Credit Wind River 2014-3 CLO Ltd. CLO subordinated notes(5)(7), (Estimated yield 18.59%, maturity January 22, 2027)		structured finance		18,530,000		14,635,542		15,565,200
THL Credit Wind River 2017-1 CLO Ltd. CLO subordinated notes(5)(7)(9), (Estimated yield 16.97%, maturity April 18, 2029)		structured finance		12,000,000		10,741,259		9,900,363
Venture XVII CLO, Ltd. CLO subordinated notes(5)(7), (Estimated yield 22.43%, maturity July 15, 2026)		structured finance		17,000,000		11,372,945		10,620,671
Venture XVIII CLO, Ltd. CLO subordinated fee notes(8), (Maturity October 15, 2026)		structured finance		357,055		—		117,911
Venture XXV CLO, Ltd. CLO subordinated notes(5)(7)(9), (Estimated yield 16.64%, maturity April 20, 2029)		structured finance		4,000,000		3,859,507		4,200,000
Wellfleet 2016-2 CLO, Ltd. CLO subordinated notes(5)(7)(9), (Estimated yield 14.83%, maturity October 20, 2028)		structured finance		10,000,000		8,890,897		8,600,000
Other CLO equity related investments CLO other(8)		structured finance				—		2,385,339
Total Collateralized Loan Obligation – Equity Investments						$358,107,175		$344,099,031		148.29	%
Total Investments						$370,596,525		$356,755,459		153.74	%
Cash and Cash Equivalents
First American Government Obligations Fund(12)					$	14,017,859	$	14,017,859
Total Cash and Cash Equivalents					$	14,017,859	$	14,017,859		6.0	%
Total Investments, Cash and Cash Equivalents					$	384,614,384	$	370,773,318		159.8	%

(1) We do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.

(2) Fair value is determined in good faith by the Board of Directors of the Fund.

(3) Notes bear interest at variable rates.

(4) Cost value reflects accretion of original issue discount or market discount.

(5) Cost value reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO equity investments.

(Continued on next page)

 
 
See Accompanying Notes.

F-5

OXFORD LANE CAPITAL CORP.
 
SCHEDULE OF INVESTMENTS – (continued)
MARCH 31, 2017

(6) The principal balance outstanding for this debt investment, in whole or in part, is indexed to a three-month LIBOR which resets quarterly. For each CLO debt investment, the rate provided is as of March 31, 2017.

(7) The CLO subordinated notes and income notes are considered equity positions in the CLO funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund's securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.

(8) Fair value represents discounted cash flows associated with fees earned from CLO equity investments.

(9) Investment has not made its inaugural distribution for the relevant period end. See “Note 2. Summary of Significnt Accounting Policies — Investment Income Recognition.”

(10) The subordinated shares represent an investment in a warehouse facility, which is a financing structure intended to aggregate loans that may be used to form the basis of a CLO vehicle.

(11) The CLO was optionally redeemed during the year ended March 31, 2017. See “Note 2. Summary of Significant Accounting Policies — Securities Transactions.”

(12) Represents cash equivalents held in a money market account as of March 31, 2017.

 
 
See Accompanying Notes.

F-6

OXFORD LANE CAPITAL CORP.
 
STATEMENT OF OPERATIONS

	Year Ended March 31, 2017
INVESTMENT INCOME
Income from securitization vehicles and investments	$	55,656,329
Interest income – debt investments		1,052,099
Other income		1,235,700
Total investment income		57,944,128
EXPENSES
Interest expense on mandatorily redeemable preferred stock		11,711,709
Investment advisory fees		6,346,009
Incentive fees		7,535,607
Professional fees		758,856
Administrator expense		594,982
Directors’ fees		295,000
General and administrative		333,397
Insurance expense		117,527
Transfer agent and custodian fees		108,616
Total expenses		27,801,703
Net investment income		30,142,425
Net change in unrealized appreciation on investments		80,691,611
Net realized loss on investments		(5,632,210	)
Net realized loss and net change in unrealized appreciation on investments		75,059,401
Net increase in net assets resulting from operations	$	105,201,826

 
 
See Accompanying Notes.

F-7

OXFORD LANE CAPITAL CORP.
 
STATEMENT OF CHANGES IN NET ASSETS

	Year Ended March 31, 2017			Year Ended March 31, 2016
Increase/(Decrease) in net assets from operations:
Net investment income	$	30,142,425		$	28,029,913
Net realized loss on investments		(5,632,210	)		(24,021,500	)
Net change in unrealized appreciation/(depreciation) on investments		80,691,611			(89,787,744	)
Net increase/(decrease) in net assets resulting from operations		105,201,826			(85,779,331	)
Distributions from net investment income		(49,601,273	)		(43,289,314	)
Total distributions to shareholders		(49,601,273	)		(43,289,314	)
Capital share transaction:
Issuance of common stock (net of underwriting fees and
offering costs $1,038,300 and $1,299,903, respectively)		43,800,085			30,531,781
Repurchase of common stock (including fees)		—			(430,278	)
Reinvestment of distributions		697,925			5,984,192
Net increase in net assets from capital share transactions		44,498,010			36,085,695
Total increase/(decrease) in net assets		100,098,563			(92,982,950	)
Net assets at beginning of period		131,949,882			224,932,832
Net assets at end of period (including distributions in excess of net investment income of $25,671,409 and $11,391,094, respectively)	$	232,048,445		$	131,949,882
Capital share activity:
Shares issued		3,929,836			2,219,275
Shares repurchased		—			(33,776	)
Shares issued from reinvestment of distributions		69,900			593,816
Net increase in capital share activity		3,999,736			2,779,315

 
 
See Accompanying Notes.

F-8

OXFORD LANE CAPITAL CORP.
 
STATEMENT OF CASH FLOWS

	Year Ended March 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	105,201,826
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Amortization/accretion of discounts and premiums		(170,317	)
Amortization of deferred issuance costs on mandatorily redeemable preferred stock		591,485
Amortization of deferred costs from repurchase of mandatorily redeemable preferred stock		492,268
Accretion of discount on mandatorily redeemable preferred stock		555,110
Purchases of investments		(258,598,515	)
Sales of investments		175,700,321
Repayments of principal and reductions to investment cost value		25,231,717
Net change in unrealized appreciation on investments		(80,691,611	)
Net realized loss on investments		5,632,210
Reductions to CLO equity cost value		22,633,754
Decrease in distributions receivable		1,257,711
Decrease in fee receivable		141,385
Increase in interest receivable		(16,929	)
Increase in prepaid expenses and other assets		(47,998	)
Decrease in due from affiliate		20,259
Increase in investment advisory fee payable		484,735
Increase in incentive fee payable		799,742
Increase in directors’ fees payable		6,000
Increase in administrator expense payable		8,048
Increase in accrued offering costs		7,213
Increase in accrued expenses		6,147
Net cash used in operating activities		(755,439	)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid (net of distribution reinvestment plan of $697,925)		(48,903,348	)
Proceeds from the issuance of common stock		44,838,385
Underwriting fees and offering costs for the issuance of common stock		(1,038,300	)
Deferred offering costs		(124,146	)
Repurchase of mandatorily redeemable preferred stock		(15,306,225	)
Proceeds from the issuance of mandatorily redeemable preferred stock (including premiums of $223)		15,032,500
Deferred issuance costs for the issuance of mandatorily redeemable preferred stock		(88,781	)
Net cash used in financing activities		(5,589,915	)
Net decrease in cash and cash equivalents		(6,345,354	)
Cash and cash equivalents, beginning of period		20,363,213
Cash and cash equivalents, end of period	$	14,017,859
SUPPLEMENTAL DISCLOSURES
Cash paid for interest	$	10,565,336
NON-CASH ACTIVITIES
Value of shares issued in connection with distribution reinvestment plan	$	697,925
Securities purchased not settled	$	6,888,651

 
 
See Accompanying Notes.

F-9

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 1. ORGANIZATION

Oxford Lane Capital Corp. (“OXLC,” “we,” “us,” “our” or the “Fund”) was incorporated under the General Corporation Laws of the State of Maryland on June 9, 2010. The Fund is a non-diversified closed-end management investment company that has registered under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, the Fund has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Fund’s investment objective is to maximize its portfolio’s risk adjusted total return, and it currently seeks to achieve its investment objective by investing in structured finance investments, specifically collateralized loan obligation (“CLO”) vehicles, which primarily own senior corporate debt securities.

OXLC’s investment activities are managed by Oxford Lane Management, LLC (“OXLC Management”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. BDC Partners, LLC (“BDC Partners”), a related party, is the managing member of OXLC Management and serves as the administrator of OXLC.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION

The accompanying financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), include the accounts of the Fund. The Fund follows the accounting and reporting requirements of the Accounting Standards Codification (“ASC”), Financial Services — Investment Companies (“ASC 946”), for reporting on Form N-CSR and the Fund maintains its accounting records in U.S. dollars.

USE OF ESTIMATES

The presentation of the financial statements is in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of demand deposits and cash held in a money market fund which contain investments with original maturities of three months or less. The Fund places its cash and cash equivalents with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit. Cash and cash equivalents are classified as Level 1 assets and are included on the Fund’s Schedule of Investments. Cash and cash equivalents are carried at cost or amortized cost which approximates fair value.

INVESTMENT VALUATION

The Fund determines fair value of its investment portfolio in accordance with the provisions of ASC 820, Fair Value Measurement and Disclosure. A significant estimate made in the preparation of OXLC’s financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. OXLC believes that there is no single definitive method for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments OXLC makes.

ASC 820-10 clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2,

F-10

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION  – (continued)

which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. OXLC considers the attributes of current market conditions on an on-going basis and has determined that due to the general illiquidity of the market for its investment portfolio, whereby little or no market data exists, all of OXLC’s investments are valued based upon “Level 3” inputs as of March 31, 2017.

Collateralized Loan Obligations — Debt and Equity

OXLC has acquired debt and equity positions in CLO investment vehicles and has purchased CLO warehouse facilities. These investments are special purpose financing vehicles. In valuing such investments, OXLC considers the indicative prices provided by a recognized industry pricing service as a primary source, and the implied yield of such prices, supplemented by actual trades executed in the market at or around period-end, as well as the indicative prices provided by the broker who arranges transactions in such investment vehicles. OXLC also considers those instances in which the record date for an equity distribution payment falls on the last day of the period, and the likelihood that a prospective purchaser would require a downward adjustment to the indicative price representing substantially all of the pending distribution. Additional factors include any available information on other relevant transactions, including firm bids and offers in the market and information resulting from bids-wanted-in-competition. In addition, OXLC considers the operating metrics of the specific investment vehicle, including compliance with collateralization tests, defaulted and restructured securities, and payment defaults, if any. OXLC Management or the Fund’s board of directors (the “Board of Directors”) may request an additional analysis by a third-party firm to assist in the valuation process of CLO investment vehicles. All information is presented to the Board of Directors for its determination of fair value of these investments.

SHARE REPURCHASES

From time to time, the Board of Directors may authorize a share repurchase program under which shares of the Fund’s common stock are purchased in open market transactions. Since the Fund is incorporated in the State of Maryland, state law requires share repurchases to be accounted for as a share retirement. The cost of repurchased shares is charged against capital on the settlement date. There were no share repurchases of the Fund’s common stock for the year ended March 31, 2017.

PREFERRED STOCK

The Fund carries its mandatorily redeemable preferred stock at accreted cost on the Statement of Assets and Liabilities, and not fair value. Refer to “Note 7. Mandatorily Redeemable Preferred Stock” for further details.

PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses consist primarily of insurance costs and listing fees.

INVESTMENT INCOME

Income from securitization vehicles and investments

Income from securitization vehicles and equity investments in the equity class securities of CLO vehicles (typically income notes or subordinated notes) is recorded using the effective interest method in accordance with the provisions of ASC 325-40, Beneficial Interests in Securitized Financial Assets, based upon a calculation of the effective yield to the expected redemption date based on an estimate of future cash flows, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The Fund monitors the expected residual payments, and the effective yield is determined and updated

F-11

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION  – (continued)

quarterly, as needed. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from both the tax-basis investment income and from the cash distributions actually received by the Fund during the period.

The Fund also records income on its investments in CLO warehouse facilities based on a stated rate as per the underlying note purchase agreement or, if there is no stated rate, then an estimated rate is calculated using a base case model projecting the timing of the ramp-up of the CLO warehouse facility.

Interest Income — Debt Investments

Interest income is recorded on an accrual basis using the contractual rate applicable to each debt investment and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on securities purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums, if any.

Generally, if the Fund does not expect the borrower to be able to service its debt and other obligations, the Fund will, on a discretionary basis, place the debt instrument on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to restructuring such that the interest income is deemed to be collectible. The Fund generally restores non-accrual loans to accrual status when past due principal and interest is paid and, in the Fund’s judgment, the payments are likely to remain current. As of March 31, 2017, the Fund had no non-accrual investments in its portfolio.

Other Income

Other income includes distributions from fee letters and success fees associated with portfolio investments. Distributions from CLO equity fee letter investments are an enhancement to the return on a CLO equity investment, are based upon a percentage of the collateral manager’s fees, and are recorded as other income when earned. The Fund may also earn success fees associated with its investments in CLO warehouse facilities, which are contingent upon a take-out of the warehouse by a permanent CLO structure; such fees are earned and recognized when the take-out is completed.

U.S. FEDERAL INCOME TAXES

The Fund intends to operate so as to continue to qualify to be taxed as a Regulated Investment Company (“RIC”) under Subchapter M of the U.S. Tax Code (the “Code”) and, as such, to not be subject to U.S. federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify for RIC tax treatment, OXLC is required to distribute at least 90% of its investment company taxable income, as defined by the Code.

Because U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statement to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

F-12

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION  – (continued)

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained, assuming examination by tax authorities. Management has analyzed the Fund’s tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Fund’s 2017 tax returns. The Fund identifies its major tax jurisdictions as U.S Federal and Connecticut State. The Fund is not aware of any tax position for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Distributions

Our distribution policy is based upon our estimate of our distributable net investment income, which includes actual distributions from our CLO equity class investments, with further consideration given to our realized gains or losses on a taxable basis. Distributions from net investment income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which differ from GAAP. Distributions from net investment income, if any, are expected to be declared and paid quarterly. Net realized capital gains, unless offset by any available capital loss carry-forward, are typically distributed to shareholders annually. Distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the Fund in accordance with the Fund’s distribution reinvestment plan, unless the shareholder has elected to have them paid in cash.

Amounts required to be distributed reflect estimates made by the Fund. Distributions paid by the Fund in accordance with RIC requirements are subject to re-characterization for tax purposes.

SECURITIES TRANSACTIONS

Securities transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of specific identification.

Distributions received on CLO equity investments which were previously called for which the cost basis has been reduced to zero are recorded as realized gains.

DEFERRED OFFERING COSTS ON COMMON STOCK

Deferred offering costs consist principally of legal, accounting, filing and underwriting fees incurred in relation to an offering proposed by the Fund. The deferred offering costs will be charged to capital when the offering takes place or as shares are issued. Costs related to shelf offerings are charged to capital as securities registered are issued. Deferred costs are periodically reviewed and expensed if the related registration statement is no longer active or if the offering is unsuccessful.

DEFERRED ISSUANCE COSTS ON MANDATORILY REDEEMABLE PREFERRED STOCK

Deferred issuance costs on mandatorily redeemable preferred stock consist of fees and expenses incurred in connection with the closing of preferred stock offerings, and are capitalized when incurred. These costs are amortized using the straight line method over the term of the respective preferred stock series. This amortization expense is included in interest expense on mandatorily redeemable preferred stock in the Fund’s financial statements. Upon early termination of preferred stock, the remaining balance of unamortized fees related to such debt is accelerated into interest expense on mandatorily redeemable preferred stock. Deferred issuance costs are presented on the balance sheet as a direct deduction from the related debt liability.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The guidance requires debt issuance costs (deferred financing costs) related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the related debt liability, similar

F-13

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION  – (continued)

to the presentation of debt discounts. Additionally, in August 2015, the FASB issued ASU 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”), which codifies an SEC staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets and subsequent amortization of the deferred costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 and 2015-15 were effective for annual periods ending after December 15, 2015, and interim periods within those annual periods. The Fund adopted ASU 2015-03 and ASU 2015-15 beginning with the quarter ended June 30, 2016. The adoption of ASU 2015-03 and ASU 2015-15 did not have an effect on the Fund’s results of operations and financial condition. At March 31, 2017 the adoption of ASU 2015-03 did result in the reclassification of approximately $4.0 million in deferred debt issuance costs, which post-adoption are a direct deduction from the related debt liability.

NOTE 3. FAIR VALUE

The Fund’s assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10 at March 31, 2017, were as follows:

	Fair Value Measurements at Reporting Date Using
Assets ($ in millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
CLO debt	$	—	$	—	$	12.7	$	12.7
CLO equity		—		—		344.1		344.1
Total investments at fair value		—		—		356.8		356.8
Cash and cash equivalents		14.0		—		—		14.0
Total assets at fair value	$	14.0	$	—	$	356.8	$	370.8

Financial Instruments Disclosed, But Not Carried, At Fair Value

The following table presents the carrying value and fair value of the Fund’s financial liabilities disclosed, but not carried at fair value as of March 31, 2017 and the level of each financial liability within the fair value hierarchy:

($ in millions)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Series 2023 Term Preferred Shares	$	84.6	$	92.5	$	—	$	92.5	$	—
Series 2024 Term Preferred Shares		48.7		51.9		—		51.9		—
Total	$	133.3	$	144.4	$	—	$	144.4	$	—

F-14

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 3. FAIR VALUE  – (continued)

Significant Unobservable Inputs for Level 3 Investments

In accordance with ASC 820-10, the following table provides quantitative information about the Fund’s Level 3 fair value measurements as of March 31, 2017. The Fund’s valuation policy, as described above, establishes parameters for the sources and types of valuation analysis, as well as the methodologies and inputs that the Fund uses in determining fair value. If the Board of Directors or OXLC Management determines that additional techniques, sources or inputs are appropriate or necessary in a given situation, such additional work may be undertaken. The weighted average calculations in the table below are based on the fair value within each respective valuation technique and methodology and asset category.

	Quantitative Information about Level 3 Fair Value Measurements
Assets	Fair Value as of March 31, 2017		Valuation Techniques/ Methodologies		Unobservable Input		Range/Weighted Average(5)
	($ in millions)
CLO debt	$	12.7		Market quotes		NBIB(1)		82.4% – 90.2%/86.9%
CLO equity		285.3		Market quotes		NBIB(1)		32.0% – 105.0%/63.6%
		54.5		Recent transactions		Actual trade(2)		23.8% – 100.0%/73.9%
		1.6		Yield Analysis		Yield assumptions		43.3%(3)
CLO equity – side letters		2.7		Discounted cash flow(4)		Discount rate(4)		8.2% – 19.5%/16.3%
Total Fair Value for Level 3 Investments	$	356.8

(1) The Fund generally uses non-binding indicative bid (“NBIB”) prices provided by an independent pricing service or broker on or near the valuation date as the primary basis for the fair value determinations for CLO debt and equity investments, which may be adjusted for pending equity distributions as of the valuation date. These bid prices are non-binding, and may not be determinative of fair value. Each bid price is evaluated by the Board of Directors in conjunction with additional information compiled by OXLC Management, including performance and covenant compliance information as provided by the independent trustee.

(2) Prices provided by independent pricing services are evaluated in conjunction with actual trades, and in certain cases, the value represented by actual trades may be more representative of fair value as determined by the Board of Directors.

(3) Represents a single investment fair value position, and therefore the range/weighted average is not applicable.

(4) The Fund will calculate the fair value of CLO equity side letters based upon the net present value of expected contractual payment streams discounted using estimated market yields for the equity tranche of the respective CLO vehicle. OXLC will also consider those investments in which the record date for an equity distribution payment falls on the last day of the period, and the likelihood that a prospective purchaser would require an adjustment to the transaction price representing substantially all of the pending distribution.

(5) Weighted averages are calculated based on fair value of investments.

Significant increases or decreases in any of the unobservable inputs in isolation may result in a significantly lower or higher fair value measurement.

F-15

OXFORD LANE CAPITAL CORP.
 
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017

NOTE 3. FAIR VALUE  – (continued)

A reconciliation of the fair value of investments for the year ended March 31, 2017, utilizing significant unobservable inputs, is as follows: