UNITED
STATES



SECURITIES
AND EXCHANGE COMMISSION



WASHINGTON,
D.C. 20549










FORM 10-K












(Mark One)



|x | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31,
2019



OR



| ̈ | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from to



Commission file number: 814-01154





AUDAX CREDIT BDC INC.



(Exact name of registrant as specified
in its charter)





|DELAWARE                                                               | 47-3039124                                  
|---------------------------------------------------------------------- | --------------------------------------------
|(State or other jurisdiction of
        incorporation or organization) | (I.R.S. Employer
        Identification No.)



|101 HUNTINGTON AVENUE                   |           
|--------------------------------------- | ----------
|BOSTON, MASSACHUSETTS                   | 02199     
|(Address of principal executive office) | (Zip Code)



(617) 859-1500



(Registrant’s telephone number,
including area code)



Securities registered pursuant to Section 12(b) of
the Act:



None



Securities registered pursuant to Section 12(g) of
the Act:



Common Stock, par value $0.001 per share



(Title of class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ̈ No x



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈ No x



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yesx    No    ̈



Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files).    Yes ̈No  
 ̈



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12 b-2 of the Exchange Act.



|                        |   |                           |  
|----------------------- | - | ------------------------- | -
|Large accelerated filer |  ̈ | Accelerated filer         |  ̈
|                        |   |                           |  
|Non-accelerated filer   | x | Smaller reporting company |  ̈
|                        |   |                           |  
|Emerging
growth company | x |                           |  



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ̈



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈    No   x



As
of December 31, 2019, there was no established public market for the registrant’s common stock. The registrant
had 36,698,229 shares of common stock, par value $0.001 per share, issued and outstanding as of March 17, 2020.



Portions
of the registrant’s Proxy Statement for its 2020 Annual Meeting of Stockholders to be filed not later than 120 days
after the end of the fiscal year covered by this annual report on Form 10-K are incorporated by reference into Part III
of this annual report on Form 10-K.




















AUDAX CREDIT BDC INC.



TABLE OF CONTENTS



|PART I:    |                                                                                                              |    
|---------- | ------------------------------------------------------------------------------------------------------------ | ---
|           |                                                                                                              |    
|Item 1.    | Business                                                                                                     | 2  
|Item 1A.   | Risk Factors                                                                                                 | 33 
|Item 1B.   | Unresolved Staff Comments                                                                                    | 56 
|Item 2.    | Properties                                                                                                   | 56 
|Item 3.    | Legal Proceedings                                                                                            | 56 
|Item 4.    | Mine Safety Disclosures                                                                                      | 56 
|           |                                                                                                              |    
|PART II:   |                                                                                                              |    
|           |                                                                                                              |    
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 57 
|Item 6.    | Selected Financial Data                                                                                      | 59 
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 60 
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk                                                   | 71 
|Item 8.    | Financial Statements and Supplementary Data                                                                  | 73 
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 104
|Item 9A.   | Controls and Procedures                                                                                      | 104
|Item 9B.   | Other Information                                                                                            | 105
|           |                                                                                                              |    
|PART III:  |                                                                                                              |    
|           |                                                                                                              |    
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                       | 106
|Item 11.   | Executive Compensation                                                                                       | 106
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related  Stockholder Matters              | 106
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                    | 106
|Item 14.   | Principal Accountant Fees and Services                                                                       | 106
|           |                                                                                                              |    
|PART IV:   |                                                                                                             
|           |                                                                                                              |    
|Item 15.   | Exhibits and Financial Statement Schedules                                                                   | 107
|           |                                                                                                             
|SIGNATURES |                                                                                                              |    













Part I



In this annual report on Form 10-K, except where the
context suggests otherwise, the terms “we,” “us,” “our” and the “Company” refer
to Audax Credit BDC Inc. We refer to Audax Management Company (NY), LLC, our investment adviser, as our “Adviser,”
and Audax Management Company, LLC, our administrator, as our “Administrator.” The term “stockholders” refers
to holders of our common stock, $.001 par value per share, or the Common Stock. The term “Shares” refers to the shares
of Common Stock.



ITEM 1. BUSINESS



Overview



Audax Credit BDC Inc. is a Delaware corporation
that was formed in January 2015. We are an externally managed, closed-end, non-diversified management investment company that
has elected to be treated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the
1940 Act. In addition, we have elected to be treated for federal income tax purposes as a regulated investment company, or RIC,
under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.



Our investment objective is to generate
current income and, to a lesser extent, long-term capital appreciation. We intend to meet our investment objective by investing
primarily in senior secured debt of privately owned U.S. middle-market companies. For purposes of this annual report, we define
 “middle market companies” to be companies that, in general, generate less than $500 million in annual revenue or less
than $75 million of annual earnings before interest, taxes, depreciation and amortization, or EBITDA. We intend to invest at least
80% of our net assets plus the amount of any borrowings in “credit instruments,” which we define as any fixed income
instruments.



Although we have no present intention of
doing so, we may decide to incur indebtedness for the purpose of funding investments and for general corporate purposes, which
we refer to as “leverage.” If we do incur leverage in the near term, we anticipate that it will be used in limited
circumstances and on a short-term basis for purposes such as funding distributions. As a BDC, we are limited in our use of leverage
under the 1940 Act. Specifically, as a BDC, and absent specific authorization by our Board of Directors or stockholders, we are
only allowed to borrow amounts such that our asset coverage meets the requirements of the 1940 Act, currently at least 200% after
such borrowing.  In determining whether to use leverage, we will analyze the maturity, covenants and interest rate structure
of the proposed borrowings, as well as the risks of such borrowings within the context of our investment outlook and the impact
of leverage on our investment portfolio. The amount of any leverage that we will employ as a BDC will be subject to oversight by
our Board of Directors.



We generate revenue in the form of interest
on the debt securities that we hold in our portfolio companies. The senior debt we invest in generally has stated terms of three
to ten years. Our senior debt investments generally bear interest at a floating rate. Interest on debt securities is generally
payable quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or payment-in-kind,
or PIK, interest. The principal amount of the debt securities and any accrued but unpaid interest generally will become due at
the maturity date. In addition, we may generate revenue in the form of commitment and other fees in connection with transactions,
although we do not expect to do so. Original issue discount, or OID, as well as market discount and premium are accreted and amortized
in determining our interest income. We record any prepayment premiums on loans and debt securities as income.



Available Information



Our address is 101 Huntington Avenue, Boston, MA 02199. Our
phone number is (617) 859-1500, and our internet address is www.audaxcreditbdc.com.





2







Key Elements of Investment Strategy



We have implemented the following investment strategy:



| | · | invest primarily in first lien senior secured loans and selectively in second lien loans to privately owned U.S. middle-market
companies to take advantage of what we perceive to be higher pricing, more attractive structures and lower volatility than other
fixed income investments, including larger, broadly syndicated loans (which we define for purposes of this annual report to be,
in general, loans to companies generating substantially more than $75 million of annual EBITDA);
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | utilize our Adviser’s investment team’s experience in middle-market debt investing; the senior team members average
30 years of middle-market debt investing through all phases of the credit cycle;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | benefit from the broad deal sourcing capabilities and due diligence insights of the platform developed by our Adviser and its
affiliates, which we refer to, collectively, as Audax Group, as well as Audax Group’s primary research model and expertise
in investing at each level of the capital structure of portfolio companies;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | perform thorough credit analyses on investment opportunities with a focus on principal preservation and downside protection;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | build a diversified portfolio of investments by company and industry; and
| | - | -------------------------------------------------------------------------



| | · | rigorously monitor company and portfolio performance.
| | - | -----------------------------------------------------



The Company lends directly to borrowers
and generally structures its investments to include fixed repayment schedules and extensive contractual rights and remedies. We
generally focus on cash-pay instruments that pay interest on a monthly or quarterly basis, typically with maturities of between
five and seven years. Such first lien senior secured loans typically do not include equity co-investments, warrants or PIK payment
terms. However, to the extent we invest in securities ranking more junior in a borrower’s capital structure, which is not
a focus of our portfolio, such investments may include some or all of these attributes. Any equity co-investments, warrants or
PIK instruments we hold may involve certain risks that are not applicable to the types of securities in which we typically invest.
These risks include the possibility of being unsecured with respect to our claim on such investments if the portfolio company were
to go bankrupt or being paid less upon such bankruptcy than we otherwise would have had such investment been in the form of a senior
loan.



Like bank loans, most loans in which we
invest are not rated by any rating agency. If they were rated, they would be rated as below investment grade quality. Loans rated
below investment grade quality, which are often referred to as “junk” loans, are generally regarded as having predominantly
speculative characteristics and may carry a greater risk with respect to a borrower’s capacity to pay interest and repay
principal. Therefore, our investments may result in an above average amount of risk of volatility or loss of principal. To the
extent we make investments with a deferred interest feature such as market discount, debt instruments with PIK interest and OID
securities, the higher interest rates on these investments may reflect the payment deferral and an increased credit risk associated
with such instruments.



We generally focus on investment opportunities
that have demonstrated stability in their revenues and EBITDA. We also generally make investments that demonstrate a historical
as well as projected ability to generate cash flow sufficient to service the contemplated leverage. Targeted investments typically
rely upon multiple sources of cash flow and do not depend upon a single product, customer, geography, regulation, or technology.





3







We typically require a pledge of all
of the tangible and intangible assets of borrowers as collateral to secure our loans. As a result, we and other lenders in
such first lien senior secured loans have a first priority secured claim with respect to all tangible and intangible assets
of such borrowers, including the proceeds of any sale of assets, should the borrower default on its obligations under such
first lien senior secured loans. Any such claim ranks senior or effectively senior in the capital structure of our borrowers,
ahead of all junior, subordinated and/or unsecured creditors, with respect to all tangible and intangible assets of such
borrowers pledged as collateral to secure our loans.



Generally, our loans are priced primarily
with a floating interest rate, with interest rates calculated on the basis of a fixed interest rate spread over a specified base
rate. While the London Interbank Offered Rate, or LIBOR, is the most commonly used base rate, we also offer the prime rate as an
option for borrowers. Our loan pricing is influenced by several factors, including the industry of the borrower, the degree of
leverage of our loan and of the borrower’s overall capital structure, the equity contribution of the sponsor, if any, in
the borrower’s capital, and general market conditions. We typically also include in our loan terms a yield enhancement device
commonly referred to as a “LIBOR Floor.” This feature, which first appeared in the debt markets in 2008, sets a minimum
rate to be used as the LIBOR or prime rate component of the loan’s interest rate calculation. As of December 31, 2019,
LIBOR Floors in our loan agreements ranged from 0.00% to 1.00% per annum, as compared to the one-month and three-month LIBOR of
1.91% and 1.76%, respectively, on such date.



An additional component of return on the
loans we typically purchase is an upfront or closing fee. This yield enhancement could also come in the form of a discount to the
purchase price when we purchase loans in the secondary market. When in discount form, this component is a form of deferred income
that we realize over time or upon final repayment of the loan. Such OID or closing fees serve to enhance the return on our investments.
As of December 31, 2019, market rates for fees or OID enhanced the annual rate of return on a loan over its stated interest
rate by 1.00%.



We believe our proven deal sourcing capabilities,
combined with our focus on prudent lending practices, enables us to identify investments with the potential for attractive current
returns and downside protection. Our focus on the middle-market should create opportunities for us to invest in companies with
more conservative capital structures and higher historic recovery rates than those generally found in larger, broadly syndicated
transactions.



Middle-Market Senior Loan Opportunities



Several factors drive the appeal of middle-market
senior loan investment opportunities:



Borrowers
are proven companies with limited access to capital. The U.S. middle-market companies in which we typically invest
are seasoned companies with attractive credit profiles, including a demonstrated history of positive earnings and free cash flow.
For these borrowers, however, their relatively smaller size often means they have difficulty accessing the high yield bond market
or other public capital markets.



Attractive
annualized returns. Because U.S. middle-market companies typically have fewer options to raise capital, we believe
we can earn higher yields on loans to such companies as compared to loans to larger companies in the broadly syndicated loan market.
Accordingly, we typically expect our middle-market loans to offer higher interest rate spreads, lower leverage levels, and higher
historic recovery rates than broadly syndicated loans.



More
favorable terms than broadly syndicated loans. We believe the market dynamics described above enable us to negotiate
more conservative loan structures, with lower leverage, than comparable broadly syndicated loans.



Floating
rate instruments. Middle-market loans are typically priced at a spread above LIBOR, with minimal interest rate duration.
We believe floating rate instruments provide our stockholders with a level of protection against any increase in the general level
of interest rates. In addition, LIBOR Floors offer protection in a low interest rate environment.





4







Low correlation with public fixed income and
equities. Based on the historical performance of middle-market loan indices, we expect that our portfolio will have a relatively
low correlation with the returns of public fixed income and public equities indexes.



Favorable
position in capital structure with downside protection. First lien senior secured loans of the type we typically
invest in have a favorable position at the top of the borrower’s capital structure. In addition, such loans are typically
secured by a first priority lien on the assets of the borrowers. These factors should increase our recovery in the event of a loan
default.



We believe the returns we can generate from
current yield, fees, and/or OID on senior secured loans in the current credit market environment are attractive on a risk-adjusted
basis and a historical basis. We also believe the changing dynamics of the lending environment over the past several years have
made lending to U.S. middle-market companies an increasingly attractive investment opportunity. A multi-year trend of consolidation
in the U.S. banking sector has resulted in fewer traditional lenders focused on lending to middle-market companies. As the banking
industry has consolidated, banks have grown larger, and we believe the remaining banks have focused their lending activities on
larger, broadly syndicated transactions to achieve the revenue and operating requirements required by their scale.



Compounding the impact of bank consolidation
for U.S. middle-market borrowers, several large independent specialty finance lenders have been acquired or have exited the business.
Furthermore, we believe that banks have come to depend more on the activities of private equity groups to generate leveraged loan
activity. As the number and size of private equity funds has grown, the size of leveraged buyout transactions and related financing
arrangements have increased commensurately. This has contributed, in turn, to pressure on banks to seek ever-larger transactions
to generate fees and increase demand for other banking services.



We believe the focus of many senior loan
investment strategies and of high yield managers with bank loan allocations is to acquire easily accessible broadly syndicated
loans. Below we outline the key distinctions between middle-market loans and broadly syndicated loans.



Middle-market
loans generally earn a premium over broadly syndicated loans. From January 2000 through December 2019,
the loan spread premium of middle-market loans over broadly syndicated loans ranged between -5 basis points and 209 basis points.
Over that same period, the average spread of middle-market loans was 98 basis points higher than the average spread of broadly
syndicated loans. As of December 31, 2019, the interest rate spread gap was near historically wide levels, with middle-market
loans earning on average 184 basis points more than broadly syndicated loans during the twelve months ended December 31, 2019.



Middle-market
loans generally benefit from lower leverage. Since the beginning of 1998 through the end of 2019, the difference
in the ratio of total debt to EBITDA for middle-market and broadly syndicated loans generally ranged between 0.1x and 0.9x. On
average, the total debt to EBITDA ratio for middle-market loans was 0.6x lower than broadly syndicated loans during that 22-year
period.



Middle-market
loans have had higher recovery rates than broadly syndicated loans and bonds. Between 1987 and 2009, defaulted middle-market
loans had an average recovery rate of 86%, compared to 81% for broadly syndicated loans and 64% for senior secured bonds. The largest
portion of the high yield debt market, senior subordinated notes, had a 29% recovery rate during the same period. We believe these
higher recovery rates resulted from conservative capital structures and loan documentation typically used for middle-market loans.



Competition



Our primary competitors in providing
financing to middle-market companies include public and private funds, other BDCs, commercial and investment banks,
commercial finance companies and, to the extent they provide an alternative form of financing, private equity, mezzanine and
hedge funds, as well as issuers of collateral loan obligations and other structured loan funds. Many of our competitors are
substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some
competitors have a lower cost of funds and access to funding sources that are not available to us. Our competitors have
incurred, or may in the future incur, leverage to finance their debt investments at levels or on terms more favorable than
those available to us. In addition, some of our competitors have higher risk tolerances or different risk assessments than we
do, which allows them to consider a wider variety of investments and establish more relationships than us. Furthermore, many
of our potential competitors are not subject to the regulatory restrictions that the 1940 Act imposes and the Code imposes on
us. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business,
financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of
attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and
make investments that are consistent with our investment objective.





5







Among other factors, the returns on investments
available in the marketplace are a function of the supply of investment opportunities and the amount of capital investing in such
opportunities. Strong competition for investments could result in fewer investment opportunities for us, as our competitors may
establish investment vehicles that target the same or similar investments that we typically purchase. Moreover, identifying attractive
investment opportunities is difficult and involves a high degree of uncertainty.



Audax Management Company (NY), LLC



In its investment process, our Adviser utilizes
a business model in which credit analysis is the priority throughout all processes, including deal sourcing, underwriting, and
portfolio management. We utilize our Adviser’s seasoned team and operating platform to identify compelling investment opportunities
for us. We then evaluate these opportunities through an investment approach that emphasizes strong fundamental credit analysis
and rigorous portfolio monitoring. We are disciplined in selecting investments and focusing on opportunities that we perceive offer
favorable risk/reward characteristics.



Our Adviser seeks to diversify our portfolio
by company type, asset type, investment size and industry.



The principals of our Adviser responsible
for its senior debt advisory activities have worked together at Audax Group and previously at General Electric Capital Corporation
for more than 20 years, during which time they have focused on investing in senior debt issued by private middle-market companies
and have invested in excess of $13.5 billion through multiple cycles. We believe that we benefit from our Adviser’s experience
in originating investments for us and, (to the extent permitted by the 1940 Act and the exemptive relief that we and the Adviser
have been granted from the U.S. Securities and Exchange Commission, or the SEC), co-investment opportunities.



From its inception in 2007 through the end
of December 31, 2019, the senior debt business of our Adviser, or Audax Senior Debt, invested $16.2 billion of capital primarily
in senior secured debt investments with selective investments in mezzanine debt and equity.



Competitive Strengths



Experienced
Team and Extensive Sourcing Network. We believe that Audax Senior Debt has a competitive advantage over its middle-market
investing peers given the breadth of the Audax Group platform. As part of Audax Group, Audax Senior Debt benefits from the industry-specific
knowledge, extensive middle-market business relationships and established deal sourcing capabilities across the firm. In the aggregate,
Audax Senior Debt, as well as the mezzanine debt and private equity businesses of Audax Group, together hold investments in over
313 middle-market companies across a wide variety of industries as of December 31, 2019.



Specifically, we believe Audax Senior Debt
and the Audax Group platform provide advantages in sourcing transactions, accessing proprietary due diligence (subject to applicable
confidentiality obligations), and leveraging the lengthy investing experience of the senior members of the Audax Group investment
team.



| | · | Sourcing—Audax Group’s mezzanine and private equity teams often get an early look at prospective middle-market
merger and acquisition, or M&A, transactions in the early stages of a sale process. Given this early insight into middle-market
sale transactions, our Adviser can often evaluate investment opportunities before many of its competitors. Since most of these
M&A transactions have a senior debt component, we believe the Adviser’s investment team often becomes aware of senior
debt lending opportunities well before other firms.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Due diligence— As of December 31, 2019, Audax Group held over [272] portfolio companies across three investment
businesses. Audax Senior Debt typically has direct, proprietary access to the relevant management teams, which can provide industry
insights and primary research capabilities. This helps the Adviser make more informed investment decisions.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Investing experience—As of December 31, 2019, the Co-CEOs and 40 Managing Directors of Audax Group’s
debt and equity investing businesses had an average of 21 years of experience. They have successfully invested through numerous
economic cycles.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





6







The Adviser’s sourcing processes
and robust deal flow have enabled Audax Senior Debt to be selective and apply rigorous credit analysis on the investment opportunities
it reviews. From Audax Senior Debt’s inception in December 2007 through December 31, 2019, the Audax Group platform
sourced 6,663 senior debt investment opportunities and ultimately invested $16.2 billion in 658 investments (10% of opportunities
sourced).



Audax
Senior Debt has invested in loans with lower leverage and higher spreads. Audax Senior Debt has been able to exploit
opportunities in the market for middle-market senior loans by sourcing and underwriting investments with lower leverage and higher
spreads than other middle-market transactions. From inception in 2007 through December 31, 2019, investment vehicles managed
by Audax Senior Debt invested in new issue loans that had an average first lien debt multiple, which compares the principal amount
of the Company’s loan and any other outstanding first-lien debt of the borrower to the borrower’s EBITDA, of 4.34x
and an average interest rate spread of 4.86%, which is the difference between the interest rate on the Company’s loan and
the interest rate on the comparable risk-free instrument, typically the three-month LIBOR. We believe both of these measures compare
favorably to broadly syndicated and other middle-market loans that have come to market during the same period.



Audax
Group Platform. In addition to a large, seasoned team of investment professionals, our Adviser and its affiliates
employ specialized professionals with expertise in transaction sourcing, capital markets, legal issues, and tax planning. We believe
the Audax Group platform’s size, collective knowledge base, and shared experience provide a competitive advantage in middle-market
lending.



Investment Process



We believe our Adviser has a disciplined
and repeatable process for executing, monitoring, structuring and exiting investments. We believe the primary driver of stable,
consistent returns in a senior loan portfolio is the preservation of invested capital. To accomplish this objective, our Adviser
utilizes a business model where credit analysis is the priority throughout all stages of the investment process, including deal
sourcing, underwriting, and portfolio management. We evaluate each investment opportunity by analyzing each borrower’s industry
dynamics, quality and sustainability of earnings, management team, and capital structure.



Our Adviser focuses on credit evaluation throughout the investment
process.



Initial
Screening Process. Once a potential transaction is sourced, it undergoes an initial screen to determine the suitability
of the investment. This assessment includes a review of the borrower’s industry and its relative position within that industry,
as well as transaction-specific items such as the proposed capital structure, deal size, and expected pricing. If the results of
this initial screen are positive, the next step is to proceed with detailed transaction due diligence analysis.



Transaction Underwriting. When analyzing
a possible transaction, our Adviser identifies and evaluates numerous investment criteria. While these criteria are likely to be
different for each investment, in general the analysis includes an in-depth review of the borrower’s industry and the underlying
dynamics within that industry. The Adviser reviews numerous borrower-specific criteria such as the quality and depth of the management
team, products, and end markets. Our Adviser undertakes an extensive financial analysis, including a review of historical results
and projected performance. The Adviser’s investment team also scrutinizes the specific characteristics of each investment,
including transaction structure, investment collateral, overall transaction economics, and the maturity of the contemplated facilities.



Portfolio
Management. The Adviser reviews investment performance on a regular basis to evaluate whether each investment is
delivering the expected results. For each investment, portfolio monitoring processes measure the borrower’s current and projected
financial performance versus historical performance, with emphasis on financial results since the funding of the investment. As
part of the Adviser’s financial performance evaluation, it monitors, among other items, the borrower’s historical,
current and projected covenant compliance. Additionally, the Adviser maintains communication with other lenders, borrowers, and
sponsors, and manages any requested amendments or waivers.





7







Industry
Dynamics. The Adviser evaluates criteria such as market size, participants, and barriers to entry, as well as the
competitive position of the potential borrower. We invest in established businesses with leading market positions that the Adviser
believes are defensible against potential new entrants and that demonstrate strong potential for organic growth. Attributes of
targeted investments may include low-cost manufacturing, product expertise, proprietary technology or distribution capability,
and strong customer relationships.



Quality
and Sustainability of Earnings. We focus on investment opportunities that have demonstrated stability in their revenues
and EBITDA. We make investments in companies that demonstrate a historical as well as projected ability to generate cash flow sufficient
to service the contemplated leverage. Targeted investments typically rely upon multiple sources of cash flow and do not depend
upon a single product, customer, geography, regulation, or technology.



Company
Management. We invest in companies where senior management teams have demonstrated operating experience. Borrowers’
management teams are expected to play a key role in growing their businesses, to have a firm grasp on the competitive dynamics
and business trends affecting their industries, to have demonstrated an ability to manage costs, and to have a well-defined vision
and strategy for their company’s future success.



Capital
Structure. Appropriate capitalization is a critical factor in a company’s ability to weather economic, industry,
or company-specific downturns. Therefore, we seek to invest in transactions that are prudently leveraged relative to a company’s
current and projected cash flow generating capability and underlying asset and enterprise value. Our Adviser’s due diligence
focuses on industry dynamics and a company’s future cash needs. Key metrics that the Adviser generally reviews when analyzing
capitalization include:



| | · | leverage ratios with respect to senior debt and total debt;
| | - | -----------------------------------------------------------



| | · | interest expense coverage ratios, which measure the ability of the company to pay interest on its debt obligations; and
| | - | -----------------------------------------------------------------------------------------------------------------------



| | · | fixed charge coverage ratios, which measure the ability of the company to service annual financial obligations, including interest
expense, loan principal payments, and capital expenditures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





8







Investments



We seek to create a portfolio that is primarily
composed of first lien senior secured loans and select second lien loans by making investments generally in the range of $1.0 million
to $4.0 million in privately owned, U.S.-based middle-market companies. Set forth below is a list of our ten largest investments
as of December 31, 2019 and 2018, as well as the top ten industries in which we were invested as of December 31, 2019
and 2018, in each case calculated as a percentage of our total investments at fair value as of such dates.



|                        |  | December 31, 2019 |           
|----------------------- |  | ----------------- | ----------
|Portfolio Company       |  | Fair Value        |           
|CIBT 2017               |  | $                 | 5,370,023 
|Radiology Partners 2018 |  |                   | 5,211,317 
|Pathway Partners 2019   |  |                   | 4,943,770 
|MedRisk 2018            |  |                   | 4,550,000 
|Specialty Care          |  |                   | 4,184,597 
|Veritext                |  |                   | 4,166,951 
|CoAdvantage 2019        |  |                   | 3,970,050 
|CPI International 2019  |  |                   | 3,970,000 
|Qlik Technologies       |  |                   | 3,950,150 
|RevSpring               |  |                   | 3,950,100 
|                        |  | $                 | 44,266,959



|                               |  | December 31, 2018 |           
|------------------------------ |  | ----------------- | ----------
|Portfolio Company              |  | Fair Value        |           
|Radiology Partners             |  | $                 | 4,019,924 
|Odyssey Logistics & Technology |  |                   | 3,947,706 
|Young Innovations              |  |                   | 3,921,880 
|CoAdvantage                    |  |                   | 3,915,500 
|Beaver-Visitec                 |  |                   | 3,914,043 
|RevSpring                      |  |                   | 3,491,250 
|Plaskolite                     |  |                   | 3,482,500 
|Mavis                          |  |                   | 3,468,978 
|Navicure                       |  |                   | 3,457,575 
|Syncsort                       |  |                   | 3,452,017 
|                               |  | $                 | 37,071,373





9







|                                          |  | December 31, 2019 |            
|----------------------------------------- |  | ----------------- | -----------
|Industry                                  |  | Fair Value        |            
|Healthcare & Pharmaceuticals              |  | $                 | 76,108,451 
|High Tech Industries                      |  |                   | 58,327,844 
|Services: Business                        |  |                   | 44,376,771 
|Chemicals, Plastics & Rubber              |  |                   | 28,747,162 
|Services: Consumer                        |  |                   | 25,757,966 
|Aerospace & Defense                       |  |                   | 12,911,355 
|Banking, Finance, Insurance & Real Estate |  |                   | 10,766,682 
|Consumer Goods: Non-durable               |  |                   | 8,472,022  
|Containers, Packaging & Glass             |  |                   | 7,941,602  
|Capital Equipment                         |  |                   | 7,720,891  
|                                          |  | $                 | 281,130,746



|                                          |  | December 31, 2018 |            
|----------------------------------------- |  | ----------------- | -----------
|Industry                                  |  | Fair Value        |            
|Healthcare & Pharmaceuticals              |  | $                 | 47,520,070 
|High Tech Industries                      |  |                   | 45,031,546 
|Services: Business                        |  |                   | 36,858,954 
|Chemicals, Plastics & Rubber              |  |                   | 27,716,784 
|Services: Consumer                        |  |                   | 15,942,194 
|Banking, Finance, Insurance & Real Estate |  |                   | 12,125,388 
|Transportation: Cargo                     |  |                   | 9,133,648  
|Wholesale                                 |  |                   | 8,518,879  
|Consumer Goods: Non-durable               |  |                   | 7,914,631  
|Capital Equipment                         |  |                   | 7,256,899  
|                                          |  | $                 | 218,018,993





Investment Committee



The purpose of our Adviser’s investment
committee, or the Investment Committee, is to evaluate and approve all investments by our Adviser. The Investment Committee includes
Michael McGonigle, Kevin Magid, Geoffrey Rehnert and Marc Wolpow. The Investment Committee review process is intended to bring
the diverse experience and perspectives of the committee members to the analysis and consideration of every investment. We believe
this process provides consistency to our Adviser’s investment philosophy and policies. The Investment Committee also determines
appropriate investment size and mandates ongoing monitoring requirements. No member of the Investment Committee serves as the lead
portfolio manager, and its members are equally responsible for the management of the Company’s portfolio.



10









In addition to reviewing
investments, the Investment Committee meetings serve as a forum to discuss credit views and outlooks. Potential transactions and
deal flow are also reviewed on a regular basis. Members of the Investment Committee are encouraged to share information and views
on credits with the committee early in their analysis. This process improves the quality of the analysis and enables the deal team
members to work more efficiently.



Investment Committee Compensation



The compensation of the members of the Investment
Committee paid by our Adviser includes an annual base salary, in certain cases an annual bonus based on an assessment of short-term
and long-term performance, and a portion of the incentive fees, including the Incentive Fee (if any), to be paid to our Adviser,
determined on the same basis as the annual bonus. In addition, certain of our Investment Committee members that are not on our
Board of Directors have equity interests in our Adviser and Administrator, and may receive distributions of profits in respect
of those interests.



Operating and Regulatory Structure



We have elected to be treated as a BDC
under the 1940 Act. As a BDC, we are generally prohibited from acquiring assets other than qualifying assets unless, after giving
effect to any acquisition, at least 70% of our total assets are qualifying assets. Qualifying assets generally include securities
of eligible portfolio companies, cash, cash equivalents, U.S. government securities and high-quality debt instruments maturing
in one year or less from the time of investment. Under the rules of the 1940 Act, “eligible portfolio companies”
include (i) private U.S. operating companies, (ii) public U.S. operating companies whose securities are not listed on
a national securities exchange (e.g., the New York Stock Exchange) or registered under the Securities Exchange Act of 1934, as
amended, or the Exchange Act, and (iii) public U.S. operating companies having a market capitalization of less than $250
million. Public U.S. operating companies whose securities are quoted on the over-the-counter bulletin board and through OTC Markets
Group Inc. are not listed on a national securities exchange and therefore are eligible portfolio companies.



We have elected to be treated as a RIC under
Subchapter M of the Code. As a RIC, we generally are not subject to corporate-level U.S. federal income taxes on any ordinary income
or capital gains that we distribute as dividends to our stockholders. To qualify and maintain our qualification as a RIC, we must,
among other things, meet certain source-of-income, distribution and asset diversification requirements. We intend to timely distribute
to our stockholders substantially all of our taxable income each taxable year, except that we may retain all or a portion of our
net capital gains for reinvestment and, depending upon the level of taxable income earned in a taxable year, we may choose to carry
forward all or a portion of our taxable income for distribution in the following taxable year and incur any applicable U.S. federal
excise tax.



Risk Management



Broad
Diversification. We have diversified and intend to continue to diversify our transactions by company, asset type,
investment size, industry and geography within the United States. Once we have fully invested the proceeds from any offering of
the Shares, we expect that each individual investment will not exceed approximately five percent of our total assets and that the
size of our individual investments will vary proportionately with the size of our capital base. Furthermore, we must meet certain
diversification tests in order to qualify as a RIC for U.S. federal income tax purposes. See “Item 1. Business — Material
U.S. Federal Income Tax Considerations.”



Rigorous
Due Diligence. As noted above, our Adviser’s systematic underwriting process involves exhaustive in-house
due diligence, applicable third-party consulting reports and multiple stages of investment approval, with a goal of risk mitigation
during and after transaction execution.



Administrator



We have entered into an administration agreement,
or the Administration Agreement, with Audax Management Company, LLC, who serves as our Administrator and provides us with office
space, office services and equipment. The responsibilities of our Administrator include overseeing our financial records, preparing
reports to our investors and, as applicable, reports filed with the SEC. Our Administrator also generally monitors the payment
of our expenses and the performance of administrative and professional services rendered to us by others. Our Administrator is
reimbursed for certain administrative expenses it incurs on our behalf, and has entered into a fee waiver agreement with us pursuant
to which the Administrator may waive, in whole or in part, its entitlement to receive reimbursements from us. The Adviser is a
wholly-owned subsidiary of our Administrator.





11







License Agreement



We have entered into a license
agreement with an affiliate of the Adviser under which such affiliate has granted us a non-exclusive, royalty-free license to
use the name “Audax” for specified purposes in our business. Under this agreement, we have a right to use the
 “Audax” name, subject to certain conditions, for so long as our Adviser or one of its affiliates remains our
investment adviser. Other than with respect to this limited license, we have no legal right to the “Audax”
name.



Investment Advisory Agreement



We have entered into the Investment Advisory
Agreement with our Adviser. Pursuant to the Investment Advisory Agreement with our Adviser, we pay our Adviser a fee for investment
advisory and management services consisting of two components — a base management fee and an Incentive Fee. Our Adviser may,
from time-to-time, grant waivers on our obligations, including waivers of the base management fee and/or Incentive Fee, under the
Investment Advisory Agreement. We also entered into a management fee waiver agreement with our Adviser on July 8, 2015, or
the Waiver Agreement, which we or the Adviser may terminate upon 60 days’ prior written notice.



Base Management Fee



The base management fee is calculated at
an annual rate of 1.00% of the value of our gross assets. Pursuant to the Waiver Agreement, the Adviser has agreed to waive the
right to receive the base management fee to the extent necessary so that the base management fee payable under the Investment Advisory
Agreement equals, and is calculated in the same manner as if, the base management fee otherwise payable by the Company were calculated
at an annual rate equal to 0.65% (instead of an annual rate of 1.00%).



Incentive Fee



The Incentive Fee has two parts: The first
part is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding
calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other
income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring,
diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus
our operating expenses accrued for the quarter (including the base management fee, expenses payable under the Administration Agreement,
and any interest expense on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred
stock, but excluding the Incentive Fee).



Incentive Fee on Pre-Incentive Fee Net Investment Income



We determine pre-incentive fee net
investment income in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, including, in the case of
investments with a deferred interest feature, such as OID, debt instruments with PIK, interest and zero coupon securities,
accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized
capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive
fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately
preceding calendar quarter, is compared to a hurdle of 1.0% per quarter (4.0% annualized). We determine our average gross
assets during each fiscal quarter and calculate the base management fee payable with respect to such amount at the end of
each fiscal quarter. As a result, a portion of our net investment income is included in our gross assets for the period
between the date on which such income is earned and the date on which such income is distributed. Therefore, our net
investment income used to calculate part of the Incentive Fee is also included in the amount of our gross assets used to
calculate the 1.0% annual base management fee. We pay our Adviser an Incentive Fee with respect to our pre-incentive fee net
investment income in each calendar quarter as follows:





12







| | · | no amount is paid on the income-portion of the Incentive Fee in any calendar quarter in which our pre-incentive fee net investment
income does not exceed the hurdle of 1.0% (4.0% annualized);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment
income, if any, that exceeds the hurdle rate but is less than 1.1765 % in any calendar quarter (4.706% annualized). We refer
to this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 1.1765%) as the
 “catch-up” provision. The catch-up is meant to provide our Adviser with 15.0% of the pre-incentive fee net investment
income as if a hurdle rate did not apply if this net investment income exceeds 1.1765% in any calendar quarter (4.706% annualized);
and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | · | 15.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.1765% in any calendar quarter (4.706%
annualized) is payable to our Adviser.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following is a graphical representation of the calculation
of the income-related portion of the Incentive Fee on a quarterly basis:







These calculations are pro-rated for any
period of less than three months and adjusted for any Share issuances or repurchases during the relevant quarter. You should be
aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt
investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the hurdle rate and may result
in a substantial increase of the amount of Incentive Fees payable to our Adviser with respect to pre-incentive fee net investment
income.



Pursuant to the Waiver Agreement, the Adviser
has agreed to waive its right to receive the Incentive Fee on pre-incentive fee net investment income to the extent necessary so
that such Incentive Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on pre-incentive fee net
investment income, if such Incentive Fee (i) were calculated based upon the Adviser receiving 10% (instead of 15%) of the
applicable pre-incentive fee net investment income and (ii) did not include any “catch-up” feature in favor of
the Adviser.



Incentive Fee on Capital Gains



The
second part of the Incentive Fee is determined and payable in arrears as of the end of each calendar year (or upon
termination of the Investment Advisory Agreement, as of the termination date), and equals 15% of our realized capital gains,
if any, on a cumulative basis from June 16, 2015, the date of effectiveness of our registration statementon
Form 10 (file no. 000-55426), or the Registration Statement, through the end of each calendar year, computed net of all
realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any
previously paid capital gain Incentive Fees with respect to each of the investments in our portfolio. However, the Incentive
Fee determined as of December 31, 2015 was calculated for a period of shorter than 12 calendar months (commencing on the
date of effectiveness of the Registration Statement through December 31, 2015) to take into account any realized capital
gains computed net of all realized capital losses and unrealized capital depreciation from the date of effectiveness of the
Registration Statement.





13







Pursuant to the Waiver Agreement, the Adviser
has agreed to waive the right to receive the Incentive Fee on capital gains to the extent necessary so that such portion of the
Incentive Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on capital gains, if such portion
of the Incentive Fee were calculated based upon the Adviser receiving 10% (instead of 15%).



In addition, pursuant to the Waiver Agreement,
the Adviser has agreed to waive the right to receive both components of the Incentive Fee to the extent necessary so that it does
not receive Incentive Fees which are attributable to income and gains of the Company that exceed an annualized rate of 12% in any
calendar quarter.



The sum of the incentive fee on pre-incentive
fee net investment income and incentive fee on capital gains is the Incentive Fee.



Examples of Quarterly Incentive Fee Calculation



Example 1: Income Related Portion of Incentive Fee (*):



Alternative 1

Assumptions

Investment income (including interest, dividends,
fees, etc.) = 1.0%

Hurdle
rate(1) = 1.0%

Management
fee(2) = 0.25%

Other
expenses (legal, accounting, custodian, transfer agent, etc.)(3) =
0.15%

Pre-incentive fee net investment income

(investment income –
(management fee + other expenses)) = 0.60%

Pre-incentive net investment income does not exceed
hurdle rate, therefore there is no incentive fee.



Alternative 2

Assumptions

Investment income (including interest, dividends,
fees, etc.) = 1.5%

Hurdle
rate(1) = 1.0%

Management
fee(2) = 0.25%

Other
expenses (legal, accounting, custodian, transfer agent, etc.)(3) =
0.15%

Pre-incentive fee net investment income

(investment income –
(management fee + other expenses)) = 1.1%, which exceeds the hurdle rate

Incentive fee = 15% × pre-incentive fee net
investment income, subject to the “catch-up”(4)

= 100% x (1.10%- 1.0%)

= 0.10%



Alternative 3

Assumptions

Investment income (including
interest, dividends, fees, etc.) = 2.0%

Hurdle
rate(1)= 1.0%

Management
fee(2)= 0.25%

Other expenses (legal, accounting,
custodian, transfer agent, etc.)(3) = 0.15%

Pre-incentive fee net investment
income

(investment income – (management
fee + other expenses)) = 1.60%

Incentive fee        =
15% × pre-incentive fee net investment income, subject to “catch-up”(4)

= 100% ×
 “catch-up” + (15% × (pre-incentive fee net investment income –1.1765%))





14







Catch-up             
= 1.1765% – 1.0% = 0.1765%



Incentive fee       
= (100% × 0.1765%) + (15% × (1.60% –1.1765%))

= 0.1765%
+ (15% × 0.4235%)

= 0.1765%
+ 0.063525%

= 0.24%








| | (*) | The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.
| | --- | ----------------------------------------------------------------------------------------------------------------------



|(1) | Represents 4.0% annualized hurdle rate.       
|--- | ----------------------------------------------
|   
|(2) | Represents 1% annualized management fee.      
|   
|(3) | Excludes organizational and offering expenses.



| | (4) | The “catch-up”
provision is intended to provide our Adviser with an Incentive Fee of approximately 15.0% on all of our pre-incentive fee net investment
income as if a hurdle rate did not apply when our net investment income exceeds 1.1765% in any calendar quarter(4.706%
annualized).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Example 2: Capital Gains Portion of Incentive Fee:



Alternative 1

Assumptions



| | · | Year 1: $20 million investment made in Company A (“Investment A”), and $30 million investment made in Company B
(“Investment B”)
| | - | --------------------------------------------------------------------------------------------------------------------------------
| | · | Year 2: Investment A sold for $50 million and fair market value (“FMV”) of Investment B determined to be $32 million            
| | · | Year 3: FMV of Investment B determined to be $25 million                                                                        
| | · | Year 4: Investment B sold for $31 million                                                                                       



The capital gains portion of the Incentive Fee, if any, would
be:



| | · | Year 1: None
| | - | ------------



| | · | Year 2: $4.5 million capital gains incentive fee
| | - | ------------------------------------------------



$30 million realized capital
gains on sale of Investment A multiplied by 15%

| | · | Year 3: None
| | - | ------------



$3.75 million cumulative fee (15% multiplied by $25
million ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $4.5 million (previous capital
gains fee paid in Year 2)

| | · | Year 4: $150,000 capital gains incentive fee
| | - | --------------------------------------------



$4.65 million cumulative fee ($31 million cumulative
realized capital gains multiplied by 15%) less $4.5 million (previous capital gains fee paid in Year 2)



Alternative 2

Assumptions



| | · | Year 1: $20 million investment made in Company A (“Investment A”), $30 million investment made in Company B (“Investment
B”) and $25 million investment made in Company C (“Investment C”)
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined
to be $25 million                                          
| | · | Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million                                                                                            
| | · | Year 4: FMV of Investment B determined to be $35 million                                                                                                                                  
| | · | Year 5: Investment B sold for $20 million                                                                                                                                                 





15







The capital gains portion of the Incentive Fee, if any, would
be:



| | · | Year 1: None
| | - | ------------



| | · | Year 2: $3.75 million capital gains incentive fee
| | - | -------------------------------------------------



15% multiplied by $25 million ($30 million realized
capital gains on sale of Investment A less $5 million unrealized capital depreciation on Investment B)

| | · | Year 3: $1,050,000 capital gains incentive fee
| | - | ----------------------------------------------



$4.8 million cumulative fee (15% multiplied by $32
million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $3.75 million (previous
capital gains fee paid in Year 2)

| | · | Year 4: None
| | - | ------------



| | · | Year 5: None
| | - | ------------



$3.75 million cumulative fee (15% multiplied by $25
million ($35 million cumulative realized capital gains less $10 million realized capital losses)) less $4.8 million (previous cumulative
capital gains fee paid in Year 2 and Year 3)



Valuation of Investments



We conduct the valuation of our investments,
pursuant to which our net asset value is determined, at all times consistent with GAAP and the 1940 Act. Our Board of Directors,
with the assistance of our Audit Committee, determines the fair value of our investments, for investments with a public market
and for investments with no readily available public market, on at least a quarterly basis, in accordance with the terms of Topic
820 of the Financial Accounting Standards Board’s Accounting Standards Codification, “Fair Value Measurement and
Disclosures,” or ASC 820. Our valuation procedures are set forth in more detail below.



ASC 820 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.” Fair value is a market-based measurement, not an entity-specific measurement. For some assets and
liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable
market transactions and market information might not be available. However, the objective of a fair value measurement in both cases
is the same – to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place
between market participants at the measurement date under current market conditions (that is, an exit price at the measurement
date from the perspective of a market participant that holds the asset or owes the liability).



ASC 820 establishes a hierarchal disclosure
framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs
is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments
with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will
have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.



The three-level hierarchy for fair value
measurement is defined as follows:



Level
1— Inputs to the valuation methodology are quoted prices available in active markets for identical financial
instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including
equities and derivatives, listed in active markets. We do not adjust the quoted price for these instruments, even in situations
where we hold a large position, and a sale could reasonably be expected to impact the quoted price.



Level
2— Inputs to the valuation methodology are quoted prices in markets that are not active or for which all
significant inputs are either directly or indirectly observable as of the measurement date. The types of financial
instruments in this category include less liquid and restricted securities listed in active markets, securities traded in
markets that are not active, government and agency securities, and certain over-the-counter derivatives where the fair value
is based on observable inputs.



Level
3— Inputs to the valuation methodology are unobservable and significant to the overall fair value measurement,
and include situations where there is little, if any, market activity for the investment. The inputs into the determination of
fair value require significant management judgment or estimation. The types of financial instruments in this category include investments
in privately held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain
over-the-counter derivatives where the fair value is based on unobservable inputs.





16







In certain cases, the inputs used to measure
fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within
the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant
to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the financial instrument.



Pursuant to the framework set forth above,
we value securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments
by the quantity of shares or amount of the instrument held. We may also obtain quotes with respect to certain of our investments
from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded
in active markets.



Pricing services aggregate, evaluate and
report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes,
model-based valuations and internal fundamental analysis and research. When doing so, we determine whether the quote obtained is
sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.



Securities that are illiquid or for which
the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of
our Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate
under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include
comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. The process
used to determine the applicable value is as follows: (i) each portfolio company or investment is initially valued by the
investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate
fair market value based on observable market inputs and updated credit statistics and unobservable inputs; (ii) preliminary
valuation conclusions are documented and discussed with our senior management and members of our Adviser’s valuation team;
(iii) our Audit Committee reviews the assessments of the Adviser and provides our Board of Directors with recommendations
with respect to the fair value of the investments in our portfolio; and (iv) our Board of Directors discusses the valuation
recommendations of our Audit Committee and determines the fair value of the investments in our portfolio in good faith based on
the input of the Adviser and in accordance with our valuation policy.



Our Audit Committee’s recommendation
of fair value is generally based on its assessment of the following factors, as relevant:



| | · | the nature and realizable value of any collateral;
| | - | --------------------------------------------------



| | · | call features, put features and other relevant terms of debt;
| | - | -------------------------------------------------------------



| | · | the portfolio company’s ability to make payments;
| | - | -------------------------------------------------



| | · | the portfolio company’s actual and expected earnings and discounted cash flow;
| | - | ------------------------------------------------------------------------------



| | · | prevailing interest rates for like securities and expected volatility in future interest rates;
| | - | -----------------------------------------------------------------------------------------------



| | · | the markets in which the portfolio company does business and recent economic and/or market events; and
| | - | ------------------------------------------------------------------------------------------------------



| | · | comparisons to publicly traded securities.
| | - | ------------------------------------------





17







Investment performance data utilized are
the most recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.



Securities for which market quotations are
not readily available or for which a pricing source is not sufficient may include the following:



| | · | private placements and restricted securities that do not have an active trading market;
| | - | ---------------------------------------------------------------------------------------



| | · | securities whose trading has been suspended or for which market quotes are no longer available;
| | - | -----------------------------------------------------------------------------------------------



| | · | debt securities that have recently gone into default and for which there is no current market;
| | - | ----------------------------------------------------------------------------------------------



| | · | securities whose prices are stale; and
| | - | --------------------------------------



| | · | securities affected by significant events.
| | - | ------------------------------------------



Our Board of Directors is responsible for
the determination, in good faith, of the fair value of our portfolio investments.



Determination of fair value involves subjective
judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible
effect of such valuations, and any change in such valuations, on our financial statements.



Security transactions are recorded on the
trade date (the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which
is when all terms of the transactions have been defined). Realized gains and losses on investments are determined based on the
identified cost method.



Refer to Note 3 — Investmentsin
the notes to our accompanying financial statements included elsewhere in this annual report for additional information regarding
fair value measurements and our application of ASC 820.



Advisory and Administrative Services



We do not currently have any
employees. Our day-to-day investment operations are managed by our Adviser, and our Administrator provides services necessary
to conduct our business. No compensation is paid directly by us to any interested director or executive officer of the
Company. We pay our Adviser our allocable portion of overhead and other expenses incurred by our Administrator in performing
its obligations under the Administration Agreement, including rent and our allocable portion of the cost of our Chief
Financial Officer and Chief Compliance Officer and their respective staffs. Messrs. Magid and McGonigle, as Managing
Directors, have general oversight responsibility for Audax Senior Debt. Mr. McGonigle joined Audax Group in 2007 and
manages the activities of Audax Senior Debt. He has over 29 years of experience in sourcing, underwriting, and managing the
type of loans and other securities purchased by Audax Senior Debt. Mr. McGonigle leads a team of ten seasoned debt
investment professionals. In addition, the Audax Senior Debt team is supported by experienced finance, accounting, legal,
operations and investor relations professionals as a part of the Audax Group platform and the Administrator’s proposed
services to the Company. Our Adviser may hire additional investment professionals in the future.





18







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. 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, or AMT, tax-exempt
organizations, insurance companies, dealers in securities, a trader in securities that elects to use a mark-to-market method
of accounting for its securities holdings, pension plans and trusts, financial institutions, U.S. expatriates, U.S. persons
with a functional currency other than the U.S. dollar, “controlled foreign corporations,” “passive foreign
investment companies,” or corporations that accumulate earnings to avoid U.S. federal income tax. This summary assumes
that investors hold our Common Stock as capital assets (within the meaning of the Code). The discussion is based upon the
Code, U.S. Department of the Treasury, or Treasury, regulations, and administrative and judicial interpretations, each as of
the date of this annual report and all of which are subject to change, possibly retroactively, which could affect the
continuing validity of this discussion. 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.



For purposes of this discussion, a “U.S.
stockholder” generally is a beneficial owner of Shares who is for U.S. federal income tax purposes:



| | · | an individual who is a citizen or 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 can exercise primary supervision over its administration and one or more U.S. persons
have the authority to control all of its substantial decisions (or a trust that has made a valid election to be treated as a U.S.
person); or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
| | - | ---------------------------------------------------------------------------------------------------



For purposes of this discussion, a “Non-U.S.
stockholder” generally is a beneficial owner of the Shares who is not a U.S. stockholder.



If a partnership (including an entity treated
as a partnership for U.S. federal income tax purposes) holds the Shares, 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 the Shares should consult its tax advisers with respect to the partnership’s purchase, ownership
and disposition of the Shares.



Tax matters are complicated and the tax
consequences to an investor of an investment in the Shares will depend on the facts of its particular situation. Moreover, prospective
investors should recognize that the present U.S. federal tax treatment of an investment in the Shares may be modified by legislative,
judicial or administrative action at any time, and that any such action may have retroactive effect, and such modifications could
adversely affect the tax consequences of investing in our Common Stock. We encourage investors to consult their tax advisers regarding
the specific consequences of such an investment, including tax reporting requirements, the applicability of U.S. 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 be subject to corporate-level U.S. federal income taxes on any ordinary
income or capital gains that we distribute as dividends to our stockholders. To qualify and maintain our qualification as a RIC,
we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition,
in order to obtain RIC tax treatment, we must distribute dividends to our stockholders, in respect of each taxable year, generally
of an amount at least equal to 90% of our “investment company taxable income,” which is generally defined as the sum
of our net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital
losses, determined without regard to any deduction for dividends paid, or the Annual Distribution Requirement.





19







Taxation as a Regulated Investment Company



If we:



| | · | qualify as a RIC; and
| | - | ---------------------



| | · | satisfy the Annual Distribution Requirement,
| | - | --------------------------------------------



then we will not be subject to U.S. federal income tax on the
portion of our taxable income (including capital gains) we distribute (or are deemed to distribute) as dividends to stockholders.
We are subject to U.S. federal income tax at regular corporate rates on any income or capital gains not distributed (or deemed
distributed) to our stockholders.



As a RIC, we are subject to a 4% nondeductible
U.S. federal excise tax on certain undistributed income and gains if we fail to distribute dividends in a timely manner to stockholders
in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into
account certain deferrals and elections) for the calendar year, (2) 98.2% of the excess of our capital gains over capital
losses, or capital gain net income (adjusted for certain net ordinary losses), for the one-year period ending October 31 of
that calendar year and (3) any net ordinary income or capital gain net income recognized, but not distributed, in preceding
years, or the Excise Tax Avoidance Requirement. For this purpose, however, any net ordinary income or capital gain net income retained
by us and on which we incurred corporate income tax for the taxable year ending in that calendar year will be considered to have
been distributed by calendar year end (or earlier if estimated taxes are paid). We intend to make sufficient distributions each
year to satisfy the Excise Tax Avoidance Requirement.



We may incur in the future such excise tax
on all or a portion of our income and capital gains. While we intend to distribute income and capital gains to minimize exposure
to the 4% excise tax, we may not be able to, or may choose not to, distribute amounts sufficient to avoid the imposition of the
tax entirely. In that event, we generally will be liable for the excise tax only on the amount by which we do not meet the Excise
Tax Avoidance Requirement.



In order to qualify as a RIC for U.S. federal income tax purposes,
we must:



| | · | continue to qualify as a BDC under the 1940 Act at all times during each taxable year;
| | - | --------------------------------------------------------------------------------------



| | · | derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to loans of certain
securities, gains from the sale of stock or other securities or foreign currencies, net income from certain “qualified publicly
traded partnerships,” or other income derived with respect to our business of investing in such stock or other securities,
or foreign currencies, or the 90% Income Test; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | diversify our holdings so that at the end of each quarter of the taxable year:
| | - | ------------------------------------------------------------------------------



| | o | at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other
RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets
or more than 10% of the outstanding voting securities of the issuer; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities
of other RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and
that are engaged in the same or similar or related trades or businesses, or of certain “qualified publicly traded partnerships,”
or the Diversification Tests.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Some of the income that we might otherwise
earn, such as certain fees earned with respect to our investments, income recognized in a work-out or restructuring of a portfolio
investment, or income recognized from an equity investment in an operating partnership, may not be qualifying income under the
90% Income Test. To manage the risk that such income might disqualify us as a RIC for failure to satisfy the 90% Income Test, one
or more subsidiary entities treated as U.S. corporations for U.S. federal income tax purposes may be employed to earn such income
and (if applicable) hold the related asset. Such subsidiary entities generally will be required to incur U.S. federal income tax
as well as may be required to pay state or local tax on their earnings, which ultimately will reduce the yield to our stockholders
on such fees and income.





20







We may in the future decide to pay a portion
of our dividends in our stock. A distribution payable in stock or cash at the election of shareholders is treated as a dividend
so long as certain requirements are satisfied. If the total distribution to shareholders electing to receive cash would exceed
the total amount of cash to be distributed, each shareholder electing to receive the distribution in cash will be considered to
have received a proportionate share of the cash to be distributed. Taxable stockholders receiving such distributions are required
to include the full amount of the distribution (including the portion payable in stock) as ordinary income (or as long-term capital
gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated
earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to incur tax with respect
to such distributions in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order
to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution.



For U.S. federal income tax purposes, we
may be required to recognize taxable income in circumstances in which we do not currently receive cash in respect of such income.
For example, if we hold debt instruments that are treated under applicable tax rules as having OID (which may arise if we
receive warrants in connection with the origination of a loan or possibly in other circumstances), we must include in income each
taxable year a portion of the OID that accrues over the life of the instrument, regardless of whether cash in respect of such income
is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in
cash, such as contractual PIK interest (which represents contractual interest added to the loan balance and due at the end of the
loan term) and deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation
such as warrants or stock. Because any OID or other amounts accrued is included in our investment company taxable income for the
taxable year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution
Requirement, even though we will not have received any corresponding cash amount. Further, we may elect to amortize market discount
and include such amounts in our taxable income in the current taxable year, instead of upon disposition, as an election not to
do so could limit our ability to deduct interest expense for tax purposes.



We are authorized to borrow funds and
to sell assets in order to satisfy distribution requirements. However, under the 1940 Act (and possibly certain debt
covenants), we are not permitted to make distributions to our stockholders while our debt obligations and other senior
securities are outstanding unless certain “asset coverage” tests are met. See “Item 1. Business —
Regulation as a Business Development Company — Senior Securities.” Moreover, our ability to dispose of assets to
meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other
requirements relating to our qualification as a RIC, including the Diversification Tests. If we dispose of assets in order to
meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times
that, from an investment standpoint, are not advantageous. If we are prohibited from making distributions or are unable to
raise additional debt or equity capital or sell assets to make distributions, we may not be able to make sufficient
distributions to satisfy the Annual Distribution Requirement, and therefore would not be able to maintain our ability to be
subject to tax as a RIC.



A portfolio company in which we invest may
face financial difficulties that require us to work-out, modify or otherwise restructure our investment in the portfolio company.
Any such transaction could, depending upon the specific terms of the transaction, result in unusable capital losses and future
non-cash income. Any such transaction could also result in our receiving assets that give rise to non-qualifying income for purposes
of the 90% Income Test or otherwise would not count toward satisfying the Diversification Tests.



A RIC is limited in its ability to claim
expenses as deductions in excess of its investment company taxable income. If our expenses in a given taxable year exceed gross
taxable income, we would incur a net operating loss for that taxable year. However, a RIC is not permitted to carry forward net
operating losses and use such losses to offset investment company taxable income generated in subsequent taxable years. In addition,
such expenses can be used only to offset investment company taxable income, not net capital gain. Due to these limits on the deductibility
of expenses, we may for U.S. federal income tax purposes have aggregate taxable income for several taxable years that we distribute
and that is taxable to our stockholders even if such income is greater than the aggregate net income we actually earned during
those taxable years. Such distributions may be made from our cash assets or by premature sale, exchange, or other disposition of
our investments, if necessary. We may realize gains or losses from such sales, exchanges, or other disposition of our investments.
In the event we realize net capital gains (which are generally our realized net long-term capital gains in excess of realized net
short-term capital losses) from such transactions, you may receive a larger capital gain distribution than you would have received
in the absence of such transactions.





21







Investment income received from sources
within foreign countries, or capital gains earned by investing in securities of foreign issuers, may be subject to foreign income
taxes withheld at the source. In this regard, withholding tax rates in countries with which the United States does not have a tax
treaty are often as high as 35% or more. The United States has entered into tax treaties with many foreign countries that may entitle
us to a reduced rate of tax or exemption from tax on this related income and gains. The effective rate of foreign tax cannot be
determined at this time since the amount of our assets to be invested within various countries is not now known. We do not anticipate
being eligible for the special election that allows a RIC to treat foreign income taxes paid by such RIC as paid by its stockholders.



If we acquire interests treated as equity
securities in certain foreign corporations for U.S. federal income tax purposes that earn at least 75% of their annual gross income
from passive sources (such as interest, dividends, rents, royalties or capital gain) or hold at least 50% of their total assets
in investments producing such passive income (“passive foreign investment companies” or “PFICs”), we could
be subject to U.S. federal income tax and additional interest charges on “excess distributions” received from such
corporations or gain from the sale of stock in such corporations, even if all income or gain actually earned by us is timely distributed
to our stockholders. We would not be able to pass through to our stockholders any credit or deduction for such a tax. Certain elections
may, if available, ameliorate these adverse tax consequences, but any such election may require us to recognize taxable income
or gain without the concurrent receipt of cash, and such income will nevertheless be subject to the Annual Distribution Requirement
as well as will be taken into account for purposes of determining whether we satisfy the Excise Tax Avoidance Requirement.



Our functional currency, for U.S.
federal tax purposes, is the U.S. dollar. Under Section 988 of the Code, gains and losses realized by us attributable to
fluctuations in exchange rates between the time we accrue income, expenses, or other liabilities denominated in a foreign
currency and the time we actually collect such income or pay such expenses or liabilities generally will be characterized as
ordinary gains and losses. Similarly, gains and losses realized by us upon the sale, exchange, or other disposition of debt
instruments denominated in a foreign currency, foreign currency forward contracts, and other financial transactions
denominated in a foreign currency, to the extent attributable to fluctuations in exchange rates between their acquisition and
disposition dates, generally will be characterized as ordinary gains and losses. In each case, such gains and losses may
affect the amount, timing and character of distributions to our stockholders. Any such transactions that are not directly
related to our investment in securities (possibly including speculative currency positions or currency derivatives not used
for hedging purposes) could, under future Treasury regulations, produce income not among the types of “qualifying
income” for purposes of the 90% Income Test.



Certain of our investment practices may
be subject to special and complex U.S. federal income tax provisions that may, among other things: (i) disallow, suspend or
otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher
taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility
of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v) adversely
affect the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization
of certain complex financial transactions; and (vii) produce income that will not be qualifying income for purposes of the
90% Income Test. We intend to monitor our transactions and may make certain tax elections in order to mitigate the potential adverse
effect of these provisions.



Gain or loss realized by us from the sale
or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally will be treated
as capital gain or loss. The treatment of such gain or loss as long-term or short-term capital gain or loss will depend on how
long we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the
warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant.





22







If we fail to satisfy the 90% Income Test
or any Diversification Tests in any taxable year, we may be eligible to avail ourselves of certain relief provisions under the
Code if the failures are due to reasonable cause and not willful neglect, and if a penalty tax is incurred with respect to each
failure in satisfaction of the applicable requirements. Additionally, relief is provided for certain de minimis failures of the
Diversification Tests where we correct a failure within a specified period. If the applicable relief provisions are not available
or cannot be met, all of our income will be subject to U.S. federal corporate-level income tax as described below. We cannot provide
assurance that we would qualify for any such relief should we fail either the 90% Income Test or any Diversification Test.



If we fail to satisfy the Annual Distribution
Requirement or otherwise fail to qualify as a RIC in any taxable year, and are not eligible for relief as described above, we will
be subject to tax in that taxable year on all of our taxable income, regardless of whether we make any distributions to our stockholders.
In that case, all of our taxable income will be subject to U.S. federal corporate-level income tax, reducing the amount available
to be distributed to our stockholders. In contrast, assuming we qualify as a RIC, our U.S. federal corporate-level income tax should
be substantially reduced or eliminated. To qualify again to be subject to tax as a RIC in a subsequent taxable year, we would be
required to distribute to our stockholders our accumulated earnings and profits attributable to our non-RIC taxable years. In addition,
if we failed to qualify as a RIC for a period of greater than two consecutive taxable years, then, in order to qualify as a RIC
in a subsequent taxable year, we would be required to either elect to recognize and incur tax on any net built-in gain (i.e., the
excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated)
in our assets held at the end of the taxable year in which we choose to requalify as a RIC or, alternatively, be subject to taxation
on such built-in gain recognized for a period of five taxable years following the taxable year in which we choose to requalify
as a RIC.



The remainder of this discussion assumes
that we qualify as a RIC and have satisfied the Annual Distribution Requirement.



Taxation of U.S. Stockholders



Distributions by us generally are
taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our investment company taxable income are
taxable as ordinary dividend income to U.S. stockholders to the extent of our current or accumulated earnings and profits,
whether paid in cash or reinvested in additional Common Stock. 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 and if certain holding period and other requirements are met, such distributions, or Qualifying Dividends, may
be eligible for a maximum tax rate of either 15% or 20%, depending on whether the stockholder’s income exceeds certain
threshold amounts, and if other applicable requirements are met, such distributions generally will be eligible for the
corporate dividends received deduction to the extent such dividends have been consist of income from qualifying sources. 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 maximum rate applicable to Qualifying Dividends or the dividends received deduction
available to corporations under the Code. Distributions of our net capital gains that are properly reported by us as
 “capital gain dividends” generally would be characterized as long-term capital gains. Capital gain dividends are
currently subject to a maximum U.S. federal income tax rate of 20%, in the case of individuals, trusts or estates, regardless
of the U.S. stockholder’s holding period for his, her or its Common Stock and regardless of whether paid in cash or
reinvested in additional Common Stock. Distributions in excess of our earnings and profits first will reduce a U.S.
stockholder’s adjusted tax basis in such stockholder’s Common Stock and, after the adjusted basis is reduced to
zero, will constitute capital gains to such U.S. stockholder.



Under the dividend reinvestment plan, our
stockholders who have not “opted out” of our dividend reinvestment plan will have their cash distributions automatically
reinvested in additional Shares, rather than receiving the cash distributions. Any distributions reinvested under the plan will
nevertheless remain taxable to U.S. stockholders. A U.S. stockholder will have an adjusted basis in the additional Shares purchased
through the plan equal to the cash that would have been received if the stockholder had received the distribution in cash, unless
we issue new Shares that are trading at or above net asset value, in which case, the stockholder’s basis in the new Shares
will generally be equal to their fair market value. The additional Shares will have a new holding period commencing on the day
following the day on which the Shares are credited to the U.S. stockholder’s account.





23







Although we currently intend to distribute
any net capital gains at least annually, we may in the future decide to retain some or all of our net capital gains but report
the retained amount as a “deemed distribution.” In that case, among other consequences, we will pay tax on the retained
amount, each U.S. stockholder will be required to include such stockholder’s share of the deemed distribution in income as
if it had been distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to such stockholder’s
allocable share of the tax paid on the deemed distribution by us. The amount of the deemed distribution net of such tax will be
added to the U.S. stockholder’s tax basis for its Shares. Since we expect to pay tax on any retained net capital gains at
our regular corporate tax rate, and since that rate is generally in excess of the maximum rate currently payable by individuals
on long-term capital gains, the amount of tax that individual stockholders will be treated as having paid and for which they will
receive a credit will exceed the tax they owe on the retained net capital gains. Such excess generally may be claimed as a credit
against the U.S. stockholder’s other U.S. federal income tax obligations or may be refunded to the extent it exceeds a stockholder’s
liability for U.S. federal income tax. A stockholder that is not subject to U.S. federal income tax or otherwise required to file
a U.S. federal income tax return would be required to file a U.S. federal income tax return on the appropriate form in order to
claim a refund for the taxes we paid. In order to utilize the deemed distribution approach, we must provide written notice to our
stockholders prior to the expiration of 60 days after the close of the relevant taxable year. We cannot treat any distributions
derived from our investment company taxable income as a “deemed distribution.”



For purposes of determining (1) whether
the Annual Distribution Requirement is satisfied for any taxable year and (2) the amount of capital gain dividends paid for
that taxable year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year
as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated
as receiving the dividend in the taxable year in which the distribution is made. However, 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 calendar year, will be treated as if it had been received by our U.S. stockholders
on December 31 of the calendar year in which the dividend was declared.



If an investor purchases the Shares shortly
before the record date of a distribution, the price of the Shares will include the value of the distribution and the investor will
be subject to tax on the distribution even though economically it may represent a return of the investor’s investment.



A stockholder generally will recognize taxable
gain or loss if the stockholder sells or otherwise disposes of the stockholder’s Shares. The amount of gain or loss will
be measured by the difference between such stockholder’s adjusted tax basis in the Common 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 the 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 the Shares 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 the Shares may be disallowed
if other Shares are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.
In such a case, the basis of the Common Stock acquired will be increased to reflect the disallowed loss.



In general, individual and other non-corporate
U.S. stockholders currently are subject to a maximum federal income tax rate of either 15% or 20%, depending on whether the stockholder’s
income exceeds certain threshold amounts, on their net capital gain (i.e., the excess of realized net long-term capital gains over
realized net short-term capital losses), including any long-term capital gain derived from an investment in the Shares. Such rate
is lower than the maximum rate on ordinary income currently payable by individuals. An additional 3.8% Medicare tax is imposed
on certain net investment income (including ordinary dividends and capital gain distributions received from us and net gains from
redemptions or other taxable dispositions of our Common Stock) of U.S. individuals, estates and trusts to the extent that such
person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds certain threshold amounts. Corporate U.S. stockholders currently are subject to U.S.
federal income tax on net capital gain at the maximum 21% rate also applied to ordinary income. Non-corporate stockholders incurring
net capital losses for a taxable year (i.e., capital losses in excess of capital gains) generally may currently deduct up to $3,000
of such losses against their ordinary income each taxable year; any net capital losses of a non-corporate stockholder in excess
of $3,000 generally may be carried forward and used in subsequent taxable years as provided in the Code. Corporate stockholders
generally may not deduct any net capital losses for a taxable year, but may carry back such losses for three taxable years or carry
forward such losses for five taxable years.





24







For any period that we are not considered
to be a “publicly offered regulated investment company” within the meaning of Section 67 of the Code, a non-corporate
stockholder’s pro rata portion of our affected expenses, including our management fees, will be treated as an additional
dividend to the stockholder and will be deductible by such stockholder only to the extent permitted under the limitations described
below. For non-corporate stockholders, including individuals, trusts, and estates, significant limitations generally apply to the
deductibility of certain expenses of a non-publicly offered RIC, including advisory fees. In particular, these expenses, referred
to as miscellaneous itemized deductions, will be deductible only to individuals to the extent they exceed 2% of such a stockholder’s
adjusted gross income after 2025 and will not be deductible at all before then, are not deductible for AMT purposes and are subject
to the overall limitation on itemized deductions under Section 68 of the Code. A publicly offered regulated investment company
is a RIC whose shares are either (i) continuously offered pursuant to a public offering within the meaning of Section 4
of the Securities Act of 1933, as amended, or the Securities Act, (ii) regularly traded on an established securities market
or (iii) held by at least 500 persons at all times during the taxable year. We anticipate that we will not qualify as a publicly
offered RIC for the foreseeable future.



We (or if a U.S. stockholder holds Shares
through an intermediary, such intermediary) will send to each of our U.S. stockholders, as promptly as possible after the end
of each calendar year, a notice detailing, on a per Share and per distribution basis, the amounts includible in such U.S. stockholder’s
taxable income for such year as ordinary income and as long-term capital gain. In addition, the U.S. 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
preferential 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. stockholder’s particular situation. In addition,
the Code requires reporting of adjusted cost basis information for covered securities, which generally include shares of a RIC
acquired after January 1, 2012, to the IRS and to taxpayers. Stockholders should contact their financial intermediaries with
respect to reporting of cost basis and available elections for their accounts.



Under applicable Treasury regulations, if
a U.S. stockholder recognizes a loss with respect to our Common Stock of $2 million or more for a non- corporate U.S. stockholder
or $10 million or more for a corporate U.S. stockholder in any single taxable year (or a greater loss over a combination of years),
the U.S. stockholder must file with the IRS a disclosure statement on Form 8886. Direct U.S. stockholders of portfolio securities
are in many cases excepted from this reporting requirement, but under current guidance, U.S. stockholders of a RIC are not excepted.
Future guidance may extend the current exception from this reporting requirement to U.S. stockholders of most or all RICs. The
fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s
treatment of the loss is proper. Significant monetary penalties apply to a failure to comply with this reporting requirement. States
may also have a similar reporting requirement. U.S. stockholders should consult their own tax advisers to determine the applicability
of these Treasury regulations in light of their individual circumstances.



We may be required to withhold federal income
tax, or backup withholding, currently at a rate of 24%, from all distributions to any U.S. stockholder (1) who fails to furnish
us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding 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 generally is his or her
social security number. Backup withholding is not an additional tax. Any amount withheld under backup withholding is allowed as
a credit against the U.S. stockholder’s federal income tax liability, so long as proper information is provided to the IRS.





25







Taxation of Tax-Exempt U.S. Stockholders



A U.S. stockholder that is a tax-exempt
organization for U.S. federal income tax purposes and therefore generally exempt from U.S. federal income taxation may nevertheless
be subject to taxation to the extent that it is considered to derive unrelated business taxable income, or UBTI. The direct conduct
by a tax-exempt U.S. stockholder of the activities that we have conducted and are eligible to conduct could give rise to UBTI.
However, if a BDC is classified as a corporation for U.S. federal income tax purposes, its business activities generally will not
be attributed to its stockholders for purposes of determining the treatment of any amounts earned from the BDC for U.S. federal
income tax purposes. Therefore, a tax-exempt U.S. stockholder should not be subject to U.S. taxation solely as a result of the
holder’s ownership of the Shares and receipt of dividends that we pay. Moreover, under current law, if we incur indebtedness,
such indebtedness will not be attributed to portfolio investors in our stock. Therefore, a tax-exempt U.S. stockholder should not
be treated as earning income from “debt-financed property” and dividends we pay should not be treated as “unrelated
debt-financed income” solely as a result of indebtedness that we incur. Proposals periodically are made to change the treatment
of “blocker” investment vehicles interposed between tax-exempt investors and non-qualifying investments. In the event
that any such proposals were to be adopted and applied to BDCs, the treatment of dividends payable to tax-exempt U.S. stockholders
could be adversely affected.



Taxation of Non-U.S. Stockholders



Whether an investment in the Shares is appropriate
for a Non-U.S. stockholder will depend upon that person’s particular circumstances. Non-U.S. stockholders should consult
their tax advisers before investing in our Common Stock.



Distributions of our “investment
company taxable income” to Non-U.S. stockholders generally will be subject to withholding of U.S. 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. stockholder, we will not be required to withhold U.S. federal tax if the Non-U.S. 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. stockholder that is a foreign
partnership or a foreign trust, and such entities are urged to consult their tax advisers.



However, certain properly reported distributions
are generally exempt from withholding of U.S. federal income tax where they are paid in respect of our (i) “qualified
net interest income” (generally, our U.S.-source interest income, other than certain contingent interest and interest from
obligations of a corporation or partnership in which we or the Non-U.S. stockholder are at least a 10% shareholder, reduced by
expenses that are allocable to such income) or (ii) “qualified short-term capital gains” (generally, the excess
of our net short-term capital gain, other than short-term capital gains recognized on the disposition of U.S. real property interests,
over our long-term capital loss for such taxable year), and certain other requirements were satisfied. No assurance can be given
as to whether any of our distributions will be eligible for this exemption from withholding of U.S. federal income tax or, if eligible,
will be reported as such by us. In the case of Shares held through an intermediary, the intermediary may withhold U.S. federal
income tax even if we report the payment as a distribution derived from qualified net interest income or qualified short-term capital
gain. Moreover, depending on the circumstances, we may report all, some or none of our potentially eligible distributions as derived
from such qualified net interest income or as qualified short-term capital gains, or treat such distributions, in whole or in part,
as ineligible for this exemption from withholding.



Actual or deemed distributions of our net
capital gains to a stockholder that is a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale or redemption
of our Common 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. stockholder (and, if an income tax treaty applies, are attributable
to a permanent establishment maintained by the Non-U.S. stockholder in the United States) or, in the case of an individual, the
Non-U.S. stockholder was present in the United States for 183 days or more during the taxable year and certain other conditions
are met.



If we distribute our net capital gains in
the form of deemed rather than actual distributions, a stockholder that is a Non-U.S. stockholder will be entitled to a U.S. federal
income tax credit or tax refund equal to the stockholder’s allocable share of the corporate-level tax we pay on the capital
gains deemed to have been distributed; however, in order to obtain the refund, the Non-U.S. stockholder must obtain a U.S. taxpayer
identification number and file a U.S. federal income tax return even if the Non-U.S. stockholder would not otherwise be required
to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.



For a corporate Non-U.S. stockholder, distributions
(both actual and deemed), and gains realized upon the sale or redemption of our Common 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).





26







Under the dividend reinvestment plan,
our stockholders who have not “opted out” of our dividend reinvestment plan will have their cash distributions
automatically reinvested in additional Shares, rather than receiving the cash distributions. If the distribution is a
distribution of our investment company taxable income, is not properly reported by us as derived from qualified short-term
capital gains or qualified net interest income (as discussed above), and it is not effectively connected with a U.S. trade or
business of a Non-U.S. stockholder (or, if a treaty applies, is not attributable to a permanent establishment), the amount
distributed (to the extent of our current and accumulated earnings and profits) will be subject to U.S. federal withholding
tax at a 30% rate (or lower rate provided by an applicable treaty) and only the net after-tax amount will be reinvested in
the Shares. If the distribution is effectively connected with a U.S. trade or business of a Non-U.S. stockholder, generally
the full amount of the distribution will be reinvested in the plan and will nevertheless be subject to U.S. federal income
tax at the ordinary income rates applicable to U.S. persons. A Non-U.S. stockholder will have an adjusted basis in the
additional Shares purchased through the plan equal to the cash that would have been received if the stockholder had received
the distribution in cash, unless we issue new Shares that are trading at or above net asset value, in which case, the
stockholder’s basis in the new Shares will generally be equal to their fair market value. The additional Shares will
have a new holding period commencing on the day following the day on which the Shares are credited to the Non-U.S.
stockholder’s account.



A Non-U.S. stockholder who is a non-resident
alien individual, and who is otherwise subject to withholding of U.S. federal tax, may be subject to information reporting and
backup withholding of U.S. federal income tax on dividends unless the Non-U.S. stockholder provides us or the dividend paying agent
with a U.S. nonresident withholding tax certificate (e.g. an IRS Form W-8BEN, IRS Form W-8BEN-E or an acceptable
substitute form) or an acceptable substitute form.



We are required to withhold U.S. tax (at
a 30% rate) on payments of taxable dividends to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive
new reporting and withholding requirements designed to inform the Treasury of U.S.-owned foreign investment accounts. Stockholders
may be requested to provide additional information to us to enable us to determine whether withholding is required.



An investment in the Shares by a non-U.S.
person may also be subject to U.S. federal estate tax. 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.



Change in Taxable Year



For the period from inception through July 7,
2015, we were subject to tax as a corporation. As a corporation, no provision for U.S. federal, state and local taxes was accrued
and included in the accompanying statement of operations for our fiscal periods ended December 31, 2019, 2018, and 2017. Based
upon our election to be subject to tax as a RIC as of our initial RIC taxable year ended December 31, 2015, as well as our
intended maintenance of such election in future taxable years, no provision for U.S. federal, state and local taxes was accrued
and included in the accompanying statement of operations for our fiscal periods ended December 31, 2019, 2018, and 2017.



Regulation as a Business Development Company



General



A BDC is a specialized investment vehicle
that elects to be regulated under the 1940 Act as an investment company, but is generally subject to less onerous requirements
than other registered investment companies under a regime designed to encourage lending to U.S.-based small and mid-sized businesses.
Unlike many similar types of investment vehicles that are restricted to being private entities, the stock of a BDC is permitted
to trade in the public equity markets (although there are no current plans to list the Shares to allow for such trading). BDCs
are also eligible to elect to be treated as a RIC under Subchapter M of the Code. A RIC typically does not incur significant entity-level
income taxes, because it is generally entitled to deduct distributions made to its stockholders.





27







Advantages of a BDC Compared to Other Institutional Investment
Vehicles



The advantages of the BDC structure derive from two characteristics:



First, a BDC is permitted to become a publicly
traded company. This can provide a BDC with access to an additional source of capital and offers investors the potential to monetize
their investment through the sale of shares in an active public stock market. Most BDCs trade on either the New York Stock Exchange
or the Nasdaq Stock Market. However, we do not intend to list the Shares on any national securities exchange.



In contrast, many investment vehicles
utilized by institutional investors are required to be “private” vehicles. Investors in such vehicles can
transfer their interests only under strict rules designed to ensure that “private” status is maintained.
This may have the effect of limiting the liquidity of those interests and result in a discount when they trade in the
secondary market. Typically, these investment vehicles are designed for a medium- term (ten year) life, and the timing of
return of capital from these vehicles typically depends upon the investment activity of the vehicle.



On the other hand, in a BDC, once a public
market develops and lock-ups pursuant to any subscription agreements in respect of the shares expires, an investor is free to
sell shares and control the timing of any capital return. The timing and pricing of any initial public offering of our Common
Stock, or an IPO, and subsequent trading price of the Shares will depend on market conditions and our Adviser’s investment
performance. Prior to an IPO, the Shares will be subject to certain transfer restrictions. Following an IPO, investors may be
restricted from selling or disposing of their Shares by applicable securities laws, contractually by a lock-up agreement with
the underwriters of the IPO and contractually through restrictions contained in the subscription agreement in respect of the Shares.



Second, as a BDC, we have elected to be
treated as a RIC under the Code. A RIC typically does not incur significant entity-level income taxes, because it is entitled to
deduct distributions made to its stockholders treated as dividends for U.S. federal income tax purposes in computing its income
subject to entity-level taxation. As a result, a BDC that has elected to be a RIC does not incur any U.S. federal income tax so
long as the BDC continuously maintains its registration in accordance with the 1940 Act, at least 90% of the BDC’s gross
income each taxable year consists of certain types of qualifying investment income, the BDC satisfies certain asset composition
requirements at the close of each quarter of its taxable year, and if the BDC distributes all of its taxable income (including
net realized capital gains, if any) to its stockholders on a current basis. The rules applicable to our qualification as a
RIC for tax purposes are complex and involve significant practical and technical issues. If we fail to qualify as a RIC for U.S.
federal income tax purposes or are unable to maintain our qualification for any reason, then we would become subject to regular
corporate income tax, which would have a material adverse effect on the amount of after-tax income available for distribution to
our stockholders. See “Item 1. Business — Material U.S. Federal Income Tax Considerations.”



Distributions by a BDC generally are treated
as dividends for U.S. tax purposes, and generally are subject to U.S. income or withholding tax unless the stockholder receiving
the dividend qualifies for an exemption from U.S. tax, or the distribution is subject to one of the special look-through rules.
Distributions paid out of U.S. derived interest income or short term capital gains may qualify for an exemption from U.S. withholding
tax. Distributions paid out of net capital gains can qualify for a reduced rate of taxation in the hands of an individual U.S.
stockholder and an exemption from U.S. tax in the hands of a non-U.S. stockholder. Additionally, certain U.S. resident persons
eligible to claim exemptions from U.S. federal income tax provided by the Code (such as certain U.S. qualified plans and charitable
organizations) that own shares in a BDC generally are not required to take account of indebtedness incurred at the level of the
BDC in determining whether dividends received from a BDC constitute “unrelated debt-financed income.” Finally, a non-U.S.
investor in a BDC generally does not need to take account of activities conducted by the BDC in determining whether such non-U.S.
investor is engaged in the conduct of a business in the United States. See “Item 1. Business — Material U.S. Federal
Income Tax Considerations.”



The 1940 Act contains prohibitions and restrictions
relating to transactions between BDCs and their affiliates (including any investment advisers or investment sub-advisers), principal
underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors of a BDC be persons
other than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that a
BDC may not change the nature of its business so as to cease to be, or to withdraw its election as, a BDC unless approved by a
majority of its outstanding voting securities as defined by the 1940 Act.





28







Qualifying Assets



Under the 1940 Act, a BDC may not acquire
any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying
assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets.
The principal categories of qualifying assets relevant to our proposed business are the following:



(1)            Securities
purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain
limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an
affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by
the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:



(a)            is
organized under the laws of, and has its principal place of business in, the United States;



(b)            is
not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an
investment company but for certain exclusions under the 1940 Act; and



(c)            satisfies
either of the following:



(i)            does
not have any class of securities listed on a national securities exchange or has any class of securities listed on a national securities
exchange subject to a $250 million market capitalization maximum; or



(ii)            is
controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management
or policies of the eligible portfolio company, and, as a result, the BDC has an affiliated person who is a director of the eligible
portfolio company.



(2)            Securities
of any eligible portfolio company which we control.



(3)            Securities
purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer,
or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately
prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other
than conventional lending or financing arrangements.



(4)            Securities
of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities
and we already own 60% of the outstanding equity of the eligible portfolio company.



(5)            Securities
received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant
to the exercise of warrants or rights relating to such securities.



(6)            Cash,
cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.





29







Managerial Assistance to Portfolio Companies



In addition, a BDC must have been organized
and have its principal place of business in the United States and must be operated for the purpose of making investments in the
types of securities described in (1), (2) or (3) above. However, in order to count portfolio securities as qualifying
assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available
to the issuer of the securities significant managerial assistance. However, when a BDC purchases securities in conjunction with
one or more other persons acting together, one of the other persons in the group may make available such managerial assistance.
Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers
or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management,
operations or business objectives and policies of a portfolio company.



Temporary Investments



Pending investment in other types of “qualifying
assets,” as described above, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality
debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments,
so that 70% of our assets are qualifying assets.



Senior Securities



While there is no present intention to do
so, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to the
Shares if our asset coverage complies with the requirements of the 1940 Act. Under the 1940 Act, and absent specific authorization
by our Board of Directors or stockholders, a BDC generally is required to maintain asset coverage of 200% for senior securities
representing indebtedness (such as borrowings from banks or other financial institutions) or stock (such as preferred stock). The
Small Business Credit Availability Act, which was signed into law on March 23, 2018, or the SBCAA, provides that a BDC’s
required asset coverage under the 1940 Act may be reduced from 200% to 150%. This reduction in asset coverage would permit a BDC
to double the amount of leverage it may utilize, subject to certain approval, timing and reporting requirements, including either
stockholder approval or approval of a majority of the directors who are not “interested persons” (as defined in the
1940 Act) of the BDC and who have no financial interest in the arrangement. As defined in the 1940 Act, asset coverage of 150%
means that for every $100 of net assets a BDC holds, it may raise up to $200 from borrowing and issuing senior securities. In addition,
while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the
repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or
repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard
to asset coverage. Regulations governing our operations as a BDC will affect our ability to raise, and the method of raising, additional
capital, which may expose us to risks.



Code of Ethics



We and our Adviser have adopted a joint
code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts
certain personal securities transactions. Personnel subject to the joint code may invest in securities for their personal investment
accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the
code’s requirements.



Proxy Voting Policies and Procedures



We have delegated our proxy voting responsibility
to our Adviser. A summary of the proxy voting policies and procedures of our Adviser, or the Proxy Voting Policies and Procedures,
are set forth below. These policies and procedures will be reviewed periodically by our Adviser and, subsequent to our election
to be regulated as a BDC, our non-interested directors, and, accordingly, are subject to change. For purposes of these Proxy Voting
Policies and Procedures described below, “we” “our” and “us” refers to our Adviser.



30













An investment adviser registered under the
Investment Advisers Act of 1940, as amended, or the Advisers Act, has a fiduciary duty to act solely in the best interests of its
clients. As part of this duty, we recognize that we must vote client securities in a timely manner free of conflicts of interest
and in the best interests of our clients.



These policies and procedures for voting
proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the
Advisers Act.



We vote proxies relating to our
portfolio securities in what we believe to be the best interest of our clients’ stockholders by seeking to maximize the
economic value of each such client’s holdings. In doing so, we take into account the relevant client’s investment
horizon, the contractual obligations under the applicable advisory agreements or comparable documents, and all other relevant
facts and circumstances at the time of the vote. It is our general policy to vote or give consent on all matters presented to
security holders in any vote; provided, however, that we reserve the right to abstain on any particular vote or otherwise
withhold our vote or consent on any matter if, in the judgment of our general counsel or our relevant investment
professional, the costs associated with such vote outweigh the benefits to the relevant clients or if the circumstances make
such an abstention or withholding otherwise advisable and in the best interests of the relevant clients.



Our proxy voting decisions are made by the
senior officers who are responsible for monitoring each of our clients’ investments. To ensure that our vote is not the product
of a conflict of interest, we require that: (1) anyone involved in the decision making process disclose to our chief compliance
officer any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding
a proxy vote; and (2) employees involved in the decision making process or vote administration are prohibited from revealing
how we voted on a proposal in order to reduce any attempted influence from interested parties.



You may obtain information about how we
voted proxies by making a written request for proxy voting information to: Audax Management Company (NY), LLC, 101 Huntington Avenue,
Boston, MA 02199, Attention: General Counsel.





31







Privacy Principles



We are committed to maintaining the privacy
of our investors and to safeguarding their non-public personal information. The following information is provided to help you understand
what personal information we collect, how we protect that information and why, in certain cases, we may share information with
select other parties.



We do not disclose any non-public personal
information about our stockholders or a former stockholder to anyone, except as permitted by law or as is necessary in order to
service stockholder accounts (for example, to a transfer agent or third party administrator).



We restrict access to non-public personal
information about our stockholders to employees of our Adviser and its affiliates with a legitimate business need for the information.
We maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our stockholders.



Other



We are prohibited under the 1940 Act from
knowingly participating in certain transactions with our affiliates, including the Adviser, without the prior approval of our independent
directors and, in some cases, prior approval by the SEC.



On November 7, 2018, we and the Adviser
and other affiliates received exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments
because we believe that it will be advantageous for us to co-invest with accounts sponsored or managed by the Adviser and its affiliates
where such investment is consistent with our investment objectives, positions, policies, strategies and restrictions, as well as
regulatory requirements and other pertinent factors. We may also co-invest alongside other accounts sponsored or managed by our
Adviser and its affiliates as otherwise permissible under SEC staff guidance and interpretations, applicable regulations and the
allocation policy of the Adviser. We believe that co-investment by us and accounts sponsored or managed by the Adviser may afford
us additional investment opportunities.



Under the terms of our exemptive relief,
a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors is required
to make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction
are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any
person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment
strategies and policies.



We are subject to periodic examination by
the SEC for compliance with the 1940 Act.



We are required to provide and maintain
a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC,
we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.



We and our Adviser are each required to
adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review
these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief
compliance officer to be responsible for administering the policies and procedures.





32







Item 1A. Risk Factors



Investing in the Shares involves a number of significant
risks. In addition to the other information contained in this annual report, you should consider carefully the following information
before making an investment in the Shares. The risks below are not the only risks we face. Additional risks and uncertainties not
presently known to us or not presently deemed material by us could also impair our operations and performance. If any of the following
events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case,
the net asset value of the Shares could decline, and you may lose all or part of your investment.



Risks Related to our Investments



Investing in the Shares involves a high degree of risk.



The investments we make in accordance with
our investment objective may involve a higher amount of volatility and risk of loss of principal than alternative investment options
and, therefore, an investment in the Shares may not be suitable for someone with lower risk tolerance.



Our investments in portfolio companies may be risky, and
we could lose all or part of our investment.



We invest primarily in senior secured debt
instruments, including “one-stop” or “unitranche” senior secured loans, of privately owned U.S. companies
with approximately $10 to $75 million of annual EBITDA, with a focus on transactions sourced through the network of our Adviser.
We intend to invest at least 80% of our net assets, plus the amount of any borrowings, in credit instruments.



When we invest in senior secured debt, we
generally take a security interest in the available assets of these portfolio companies, including equity interests in their subsidiaries.
There is a risk that the collateral securing our investments may decrease in value over time or lose its entire value, may be difficult
to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and
market conditions, including as a result of the inability of the portfolio company to raise additional capital. Also, in some circumstances,
our security interest could be subordinated to claims of other creditors. In addition, any deterioration in a portfolio company’s
financial condition and prospects, including any inability on its part to raise additional capital, may result in the deterioration
in the value of the related collateral. Consequently, the fact that debt is secured does not guarantee that we will receive principal
and interest payments according to the investment terms or at all, or that we will be able to collect on the investment should
we be forced to enforce our remedies.



We typically lend directly to
borrowers, and structure our investments to include fixed repayment schedules and extensive contractual rights and remedies.
We do not expect to invest in structured products and investments and intend to focus on cash-pay instruments that pay
interest on a monthly or quarterly basis, typically with maturities of between five and seven years. Such first lien senior
secured loans typically do not include equity co-investments, warrants or PIK payment terms. However, to the extent we invest
in securities ranking more junior in a borrower’s capital structure, which we do not expect to be a focus of our
portfolio, such investments may include some or all of these attributes. Any equity co-investments, warrants or PIK
instruments we hold may involve certain risks that are not applicable to the types of securities in which we typically
invest. These risks include the possibility of being unsecured with respect to our claim on such investments if the portfolio
company were to go bankrupt or being paid less upon such bankruptcy than we otherwise would have had such investment been in
the form of a senior loan.



Most loans in which we invest are not rated
by any rating agency. If they were rated, they would be rated as below investment grade quality. Loans rated below investment grade
quality, which are often referred to as “junk” loans, are generally regarded as having predominantly speculative characteristics
and may carry a greater risk with respect to a borrower’s capacity to pay interest and repay principal. Therefore, our investments
may result in an above average amount of risk and volatility or loss of principal. To the extent we make investments with a deferred
interest feature such as market discount, debt instruments with PIK interest and OID securities, the higher interest rates on these
investments may reflect the payment deferral and an increased credit risk associated with such instruments.





33







We are a non-diversified investment company within the
meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in
securities of a single issuer.



We are classified as a non-diversified investment
company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion
of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities
of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company
as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible
to any single economic or regulatory occurrence than a diversified investment company. Beyond our asset diversification requirements
as a RIC under the Code, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively
few portfolio companies. Although we are classified as a non-diversified investment company within the meaning of the 1940 Act,
we maintain the flexibility to operate as a diversified investment company and have done so for an extended period of time. To
the extent that we operate as a non-diversified investment company in the future, we may be subject to greater risk.



We generally do not control the business operations of
our portfolio companies and management of our portfolio companies could make decisions adverse to our interests as debt investors.



We do not control or expect to control any
of our portfolio companies, even though it is possible that we could have board representation or board observation rights. As
a result, we are subject to the risk that a portfolio company in which we invest may make business decisions with which we disagree,
and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise act in
ways that do not serve our interests as debt investors. As a result, a portfolio company may make decisions that could decrease
the value of our portfolio holdings.



Economic recessions or downturns could impair our portfolio
companies and harm our operating results.



Many of our portfolio companies are susceptible
to economic or industry centric slowdowns or recessions and may be unable to repay our debt investments during these periods. Therefore,
our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse
economic conditions may also decrease the value of any collateral securing investments in senior secured debt. Economic slowdowns
or recessions may further decrease the value of our collateral and result in losses of value in our portfolio and a material decrease
in our revenues, net income, assets and net worth. Unfavorable economic conditions also could increase our funding costs, limit
our access to the capital markets or result in a decision by our lenders not to extend credit to us on terms we deem acceptable.
These events could prevent us from increasing investments and materially harm our operating results.



A portfolio company’s failure to satisfy
financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans
and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize such portfolio
company’s ability to meet its obligations under debt securities that we hold. We may incur expenses to the extent necessary
to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio
companies were to go bankrupt, even if we had structured our interest as senior debt, depending on the facts and circumstances,
including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize
our debt holding and subordinate all or a portion of our claim to that of other creditors.





34







A covenant breach by a portfolio company may harm our
operating results.



A portfolio company’s failure to satisfy
financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its debt
and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company’s
ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery
upon default or to negotiate new terms with a defaulting portfolio company.



Global markets could enter a period of severe disruption
and instability due to catastrophic events, such as terrorist attacks, acts of war, natural disasters, and outbreaks of epidemic,
pandemic or contagious diseases, which could impair our portfolio companies’ financial positions and operating results and
affect the industries in which we invest and, in turn, harm our operating results



The U.S. and global markets have, from time
to time, experienced periods of disruption due to events such as terrorist attacks; acts of war; natural disasters, such as earthquakes,
tsunamis, fires, floods or hurricanes; and outbreaks of epidemic, pandemic or contagious diseases. Such events have created, and
continue to create, economic and political uncertainties and have contributed to recent global economic instability. In particular,
outbreaks of epidemic, pandemic or contagious diseases may cause serious harm to our business, operating results and financial
condition. Historically, disease pandemics such as the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory
Syndrome or the H1N1 virus, have diverted resources and priorities towards the treatment of such diseases. In December 2019,
a strain of novel coronavirus causing respiratory illness emerged in the city of Wuhan in the Hubei province of China (the “Wuhan
Coronavirus”). We are closely monitoring the developments in China and continually assessing the potential impact on our
business and the business of our portfolio companies, including the effects described below. However, the full impact of this outbreak
is unknown as of the date of this report.



Any prolonged disruptions in the business
of our portfolio companies, including a disruption in their supply chains may adversely affect their ability to obtain the necessary
raw materials or components to make their products or cause a decline in the demand for their products or services, leading to
a negative impact on their operating results. In addition, such events may lead to restrictions on travel to and from the affected
areas, making it more difficult for our portfolio companies to conduct their businesses. As a result of pandemic outbreaks, including
the Wuhan Coronavirus, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals
can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Governmental
mandates may require forced shutdowns of our portfolio companies’ facilities for extended or indefinite periods. In addition,
these widespread outbreaks of illness, particularly in China, North America, Europe, or other locations significant to the operations
of our portfolio companies, could adversely affect their workforce, resulting in serious health issues and absenteeism, and may
cause serious harm to our results of operations, business, or prospects.



Furthermore, future terrorist
activities, military or security operations, natural disasters, disease outbreaks, pandemics or other similar events could
further weaken the domestic/global economies and create additional uncertainties, which may negatively impact our portfolio
companies. During these periods of disruption, general economic conditions may deteriorate with material and adverse
consequences for the broader financial and credit markets, and the availability of debt and equity capital for the market as
a whole, and financial services firms in particular. Such economic adversity could impair our portfolio companies’
financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our
operating results. These conditions may reoccur for a prolonged period of time or materially worsen in the future.





35







Changes to U.S. tariff and import/export regulations may
affect our portfolio companies, and may negatively impact our business, results of operations or financial conditions.



The current U.S. administration has signified potential significant
changes to U.S. trade policies, treaties and tariffs, creating uncertainty about the future relationship between the United States
and other countries. These developments, or the perception that any of them could occur, may have a material adverse effect on
global economic conditions and the stability of global financial markets, and may significantly reduce global trade. Any of these
factors could dampen economic activity and limit our portfolio companies’ access to suppliers or customers, resulting in
a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact
us.



An investment strategy focused primarily on privately
held companies presents certain challenges, including the lack of available information about these companies.



We generally invest primarily in privately
owned U.S. companies. Investments in privately owned companies pose certain incremental risks as compared to investments in public
companies. For example, such private companies:



| | · | have reduced access to the capital markets, resulting in diminished capital resources and ability to withstand financial distress;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | · | may have limited financial resources and may be unable to meet their obligations under the debt securities that we hold, which
may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing on any guarantees
we may have obtained in connection with our investment;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | may have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to
render them more vulnerable to competitors’ actions and changing market conditions, as well as general economic downturns;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability,
resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in
turn, on us; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | may have less predictable operating results, may from time to time be parties to litigation, may be engaged in volatile businesses
with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their operations,
finance expansion or maintain their competitive position.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Finally, little public information generally
exists about privately owned companies and these companies may not have third-party debt ratings or audited financial statements.
We must therefore rely on the ability of our Adviser to obtain adequate information through due diligence to evaluate the creditworthiness
and potential returns from investing in these companies. Additionally, these companies and their financial information are not
generally subject to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and other rules that govern public
companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment
decision, and we may lose money on our investments.





36







Our portfolio securities may be thinly traded and, as
a result, the lack of liquidity in our investments may adversely affect our business.



Investments in privately owned companies
tend to be less liquid. The securities of privately owned companies are not publicly traded or actively traded on the secondary
market and are, instead, traded on a privately negotiated over-the-counter secondary market for institutional investors. These
privately negotiated over-the-counter secondary markets may be inactive during an economic downturn or a credit crisis. In addition,
the securities in these companies are subject to legal and other restrictions on resale or are otherwise less liquid than publicly
traded securities. Also, if there is no readily available market for these investments, we carry these investments at fair value
as determined by our Adviser. As a result, if we are required to liquidate all or a portion of our portfolio quickly, we may realize
significantly less than the value at which we had previously recorded these investments. We may also face other restrictions on
our ability to liquidate an investment in a portfolio company to the extent that we, our Adviser or any of respective affiliates
have material nonpublic information regarding such portfolio company or where the sale would be an impermissible joint transaction.
The reduced liquidity of our investments may make it difficult for us to dispose of them at a favorable price, and, as a result,
we may suffer losses.



We may hold the debt securities of leveraged companies
that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.



Leveraged companies may experience bankruptcy
or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding
are the product of contested matters and adversary proceedings and are beyond the control of creditors. A bankruptcy filing by
an issuer may adversely and permanently affect the issuer. If such bankruptcy proceeding is converted to a liquidation, our value
may not equal the liquidation value that was believed to exist at the time of your investment. The duration of a bankruptcy proceeding
is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of
reorganization or liquidation ultimately becomes effective. The administrative costs of a bankruptcy proceeding are frequently
high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification
of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may
be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the
early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, contingent claims
that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial and
may impair the recovery of other creditors.



The financial projections of our portfolio companies could
prove inaccurate.



We generally evaluate the capital structure
of portfolio companies on the basis of financial projections prepared by the management of such portfolio companies. These projected
operating results will normally be based primarily on judgments of the management of the portfolio companies. In all cases, projections
are only estimates of future results that are based upon assumptions made at the time that the projections are developed. General
economic conditions, which are not predictable with accuracy, along with other factors may cause actual performance to fall short
of the financial projections that were used to establish a given portfolio company’s capital structure. Because of the leverage
that is typically employed by our portfolio companies, this could cause a substantial decrease in the value of our investment in
the portfolio company. The inaccuracy of financial projections could thus cause our performance to fall short of our expectations.



Price declines in the corporate leveraged loan market
may adversely affect the fair value of our portfolio, reducing our net asset value through increased net unrealized depreciation.



Prior to the onset of the financial
crisis that began in 2007, securitized investment vehicles, hedge funds and other highly leveraged non-bank financial
institutions comprised the majority of the market for purchasing and holding senior, unitranche and subordinated debt. As the
trading price of the loans underlying these portfolios began to deteriorate beginning in the first quarter of 2007, we
believe that many institutions were forced to raise cash by selling their interests in performing assets in order to satisfy
margin requirements or the equivalent of margin requirements imposed by their lenders. This resulted in a cycle of forced
deleveraging through price declines, compulsory sales and further price declines, with falling underlying credit values,
widespread redemption requests and other constraints resulting from the credit crisis generating further selling
pressure.



Conditions in the medium- and large-sized
U.S. corporate debt market may experience similar or worse disruption or deterioration in the future, which may cause pricing levels
to decline or be volatile. As a result, our net asset value could decline through an increase in unrealized depreciation and incurrence
of realized losses in connection with the sale of our investments. This, in turn, could have a material adverse impact on our business,
financial condition and results of operations.





37







We are exposed to risks associated with changes in interest
rates.



The majority of our debt investments are
floating rates, based on a spread to LIBOR or the prime rate. General interest rate fluctuations may have a substantial negative
impact on our investments, including those with a LIBOR Floor. Any fluctuations in general interest rates would affect the reference
rates used in the interest calculation on our investment. Any of these fluctuations individually, or in the aggregate, may have
an adverse impact on the overall return of on our investments.



If general interest rates rise, there is
a risk that the portfolio companies in which we hold floating rate securities will be unable to pay escalating interest amounts,
which could result in a default under their loan documents with us. Rising interest rates could also cause portfolio companies
to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business
and operations and could, over time, lead to increased defaults. In addition, rising interest rates may increase pressure on us
to provide fixed rate loans to our portfolio companies, which could adversely affect our net investment income, as increases in
our cost of borrowed funds, if any, would not be accompanied by increased interest income from such fixed-rate investments.



To the extent we borrow money to make investments,
our net investment income depends, in part, upon the difference between the rate at which we borrow funds and the rate at which
we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates or a decrease
in the spread between the rate at which we borrow and the rate at which we invest will not have a material adverse effect on our
net investment income to the extent we use debt to finance investments. In periods of rising interest rates, our cost of funds
would increase, which could reduce our net investment income.



Additionally,
in July 2017, the head of the United Kingdom Financial Conduct Authority announced that it will no longer persuade or compel
banks to submit rates for the calculation of LIBOR after 2021.. To identify a successor rate for U.S. dollar LIBOR, the
Federal Reserve System, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large
U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, as its preferred alternative rate for
LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly
observable U.S. Treasury-backed repurchase transactions. Although SOFR appears to be the preferred replacement rate for U.S. dollar
LIBOR, at this time, it is not possible to predict whether SOFR will attain market traction as a LIBOR replacement tool or the
effect of any such changes as the establishment of alternative reference rates or other reforms to LIBOR may be enacted in the
United States, United Kingdom or elsewhere. As such, the potential effect of SOFR and LIBOR on our net investment income cannot
yet be determined.



If
LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that
utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established.In
addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase
or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities,
loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on
our business, financial condition, tax position and results of operations.





38







Our portfolio companies may incur debt that ranks equally
with, or senior to, our investments in such companies.



Our portfolio companies may have, or may
be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt
instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled
to receive payments with respect to the debt instruments in which we invest. Also, in the event of the insolvency, liquidation,
dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment
in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying
such senior creditors, such portfolio company may not have any remaining assets to repay its obligation to us. In the case of debt
ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other
creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio
company.



To the extent we make investments in restructurings and
reorganizations they may be subject to greater regulatory and legal risks than other traditional investments in portfolio companies.



We may make investments in restructurings
that involve, or otherwise invest in the debt securities of, companies that are experiencing or are expected to experience severe
financial difficulties. These severe financial difficulties may never be overcome and may cause such companies to become subject
to bankruptcy proceedings. As such, these investments could subject us to certain additional potential liabilities that may exceed
the value of our original investment. For instance, under certain circumstances, payments to us and our distributions to stockholders
may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment
or similar transaction under applicable bankruptcy and insolvency laws. Furthermore, investments in restructurings may be adversely
affected by statutes relating to fraudulent conveyances, voidable preferences, lender liability and a court’s discretionary
power to disallow, subordinate or disenfranchise particular claims. Under certain circumstances, a lender that has inappropriately
exercised control of the management and policies of a debtor may have its claims subordinated or disallowed, or may be found liable
for damages suffered by parties as a result of such actions.



There may be circumstances where our debt investments
are subordinated to claims of other creditors, or we could be subject to lender liability claims.



If one of our portfolio companies were to
go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance
to that portfolio company or a representative of us or our Adviser sat on the board of directors of such portfolio company, a bankruptcy
court might re-characterize our debt investment and subordinate all or a portion of our claim to that of other creditors. Bankruptcy
courts weigh equitable considerations when determining the recovery creditors may receive. As a result, it is difficult to predict
with any certainty the situations in which our legal rights may be subordinated to other creditors in a bankruptcy. For example,
in situations where a bankruptcy carries a higher degree of political or broader economic significance, our recovery may be adversely
affected.



In addition, lenders in certain cases can
be subject to lender liability claims for actions taken by them when they become too involved in the borrower’s business
or exercise control over a borrower. It is possible that we could become subject to a lender’s liability claim, including
as a result of actions taken if we render significant managerial assistance to, or exercise control or influence over the board
of directors of, the borrower.





39







We may not have the funds or ability to make additional
investments in our portfolio companies.



After our initial investment in a
portfolio company, we may be called upon from time to time to provide additional funds to such company or have the
opportunity to increase our investment through the exercise of a warrant or other right to purchase shares. There is no
assurance that we will make, or will have sufficient funds to make, follow-on investments. Even if we have sufficient capital
to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase
our level of risk, we prefer other opportunities, we are limited in our ability to do so by compliance with BDC requirements,
or we desire to maintain our RIC tax status. Our ability to make follow-on investments may also be limited by our
Adviser’s allocation policies. Any decisions not to make a follow-on investment or any inability on our part to make
such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed
opportunity for us to increase our participation in a successful operation or may reduce the expected return on the
investment.



Prepayments of our debt investments by our portfolio companies
could adversely impact our results of operations and reduce our return on equity.



We are subject to the risk that the investments
we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds
in temporary investments, pending their future investment in new portfolio companies. These temporary investments may have substantially
lower yields than the debt being prepaid, and we could experience significant delays in reinvesting these amounts. Alternative
future investments in new portfolio companies may also be at lower yields than the debt that was repaid and will, in any case,
require additional Adviser time. As a result, our results of operations could be materially adversely affected if one or more of
our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments, net of prepayment fees, could negatively
impact our return on equity.



To the extent OID or PIK constitutes a portion of our
income, we will be exposed to risks associated with the deferred receipt of cash representing such income.



Our investments may include instruments
issued with OID or PIK provisions. To the extent OID or PIK constitutes a portion of our income, we will be exposed to typical
risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including:



| | · | instruments issued with OID may have unreliable valuations because the accruals require judgments about collectability.
| | - | -----------------------------------------------------------------------------------------------------------------------



| | · | instruments issued with OID may create heightened credit risks because the inducement to trade higher rates for the deferral
of cash payments typically represents, to some extent, speculation on the part of the borrower.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | for accounting purposes, cash distributions to stockholders derived from OID income are not considered to have been made from
our paid-in capital, although they may be paid from the proceeds of any offering of the Shares. Thus, although a distribution of
OID income comes from the cash invested by the stockholders, the 1940 Act does not require that stockholders be given notice of
this fact.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | in the case of PIK “toggle” debt, a PIK election has the simultaneous effects of increasing the assets under management,
thereby increasing our base management fee, and increasing our investment income.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | OID creates risk of non-refundable cash payments to our Adviser based on non-cash accruals that may never be realized.
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | in addition, in the event we recognize deferred loan interest income in excess of our available capital as a result of our
receipt of PIK interest, we may be required to liquidate assets in order to pay a portion of the base management fee.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





40







Risks Relating to the Shares



There is no public market for the Shares, and we do not
expect any market for the Shares to develop.



There is no existing trading market for
the Shares. We do not expect any market for the Shares to develop in the future or, if developed, such market may not be sustained.
In the absence of a trading market or unless we choose to conduct a tender offer, an investor may be unable to liquidate an investment
in the Shares.



We may be unable to invest a significant portion of the
net proceeds of any offering of the Shares on acceptable terms in an acceptable timeframe.



Delays in investing the net proceeds of
any offering of the Shares may impair our performance. We cannot assure you we will be able to identify any investments that meet
our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net
proceeds of any offering of the Shares on acceptable terms within the time period that we anticipate or at all, which could harm
our financial condition and operating results.



Before investing our cash on hand, we will
invest such primarily in cash equivalents, U.S. government securities and other high-quality debt instruments maturing in one year
or less from the time of investment. This will produce returns that are significantly lower than the returns that we expect to
achieve when our portfolio is fully invested in securities meeting our investment objective. As a result, any distributions that
we pay while our portfolio is not fully invested in securities meeting our investment objective may be lower than the distributions
that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective.



Risks Relating to Our Business and Structure



We are a relatively new company and have a limited operating
history.



We were formed on January 29, 2015
and are the first BDC to be advised by our Adviser. As a result, we are subject to all of the business risks and uncertainties
associated with any young business, including the risk that we will not achieve our investment objective. We take time to invest
capital in part because extending loans to middle-market borrowers requires substantial due diligence and structuring. We will
invest any uninvested cash that we hold in short-term investments, such as cash and cash equivalents, U.S. government securities
and high-quality debt instruments maturing in one year or less from the time of investment. As a result, we earn yields substantially
lower than the interest income that we receive in respect of loans to middle-market borrowers, and our distributions, if any, may
be lower than the distributions that may be paid when our portfolio is fully invested.



Our portfolio may be concentrated in a limited number
of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on
its obligations under any of its debt instruments or if there is a downturn in a particular industry.



Although we do not intend to focus our investments
in any specific industries, our portfolio may be concentrated in a limited number of portfolio companies and industries. Beyond
the asset diversification requirements associated with our qualification as a RIC under Subchapter M of the Code, we do not have
fixed guidelines for diversification; while we do not target any specific industries, our investments may be concentrated in relatively
few industries. As a result, the aggregate returns we realize may be significantly adversely affected if a small number of investments
perform poorly or if we need to write down the value of any one investment. Additionally, a downturn in any particular industry
in which we are invested could also significantly impact the aggregate returns we realize.





41







Because our business model depends to a significant extent
upon relationships with corporations, financial institutions and investment firms, the inability of our Adviser to maintain or
develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect
our business.



Our Adviser depends on its relationships
with corporations, financial institutions and investment firms, and we rely indirectly to a significant extent upon these relationships
to provide us with potential investment opportunities. If our Adviser fails to maintain its existing relationships or develop new
relationships or sources of investment opportunities, we may not be able to grow our investment portfolio. In addition, individuals
with whom our Adviser has relationships are not obligated to provide us with investment opportunities. Therefore, we can offer
no assurance that such relationships will generate investment opportunities for us.



We may face increasing competition for investment opportunities,
which could delay deployment of our capital, reduce returns and result in losses.



We compete for investments with other BDCs
and investment funds (including registered investment companies, private equity funds and mezzanine funds), as well as traditional
financial services companies such as commercial and investment banks and other sources of funding, such as issuers of collateral
loan obligations and other structured loan funds. Moreover, alternative investment vehicles, such as hedge funds, have begun to
invest in areas in which they have not traditionally invested, including making investments in our target market of privately owned
U.S. companies. As a result of these new entrants, competition for investment opportunities in privately owned U.S. companies could
intensify. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources
than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available
to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics
could allow our competitors to consider a wider variety of investments, establish more relationships and offer prospective borrowers
better pricing and more flexible structuring than we are able to do.



We may lose investment opportunities if
we do not match our competitors’ pricing, terms and structure criteria. If we are forced to match these criteria to make
investments, we may not be able to achieve acceptable returns on our investments or lose capital. Any increase in the number and/or
the size of our competitors could force us to accept less attractive investment terms or not lend. Furthermore, many of our competitors
are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the source of income, asset diversification
and distribution requirements we must satisfy to maintain our RIC status. Such competitive pressures may adversely affect our business,
financial condition, results of operations and cash flows. As a result of this competition, we may not be able to take advantage
of attractive investment opportunities from time to time. Also we may not be able to identify and make investments that are consistent
with our investment objective.



We may not be able to pay you distributions, and our distributions
may not grow over time.



Subject
to the discretion of our Board of Directors and applicable legal restrictions, we intend to make distributions to our stockholders
out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow
us to make a specified level of cash distributions or to increase our cash distributions in the future.All distributions
will be paid at the discretion of our Board of Directors and will depend on our earnings, our net investment income, our financial
condition, maintenance of our RIC tax status, compliance with applicable BDC regulations and such other factors as our Board of
Directors may deem relevant from time to time.





42







We may need to raise additional capital to grow because
we must distribute most of our income.



We may need additional capital to fund
growth in our investments. A reduction in the availability of new capital could limit our ability to grow. We must distribute
dividends each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined
without regard to any deduction for dividends paid, to our stockholders to maintain our ability to be subject to tax as a
RIC. As a result, any such cash earnings may not be available to fund investment originations. We expect to issue equity
securities in private offerings. If we fail to obtain funds from such sources or from other sources to fund our investments,
it could limit our ability to grow, which may have an adverse effect on the value of our securities. In addition, our ability
to borrow or issue additional preferred stock may be restricted if our total assets are less than the required asset coverage
ratio under the 1940 Act, currently 200% (or 150% upon receipt of certain approvals and subject to certain disclosure
requirements) of total borrowings and preferred stock.



A significant portion of our investment portfolio is recorded
at fair value as determined in good faith by our Board of Directors and, as a result, there is uncertainty as to the value of our
portfolio investments.



We carry our portfolio investments at market
value or, if there is no readily available market value, at fair value. There is no public market or active secondary market for
many of the securities of the privately held companies in which we have invested. The majority of our investments are not publicly
traded or actively traded on a secondary market but, instead, may be traded on a privately negotiated over-the-counter secondary
market for institutional investors. As a result, we value these securities quarterly at fair value as determined in good faith
by our Board of Directors.



The determination of fair value, and thus
the amount of unrealized losses we may incur in any year, is to a degree subjective. We value these securities quarterly at fair
value as determined in good faith by our Board of Directors, which may rely on the services of our Adviser. The types of factors
that may be considered in determining the fair values of our investments include the nature and realizable value of any collateral,
the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business,
comparison to publicly traded companies, discounted cash flow, current market interest rates and other relevant factors. Because
such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, they may fluctuate
significantly over short periods of time due to changes in market conditions. The determinations of fair value by our Board of
Directors may differ materially from the values that would have been used if an active market and market quotations existed for
these investments. Our net asset value could be adversely affected if the determinations regarding the fair value of our investments
were materially higher than the values that we ultimately realize upon the disposal of such investments.



Our distribution proceeds may exceed our earnings, particularly
during the period before we have substantially invested the net proceeds from any offering of the Shares. We have not established
any limit on the extent to which we may use proceeds from any offering of the Shares to fund distributions, which may reduce the
amount of capital we ultimately invest in assets.



We expect to pay distributions out of assets
legally available for distribution. In the event that we encounter delays in locating suitable investment opportunities, we may
pay our distributions from the proceeds of any offering of the Shares in anticipation of future cash flow, which may constitute
a return of your capital. Distributions from the proceeds of any offering of the Shares also could reduce the amount of capital
we ultimately invest in portfolio companies. Accordingly, stockholders who receive the payment of a distribution from us should
not assume that such distribution is the result of a net profit earned by us.



Our Adviser may change our operating policies and strategies
without prior notice or stockholder approval, the effects of which may be adverse to our stockholders.



Our Adviser has the authority to modify
or waive our operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot
predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business,
net asset value, operating results and the value of the Shares. However, the effects might be adverse, which could negatively impact
our ability to pay you distributions and cause you to lose all or part of your investment. Moreover, we will have significant flexibility
in investing the net proceeds of any offering of the Shares and may use the net proceeds from any offering of the Shares in ways
with which investors may not agree.





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We are subject to risks associated with cybersecurity
and cyber incidents which may adversely affect our business by causing a disruption to our operations, a compromise or corruption
of our confidential information and/or damage to our business relationships, all of which could negatively impact our business,
financial condition and operating results.



Our business relies on secure information
technology systems. These systems are subject to potential attacks, including through adverse events that threaten the confidentiality,
integrity or availability of our information resources (i.e., cyber incidents). These attacks could involve gaining unauthorized
access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or
causing operational disruption and result in disrupted operations, misstated or unreliable financial data, liability for stolen
assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships,
any of which could have a material adverse effect on our business, financial condition and results of operations. As our reliance
on technology has increased, so have the risks posed to our information systems, both internal and those provided by the Adviser
and third-party service providers. While we, along with our Adviser, have implemented processes, procedures and internal controls
seeking to mitigate cybersecurity risks and cyber intrusions, these measures may be ineffective and do not guarantee that a cyber
incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by
such an incident.



We may experience fluctuations in our quarterly results.



We could experience fluctuations in our
quarterly operating results due to a number of factors, including our ability or inability to make investments in companies that
meet our investment criteria, the interest rate payable and default rates on the debt securities we acquire, the level of our expenses,
variations in and timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition
in our markets, and general economic conditions. As a result of these factors, results for any previous period should not be relied
upon as indicative of performance in future periods. These occurrences could have a material adverse effect on our results of operations,
the value of your investment and our ability to pay distributions.



Price declines and illiquidity in the corporate debt markets
may adversely affect the fair value of our portfolio investments, reducing our net asset value through increased net unrealized
depreciation.



We carry our investments at market value
or, if no market value is ascertainable, at fair value. A decrease in the market values or fair values of our investments is recorded
as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized
depreciation in our portfolio, reducing their net asset value. Depending on market conditions, we could incur substantial realized
losses and may suffer additional unrealized losses in future periods, which could have a material adverse impact on our business,
financial condition and results of operations and our net asset value.



We are subject to risks in using custodians and other
agents.



We depend on the services of custodians
or other agents to carry out certain securities transactions and administrative services for us. In the event of the insolvency
of a custodian, we may not be able to recover equivalent assets in full as we will rank among the custodian’s unsecured creditors
in relation to assets which the custodian borrows, lends or otherwise uses. In addition, our cash held with a custodian may not
be segregated from the custodian’s own cash, and we therefore may rank as unsecured creditors in relation thereto. The inability
to recover assets from the custodian could have a material impact on our performance.



Uncertainty about administration initiatives of the current
U.S. President could negatively impact our business, financial condition and results of operations.





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The Trump administration has called
for significant changes to U.S. trade, healthcare, immigration, foreign and government regulatory policy. In this regard,
there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well
as the state and local levels. Recent events have created a climate of heightened uncertainty and introduced new and
difficult-to-quantify macroeconomic and political risks with potentially far-reaching implications. There has been a
corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade
volumes and fiscal and monetary policy. To the extent the U.S. Congress or the Trump administration implements changes to
U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and relations,
unemployment, immigration, corporate taxes, healthcare, the U.S. regulatory environment, inflation and other areas. Although
we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business, financial
condition, operating results and cash flows. Until we know what policy changes are made and how those changes impact our
business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or
be negatively affected by them.



Global economic, political and market conditions may adversely
affect our business, results of operations and financial condition, including our revenue growth and profitability.



The current worldwide financial market situation,
as well as growing social and political tensions in the United States and around the world, may contribute to increased market
volatility, may have long-term effects on the United States and worldwide financial markets, and may cause economic uncertainties
or deterioration in the United States and worldwide through economic sanctions and otherwise.



As a consequence of the United Kingdom’s
vote to withdraw from the European Union, the government of the United Kingdom gave notice of its withdrawal from the European
Union, commonly referred to as “Brexit”. The process for the United Kingdom to exit the European Union, and the longer
term economic, legal, political, regulatory and social framework to be put in place between the United Kingdom and the European
Union remain unclear and may lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the
United Kingdom and in wider European and global markets for some time. Additional risks associated with the outcome of Brexit include
macroeconomic risk to the United Kingdom and European economies, impetus for further disintegration of the European Union and related
political stresses (including those related to sentiment against cross border capital movements and activities of investors like
us), prejudice to financial services business that are conducting business in the European Union and which are based in the United
Kingdom, legal uncertainty regarding achievement of compliance with applicable financial and commercial laws and regulations, and
the unavailability of timely information as to expected legal, tax and other regimes. Any further exits from the European Union,
or the possibility of such exits, would likely cause additional market disruption globally and introduce new legal and regulatory
uncertainties. In addition, continuing signs of deteriorating sovereign debt conditions in Europe and an economic slowdown in China
create uncertainty that could lead to further disruptions, instability and weakening consumer, corporate and financial confidence.
We may in the future have difficulty accessing debt and equity capital markets, and a severe disruption in the global financial
markets, deterioration in credit and financing conditions or uncertainty regarding U.S. government spending and deficit levels,
Brexit, European sovereign debt, Chinese economic slowdown or other global economic conditions could have a material adverse effect
on our business, financial condition and results of operations.



We are subject to risks related to corporate social responsibility.



There is increased public scrutiny related
to environmental, social and governance (“ESG”) activities of public companies. We risk damage to our brand and reputation
if we do not act responsibly in a number of key areas, including diversity and inclusion, environmental stewardship, support for
local communities, corporate governance and transparency and considering ESG factors in our investment processes. Adverse incidents
with respect to ESG activities could impact the value of our brand, the cost of our operations and relationships with investors,
all of which could negatively affect our business and results of operations. Additionally, new regulatory initiatives related to
ESG could adversely affect our business.





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Risks Related to our Adviser and its Affiliates



Our Adviser and its affiliates, including our officers
and some of our directors, could face conflicts of interest caused by compensation arrangements with us, which could result in
actions that are not in the best interests of our stockholders.



Many of our portfolio investments are and
are expected to be made in the form of securities that are not publicly traded. As a result, our Board of Directors determines
the fair value of these securities in good faith. In connection with that determination, our Adviser may provide our Board of Directors
with valuations based upon the most recent portfolio company financial statements available and projected financial results of
each portfolio company. In addition, certain of our Investment Committee members that are not on our Board of Directors have an
indirect pecuniary interest in our Adviser. The participation of our Adviser in our valuation process, and the indirect pecuniary
interest in our Adviser of certain of our Investment Committee members, could result in a conflict of interest because the base
management fee is based, in part, on our gross assets, and our incentive fees are based, in part, on unrealized depreciation.



The part of the management and incentive
fees payable to our Adviser that relates to our net investment income is computed and paid on income that may include interest
income that has been accrued for GAAP (without any adjustments) but not yet received in cash, such as OID, debt instruments with
PIK interest, interest and zero coupon securities. This fee structure may be considered to involve a conflict of interest for our
Adviser to the extent that it may encourage our Adviser to favor debt financings that provide for deferred interest, rather than
current cash payments of interest. Our Adviser may have an incentive to invest in deferred interest securities in circumstances
where it would not have done so but for the opportunity to continue to earn the fees even when the issuers of the deferred interest
securities would not be able to make actual cash payments to us on such securities. This risk could be increased because our Adviser
is not obligated to reimburse us for any fees received even if we subsequently incur losses or never receive in cash the deferred
income that was previously accrued.



The Investment Advisory Agreement and the Administration
Agreement were not negotiated on an arm’s length basis and may not be as favorable to us as if they had been negotiated with
an unaffiliated third party.



Because the sole stockholder of the Company
at the time of the negotiations was an affiliate of our Adviser and our Administrator, the Investment Advisory Agreement and the
Administration Agreement were negotiated between related parties. Consequently, while the terms of each were subject to approval
by our Board of Directors, including a majority of independent directors, such terms, including the advisory fees payable under
the Investment Advisory Agreement may not be as favorable to us as if they had been negotiated with an unaffiliated third party.



Our Adviser’s liability is limited
under the Investment Advisory Agreement, and we are required to indemnify our Adviser against certain liabilities, which may lead
our Adviser to act in a riskier manner on our behalf than it would when acting for its own account.



Our Adviser does not assume any responsibility
to us other than to render the services described in the Investment Advisory Agreement, and it will not be responsible for any
action of our Board of Directors in declining to follow our Adviser’s advice or recommendations.



The time and resources that individuals associated with
our Adviser devote to us may be diverted, and we may face additional competition due to the fact that our Adviser is not prohibited
from raising money for or managing other entities that make the same types of investments that we target.



Our Adviser is not prohibited from raising
money for and managing future investment entities that make the same types of investments as those we target. As a result, the
time and resources that our Adviser devotes to us may be diverted. During times of intense activity in other programs, our Adviser
may devote less time and resources to our business than is necessary or appropriate. In addition, we will compete with such other
entities for the same investors and investment opportunities. We may co-invest with such investment entities only to the extent
permitted by the 1940 Act, the rules and regulations under the 1940 Act and the exemptive relief under the 1940 Act that we,
the Adviser and other affiliates received from the SEC. However, even with such exemptive relief, we are unable to participate
in certain transactions originated by our Adviser or its affiliates. Affiliates of our Adviser, whose primary business includes
the origination of investments, engage in investment advisory businesses with accounts that compete with us. Affiliates of our
Adviser have no obligation to make their originated investment opportunities available to us.





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We may be obligated to pay our Adviser incentive compensation
even if we incur a loss.



Our Adviser is entitled to incentive compensation
for each calendar quarter in an amount equal to a percentage of the excess of our pre-incentive fee net investment income for that
quarter (before deducting incentive compensation) above a performance threshold for that quarter. Our pre-incentive fee net investment
income for incentive compensation purposes excludes realized and unrealized capital losses and depreciation that we may incur in
the calendar quarter, even if such capital losses or depreciation result in a net loss on our statement of operations for that
quarter. Thus, we may be required to pay incentive compensation for a calendar quarter even if there is a decline in the value
of our portfolio or we incur a net loss for that quarter, subject to the deferral provisions. See “Item 1. Business —
Investment Advisory Agreement.”



We may make investments that could give rise to a conflict
of interest.



We do not invest in, or hold securities
of, companies that are controlled by our affiliates’ other clients. However, our affiliates’ other clients may invest
in, and gain control over, one of our portfolio companies. If our affiliates’ other client or clients gain control over one
of our portfolio companies, this may create conflicts of interest and subject us to certain restrictions under the 1940 Act. As
a result of these conflicts and restrictions, our Adviser may be unable to implement our investment strategies as effectively as
they could have in the absence of such conflicts or restrictions. For example, as a result of a conflict or restriction, our Adviser
may be unable to engage in certain transactions that they would otherwise pursue. In order to avoid these conflicts and restrictions,
our Adviser may choose to exit these investments prematurely and, as a result, we may forego positive returns associated with such
investments. In addition, to the extent that another client holds a different class of securities than us as a result of such transactions,
our interests may not be aligned. Our ability to enter into transactions with our affiliates may be restricted.



As a BDC, we are prohibited under the 1940
Act from participating in transactions with certain of our affiliates without the prior approval of a majority of the independent
directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities
is our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any securities from or to
such affiliate, absent the prior approval of our Board of Directors. The 1940 Act also prohibits certain “joint” transactions
with certain of our affiliates, which in certain circumstances could include investments in the same portfolio company (whether
at the same or different times to the extent the transaction involves jointness), without prior approval of our Board of Directors
and, in some cases, the SEC. If a person acquires more than 25% of our voting securities, we will be prohibited from buying or
selling any security from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions
with such persons, absent the prior approval of the SEC. Similar restrictions limit our ability to transact business with our officers
or directors or their affiliates. The SEC has interpreted the BDC regulations governing transactions with affiliates to prohibit
certain “joint transactions” involving entities that share a common investment adviser or have investment advisers
under common control. As a result of these restrictions, we may be prohibited from buying or selling any security from or to any
portfolio company that is controlled by a fund managed by our Adviser or its respective affiliates except under certain circumstances
or with the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available
to us.



We may, however, invest alongside our Adviser’s
and/or its affiliates’ other clients, in certain circumstances where doing so is consistent with applicable law and SEC staff
interpretations, guidance and exemptive relief orders. However, we can offer no assurance that investment opportunities will be
allocated to us fairly or equitably in the short-term or over time or that there may not be inadvertent errors in our application
of our Adviser’s allocation policy.



We, the Adviser, and other affiliates have
received exemptive relief that permits greater flexibility to negotiate the terms of co-investments if our Board of Directors determines
that it would be advantageous for us to co-invest with other accounts sponsored or managed by our Adviser or its affiliates in
a manner consistent with our investment objective, positions, policies, strategies and restrictions, as well as regulatory requirements
and other relevant factors. We cannot assure you, however, that we will continue to develop opportunities that comply with such
limitations.





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In situations where co-investment with our
affiliates’ other clients is not permitted under the 1940 Act and related rules, existing or future staff guidance or the
terms and conditions of exemptive relief granted to our Adviser and its affiliates by the SEC, our Adviser will need to decide
which client or clients will proceed with the investment. Generally, we will not be entitled to make a co-investment in these circumstances
and, to the extent that another client elects to proceed with the investment, we will not be permitted to participate. Moreover,
except in certain circumstances, we will be unable to invest in any issuer in which an affiliates’ other client holds a controlling
interest. These restrictions may limit the scope of investment opportunities that would otherwise be available to us.



Our ability to achieve our investment objective depends
on our Adviser’s ability to manage and support our investment process. If our Adviser were to lose its key professional(s),
our ability to achieve our investment objective could be significantly harmed.



We have no internal management capacity
or employees other than our appointed executive officers and depend upon the investment expertise, skill and network of business
contacts of our Adviser to achieve our investment objective. Our Adviser evaluates, negotiates, structures, executes, monitors
and services our investments. Our future success will depend to a significant extent on the continued service and coordination
of our Adviser’s senior investment professionals. The departure of a significant number of our Adviser’s senior investment
professionals could have a material adverse effect on our ability to achieve our investment objective.



Our ability to achieve our investment objective
also depends on our Adviser’s ability to identify, analyze, invest in, finance and monitor companies that meet our investment
criteria. Our Adviser’s capabilities in structuring the investment process, providing competent, attentive and efficient
services to us and facilitating access to financing on acceptable terms depend on the involvement of investment professionals in
an adequate number and of adequate sophistication to handle the flow of transactions. To achieve our investment objective, our
Adviser will need to retain, hire, train, supervise and manage new investment professionals to participate in our investment selection
and monitoring process. Our Adviser may not be able to find qualified investment professionals in a timely manner or at all. Any
failure to do so could have a material adverse effect on our business, financial condition and results of operations.



Risks Related to our Election to be Regulated as a BDC and
Subject to Tax as a RIC



We are regulated as a BDC, and we have elected
to be treated as a RIC under the Code. Accordingly, you should carefully consider the risks below.



We are subject to corporate-level income tax if we are
unable to qualify as a RIC under Subchapter M of the Code or to satisfy RIC distribution requirements.



In order for us to qualify for and maintain
RIC tax treatment under the Code, we must maintain our election with the SEC to be treated as a BDC under the 1940 Act as well
as meet the Annual Distribution Requirement, the 90% Income Test and the Diversification Tests. See “Item 1. Business —
Material U.S. Federal Income Tax Considerations.”



The Annual Distribution Requirement is satisfied
if we distribute dividends to our stockholders each taxable year of an amount generally at least equal to 90% of our investment
company taxable income, determined without regard to the deduction for any dividends paid. We are subject to tax on any retained
investment company taxable income and/or net capital gains. We must also satisfy an additional annual distribution requirement
in respect of each calendar year in order to avoid a 4% excise tax on the amount of any under-distribution. Although we do not
intend to use debt financing in the near term, we are subject to an asset coverage ratio requirement under the 1940 Act and may
in the future become subject to restrictions from making distributions necessary to satisfy the distribution requirements. If we
are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment, or could be required to retain a
portion of our income or gains, and thus become subject to corporate-level income tax.





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The 90% Income Test is satisfied if we earn
at least 90% of our gross income each taxable year from dividends, interest, gains from the sale of stock or securities, or qualifying
sources.



The Diversification Tests is satisfied if
we meet certain asset composition requirements at the end of each quarter of our taxable year. To satisfy this requirement, at
least 50% of the value of our assets must consist of cash, cash equivalents, U.S. government securities, securities of other RICs,
and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than
U.S. government securities or securities of other RICs, of one issuer, of two or more issuers that are controlled, as determined
under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or of certain “qualified
publicly traded partnerships.” Failure to meet these requirements may result in our having to dispose of certain investments
quickly in order to prevent the loss of RIC status. Because most of our investments are in private companies, and therefore are
relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.



If we fail to qualify for or maintain RIC
tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce
our net assets, the amount of income available for distribution, and the amount of our distributions.



Our distribution proceeds may exceed our earnings, particularly
during the period before we have substantially invested the net proceeds from any offering of the Shares. We have not established
any limit on the extent to which we may use proceeds from any offering of the Shares to fund distributions, which may reduce the
amount of capital we ultimately invest in assets.



We expect to pay distributions out of assets
legally available for distribution. In the event that we encounter delays in locating suitable investment opportunities, we may
pay our distributions from the proceeds of any offering of the Shares in anticipation of future cash flow, which may constitute
a return of your capital. Distributions from the proceeds of any offering of the Shares also could reduce the amount of capital
we ultimately invest in portfolio companies. Accordingly, stockholders who receive the payment of a distribution from us should
not assume that such distribution is the result of a net profit earned by us.



We may choose to pay distributions in the form of the
Shares, in which case our investors may be required to pay federal income taxes in cash in excess of the cash distributions they
receive.



We may distribute taxable dividends that
are payable in cash or the Shares at the election of each investor. Under certain applicable provisions of the Code and the Treasury
regulations, distributions payable in cash or the Shares at the election of investors are treated as taxable dividends. If we decide
to make any distributions consistent with these rulings that are payable in part in the Shares, taxable investors receiving such
dividends will be required to include the full amount of the dividend (whether received in cash, the Shares, or a combination of
cash and the Shares) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a
capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
As a result, a U.S. investor may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S.
investor sells the Shares it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included
in income with respect to the dividend, depending on the market price of the Shares at the time of the sale. Furthermore, with
respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect
of all or a portion of such dividend that is payable in the Shares. In addition, if a significant number of our stockholders determine
to sell the Shares in order to pay taxes owed on dividends, it may put downward pressure on the trading price of the Shares.





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If we do not qualify as a “publicly offered regulated
investment company,” as defined in the Code, certain investors will be taxed as though they received a distribution of some
of our expenses.



A “publicly offered regulated investment
company” is a RIC whose shares are either (1) continuously offered pursuant to a public offering, (2) regularly
traded on an established securities market or (3) held by at least 500 persons at all times during the taxable year. We do
not expect to qualify as a publicly offered RIC for any period. As a result, a non-corporate U.S. stockholder’s allocable
portion of our affected expenses will be treated as an additional deemed distribution to the stockholder and will be deductible
by such stockholder only to the extent permitted under the limitations described below. For non-corporate U.S. stockholders, including
individuals, trusts and estates, significant limitations generally apply to the deductibility of certain expenses of a non-publicly
offered RIC. In particular, for taxable years beginning after 2025, these expenses, referred to as miscellaneous itemized deductions,
are deductible to a U.S. individual only to the extent they exceed 2% of such a stockholder’s adjusted gross income, are
not deductible for AMT purposes and are subject to the overall limitation on itemized deductions under Section 68 of the Code.
For taxable years beginning after 2017 and prior to 2026, miscellaneous itemized deductions are disallowed in their entirety.



We may have difficulty paying our required distributions
if we recognize income before or without receiving cash representing such income.



For U.S. federal income tax purposes, we
may be required to recognize taxable income in circumstances in which we do not receive a corresponding payment in cash. For example,
if we hold debt obligations that are treated under applicable tax rules as having OID, such as debt instruments with PIK interest
or, in certain cases, increasing interest rates or debt instruments that were issued with warrants, we must include in income a
portion of the OID that accrues over the life of each debt obligation in determining our taxable income, regardless of whether
cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that
we have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid
in non-cash compensation such as warrants or stock. Furthermore, we may invest in non-U.S. corporations (or other non-U.S. entities
treated as corporations for U.S. federal income tax purposes) that could be treated under the Code and Treasury regulations as
 “passive foreign investment companies” and/or “controlled foreign corporations.” The rules relating
to investment in these types of non-U.S. entities are designed to ensure that U.S. taxpayers are either, in effect, taxed currently
(or on an accelerated basis with respect to corporate level events) or taxed at increased tax rates at distribution or disposition.
In certain circumstances this could require us to recognize income where we do not receive a corresponding payment in cash. Further,
we may elect to amortize market discount and include such amount currently in our taxable income, instead of upon disposition,
as an election not to do so would limit our ability to deduct interest expense for tax purposes.



Because any OID or other amounts accrued
will be included in our investment company taxable income for the year of the accrual, we may be required to make a distribution
to our stockholders in order to satisfy the Annual Distribution Requirement, even if we will not have received any corresponding
cash amount. As a result, we may have difficulty meeting the Annual Distribution Requirement necessary to obtain and maintain RIC
tax treatment under the Code. We may have to sell some of our investments at times and/or at prices we would not consider advantageous,
raise additional equity capital, make a partial share distribution, or forgo new investment opportunities for this purpose. If
we are not able to obtain cash from other sources, and choose not to make a qualifying share distribution, we may fail to qualify
for RIC tax treatment and thus become subject to corporate-level income tax.



The requirement that we, as a BDC, invest a sufficient
portion of our assets in qualifying assets could preclude us from investing in accordance with our current business strategy; conversely,
any failure on our part to invest a sufficient portion of our assets in qualifying assets could cause us to lose our status as
a BDC.



As a BDC, the 1940 Act prohibits us from
acquiring any assets other than certain “qualifying assets,” as defined in the 1940 Act, unless, at the time of and
after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. Therefore, we may be precluded
from investing in what we believe are attractive investments if such investments are not qualifying assets. Conversely, if we fail
to invest a sufficient portion of our assets in qualifying assets, we could lose our status as a BDC, which would have a material
adverse effect on our business, financial condition, and result of operations. Similarly, these rules could prevent us from
making additional investments in existing portfolio companies, which could result in the dilution of our position.





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Failure to maintain our status as a BDC would reduce our
operating flexibility.



If we do not remain a BDC, we could be subject
to regulation as a registered closed-end investment company under the 1940 Act, which would subject us to substantially more regulatory
restrictions and correspondingly decrease our operating flexibility.



Any failure to comply with the requirements
imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private
litigants. In addition, upon approval of a majority of our stockholders, we may elect to withdraw our status as a BDC. If we decide
to withdraw our election, or if we otherwise fail to qualify, or maintain our qualification, as a BDC, we may be subject to substantially
greater regulation under the 1940 Act as a closed-end investment company. Compliance with such regulations would significantly
decrease our operating flexibility, and could significantly increase our costs of doing business.



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



We and our portfolio companies are subject
to regulation at the local, state and federal level. New legislation may be enacted or new interpretations, rulings or regulations
could be adopted, including those governing the types of investments we are permitted to make or that impose limits on our ability
to pledge a significant amount of our assets to secure loans or that restrict the operations of a portfolio company, any of which
could harm us and our stockholders and the value of our investments, potentially with retroactive effect. For example, certain
provisions of the Dodd Frank Act, which influences many aspects of the financial services industry, have been amended or repealed
and the Code has been substantially amended and reformed. Any amendment or repeal of legislation, or changes in regulations or
regulatory interpretations thereof, could create uncertainty in the near term, which could have a material adverse impact on our
business, financial condition and results of operations. In addition, on March 20, 2019, the SEC proposed a series of rule and
form amendments pursuant to the SBCAA. However, in the absence of final rules, the revisions required under the SBCAA became self-implementing
on March 24, 2019. In the continued absence of transition guidance and through the effectiveness of the final rules, the appropriate
mechanisms for implementing offering reform may remain in flux.



In addition, any changes to the laws and
regulations governing our operations relating to permitted investments may cause us to change our investment strategy in order
to avail ourselves to new or different opportunities. Such changes could differ materially from the strategies and plans set forth
in this annual report and may shift our investment focus from the areas of expertise of our Adviser. Thus, any such changes, if
they occur, could have a material adverse effect on our results of operations and the value of your investment.



The SBCAA allows us to incur additional leverage and would
require us to offer liquidity to our stockholders.



Under the 1940 Act, a BDC generally is required
to maintain asset coverage of 200% for senior securities representing indebtedness (such as borrowings from banks or other financial
institutions) or stock (such as preferred stock). The SBCAA, which was signed into law on March 23, 2018, provides that a
BDC’s required asset coverage under the 1940 Act may be reduced from 200% (equivalent of $1 of debt outstanding for each
$1 equity) to 150% (equivalent to $2 of debt outstanding for each $1 of equity). This reduction in asset coverage would permit
a BDC to double the amount of leverage it may utilize, subject to certain approval, timing and reporting requirements, including
either stockholder approval or approval of a majority of the directors who are not “interested persons” (as defined
in the 1940 Act) of the BDC and who have no financial interest in the arrangement. As a result, if we were to seek and receive
the relevant approval, and we complied with the applicable disclosure requirements, we would be able to incur additional leverage,
which may increase the risk of investing in us. In addition, since our base management fee is payable based upon our average adjusted
gross assets, which includes any borrowings for investment purposes, our base management fee expenses may increase if we incur
additional leverage.



We have not commenced any tender offers, and we do not currently
intend to conduct any tender offers. As a non-traded BDC, however, if we receive the relevant approval to increase our authorized
leverage, we will be required to offer our stockholders the opportunity to sell their shares of common stock over the next year
following the calendar quarter in which the approval was obtained. The timing and method for such offers has not been determined
at this time.





51







The impact of recent financial reform legislation on us
is uncertain.



In light of current conditions in the U.S.
and global financial markets and the U.S. and global economy, legislators, the presidential administration and regulators have
increased their focus on the regulation of the financial services industry. The Dodd-Frank Wall Street Reform and Consumer Protection
Act, or the Dodd-Frank Act, institutes a wide range of reforms that will have an impact on financial institutions. However, the
current presidential administration has announced its intention to repeal, amend or replace certain portions of the Dodd-Frank
Act and the regulations implemented thereunder. Given the uncertainty associated with the manner in which and whether the provisions
of the Dodd-Frank Act might be implemented, repealed, amended or replaced, the full impact such requirements will have on our business,
results of operations or financial condition is unclear. While we cannot predict what effect any changes in the laws or regulations
or their interpretations would have on us as a result of recent financial reform legislation, these changes could be materially
adverse to us and our stockholders. Accordingly, we are continuing to evaluate the effect the Dodd-Frank Act or implementing its
regulations or any repeal or revision thereto will have on our business, financial condition and results of operations.



Efforts to comply with the Sarbanes-Oxley Act involve
significant expenditures.



We are subject to the Sarbanes-Oxley Act
and the related rules and regulations promulgated by the SEC. These requirements may place a strain on our systems and resources.
The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.
The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial
reporting, which are discussed below. In order to maintain and improve the effectiveness of our disclosure controls and procedures
and internal controls, significant resources and management oversight are required. We have implemented, and expect to continue
to implement, procedures, processes, policies and practices for the purpose of addressing the standards and requirements applicable
to public companies. As a result, we expect to incur significant additional expenses, which may negatively impact our financial
performance and our ability to make distributions. This process also will result in a diversion of our management’s time
and attention. We do not know when our evaluation, testing and remediation actions will be completed or its impact on our operations.
In addition, we may be unable to ensure that the process is effective or that our internal controls over financial reporting are
or will be effective.



The systems and resources necessary to comply
with public company reporting requirements will increase further once we cease to be a “non-accelerated filer” under
Rule 12b-2 of the Exchange Act or an “emerging growth company” under the Jumpstart Our Business Startups Act,
as amended, or the JOBS Act. As long as we remain a non-accelerated filer or an emerging growth company, we intend to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies, including not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will remain a non-accelerated
filer until we have a public float, as such term is used in Rule 12b-2 of the Exchange Act, of $75 million or more. We will
remain an emerging growth company for up to five years following an IPO, although if our public float exceeds $700 million as of
any June 30 before that time, we would cease to be an emerging growth company as of the following December 31.



We are obligated to maintain proper and effective internal
controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain
effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a
material adverse effect on our business and the value of the Shares.



We are obligated to maintain proper and
effective internal controls over financial reporting, including the internal control evaluation and certification requirements
of Section 404 of the Sarbanes-Oxley Act and related rules and regulations of the SEC. However, we will not be required
to comply with all of the requirements under Section 404 of the Sarbanes-Oxley Act until the later of the date we are no longer
a non-accelerated filer or the date we are no longer an emerging growth company under the JOBS Act. Accordingly, our internal controls
over financial reporting may not currently meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act
that we will eventually be required to meet. Specifically, we are required to conduct annual management assessments of the effectiveness
of our internal controls over financial reporting, however our independent registered public accounting firm will not be required
to formally attest to the effectiveness of our internal control over financial reporting until the later of the date we are no
longer a non-accelerated filer or the date we are no longer an emerging growth company under the JOBS Act.





52







If we are not able to implement the complete
requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our operations, financial
reporting or financial results could be adversely affected. Matters impacting our internal controls may cause us to be unable to
report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions
by the SEC or violations of applicable stock exchange listing rules, and result in a breach of the covenants under the agreements
governing any of our financing arrangements. There could also be a negative reaction in the financial markets due to a loss of
investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements
could also suffer if we or our independent registered public accounting firm were to report a material weakness in our internal
controls over financial reporting. This could materially adversely affect us and lead to a decline in the market price of the Shares,
to the extent we have completed an IPO.



Stockholders may be subject to filing requirements under
the Exchange Act as a result of an investment in us.



Because the Shares are registered under
the Exchange Act, ownership information for any person who beneficially owns 5% or more of the Shares has to be disclosed in a
Schedule 13D or other filings with the SEC. Beneficial ownership for these purposes is determined in accordance with the rules of
the SEC, and includes having voting or investment power over the securities. In some circumstances, investors who choose to reinvest
their dividends may see their percentage stake in us increased to more than 5%, thus triggering this filing requirement. Although
we provide in our quarterly statements the amount of outstanding Shares and the amount of the investor’s Shares, the responsibility
for determining the filing obligation and preparing the filing remains with the investor. In addition, owners of 10% or more of
the Shares are subject to reporting obligations under Section 16(a) of the Exchange Act.



Stockholders may be subject to the short-swing profits
rules under the Exchange Act as a result of an investment in us.



Persons with the right to appoint a director
or who hold more than 10% of a class of the Shares may be subject to Section 16(b) of the Exchange Act, which recaptures
for the benefit of the issuer profits from the purchase and sale of registered stock within a six-month period.



Our Board of Directors may change our investment objective,
operating policies and strategies without prior notice or stockholder approval.



Our Board of Directors has the authority
to change our investment objective and modify or waive certain of our operating policies and strategies without prior notice (except
as required by the 1940 Act) and without stockholder approval. However, absent stockholder approval, we may not change the nature
of our business so as to cease to be a BDC and we may not withdraw our election as a BDC. We cannot predict the effect any changes
to our current operating policies or strategies would have on our business, operating results and value of our Common Stock. Nevertheless,
the effects may adversely affect our business and impact our ability to make distributions.





53







A stockholder’s interest in us could be diluted
if we issue additional Shares, which could reduce the overall value of an investment in us.



Our Board of Directors may, in its sole
discretion, conduct one or more additional private offerings of the Shares. Investors do not have preemptive rights to any Shares
we issue in the future. Any such additional offering may have a dilutive effect on existing stockholders. To the extent we issue
additional Shares at or below net asset value, after an investor purchases the Shares, an investor’s percentage ownership
interest in us will be diluted. If we were to sell the Shares below the then current net asset value per Share in any such additional
offering, there would be an immediate dilution to our net asset value per Share. In addition, depending upon the terms and pricing
of any additional offerings and the value of our investments, an investor may also experience dilution in the net asset and fair
value of his, her or its Shares.



As a BDC, we generally are prohibited from
issuing or selling the Shares at a price below net asset value per Share, which may be a disadvantage as compared with certain
public companies. In any such case, the price at which our securities are to be issued and sold may not be less than a price that,
in the determination of the Board of Directors, closely approximates the fair value of such securities (less any distributing commission
or discount). If we raise additional funds by issuing Common Stock, or senior securities convertible into or exchangeable for our
Common Stock, then the percentage ownership of our stockholders at that time will decrease, and you will experience dilution. We
may sell the Shares, or warrants, options, or rights to acquire such Shares at a price below the then current net asset value of
such Shares if (1) our Board of Directors and independent directors determine that such sale is in our best interests and
the best interests of our stockholders, and (2) our stockholders, including a majority of those stockholders who are not affiliated
with us, approve such sale.



Provisions of the General Corporation Law of the State
of Delaware and our certificate of incorporation and bylaws could deter takeover attempts and have an adverse effect on the price
of our Common Stock.



The General Corporation Law of the State
of Delaware, or the DGCL, our certificate of incorporation, and bylaws contain provisions that may discourage, delay or make more
difficult a change in control of us or the removal of our directors. These measures may delay, defer or prevent a transaction or
a change in control that might otherwise be in the best interests of our stockholders and could have the effect of depriving stockholders
of an opportunity to sell their shares at a premium over prevailing market prices.





54









Our Adviser is able to resign upon 60 days’ notice,
and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could
adversely affect our financial condition, business and results of operations.



Our Adviser has the right, under the Investment
Advisory Agreement, to resign at any time upon 60 days written notice, whether we have found a replacement or not. If our Adviser
resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to
provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations
are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay
distributions are likely to be adversely affected and the value of our Common Stock may decline. In addition, the coordination
of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with
a single institution or group of executives having the expertise possessed by our Adviser and its affiliates. Even if we are able
to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity
with our investment objective may result in additional costs and time delays that may adversely affect our financial condition,
business and results of operations.



Our Administrator is able to resign from its role as Administrator
under the Administration Agreement, and a suitable replacement may not be found, resulting in disruptions that could adversely
affect our business, results of operations and financial condition.



Our Administrator has the right to resign
under the Administration Agreement upon 60 days’ written notice, whether a replacement has been found or not. If our Administrator
resigns, it may be difficult to find a new administrator or hire internal management with similar expertise and ability to provide
the same or equivalent services on acceptable terms, or at all. If a replacement is not found quickly, our business, results of
operations and financial condition are likely to be adversely affected and the value of our Common Stock may decline. Even if a
comparable service provider or individuals to perform such services are retained, whether internal or external, their integration
into our business and lack of familiarity with our investment objective may result in additional costs and time delays that may
materially adversely affect our business, results of operations and financial condition.



We, our Adviser or its affiliates may be subject to litigation
or regulatory proceedings the results of which could have a material adverse effect on our financial condition or results of operations.



From time to time we, our Adviser or its
affiliates may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of their respective businesses.
We, our Adviser and its affiliates are also subject to extensive regulation, which may result in regulatory proceedings. In addition,
our executive management team, directors and members of our Adviser’s management may, in the ordinary course of business,
be named as defendants in litigation arising from our investments in such portfolio companies. To the extent we, our executive
management team or directors, or members of our Adviser’s management team face adverse outcomes in any such proceedings,
our financial condition or results of operations could be materially adversely affected.





The net asset value of the Shares may fluctuate significantly.



The net asset value and liquidity, if any,
of the market for the Shares may be significantly affected by numerous factors, some of which are beyond our control and may not
be directly related to our operating performance. These factors include:



| | · | changes in earnings or variations in operating results;
| | - | -------------------------------------------------------



| | · | changes in the value of our portfolio of investments;
| | - | -----------------------------------------------------



| | · | changes in accounting guidelines governing valuation of our investments;
| | - | ------------------------------------------------------------------------



| | · | changes in regulatory policies or tax guidelines, particularly with respect to RICs and/or BDCs;
| | - | ------------------------------------------------------------------------------------------------



| | · | loss of RIC and/or BDC status;
| | - | ------------------------------



| | · | any shortfall in revenue or net income or any increase in losses from levels expected by investors;
| | - | ---------------------------------------------------------------------------------------------------



| | · | departure of either of our Adviser or certain of its key personnel;
| | - | -------------------------------------------------------------------



| | · | general economic trends and other external factors; and
| | - | -------------------------------------------------------



| | · | the potential loss of a major funding source.
| | - | ---------------------------------------------





55







ITEM 1B. UNRESOLVED STAFF COMMENTS



None.



ITEM 2. PROPERTIES



Our headquarters are located at 101
Huntington Avenue, Boston, Massachusetts 02199, and are provided by our Administrator. We reimburse our Administrator for
such costs on an allocated basis, in accordance with the terms of our Administration Agreement. We believe that our office
facilities are suitable and adequate for our business.



ITEM 3. LEGAL PROCEEDINGS



Neither we nor our Adviser or Administrator
is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against
us, or against our Adviser or Administrator.



From time to time, we, our Adviser or Administrator
may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement
of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with
certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.



From time to time we are involved in various
legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive
regulation, which may result in regulatory proceedings against us.



ITEM 4. MINE SAFETY DISCLOSURES



Not applicable.





56







PART II





ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Until the completion of an IPO, our outstanding
Common Stock will be offered and sold in transactions exempt from registration under the Securities Act under Section 4(a)(2) and
Regulation D. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities — Recent Sales of Unregistered Securities and Purchases of Equity Securities” for more information.
There is currently no public market for our Common Stock, nor can we give any assurance that one will develop.



Because our Common Stock is acquired by
investors in one or more transactions “not involving a public offering,” they are “restricted securities”
and may be required to be held indefinitely. Our Common Stock may not be sold, transferred, assigned, pledged or otherwise disposed
of unless (i) our consent is granted, and (ii) the Common Stock is registered under applicable securities laws or specifically
exempted from registration (in which case the stockholder may, at our option, be required to provide us with a legal opinion, in
form and substance satisfactory to us, that registration is not required). Accordingly, an investor must be willing to bear the
economic risk of investment in the Common Stock until we are liquidated. No sale, transfer, assignment, pledge or other disposition,
whether voluntary or involuntary, of the Common Stock may be made except by registration of the transfer on our books. Each transferee
will be required to execute an instrument agreeing to be bound by these restrictions and the other restrictions imposed on the
Common Stock and to execute such other instruments or certifications as are reasonably required by us.



Holders



As of March 17, 2020, we had two stockholders
of record.



Distributions



We
have elected to be treated as a RIC under Subchapter M of the Code.To qualify and maintain our qualification as a RIC, we must meet certain source-of-income and asset diversification requirements
as well as distribute dividends to our stockholders each taxable year of an amount at least equal to 90% of our investment company
taxable income. For more information, see “Item 7 — Management’s Discussion and Analysis of Financial Condition
and Results of Operation — Distributions to Stockholders — Common Stock Distributions.”



The distributions declared during the year
ended December 31, 2019, were derived from $0.51 of net investment income. The distributions declared during the year ended
December 31, 2018, were derived from $0.52 of net investment income and $0.01 capital gains.



The fund will notify shareholders of amounts
for use in preparing 2019 income tax forms in January 2020. The following information is provided pursuant to provisions of
the Code. The Company designates $[xx] as capital gain dividends paid during the fiscal year ended December 31, 2019.



Recent Sales of Unregistered Securities and Purchases
of Equity Securities



We have been party to subscription agreements,
pursuant to which an investor is required to fund drawdowns to purchase Shares up to the amount of the investor’s capital
commitment on an as-needed basis with a minimum of 10 calendar days’ prior notice.



The following table summarizes the sales
of the Shares pursuant to a subscription agreement during the year ended December 31, 2019:



|Date of Sale     |  | Shares Sold |           |  | Aggregate Offering Price
|---------------- |  | ----------- | --------- |  | ------------------------
|January 11, 2019 |  |             | 2,114,165 |  | $                       
|April 5, 2019    |  |             | 1,565,762 |  |                         
|July 3, 2019     |  |             | 1,588,983 |  |                         
|October 2, 2019  |  |             | 1,570,681 |  |                         





57









The following table summarizes the sales
of the Shares pursuant to a subscription agreement during the year ended December 31, 2018:



|Date of Sale       |  | Shares Sold |           |  | Aggregate Offering Price |  
|------------------ |  | ----------- | --------- |  | ------------------------ | -
|March 29, 2018     |  |             | 1,557,632 |  |                          | $
|June 14, 2018      |  |             | 1,578,947 |  |                          |  
|September 27, 2018 |  |             | 1,037,344 |  |                          |  
|December 28, 2018  |  |             | 2,107,482 |  |                          |  



The sales of our Common Stock pursuant to
the subscription agreements were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof.
We did not engage in general solicitation or advertising with regard to such sales of our Common Stock and did not offer securities
to the public in connection with such issuance and sale. The investors who purchased Common Stock were all accredited investors.





58







ITEM 6. SELECTED FINANCIAL DATA



The following selected financial data for
the years ended December 31, 2019, 2018 and 2017 were derived from our accompanying audited financial statements and notes
to the financial statements, included elsewhere in this annual report. The data should be read in conjunction with our accompanying
financial statements, notes to the financial statements and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included elsewhere in this annual report.



|                                                                                                  |  | Year Ended
 December 31, 2019 |             |   | Year Ended
 December 31, 2018 |   |             | Year Ended
 December 31, 2017 | 
|------------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------- | - | ----------------------------- | - | ----------- | ----------------------------- | 
|Statement of Operations Data:                                                                     |  |                               |             |   |                               |   |             |                               | 
|Income                                                                                            |  |                               |             |   |                               |   |             |                               | 
|Total investment income                                                                           |  | $                             | 21,029,469  |   |                               | $ | 15,565,122  |                               | 
|Expenses                                                                                          |  |                               |             |   |                               |   |             |                               | 
|Net expense                                                                                       |  |                               | 4,067,186   |   |                               |   | 3,007,021   |                               | 
|Net investment income                                                                             |  |                               | 16,962,283  |   |                               |   | 12,558,101  |                               | 
|Net realized (loss) gain on investments                                                           |  |                               | (672,026    | ) |                               |   | 449,694     |                               | 
|Net change in unrealized depreciation on investments                                              |  |                               | (229,677    | ) |                               |   | (1,778,021  | )                             | 
|Net increase in net assets resulting from operations                                              |  | $                             | 16,060,580  |   |                               | $ | 11,229,774  |                               | 
|                                                                                                  |  |                               |             |   |                               |   |             |                               | 
|Per Share Data:                                                                                   |  |                               |             |   |                               |   |             |                               | 
|Net investment income per common share - basic and diluted (a)                                    |  | $                             | 0.52        |   |                               | $ | 0.52        |                               | 
|Net
    increase in net assets resulting from operations per common share - basic and diluted (a) |  | 0.49                          |             |   | 0.46                          |   |             | 0.43                          | 
|Distributions declared per common share                                                           |  |                               | 0.51        |   |                               |   | 0.52        |                               | 
|                                                                                                  |  |                               |             |   |                               |   |             |                               | 
|Statement of Assets and Liabilities Data:                                                         |  |                               |             |   |                               |   |             |                               | 
|Total assets                                                                                      |  | $                             | 339,396,997 |   |                               | $ | 282,945,853 |                               | 
|Total liabilities                                                                                 |  |                               | 7,997,324   |   |                               |   | 15,522,618  |                               | 
|Net assets                                                                                        |  |                               | 331,399,673 |   |                               |   | 267,423,235 |                               | 
|Net asset value per common share                                                                  |  |                               | 9.44        |   |                               |   | 9.46        |                               | 
|Common shares outstanding                                                                         |  |                               | 35,109,246  |   |                               |   | 28,269,649  |                               | 
|Weighted common shares outstanding - basic and diluted                                            |  |                               | 32,672,328  |   |                               |   | 24,340,035  |                               | 
|                                                                                                  |  |                               |             |   |                               |   |             |                               | 
|Other Data:                                                                                       |  |                               |             |   |                               |   |             |                               | 
|Number of portfolio investments                                                                   |  |                               | 176         |   |                               |   | 144         |                               | 
|Average investment amount (b)                                                                     |  | $                             | 1,890,466   |   |                               | $ | 1,849,169   |                               | 
|Percentage of investments at floating rates (b)                                                   |  |                               | 99.38       | % |                               |   | 100.00      | %                             | 





| | (a) | Per share data is based on weighted average common stock
outstanding for both basic and diluted.
| | --- | ------------------------------------------------------------------------------------------------



| | (b) | Based on cost of investments.
| | --- | -----------------------------





59









ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



The information contained in this section should be
read in conjunction with the financial statements and notes to the financial statements appearing elsewhere in this annual report.



This
annual report and other statements contain forward-looking statements that involve substantial risks and uncertainties.
Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon.
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. 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:



| | · | our future operating results;
| | - | -----------------------------



| | · | our business prospects and the prospects of our portfolio companies;
| | - | --------------------------------------------------------------------



| | · | the ability of our portfolio companies to achieve their objectives;
| | - | -------------------------------------------------------------------



| | · | the timing of cash flows, if any, from the operations of our portfolio companies;
| | - | ---------------------------------------------------------------------------------



| | · | the ability of our Adviser to locate suitable investments for us and to monitor and administer our investments;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | changes in the general economy;
| | - | -------------------------------



| | · | risk associated with possible disruptions in our operations or the economy generally;
| | - | -------------------------------------------------------------------------------------



| | · | the effect of investments that we expect to make;
| | - | -------------------------------------------------



| | · | our contractual arrangements and relationships with third parties;
| | - | ------------------------------------------------------------------



| | · | actual and potential conflicts of interest with Adviser and its affiliates;
| | - | ---------------------------------------------------------------------------



| | · | the dependence of our future success on the general economy and its effect on the industries in which we invest;
| | - | ----------------------------------------------------------------------------------------------------------------



| | · | the adequacy of our financing sources and working capital;
| | - | ----------------------------------------------------------



| | · | the ability of our Adviser and its affiliates to attract and retain highly talented professionals;
| | - | --------------------------------------------------------------------------------------------------



| | · | our ability to qualify and maintain our qualification as a BDC and as a RIC; and
| | - | --------------------------------------------------------------------------------



| | · | the risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” and elsewhere in this annual
report.
| | - | -------------------------------------------------------------------------------------------------------------------------



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. In light of
these and other uncertainties, the inclusion of a projection or forward-looking statement in this annual report 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 the section of our Registration Statement and this Form 10-K entitled “Item 1A.
Risk Factors” and elsewhere in this annual report on Form 10-K. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this annual report. Moreover, we assume no duty and do not
undertake to update the forward-looking statements.





60







OVERVIEW



Audax Credit BDC Inc. is a Delaware corporation
that was formed on January 29, 2015. We are an externally managed, closed-end, non-diversified management investment company
that has elected to be treated as a BDC under the 1940 Act. In addition, we have elected to be treated for U.S. federal income
tax purposes as a RIC under Subchapter M of the Code.



Our investment objective is to generate
current income and, to a lesser extent, long-term capital appreciation. We intend to meet our investment objective by investing
primarily in senior secured debt of privately owned U.S. middle- market companies. We intend to invest at least 80% of our net
assets plus the amount of any borrowings in “credit instruments,” which we define as any fixed income instruments.



Although we have no present intention of
doing so, we may decide to incur leverage. If we do incur leverage, however, we anticipate that it will be used in limited circumstances
and on a short-term basis for purposes such as funding distributions. As a BDC, we are limited in our use of leverage under the
1940 Act. Under the 1940 Act, a BDC generally is required to maintain asset coverage of 200% for senior securities representing
indebtedness (such as borrowings from banks or other financial institutions) or stock (such as preferred stock). The SBCAA, which
was signed into law on March 23, 2018, provides that a BDC's required asset coverage under the 1940 Act may be reduced from
200% to 150%. This reduction in asset coverage would permit a BDC to double the amount of leverage it may utilize, subject to certain
approval, timing and reporting requirements, including either stockholder approval or approval of a majority of the directors who
are not “interested persons” (as defined in the 1940 Act) of the BDC and who have no financial interest in the arrangement.
In addition, as a non-traded BDC, if we receive the relevant approval to increase our authorized leverage, we will be required
to offer our stockholders the opportunity to sell their shares of common stock over the next year following the calendar quarter
in which the approval was obtained. In determining whether to use leverage, we will analyze the maturity, covenants and interest
rate structure of the proposed borrowings, as well as the risks of such borrowings within the context of our investment outlook
and the impact of leverage on our investment portfolio. The amount of any leverage that we will employ as a BDC will be subject
to oversight by our Board of Directors.



We generate revenue in the form of interest
on the debt securities that we hold in our portfolio companies. The senior debt we invest in generally has stated terms of three
to ten years. Our senior debt investments generally bear interest at a floating rate. Interest on debt securities is generally
payable quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest.
The principal amount of the debt securities and any accrued but unpaid interest generally will become due at the maturity date.
In addition, we may generate revenue in the form of commitment and other fees in connection with transactions, although we do not
expect to do so. OID as well as market discount and premium are accreted and amortized in determining our interest income. We record
any prepayment premiums on loans and debt securities as income.



PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY



Portfolio Composition



The fair value of our investments, comprised
of syndicated loans and equity, as of December 31, 2019, was approximately $330,874,911 and held in 164 portfolio companies
as of December 31, 2019. The fair value of our investments, all of which were syndicated loans as of December 31, 2018,
was approximately $264,662,881 and held in 135 portfolio companies as of December 31, 2018.



During the year ended
December 31, 2019, we purchased $134,467,139 in investments, and we had $58,594,377 in debt repayments by existing
portfolio companies, and $9,096,342 in sales of securities of portfolio companies. During the year ended December 31,
2018, we purchased $166,050,572 in investments, and we had $83,013,696 in debt repayments by existing portfolio companies,
and $1,520,433 in sales of securities of portfolio companies. In addition, for the year ended December 31, 2019, we had
a change in unrealized depreciation of approximately $229,677 and realized losses of $672,026, and for the year ended
December 31, 2018, we had a change in unrealized depreciation of approximately $1,778,021 and realized gains of
$449,694.





61







Our investment activity for the years ended
December 31, 2019 and 2018, is presented at fair value below:





|                                                     |  | Year Ended December 
31, 2019 |             |   | Year Ended December 
31, 2018 |  
|---------------------------------------------------- |  | ----------------------------- | ----------- | - | ----------------------------- | -
|Beginning investment portfolio, at fair value        |  | $                             | 264,662,881 |   |                               | $
|Investments in new portfolio investments             |  |                               | 112,937,320 |   |                               |  
|Investments in existing portfolio investments        |  |                               | 21,529,819  |   |                               |  
|Principal repayments                                 |  |                               | (58,594,377 | ) |                               |  
|Proceeds from investments sold                       |  |                               | (9,096,342  | ) |                               |  
|Change in premiums, discounts and amortization       |  |                               | 337,313     |   |                               |  
|Net change in unrealized depreciation on investments |  |                               | (229,677    | ) |                               |  
|Realized (loss) gain on investments                  |  |                               | (672,026    | ) |                               |  
|Ending portfolio investment activity, at fair value  |  | $                             | 330,874,911 |   |                               | $
|Number of portfolio investments                      |  |                               | 176         |   |                               |  
|Average investment amount, at cost                   |  | $                             | 1,890,466   |   |                               | $
|Percentage of investments at floating rates          |  |                               | 99.38       | % |                               |  



As of December 31, 2019 and 2018, all
of our portfolio consisted of non-controlled/non-affiliated investments.



RECENT DEVELOPMENTS



Subsequent to December 31, 2019 through
March 17, 2020, we invested $12,603,912 at cost in 22 different portfolio companies.



On December 26, 2019, the Company delivered
a capital drawdown notice to one of its investors relating to the sale of 1,588,983 shares of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), for an aggregate offering price of $15 million. The sale closed on
January 10, 2020.



The sale of Common Stock was made pursuant
to a subscription agreement entered into by the Company and the investor. Under the terms of the subscription agreement, the investor
is required to fund drawdowns to purchase shares of Common Stock up to the amount of its capital commitment on an as-needed basis
with a minimum of 10 calendar days’ prior notice.



The issuance of the Common Stock is
exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. The Company
has not engaged in general solicitation or advertising with regard to the issuance and sale of the Common Stock and has not
offered securities to the public in connection with such issuance and sale.



RESULTS OF OPERATIONS



Set forth below is a comparison of our results
of operations for the years ended December 31, 2019 and 2018. For a comparison of our results of operations for the years
ended December 31, 2018 and 2017, see the Company's Form 10-K for the fiscal year ended December 31, 2018, as filed
with the SEC on March 18, 2019.



The net increase or decrease in net assets
from operations may vary substantially from period to period as a result of various factors, including the recognition of realized
gains and/or losses and net change in unrealized appreciation and depreciation.





62







Revenue



Net investment income for the years ended
December 31, 2019 and 2018, is presented in the table below:



|                                                                     |  | Year Ended
 December 31, 2019 |            |  | Year Ended
 December 31, 2018 |  
|-------------------------------------------------------------------- |  | ----------------------------- | ---------- |  | ----------------------------- | -
|Total interest income from non-controlled/non-affiliated investments |  | $                             | 20,812,478 |  |                               | $
|Total other interest income                                          |  |                               | 145,127    |  |                               |  
|Total other income                                                   |  |                               | 71,864     |  |                               |  
|Total investment income                                              |  | $                             | 21,029,469 |  |                               | $



Total investment income for the year ended
December 31, 2019 increased to $21,029,469 from $15,565,122 for the year ended December 31, 2018, and was primarily driven
by our interest income from our increasing investment balance. As of December 31, 2019 and 2018, the size of our debt portfolio
was $331,601,425 and $266,280,299 at amortized cost, respectively, with total principal amount of debt outstanding of $333,335,057
and $267,318,344, respectively.



Expenses



Total expenses net of waivers for the years
ended December 31, 2019 and 2018, were as follows:



|                               |  | Year Ended
 December 31, 2019 |            |   | Year Ended
 December 31, 2018 |  
|------------------------------ |  | ----------------------------- | ---------- | - | ----------------------------- | -
|Base management fee(a)         |  | $                             | 3,243,496  |   |                               | $
|Incentive fee(a)               |  |                               | 2,620,312  |   |                               |  
|Administrative fee(a)          |  |                               | 265,000    |   |                               |  
|Directors' fees                |  |                               | 210,000    |   |                               |  
|Professional fees              |  |                               | 650,709    |   |                               |  
|Other expenses                 |  |                               | 328,812    |   |                               |  
|Total expenses                 |  |                               | 7,318,329  |   |                               |  
|Base management fee waivers(a) |  |                               | (1,135,224 | ) |                               |  
|Incentive fee waivers(a)       |  |                               | (2,115,919 | ) |                               |  
|Total expenses, net of waivers |  | $                             | 4,067,186  |   |                               | $



(a) Refer to Note 4-Related Party
Transactionswithin the financial statements for a description of the relevant fees.



The
increase in base management fees before waivers for the year ended December 31, 2019 in comparison to the year ended December 31,
2018 was driven by our increasing invested balance. For the year ended December 31, 2019 and 2018, we accrued gross base management
fees before waivers of $3,243,496 and $2,446,249, respectively. Offsetting those fees, we recognized base management fee waivers
of $1,135,224 and $856,187, respectively. For the years ended December 31, 2019 and 2018, we accrued incentive fees related
to net investment income before waivers of $2,620,312 and $1,938,059, respectively. Offsetting those fees during the periods were
incentive fee waivers of $2,115,919 and $1,577,318, respectively. For the years ended December 31, 2019 and 2018, we did not
accrue incentive fees related to capital gains. Additionally, we accrued $265,000 of administrative fees for the years ended December 31,
2019 and 2018. Refer to Note 4— Related Party Transactionsin the notes accompanying our financial statements
for more information related to base management fees, incentive fees and waivers.





63







During the years ended December 31,
2019 and 2018, we incurred professional fees of $650,709 and $421,966, respectively, related to audit fees, tax fees, and legal
fees. The increase in professional fess was driven by an increase in legal expenses during the year ended December 31, 2019.
We also incurred expenses related to fees paid to our independent directors of $210,000 and $195,000 for the years ended December 31,
2019 and 2018, respectively. During the years ended December 31, 2019 and 2018, we incurred other expenses of $328,812 and
$174,252, respectively. The increase in other expenses was driven by an increase in the Delaware Franchise Tax in the year ended
December 31, 2019.



Realized and Unrealized Gains and Losses



We recognized $672,026 in net realized losses
for the year ended December 31, 2019. We recognized $449,694 in net realized gains for the year ended December 31, 2018.



Net change in unrealized depreciation on
investments for the years ended December 31, 2019, and 2018, is presented in the table below, was as follows:



|Type                        |  | Year Ended
 December 31, 2019 |          |   | Year Ended
 December 31, 2018 |  
|--------------------------- |  | ----------------------------- | -------- | - | ----------------------------- | -
|First Lien Debt             |  | $                             | 111,757  |   |                               | $
|Second Lien Debt            |  |                               | 59,890   |   |                               |  
|Equity and Preferred Shares |  |                               | (401,324 | ) |                               |  
|Net change in unrealized    |  |                               |          |   |                               |  
|depreciation on investments |  | $                             | (229,677 | ) |                               | $



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES



Set forth below are our financial condition,
liquidity and capital resources for the years ended December 31, 2019 and 2018. For information regarding our liquidity and
capital resources for the year ended December 31, 2017, see the Company's Form 10-K for the fiscal year ended December 31,
2018, as filed with the SEC on March 18, 2019.



We generate cash primarily from the net
proceeds of any offering of the Shares, from cash flows from interest and fees earned from our investments, and from principal
repayments and proceeds from sales of our investments. Our primary use of cash is investments in portfolio companies, payments
of our expenses and cash distributions to our stockholders. As of December 31, 2019 and 2018, we had cash of and $5,506,217
and $17,715,145, respectively.



Operating Activities



Net cash used in the operating activities
for the year ended December 31, 2019 was $60,124,786. The primary operating activity during this period was investments in
portfolio companies. This was partially offset by repayments of bank loans and proceeds from investments sold. Net cash used in
the operating activities for the year ended December 31, 2018 was $59,004,299. The primary operating activity during this
period was investments in portfolio companies. This was partially offset by repayments of bank loans and proceeds from investments
sold.



As of December 31, 2019 and 2018, we
had eighteen and ten investments with unfunded commitments of and $3,878,962 and $2,225,517, respectively. We believe that, as
of December 31, 2019 and 2018, we had sufficient assets to adequately cover any obligations under our unfunded commitments.





64







The following table summarizes our total
portfolio activity during the year ended December 31, 2019 and 2018:



|                                                     |  | Year Ended
 December 31, 2019 |             |   | Year Ended
 December 31, 2018 |  
|---------------------------------------------------- |  | ----------------------------- | ----------- | - | ----------------------------- | -
|Beginning investment portfolio                       |  | $                             | 264,662,881 |   |                               | $
|Investments in new portfolio investments             |  |                               | 112,937,320 |   |                               |  
|Investments in existing portfolio investments        |  |                               | 21,529,819  |   |                               |  
|Principal repayments                                 |  |                               | (58,594,377 | ) |                               |  
|Proceeds from sales of investments                   |  |                               | (9,096,342  | ) |                               |  
|Net change in unrealized depreciation on investments |  |                               | (229,677    | ) |                               |  
|Net realized (loss) gain on investments              |  |                               | (672,026    | ) |                               |  
|Net change in premiums, discounts and amortization   |  |                               | 337,313     |   |                               |  
|Investment Portfolio, at Fair Value                  |  | $                             | 330,874,911 |   |                               | $



Financing Activities



Net cash provided by our financing activities
for the year ended December 31, 2019 was $47,915,858 from issuances of 6,839,591 of Shares to our shareholders, in connection
with our capital calls during the period. These capital calls were partially offset by distributions of $17,084,142 or $0.51 per
share. Net cash provided by our financing activities for the year ended December 31, 2018 was $46,997,885 from issuances of
6,281,406 of Shares to our shareholders, in connection with our capital calls during the period. These capital calls were partially
offset by distributions of $13,002,172 or $0.53 per share.



Equity Activity



On June 23, 2015, an investor made
a $140,000,000 capital commitment to the Company. On December 2, 2016, the same investor made an additional capital commitment
of $50,000,000. On December 7, 2017, the same investor made an additional capital commitment of $100,000,000. On March 22,
2019, the same investor made an additional capital commitment of $40,000,000. On September 23, 2019, the same investor made
an additional capital commitment of $30,000,000. As of December 31, 2019, $25,000,000 of total capital commitments remained
unfunded by the Company’s investors.



The number of Shares issued and outstanding
as of December 31, 2019 and 2018 were 35,109,246 and 28,269,649, respectively.



The following table summarizes activity
in the number of Shares during the years ended December 31, 2019 and 2018:



|                                                                                                    |  | Common stock shares in issue  |           
|--------------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------
|                                                                                                    |  | Year Ended
 December 31, 2019 |           
|Shares in issue, beginning of period                                                                |  |                               | 28,269,649
|Common stock issued ($65,000,000 and $60,000,000, respectively )                                    |  |                               | 6,839,591 
|Issuance of common shares in connection with dividend reinvestment plan ($60 and $57, respectively) |  |                               | 6         
|Shares in issue, end of period                                                                      |  |                               | 35,109,246





65







Contractual Obligations



The
following table summarizesour significant contractual payment obligations as of December 31, 2019:



|                              |  | Payments Due by Period |          
|----------------------------- |  | ---------------------- | ---------
|                              |  | Total                  |          
|Unfunded commitments(1)       |  | $                      | 3,878,962
|Total contractual obligations |  | $                      | 3,878,962



| | (1) | Unfunded commitments represent all amounts unfunded as of December 31, 2019. These amounts may or may not be funded to
the borrowing party now or in the future. We reflect this amount in the less than one-year category because the entire amount was
eligible for funding as of December 31, 2019.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Distributions to Stockholders – Common Stock Distributions



We have elected to be treated as a RIC for
U.S. federal income tax purposes. As a RIC, we generally are not subject to corporate-level U.S. federal income taxes on ordinary
income or capital gains that we timely distribute as dividends for U.S. federal income tax purposes to our stockholders. To qualify
to be taxed as a RIC and thus avoid corporate-level income tax on the income that we distribute as dividends to our stockholders,
we are required to distribute dividends to our stockholders each taxable year generally of an amount at least equal to 90% of our
investment company taxable income, determined without regard to the deduction for any dividends paid. To avoid a 4% excise tax
on undistributed earnings, we are required to distribute dividends to our stockholders in respect of each calendar year of an amount
at least equal to the sum of (i) 98% of our ordinary income (taking into account certain deferrals and elections) for such
calendar year, (ii) 98.2% of our capital gain net income, adjusted for certain ordinary losses, for the one-year period ending
October 31 of that calendar year and (iii) any income or capital gains recognized, but not distributed, in preceding
calendar years and on which we incurred no federal income tax. We intend to make distributions to stockholders on an annual basis
of substantially all of our net investment income. Although we intend to make distributions of net realized capital gains, if any,
at least annually, out of assets legally available for such distributions, we may in the future decide to retain such capital gains
for investment. In addition, the extent and timing of special dividends, if any, will be determined by our Board of Directors and
will largely be driven by portfolio specific events and tax considerations.



We may fund our cash distributions from
any sources of funds available, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds
from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account
of preferred and common equity investments in portfolio companies and fee waivers from our Adviser. Our distributions may exceed
our earnings, especially during the period before we have substantially invested the proceeds from an offering. As a result, a
portion of the distributions we may represent a return of capital for U.S. federal income tax purposes. Thus the source of a distribution
to our stockholders may be the original capital invested by the stockholder rather than our income or gains. In addition, we may
be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a BDC under the
1940 Act. During the year ended December 31, 2019, we made two distributions totaling $17,084,202, or $0.51 per Share. During
the year ended December 31, 2018, we made two distributions totaling $13,002,172, or $0.52 per Share. The following tables
provide the details of each distribution for the year ended December 31, 2019 and 2018.





66









|Period             |  | Declaration Date  |  | Record Date       |  | Payment Date      |  | Distribution per
 Common Share |      
|------------------ |  | ----------------- |  | ----------------- |  | ----------------- |  | ------------------------------ | -----
|Fiscal Year  Ended |  | June 6, 2019      |  | June 7, 2019      |  | June 13, 2019     |  | $                              | 0.260
|2019               |  | December 12, 2019 |  | December 13, 2019 |  | December 18, 2019 |  | $                              | 0.250





|Period             |  | Declaration Date  |  | Record Date       |  | Payment Date      |  | Distribution per
 Common Share |      
|------------------ |  | ----------------- |  | ----------------- |  | ----------------- |  | ------------------------------ | -----
|Fiscal Year  Ended |  | May 30, 2018      |  | May 31, 2018      |  | June 5, 2018      |  | $                              | 0.250
|2018               |  | December 10, 2018 |  | December 11, 2018 |  | December 14, 2018 |  | $                              | 0.272





Qualified Interest Income and Qualified
Short-Term Capital Gain (for non-U.S. resident shareholders only). Under the American Jobs Creation Act of 2004, the following
amounts of ordinary dividends paid during the fiscal year ended December 31, 2019 are considered to be derived from “qualified
interest income,” as defined in Section 871(k)(1)(E) of the Code, and therefore are designated as interest-related dividends,
as defined in Section 871(k)(1)(C) of the Code. Further, the following amounts of ordinary dividends paid during the fiscal year
ended December 31, 2019 are considered to be derived from “qualified short-term capital gain,” as defined in Section
871(k)(2)(D) of the Code, and therefore are designated as qualified short-term gain dividends, as defined by Section 871(k)(2)(C)
of the Code.



The determination of the tax attributes
of our distributions is made annually at the end of our taxable year, based upon our taxable income for the full taxable year and
distributions paid for the full taxable year. Therefore, estimates made on an interim basis may not be representative of the actual
tax attributes of distributions for a full year. The actual tax characteristics of distributions to stockholders will reported
to stockholders subject to information reporting after the close of each calendar year on Form 1099-DIV.



Related Party Fees



For the year ended December 31, 2019,
the Company recorded base management fees of $3,243,496 and waivers to the base management fees of $1,135,224, as set forth within
the accompanying statements of operations. For the year ended December 31, 2018, the Company recorded base management fees
of $2,446,249 and waivers to the base management fees of $856,187, as set forth within the accompanying statements of operations.



For the year ended December 31, 2019,
the Company recorded incentive fees of $2,620,312 and waivers to the incentive fees of $2,115,919, as set forth within the accompanying
statements of operations. For the year ended December 31, 2018, the Company recorded incentive fees of $1,938,059 and waivers
to the incentive fees of $1,577,318, as set forth within the accompanying statements of operations.



For the years ended December 31, 2019
and 2018, the Company recorded administrative fees of $265,000, as set forth within the accompanying statements of operations.



Fees
due to related parties as of December 31, 2019 and2018 on our accompanying statements of assets and liabilities were
as follows:



|                                              |  | December 31, 2019 |         |  | December 31, 2018 |  
|--------------------------------------------- |  | ----------------- | ------- |  | ----------------- | -
|Net base management fee due to Adviser        |  | $                 | 569,600 |  |                   | $
|Net incentive fee due to Adviser              |  |                   | 118,536 |  |                   |  
|Total fees due to Adviser, net
    of waivers |  |                   | 688,136 |  |                   |  
|Fee due to Administrator, net of waivers      |  |                   | 66,250  |  |                   |  
|Total Related Party Fees Due                  |  | $                 | 754,386 |  |                   | $



| | (a) | Expenses
paid on behalf of the Company by the Adviser
| | --- | -----------------------------------------------------



Tender Offers



We do not currently intend to list the Shares
on any securities exchange, and we do not expect a public market for them to develop in the foreseeable future. Therefore, stockholders
should not expect to be able to sell their Shares promptly or at a desired price. To provide our stockholders with limited liquidity,
we may, in the absolute discretion of our Board of Directors, conduct an annual tender offer. Our tenders for the Shares, if any,
would be conducted on such terms as may be determined by our Board of Directors and in accordance with the requirements of applicable
law, including Section 23(c) of the 1940 Act and Regulation M under the Exchange Act. We have not commenced any tender
offers, and we do not currently intend to conduct any tender offers.





67







CRITICAL ACCOUNTING POLICIES



This discussion of our operations is based
upon our financial statements, which are prepared in accordance with GAAP. The preparation of these financial statements requires
our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.



Changes in the economic environment, financial
markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion
below, we describe our critical accounting policies in the notes to our financial statements.



Valuation of Investments



We conduct the valuation of our investments,
pursuant to which our net asset value is determined, at all times consistent with GAAP and the 1940 Act. Our Board of Directors,
with the assistance of our Audit Committee, determines the fair value of our investments, for investments with a public market
and for investments with no readily available public market, on at least a quarterly basis, in accordance with the terms of ASC
820. Our valuation procedures are set forth in more detail below.



ASC 820 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.” Fair value is a market-based measurement, not an entity-specific measurement. For some assets and
liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable
market transactions and market information might not be available. However, the objective of a fair value measurement in both cases
is the same – to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place
between market participants at the measurement date under current market conditions (that is, an exit price at the measurement
date from the perspective of a market participant that holds the asset or owes the liability).



ASC 820 establishes a hierarchal disclosure
framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs
is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments
with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will
have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.



The three-level hierarchy for fair value
measurement is defined as follows:



Level
1— Inputs to the valuation methodology are quoted prices available in active markets for identical financial
instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including
equities and derivatives, listed in active markets. We do not adjust the quoted price for these instruments, even in situations
where we hold a large position, and a sale could reasonably be expected to impact the quoted price.



Level
2— Inputs to the valuation methodology are quoted prices in markets that are not active or for which all significant
inputs are either directly or indirectly observable as of the measurement date. The types of financial instruments in this category
include less liquid and restricted securities listed in active markets, securities traded in markets that are not active, government
and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.



Level
3— Inputs to the valuation methodology are unobservable and significant to the overall fair value measurement,
and include situations where there is little, if any, market activity for the investment. The inputs into the determination of
fair value require significant management judgment or estimation. The types of financial instruments in this category include investments
in privately held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain
over-the-counter derivatives where the fair value is based on unobservable inputs.





68







In certain cases, the inputs used to measure
fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within
the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant
to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the financial instrument.



Pursuant to the framework set forth above,
we value securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded
securities/instruments by the quantity of shares or amount of the instrument held. We may also obtain quotes with respect to certain
of our investments from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets
that are not traded in active markets.



Pricing services aggregate, evaluate and
report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes,
model-based valuations and internal fundamental analysis and research. When doing so, we determine whether the quote obtained is
sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.



Securities that are illiquid or for which
the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of
our Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate
under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include
comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. The process
used to determine the applicable value is as follows: (i) each portfolio company or investment is initially valued by the
investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate
fair market value based on observable market inputs and updated credit statistics and unobservable inputs; (ii) preliminary
valuation conclusions are documented and discussed with our senior management and members of our Adviser’s valuation team;
(iii) our Audit Committee reviews the assessments of the Adviser and provides our Board of Directors with recommendations
with respect to the fair value of the investments in our portfolio; and (iv) our Board of Directors discusses the valuation
recommendations of our Audit Committee and determines the fair value of the investments in our portfolio in good faith based on
the input of the Adviser and in accordance with our valuation policy.



Our Audit Committee’s recommendation
of fair value is generally based on its assessment of the following factors, as relevant:



| | · | the nature and realizable value of any collateral;
| | - | --------------------------------------------------



| | · | call features, put features and other relevant terms of debt;
| | - | -------------------------------------------------------------



| | · | the portfolio company’s ability to make payments;
| | - | -------------------------------------------------



| | · | the portfolio company’s actual and expected earnings and discounted cash flow;
| | - | ------------------------------------------------------------------------------



| | · | prevailing interest rates for like securities and expected volatility in future interest rates;
| | - | -----------------------------------------------------------------------------------------------



| | · | the markets in which the portfolio company does business and recent economic and/or market events; and
| | - | ------------------------------------------------------------------------------------------------------



| | · | comparisons to publicly traded securities.
| | - | ------------------------------------------



Investment performance data utilized are
the most recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.





69







Securities for which market quotations are
not readily available or for which a pricing source is not sufficient may include the following:



| | · | private placements and restricted securities that do not have an active trading market;
| | - | ---------------------------------------------------------------------------------------



| | · | securities whose trading has been suspended or for which market quotes are no longer available;
| | - | -----------------------------------------------------------------------------------------------



| | · | debt securities that have recently gone into default and for which there is no current market;
| | - | ----------------------------------------------------------------------------------------------



| | · | securities whose prices are stale; and
| | - | --------------------------------------



| | · | securities affected by significant events.
| | - | ------------------------------------------



Our Board of Directors is responsible for
the determination, in good faith, of the fair value of our portfolio investments.



Determination of fair value involves subjective
judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible
effect of such valuations, and any change in such valuations, on our financial statements.



Security transactions are recorded on the
trade date (the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which
is when all terms of the transactions have been defined). Realized gains and losses on investments are determined based on the
identified cost method.



Refer to Note 3 — Investmentsin
the notes to our accompanying financial statements included elsewhere in this annual report for additional information regarding
fair value measurements and our application of ASC 820.



Revenue Recognition



We record interest income on an accrual
basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, which
represents contractual interest accrued and added to the principal balance, we generally will not accrue PIK interest for accounting
purposes if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable
interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest.
OID, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment
premiums on loans and debt securities as interest income.



Net Realized Gains or Losses and Net Change in Unrealized
Appreciation or Depreciation



We measure net realized gains or losses
by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard
to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties.
Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period,
including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.



PIK Interest



We may have investments in our portfolio
that contain a PIK interest provision. Any PIK interest will be added to the principal balance of such investments and is recorded
as income if the portfolio company valuation indicates that such PIK interest is collectible. In order to maintain our status as
a RIC, substantially all of this income must be included in the amounts paid out by us to stockholders in the form of dividends,
even if we have not collected any cash.





70







Federal Income Taxes



We have elected to be subject to tax as
a RIC under Subchapter M of the Code. As a RIC, we generally will not have to incur any corporate-level U.S. federal income taxes
on any ordinary income or capital gains that we distribute as dividends to our stockholders. To qualify and maintain our qualification
as a RIC, we must meet certain source-of-income and asset diversification requirements as well as distribute dividends to our stockholders
each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard
to any distributions paid.



Depending on the level of taxable income
earned in a taxable year, we may choose to retain taxable income in excess of current year distributions into the next taxable
year. We would then incur a 4% excise tax on such taxable income, as required. To the extent that we determine that our estimated
current year annual taxable income may exceed estimated current year distributions, we will accrue an excise tax, if any, on estimated
excess taxable income as taxable income is earned. We did not accrue any excise tax for the fiscal years ended December 31,
2019, 2018, and 2017.



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 within capital
accounts in the financial statements to reflect their tax character. Permanent differences may also result from differences in
classification in certain items, such as the treatment of short-term gains as ordinary income for tax purposes. Temporary differences
arise when certain items of income, expense, gain or loss are recognized at some time in the future.



We evaluate tax positions taken or expected
to be taken in the course of preparing our financial statements to determine whether the tax positions are “more-likely-than-not”
of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold
are reversed and recorded as a tax benefit or expense in the current fiscal year. All penalties and interest associated with any
income taxes accrued are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted
at a later date based on factors including, but not limited to, ongoing analyses of tax law, regulations and interpretations thereof.
Our accounting policy on income taxes is critical because if we are unable to qualify, or once qualified, maintain our tax status
as a RIC, we would be required to record a provision for corporate-level U.S. federal income taxes, as well as any related state
or local taxes which may be significant to our financial results.



COMMITMENTS AND CONTINGENCIES



Unfunded commitments to provide funds to
portfolio companies are not reflected in our accompanying statements of assets and liabilities. Our unfunded commitments may be
significant from time to time. These commitments are subject to the same underwriting and ongoing portfolio maintenance as are
the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn, the total commitment
amount does not necessarily represent future cash requirements. We use cash flow from normal and early principal repayments and
proceeds from borrowings and offerings to fund these commitments. As of December 31, 2019, we had eighteen investments with
unfunded commitments of $3,878,962. As of December 31, 2018, we had ten investments with unfunded commitments of $2,225,517.
We believe that, as of December 31, 2019 and 2018, we had sufficient assets to adequately cover any obligations under our
unfunded commitments.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK



We are subject to financial market risks,
including changes in interest rates. As a result, there can be no assurance that a significant change in market interest rates
will not have a material adverse effect on our net investment income. As of December 31, 2019, 99.38% of our investments included
variable rates or variable rates with a floor.





71







Assuming that the accompanying statement
of assets and liabilities as of December 31, 2019 was to remain constant and that we took no actions to alter interest rate
sensitivity as of such date, the following table shows the annualized impact of hypothetical base rate changes in interest rates.



|Change in interest rates |  | Increase (decrease) in investment income |           
|------------------------ |  | ---------------------------------------- | ----------
|Down 300 basis points    |  |                                          | (3,721,822
|Down 200 basis points    |  |                                          | (3,721,822
|Down 100 basis points    |  |                                          | (2,814,586
|Up 100 basis points      |  |                                          | 3,320,662 
|Up 200 basis points      |  |                                          | 6,641,324 
|Up 300 basis points      |  |                                          | 9,961,986 



Although we believe that this measure is
indicative of our sensitivity to interest rate changes, it does not reflect potential changes in the credit market, credit quality,
size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that
could affect our net increase in net assets resulting from operations or net investment income. Accordingly, no assurances can
be given that actual results would not differ materially from those shown above.



In addition, any investments we make that
are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These risks
include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign
exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies
involved.





72









ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Financial Statements



|Report of Independent of Registered Public Accounting Firm                                | 74
|----------------------------------------------------------------------------------------- | --
|Statements of Assets and Liabilities as of December 31, 2019 and 2018                     | 75
|Statements of Operations for the Years Ended December 31, 2019, 2018, and 2017            | 76
|Statements of Changes in Net Assets for the Years Ended December 31, 2019, 2018, and 2017 | 77
|Statements of Cash Flows for the Years Ended December 31, 2019, 2018, and 2017            | 78
|Schedules of Investments as of December 31, 2019 and 2018                                 | 79
|Notes to Financial Statements                                                             | 86





73









Report of Independent
Registered Public Accounting Firm



To the Shareholder and
Board of Directors of Audax Credit BDC Inc.



Opinion on the Financial
Statements

We have audited the accompanying
statements of assets and liabilities of Audax Credit BDC Inc. (the “Company”), including the schedules of investments,
as of December 31, 2019 and 2018, the related statements of operations, changes in net assets, and cash flows for each of the three
years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December
31, 2019 and 2018, and the results of its operations, changes in its net assets and its cash flows for each of the three years
in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.



Basis for Opinion

These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.



We conducted our audits
in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of
our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.



Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019 and
2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers
were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.





/s/ Ernst & Young LLP





We have served as the auditor
of the Company since 2015.



New York, NY

March 17, 2020





74













Audax Credit BDC Inc.

Statements of Assets and Liabilities

December 31, 2019 and
December 31, 2018

(Expressed
in U.S. Dollars)



|                                                                                                                                               |  | December 31,
 2019 |             |   | December 31,
 2018 |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ------------------ | -
|Assets                                                                                                                                         |  |                    |             |   |                    |  
|Investments, at fair value                                                                                                                     |  |                    |             |   |                    |  
|Non-Control/Non-Affiliate investments (Cost of $332,722,006 and $266,280,299, respectively)                                                    |  | $                  | 330,874,911 |   |                    | $
|Cash and cash equivalents                                                                                                                      |  |                    | 5,506,217   |   |                    |  
|Interest receivable                                                                                                                            |  |                    | 942,329     |   |                    |  
|Receivable from investments sold                                                                                                               |  |                    | 1,993,379   |   |                    |  
|Receivable from bank loan repayment                                                                                                            |  |                    | 80,161      |   |                    |  
|                                                                                                                                               |  |                    |             |   |                    |  
|Total assets                                                                                                                                   |  | $                  | 339,396,997 |   |                    | $
|                                                                                                                                               |  |                    |             |   |                    |  
|Liabilities                                                                                                                                    |  |                    |             |   |                    |  
|Accrued expenses and other liabilities                                                                                                         |  | $                  | 297,938     |   |                    | $
|Fee due to administrator(a)                                                                                                                    |  |                    | 66,250      |   |                    |  
|Fees due to investment advisor, net of waivers(a)                                                                                              |  |                    | 688,136     |   |                    |  
|Payable for investments purchased                                                                                                              |  |                    | 6,945,000   |   |                    |  
|                                                                                                                                               |  |                    |             |   |                    |  
|Total liabilities                                                                                                                              |  | $                  | 7,997,324   |   |                    | $
|Commitments and contingencies(b)                                                                                                               |  |                    |             |   |                    |  
|                                                                                                                                               |  |                    |             |   |                    |  
|Net Assets                                                                                                                                     |  |                    |             |   |                    |  
|Common stock, $0.001 par value per share, 100,000,000 shares authorized, 35,109,246 and 28,269,649 shares issued and outstanding, respectively |  | $                  | 35,110      |   |                    | $
|Capital in excess of par value                                                                                                                 |  |                    | 334,095,408 |   |                    |  
|Total distributable earnings                                                                                                                   |  |                    | (2,730,845  | ) |                    |  
|Total Net Assets                                                                                                                               |  | $                  | 331,399,673 |   |                    | $
|                                                                                                                                               |  |                    |             |   |                    |  
|Net Asset Value per Share of Common Stock at End of Period                                                                                     |  | $                  | 9.44        |   |                    | $
|                                                                                                                                               |  |                    |             |   |                    |  
|Shares Outstanding                                                                                                                             |  |                    | 35,109,246  |   |                    |  



| | (a) | Refer to Note 4-Related Party Transactions for
additional information.   
| | --- | -------------------------------------------------------------------------
| | (b) | Refer to Note 8-Commitments and Contingencies
for additional information.



The accompanying
notes are an integral part of these financial statements.





75







Audax Credit BDC Inc.

Statements of Operations

For Years
Ended December 31, 2019,  2018, and 2017

(Expressed
in U.S. Dollars)



|                                                                  |  | Year Ended         |            |   | Year Ended         |   |            | Year Ended         | 
|----------------------------------------------------------------- |  | ------------------ | ---------- | - | ------------------ | - | ---------- | ------------------ | 
|                                                                  |  | December 31,
 2019 |            |   | December 31,
 2018 |   |            | December 31,
 2017 | 
|Investment Income                                                 |  |                    |            |   |                    |   |            |                    | 
|Interest income                                                   |  |                    |            |   |                    |   |            |                    | 
|Non-Control/Non-Affiliate                                         |  | $                  | 20,812,478 |   |                    | $ | 15,332,000 |                    | 
|Other                                                             |  |                    | 145,127    |   |                    |   | 141,063    |                    | 
|Total interest income                                             |  |                    | 20,957,605 |   |                    |   | 15,473,063 |                    | 
|Other income                                                      |  |                    |            |   |                    |   |            |                    | 
|Non-Control/Non-Affiliate                                         |  |                    | 71,864     |   |                    |   | 92,059     |                    | 
|Total income                                                      |  |                    | 21,029,469 |   |                    |   | 15,565,122 |                    | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Expenses                                                          |  |                    |            |   |                    |   |            |                    | 
|Base management fee(a)                                            |  | $                  | 3,243,496  |   |                    | $ | 2,446,249  |                    | 
|Incentive fee(a)                                                  |  |                    | 2,620,312  |   |                    |   | 1,938,059  |                    | 
|Administrative fee(a)                                             |  |                    | 265,000    |   |                    |   | 265,000    |                    | 
|Directors' fees                                                   |  |                    | 210,000    |   |                    |   | 195,000    |                    | 
|Professional fees                                                 |  |                    | 650,709    |   |                    |   | 421,966    |                    | 
|Other expenses                                                    |  |                    | 328,812    |   |                    |   | 174,252    |                    | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Expenses before waivers from investment adviser and administrator |  |                    | 7,318,329  |   |                    |   | 5,440,526  |                    | 
|Base management fee waivers(a)                                    |  |                    | (1,135,224 | ) |                    |   | (856,187   | )                  | 
|Incentive fee waivers(a)                                          |  |                    | (2,115,919 | ) |                    |   | (1,577,318 | )                  | 
|Total expenses, net of waivers                                    |  |                    | 4,067,186  |   |                    |   | 3,007,021  |                    | 
|Net Investment Income                                             |  |                    | 16,962,283 |   |                    |   | 12,558,101 |                    | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Realized and Unrealized (Loss) Gain on Investments                |  |                    |            |   |                    |   |            |                    | 
|Net realized (loss) gain on investments                           |  |                    | (672,026   | ) |                    |   | 449,694    |                    | 
|Net change in unrealized depreciation on investments              |  |                    | (229,677   | ) |                    |   | (1,778,021 | )                  | 
|Net realized and unrealized loss on investments                   |  |                    | (901,703   | ) |                    |   | (1,328,327 | )                  | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Net Increase in Net Assets Resulting from Operations              |  | $                  | 16,060,580 |   |                    | $ | 11,229,774 |                    | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Basic and Diluted per Share of Common Stock:                      |  |                    |            |   |                    |   |            |                    | 
|Net investment income                                             |  | $                  | 0.52       |   |                    | $ | 0.52       |                    | 
|Net increase in net assets resulting from operations              |  | $                  | 0.49       |   |                    | $ | 0.46       |                    | 
|                                                                  |  |                    |            |   |                    |   |            |                    | 
|Weighted average shares of common stock outstanding basic         |  |                    |            |   |                    |   |            |                    | 
|diluted                                                           |  |                    | 32,672,328 |   |                    |   | 24,340,035 |                    | 



| | (a) | Refer to Note 4-Related Party Transactions for
additional information
| | --- | ---------------------------------------------------------------------



The accompanying notes are an integral
part of these financial statements.





76









Audax
Credit BDC Inc.

Statements
of Changes in Net Assets

For
the Years Ended December 31, 2019, 2018, and 2017



(Expressed
in U.S. Dollars)



|                                                           |  | Year Ended
 December 31,
 2019 |             |   | Year Ended
 December 31,
 2018 |   |             | Year Ended
 December 31,
 2017 | 
|---------------------------------------------------------- |  | ------------------------------ | ----------- | - | ------------------------------ | - | ----------- | ------------------------------ | 
|Operations                                                 |  |                                |             |   |                                |   |             |                                | 
|Net investment income                                      |  | $                              | 16,962,283  |   |                                | $ | 12,558,101  |                                | 
|Net realized (loss) gain on investments                    |  |                                | (672,026    | ) |                                |   | 449,694     |                                | 
|Net change in unrealized depreciation on investments       |  |                                | (229,677    | ) |                                |   | (1,778,021  | )                              | 
|Net increase in net assets resulting from operations       |  |                                | 16,060,580  |   |                                |   | 11,229,774  |                                | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|Distributions:                                             |  |                                |             |   |                                |   |             |                                | 
|Distributions to common stockholders                       |  |                                | (16,941,968 | ) |                                |   | (12,987,835 | )                              | 
|Return of capital to common stockholders                   |  |                                | (142,234    | ) |                                |   | (14,337     | )                              | 
|Total distributions                                        |  |                                | (17,084,202 | ) |                                |   | (13,002,172 | )                              | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|Capital Share Transactions:                                |  |                                |             |   |                                |   |             |                                | 
|Issuance of common stock                                   |  |                                | 65,000,000  |   |                                |   | 60,000,000  |                                | 
|Reinvestment of common stock                               |  |                                | 60          |   |                                |   | 57          |                                | 
|Net increase in net assets from capital share transactions |  |                                | 65,000,060  |   |                                |   | 60,000,057  |                                | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|Net Increase in Net Assets                                 |  |                                | 63,976,438  |   |                                |   | 58,227,659  |                                | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|Net Assets, Beginning of Period                            |  |                                | 267,423,235 |   |                                |   | 209,195,576 |                                | 
|                                                           |  |                                |             |   |                                |   |             |                                | 
|Net Assets, End of Period                                  |  | $                              | 331,399,673 |   |                                | $ | 267,423,235 |                                | 



| | (a) | For the year ended December 31, 2017, the components of distributions to common stockholders were comprised of distributions from net investment income of $8,026,282 and distributions from realized gains of $696,970.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
accompanying notes are an integral part of these financial statements.





77







Audax
Credit BDC Inc.

Statements
of Cash Flows

For
 Years Ended December 31, 2019, 2018, and 2017

(Expressed
in U.S. Dollars)





|                                                                                                                  |  |   | Year
                                         Ended         |   |  |   | Year
                                         Ended         |   |  |   | Year
                                         Ended         |  
|----------------------------------------------------------------------------------------------------------------- |  | - | ----------------------------------------------------------- | - |  | - | ----------------------------------------------------------- | - |  | - | ----------------------------------------------------------- | -
|                                                                                                                  |  |   | December
                                         31,
 2019 |   |  |   | December
                                         31,
 2018 |   |  |   | December
                                         31,
 2017 |  
|Cash flows
    from operating activities:                                                                         |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Net increase in net assets resulting from operations                                                              |  | $ | 16,060,580                                                  |   |  | $ | 11,229,774                                                  |   |  | $ | 7,741,286                                                   |  
|Adjustments to reconcile net increase in net assets
    from operations to net cash used in operating activities: |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Net realized loss (gain) on investments                                                                           |  |   | 672,026                                                     |   |  |   | (449,694                                                    | ) |  |   | (696,970                                                    | )
|Net change in unrealized depreciation on investments                                                              |  |   | 229,677                                                     |   |  |   | 1,778,021                                                   |   |  |   | 981,966                                                     |  
|Accretion of original issue discount interest and payment-in-kind interest                                        |  |   | (337,313                                                    | ) |  |   | (138,588                                                    | ) |  |   | (266,197                                                    | )
|Increase in receivable from investments sold                                                                      |  |   | (1,993,379                                                  | ) |  |   | -                                                           |   |  |   | -                                                           |  
|Increase in interest receivable                                                                                   |  |   | (384,215                                                    | ) |  |   | (128,688                                                    | ) |  |   | (45,655                                                     | )
|(Increase) decrease in receivable from bank loan repayment                                                        |  |   | (70,448                                                     | ) |  |   | (9,713                                                      | ) |  |   | 6,773                                                       |  
|Decrease (increase) in other assets                                                                               |  |   | -                                                           |   |  |   | 2,511                                                       |   |  |   | (1,569                                                      | )
|(Decrease) increase in accrued expenses and other liabilities                                                     |  |   | (219,683                                                    | ) |  |   | 278,800                                                     |   |  |   | 39,646                                                      |  
|Increase in fee due to administrator(a)                                                                           |  |   | -                                                           |   |  |   | -                                                           |   |  |   | 44,375                                                      |  
|Increase in fees due to investment advisor(a)                                                                     |  |   | 152,222                                                     |   |  |   | 4,859                                                       |   |  |   | 90,430                                                      |  
|(Decrease) increase in payable for investments purchased                                                          |  |   | (7,457,833                                                  | ) |  |   | 9,944,862                                                   |   |  |   | 742,532                                                     |  
|Investment activity:                                                                                              |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Investments purchased                                                                                             |  |   | (134,467,139                                                | ) |  |   | (166,050,572                                                | ) |  |   | (131,131,217                                                | )
|Proceeds from investments sold                                                                                    |  |   | 9,096,342                                                   |   |  |   | 1,520,433                                                   |   |  |   | 3,022,500                                                   |  
|Repayment of bank loans                                                                                           |  |   | 58,594,377                                                  |   |  |   | 83,013,696                                                  |   |  |   | 87,502,962                                                  |  
|Total investment activity                                                                                         |  |   | (66,776,420                                                 | ) |  |   | (81,516,443                                                 | ) |  |   | (40,605,755                                                 | )
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Net cash used in operating activities                                                                             |  |   | (60,124,786                                                 | ) |  |   | (59,004,299                                                 | ) |  |   | (31,969,138                                                 | )
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Cash flows from financing activities:                                                                             |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Issuance of shares of common stock                                                                                |  |   | 65,000,000                                                  |   |  |   | 60,000,000                                                  |   |  |   | 40,000,000                                                  |  
|Distributions paid to common stockholders                                                                         |  |   | (17,084,142                                                 | ) |  |   | (13,002,115                                                 | ) |  |   | (8,915,371                                                  | )
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Net cash provided by financing activities                                                                         |  |   | 47,915,858                                                  |   |  |   | 46,997,885                                                  |   |  |   | 31,084,629                                                  |  
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Net decrease in cash and cash equivalents                                                                         |  |   | (12,208,928                                                 | ) |  |   | (12,006,414                                                 | ) |  |   | (884,509                                                    | )
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Cash and cash equivalents:                                                                                        |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Cash and cash equivalents, beginning of period                                                                    |  |   | 17,715,145                                                  |   |  |   | 29,721,559                                                  |   |  |   | 30,566,068                                                  |  
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Cash and cash equivalents, end of period                                                                          |  | $ | 5,506,217                                                   |   |  | $ | 17,715,145                                                  |   |  | $ | 29,681,559                                                  |  
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|                                                                                                                  |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Supplemental non-cash information                                                                                 |  |   |                                                             |   |  |   |                                                             |   |  |   |                                                             |  
|Issuance of common shares in connection with dividend reinvestment plan                                           |  | $ | 60                                                          |   |  | $ | 57                                                          |   |  | $ | 50                                                          |  
|Payment-in-kind ("PIK") interest income                                                                           |  | $ | 91,960                                                      |   |  | $ | -                                                           |   |  | $ | -                                                           |  



| | (a) | Refer to Note 4-Related Party Transactions for additional
information
| | --- | ---------------------------------------------------------------------



The
accompanying notes are an integral part of these financial statements.





78







Audax
Credit BDC Inc.

Schedules
of Investments

As of December 31, 2019



(Expressed
in U.S. Dollars)



|Portfolio
    Investments (a) (b) (c) (d) (e) (f)                                                                 |  | Par |           |  | Cost |   |           | Value | 
|----------------------------------------------------------------------------------------------------------------- |  | --- | --------- |  | ---- | - | --------- | ----- | 
|BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS - (99.6%)(g)(h):                                                |  |     |           |  |      |   |           |       | 
|                                                                                                                  |  |     |           |  |      |   |           |       | 
|Healthcare & Pharmaceuticals                                                                                      |  |     |           |  |      |   |           |       | 
|Radiology Partners, Senior Secured Term B Loan (First Lien), 6.66% (Libor + 4.75%), maturity 7/9/25(i)            |  | $   | 5,187,469 |  |      | $ | 5,149,488 |       | 
|Pathway, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/20/24                  |  |     | 4,956,161 |  |      |   | 4,911,269 |       | 
|Tecomet, Senior Secured 2017 Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 5/1/24                       |  |     | 3,959,391 |  |      |   | 3,942,690 |       | 
|Advarra, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)                 |  |     | 3,939,427 |  |      |   | 3,899,562 |       | 
|Young, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 11/7/24                     |  |     | 3,834,156 |  |      |   | 3,823,748 |       | 
|Specialty Care, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 9/1/23             |  |     | 3,342,954 |  |      |   | 3,346,536 |       | 
|Zest Dental, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 3/14/25(i)            |  |     | 3,333,213 |  |      |   | 3,356,177 |       | 
|Veritext, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 8/1/25                   |  |     | 3,187,891 |  |      |   | 3,173,500 |       | 
|Confluent Health, Senior Secured Initial Term Loan, 6.91% (Libor + 5.00%), maturity 6/24/26                       |  |     | 2,985,000 |  |      |   | 2,957,225 |       | 
|Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/18/23      |  |     | 2,906,775 |  |      |   | 2,886,868 |       | 
|PharMedQuest, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 10/31/24                          |  |     | 2,500,000 |  |      |   | 2,463,488 |       | 
|Waystar, Senior Secured Term Loan B, 5.91% (Libor + 4.00%), maturity 10/22/26                                     |  |     | 2,500,000 |  |      |   | 2,487,836 |       | 
|MedRisk, Senior Secured Initial Term Loan (First Lien), 4.66% (Libor + 2.75%), maturity 12/27/24                  |  |     | 2,450,000 |  |      |   | 2,455,219 |       | 
|Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 9/23/24    |  |     | 2,446,014 |  |      |   | 2,426,873 |       | 
|OB Hospitalist Group, Senior Secured Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/1/24               |  |     | 2,316,088 |  |      |   | 2,305,375 |       | 
|MedRisk, Senior Secured Initial Loan (Second Lien), 8.66% (Libor + 6.75%), maturity 12/29/25                      |  |     | 2,100,000 |  |      |   | 2,074,832 |       | 
|Zelis RedCard, Senior Secured Initial Term Loan, 6.66% (Libor + 4.75%), maturity 9/30/26(i)                       |  |     | 2,000,000 |  |      |   | 1,980,688 |       | 
|Press Ganey, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 7/24/26(i)            |  |     | 1,995,000 |  |      |   | 1,987,841 |       | 
|Avalign Technologies, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/22/25     |  |     | 1,980,000 |  |      |   | 1,962,728 |       | 
|CareCentrix, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 4/3/25                             |  |     | 1,912,500 |  |      |   | 1,904,900 |       | 
|Premise Health, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 7/10/25            |  |     | 1,829,786 |  |      |   | 1,838,127 |       | 
|Alpaca, Senior Secured Term Loan, 6.16% (Libor + 4.25%), maturity 4/19/24(j)                                      |  |     | 1,674,127 |  |      |   | 1,650,502 |       | 
|CPS, Unitranche, 7.16% (Libor + 5.25%), maturity 2/28/25                                                          |  |     | 1,492,500 |  |      |   | 1,472,625 |       | 
|Stepping Stones, Unitranche, 7.41% (Libor + 5.50%), maturity 12/12/24                                             |  |     | 1,484,409 |  |      |   | 1,477,320 |       | 
|Ensemble, Senior Secured Closing Date Term Loan, 5.66% (Libor + 3.75%), maturity 8/3/26(i)                        |  |     | 997,500   |  |      |   | 992,719   |       | 
|Veritext, Senior Secured Initial Term Loan (Second Lien), 8.91% (Libor + 7.00%), maturity 7/31/26                 |  |     | 1,000,000 |  |      |   | 995,613   |       | 
|Upstream Rehabilitation, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 11/20/26                       |  |     | 1,000,000 |  |      |   | 995,045   |       | 
|Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 6/30/23(i) |  |     | 984,694   |  |      |   | 990,391   |       | 
|Alcami, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/14/25                    |  |     | 987,500   |  |      |   | 983,389   |       | 
|Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 7.41% (Libor + 5.50%), maturity 5/9/25      |  |     | 987,500   |  |      |   | 975,453   |       | 
|Dermatologists of Central States, Senior Secured Term Loan, 8.41% (Libor + 6.50%), maturity 4/20/22               |  |     | 977,310   |  |      |   | 970,785   |       | 
|ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/10/23(i)   |  |     | 922,022   |  |      |   | 926,900   |       | 
|Specialty Care, Senior Secured Initial Term Loan (Second Lien), 10.16% (Libor + 8.25%), maturity 9/1/24           |  |     | 850,000   |  |      |   | 843,325   |       | 
|Athena, Senior Secured Term B Loan (First Lien), 6.41% (Libor + 4.50%), maturity 2/11/26(i)                       |  |     | 497,494   |  |      |   | 495,129   |       | 
|RMP & MedA/Rx, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 3/2/22                                   |  |     | 441,647   |  |      |   | 440,553   |       | 
|Injured Workers Pharmacy, Senior Secured Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 7/22/20          |  |     | 378,724   |  |      |   | 375,038   |       | 
|Alpaca, Senior Secured Revolver, 6.16% (Libor + 4.25%), maturity 4/19/24(j)                                       |  |     | 134,215   |  |      |   | 130,332   |       | 
|Advarra, Senior Secured Initial Revolving Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)            |  |     | -         |  |      |   | (7,619    | )     | 
|                                                                                                                  |  |     |           |  |      |   |           |       | 
|High Tech Industries                                                                                              |  |     |           |  |      |   |           |       | 
|Qlik, Senior Secured 2019 Incremental Term Loan, 6.16% (Libor + 4.25%), maturity 4/26/24                          |  |     | 3,980,000 |  |      |   | 3,954,501 |       | 
|Barracuda, Senior Secured 2019 Incremental Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 2/12/25(i)     |  |     | 3,451,222 |  |      |   | 3,464,246 |       | 
|Masergy, Senior Secured Initial Loan (Second Lien), 9.41% (Libor + 7.50%), maturity 12/16/24                      |  |     | 3,428,571 |  |      |   | 3,420,116 |       | 
|Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 8/16/24         |  |     | 3,421,688 |  |      |   | 3,397,118 |       | 
|Sparta, Senior Secured New Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 8/21/24                        |  |     | 3,421,250 |  |      |   | 3,423,008 |       | 
|Jaggaer, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/14/26(i)                |  |     | 3,154,345 |  |      |   | 3,150,077 |       | 
|Infogroup, Senior Secured Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 4/3/23                          |  |     | 2,919,937 |  |      |   | 2,895,405 |       | 
|McAfee, Senior Secured Term B USD Loan, 5.66% (Libor + 3.75%), maturity 9/30/24(i)                                |  |     | 2,864,431 |  |      |   | 2,875,358 |       | 
|eResearch (ERT), Senior Secured Initial Term Loan, 5.66% (Libor + 3.75%), maturity 5/2/23(i)                      |  |     | 2,538,022 |  |      |   | 2,538,022 |       | 
|ECi Software Solutions, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 9/27/24(i)              |  |     | 2,463,579 |  |      |   | 2,451,402 |       | 
|EverCommerce, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 8/23/25                           |  |     | 2,184,679 |  |      |   | 2,142,420 |       | 
|Idera, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/28/24                     |  |     | 2,146,089 |  |      |   | 2,145,337 |       | 
|Intermedia , Senior Secured New Term Loan (First Lien), 7.91% (Libor + 6.00%), maturity 7/21/25(i)                |  |     | 1,980,000 |  |      |   | 1,963,699 |       | 
|Flexera Software, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 2/26/25(i)       |  |     | 1,965,000 |  |      |   | 1,970,591 |       | 
|QuickBase, Senior Secured Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 4/2/26                          |  |     | 1,990,000 |  |      |   | 1,981,139 |       | 
|GlobalLogic, Senior Secured Initial Term Loan, 5.16% (Libor + 3.25%), maturity 8/1/25(i)                          |  |     | 1,728,438 |  |      |   | 1,719,948 |       | 
|Bomgar, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 4/18/25                    |  |     | 1,723,750 |  |      |   | 1,733,891 |       | 
|Liaison, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 12/20/26(i)                            |  |     | 1,500,000 |  |      |   | 1,496,250 |       | 
|OEConnection, Senior Secured Initial Term Loan, 5.91% (Libor + 4.00%), maturity 9/25/26                           |  |     | 1,496,250 |  |      |   | 1,488,267 |       | 
|Navex Global, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 9/5/25(i)            |  |     | 1,481,250 |  |      |   | 1,467,074 |       | 
|Compusearch Software Systems, Senior Secured Term Loan C, 6.16% (Libor + 4.25%), maturity 5/8/23                  |  |     | 1,432,979 |  |      |   | 1,432,391 |       | 
|Ultimate Software , Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 5/4/26(i)      |  |     | 1,080,625 |  |      |   | 1,082,379 |       | 
|Insurity, Senior Secured Closing Date Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/31/26             |  |     | 1,000,000 |  |      |   | 995,219   |       | 
|Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 12.16% (Libor + 10.25%), maturity 1/20/22       |  |     | 1,000,000 |  |      |   | 995,441   |       | 
|LANDesk, Senior Secured Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 1/20/24(i)                        |  |     | 978,627   |  |      |   | 969,988   |       | 
|Corsair, Senior Secured Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/28/24                           |  |     | 982,444   |  |      |   | 978,622   |       | 
|Community Brands, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 12/2/22          |  |     | 834,254   |  |      |   | 830,477   |       | 
|HelpSystems, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 11/19/26(i)           |  |     | 500,000   |  |      |   | 498,750   |       | 
|Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 12/15/23         |  |     | 484,908   |  |      |   | 483,405   |       | 
|Endurance Int'l Group, Senior Secured Refinancing Loan (2018), 5.66% (Libor + 3.75%), maturity 2/9/23(i)          |  |     | 404,507   |  |      |   | 403,788   |       | 



The
accompanying notes are an integral part of these financial statements.





79







Audax
Credit BDC Inc.



Schedules
of Investments (Continued)



As
of December 31, 2019



(Expressed
in U.S. Dollars)



|Portfolio Investments (a) (b) (c) (d) (e) (f)                                                                              |  | Par |           |  | Cost |   |           | Value | 
|-------------------------------------------------------------------------------------------------------------------------- |  | --- | --------- |  | ---- | - | --------- | ----- | 
|BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS(h)(Continued):                                                           |  |     |           |  |      |   |           |       | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Services: Business                                                                                                         |  |     |           |  |      |   |           |       | 
|CoAdvantage, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 9/23/25                        |  | $   | 3,990,000 |  |      | $ | 3,950,952 |       | 
|RevSpring, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 10/11/25                         |  |     | 3,960,000 |  |      |   | 3,955,758 |       | 
|Aimbridge, Senior Secured Initial Term Loan (2019) (First Lien), 5.66% (Libor + 3.75%), maturity 2/2/26                    |  |     | 2,982,525 |  |      |   | 2,973,315 |       | 
|Addison, Senior Secured Initial Term Loan, 6.91% (Libor + 5.00%), maturity 4/15/26                                         |  |     | 2,985,000 |  |      |   | 2,931,090 |       | 
|Fleetwash, Senior Secured Incremental Term Loan, 6.66% (Libor + 4.75%), maturity 10/1/24                                   |  |     | 2,962,613 |  |      |   | 2,938,051 |       | 
|Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 6/19/24(i)              |  |     | 2,894,218 |  |      |   | 2,894,218 |       | 
|Allied Universal, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 7/10/26(i)                             |  |     | 2,613,149 |  |      |   | 2,591,810 |       | 
|Cast & Crew, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 2/9/26(i)                      |  |     | 2,481,250 |  |      |   | 2,484,662 |       | 
|HireRight, Senior Secured Initial Term Loan (Second Lien), 9.16% (Libor + 7.25%), maturity 7/10/26                         |  |     | 2,500,000 |  |      |   | 2,479,365 |       | 
|Newport Group, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/12/25                      |  |     | 2,471,231 |  |      |   | 2,458,304 |       | 
|First Advantage, Senior Secured Term Loan (First Lien), 7.16% (Libor + 5.25%), maturity 6/30/22                            |  |     | 2,000,000 |  |      |   | 1,996,094 |       | 
|Vistage, Senior Secured Term B Loan (First Lien), 5.91% (Libor + 4.00%), maturity 2/10/25                                  |  |     | 1,965,000 |  |      |   | 1,961,739 |       | 
|Service Logic, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 12/31/24                     |  |     | 2,339,998 |  |      |   | 2,333,703 |       | 
|Eliassen Group, Senior Secured Initial Term B Loan, 6.41% (Libor + 4.50%), maturity 11/5/24                                |  |     | 1,493,123 |  |      |   | 1,486,683 |       | 
|OSG Billing Services, Senior Secured Term B Loan (First Lien), 6.41% (Libor + 4.50%), maturity 3/27/24                     |  |     | 1,474,855 |  |      |   | 1,470,192 |       | 
|DBi Services, Senior Secured Term B Loan (Second Lien), 8.00% (Libor + 8.00%), maturity 2/2/26                             |  |     | 1,268,869 |  |      |   | 1,268,869 |       | 
|Diversified, Senior Secured Initial Term Loan, 6.66% (Libor + 4.75%), maturity 12/23/23                                    |  |     | 992,500   |  |      |   | 986,007   |       | 
|WCG, Senior Secured Term Loan, 5.91% (Libor + 4.00%), maturity 1/8/27(i)                                                   |  |     | 1,000,000 |  |      |   | 990,000   |       | 
|Franklin Energy, Senior Secured Term B Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/14/26                          |  |     | 997,500   |  |      |   | 995,123   |       | 
|Worley Claims Services, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 6/3/26(i)           |  |     | 498,747   |  |      |   | 494,694   |       | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Chemicals, Plastics & Rubber                                                                                               |  |     |           |  |      |   |           |       | 
|Plaskolite, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 12/15/25                        |  |     | 3,960,000 |  |      |   | 3,896,852 |       | 
|Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/30/24               |  |     | 3,427,599 |  |      |   | 3,413,966 |       | 
|Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 10/4/21            |  |     | 2,811,462 |  |      |   | 2,806,249 |       | 
|Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 1/31/25             |  |     | 2,682,225 |  |      |   | 2,691,463 |       | 
|Unifrax, Senior Secured USD Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 12/12/25(i)                            |  |     | 2,476,241 |  |      |   | 2,454,997 |       | 
|Q Holding, Senior Secured Term B Loan (2019), 6.91% (Libor + 5.00%), maturity 12/29/23                                     |  |     | 1,995,000 |  |      |   | 1,985,388 |       | 
|Boyd Corp, Senior Secured Initial Loan (Second Lien), 8.66% (Libor + 6.75%), maturity 9/6/26                               |  |     | 2,000,000 |  |      |   | 2,002,217 |       | 
|DuBois Chemicals 2019, Senior Secured Term Loan (Second Lien), 10.41% (Libor + 8.50%), maturity 9/30/27                    |  |     | 2,000,000 |  |      |   | 1,950,862 |       | 
|Borchers, Senior Secured Term Loan, 6.41% (Libor + 4.50%), maturity 11/1/24                                                |  |     | 1,910,136 |  |      |   | 1,905,332 |       | 
|Zep, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 8/12/24                                |  |     | 1,956,225 |  |      |   | 1,954,251 |       | 
|DuBois Chemicals 2019, Senior Secured Term Loan B (First Lien), 6.41% (Libor + 4.50%), maturity 9/30/26                    |  |     | 1,560,865 |  |      |   | 1,516,107 |       | 
|Spartech, Senior Secured Term Loan, 6.91% (Libor + 5.00%), maturity 10/17/25                                               |  |     | 1,000,000 |  |      |   | 985,134   |       | 
|Vantage Specialty Chemicals, Senior Secured Closing Date Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 10/28/24  |  |     | 987,406   |  |      |   | 970,460   |       | 
|Prince Minerals, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 3/31/25(i)                 |  |     | 982,500   |  |      |   | 978,584   |       | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Services: Consumer                                                                                                         |  |     |           |  |      |   |           |       | 
|CIBT Holdings, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 6/3/24                       |  |     | 5,424,266 |  |      |   | 5,407,341 |       | 
|A Place For Mom, Senior Secured Term Loan, 5.66% (Libor + 3.75%), maturity 8/10/24                                         |  |     | 2,666,144 |  |      |   | 2,665,484 |       | 
|Weld North, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 2/15/25                                      |  |     | 2,463,674 |  |      |   | 2,441,530 |       | 
|Cambium Learning, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 12/18/25                  |  |     | 2,475,000 |  |      |   | 2,365,058 |       | 
|Smart Start, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 2/21/22                        |  |     | 2,417,625 |  |      |   | 2,417,625 |       | 
|Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/14/26(i)                 |  |     | 1,990,000 |  |      |   | 1,985,439 |       | 
|SMG, Senior Secured Initial Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 1/23/25(i)                             |  |     | 1,976,118 |  |      |   | 1,963,737 |       | 
|Valet Living, Senior Secured Initial Term Loan, 5.91% (Libor + 4.00%), maturity 9/28/25                                    |  |     | 1,983,718 |  |      |   | 1,979,195 |       | 
|LegalShield, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 5/1/25                         |  |     | 1,940,510 |  |      |   | 1,927,273 |       | 
|Ned Stevens, Senior Secured Term A Loan, 7.66% (Libor + 5.75%), maturity 9/30/25(j)                                        |  |     | 1,603,824 |  |      |   | 1,572,794 |       | 
|Spring Education, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/30/25                   |  |     | 987,500   |  |      |   | 985,450   |       | 
|Ned Stevens, Senior Secured Revolver, 6.66% (Libor + 4.75%), maturity 9/30/25(j)                                           |  |     | -         |  |      |   | (2,614    | )     | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Aerospace & Defense                                                                                                        |  |     |           |  |      |   |           |       | 
|CPI International, Senior Secured TL, 6.66% (Libor + 4.75%), maturity 7/26/24                                              |  |     | 4,000,000 |  |      |   | 3,960,000 |       | 
|StandardAero, Senior Secured Initial Term B-1 Loan, 5.91% (Libor + 4.00%), maturity 4/6/26(i)                              |  |     | 3,567,981 |  |      |   | 3,556,378 |       | 
|StandardAero, Senior Secured Initial Term B-2 Loan, 5.91% (Libor + 4.00%), maturity 4/6/26(i)                              |  |     | 1,918,269 |  |      |   | 1,912,031 |       | 
|Consolidated Precision Products, Senior Secured Initial Term Loan (Second Lien), 9.66% (Libor + 7.75%), maturity 4/30/26   |  |     | 1,500,000 |  |      |   | 1,514,877 |       | 
|Tronair, Senior Secured Initial Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 9/8/23                             |  |     | 1,459,899 |  |      |   | 1,453,639 |       | 
|Consolidated Precision Products, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 4/30/25(i) |  |     | 497,481   |  |      |   | 495,124   |       | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Banking, Finance, Insurance & Real Estate                                                                                  |  |     |           |  |      |   |           |       | 
|American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 9.41% (Libor + 7.50%), maturity 4/30/23        |  |     | 2,000,000 |  |      |   | 2,000,000 |       | 
|Kestra Financial, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 6/3/26                                 |  |     | 1,995,000 |  |      |   | 1,976,368 |       | 
|Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 7.66% (Libor + 5.75%), maturity 10/31/22         |  |     | 1,989,457 |  |      |   | 1,951,565 |       | 
|Advisor Group, Senior Secured Initial Term B Loan, 6.91% (Libor + 5.00%), maturity 7/31/26(i)                              |  |     | 1,490,625 |  |      |   | 1,465,245 |       | 
|EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 9/6/24                      |  |     | 1,470,000 |  |      |   | 1,467,280 |       | 
|AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/12/26                    |  |     | 978,070   |  |      |   | 973,369   |       | 
|Aperio, Senior Secured Loan, 6.91% (Libor + 5.00%), maturity 10/25/24                                                      |  |     | 933,889   |  |      |   | 929,619   |       | 
|                                                                                                                           |  |     |           |  |      |   |           |       | 
|Consumer Goods: Non-durable                                                                                                |  |     |           |  |      |   |           |       | 
|Manna Pro, Senior Secured Term Loan, 7.91% (Libor + 6.00%), maturity 12/8/23                                               |  |     | 3,438,750 |  |      |   | 3,399,412 |       | 
|Augusta Sportswear Group, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 10/26/23                       |  |     | 2,228,517 |  |      |   | 2,214,540 |       | 
|Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 9/11/23                  |  |     | 1,906,766 |  |      |   | 1,895,349 |       | 
|Varsity Brands, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 12/16/24(i)                 |  |     | 987,418   |  |      |   | 993,636   |       | 



The
accompanying notes are an integral part of these financial statements.





80







Audax
Credit BDC Inc.



Schedules
of Investments (Continued)



As
of December 31, 2019



(Expressed
in U.S. Dollars)



|Portfolio Investments (a) (b) (c) (d) (e) (f)                                                                        |  | Par |           |  | Cost |   |             | Value | 
|-------------------------------------------------------------------------------------------------------------------- |  | --- | --------- |  | ---- | - | ----------- | ----- | 
|BANK LOANS:  NON-CONTROL/NON-AFFILIATE INVESTMENTS(h)(Continued):                                                    |  |     |           |  |      |   |             |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Containers, Packaging & Glass                                                                                        |  |     |           |  |      |   |             |       | 
|ProAmpac, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 11/20/23(i)                 |  | $   | 3,000,535 |  |      | $ | 3,017,391   |       | 
|Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/18/26             |  |     | 1,995,000 |  |      |   | 1,985,448   |       | 
|Tank Holding, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 3/26/26(i)              |  |     | 997,500   |  |      |   | 993,032     |       | 
|Pregis Corporation, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/31/26           |  |     | 1,000,000 |  |      |   | 997,605     |       | 
|TricorBraun, Senior Secured Closing Date Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 11/30/23(i)         |  |     | 494,901   |  |      |   | 494,901     |       | 
|Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 6.16% (Libor + 4.25%), maturity 5/12/20                       |  |     | 488,837   |  |      |   | 488,275     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Capital Equipment                                                                                                    |  |     |           |  |      |   |             |       | 
|MW Industries, Senior Secured 2018 New Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/30/24               |  |     | 2,443,750 |  |      |   | 2,443,750   |       | 
|BAS, Senior Secured Repricing Term Loan, 5.66% (Libor + 3.75%), maturity 5/21/24                                     |  |     | 1,969,661 |  |      |   | 1,971,159   |       | 
|Edward Don, Senior Secured Initial Term Loan, 6.16% (Libor + 4.25%), maturity 7/2/25                                 |  |     | 1,478,769 |  |      |   | 1,472,799   |       | 
|Cole-Parmer, Senior Secured Closing Date Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 11/4/26             |  |     | 1,000,000 |  |      |   | 995,111     |       | 
|Excelitas, Senior Secured Initial USD Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 12/2/24                |  |     | 493,703   |  |      |   | 497,366     |       | 
|TriMark, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 8/28/24(i)                   |  |     | 491,207   |  |      |   | 492,665     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Wholesale                                                                                                            |  |     |           |  |      |   |             |       | 
|Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 3/20/25         |  |     | 3,935,671 |  |      |   | 3,936,089   |       | 
|PetroChoice, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 8/19/22                  |  |     | 1,915,184 |  |      |   | 1,893,658   |       | 
|ABB Optical, Senior Secured Initial Term Loan (First Lien), 6.91% (Libor + 5.00%), maturity 6/15/23                  |  |     | 1,454,906 |  |      |   | 1,452,426   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Transportation: Cargo                                                                                                |  |     |           |  |      |   |             |       | 
|Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 10/12/24 |  |     | 3,615,344 |  |      |   | 3,611,340   |       | 
|Transplace, Senior Secured Closing Date Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 10/7/24(i)           |  |     | 2,466,458 |  |      |   | 2,459,768   |       | 
|Capstone Logistics, Senior Secured Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 10/7/21                   |  |     | 1,161,707 |  |      |   | 1,161,868   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Construction & Building                                                                                              |  |     |           |  |      |   |             |       | 
|PlayPower, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 5/8/26                                  |  |     | 1,934,722 |  |      |   | 1,934,722   |       | 
|Tangent, Senior Secured Closing Date Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 11/30/24                |  |     | 1,496,238 |  |      |   | 1,480,815   |       | 
|DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 6/3/24   |  |     | 1,474,832 |  |      |   | 1,462,983   |       | 
|PlayCore, Senior Secured Initial Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 9/30/24(i)                  |  |     | 976,912   |  |      |   | 975,059     |       | 
|CHI Overhead Doors, Senior Secured Initial Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 7/29/22(i)        |  |     | 628,442   |  |      |   | 623,246     |       | 
|Hoffman Southwest, Senior Secured Initial Term Loan, 6.41% (Libor + 4.50%), maturity 8/14/23                         |  |     | 527,876   |  |      |   | 523,556     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Automotive                                                                                                           |  |     |           |  |      |   |             |       | 
|Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 3/20/25(i)                |  |     | 3,592,566 |  |      |   | 3,578,510   |       | 
|Truck Hero, Senior Secured Initial Term Loan (Second Lien), 10.16% (Libor + 8.25%), maturity 4/21/25                 |  |     | 1,800,000 |  |      |   | 1,798,507   |       | 
|Safe Fleet, Senior Secured Tranche B-1 Term Loan (First Lien), 5.66% (Libor + 3.75%), maturity 2/3/25                |  |     | 987,500   |  |      |   | 963,545     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Media: Advertising, Printing & Publishing                                                                            |  |     |           |  |      |   |             |       | 
|Ansira, Unitranche, 7.66% (Libor + 5.75%), maturity 12/20/22                                                         |  |     | 1,905,523 |  |      |   | 1,893,460   |       | 
|Northstar, Senior Secured Term Loan, 8.16% (Libor + 6.25%), maturity 6/7/22                                          |  |     | 1,449,510 |  |      |   | 1,449,510   |       | 
|Imagine! Print Solutions, Senior Secured Term B-1 Loan (First Lien), 6.66% (Libor + 4.75%), maturity 6/21/22         |  |     | 1,458,750 |  |      |   | 1,451,152   |       | 
|Vestcom International, Senior Secured L/C Collaterilized, 5.91% (Libor + 4.00%), maturity 12/19/23                   |  |     | 783,878   |  |      |   | 786,703     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Forest Products & Paper                                                                                              |  |     |           |  |      |   |             |       | 
|Hoffmaster Group, Senior Secured Tranche B-1 Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 11/21/23        |  |     | 2,927,277 |  |      |   | 2,915,319   |       | 
|Loparex, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 7/31/26                      |  |     | 1,496,250 |  |      |   | 1,481,906   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Beverage, Food & Tobacco                                                                                             |  |     |           |  |      |   |             |       | 
|Sovos Brands, Senior Secured Initial Term Loan (2018), 6.91% (Libor + 5.00%), maturity 11/20/25                      |  |     | 1,980,000 |  |      |   | 1,962,677   |       | 
|Kettle Cuisine, Senior Secured Initial Term Loan (First Lien) , 5.66% (Libor + 3.75%), maturity 8/25/25              |  |     | 1,975,000 |  |      |   | 1,966,820   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Hotel, Gaming & Leisure                                                                                              |  |     |           |  |      |   |             |       | 
|On Location, Senior Secured Second Amendment Term Loan, 6.91% (Libor + 5.00%), maturity 9/29/21                      |  |     | 2,396,566 |  |      |   | 2,384,489   |       | 
|Auto Europe, Senior Secured Initial Dollar Term Loan, 6.91% (Libor + 5.00%), maturity 10/21/23                       |  |     | 1,119,231 |  |      |   | 1,110,756   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Consumer Goods: Durable                                                                                              |  |     |           |  |      |   |             |       | 
|Strategic Partners, Senior Secured Initial Term Loan, 5.66% (Libor + 3.75%), maturity 6/30/23                        |  |     | 2,309,428 |  |      |   | 2,306,211   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Retail                                                                                                               |  |     |           |  |      |   |             |       | 
|Grocery Outlet, Senior Secured 2019 Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 10/22/25(i)              |  |     | 1,269,483 |  |      |   | 1,266,905   |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Metals & Mining                                                                                                      |  |     |           |  |      |   |             |       | 
|Dynatect, Senior Secured Term B Loan, 6.41% (Libor + 4.50%), maturity 9/30/22                                        |  |     | 997,579   |  |      |   | 990,633     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Health Care Equipment & Services                                                                                     |  |     |           |  |      |   |             |       | 
|MyEyeDr, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/31/26(i)                   |  |     | 525,311   |  |      |   | 519,256     |       | 
|                                                                                                                     |  |     |           |  |      |   |             |       | 
|Total Bank Loans                                                                                                     |  |     |           |  |      | $ | 331,601,425 |       | 



The
accompanying notes are an integral part of these financial statements.





81







Audax
Credit BDC Inc.



Schedules
of Investments (Continued)



As
of December 31, 2019



(Expressed
in U.S. Dollars)



|Portfolio
    Investments (a) (b) (c) (d) (e) (f)                                                     |  | Par |  |  | Cost |   |             | Value | 
|----------------------------------------------------------------------------------------------------- |  | --- |  |  | ---- | - | ----------- | ----- | 
|EQUITY
    AND PREFERRED SHARES:  NON-CONTROL/NON-AFFILIATE INVESTMENTS- (0.2%)(g)(h):                |  |     |  |  |      |   |             |       | 
|                                                                                                      |  |     |  |  |      |   |             |       | 
|Services: Business                                                                                    |  |     |  |  |      |   |             |       | 
|DBi
    Services, Class A-1 Preferred Units (800.53 units)(k)                                         |  |     |  |  |      | $ | 800,535     |       | 
|DBi
    Services, Class B Common Shares (169,362.31 shares)(l)(m)                                     |  |     |  |  |      |   | -           |       | 
|                                                                                                      |  |     |  |  |      |   |             |       | 
|Services: Consumer                                                                                    |  |     |  |  |      |   |             |       | 
|Ned
    Stevens, Class B Common Units (261,438 Common B units, Fair value of $261,438)(f)(j)(m)(n)(o) |  |     |  |  |      |   | 261,438     |       | 
|                                                                                                      |  |     |  |  |      |   |             |       | 
|Healthcare &
    Pharmaceuticals                                                                      |  |     |  |  |      |   |             |       | 
|Alpaca,
    Class A Units (33,300.04 Class A Units, Fair value of $57,552)(f)(i)(j)(m)(o)(p)          |  |     |  |  |      |   | 58,608      |       | 
|Total Equity and Preferred Shares                                                                     |  |     |  |  |      | $ | 1,120,581   |       | 
|                                                                                                      |  |     |  |  |      |   |             |       | 
|                                                                                                      |  |     |  |  |      |   |             |       | 
|Total Portfolio Investments(q)                                                                        |  |     |  |  |      | $ | 332,722,006 |       | 



|(a) | All companies are located in the United States of America,
unless otherwise noted.                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Interest rate percentages represent actual interest
rates which are indexed from then 30-day London Interbank Offered Rate ("LIBOR") unless otherwise noted. LIBOR
rates are subject to interest rate floors which can vary based on the contractual agreement with the borrower. Due dates
represent the contractual maturity date.                             
|(c) | All loans are income-producing, unless otherwise noted.                                                                                                                                                                                                                                                                                                          
|(d) | All investments are qualifying assets under Section 55(a) of
the Investment Company Act of 1940, as amended (the "1940 Act") unless otherwise noted.                                                                                                                                                                                                             
|(e) | All investments are exempt from registration under the
Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities”  under
the Securities Act.                                                                                                                                                                                 
|(f) | Unless indicated otherwise, all of our investments are
valued using Level 3 inputs within the FASB Accounting Standard Codification (“ASC”) Topic 820, “Fair
Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3 – Investments in
the accompanying Notes to Financial  Statements for additional information.                  
|(g) | Percentages are calculated using fair value of investments
over net assets.                                                                                                                                                                                                                                                                                      
|(h) | As defined in 1940 Act, the Company is not deemed to
be an “Affiliated Person” of or “Control” this portfolio company because it neither owns 5%  or more
of the  portfolio company’s outstanding voting securities nor has the power to exercise control over the management
or policies of such  portfolio  company (including through a management agreement).
|(i) | Investment was valued using Level 2 inputs within the
ASC 820 fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to  Financial Statements
for additional information.                                                                                                                                                                 
|(j) | Three of our affiliated funds, Audax Direct Lending
Solutions Fund - A, L.P., Audax Direct Lending Solutions Fund - C, L.P., and Audax Direct Lending Solutions Fund - D, L.P.,
"'co-invested with us in this portfolio company pursuant to an exemptive
order granted by the U.S. Securities and Exchange Commission.                                           
|(k) | Represents an investment owned by APD Dbi Preferred, Inc.,
a holding company for the investment in DBi.                                                                                                                                                                                                                                                          
|(l) | Represents an investment owned by APD Dbi Common, Inc.,
a holding company for the investment in DBi.                                                                                                                                                                                                                                                             
|(m) | Investment is non-income producing.                                                                                                                                                                                                                                                                                                                              
|(n) | Represents an investment in APD NS Equity, L.P., a holding
company, made through an affiliated equity aggregator vehicle.                                                                                                                                                                                                                                        
|(o) | Other net assets of $0 at the aggregator levels are
included in the fair value of the investments when using the net asset value as a practical expedient.                                                                                                                                                                                                       
|(p) | Represents an investment in APD ALP Equity, L.P., a
holding company, made through an affiliated equity aggregator vehicle.                                                                                                                                                                                                                                       
|(q) | At December 31, 2019, the cost of investments for
income tax purposes was $332,722,006 the gross unrealized depreciation for federal tax purposes was $2,951,506, the gross
unrealized appreciation for federal income tax purposes was $1,104,411, and the net unrealized depreciation was $1,847,095.                                                          







The
accompanying notes are an integral part of these financial statements.





82







Audax
Credit BDC Inc.

Schedules of Investments

As of December 31,
2018

(Expressed in U.S.
Dollars)



|Portfolio Investments (a) (b) (c) (d) (e) (f)                                                                                        |  | Par |           |  | Cost |   |           | Value | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | --- | --------- |  | ---- | - | --------- | ----- | 
|NON-CONTROL/NON-AFFILIATE INVESTMENTS - (99.0%)(g)(h):                                                                               |  |     |           |  |      |   |           |       | 
|                                                                                                                                     |  |     |           |  |      |   |           |       | 
|Healthcare & Pharmaceuticals                                                                                                         |  |     |           |  |      |   |           |       | 
|Radiology Partners, Senior Secured Term B Loan (First Lien), 7.05% (Libor + 4.25%), maturity 7/9/25(i)                               |  | $   | 3,990,000 |  |      | $ | 3,952,085 |       | 
|Young, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 11/7/24(i)                                     |  |     | 3,902,369 |  |      |   | 3,890,558 |       | 
|Beaver-Visitec, Senior Secured Term B Loan, 6.80% (Libor + 4.00%), maturity 8/21/23(i)                                               |  |     | 3,914,044 |  |      |   | 3,914,043 |       | 
|Specialty Care, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 9/1/23                                |  |     | 3,377,066 |  |      |   | 3,381,533 |       | 
|Zest Dental, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 3/14/25                                  |  |     | 3,367,138 |  |      |   | 3,394,604 |       | 
|Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 8/18/23                         |  |     | 2,936,340 |  |      |   | 2,913,237 |       | 
|MedRisk, Senior Secured Initial Term Loan (First Lien), 5.55% (Libor + 2.75%), maturity 12/27/24                                     |  |     | 2,475,000 |  |      |   | 2,481,109 |       | 
|Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 9/23/24                       |  |     | 2,465,213 |  |      |   | 2,443,320 |       | 
|Upstream Rehabilitation, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 1/3/24                                    |  |     | 2,411,880 |  |      |   | 2,409,690 |       | 
|OB Hospitalist Group, Senior Secured Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 8/1/24                                  |  |     | 2,363,660 |  |      |   | 2,350,839 |       | 
|Avalign Technologies, Senior Secured Term Loan B, 7.30% (Libor + 4.50%), maturity 12/19/25(i)                                        |  |     | 2,000,000 |  |      |   | 1,980,000 |       | 
|CareCentrix, Senior Secured Initial Term Loan, 7.30% (Libor + 4.50%), maturity 4/3/25                                                |  |     | 1,962,500 |  |      |   | 1,953,489 |       | 
|Premise Health, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 7/10/25(i)                            |  |     | 1,848,316 |  |      |   | 1,858,011 |       | 
|Veritext, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 8/1/25(i)                                   |  |     | 1,459,924 |  |      |   | 1,460,860 |       | 
|MedRisk, Senior Secured Initial Loan (Second Lien), 9.55% (Libor + 6.75%), maturity 12/29/25                                         |  |     | 1,100,000 |  |      |   | 1,089,000 |       | 
|Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 6/30/23(i)                    |  |     | 994,898   |  |      |   | 1,002,071 |       | 
|Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 8.30% (Libor + 5.50%), maturity 5/9/25                         |  |     | 997,500   |  |      |   | 983,581   |       | 
|Veritext, Senior Secured Initial Term Loan (Second Lien), 9.80% (Libor + 7.00%), maturity 7/31/26                                    |  |     | 1,000,000 |  |      |   | 995,138   |       | 
|Alcami, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 7/14/25                                       |  |     | 997,500   |  |      |   | 992,739   |       | 
|U.S. Renal Care, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 12/30/22(i)                          |  |     | 993,613   |  |      |   | 989,751   |       | 
|ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 5/10/23                         |  |     | 931,577   |  |      |   | 937,752   |       | 
|Dermatologists of Central States, Senior Secured Term Loan, 9.30% (Libor + 6.50%), maturity 4/20/22                                  |  |     | 895,940   |  |      |   | 887,937   |       | 
|Specialty Care, Senior Secured Initial Term Loan (Second Lien), 11.05% (Libor + 8.25%), maturity 9/1/24                              |  |     | 850,000   |  |      |   | 842,238   |       | 
|RMP & MedA/Rx, Senior Secured Term Loan, 7.55% (Libor + 4.75%), maturity 3/2/22                                                      |  |     | 467,243   |  |      |   | 465,637   |       | 
|                                                                                                                                     |  |     |           |  |      |   |           |       | 
|High Tech Industries                                                                                                                 |  |     |           |  |      |   |           |       | 
|Navicure, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 11/1/24                                     |  |     | 3,466,241 |  |      |   | 3,455,194 |       | 
|Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 8/16/24(i)                         |  |     | 3,456,338 |  |      |   | 3,427,046 |       | 
|Masergy, Senior Secured Initial Loan (Second Lien), 10.30% (Libor + 7.50%), maturity 12/16/24                                        |  |     | 3,428,571 |  |      |   | 3,418,552 |       | 
|Sparta, Senior Secured New Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 8/21/24                                           |  |     | 3,456,250 |  |      |   | 3,458,349 |       | 
|Barracuda, Senior Secured Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 2/12/25(i)                                         |  |     | 2,985,000 |  |      |   | 3,003,618 |       | 
|Infogroup, Senior Secured Term Loan (First Lien), 7.80% (Libor + 5.00%), maturity 4/3/23                                             |  |     | 2,949,962 |  |      |   | 2,918,814 |       | 
|McAfee, Senior Secured Term B USD Loan, 6.55% (Libor + 3.75%), maturity 9/30/24(i)                                                   |  |     | 2,893,438 |  |      |   | 2,906,309 |       | 
|HelpSystems, Senior Secured Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 3/28/25                                          |  |     | 2,487,500 |  |      |   | 2,485,229 |       | 
|Intermedia , Senior Secured New Term Loan (First Lien), 8.80% (Libor + 6.00%), maturity 7/21/25                                      |  |     | 2,000,000 |  |      |   | 1,980,887 |       | 
|Flexera Software, Senior Secured Initial Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 2/26/25(i)                          |  |     | 1,985,000 |  |      |   | 1,990,262 |       | 
|Bomgar, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 4/18/25                                       |  |     | 1,741,250 |  |      |   | 1,753,357 |       | 
|GlobalLogic, Senior Secured Initial Term Loan, 6.05% (Libor + 3.25%), maturity 8/1/25(i)                                             |  |     | 1,745,625 |  |      |   | 1,735,985 |       | 
|Idera, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 6/28/24                                        |  |     | 1,665,545 |  |      |   | 1,667,150 |       | 
|SciQuest, Senior Secured Term Loan, 6.80% (Libor + 4.00%), maturity 12/28/24                                                         |  |     | 1,488,750 |  |      |   | 1,482,127 |       | 
|ECi Software Solutions, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 9/27/24(i)                                 |  |     | 1,486,237 |  |      |   | 1,474,659 |       | 
|Compusearch Software Systems, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 5/7/21                               |  |     | 1,474,211 |  |      |   | 1,473,229 |       | 
|Navex Global, Senior Secured Initial Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 9/5/25(i)                               |  |     | 1,496,250 |  |      |   | 1,479,928 |       | 
|Corsair, Senior Secured Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 8/28/24                                              |  |     | 992,683   |  |      |   | 988,177   |       | 
|Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 13.05% (Libor + 10.25%), maturity 1/20/22                          |  |     | 1,000,000 |  |      |   | 993,585   |       | 
|LANDesk, Senior Secured Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 1/20/24(i)                                           |  |     | 988,129   |  |      |   | 977,504   |       | 
|Community Brands, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 12/2/22                             |  |     | 798,373   |  |      |   | 793,856   |       | 
|Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 12/15/23                            |  |     | 490,000   |  |      |   | 488,150   |       | 
|MultiPlan, Senior Secured Initial Term Loan, 5.55% (Libor + 2.75%), maturity 6/7/23(i)                                               |  |     | 500,000   |  |      |   | 483,750   |       | 
|Endurance Int'l Group, Senior Secured Refinancing Loan (2018), 6.55% (Libor + 3.75%), maturity 2/9/23(i)                             |  |     | 443,365   |  |      |   | 442,430   |       | 
|                                                                                                                                     |  |     |           |  |      |   |           |       | 
|Services: Business                                                                                                                   |  |     |           |  |      |   |           |       | 
|CoAdvantage, Senior Secured Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 10/1/23(i)                                       |  |     | 3,955,050 |  |      |   | 3,955,050 |       | 
|RevSpring, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 10/11/25(i)                                |  |     | 3,500,000 |  |      |   | 3,496,396 |       | 
|Fleetwash, Senior Secured Initial Term Loan, 7.55% (Libor + 4.75%), maturity 10/1/24                                                 |  |     | 2,992,500 |  |      |   | 2,963,427 |       | 
|Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 6/19/24                           |  |     | 2,923,903 |  |      |   | 2,923,903 |       | 
|Systems Maintenance Services, Senior Secured Initial Term Loan (First Lien), 7.80% (Libor + 5.00%), maturity 10/30/23                |  |     | 2,940,000 |  |      |   | 2,940,000 |       | 
|HireRight, Senior Secured Initial Term Loan (Second Lien), 10.05% (Libor + 7.25%), maturity 7/10/26                                  |  |     | 2,500,000 |  |      |   | 2,476,095 |       | 
|Kellermeyer Bergensons Services, Senior Secured 2018 Replacement Term Loan (First Lien), 7.55% (Libor + 4.75%), maturity 10/29/21(i) |  |     | 2,318,897 |  |      |   | 2,309,135 |       | 
|First Advantage, Senior Secured Term Loan (First Lien), 8.05% (Libor + 5.25%), maturity 6/30/22                                      |  |     | 2,000,000 |  |      |   | 1,991,806 |       | 
|Newport Group, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 9/12/25                                |  |     | 1,995,000 |  |      |   | 1,985,318 |       | 
|Vistage, Senior Secured Term B Loan (First Lien), 6.80% (Libor + 4.00%), maturity 2/10/25                                            |  |     | 1,985,000 |  |      |   | 1,980,809 |       | 
|Allied Universal, Senior Secured Incremental Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 7/28/22                         |  |     | 2,000,000 |  |      |   | 2,000,000 |       | 
|DBi Services, Senior Secured Term B Loan, 8.05% (Libor + 5.25%), maturity 8/1/21                                                     |  |     | 1,977,444 |  |      |   | 1,963,482 |       | 
|OSG Billing Services, Senior Secured Term B Loan (First Lien), 7.05% (Libor + 4.25%), maturity 3/27/24                               |  |     | 1,489,391 |  |      |   | 1,483,770 |       | 
|Livingston, Senior Secured Refinancing Term B-3 Loan (First Lien), 8.55% (Libor + 5.75%), maturity 3/20/20 (j)                       |  |     | 1,485,000 |  |      |   | 1,486,788 |       | 
|Eliassen Group, Senior Secured Term Loan B, 7.30% (Libor + 4.50%), maturity 11/5/24                                                  |  |     | 1,000,000 |  |      |   | 995,057   |       | 
|Service Logic, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 7/31/23(i)                             |  |     | 990,005   |  |      |   | 986,031   |       | 
|Equian, Senior Secured 2018 Incremental Term Loan, 6.05% (Libor + 3.25%), maturity 5/20/24(i)                                        |  |     | 993,709   |  |      |   | 997,137   |       | 
|Livingston, Senior Secured Initial Term Loan (Second Lien), 11.05% (Libor + 8.25%), maturity 4/17/20 (i)(j)                          |  |     | 616,000   |  |      |   | 597,520   |       | 
|DBi Services, Senior Secured Super Priority Term Loan, 15.00% (Libor + 15.00%), maturity 2/1/20(i)                                   |  |     | 144,000   |  |      |   | 144,000   |       | 
|                                                                                                                                     |  |     |           |  |      |   |           |       | 
|Chemicals, Plastics & Rubber                                                                                                         |  |     |           |  |      |   |           |       | 
|Plaskolite, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 12/15/25(i)                               |  |     | 3,500,000 |  |      |   | 3,430,000 |       | 
|Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 5/30/24(i)                      |  |     | 2,962,575 |  |      |   | 2,962,667 |       | 





The
accompanying notes are an integral part of these financial statements.





83







Audax
Credit BDC Inc.

Schedules of
Investments (Continued)

As of December 31,
2018

(Expressed in U.S.
Dollars)



|Portfolio Investments (a) (b) (c) (d) (e) (f)                                                                                |  | Par |           |  | Cost |   |           | Value | 
|---------------------------------------------------------------------------------------------------------------------------- |  | --- | --------- |  | ---- | - | --------- | ----- | 
|NON-CONTROL/NON-AFFILIATE INVESTMENTS(h)(Continued):                                                                         |  |     |           |  |      |   |           |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Chemicals, Plastics & Rubber (continued):                                                                                    |  |     |           |  |      |   |           |       | 
|Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 7.55% (Libor + 4.75%), maturity 10/4/21              |  | $   | 2,864,310 |  |      | $ | 2,856,324 |       | 
|Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 1/31/25               |  |     | 2,709,525 |  |      |   | 2,720,231 |       | 
|Boyd Corp, Senior Secured Initial Loan (Second Lien), 9.55% (Libor + 6.75%), maturity 9/6/26(i)                              |  |     | 2,000,000 |  |      |   | 2,002,455 |       | 
|Unifrax, Senior Secured USD Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 12/12/25(i)                              |  |     | 2,000,000 |  |      |   | 1,990,000 |       | 
|Borchers, Senior Secured Term Loan, 7.30% (Libor + 4.50%), maturity 11/1/24                                                  |  |     | 1,969,937 |  |      |   | 1,964,072 |       | 
|Zep, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 8/12/24                                  |  |     | 1,976,237 |  |      |   | 1,973,888 |       | 
|DuBois, Senior Secured Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 3/15/24(i)                                    |  |     | 1,488,898 |  |      |   | 1,490,117 |       | 
|DuBois, Senior Secured Term Loan (Second Lien), 10.80% (Libor + 8.00%), maturity 3/15/25                                     |  |     | 1,500,000 |  |      |   | 1,485,490 |       | 
|Houghton International, Senior Secured Term Loan (Second Lien), 11.30% (Libor + 8.50%), maturity 12/21/20                    |  |     | 1,000,000 |  |      |   | 1,000,000 |       | 
|Invictus, Senior Secured Initial Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 3/28/25(i)                          |  |     | 997,487   |  |      |   | 1,004,912 |       | 
|Prince Minerals, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 3/31/25                      |  |     | 992,500   |  |      |   | 987,925   |       | 
|Vantage Specialty Chemicals, Senior Secured Closing Date Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 10/28/24(i) |  |     | 997,481   |  |      |   | 977,531   |       | 
|Boyd Corp, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 9/6/25(i)                          |  |     | 997,500   |  |      |   | 980,044   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Services: Consumer                                                                                                           |  |     |           |  |      |   |           |       | 
|A Place For Mom, Senior Secured Term Loan, 6.55% (Libor + 3.75%), maturity 8/10/24(i)                                        |  |     | 2,693,419 |  |      |   | 2,692,552 |       | 
|Smart Start, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 2/21/22(i)                       |  |     | 2,442,485 |  |      |   | 2,442,485 |       | 
|Cambium Learning, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 12/18/25(i)                 |  |     | 2,500,000 |  |      |   | 2,375,000 |       | 
|CIBT Holdings, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 6/3/24                         |  |     | 1,979,900 |  |      |   | 1,995,160 |       | 
|SMG, Senior Secured Initial Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 1/23/25(i)                               |  |     | 1,496,231 |  |      |   | 1,489,971 |       | 
|Weld North, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 2/15/25                                        |  |     | 1,488,750 |  |      |   | 1,475,327 |       | 
|Valet Living, Senior Secured Initial Term Loan, 6.80% (Libor + 4.00%), maturity 9/28/25(i)                                   |  |     | 997,500   |  |      |   | 995,073   |       | 
|Mister Car Wash, Senior Secured Term Loan, 6.05% (Libor + 3.25%), maturity 8/20/21(i)                                        |  |     | 994,801   |  |      |   | 1,001,543 |       | 
|Spring Education, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 7/30/25                     |  |     | 997,500   |  |      |   | 995,113   |       | 
|LegalShield, Senior Secured Initial Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 5/1/25(i)                        |  |     | 500,000   |  |      |   | 500,000   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Banking, Finance, Insurance & Real Estate                                                                                    |  |     |           |  |      |   |           |       | 
|Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 8.55% (Libor + 5.75%), maturity 10/31/22           |  |     | 2,910,854 |  |      |   | 2,838,756 |       | 
|Inst. Shareholder Services, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 10/16/24(i)       |  |     | 2,475,521 |  |      |   | 2,470,128 |       | 
|American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 10.30% (Libor + 7.50%), maturity 4/30/23         |  |     | 2,000,000 |  |      |   | 2,000,000 |       | 
|AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 7.55% (Libor + 4.75%), maturity 7/10/22                      |  |     | 1,892,041 |  |      |   | 1,876,407 |       | 
|EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 9/6/24                        |  |     | 1,485,000 |  |      |   | 1,481,748 |       | 
|Aperio, Senior Secured Loan, 7.80% (Libor + 5.00%), maturity 10/25/24(i)                                                     |  |     | 1,000,000 |  |      |   | 995,000   |       | 
|Integrity Marketing Group, Senior Secured Term Loan, 7.05% (Libor + 4.25%), maturity 11/28/25(i)                             |  |     | 421,260   |  |      |   | 418,774   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Transportation: Cargo                                                                                                        |  |     |           |  |      |   |           |       | 
|Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 10/12/24(i)      |  |     | 3,967,544 |  |      |   | 3,962,584 |       | 
|Transplace, Senior Secured Closing Date Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 10/7/24(i)                   |  |     | 2,982,487 |  |      |   | 2,972,987 |       | 
|Capstone Logistics, Senior Secured Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 10/7/21                           |  |     | 1,237,631 |  |      |   | 1,237,865 |       | 
|GlobalTranz, Senior Secured Term Loan (First Lien), 7.05% (Libor + 4.25%), maturity 6/29/25                                  |  |     | 997,500   |  |      |   | 996,510   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Wholesale                                                                                                                    |  |     |           |  |      |   |           |       | 
|Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 3/20/25                 |  |     | 3,239,325 |  |      |   | 3,239,674 |       | 
|Ohio Transmission, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 10/2/21                                 |  |     | 1,944,545 |  |      |   | 1,934,714 |       | 
|PetroChoice, Senior Secured Initial Term Loan (First Lien), 7.80% (Libor + 5.00%), maturity 8/19/22                          |  |     | 1,935,184 |  |      |   | 1,906,108 |       | 
|ABB Optical, Senior Secured Initial Term Loan (First Lien), 7.80% (Libor + 5.00%), maturity 6/15/23                          |  |     | 1,469,943 |  |      |   | 1,465,859 |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Consumer Goods: Non-durable                                                                                                  |  |     |           |  |      |   |           |       | 
|Manna Pro, Senior Secured Term Loan, 8.80% (Libor + 6.00%), maturity 12/8/23(i)                                              |  |     | 3,243,333 |  |      |   | 3,197,312 |       | 
|Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 9/11/23                    |  |     | 1,954,707 |  |      |   | 1,940,509 |       | 
|Augusta Sportswear Group, Senior Secured Initial Term Loan, 7.30% (Libor + 4.50%), maturity 10/26/23                         |  |     | 1,812,658 |  |      |   | 1,798,262 |       | 
|Varsity Brands, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 12/16/24(i)                   |  |     | 997,484   |  |      |   | 1,004,750 |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Capital Equipment                                                                                                            |  |     |           |  |      |   |           |       | 
|MW Industries, Senior Secured 2018 New Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 9/30/24(i)                    |  |     | 2,468,750 |  |      |   | 2,468,750 |       | 
|Edward Don, Senior Secured Initial Term Loan, 7.05% (Libor + 4.25%), maturity 7/2/25                                         |  |     | 1,995,000 |  |      |   | 1,985,498 |       | 
|BAS, Senior Secured Repricing Term Loan, 6.55% (Libor + 3.75%), maturity 5/21/24(i)                                          |  |     | 1,488,680 |  |      |   | 1,489,497 |       | 
|Excelitas, Senior Secured Initial USD Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 12/2/24(i)                     |  |     | 498,741   |  |      |   | 503,059   |       | 
|TriMark, Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 8/28/24(i)                           |  |     | 496,232   |  |      |   | 497,969   |       | 
|United Flexible, Senior Secured Term Loan, 7.55% (Libor + 4.75%), maturity 2/16/21                                           |  |     | 414,596   |  |      |   | 412,054   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Construction & Building                                                                                                      |  |     |           |  |      |   |           |       | 
|PlayPower, Senior Secured Initial Term Loan (First Lien), 7.55% (Libor + 4.75%), maturity 6/23/21                            |  |     | 1,949,495 |  |      |   | 1,938,816 |       | 
|PlayPower, Senior Secured Initial Term Loan (Second Lien), 11.55% (Libor + 8.75%), maturity 6/23/22                          |  |     | 1,000,000 |  |      |   | 994,051   |       | 
|CHI Overhead Doors, Senior Secured Initial Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 7/29/22(i)                |  |     | 1,496,145 |  |      |   | 1,480,497 |       | 
|DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 6/3/24           |  |     | 989,953   |  |      |   | 989,953   |       | 
|PlayCore, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 9/30/24                             |  |     | 986,906   |  |      |   | 984,757   |       | 
|                                                                                                                             |  |     |           |  |      |   |           |       | 
|Automotive                                                                                                                   |  |     |           |  |      |   |           |       | 
|Mavis, Senior Secured Closing Date Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 3/20/25                           |  |     | 3,504,018 |  |      |   | 3,488,084 |       | 
|Truck Hero, Senior Secured Initial Term Loan (Second Lien), 11.05% (Libor + 8.25%), maturity 4/21/25                         |  |     | 1,800,000 |  |      |   | 1,798,295 |       | 
|Safe Fleet, Senior Secured Tranche B-1 Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 2/3/25(i)                     |  |     | 997,500   |  |      |   | 970,069   |       | 





The
accompanying notes are an integral part of these financial statements.





84







Audax
Credit BDC Inc.

Schedules
of Investments (Continued)

As of December 31,
2018

(Expressed in U.S.
Dollars)



|Portfolio
    Investments (a) (b) (c) (d) (e) (f)                                                                                |  | Par |           |  | Cost |   |             | Value | 
|-------------------------------------------------------------------------------------------------------------------------------- |  | --- | --------- |  | ---- | - | ----------- | ----- | 
|NON-CONTROL/NON-AFFILIATE
    INVESTMENTS(h)(Continued):                                                                         |  |     |           |  |      |   |             |       | 
|Aerospace & Defense                                                                                                              |  |     |           |  |      |   |             |       | 
|StandardAero,
    Senior Secured Initial Term Loan, 6.55% (Libor + 3.75%), maturity 7/7/22(i)                                    |  | $   | 2,971,912 |  |      | $ | 2,987,349   |       | 
|Consolidated
    Precision Products, Senior Secured Initial Term Loan (Second Lien), 10.55% (Libor + 7.75%), maturity 4/30/26(i) |  |     | 1,500,000 |  |      |   | 1,516,576   |       | 
|Tronair, Senior Secured Initial
    Term Loan (First Lien), 7.55% (Libor + 4.75%), maturity 9/8/23                               |  |     | 1,471,187 |  |      |   | 1,463,261   |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Beverage, Food & Tobacco                                                                                                         |  |     |           |  |      |   |             |       | 
|Sovos
    Brands, Senior Secured Initial Term Loan (2018), 7.80% (Libor + 5.00%), maturity 11/20/25(i)                           |  |     | 2,000,000 |  |      |   | 1,980,206   |       | 
|Kettle Cuisine, Senior Secured
    Initial Term Loan (First Lien) , 6.55% (Libor + 3.75%), maturity 8/25/25                      |  |     | 1,995,000 |  |      |   | 1,985,383   |       | 
|Lipari,
    Senior Secured Term Loan A, 7.30% (Libor + 4.50%), maturity 10/1/22(i)                                               |  |     | 1,957,180 |  |      |   | 1,949,755   |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Containers, Packaging & Glass                                                                                                    |  |     |           |  |      |   |             |       | 
|ProAmpac,
    Senior Secured Initial Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 11/20/23(i)                         |  |     | 3,461,013 |  |      |   | 3,484,861   |       | 
|Pregis
    Corporation, Senior Secured Term Loan (First Lien), 6.30% (Libor + 3.50%), maturity 5/20/21(i)                        |  |     | 1,732,054 |  |      |   | 1,738,637   |       | 
|Alpha Packaging, Senior Secured
    Tranche B-1 Term Loan, 7.05% (Libor + 4.25%), maturity 5/12/20                               |  |     | 493,837   |  |      |   | 492,994     |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Media: Advertising, Printing & Publishing                                                                                        |  |     |           |  |      |   |             |       | 
|Ansira,
    Senior Secured Initial Term Loan, 8.55% (Libor + 5.75%), maturity 12/20/22(i)                                        |  |     | 1,877,875 |  |      |   | 1,863,012   |       | 
|Northstar, Senior Secured Term
    Loan, 9.05% (Libor + 6.25%), maturity 6/7/22                                                  |  |     | 1,534,360 |  |      |   | 1,534,360   |       | 
|Imagine!
    Print Solutions, Senior Secured Term B-1 Loan (First Lien), 7.55% (Libor + 4.75%), maturity 6/21/22(i)              |  |     | 1,473,750 |  |      |   | 1,463,068   |       | 
|Vestcom International, Senior
    Secured L/C Collaterilized, 6.80% (Libor + 4.00%), maturity 12/19/23                           |  |     | 796,874   |  |      |   | 800,335     |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Hotel, Gaming & Leisure                                                                                                          |  |     |           |  |      |   |             |       | 
|On Location, Senior Secured
    Second Amendment Term Loan, 8.30% (Libor + 5.50%), maturity 9/29/21                              |  |     | 1,949,969 |  |      |   | 1,931,313   |       | 
|Auto Europe, Senior Secured
    Initial Dollar Term Loan, 7.80% (Libor + 5.00%), maturity 10/21/23                               |  |     | 1,286,538 |  |      |   | 1,275,932   |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Forest Products & Paper                                                                                                          |  |     |           |  |      |   |             |       | 
|Hoffmaster
    Group, Senior Secured Tranche B-1 Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 11/21/23(i)             |  |     | 2,957,455 |  |      |   | 2,942,751   |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Retail                                                                                                                           |  |     |           |  |      |   |             |       | 
|Grocery
    Outlet, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 10/22/25(i)                   |  |     | 2,000,000 |  |      |   | 1,995,111   |       | 
|Albertson's,
    Senior Secured 2018 Term B-7 Loan, 5.80% (Libor + 3.00%), maturity 11/17/25(i)                                  |  |     | 500,000   |  |      |   | 496,293     |       | 
|                                                                                                                                 |  |     |           |  |      |   |             |       | 
|Consumer Goods: Durable                                                                                                          |  |     |           |  |      |   |             |       | 
|Strategic
    Partners, Senior Secured Initial Term Loan, 6.55% (Libor + 3.75%), maturity 6/30/23(i)                             |  |     | 2,332,933 |  |      |   | 2,328,833   |       | 
|Total
    Portfolio Investments(k)                                                                                               |  |     |           |  |      | $ | 266,280,299 |       | 



|(a) | All companies are located in the United States of America, unless otherwise noted.                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Interest rate percentages represent actual interest rates which are indexed from then 30-day London Interbank Offered Rate ("LIBOR")       unless otherwise noted.  LIBOR rates are subject to interest rate floors which can vary based on the contractual agreement with the borrower.  Due      dates represent the contractual maturity date.            
|(c) | All loans are income-producing, unless otherwise noted.                                                                                                                                                                                                                                                                                                      
|(d) | All investments are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act") unless otherwise noted.                                                                                                                                                                                                         
|(e) | All loans are restricted, unless otherwise noted.                                                                                                                                                                                                                                                                                                            
|(f) | Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the FASB Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.               
|(g) | Percentages are calculated using fair value of investments over net assets.                                                                                                                                                                                                                                                                                  
|(h) | As defined in 1940 Act, the Company is not deemed to be an “Affiliated Person” of or “Control” this portfolio company because it neither owns 5% or more of the portfolio company’s outstanding voting securities nor has the power to exercise control over the management or policies of such portfolio company (including through a management agreement).
|(i) | Investment was valued using Level 2 inputs within the ASC 820 fair value hierarchy.  Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.                                                                                                                                                             
|(j) | The borrower for Livingston, Livingston International Inc., is located in Canada.                                                                                                                                                                                                                                                                            
|(k) | At December 31, 2018, the cost of investments for income tax purposes was $266,280,299 the gross unrealized depreciation for federal tax purposes was $2,140,935, the gross unrealized appreciation for federal income tax purposes was $523,517, and the net unrealized depreciation was $1,617,418.                                                        



The
accompanying notes are an integral part of these financial statements.





85







Audax
Credit BDC Inc. 
Notes to Financial Statements
December 31, 2019

(Expressed
in U.S. Dollars)



Note 1. Organization



Audax Credit BDC Inc. (the “Company”)
is a Delaware corporation that was formed on January 29, 2015. The Company is an externally managed, closed-end, non-diversified
management investment company that has elected to be treated as a business development company (“BDC”) under the Investment
Company Act of 1940, as amended (the “1940 Act”). In addition, effective with the Company’s taxable year ended
December 31, 2015, the Company has elected to be treated for federal income tax purposes as a regulated investment company
(“RIC”) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).



The Company commenced business operations on July 8,
2015, the date on which the Company made its first investment. The Company has been formed for the purpose of investing primarily
in the debt of leveraged, non-investment grade middle market companies, with the principal objective of generating income and capital
appreciation. The Company’s investment strategy is to invest primarily in first lien senior secured loans and selectively
in second lien loans to middle market companies. During the period prior to July 8, 2015, the Company was a development stage
company, as defined in Paragraph 915-10-05, Development Stage Entity, of the Financial Accounting Standards Board’s
(“FASB’s”) Accounting Standards Codification, as amended (“ASC”). During this time, the Company was
devoting substantially all of its efforts to establishing its business and its planned principal operations had not commenced.
All losses incurred during the period prior to July 8, 2015 have been considered a part of the Company’s development
stage activities.



Audax Management Company (NY), LLC (the “Adviser”)
is the investment adviser of the Company. The Adviser is registered as an investment adviser with the U.S. Securities and Exchange
Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended.



Note 2. Significant Accounting Policies



Basis of Presentation



As an investment company, the accompanying financial
statements of the Company are prepared in accordance with the investment company accounting and reporting guidance of ASC Topic
946, “Financial Services – Investment Companies,” as amended, which incorporates the requirements for
reporting on Form 10-K and Article 6 of Regulation S-X under the Securities Exchange Act of 1934, as amended, as well
as accounting principles generally accepted in the United States of America (“GAAP”). The accompanying financial statements
and related notes present the results of activity of the Company for the years ended December 31, 2019, 2018, and 2017.



Use of Estimates



The preparation of financial statements in conformity
with GAAP requires management of the Company to make estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Changes in the economic environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ and these differences could be material.



Cash and Cash Equivalents



Cash
and cash equivalents are stated at fair value. The Company considers all highly liquid investments purchased with maturities of
three months or less and money market mutual funds to be cash equivalents.No cash equivalent balances were held at December 31,
2019 and 2018. The cash was not subject to any restrictions on withdrawal.





86









Expenses



The Company is responsible for investment expenses,
legal expenses, auditing fees and other expenses related to the Company’s operations. Such fees and expenses, including expenses
initially incurred by the Adviser, may be reimbursed by the Company.



Investment Valuation Policy



The Company conducts the valuation of the Company’s
investments, pursuant to which the Company’s net asset value is determined, at all times consistent with GAAP and the 1940
Act. The Company’s Board of Directors, with the assistance of the Audit Committee, determines the fair value of the Company’s
investments, for investments with a public market and for investments with no readily available public market, on at least a quarterly
basis, in accordance with the terms of ASC Topic 820, “Fair Value Measurement and Disclosures,” (“ASC
820”). The Company’s valuation procedures are set forth in more detail below.



ASC 820 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.” Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities,
observable market transactions or market information might be available. For other assets and liabilities, observable market transactions
and market information might not be available. However, the objective of a fair value measurement in both cases is the same –
to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants
at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of
a market participant that holds the asset or owes the liability).



ASC 820 establishes a hierarchal disclosure framework
which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted
by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with
readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have
a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.



The three-level hierarchy for fair value measurement
is defined as follows:



| | Level1— | Inputs to the valuation methodology are quoted prices available in active markets for identical financial instruments as of the
measurement date. The types of financial instruments in this category include unrestricted securities, including equities and
derivatives, listed in active markets. The Company does not adjust the quoted price for these instruments, even in situations
where the Company holds a large position, and a sale could reasonably be expected to impact the quoted price.
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Level2— | Inputs
to the valuation methodology are quoted prices in markets that are not active or for which all significant inputs are either directly
or indirectly observable as of the measurement date. The types of financial instruments in this category include less liquid and
restricted securities listed in active markets, securities traded in markets that are not active, government and agency securities,
and certain over-the-counter derivatives where the fair value is based on observable inputs.
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Level3— | Inputs
to the valuation methodology are unobservable and significant to the overall fair value measurement, and include situations where
there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant
management judgment or estimation. The types of financial instruments in this category include investments in privately held entities,
non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives
where the fair value is based on unobservable inputs.
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the
fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant
to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the financial instrument.





87







Pursuant to the framework set forth above, the Company
values securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments
by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments
from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded
in active markets.



Pricing services aggregate, evaluate and report pricing
from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes, model-based valuations
and internal fundamental analysis and research. When doing so, the Company determines whether the quote obtained is sufficient
in accordance with GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.



Securities that are illiquid or for which the pricing
source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Company’s
Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate
under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include
comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. The process
used to determine the applicable value is as follows: (i) each portfolio company or investment is initially valued by the
investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate
fair market value based on observable market inputs and updated credit statistics and unobservable inputs; (ii) preliminary
valuation conclusions are documented and discussed with the Company’s senior management and members of the Company’s
Adviser’s valuation team; (iii) the Company’s Audit Committee reviews the assessments of the Adviser and provides
the Company’s Board of Directors with recommendations with respect to the fair value of the investments in the Company’s
portfolio; and (iv) the Company’s Board of Directors discusses the valuation recommendations of the Company’s
Audit Committee and determines the fair value of the investments in the Company’s portfolio in good faith based on the input
of the Adviser and in accordance with the Company’s valuation policy.



The Company’s Audit Committee’s recommendation
of fair value is generally based on its assessment of the following factors, as relevant:



| | · | the nature and realizable value of any collateral;
| | - | --------------------------------------------------



| | · | call features, put features and other relevant terms of debt;
| | - | -------------------------------------------------------------



| | · | the portfolio company’s ability to make payments;
| | - | -------------------------------------------------



| | · | the portfolio company’s actual and expected earnings and discounted cash flow;
| | - | ------------------------------------------------------------------------------



| | · | prevailing interest rates for like securities and expected volatility in future interest rates;
| | - | -----------------------------------------------------------------------------------------------



| | · | the markets in which the portfolio company does business and recent economic and/or market events; and
| | - | ------------------------------------------------------------------------------------------------------



| | · | comparisons to publicly traded securities.
| | - | ------------------------------------------



Investment performance data utilized are the most
recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.





88







Securities for which market quotations are not readily
available or for which a pricing source is not sufficient may include the following:



| | · | private placements and restricted securities that do not have an active trading market;
| | - | ---------------------------------------------------------------------------------------



| | · | securities whose trading has been suspended or for which market quotes are no longer available;
| | - | -----------------------------------------------------------------------------------------------



| | · | debt securities that have recently gone into default and for which there is no current market;
| | - | ----------------------------------------------------------------------------------------------



| | · | securities whose prices are stale; and
| | - | --------------------------------------



| | · | securities affected by significant events.
| | - | ------------------------------------------



The Company’s Board of Directors is responsible
for the determination, in good faith, of the fair value of the Company’s portfolio investments.



Determination of fair value involves subjective
judgments and estimates. Accordingly, these notes to the Company’s financial statements express the uncertainty with
respect to the possible effect of such valuations, and any change in such valuations, on the Company’s financial
statements.



Security transactions are recorded on the trade date
(the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which is when
all terms of the transactions have been defined).



Realized gains and losses on investments are determined
based on the identified cost method.



Refer to Note 3 — Investments for additional
information regarding fair value measurements and the Company’s application of ASC 820.



Interest Income Recognition



Interest income, adjusted for amortization of premium,
acquisition costs, and amendment fees and the accretion of original issue discount (“OID”), are recorded on an accrual
basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 120 days or more past due, or
if the Company’s qualitative assessment indicates that the debtor is unable to service its debt or other obligations, the
Company will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes
until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, the Company will remain contractually
entitled to this interest. Interest payments received on non-accrual loans are restored to accrual status when past due principal
and interest are paid and, in management’s judgment, are likely to remain current or, due to a restructuring, the interest
income is deemed to be collectible.



The
Company currently holds loans in the portfolio that contain OID and expects to hold loans in the future that contain
payment-in-kind (“PIK”) provisions. The Company recognizes OID for loans originally issued at a discount
and recognizes the income over the life of the obligation based on an effective yield calculation. PIK interest, computed at
the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over
the life of the obligation. Therefore, the actual collection of PIK income may be deferred until the time of debt principal
repayment. To maintain the ability to be taxed as a RIC, the Company may need to pay out of both OID and PIK non-cash income
amounts in the form of distributions, even though the Company has not yet collected the cash on either.



As of December 31, 2019, the Company held 162
investments in loans with OID. The Company accrued OID income of $245,353 for the year ended December 31, 2019. The unamortized
balance of OID investments as of December 31, 2019, totaled $1,733,632. As of December 31, 2018, the Company held 130
investments in loans with OID. The Company accrued OID income of $138,588 for the year ended December 31, 2018. The unamortized
balance of OID investments as of December 31, 2018, totaled $1,038,045.





89









As of December 31, 2019, the Company held two
investments had a PIK interest component. The Company did not hold any investments with a PIK interest component as of December 31,
2018. During the year ended December 31, 2019, the Company accrued PIK income in the amount of $91,960. The Company did not
accrue PIK income during the years ended December 31, 2018 and 2017.



As of December 31, 2019 and 2018, the Company
held $5,506,217 and $17,715,145 cash and cash equivalents, respectively. For the years ended December 31, 2019, 2018, and
2017, the Company earned $145,127, $141,063, and $110,905, respectively, of interest income related to cash, which is included
in other interest income within the accompanying statement of operations.



Other Income Recognition



The Company generally records prepayment fees upon
receipt of cash or as soon as the Company becomes aware of the prepayment.



Dividend income on equity investments is accrued to
the extent that such amounts are expected to be collected and if the Company has the option to collect such amounts in cash.



Prepayment fees and dividend income are both accrued
in other income in the accompanying statements of operations.



The Company accrued $71,864 of other income for the
year ended December 31, 2019 related to amendment fees. The Company accrued $92,059 of other income for the year ended December 31,
2018 related to amendment fees. The Company accrued $117,413 of other income for the year ended December 31, 2017 related
to amendment fees.



New Accounting Pronouncements



In August 2018,
the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the
Disclosure Requirements for Fair Value Measurement ("ASU 2018-13") which introduces new fair value disclosure requirements
as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal
years beginning after December 15, 2019, and interim periods within those fiscal years; however, management has elected to
early adopt ASU 2018-13 effective with the current reporting period.



Note 3. Investments



Fair Value



In accordance with ASC 820, the Company’s investments’
fair value is determined to be the price that would be received for an investment in a current sale, assuming an orderly transaction
between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal,
or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific
inputs. ASC 820 also establishes the three-level hierarchy for fair value measurements based upon the transparency of inputs to
the valuation of a financial instrument as of the measurement date as described in Note–2 – Significant Accounting
Policies.



As of December 31, 2019, $249,452,590 of the
Company’s investments were valued using unobservable inputs, and $81,422,321 were valued using observable inputs. During
the year ended December 31, 2019, $61,204,686 transferred into Level 3 due to a decrease in observable prices in the market
and $14,565,516 out of Level 3 due to price transparency.



As of December 31, 2018, $142,020,074 of the
Company’s investments were valued using unobservable inputs, and $122,642,807 were valued using observable inputs. During
the year ended December 31, 2018, $32,513,543 transferred into Level 3 due to a decrease in observable prices in the market
and $9,008,246 of out of Level 3 due to price transparency.





90







The following table presents the Company’s investments
carried at fair value as of December 31, 2019 and 2018, by caption on the Company’s accompanying statements of assets
and liabilities and by security type.



|                            |  | Assets at Fair Value as of December 31, 2019 |  
|--------------------------- |  | -------------------------------------------- | -
|                            |  | Level 1                                      |  
|First lien debt             |  | $                                            | -
|Second lien debt            |  |                                              | -
|Equity and Preferred Shares |  |                                              | -
|Total                       |  | $                                            | -



|                 |  | Assets at Fair Value as of December 31, 2018 |  
|---------------- |  | -------------------------------------------- | -
|                 |  | Level 1                                      |  
|First lien debt  |  | $                                            | -
|Second lien debt |  |                                              |  
|Total            |  | $                                            | -



In accordance with ASC 820, the following table provides
quantitative information about the Level 3 fair value measurements of the Company’s investments as of December 31, 2019.
The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for
the particular input.



|                     |  |       |             |  |           |                    |                |                           | As
    of December 31, 2019
|-------------------- |  | ----- | ----------- |  | --------- | ------------------ | -------------- | ------------------------- | ---------------------------
|                     |  | Fair  |             |  | Valuation |                    | Unobservable   |                           |                            
|                     |  | Value |             |  | Technique |                    | Inputs
    (1) |                           | Range
    (2)              
|First
    lien debt  |  | $     | 224,772,281 |  |           | Matrix
    Pricing |                | Senior
    Leverage       |                            
|                     |  |       |             |  |           |                    |                | Total
    Leverage        |                            
|                     |  |       |             |  |           |                    |                | Interest
    Coverage     |                            
|                     |  |       |             |  |           |                    |                | Debt
    Service Coverage |                            
|                     |  |       |             |  |           |                    |                | TEV
    Coverage          |                            
|                     |  |       |             |  |           |                    |                | Liquidity                 |                            
|                     |  |       |             |  |           |                    |                | Spread
    Comparison     |                            
|                     |  |       |             |  |           |                    |                |                           |                            
|Second
    lien debt |  |       | 20,071,929  |  |           | Matrix
    Pricing |                | Senior
    Leverage       |                            
|                     |  |       |             |  |           |                    |                | Total
    Leverage        |                            
|                     |  |       |             |  |           |                    |                | Interest
    Coverage     |                            
|                     |  |       |             |  |           |                    |                | Debt
    Service Coverage |                            
|                     |  |       |             |  |           |                    |                | TEV
    Coverage          |                            
|                     |  |       |             |  |           |                    |                | Liquidity                 |                            
|                     |  |       |             |  |           |                    |                | Spread
    Comparison     |                            
|                     |  |       |             |  |           |                    |                |                           |                            
|Total                |  | $     | 244,844,210 |  |           |                    |                |                           |                            





|(1) | For any portfolio company, the unobservable input "Liquidity" is a fraction, expressed as a percentage, the numerator of which is the sum of the company's undrawn revolving credit facility capacity plus cash, and the denominator of which is the total amount that may be borrowed under the company's revolving credit facility.  The unobservable input "Spread Comparison" is a comparison of the spread over LIBOR for each investment to the spread over LIBOR for general leveraged loan transactions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority.  The range may be a single data point when there is only one company represented in a specific credit seniority.                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Inputs are weighted based on the fair value of the investments included in the range.                                                                                                                                                                                                                                                                                                                                                                                                                           





91









The table above does not include $4,608,380 of debt,
equity and preferred shares which management values using other unobservable inputs, such as earnings before interest, taxes, depreciation
and amortization (“EBITDA”) and EBITDA multiples, as well as other qualitative information, including company specific
information.



In accordance with ASC 820, the following table provides
quantitative information about the Level 3 fair value measurements of the Company’s investments as of December 31, 2018.
The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for
the particular input.



|                     |  | Fair  |             |  | Valuation |                     | Unobservable |                       |               |                      | Weighted        | 
|-------------------- |  | ----- | ----------- |  | --------- | ------------------- | ------------ | --------------------- | ------------- | -------------------- | --------------- | 
|                     |  | Value |             |  | Technique |                     | Inputs (1)   |                       | Range
    (2) |                      | Average
    (3) | 
|First
    lien debt  |  | $     | 120,756,091 |  |           | Matrix
    Pricing  |              | Senior Leverage       |               | 1.98x
    - 6.39x    |                 | 
|                     |  |       |             |  |           |                     |              | Total Leverage        |               | 2.48x
    - 8.79x    |                 | 
|                     |  |       |             |  |           |                     |              | Interest Coverage     |               | 1.21x
    - 4.33x    |                 | 
|                     |  |       |             |  |           |                     |              | Debt Service Coverage |               | 1.04x
    - 2.82x    |                 | 
|                     |  |       |             |  |           |                     |              | TEV Coverage          |               | 1.31x
    - 4.84x    |                 | 
|                     |  |       |             |  |           |                     |              | Liquidity             |               | 8.64%
    - 608.88%  |                 | 
|                     |  |       |             |  |           |                     |              | Spread Comparison     |               | 275bps
    - 650bps  |                 | 
|                     |  |       |             |  |           |                     |              |                       |               |                      |                 | 
|                     |  |       | 4,219,376   |  |           | Market
    Analysis |              | Senior Leverage       |               | 5.05x
    - 8.14x    |                 | 
|                     |  |       |             |  |           |                     |              | Total Leverage        |               | 5.76x
    - 10.80x   |                 | 
|                     |  |       |             |  |           |                     |              | Interest Coverage     |               | 0.95x
    - 2.17x    |                 | 
|                     |  |       |             |  |           |                     |              | Debt Service Coverage |               | 0.87x
    - 1.78x    |                 | 
|                     |  |       |             |  |           |                     |              | TEV Coverage          |               | 1.11x
    - 2.04x    |                 | 
|                     |  |       |             |  |           |                     |              | Liquidity             |               | 63.01%
    - 89.50%  |                 | 
|                     |  |       |             |  |           |                     |              | Spread Comparison     |               | 500bps
    - 525bps  |                 | 
|                     |  |       |             |  |           |                     |              |                       |               |                      |                 | 
|Second
    lien debt |  |       | 17,044,607  |  |           | Matrix
    Pricing  |              | Senior Leverage       |               | 4.25x
    - 7.05x    |                 | 
|                     |  |       |             |  |           |                     |              | Total Leverage        |               | 4.25x
    - 7.05x    |                 | 
|                     |  |       |             |  |           |                     |              | Interest Coverage     |               | 1.42x
    - 3.48x    |                 | 
|                     |  |       |             |  |           |                     |              | Debt Service Coverage |               | 1.01x
    - 3.10x    |                 | 
|                     |  |       |             |  |           |                     |              | TEV Coverage          |               | 1.28x
    - 2.17x    |                 | 
|                     |  |       |             |  |           |                     |              | Liquidity             |               | 18.96%
    - 283.00% |                 | 
|                     |  |       |             |  |           |                     |              | Spread Comparison     |               | 675bps
    - 1025bps |                 | 
|                     |  |       |             |  |           |                     |              |                       |               |                      |                 | 
|Total                |  | $     | 142,020,074 |  |           |                     |              |                       |               |                      |                 | 



|(1) | For any portfolio company, the unobservable input "Liquidity" is a fraction, expressed as a percentage, the numerator of which is the sum of the company's undrawn revolving credit facility capacity plus cash, and the denominator of which is the total amount that may be borrowed under the company's revolving credit facility.  The unobservable input "Spread Comparison" is a comparison of the spread over LIBOR for each investment to the spread over LIBOR for general leveraged loan transactions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority.  The range may be a single data point when there is only one company represented in a specific credit seniority.                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Inputs are weighted based on the fair value of the investments included in the range.                                                                                                                                                                                                                                                                                                                                                                                                                           



Fair value measurements can be sensitive to
changes in one or more of the valuation inputs. Changes in market yields, discounts rates, leverage, or EBITDA multiples (or
revenue or revenue multiples), each in isolation, may change the fair value of certain of the Company’s investments.
Generally, an increase or decrease in market yields, discount rates or leverage or a decrease in EBITDA or EBITDA multiples
(or revenue or revenue multiples) may result in a corresponding decrease or increase, respectively, in the fair value of
certain of the Company’s investments.



The following tables provide the changes in fair value,
broken out by security type, during the year ended December 31, 2019 and 2018 for all investments for which the Company determines
fair value using unobservable (Level 3) factors.





92









|Year Ended December 31, 2019                          |  | First lien debt |             |   | Second lien
 debt |   |            | Equity and
 Preferred
 Shares |  |   | Total     |  
|----------------------------------------------------- |  | --------------- | ----------- | - | ----------------- | - | ---------- | ----------------------------- |  | - | --------- | -
|Fair Value as of December 31, 2018                    |  | $               | 124,975,467 |   |                   | $ | 17,044,607 |                               |  | $ | -         |  
|Transfers into Level 3                                |  |                 | 57,700,936  |   |                   |   | 3,503,750  |                               |  |   | -         |  
|Transfers out of Level 3                              |  |                 | (14,565,516 | ) |                   |   | -          |                               |  |   | -         |  
|Total gains:                                          |  |                 |             |   |                   |   |            |                               |  |   |           |  
|Net realized (loss) gain(a)                           |  |                 | (732,990    | ) |                   |   | 18,297     |                               |  |   | -         |  
|Net unrealized (depreciation) appreciation(b)         |  |                 | (260,725    | ) |                   |   | 119,029    |                               |  |   | (401,324  | )
|New investments, repayments and settlements:(c)       |  |                 |             |   |                   |   |            |                               |  |   |           |  
|Purchases                                             |  |                 | 89,522,682  |   |                   |   | 4,142,231  |                               |  |   | 1,120,581 |  
|Settlements/repayments                                |  |                 | (26,644,027 | ) |                   |   | (3,500,000 | )                             |  |   | -         |  
|Net amortization of premiums, PIK, discounts and fees |  |                 | 303,448     |   |                   |   | 12,884     |                               |  |   | -         |  
|Sales                                                 |  |                 | (2,906,740  | ) |                   |   | -          |                               |  |   | -         |  
|Fair Value as of December 31, 2019                    |  | $               | 227,392,535 |   |                   | $ | 21,340,798 |                               |  | $ | 719,257   |  



(a)         Included
in net realized gain on the accompanying Statement of Operations for the year ended December 31, 2019.



(b)        Included
in net change in unrealized depreciation on the accompanying Statement of Operations for the year ended December 31,
2019.



(c)         Includes
increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well
as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and
acquisition costs and other cost-basis adjustments.



|Year Ended December 31, 2018                     |  | First lien debt |             |   | Second lien
 debt |   |            | Total | 
|------------------------------------------------ |  | --------------- | ----------- | - | ----------------- | - | ---------- | ----- | 
|Fair Value as of December 31, 2017               |  | $               | 64,377,922  |   |                   | $ | 15,716,499 |       | 
|Transfers into Level 3                           |  |                 | 31,508,543  |   |                   |   | 1,005,000  |       | 
|Transfers out of Level 3                         |  |                 | (9,008,246  | ) |                   |   | -          |       | 
|Total gains:                                     |  |                 |             |   |                   |   |            |       | 
|Net realized gain(a)                             |  |                 | 59,521      |   |                   |   | 52,823     |       | 
|Net unrealized depreciation(b)                   |  |                 | (1,111,659  | ) |                   |   | (18,146    | )     | 
|New investments, repayments and settlements:(c)  |  |                 |             |   |                   |   |            |       | 
|Purchases                                        |  |                 | 65,728,583  |   |                   |   | 6,885,500  |       | 
|Settlements/repayments                           |  |                 | (25,778,099 | ) |                   |   | (6,606,429 | )     | 
|Net amortization of premiums, discounts and fees |  |                 | 92,989      |   |                   |   | 9,360      |       | 
|Sales                                            |  |                 | (894,087    | ) |                   |   | -          |       | 
|Fair Value as of December 31, 2018               |  | $               | 124,975,467 |   |                   | $ | 17,044,607 |       | 





(a)         Included
in net realized gain on the accompanying Statement of Operations for the year ended December 31, 2018.





(b)         Included
in net change in unrealized depreciation on the accompanying Statement of Operations for the year ended December 31,
2018.



(c)         Includes
increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well
as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and
acquisition costs and other cost-basis adjustments.



The change in unrealized value attributable to investments
still held at December 31, 2019 and 2018 $(1,209,117) and $(1,294,378), respectively.



Transfers between levels of the fair value hierarchy
are reported at the beginning of the reporting period in which they occur. For the years ended December 31, 2019 and 2018,
transfers from Level 2 to Level 3 were primarily due to increased or decreased price transparency.





93







Investment Activities



The Company held a total of 176 syndicated investments
with an aggregate fair value of $330,874,911 as of December 31, 2019. During the year ended December 31, 2019, the Company
invested in 164 new syndicated investments for a combined $112,937,320 and in existing investments for a combined $21,529,819.
The Company also received $58,594,377 in repayments from investments and $9,096,342 from investments sold during the period.



The Company held a total of 144 syndicated investments
with an aggregate fair value of $264,662,881 as of December 31, 2018. During the year ended December 31, 2018, the Company
invested in 89 new syndicated investments for a combined $146,482,757 and in existing investments for a combined $19,567,815. The
Company also received $83,013,696 in repayments from investments and $1,520,433 from investments sold during the period.



Investment Concentrations



As of December 31, 2019, the
Company’s investment portfolio consisted of investments in 164 companies located in 33 states across 22 different
industries, with an aggregate fair value of $330,874,911. The five largest investments at fair value as of December 31,
2019 totaled $21,465,158, or 7.16% of the Company’s total investment portfolio as of such date. As of December 31,
2019, the Company’s average investment by obligor was $2,028,793 at cost.



As of December 31, 2018, the Company’s
investment portfolio consisted of investments in 135 companies located in 34 states across 20 different industries, with an aggregate
fair value of $264,662,881. The five largest investments at fair value as of December 31, 2018 totaled $19,719,053, or 7.45%
of the Company’s total investment portfolio as of such date. As of December 31, 2018, the Company’s average investment
by obligor was $1,927,447 at cost.



The following table outlines the Company’s investments
by security type as of December 31, 2019 and 2018:



|                            |  | December 31, 2019 |             |  | December 31, 2018 | 
|--------------------------- |  | ----------------- | ----------- |  | ----------------- | 
|                            |  |                   | Cost        |  |                   | 
|First lien debt             |  | $                 | 310,257,401 |  |                   | 
|Second lien debt            |  |                   | 21,344,024  |  |                   | 
|Total Debt Investments      |  |                   | 331,601,425 |  |                   | 
|Equity and Preferred Shares |  |                   | 1,120,581   |  |                   | 
|Total Equity Investments    |  |                   | 1,120,581   |  |                   | 
|Total Investments           |  | $                 | 332,722,006 |  |                   | 







94







Investments at fair value consisted of the following
industry classifications as of December 31, 2019 and 2018:



|                                          |  | December 31, 2019 |             |  | December 31, 2018                | 
|----------------------------------------- |  | ----------------- | ----------- |  | -------------------------------- | 
|Industry                                  |  | Fair Value        |             |  | Percentage of
 Total Investments | 
|Healthcare & Pharmaceuticals              |  | $                 | 76,108,451  |  |                                  | 
|High Tech Industries                      |  |                   | 58,327,844  |  |                                  | 
|Services: Business                        |  |                   | 44,376,771  |  |                                  | 
|Chemicals, Plastics & Rubber              |  |                   | 28,747,162  |  |                                  | 
|Services: Consumer                        |  |                   | 25,757,966  |  |                                  | 
|Aerospace & Defense                       |  |                   | 12,911,355  |  |                                  | 
|Banking, Finance, Insurance & Real Estate |  |                   | 10,766,682  |  |                                  | 
|Consumer Goods: Non-durable               |  |                   | 8,472,022   |  |                                  | 
|Containers, Packaging & Glass             |  |                   | 7,941,602   |  |                                  | 
|Capital Equipment                         |  |                   | 7,720,891   |  |                                  | 
|Wholesale                                 |  |                   | 7,219,568   |  |                                  | 
|Transportation: Cargo                     |  |                   | 7,192,803   |  |                                  | 
|Construction & Building                   |  |                   | 6,989,790   |  |                                  | 
|Automotive                                |  |                   | 6,294,153   |  |                                  | 
|Media: Advertising, Printing & Publishing |  |                   | 5,124,527   |  |                                  | 
|Forest Products & Paper                   |  |                   | 4,379,293   |  |                                  | 
|Beverage, Food & Tobacco                  |  |                   | 3,930,263   |  |                                  | 
|Hotel, Gaming & Leisure                   |  |                   | 3,503,815   |  |                                  | 
|Consumer Goods: Durable                   |  |                   | 2,309,428   |  |                                  | 
|Retail                                    |  |                   | 1,286,070   |  |                                  | 
|Metals & Mining                           |  |                   | 987,604     |  |                                  | 
|Health Care Equipment & Services          |  |                   | 526,851     |  |                                  | 
|                                          |  | $                 | 330,874,911 |  |                                  | 





Investments at fair value were included in the following
geographic regions of the United States as of December 31, 2019 and 2018:



|                  |  | December 31, 2019 |             |  | December 31, 2018                 | 
|----------------- |  | ----------------- | ----------- |  | --------------------------------- | 
|Geographic Region |  | Fair Value        |             |  | Percentage
 of Total
 Investments | 
|Northeast         |  | $                 | 87,146,010  |  |                                   | 
|Midwest           |  |                   | 68,357,102  |  |                                   | 
|West              |  |                   | 52,320,288  |  |                                   | 
|Southwest         |  |                   | 42,469,487  |  |                                   | 
|Southeast         |  |                   | 35,674,150  |  |                                   | 
|East              |  |                   | 39,053,575  |  |                                   | 
|Northwest         |  |                   | 4,083,800   |  |                                   | 
|South             |  |                   | 1,770,499   |  |                                   | 
|Other (a)         |  |                   | -           |  |                                   | 
|Total Investments |  | $                 | 330,874,911 |  |                                   | 



(a) The
borrower for Livingston, Livingston International Inc., is located in Canada.



The geographic region indicates the location of the
headquarters of the Company’s portfolio companies. A portfolio company may have a number of other business locations in other
geographic regions.





95







Investment Principal Repayments



The following table summarizes the contractual principal
repayments and maturity of the Company’s investment portfolio by fiscal year, assuming no voluntary prepayments, as of December 31,
2019:



|For the Fiscal Years Ending December 31:                        |  | Amount |            
|--------------------------------------------------------------- |  | ------ | -----------
|2020                                                            |  | $      | 4,059,981  
|2021                                                            |  |        | 12,187,413 
|2022                                                            |  |        | 25,888,690 
|2023                                                            |  |        | 44,906,817 
|2024                                                            |  |        | 86,131,371 
|Thereafter                                                      |  |        | 160,160,785
|Total contractual repayments                                    |  |        | 333,335,057
|Adjustments to cost basis on debt investments(a)                |  |        | (1,733,632 
|Total Cost Basis of Debt Investments Held at December 31, 2019: |  | $      | 331,601,425



(a) Adjustment
to cost basis related to unamortized balance of OID investments.



Note 4. Related Party Transactions



Investment Advisory Agreement



The Company has entered into an investment advisory
agreement (the “Investment Advisory Agreement”) with the Adviser. In accordance with the Investment Advisory Agreement,
the Company pays the Adviser certain fees as compensation for its services, such fees consisting of a base management fee and an
incentive fee (the “Incentive Fee”). The services the Adviser provides to the Company, subject to the overall supervision
of the Company’s Board of Directors, include managing the day-to-day operations of, and providing investment services to,
the Company. The Company also entered into a management fee waiver agreement with the Adviser (the “Waiver Agreement”),
which the Company or the Adviser may terminate upon 60 days’ prior written notice.



Management Fee



The base management fee is calculated at an annual
rate of 1.0% of the Company’s average gross assets including cash and any temporary investments in cash-equivalents, including
U.S. government securities and other high-quality investment grade debt investments that mature in 12 months or less from the date
of investment, payable quarterly in arrears on a calendar quarter basis.



Pursuant to the Waiver Agreement, the Adviser has
agreed to waive the right to receive the base management fee to the extent necessary so that the base management fee payable under
the Investment Advisory Agreement equals, and is calculated in the same manner as if, the base management fee otherwise payable
by the Company were calculated at an annual rate equal to 0.65% (instead of an annual rate of 1.00%).



For the year ended December 31, 2019, the Company
recorded base management fees $3,243,496 and waivers to the base management fees of $1,135,224, as set forth within the accompanying
statements of operations. For the year ended December 31, 2018, the Company recorded base management fees $2,446,249 and waivers
to the base management fees of $856,187, as set forth within the accompanying statements of operations. For the year ended December 31,
2017, the Company recorded base management fees $1,798,651 and waivers to the base management fees of $629,527, as set forth within
the accompanying statements of operations.





96









Incentive Fee



The Incentive Fee has two parts, as follows: one is
calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately
preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and
any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination,
structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the
calendar quarter, minus the Company’s operating expenses accrued for the quarter (including the base management fee, expenses
payable under the Administration Agreement and any interest expense on any credit facilities or outstanding debt and dividends
paid on any issued and outstanding preferred stock, but excluding the Incentive Fee).



The Company determines
pre-incentive fee net investment income in accordance with GAAP, including, in the case of investments
with a deferred interest feature, such as debt instruments with PIK interest, OID securities and
accrued income that the Company has not yet received in cash. Pre-incentive fee net investment
income does not include any realized capital gains, computed net of all realized capital losses or unrealized
capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of
return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is
compared to a hurdle of 1.0% per quarter (4.0% annualized). The Company determines its average gross assets
during each fiscal quarter and calculates the base management fee payable with respect to such amount at
the end of each fiscal quarter. As a result, a portion of the Company’s net investment income is included in
its gross assets for the period between the date on which such income is earned and the date on which such income
is distributed. Therefore, the Company’s net investment income used to calculate part of the Incentive Fee
is also included in the amount of the Company’s gross assets used to calculate the 1.0% annual base management
fee. The Company pays its Adviser an Incentive Fee with respect to its pre-incentive fee net investment
income in each calendar quarter as follows:



| | · | no amount is paid on the income-portion of the Incentive Fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle of 1.0% (4.0% annualized);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.1765 % in any calendar quarter (4.706% annualized). The Company refers to this portion of its pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 1.1765%) as the “catch-up” provision. The catch-up is meant to provide the Company’s Adviser with 15.0% of the pre-incentive fee net investment income as if a hurdle rate did not apply if net investment income exceeds 1.1765% in any calendar quarter (4.706% annualized); and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 15.0% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.1765% in any calendar quarter (4.706% annualized) is payable to the Company’s Adviser.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pursuant to the Waiver Agreement, the Adviser
has agreed to waive its right to receive the Incentive Fee on pre-incentive fee net investment income to the extent necessary
so that such Incentive Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on pre-incentive
fee net investment income, if such Incentive Fee (i) were calculated based upon the Adviser receiving 10.0% (instead of
15.0%) of the applicable pre-incentive fee net investment income and (ii) did not include any “catch-up”
feature in favor of the Adviser.



The
second part of the Incentive Fee is determined and payable in arrears as of the end of each calendar year (or upon termination
of theInvestment Advisory Agreement, as of the termination date), and equals 15.0% of the Company’s realized capital
gains, if any, on a cumulative basis from June 16, 2015, the effective date of the Registration Statement, through the end
of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less
the aggregate amount of any previously paid capital gain Incentive Fees with respect to each of the investments in the Company’s
portfolio.





97







Pursuant to the Waiver Agreement, the Adviser has
agreed to waive the right to receive the Incentive Fee on capital gains to the extent necessary so that such portion of the Incentive
Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on capital gains, if such portion of the Incentive
Fee were calculated based upon the Adviser receiving 10.0% (instead of 15.0%).



In addition, pursuant to the Waiver Agreement, the
Adviser has agreed to waive the right to receive both components of the Incentive Fee to the extent necessary so that it does not
receive Incentive Fees which are attributable to income and gains of the Company that exceed an annualized rate of 12.0% in any
calendar quarter.



The waivers from the Adviser will remain effective
until terminated earlier by either party on 60 days’ prior to written notice.



For the year ended December 31, 2019, the Company
recorded incentive fees related to net investment income of $2,620,312. Offsetting the incentive fees were waivers of the incentive
fess related to net investment income of $2,115,919, as set forth within the accompanying statements of operations. For the year
ended December 31, 2018, the Company recorded incentive fees related to net investment income of $1,938,059. Offsetting the
incentive fees were waivers of the incentive fess related to net investment income of $1,577,318, as set forth within the accompanying
statements of operations. For the year ended December 31, 2017, the Company recorded incentive fees related to net investment
income of $1,072,081. Offsetting the incentive fees were waivers of the incentive fess related to net investment income of $949,774,
as set forth within the accompanying statements of operations.



For the years ended December 31, 2019 and 2018,
the Company did not record any incentive fees related to capital gains. For the year ended December 31, 2017, the Company
recorded incentive fees related to capital gains of $37,286. Offsetting the incentive fees were waivers of the incentive fess related
capital gains of $12,429, as set forth within the accompanying statements of operations.



Administrative Fee



The
Company has also entered into an administration agreement (the “Administration Agreement”) with Audax Management
Company, LLC (the “Administrator”) under which the Administrator provides administrative services to the Company.
Under the Administration Agreement, the Administrator performs, or oversees the performance of administrative services
necessary for the operation of the Company, which include being responsible for the financial records which the Company is
required to maintain and prepare reports filed with the SEC. In addition, the Administrator assists in determining and
publishing the Company’s net asset value, oversees the preparation and filing of the Company’s tax returns and
the printing and dissemination of reports to the Company’s stockholders, and generally oversees the payment of the
Company’s expenses and the performance of administrative and professional services rendered to the Company by others.
The Company reimburses the Administrator for its allocable portion of the costs and expenses incurred by the Administrator
for overhead in performance by the Administrator of its duties under the Administration Agreement, including the cost of
facilities, office equipment and the Company’s allocable portion of cost of compensation and related expenses of its
Chief Financial Officer and Chief Compliance Officer and their respective staffs, as well as any costs and expenses incurred
by the Administrator relating to any administrative or operating services provided by the Administrator to the Company. Such
costs are reflected as an administrative fee in the accompanying statements of operations.



The Company has also entered into a fee waiver agreement
with the Administrator, pursuant to which the Administrator may waive, in whole or in part, its entitlement to receive reimbursements
from the Company.



For each of the years ended December 31, 2019,
2018 and 2017, the Company recorded administrative fees of $265,000, as set forth within the accompanying statements of operations.





98







Related Party Fees



Fees
due to related parties as of December 31,2019 and 2018 on the Company’s accompanying statements of assets and
liabilities were as follows:



|                                          |  | December 31, 2019 |         |  | December 31, 2018 |  
|----------------------------------------- |  | ----------------- | ------- |  | ----------------- | -
|Net base management fee due to Adviser    |  | $                 | 569,600 |  |                   | $
|Net incentive fee due to Adviser          |  |                   | 118,536 |  |                   |  
|Total fees due to Adviser, net of waivers |  |                   | 688,136 |  |                   |  
|Fee due to Administrator, net of waivers  |  |                   | 66,250  |  |                   |  
|Total Related Party Fees Due              |  | $                 | 754,386 |  |                   | $



(a) Expenses paid on behalf of the Company by the Adviser



Other Agreements



The Company may invest alongside other clients of
the Adviser and its affiliates in certain circumstances where doing so is consistent with applicable law, SEC staff interpretations
and the terms of the Company’s exemptive relief.



|Note 5. | Net Increase in Net Assets Resulting from Operations Per Share of Common Stock:
|------- | -------------------------------------------------------------------------------



The following table sets forth the computation of
basic and diluted net increase in net assets resulting from operations per weighted average share of Company’s common stock
for the years ended December 31, 2019, 2018, and 2017:



|                                                                                                      |  | Year Ended December 31, 2019 |            |  | Year Ended December 31, 2018 |   |            | Year Ended December 31, 2017 | 
|----------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- |  | ---------------------------- | - | ---------- | ---------------------------- | 
|Numerator for basic and diluted net increase in net assets resulting from operations per common share |  | $                            | 16,060,580 |  |                              | $ | 11,229,774 |                              | 
|Denominator for basic and diluted weighted average common shares                                      |  |                              | 32,672,328 |  |                              |   | 24,340,035 |                              | 
|Basic and diluted net
    increase in net assets resulting from operations per common share           |  | $                            | 0.49       |  |                              | $ | 0.46       |                              | 





|Note 6. | Income Tax
|------- | ----------



The
Company has elected to be regulated as a BDC under the 1940 Act, as well as elected to be treated as a RIC under Subchapter M of
the Code. As a RIC, the Company generally is not subject to corporate-level U.S. federal income taxes on any ordinary income or
capital gains that it timely distributes as dividends for U.S. federal income tax purposes to its stockholders. To qualify to be
treated as a RIC,the Company is required to meet certain source of income and asset diversification requirements, and to
timely distribute dividends out of assets legally available for distributions to its stockholders of an amount generally equal
to at least 90% of the sum of its net ordinary income and net short-term capital gains in excess of net long-term capital losses,
if any (i.e., “investment company taxable income,” determined without regard to any deduction for dividends paid),
for each taxable year. The amount to be paid out as distributions to the Company’s stockholders is determined by the Company’s
Board of Directors and is based on management’s estimate of the fiscal year earnings. Based on that estimate, the Company
intends to make the requisite distributions to its stockholders, which will generally relieve the Company from corporate-level
U.S. federal income taxes. Although the Company currently intends to distribute its net capital gains (i.e., net long-term capital
gains in excess of net short-term capital losses), if any, recognized in respect of each taxable year as dividends out of the Company’s
assets legally available for distribution, the Company in the future may decide to retain for investment and be subject to entity-level
income tax on such net capital gains. Additionally, depending on the level of taxable income earned in a taxable year, the Company
may choose to carry forward taxable income in excess of current year distributions into the next taxable year and incur a 4% excise
tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income
will be in excess of estimated current year distributions, the Company will accrue an excise tax, if any, on estimated excess taxable
income as such excess taxable income is earned.





99







The Company had aggregate distributions declared and
paid to its shareholders for the year ended December 31, 2019 of $17,084,202, or $0.52 per share. The tax character of the
distributions declared and paid represented $16,941,968 from ordinary income,  and $142,234 from tax return
of capital. The Company had aggregate distributions declared and paid to its shareholders for the year ended December 31,
2018 of $13,002,172, or $0.52 per share. The tax character of the distributions declared and paid represented $12,537,786 from
ordinary income, $450,049 capital gains, and $14,337 from tax return of capital.



GAAP require adjustments to certain components of
net assets to reflect permanent differences between financial and tax reporting. These adjustments have no effect on net asset
value per share. For the year ended December 31, 2019 and 2018, the Company recorded the following adjustments for permanent
book to tax differences to reflect their tax characteristics. The adjustments only change the classification in net assets in the
statements of assets and liabilities. During the year ended December 31, 2019 and 2018, the Company reclassified for book
purposes amounts arising from permanent book/tax differences primarily related to distribution redesignations and return of capital
distributions.



|                                     |  | Year Ended December 31,
                                                                                2019 |         |   | Year Ended December 31,
                                                                                2018 |  
|------------------------------------ |  | ------------------------------------------------------------------------------------------------------------ | ------- | - | ------------------------------------------------------------------------------------------------------------ | -
|Capital in excess of par value       |  |                                                                                                              | (1,583  | ) |                                                                                                              | $
|Accumulated net investment  income   |  |                                                                                                              | (49,515 | ) |                                                                                                              |  
|Accumulated net realized gain (loss) |  |                                                                                                              | 51,098  |   |                                                                                                              |  



At December 31, 2019 and 2018, the components
of distributable taxable earnings as detailed below differ from the amounts reflected in the Company’s statements of assets
and liabilities by temporary book/tax differences primarily arising from amortization of organizational expenditures.



|                                                                 |  | As of
                                                                                December 31,
                                                                                2019 |            |   | As of
                                                                                December 31,
                                                                                2018 |  
|---------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|Other temporary book/tax differences                             |  | $                                                                                                                                                                                       | (213,307   | ) |                                                                                                                                                                                         | $
|Net tax basis unrealized (depreciation) appreciation             |  |                                                                                                                                                                                         | (1,847,095 | ) |                                                                                                                                                                                         |  
|Accumulated net realized loss                                    |  |                                                                                                                                                                                         | (670,443   | ) |                                                                                                                                                                                         |  
|Components of tax distributable (deficit) earnings at period end |  | $                                                                                                                                                                                       | (2,730,845 | ) |                                                                                                                                                                                         | $



Certain losses incurred by the Company after October 31
of a taxable year are deemed to arise on the first business day of the Company’s next taxable year. The Company did not incur
such losses after October 31 of the Company’s taxable year ended December 31, 2019.



Capital
losses are generally eligible to be carried forward indefinitely, and retain their status as short-term or long-term in the manner
originally incurred by the Company. As of December 31, 2019, the Company has long-term capital loss carryforward of $670,443.
The Company has evaluated tax positions it has taken, expects to take, or that are otherwise relevant to the Company for purposes
of determining whether any relevant tax positions would “more-likely-than-not” be sustained by the applicable tax authority
in accordance with ASC Topic 740, “Income Taxes,” as modified by ASC Topic 946. The Company has analyzed such
tax positions and has concluded that no unrecognized tax benefits should be recorded for uncertain tax positions for taxable years
that may be open. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized
tax benefits will change materially in the next twelve months. The Company’s U.S. federal tax returns for fiscal years 2015,
2016, and 2017 remain subject to examination by the Internal Revenue Service. The Company records tax positions that are not deemed
to meet a more-likely-than-not threshold as tax expenses as well as any applicable penalties or interest associated with such positions.
During each of the years ended December 31, 2019, 2018, and 2017, no tax expense or any related interest or penalties were
incurred.





100







|Note 7. | Equity
|------- | ------



On June 23, 2015, an investor made a $140,000,000
capital commitment to the Company. On December 2, 2016, the same investor made an additional capital commitment of $50,000,000.
On December 7, 2017, the same investor made an additional capital commitment of $100,000,000. On March 22, 2019, the
same investor made an additional capital commitment of $40,000,000. On September 23, 2019, the same investor made an additional
capital commitment of $30,000,000. As of December 31, 2019, $25,000,000 of total capital commitments remained unfunded by
the Company’s investors.



The number of Shares issued and outstanding as of
December 31, 2019 and 2018, were 35,109,246 and 28,269,649, respectively.



The following table summarizes activity in the number
of Shares during the years ended December 31, 2019 and 2018:



|                                                                                                        |  | Common stock shares in issue 
|------------------------------------------------------------------------------------------------------- |  | -----------------------------
|                                                                                                        |  | Year Ended
 December 31, 2019
|Shares in issue, beginning of period                                                                    |  |                              
|Common stock issued ($65,000,000 and $60,000,000, respectively )                                        |  |                              
|Issuance of common shares in connection with dividend
    reinvestment plan ($60 and $57, respectively) |  |                              
|Shares in issue, end of period                                                                          |  |                              



The following table details the activity of Stockholders’
Equity for the years ended December 31, 2019 and 2018:



|Year Ended December 31, 2019                         |  | Common Stock |        |  | Capital in Excess
 of Par Value |   |             | Total
 Distributable
 (Loss) Earnings |  |   | Total 
Stockholders'
 Equity |  
|---------------------------------------------------- |  | ------------ | ------ |  | ------------------------------- | - | ----------- | ------------------------------------- |  | - | ---------------------------- | -
|Balance as of December 31, 2018                      |  | $            | 28,270 |  |                                 | $ | 269,246,005 |                                       |  | $ | (1,851,040                   | )
|Net investment income                                |  |              | -      |  |                                 |   | -           |                                       |  |   | 16,962,283                   |  
|Net realized loss from investment transactions       |  |              | -      |  |                                 |   | -           |                                       |  |   | (672,026                     | )
|Net change in unrealized depreciation on investments |  |              | -      |  |                                 |   | -           |                                       |  |   | (229,677                     | )
|Issuance of shares                                   |  |              | 6,840  |  |                                 |   | 64,993,160  |                                       |  |   | -                            |  
|Distributions to Stockholders                        |  |              | -      |  |                                 |   | (143,817    | )                                     |  |   | (16,940,385                  | )
|Reinvested Dividends                                 |  |              | -      |  |                                 |   | 60          |                                       |  |   | -                            |  
|Balance as of December 31, 2019                      |  | $            | 35,110 |  |                                 | $ | 334,095,408 |                                       |  | $ | (2,730,845                   | )





101













|Year Ended December 31, 2018                         |  | Common Stock |        |  | Capital in Excess of Par Value |   |             | Total Distributable (Loss) Earnings |  |   | Total Stockholders' Equity |  
|---------------------------------------------------- |  | ------------ | ------ |  | ------------------------------ | - | ----------- | ----------------------------------- |  | - | -------------------------- | -
|Balance as of December 31, 2017                      |  | $            | 21,989 |  |                                | $ | 209,266,921 |                                     |  | $ | (93,334                    | )
|Net investment income                                |  |              | -      |  |                                |   | -           |                                     |  |   | 12,558,101                 |  
|Net realized gains from investment transactions      |  |              | -      |  |                                |   | -           |                                     |  |   | 449,694                    |  
|Net change in unrealized appreciation on investments |  |              | -      |  |                                |   | -           |                                     |  |   | (1,778,021                 | )
|Issuance of shares                                   |  |              | 6,281  |  |                                |   | 59,993,719  |                                     |  |   | -                          |  
|Distributions to Stockholders                        |  |              | -      |  |                                |   | (14,692     | )                                   |  |   | (12,987,480                | )
|Reinvested Dividends                                 |  |              | -      |  |                                |   | 57          |                                     |  |   | -                          |  
|Balance as of December 31, 2018                      |  | $            | 28,270 |  |                                | $ | 269,246,005 |                                     |  | $ | (1,851,040                 | )



|Year Ended December 31, 2017                         |  | Common Stock |        |  | Capital in Excess of Par Value |   |             | Total Distributable (Loss) Earnings |  |   | Total Stockholders' Equity |  
|---------------------------------------------------- |  | ------------ | ------ |  | ------------------------------ | - | ----------- | ----------------------------------- |  | - | -------------------------- | -
|Balance as of December 31, 2016                      |  | $            | 17,832 |  |                                | $ | 169,483,511 |                                     |  | $ | 868,318                    |  
|Net investment income                                |  |              | -      |  |                                |   | -           |                                     |  |   | 8,026,282                  |  
|Net realized gains from investment transactions      |  |              | -      |  |                                |   | -           |                                     |  |   | 696,970                    |  
|Net change in unrealized depreciation on investments |  |              | -      |  |                                |   | -           |                                     |  |   | (981,966                   | )
|Issuance of shares                                   |  |              | 4,157  |  |                                |   | 39,995,843  |                                     |  |   | -                          |  
|Distributions to Stockholders                        |  |              | -      |  |                                |   | (212,483    | )                                   |  |   | (8,702,938                 | )
|Reinvested Dividends                                 |  |              | -      |  |                                |   | 50          |                                     |  |   | -                          |  
|Balance as of December 31, 2017                      |  | $            | 21,989 |  |                                | $ | 209,266,921 |                                     |  | $ | (93,334                    | )



Note 8. Commitments and Contingencies



The Company may enter into certain credit agreements
that include loan commitments where all or a portion of such commitment may be unfunded. The Company is generally obligated to
fund the unfunded loan commitments at the borrowers’ discretion. Funded portions of credit agreements are presented on the
accompanying schedule of investments. Unfunded loan commitments and funded portions of credit agreements are fair valued and unrealized
appreciation or depreciation, if any, have been included in the accompanying statements of assets and liabilities and statements
of operations.



The
following table summarizesthe Company’s significant contractual payment obligations as of December 31, 2019
and December 31, 2018:



|Investment                                                                                                       |  | Industry                                  |  | December 31, 2019 |           |  | December 31, 2018 |  
|---------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- |  | ----------------- | --------- |  | ----------------- | -
|                                                                                                                 |  |                                           |  |                   |           |  |                   |  
|Advarra, Senior Secured Initial Revolving Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)           |  | Healthcare & Pharmaceuticals              |  | $                 | 761,905   |  |                   | $
|EverCommerce, Senior Secured Initial Term Loan, 7.41% (Libor + 5.50%), maturity 8/23/25                          |  | High Tech Industries                      |  |                   | 464,713   |  |                   |  
|Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 7/18/26         |  | Containers, Packaging & Glass             |  |                   | 437,500   |  |                   |  
|Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.16% (Libor + 3.25%), maturity 3/20/25(i)            |  | Automotive                                |  |                   | 345,141   |  |                   |  
|Tangent, Senior Secured Closing Date Term Loan (First Lien), 6.66% (Libor + 4.75%), maturity 11/30/24            |  | Construction & Building                   |  |                   | 333,333   |  |                   |  
|Advarra, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 7/9/26(j)                |  | Healthcare & Pharmaceuticals              |  |                   | 288,796   |  |                   |  
|DuBois Chemicals 2019, Senior Secured Term Loan B (First Lien), 6.41% (Libor + 4.50%), maturity 9/30/26          |  | Chemicals, Plastics & Rubber              |  |                   | 252,692   |  |                   |  
|Premise Health, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 7/10/25           |  | Healthcare & Pharmaceuticals              |  |                   | 147,052   |  |                   |  
|OEConnection, Senior Secured Initial Term Loan, 5.91% (Libor + 4.00%), maturity 9/25/26                          |  | High Tech Industries                      |  |                   | 142,180   |  |                   |  
|Service Logic, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 12/31/24           |  | Services: Business                        |  |                   | 136,667   |  |                   |  
|Ned Stevens, Senior Secured Term A Loan, 7.66% (Libor + 5.75%), maturity 9/30/25(j)                              |  | Services: Consumer                        |  |                   | 130,719   |  |                   |  
|Alpaca, Senior Secured Term Loan, 6.16% (Libor + 4.25%), maturity 4/19/24(j)                                     |  | Healthcare & Pharmaceuticals              |  |                   | 124,637   |  |                   |  
|Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 5.41% (Libor + 3.50%), maturity 5/14/26(i)       |  | Services: Consumer                        |  |                   | 100,000   |  |                   |  
|MyEyeDr, Senior Secured Initial Term Loan (First Lien), 6.16% (Libor + 4.25%), maturity 8/31/26(i)               |  | Health Care Equipment & Services          |  |                   | 98,225    |  |                   |  
|Worley Claims Services, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 6/3/26(i) |  | Services: Business                        |  |                   | 50,125    |  |                   |  
|Ansira, Unitranche, 7.66% (Libor + 5.75%), maturity 12/20/22                                                     |  | Media: Advertising, Printing & Publishing |  |                   | 38,214    |  |                   |  
|AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/12/26          |  | Banking, Finance, Insurance & Real Estate |  |                   | 17,544    |  |                   |  
|Stepping Stones, Unitranche, 7.41% (Libor + 5.50%), maturity 12/12/24                                            |  | Healthcare & Pharmaceuticals              |  |                   | 9,519     |  |                   |  
|Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 4.91% (Libor + 3.00%), maturity 3/20/25     |  | Wholesale                                 |  |                   | -         |  |                   |  
|GlobalLogic, Senior Secured Initial Term Loan, 6.05% (Libor + 3.25%), maturity 8/1/25                            |  | High Tech Industries                      |  |                   | -         |  |                   |  
|Community Brands, Senior Secured Initial Term Loan (First Lien), 5.91% (Libor + 4.00%), maturity 12/2/22         |  | High Tech Industries                      |  |                   | -         |  |                   |  
|Veritext, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 8/1/25                  |  | Healthcare & Pharmaceuticals              |  |                   | -         |  |                   |  
|Dermatologists of Central States, Senior Secured Term Loan, 9.30% (Libor + 6.50%), maturity 4/20/22              |  | Healthcare & Pharmaceuticals              |  |                   | -         |  |                   |  
|Integrity Marketing Group, Senior Secured Term Loan, 7.05% (Libor + 4.25%), maturity 11/28/25                    |  | Banking, Finance, Insurance & Real Estate |  |                   | -         |  |                   |  
|Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 9/23/24   |  | Healthcare & Pharmaceuticals              |  |                   | -         |  |                   |  
|                                                                                                                 |  |                                           |  |                   |           |  |                   |  
|                                                                                                                 |  |                                           |  | $                 | 3,878,962 |  |                   | $









102







Unfunded commitments represent all amounts unfunded
as of December 31, 2019 and 2018. These amounts may or may not be funded to the borrowing party now or in the future.



Note 9. Financial Highlights





|                                                                                                          |  | Year
    Ended December 31, 2019 |             |   | Year
    Ended December 31, 2018 |   |             | Year
    Ended December 31, 2017 |  |   | Year
    Ended December 31, 2017 |   |  | For
    the period January 29, 2015 (date of inception) through December 31, 2015 |            
|--------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ----------- | - | -------------------------------- | - | ----------- | -------------------------------- |  | - | -------------------------------- | - |  | --------------------------------------------------------------------------------- | -----------
|Per
    Share Data:                                                                                       |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Net asset
    value, beginning of period                                                                  |  | $                                | 9.46        |   |                                  | $ | 9.51        |                                  |  | $ | 9.55                             |   |  | $                                                                                 | 9.45       
|Net
    investment income(a)                                                                              |  |                                  | 0.52        |   |                                  |   | 0.52        |                                  |  |   | 0.44                             |   |  |                                                                                   | 0.38       
|Net
    realized (loss) gain on investments and change inunrealized depreciation on
    investments(a)(b) |  |                                  | (0.02       | ) |                                  |   | (0.04       | )                                |  |   | (0.02                            | ) |  |                                                                                   | 0.07       
|Net
    increase in net assets resulting from operations                                                  |  | $                                | 50.00       |   |                                  | $ | 0.48        |                                  |  | $ | 0.42                             |   |  | $                                                                                 | 0.45       
|                                                                                                          |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Effect
    of equity capital activity                                                                     |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Equity
    contribution                                                                                   |  |                                  | -           |   |                                  |   | -           |                                  |  |   | -                                |   |  |                                                                                   | -          
|Distributions
    to stockholders from net investment income                                              |  |                                  | (0.52       | ) |                                  |   | (0.52       | )                                |  |   | (0.42                            | ) |  |                                                                                   | (0.33      
|Distributions
    to stockholders from capital gains(c)(i)                                                |  |                                  | -           |   |                                  |   | (0.01       | )                                |  |   | (0.03                            | ) |  |                                                                                   | (0.01      
|Distributions
    to stockholders from return of capital(c)                                               |  |                                  | -           |   |                                  |   | -           |                                  |  |   | (0.01                            | ) |  |                                                                                   | (0.01      
|Net
    asset value at end of period                                                                      |  | $                                | 9.44        |   |                                  | $ | 9.46        |                                  |  | $ | 9.51                             |   |  | $                                                                                 | 9.55       
|Total
    return(d)(h)                                                                                    |  |                                  | 5.18        | % |                                  |   | 4.94        | %                                |  |   | 4.47                             | % |  |                                                                                   | 4.80       
|Shares of common stock
    outstanding at end of period                                                   |  |                                  | 35,109,246  |   |                                  |   | 28,269,649  |                                  |  |   | 21,988,238                       |   |  |                                                                                   | 28,269,649 
|                                                                                                          |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Statement
    of Assets and Liabilities Data:                                                             |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Net
    assets at end of period                                                                           |  | $                                | 331,399,673 |   |                                  | $ | 267,423,235 |                                  |  | $ | 209,195,576                      |   |  | $                                                                                 | 170,369,661
|Average net assets(e)                                                                                     |  |                                  | 316,110,129 |   |                                  |   | 241,057,371 |                                  |  |   | 180,098,537                      |   |  |                                                                                   | 123,605,111
|                                                                                                          |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Ratio/Supplemental
    Data:                                                                              |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Ratio
    of gross expenses to average net assets-annualized(f)                                           |  |                                  | 2.32        | % |                                  |   | 2.26        | %                                |  |   | 2.23                             | % |  |                                                                                   | 2.37       
|Ratio of net expenses to average net assets-annualized(g)                                                 |  |                                  | 1.29        | % |                                  |   | 1.25        | %                                |  |   | 1.35                             | % |  |                                                                                   | 1.59       
|Ratio
of net investment income to average net assets-annualized                                           |  |                                  | 5.37        | % |                                  |   | 5.21        | %                                |  |   | 4.46                             | % |  |                                                                                   | 3.81       
|                                                                                                          |  |                                  |             |   |                                  |   |             |                                  |  |   |                                  |   |  |                                                                                   |            
|Portfolio
    turnover(h)                                                                                 |  |                                  | 2.91        | % |                                  |   | 0.66        | %                                |  |   | 1.92                             | % |  |                                                                                   | 0.96       





(a) Based on weighted average basic per share of Common Stock data.

(b)
The per share amount varies from the net realized and unrealized gain (loss) for the period because of the timing of sales of
fund shares and the per share amount of realized and unrealized gains and losses at such time.

(c)
For the year ended December 31, 2019, the 0.00 is due to rounding.

(d)
Total return is based on the change in net asset value during the respective periods.  Total return also takes into
account dividends and distributions, if any, reinvested in accordance with the Company's dividend reinvestment
plan.

(e) Average net assets are computed using the average balance of net assets at the end of each  month of the reporting  period.

(f) Ratio of gross expenses to average net assets is computed using expenses before waivers from the Adviser and Administrator.

(g) Ratio of net expenses to average net assets is computed using total expenses net of waivers from the Adviser and Administrator.

(h) The period January 29, 2015 (date of inception) through December 31, 2015 is not annualized.

(i) As of December 31, 2019, the Company has current capital loss carryforward of $670,443.





103







Note 10. Selected Quarterly Financial Data (Unaudited)



|                                                                                                  |  | Quarter Ended December 31,
    2019 |             |   | Quarter Ended December 31,
    2018 |   |             | Quarter Ended December 31,
    2017 | 
|------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ----------- | - | ----------------------------------- | - | ----------- | ----------------------------------- | 
|Statement of Operations Data:                                                                     |  |                                     |             |   |                                     |   |             |                                     | 
|Income                                                                                            |  |                                     |             |   |                                     |   |             |                                     | 
|Total investment income                                                                           |  | $                                   | 5,434,922   |   |                                     | $ | 4,327,197   |                                     | 
|Expenses                                                                                          |  |                                     |             |   |                                     |   |             |                                     | 
|Net expense                                                                                       |  |                                     | 1,015,174   |   |                                     |   | 802,019     |                                     | 
|Net investment income                                                                             |  |                                     | 4,419,748   |   |                                     |   | 3,525,178   |                                     | 
|Net realized gain on investments                                                                  |  |                                     | 52,428      |   |                                     |   | 52,381      |                                     | 
|Net change in unrealized appreciation (depreciation) on investments                               |  |                                     | 249,483     |   |                                     |   | (900,688    | )                                   | 
|Net increase in net assets resulting from operations                                              |  | $                                   | 4,721,659   |   |                                     | $ | 2,676,871   |                                     | 
|                                                                                                  |  |                                     |             |   |                                     |   |             |                                     | 
|Per Share Data:                                                                                   |  |                                     |             |   |                                     |   |             |                                     | 
|Net investment income per common share - basic and diluted (a)                                    |  | $                                   | 0.13        |   |                                     | $ | 0.13        |                                     | 
|Net
    increase in net assets resulting from operations per common share - basic and diluted (a) |  |                                     | 0.13        |   |                                     |   | 0.10        |                                     | 
|Distributions declared per common share                                                           |  |                                     | 0.25        |   |                                     |   | 0.27        |                                     | 
|                                                                                                  |  |                                     |             |   |                                     |   |             |                                     | 
|Statement of Assets and Liabilities Data:                                                         |  |                                     |             |   |                                     |   |             |                                     | 
|Total assets                                                                                      |  | $                                   | 339,396,997 |   |                                     | $ | 282,945,853 |                                     | 
|Total liabilities                                                                                 |  |                                     | 7,997,324   |   |                                     |   | 15,522,618  |                                     | 
|Net assets                                                                                        |  |                                     | 331,399,673 |   |                                     |   | 267,423,235 |                                     | 
|Net asset value per common share                                                                  |  |                                     | 9.44        |   |                                     |   | 9.46        |                                     | 
|Common shares outstanding                                                                         |  |                                     | 35,109,246  |   |                                     |   | 28,269,649  |                                     | 
|Weighted common shares outstanding - basic and diluted                                            |  |                                     | 35,092,171  |   |                                     |   | 26,253,795  |                                     | 
|                                                                                                  |  |                                     |             |   |                                     |   |             |                                     | 
|Other Data:                                                                                       |  |                                     |             |   |                                     |   |             |                                     | 
|Number of portfolio investments                                                                   |  |                                     | 174         |   |                                     |   | 144         |                                     | 
|Average investment amount (b)                                                                     |  | $                                   | 1,912,195   |   |                                     | $ | 1,849,169   |                                     | 
|Percentage of new investments at floating rates (b)                                               |  |                                     | 99.38       | % |                                     |   | 100.00      | %                                   | 





(a) Per share data is based on weighted average common stock outstanding for both basic and diluted.

(b) Based on cost of investments.



Note 11. Indemnification



In the normal course of business, the Company may
enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities
is unknown. The Company does not consider it necessary to record a liability in this regard.



Note 12. Subsequent Events



Subsequent to December 31, 2019 through March 17,
2020, we invested $12,603,912 at cost in 22 different portfolio companies.



On December 26, 2019, the Company delivered a
capital drawdown notice to one of its investors relating to the sale of 1,588,983 shares of the Company’s Common Stock, for
an aggregate offering price of $15 million. The sale closed on January 10, 2020.



The sale of Common Stock was made pursuant to a subscription
agreement entered into by the Company and the investor. Under the terms of the subscription agreement, the investor is required
to fund drawdowns to purchase shares of Common Stock up to the amount of its capital commitment on an as-needed basis with a minimum
of 10 calendar days’ prior notice.



The issuance of the Common Stock is exempt from the
registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. The Company has not engaged in general
solicitation or advertising with regard to the issuance and sale of the Common Stock and has not offered securities to the public
in connection with such issuance and sale.





104













ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE



None.



ITEM 9A. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



As of December 31, 2019 (the end of the period covered
by this annual report), our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief
Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective at a reasonable
assurance level in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information
about us required to be included in periodic SEC filings. However, in evaluation of the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.



Changes in Internal Control Over Financial Reporting



There have been no changes in our internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during our most recently
completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.



Management’s
Report on Internal Control Over Financial Reporting



The management of Audax Credit BDC Inc.
(“we” and “our”) is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal control system is a process designed to provide reasonable assurance to our management and Board of Directors
regarding the preparation and fair presentation of published financial statements.



Our internal control over financial reporting
includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
transactions recorded necessary to permit the preparation of financial statements in accordance with U.S. generally accepted accounting
principles. Our policies and procedures also provide reasonable assurance that receipts and expenditures are being made only in
accordance with authorizations of our management and directors, and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.



All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness
as to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.



Management assessed the effectiveness of
our internal control over financial reporting as of December 31, 2019. In making this assessment, we used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated
Framework issued in 2013. Based on the assessment, management believes that, as of December 31, 2019, our internal
control over financial reporting is effective based on those criteria.





105







The independent registered public accounting
firm that audited our financial statements has not issued an audit report on the effectiveness of our internal control over financial
reporting, due to exemptions for non-accelerated filers under the Sarbanes-Oxley Act of 2002, as amended, and for emerging growth
companies under the Jumpstart Our Business Startups Act of 2012, as amended.



ITEM 9B. OTHER INFORMATION



Not applicable.





106







PART III



We will file a definitive Proxy Statement for our 2020 Annual
Meeting of Stockholders (the “ Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days
after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction
G(3) to Form 10-K. Only those sections of the Proxy Statement that specifically address the items set forth herein are
incorporated herein by reference.



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE



The information required by Item 10 is hereby incorporated by
reference from our Proxy Statement to be filed with the SEC within 120 days following the end of our fiscal year.



ITEM 11. EXECUTIVE COMPENSATION



The
information required by Item 11 is hereby incorporated by reference from our Proxy Statement to be filed with theSEC within
120 days following the end of our fiscal year.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The
information required by Item 12 is hereby incorporated by reference from our Proxy Statement to be filed with theSEC within
120 days following the end of our fiscal year.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE



The
information required by Item 13 is hereby incorporated by reference from our Proxy Statement to be filed with theSEC within
120 days following the end of our fiscal year.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The
information required by Item 14 is hereby incorporated by reference from our Proxy Statement to be filed with theSEC within
120 days following the end of our fiscal year.





107









PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



The following documents are filed or incorporated by reference
as part of this annual report:



1. Financial Statements – refer to “Item
8. Financial Statements and Supplementary Data”starting on page 69



2. No other financial statement schedules are filed herewith
because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial
statements.



3. Exhibits



The following exhibits are filed as part of this annual report
or are hereby incorporated by reference to exhibits previously filed with the SEC:



| | 3.1 | Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registration Statement
on Form 10 (File no. 000-55426), filed on April 17, 2015).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.2 | Form of Bylaws (Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 (File no.
000-55426), filed on April 17, 2015).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1 | Form of Subscription Agreement (Incorporated by reference to Exhibit 4.1 to the Pre-Effective Amendment No. 1
to the Registration Statement on Form 10 (File no. 000-55426), filed on June 5, 2015).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.2* | Description of Securities.
| | ---- | --------------------------



| | 10.1 | Form ofInvestment Advisory Agreement
(Incorporated by reference to Exhibit 10.1 to the Pre-Effective Amendment No. 1 to the Registration Statement on Form 10
(File no. 000-55426), filed on June 5, 2015).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.2 | Form of Administration Agreement (Incorporated by reference to Exhibit 10.2 to the Pre-Effective Amendment No. 1
to the Registration Statement on Form 10 (File no. 000-55426), filed on June 5, 2015).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 | Form of License Agreement (Incorporated by reference to Exhibit 10.3 to the Pre-Effective Amendment No. 1 to
the Registration Statement on Form 10 (File no. 000-55426), filed on June 5, 2015).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 | Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.4 to the Pre-Effective Amendment No. 1
to the Registration Statement on Form 10 (File no. 000-55426), filed on June 5, 2015).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.5 | Custodial Agreement, dated as of July 8, 2015, by and between the Company and Wells Fargo Bank, National Association (Incorporated
by reference to Exhibit 10.1 to the Current Report on Form 8-K (File no. 814-01154), filed on July 14, 2015).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.6 | Management Fee Waiver Agreement, dated as of July 8, 2015, by and between the Company and the Adviser (Incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K (File no. 814-01154), filed on July 14, 2015).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.7 | Subscription Agreement, dated as of December 2, 2016, by and between the Company and Mercer Audax Credit Feeder Fund LP
(Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K (File no. 814-01154), filed
on March 29, 2017).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.8 | Subscription Agreement, dated as of December 7, 2017, by and between the Company and Mercer Audax Credit Feeder Fund LP
(Incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K (File no. 814-01154), filed
on March 16, 2018).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.9 | Subscription Agreement, dated as of March 22, 2019, by and between the Company and Mercer Audax Credit Feeder Fund LP
(Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File no. 814-01154),
filed on May 15, 2019).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





108









| | 10.10 | Subscription Agreement, dated as of September 23, 2019, by and between the Company and Mercer Audax Credit Feeder Fund
LP. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File no. 814-01154),
filed on November 14, 2019).
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14.1 | Code of Business Conduct (Incorporated by reference to Exhibit 14.1 to the Pre-Effective Amendment No. 1 to the Registration
Statement on Form 10 (File no. 000-55426), filed on June 5, 2015).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14.2 | Code of Ethics (Incorporated by reference to Exhibit 99.1 to the Pre-Effective Amendment No. 1 to the Registration
Statement on Form 10 (File No. 000-55426), filed on June 5, 2015).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
|----- | --------------------------------------------------------------------------------------------------------------------------



|31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
|----- | --------------------------------------------------------------------------------------------------------------------------



|32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, as amended (18 U.S.C. 1350).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, as amended (18 U.S.C. 1350).
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 99.1 | Administrative Fee Waiver Letter, dated as of November 10, 2016, by and between the Company and the Administrator (Incorporated
by reference to Exhibit 99.2 to the Quarterly Report on Form 10-Q, File No. 814-01154, filed on November 14,
2016).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------










*            Filed
herewith



109







SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.



|                     | Audax Credit BDC Inc.
|-------------------- | ---------------------
|                    
|Date: March 17, 2020 | By:                  
|                     |                      
|                     |                      



|Date: March 17, 2020 | By: | /s/ Richard T. Joseph                
|-------------------- | --- | -------------------------------------
|                     |     | Richard T. Joseph                    
|                     |     | Chief Financial Officer and Treasurer



Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.



|Date: March 17, 2020 | By: | /s/ Michael P. McGonigle                                                                                
|-------------------- | --- | --------------------------------------------------------------------------------------------------------
|                     |     | Michael P. McGonigle                                                                                    
|                     |     | Chairman of the Board of Directors, President, and Chief Executive Officer (principal executive officer)



|Date: March 17, 2020 | By: | /s/ Richard T. Joseph                                                             
|-------------------- | --- | ----------------------------------------------------------------------------------
|                     |     | Richard T. Joseph                                                                 
|                     |     | Chief Financial Officer and Treasurer (principal financial and accounting officer)



|Date: March 17, 2020 | By: | /s/ Kevin P. Magid
|-------------------- | --- | ------------------
|                     |     | Kevin P. Magid    
|                     |     | Director          



|Date: March 17, 2020 | By: | /s/ Patrick H. Dowling
|-------------------- | --- | ----------------------
|                     |     | Patrick H. Dowling    
|                     |     | Director              



|Date: March 17, 2020 | By: | /s/ David G. Moyer
|-------------------- | --- | ------------------
|                     |     | David G. Moyer    
|                     |     | Director          



|Date: March 17, 2020 | By: | /s/ Joseph F. Nemia
|-------------------- | --- | -------------------
|                     |     | Joseph F. Nemia    
|                     |     | Director