UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2020
 OR
 oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 814-00908
 PROSPECT FLEXIBLE INCOME FUND, INC .
 (Exact name of Registrant as specified in its charter)
 Maryland45-2460782(State or other jurisdiction ofincorporation or organization)(I.R.S. Employer Identification No.)10 East 40thStreet, 42ndFloorNew York, NY10016(Address of principal executive offices)(Zip Code)
 TP Flexible Income Fund, Inc.
 (Former name, former address and former fiscal year, if changed since last report)
 Registrant’s telephone number, including area code: (212) 448-0702
 Securities registered pursuant to Section 12(b) of the Act: Title of each classTrading Symbol(s)Name of each exchange on which registeredNoneNoneNone
 Securities registered pursuant to Section 12(g) of the Act:
 Common Stock, $0.001 par value 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 o
 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 o 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. Yes x No o
 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No o
 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 definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
    
 Large accelerated fileroAccelerated fileroNon-accelerated filerxSmaller reporting companyoEmerging growth companyo
 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. o
 Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
 Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of August 27, 2020 was 2,367,478 .
 Documents Incorporated by Reference
 Portions of the Registrant’s definitive Proxy Statement relating to its 2020 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on this Form 10-K, are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent described herein.
 
   
 
 
 PROSPECT FLEXIBLE INCOME FUND, INC. (FORMERLY KNOWN AS TP FLEXIBLE INCOME FUND, INC.)
 TABLE OF CONTENTS
 
 PageForward-Looking Statements1PART IItem 1.Business1Item 1A.Risk Factors22Item 1B.Unresolved Staff Comments53Item 2.Properties53Item 3.Legal Proceedings54Item 4.Mine Safety Disclosures54PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities55Item 6.Selected Financial Data62Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations65Item 7A.Quantitative and Qualitative Disclosures About Market Risk89Item 8.Financial Statements and Supplementary Data90Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure140Item 9A.Controls and Procedures140Item 9B.Other Information141PART IIIItem 10.Directors, Executive Officers and Corporate Governance142Item 11.Executive Compensation143Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters143Item 13.Certain Relationships and Related Transactions, and Director Independence143Item 14.Principal Accountant Fees and Services143PART IVItem 15.Exhibits and Financial Statement Schedules144Item 16.Form 10-K Summary145Signatures146
 
 
   
 
 
 Forward-Looking Statements
 Some of the statements in this annual report on Form 10-K constitute forward-looking statements, which relate to future events or our performance or financial condition. The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, including, but not limited to, statements as to:
 •our future operating results; •our business prospects and the prospects of our portfolio companies; •changes in the 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 Prospect Flexible Income Management, LLC and its affiliates; •the dependence of our future success on the general economy and its effect on the industries in which we invest; •the impact of global health epidemics, including, but not limited to, the recent and ongoing novel coronavirus (“Wuhan Virus”) pandemic, on our and our portfolio companies’ business and the global economy; •uncertainty surrounding the financial and/or political stability of the United States, United Kingdom, Europe, and China; •the ability of our portfolio companies to achieve their objectives; •the use of borrowed money to finance a portion of our investments; •the adequacy of our financing sources and working capital; •the timing of cash flows, if any, from the operations of our portfolio companies; •the ability of Prospect Flexible Income Management, LLC to locate suitable investments for us and to monitor and administer our investments; •the ability of Prospect Flexible Income Management, LLC and its affiliates to attract and retain highly talented professionals; •our ability to qualify and maintain our qualification as a RIC and as a BDC (each as defined herein); and •the effect of changes in laws or regulations affecting our operations or to tax legislation and our tax position. Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The forward looking statements contained in this annual report involve risks and uncertainties and undue reliance should not be placed on them. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in this annual report on Form 10-K and our prospectus, dated August 26, 2020 , which was filed with the SEC on August 26, 2020 , as supplemented from time to time by prospectus supplements filed with the SEC.
 We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K.
 As a result of Pathway Capital Opportunity Fund, Inc. (“PWAY”) being the accounting survivor of the Merger (as defined herein), certain financial information and performance of operations regarding PWAY are discussed herein. Such information may contain forward-looking statements that involve risks and uncertainties. Please see “Risk Factors” and above for a discussion of the uncertainties, risks and assumptions associated with such statements. You should read this annual report on Form 10-K in conjunction with the financial statements and related notes and other financial information appearing elsewhere herein.
 
 
 
 Item 1. Business
 
 In this report, the terms “FLEX,” “we,” “us” and “our” mean Prospect Flexible Income Fund, Inc. (formerly known as TP Flexible Income Fund, Inc.) and all entities included in our consolidated financial statements, unless the context specifically requires otherwise.
 
 We were formed as a Maryland corporation on April 29, 2011. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company, or BDC, under the
 
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 Investment Company Act of 1940, as amended (the "1940 Act"). We are therefore required to comply with certain regulatory requirements. We have elected to be taxed for U.S. federal income tax purposes, and intend to qualify annually as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Prospect Flexible Income Management, LLC (the "Adviser") is registered as an investment adviser with the Securities and Exchange Commission, or SEC, under the Investment Advisers Act of 1940 (the "Advisers Act"). Our Adviser manages our portfolio and makes all investment decisions for us, subject to supervision by our board of directors. On June 25, 2014, we satisfied our minimum offering requirement of selling at least $2.5 million in common stock and on October 1, 2014, we commenced our investment operations.
 
 On and effective August 5, 2020, we changed our name to Prospect Flexible Income Fund, Inc. from TP Flexible Income Fund, Inc. by filing Articles of Amendment to our Fourth Articles of Amendment and Restatement, as amended and supplemented.
 
 Investment Objectives and Strategy
 
 Our investment objective is to generate current income and, as a secondary objective, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. We intend to meet our investment objective by primarily lending to and investing in the debt of privately-owned U.S. middle market companies, which we define as companies with annual revenue between $50 million and $2.5 billion. We may on occasion invest in smaller or larger companies if an attractive opportunity presents itself, especially when there are dislocations in the capital markets. We expect to focus primarily on making investments in syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt, of middle market companies in a broad range of industries. We expect our target credit investments will typically have initial maturities between three and ten years and generally range in size between $1 million and $100 million, although the investment size will vary with the size of our capital base. We expect that the majority of our debt investments will bear interest at floating interest rates, but our portfolio may also include fixed-rate investments. We expect to make our investments directly through the primary issuance by the borrower or in the secondary market.
 
 Our principal focus is to invest primarily in syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt of private middle market U.S. companies in a broad range of industries. In addition, we expect to invest up to 30% of our portfolio of investments in other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of a type of pools of broadly syndicated loans know as collateralized loan obligations, or "CLOs" which we referred to as "Subordinated Structured Notes" or "SSNs". The senior secured loans underlying our SSN investments are expected typically to be BB or B rated (non-investment grade, which are often referred to as “high yield” or “junk”) and in limited circumstances, unrated, senior secured loans.
 
 When identifying prospective portfolio companies, we expect to focus primarily on the attributes set forth below, which we believe should help us generate attractive total returns with an acceptable level of risk. While these criteria provide general guidelines for our investment decisions, we caution investors that, if we believe the benefits of investing are sufficiently strong, not all of these criteria necessarily will be met by each prospective portfolio company in which we chooses to invest. These attributes are:
 
 •Defensible market positions.We seek to invest in companies that have developed strong positions within their respective markets and exhibit the potential to maintain sufficient cash flows and profitability to service our debt in a range of economic environments. We seek companies that can protect their competitive advantages through scale, scope, customer loyalty, product pricing or product quality versus their competitors, thereby minimizing business risk and protecting profitability. •Proven management teams.We expect to focus on companies that have experienced management teams with an established track record of success. •Allocation among various issuers and industries.We seek to allocate our portfolio broadly among issuers and industries, thereby attempting to reduce the risk of a downturn in any one company or industry having a disproportionate adverse impact on the value of our portfolio. •Viable exit strategy.We will attempt to invest a majority of our assets in securities that may be sold in a privately negotiated over-the-counter market or public market, providing us a means by which we may exit our positions. We expect that a large portion of our portfolio may be sold on this secondary market for the foreseeable future, depending on market conditions. For investments that are not able to be sold within this market, we intend to focus primarily on investing in companies whose business models and growth prospects offer attractive exit possibilities, including repayment of our investments, an initial public offering of equity securities, a merger, a sale or a recapitalization, in each case with the potential for capital gains. 
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 •Investing in stable companies with positive cash flow.We seek to invest in established, stable companies with strong profitability and cash flows. Such companies, we believe, are well-positioned to maintain consistent cash flow to service and repay our loans and maintain growth in their businesses or market share. We do not intend to invest to any significant degree in start-up companies, turnaround situations or companies with speculative business plans. •Private equity sponsorship.Often, we will seek to participate in transactions sponsored by what we believe to be sophisticated and seasoned private equity firms. Our Adviser’s management team believes that a private equity sponsor’s willingness to invest significant sums of equity capital into a company is an endorsement of the quality of the investment. Further, by co-investing with such experienced private equity firms which commit significant sums of equity capital ranking junior in priority of payment to our debt investments, we may benefit from the due diligence review performed by the private equity firm, in addition to our own due diligence review. Further, strong private equity sponsors with significant investments at risk have the ability and a strong incentive to contribute additional capital in difficult economic times should operational or financial issues arise, which could provide additional protections for our investments. We will be subject to certain regulatory restrictions in making our investments. On January 13, 2020, we received a co-investment exemptive order from the SEC (the “Order”) granting us the ability to negotiate terms other than price and quantity of co-investment transactions with other funds managed or owned by our Adviser or certain affiliates, including Prospect Capital Corporation and Priority Income Fund, Inc., where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions included therein. Under the terms of the Order, a majority of our independent directors who have no financial interest in the transaction must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, 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 objective and strategies. The Order also imposes reporting and record keeping requirements and limitations on transactional fees. We may only co-invest with other funds managed or owned by our Adviser or certain affiliates in accordance with such Order and existing regulatory guidance.
 
 Potential Market Opportunity
 
 We believe that there are and will continue to be significant investment opportunities in the senior secured first lien loan and senior secured second lien loan asset classes, as well as investments in debt and equity securities of middle market companies.
 
 Potential Opportunity in Middle Market Private Companies
 
 We believe the middle market lending environment provides opportunities for us to meet our objective of making investments that generate attractive risk-adjusted returns as a result of a combination of the following factors:
 
 Large Addressable Market. According to Leveraged Commentary & Data, institutional leveraged loan issuance (senior secured loans and second lien secured loans) remained strong in 2019 at approximately $490 billion. We believe that there exists a large number of prospective lending opportunities for lenders, which should allow us to generate substantial investment opportunities and build an attractive portfolio of investments.
 
 Strong Demand for Debt Capital. We expect that private equity firms will continue to be active investors in middle market companies. These private equity funds generally seek to leverage their investments by combining their capital with loans provided by other sources, and we believe that our investment strategy positions us well to invest alongside such private equity investors. In addition, we believe the large amount of uninvested capital held by funds of private equity firms, estimated by Preqin Ltd., an alternative assets industry data and research company, to be $1.45 trillion as of December 2019, will continue to drive deal activity.
 
 Attractive Market Segment. We believe that the underserved nature of such a large segment of the market can at times create a significant opportunity for investment. In many environments, we believe that middle market companies are more likely to offer attractive economics in terms of transaction pricing, up-front and ongoing fees, prepayment penalties and security features in the form of stricter covenants and quality collateral than loans to larger companies. In addition, as compared to larger companies, middle market companies often have simpler capital structures and carry less leverage, thus aiding the structuring and negotiation process and allowing us greater flexibility in structuring favorable transactions.
 
 Attractive Deal Structure and Terms
 
 We believe senior secured debt provides strong defensive characteristics. Because this debt has priority in payment among an issuer’s security holders (i.e., holders are due to receive payment before junior creditors and equityholders), they carry less potential risk than other investments in the issuer’s capital structure. Further, these investments are secured by the issuer’s assets, which
 
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 may be seized in the event of a default, if necessary. They generally also carry restrictive covenants aimed at ensuring repayment before junior creditors, such as most types of unsecured bondholders, and other security holders and preserving collateral to protect against credit deterioration.
 
 The chart below illustrates examples of the collateral used to secure senior secured first lien debt and senior secured second lien debt.
 
 
 
 
 Investments in Floating Rate Debt
 
 A large portion of the investments we expect to make in middle market companies are expected to be in the form of floating rate debt instruments. These floating rate debt instruments are expected to be below investment grade rated (which are often referred to as “high yield” or “junk”). Floating rate loans have a base rate that adjusts periodically plus a spread over the base rate. The base rate is typically the three-month London Interbank Offered Rate (“LIBOR”), and resets every 30-90 days. As LIBOR increases, the income stream from these floating rate instruments will also increase. Syndicated floating rate debt offers certain benefits:
 
 Adjustable coupon payment. Floating rate loans are structured so that interest rates reset on a predetermined schedule. As a result, when interest rates rise, coupon payments increase, and vice versa, with little lag time (typically 90 days or less). This feature greatly reduces the interest rate risk, or duration risk, inherent in high yield bonds, as the value of high yields bonds may decline in an increasing interest rate environment because their interest rates do not reset. For example, as short-term rates rise, the value of a high yield bond typically will decline while the value of a floating rate loan typically will remain stable because its interest rate will reset.
 
 Priority in event of default . In the event of a default, floating rate loans typically have a higher position in a company’s capital structure, have first claim to assets and greater covenant protection than high yield bonds. As a result, floating rate loans have generally recovered a greater percentage of value than high yield bonds. Also, the default rate for floating rate loans has historically been lower than defaults of high yield bonds.
 
 Reduced volatility .  The return of floating rate loans has historically had a low correlation to most asset classes and a negative correlation with some asset classes. Therefore, adding floating rate loans to a portfolio should reduce volatility and risk.
 
 Investment Types
 Our portfolio is expected to be comprised primarily of investments in syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt of private middle market U.S. companies. In addition, a portion of our portfolio may be comprised of other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of SSNs. Our Adviser will seek to tailor our investment focus as market conditions evolve. Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital structure, where returns tend to be stronger in a more stable or growing economy, but less secure in weak economic environments. Below is a diagram illustrating where these investments lie in a typical portfolio company’s capital structure. Senior secured first lien debt is situated at the top of the capital structure and typically has the first claim on the assets and cash flows of the company, followed by senior secured second lien debt, subordinated debt, preferred equity and, finally, common equity. Due to this priority
 
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 of cash flows, an investment’s risk increases as it moves further down the capital structure. Investors are usually compensated for this risk associated with junior status in the form of higher returns, either through higher interest payments or potentially higher capital appreciation. We will rely on our Adviser’s experience to structure investments, possibly using all levels of the capital structure, which we believe will perform in a broad range of economic environments.
 Typical Leveraged Capital Structure Diagram
 
 
 Senior Secured First Lien Loans
 Senior secured first lien loans are situated at the top of the capital structure. Because these loans generally have priority in payment, they carry the least risk among all investments in a firm. Generally, our senior secured first lien loans are expected to have initial maturities of three to seven years, offer some form of amortization, and have first priority security interests in the assets of the borrower. Generally, we expect that the interest rate on our senior secured first lien loans typically will have variable rates ranging between 3.0% and 8.0% over a standard benchmark, such as the prime rate or LIBOR.
 Senior Secured Second Lien Loans
 Senior secured second lien loans are immediately junior to senior secured first lien loans and have substantially the same collateral and covenant structures as senior secured first lien loans. Generally, our senior secured second lien loans are expected to have initial maturities of three to eight years. Senior secured second lien loans, however, are granted a second priority security interest in the assets of the borrower, which means that any realization of collateral will generally be applied to pay senior secured first lien loans in full before senior secured second lien loans are paid and the value of the collateral may not be sufficient to repay in full both senior secured first lien loans and senior secured second lien loans. In return for this junior ranking, senior secured second lien loans generally offer higher returns compared to senior secured first lien debt. These higher returns come in the form of higher interest. Generally, we expect that the interest rate on our senior secured second lien loans typically will have variable rates ranging between 6.0% and 11.0% over a standard benchmark, such as the prime rate or LIBOR.
 Senior Secured Bonds
 Senior secured bonds are generally secured by collateral on a senior, pari passu or junior basis with other debt instruments in an issuer’s capital structure and have similar covenant structures as senior secured loans. Generally, we expect these investments to carry a fixed rate of 6.0% to 12.0% and have initial maturities of three to ten years.
 Subordinated Debt
 In addition to syndicated senior secured first lien loans, syndicated senior secured second lien loans and senior secured bonds, we may invest a portion of our assets in subordinated debt. Subordinated debt investments usually rank junior in priority of payment to senior debt and are often unsecured, but are situated above preferred equity and common equity in the capital structure. In return for their junior status compared to senior debt, subordinated debt investments typically offer higher returns through both higher interest rates and possible equity ownership in the form of warrants, enabling the lender to participate in the capital appreciation of the borrower. These warrants typically require only a nominal cost to exercise. We generally will target subordinated debt with interest-only payments throughout the life of the security, with the principal due at maturity. Typically, subordinated debt investments have maturities of five to ten years. Generally, we expect these securities to carry a fixed rate, or a floating current
 
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 yield of 8.0% to 18.0% over a standard benchmark. In addition, we may receive additional returns from any warrants we may receive in connection with these investments. In some cases, a portion of the total interest may accrue or be PIK.
 Equity and Equity-Related Securities
 While we intends to maintain our focus on investments in debt securities, from time to time, when We sees the potential for extraordinary gain, or in connection with securing particularly favorable terms in a debt investment, We may enter into investments in preferred or common equity, typically in conjunction with a private equity sponsor we believe to be sophisticated and seasoned. With respect to any preferred or common equity investments, we expect to target an annual investment return of at least 15%.
 Non-U.S. Securities
 We may invest in non-U.S. securities, which may include securities denominated in U.S. dollars or in non-U.S. currencies, to the extent permitted by the 1940 Act.  For example, the SSNs in which we may invest generally consist of a special purpose vehicle (typically formed in the Cayman Islands or another similar foreign jurisdiction) formed to purchase the senior secured loans and issue rated debt securities and equity tranches and/or unrated debt securities (generally treated as equity interests).
 Subordinated Structured Notes
 We may invest in subordinated structured notes or SSNs, which are a form of securitization where payments from multiple loans are pooled together. Investors may purchase one or more tranches of an SSN and each tranche typically reflects a different level of seniority in payment from the SSN.
 Other Securities
 We may also invest from time to time in royalties, derivatives, including total return swaps and credit default swaps, that seek to modify or replace the investment performance of a particular reference security or other asset. These transactions are typically individually negotiated, non-standardized agreements between two parties to exchange payments, with payments generally calculated by reference to a notional amount or quantity. Swap contracts and similar derivative contracts are not traded on exchanges; rather, banks and dealers act as principals in these markets. We anticipate that any use of derivatives would primarily be as a substitute for investing in conventional securities.
 Cash and Cash Equivalents
 We may maintain a certain level of cash or equivalent instruments, including money market funds, to make follow-on investments, if necessary, in existing portfolio companies or to take advantage of new opportunities.
 Sources of Income
 The primary means through which our stockholders will receive a return of value is through interest income, dividends and capital gains generated by our investments. In addition to these sources of income, we may receive fees paid by our portfolio companies, including one-time closing fees paid at the time each investment is made. Closing fees typically range from 1.0% to 2.0% of the purchase price of an investment. In addition, we may generate revenues in the form of non-recurring commitment, origination, structuring or diligence fees, fees for providing managerial assistance, consulting fees and performance-based fees.
 Risk Management
 We seek to limit the downside potential of our investment portfolio by:
 •applying our investment strategy guidelines for portfolio investments; •requiring a total return on investments (including both interest and potential appreciation) that adequately compensates us for credit risk; •allocating our portfolio among various issuers and industries, size permitting, with an adequate number of companies, across different industries, with different types of collateral; and •negotiating or seeking debt investments with covenants or features that protect us while affording portfolio companies flexibility in managing their businesses consistent with preservation of capital, which may include affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights. We may also enter into interest rate hedging transactions at the sole discretion of our Adviser. Such transactions will enable us to selectively modify interest rate exposure as market conditions dictate.
 Affirmative Covenants
 Affirmative covenants require borrowers to take actions that are meant to ensure the solvency of the company, facilitate the lender’s monitoring of the borrower, and ensure payment of interest and loan principal due to lenders. Examples of affirmative covenants include covenants requiring the borrower to maintain adequate insurance, accounting and tax records, and to produce frequent financial reports for the benefit of the lender.
 
 
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 Negative Covenants
 Negative covenants impose restrictions on the borrower and are meant to protect lenders from actions that the borrower may take that could harm the credit quality of the lenders’ investments. Examples of negative covenants include restrictions on the payment of dividends and restrictions on the issuance of additional debt or making capital expenditures without the lenders’ approval. In addition, certain covenants may restrict a borrower’s activities by requiring it to meet certain earnings interest coverage ratio and leverage ratio requirements. These covenants are also referred to as financial or maintenance covenants.
 
 Investment Process
 
 The investment professionals utilized by our Adviser have spent their careers developing the resources necessary to invest in private companies. Our transaction process is highlighted below.
 
 Our Transaction Process
 
 
 Sourcing
 
 In order to source transactions, our Adviser will generate investment opportunities through syndicate and club deals and, subject to regulatory constraints, through the proprietary origination channels of the investment team at our Adviser and its affiliates. In club deals, we along with other investors (including our affiliates) pool assets together to purchase securities collectively. With respect to syndicate and club deals, the investment professionals of our Adviser have built a network of relationships with commercial and investment banks, finance companies and other investment funds as a result of the long track record of its investment professionals in the leveraged finance marketplace. With respect to our Adviser’s proprietary origination channel, our Adviser will seek to leverage the relationships with private equity sponsors and financial intermediaries. We believe that the broad networks of our Adviser and its affiliates will produce a significant pipeline of investment opportunities for us.
 
 Evaluation
 
 Initial review. In its initial review of an investment opportunity, our Adviser’s professionals examine information furnished by the target company and external sources, such as rating agencies, if applicable, to determine whether the investment meets our basic investment criteria and other guidelines specified by our Adviser, within the context of proper portfolio diversification, and offers an acceptable probability of attractive returns with identifiable downside risk. For the majority of securities available on the secondary market, a comprehensive analysis is conducted and continuously maintained by a dedicated research analyst, the results of which are available for the investment team to review. In the case of a primary or secondary transaction, our Adviser will conduct detailed due diligence investigations as necessary.
 
 Credit analysis/due diligence. Before undertaking an investment, the transaction team expects to conduct a thorough due diligence review of the opportunity to ensure the company fits our investment strategy, which may include:
 
 •a full operational analysis to identify the key risks and opportunities of the company’s business, including a detailed review of historical and projected financial results; •a detailed analysis of industry dynamics, competitive position, regulatory, tax and legal matters; •on-site visits, if deemed necessary; •background checks to further evaluate management and other key personnel; •a review by legal and accounting professionals, environmental or other industry consultants, if necessary; •financial sponsor due diligence, including portfolio company and lender reference checks, if necessary; and •a review of management’s experience and track record. 
 Execution
 
 Recommendation. The professionals of our Adviser will recommend investment opportunities for its approval. Our Adviser seeks to maintain a defensive approach toward its investment recommendations by emphasizing risk control in its investment process, which includes (i) the pre-review of each opportunity by one of its investment professionals to assess the general quality, value and fit relative to our portfolio and (ii) where possible, transaction structuring with a focus on preservation of capital in varying economic environments.
 
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 Approval. After completing its internal transaction process, our Adviser will make formal recommendations for review and approval by our Adviser’s investment committee. In connection with its recommendation, it will transmit any relevant underwriting material and other information pertinent to the decision-making process. The consummation of a transaction will require unanimous approval of the members of our Adviser’s investment committee.
 
 Post-Investment Monitoring
 
 Portfolio Monitoring. Our Adviser monitors our portfolio with a focus toward anticipating negative credit events. To maintain portfolio company performance and help to ensure a successful exit, our Adviser expects to work closely with, as applicable, the lead equity sponsor, loan syndicator or agent bank, portfolio company management, consultants, advisers and other security holders to discuss financial position, compliance with covenants, financial requirements and execution of the company’s business plan. In addition, depending on the size, nature and performance of the transaction, we may occupy a seat or serve as an observer on a portfolio company’s board of directors or similar governing body.
 
 Typically, our Adviser will receive financial reports detailing operating performance, sales volumes, margins, cash flows, financial position and other key operating metrics on a quarterly basis from our portfolio companies. Our Adviser intends to use this data, combined with due diligence gained through contact with the company’s customers, suppliers, competitors, market research, and/or other methods, to conduct an ongoing, rigorous assessment of the company’s operating performance and prospects.
 
 Valuation Process. Each quarter, we will value investments in our portfolio, and such values will be disclosed each quarter in reports filed with the SEC. Investments for which market quotations are readily available will be recorded at such market quotations. With respect to investments for which market quotations are not readily available, our board of directors will determine the fair value of such investments in good faith, utilizing the input of our valuation committee, our Adviser and any other professionals or materials that our board of directors deems worthy and relevant, including independent third-party pricing services and independent third-party valuation services, if applicable.
 
 Managerial Assistance. As a BDC, we must offer, and provide upon request, managerial assistance to certain of our portfolio companies. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. Depending on the nature of the assistance required, our Adviser will provide such managerial assistance on our behalf to portfolio companies that request this assistance. To the extent fees are paid for these services, we, rather than our Adviser, will retain any fees paid for such assistance.
 
 Exit
 
 We will attempt to invest in securities that may be sold in the privately negotiated over-the-counter market, providing us a means by which we may exit our positions. We expect that a large portion of our portfolio may be sold on this secondary market for the foreseeable future, depending on market conditions. For any investments that are not able to be sold within this market, we will focus primarily in investing in companies whose business models and growth prospects offer attractive exit possibilities, including repayment of our investments, an initial public offering of equity securities, a merger, a sale or a recapitalization.
 
 Potential Competitive Strengths
 We believe that we offer investors the following potential competitive strengths:
 Established platform with seasoned investment professionals . We believe that we will benefit from the wide resources of our Adviser through the personnel it utilizes from Prospect Capital Management, which is focused on sourcing, structuring, executing, monitoring and exiting a broad range of investments. We believe these personnel possess market knowledge, experience and industry relationships that enable them to identify potentially attractive investment opportunities in companies pursuant to our investment strategy.
 Long-term investment horizon . Our long-term investment horizon gives us greater flexibility, which we believe will allow us to maximize returns on our investments. Unlike private equity and venture capital funds, we are not subject to standard periodic capital return requirements. Such requirements typically stipulate that capital invested in these funds, together with any capital gains on such investment, can be invested only once and must be returned to investors after a pre-determined time period. We believe that our ability to make investments with a longer-term view and without the capital return requirements of traditional private investment vehicles will provide us with greater flexibility to seek investments that can generate attractive returns on invested capital.
 
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 Disciplined, income-oriented investment philosophy . Our Adviser is expected to employ an investment approach focused on current income and long-term investment performance. This investment approach involves a multi-stage selection process for each investment opportunity, as well as ongoing monitoring of each investment made, with particular emphasis on early detection of deteriorating credit conditions at portfolio companies, which could result in adverse portfolio developments. This strategy is designed to maximize current income and minimize the risk of capital loss while maintaining potential for long-term capital appreciation.
 Investment expertise across all levels of the corporate capital structure . Our Adviser believes that its broad expertise and experience investing at all levels of a company’s capital structure will enable us to manage risk while affording us the opportunity for significant returns on our investments. Our Adviser will attempt to capitalize on this expertise in an effort to produce and maintain an investment portfolio that will perform in a broad range of economic conditions.
 We generally will not be required to pay corporate-level U.S. federal income taxes on income and capital gains distributed to stockholders . As a RIC, we generally will not be required to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we recognize from our investments and timely distribute to our stockholders as dividends. Furthermore, tax-exempt investors in our shares who do not finance their acquisition of our shares with indebtedness should not be required to recognize unrelated business taxable income, or “UBTI,” unlike certain direct investors in master limited partnerships (“MLPs”). We expect to form wholly owned taxable subsidiaries to make or hold certain investments in non-traded limited partnerships or other entities classified as partnership for U.S. federal tax purposes. Although, as a RIC, dividends received by us from taxable entities and distributed to our stockholders will not be subject to corporate-level U.S. federal income taxes, any taxable entities we own will generally be subject to federal and state income taxes on their income. As a result, the net return to us on such investments that are held by such subsidiaries will be reduced to the extent that the subsidiaries are subject to income taxes.
 
 Qualifying Assets
 
 Under the 1940 Act, a business development company 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 company’s total assets. The principal categories of qualifying assets relevant to our 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 business development company) or a company that would be an investment company but for certain exclusions under the 1940 Act; and c.satisfies any of the following: i.does not have any class of securities that is traded on a national securities exchange; ii.has a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million; iii.is controlled by a business development company or a group of companies including a business development company and the business development company has an affiliated person who is a director of the eligible portfolio company; or iv.is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million. 2.Securities of any eligible portfolio company that 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. 
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 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. 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.
 Managerial Assistance
 
 In order to count portfolio securities as qualifying assets for the purpose of the 70% test, we must either control the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such 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 business development company, 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 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. Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets constitute repurchase agreements from a single counterparty, we would not meet the Diversification Tests in order to qualify as a RIC for U.S. federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our Adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
 
 Senior Securities
 
 We are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our Class A Shares if our asset coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. However, recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so.
 
 At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. As a result, and subject to certain additional disclosure requirements as well as the repurchase obligations, both as described above, the 150% minimum asset coverage ratio will apply to the Company effective as of March 16, 2019, the day immediately after the 2019 Annual Meeting. As a result, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As a non-traded BDC, we are also required to offer to repurchase our outstanding shares at the rate of 25% per quarter over four calendar quarters.
 
 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. For a discussion of the risks associated with leverage, see “Risk Factors—Risks Related to Business Development Companies.”
 
 
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 Code of Ethics
 
 We have adopted a code of ethics in accordance with Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the 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. At a meeting held on April 22, 2019, the Company’s board of directors unanimously agreed to amend and restate the Company’s Code of Ethics in its entirety. The Code of Ethics was amended and restated in connection with the Merger to reflect current best practices. Specifically, the amendments included clarifications and enhancements to the description of the duties and responsibilities of the Company’s Chief Compliance Officer, increased reporting and certification requirements, and an enhanced description of the restrictions on the outside business activities of the directors and officers of the Company and its investment adviser. The code of ethics is attached as Exhibit 14.1 to the Company's Form 8-K filed with the SEC on April 26, 2019, and is also available on the EDGAR Database on the SEC’s Internet site at www.sec.gov .
 
 Compliance Policies and Procedures
 
 We have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws and are required to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation. The Company’s chief compliance officer, with whom we contract services, is responsible for administering these policies and procedures.
 
 Proxy Voting Policies and Procedures
 
 We anticipate delegating our proxy voting responsibility to our Adviser. The proxy voting policies and procedures that we anticipate that our Adviser will follow are set forth below. The guidelines will be reviewed periodically by our Adviser and our non-interested directors, and, accordingly, are subject to change.
 
 As an investment adviser registered under the Advisers Act, our Adviser has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes that it must vote client securities in a timely manner free of conflicts of interest and in the best interests of its clients. These policies and procedures for voting proxies for the investment advisory clients of our Adviser are intended to comply with Section 206 of the Advisers Act and Rule 206(4)-6 thereunder.
 
 Proxy Policies
 
 Our Adviser will vote proxies relating to portfolio securities in the best interest of its clients’ stockholders. It will review on a case-by-case basis each proposal submitted for a stockholder vote to determine its impact on the portfolio securities held by its clients. Although our Adviser will generally vote against proposals that may have a negative impact on its clients’ portfolio securities, it may vote for such a proposal if compelling long-term reasons to do so exist.
 
 The proxy voting decisions of our Adviser are made by the senior officers who are responsible for monitoring each of its clients’ investments. To ensure that its vote is not the product of a conflict of interest, it will require that: (a) anyone involved in the decision-making process disclose to its 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 (b) employees involved in the decision making process or vote administration are prohibited from revealing how our Adviser intends to vote on a proposal in order to reduce any attempted influence from interested parties.
 
 Proxy Voting Records
 
 You may obtain information, without charge, regarding how our Adviser voted proxies with respect to our portfolio securities by making a written request for proxy voting information to our Chief Compliance Officer, Kristin Van Dask or by calling us at (212) 448-0702. The SEC also maintains a website at that contains such information.
 
 Other Matters
 
 We will be periodically examined 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. Further, as a business development company, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misconduct, bad faith, gross negligence or reckless disregard of the duties
 
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 involved in the conduct of such person’s office. The SEC takes the position that indemnification against liabilities arising under the Securities Act is against public policy and is unenforceable.
 
 Securities Exchange Act and Sarbanes-Oxley Act Compliance
 We will be subject to the reporting and disclosure requirements of the Exchange Act, including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we will be subject to the Sarbanes-Oxley Act, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements will affect us. For example:
 •pursuant to Rule 13a-14 of the Exchange Act, our chief executive officer and chief financial officer will be required to certify the accuracy of the financial statements contained in our periodic reports; •pursuant to Item 307 of Regulation S-K, our periodic reports will be required to disclose our conclusions about the effectiveness of our disclosure controls and procedures; •pursuant to Rule 13a-15 of the Exchange Act, our management will be required to prepare a report regarding its assessment of our internal control over financial reporting. This report must be audited by our independent registered public accounting firm; and •pursuant to Item 308 of Regulation S-K and Rule 12a-15 under the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder. We intend to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.
 Plan of Distribution
 Through our Dealer Manager, we are conducting a continuous offering of our Class A Shares on a "best efforts" basis, as permitted by the federal securities laws. Our Dealer Manager is Triton Pacific Securities, LLC, which is a member of FINRA, and the Securities Investor Protection Corporation, or SIPC.  Triton Pacific Securities, LLC is an affiliated entity of our former investment adviser and is partially owned by one of our directors, Craig Faggen.
 The Dealer Manager is not required to sell any specific number or dollar amount of shares but will use its best efforts to sell the shares offered. We are currently selling our Class A Shares on a continuous basis at a price of $9.33 per share.  To the extent that our net asset value increases, we will sell at a price necessary to ensure that shares are not sold at a price per share, after deduction of selling commissions and dealer manager fees, that is below our net asset value per share. The minimum permitted purchase is $5,000.  Promptly following any such adjustment to the offering price per share, we will file a prospectus supplement with the SEC disclosing the adjusted offering price, and we will appropriately publish the updated information.
 Compensation of the Dealer Manager and Selected Broker-Dealers
 Except as otherwise described in this annual report on Form 10-K, the Dealer Manager will receive an upfront sales load of up to 9.0% of the gross proceeds received on Class A Shares sold in our offering all or a portion of which may be paid to selected broker-dealers and financial representatives. The upfront sales load consists of upfront selling commissions of up to 6.0% of the gross proceeds of Class A Shares sold in our offering and a dealer manager fee of up to 3.0% of the gross offering proceeds of Class A Shares sold in our offering. The upfront selling commissions and dealer manager fees will not be paid in connection with purchases of shares pursuant to our distribution reinvestment plan. In addition to the upfront selling commissions and dealer manager fees, the Adviser may pay our Dealer Manager a fee (the “Additional Selling Commissions”) equal to no more than 1.0% of the net asset value per share per year. Our Dealer Manager will reallow all or a portion of the Additional Selling Commissions to participating broker-dealers. The Additional Selling Commissions will not be paid by our shareholders. The Adviser will cease making these payments to our Dealer Manager with respect to each share upon the earliest to occur of the following: (i) the date when the aggregate underwriting compensation would exceed that permitted under Conduct Rule 2310 of FINRA over the life of the offering, which equals 10% of the gross offering proceeds from the sale of shares in our offering (excluding shares purchased through our distribution reinvestment plan); (ii) the date of a liquidity event; (iii) the date that such share is redeemed or is no longer outstanding; (iv) the date when the aggregate upfront selling commission, dealer manager fees, and payments from the Adviser together equal 10% (or such other amount, as determined by the Adviser) of the actual price paid for such share; or (v) the date when Prospect Flexible Income Management, LLC no longer serves as our investment adviser.
 
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 All or a portion of the upfront selling commissions and dealer manager fees, as applicable, may be paid to selected broker-dealers and financial representatives.  In addition, the upfront sales load, may be reduced or waived in connection with certain categories of sales, such as sales for which a volume discount applies, sales through investment advisers or banks acting as trustees or fiduciaries and sales to our affiliates.  The Dealer Manager will not directly or indirectly pay or award any fees or commissions or other compensation to any person or entity engaged to sell our shares or give investment advice to a potential stockholder except to a registered broker-dealer or other properly licensed agent for selling or distributing our shares.
 FINRA Rule 2310 provides that the maximum compensation payable from any source to FINRA members participating in an offering may not exceed 10% of gross offering proceeds, excluding proceeds received in connection with the issuance of shares through a distribution reinvestment plan. Payments collected by us in connection with the distribution fee, in addition to any upfront sales load, will be considered underwriting compensation for purposes of FINRA Rule 2310. The maximum aggregate underwriting compensation collected from payments of distribution fees, upfront selling commissions and contingent deferred sales charges, if any, and any other sources will not exceed 10% of the gross offering proceeds from the sale of shares in our offering.
 
 Status of Our Continuous Public Offering
 
 Since commencing our continuous public offering and through August 27, 2020 , we have sold 1,677,066 shares of our common stock for gross proceeds of approximately 24,070,384 .
 
 Administration
 
 We have entered into an administration agreement with our Administrator (as amended and restated, the “Administration Agreement”) pursuant to which our Administrator performs certain administrative functions on our behalf.
 
 We compensate our Administrator by payment of service fees approved by our independent directors which will reimburse the Administrator for our allocable portion of its overhead and other expenses incurred in performing its obligations under the Administration Agreement, including rent and our allocable portion of the cost of our chief executive officer, chief compliance officer and chief financial officer and their respective staffs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
 About Our Adviser
 Prospect Flexible Income Management, LLC serves as our investment adviser.  Our Adviser is registered as an investment adviser under the Advisers Act and provides services to us pursuant to the terms of an investment advisory agreement between us and our Adviser, or the Investment Advisory Agreement.  Our Adviser’s investment activities are led by a team of investment professionals from the investment and operations team of Prospect Capital Management. Our Adviser’s investment professionals have significant experience and an extensive track record of investing in companies, managing high-yielding debt and equity investments in infrastructure companies and have developed an expertise in using all levels of a firm’s capital structure to produce income-generating investments, while focusing on risk management. Such parties also have extensive knowledge of the managerial, operational and regulatory requirements of publicly traded investment companies. Most of the finance professionals of our Adviser were closely involved with the operation of PWAY prior to the Merger.  In addition, most of our finance professionals are also involved in the operation, management and regulatory compliance of two affiliated funds,  Prospect Capital Corporation, a BDC that is listed for trading on the Nasdaq Stock Market that had total assets of approximately $5.3 billion as of June 30, 2020 , and Priority Income Fund, Inc., an externally managed, non-diversified, closed-end management investment company that invests primarily in senior secured loans, including via SSN investments, of companies whose debt is rated below investment grade or, in limited circumstances, unrated.
 
 Our Adviser does not currently have employees, but has access to certain investment, finance, accounting, legal and administrative personnel of Prospect Capital Management and Prospect Administration and may retain additional personnel as our activities expand. In particular, certain personnel of Prospect Capital Management will be made available to our Adviser to assist it in managing our portfolio and operations, provided that they are supervised at all times by our Adviser’s management team.
 
 M. Grier Eliasek, the President and Chief Operating Officer of our Adviser, also serves as our Chairman, Chief Executive Officer and President. Mr. Eliasek has substantial investment and portfolio management experience. Mr. Eliasek served as the Chairman, Chief Executive Officer and President of PWAY until the Merger and is the President, Co-Founder and Chief Operating Officer of Prospect Capital Corporation. Mr. Eliasek is also the Chief Executive Officer and President of Priority Income Fund, Inc., an
 
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 externally managed, non-diversified, closed-end management investment company that invests primarily in senior secured loans, including via SSN investments, of companies whose debt is rated below investment grade or, in limited circumstances, unrated.
 
 Our board of directors includes a majority of independent directors and oversees and monitors the activities of our Adviser as well as our investment portfolio and performance, and annually reviews the compensation paid to our Adviser. See “Investment Advisory Agreement” below. In addition to managing our portfolio, our Adviser provides on our behalf managerial assistance to those of our portfolio companies to which we are required to provide such assistance.  We have the right to terminate the Investment Advisory Agreement upon 60 days’ written notice to our Adviser, and our Adviser has the right to terminate the Investment Advisory Agreement upon 120 days’ written notice to us.
 
 Wuhan Virus
 
 On March 11, 2020, the World Health Organization declared the coronavirus (“Wuhan Virus”) as a global pandemic and recommended containment and mitigation measures worldwide. As of June 30, 2020 , and subsequent to June 30, 2020 , the Wuhan Virus pandemic has had a significant impact on the U.S. and global economy and on us. We have experienced an increase in unrealized depreciation of our investment portfolio due to decreases in fair value of its investments attributable to the impact of the Wuhan Virus pandemic on the markets.
 
 The extent of the impact of the Wuhan Virus pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy, all of which are highly uncertain and cannot be predicted. To the extent our portfolio companies are adversely impacted by the effects of the Wuhan Virus pandemic, it may have a material adverse impact on its future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of our portfolio companies. See “Risk Factors.”
 
 Employees
 
 We do not currently have any employees. The services necessary for the operation of our business will be provided to us by investment professionals and personnel made available to our Adviser from Prospect Capital Management and by the officers and the employees of the Administrator pursuant to the terms of the Investment Advisory Agreement and the Administration Agreement, respectively.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
 Corporate Information
 
 Our executive offices are located at 10 East 40th Street, 42nd Floor, New York, NY 10016 and our telephone number is (212) 448-0702.
 
 Available Information
 
 As required because of our election of BDC status, we will file annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, respectively, proxy statements and other reports required by the federal securities laws with the SEC via the SEC’s EDGAR filing system. These reports will be available upon filing on the SEC’s website at www.sec.gov. These reports will also be available on our website at www.flexbdc.com . You may access and print all documents provided through this service.
 
 Certain 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 us or our investors on such an investment. For example, we have not described tax consequences that we assume to be generally known by investors or certain considerations that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, pension plans and trusts, financial institutions, U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar, persons who mark-to-market our shares and persons who hold our shares as part of a “straddle,” “hedge” or “conversion” transaction. 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, Treasury regulations, and administrative and judicial interpretations, each as of the date of this annual report on Form 10-K and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service, or the IRS, regarding our offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign,
 
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 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 our discussion, a “U.S. stockholder” means a beneficial owner of shares of our common stock that is for U.S. federal income tax purposes:
 
 •a citizen or individual resident of the United States; •a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia; •an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or •a trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. 
 For purposes of our discussion, a “Non-U.S. stockholder” means a beneficial owner of shares of our common stock that is neither a U.S. stockholder nor a partnership (including an entity treated as a partnership for U.S. federal income tax purposes).
 
 If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner or member of the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder that is a partner in a partnership holding shares of our common stock should consult his, her or its tax advisors with respect to the purchase, ownership and disposition of shares of our common stock.
 
 Tax matters are very complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of his, her or its particular situation. We encourage investors to consult their own tax advisors regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of 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 taxed as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders from our tax earnings and profits. To continue to qualify 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 to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net longterm capital loss, or the Annual Distribution Requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to U.S. federal excise, state, local and foreign taxes.
 
 Taxation as a RIC
 
 Provided that we continue to qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (which we define as net long-term capital gain in excess of net short-term capital loss) that we timely distribute to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed distributed) to our
 stockholders.
 
 We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income of RICs unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years and on which we paid no U.S. federal income tax. We generally will endeavor in each taxable year to avoid any U.S. federal excise tax on our earnings.
 
 In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
 •qualify to be regulated as a BDC or be registered as a management investment company under the 1940 Act; •meet the Annual Distribution Requirement; •derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock or other securities or currencies or other income derived with respect to our business of investing in such stock, securities or currencies and net 
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 •income derived from an interest in a “qualified publicly-traded partnership” (as defined in the Code), or the 90% Income Test; and •diversify our holdings so that at the end of each quarter of the taxable year: ◦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 (which for these purposes includes the equity securities of a “qualified publicly-traded partnership”); and ◦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, (i) of one issuer (ii) of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of one or more “qualified publicly-traded partnerships,” or the Diversification Tests. 
 To the extent that we invest in entities treated as partnerships for U.S. federal income tax purposes (other than a “qualified publicly-traded partnership”), we generally must include the items of gross income derived by the partnerships for purposes of the 90% Income Test, and the income that is derived from a partnership (other than a “qualified publicly-traded partnership”) will be treated as qualifying income for purposes of the 90% Income Test only to the extent that such income is attributable to items of income of the partnership which would be qualifying income if realized by us directly.
 
 In order to meet the 90% Income Test, we may establish one or more special purpose corporations to hold assets from which we do not anticipate earning dividend, interest or other qualifying income under the 90% Income Test. Any investments held through a special purpose corporation would generally be subject to U.S. federal income and other taxes, and therefore we can expect to achieve a reduced after-tax yield on such investments.
 
 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 original issue discount (such as debt instruments with payment-in-kind interest, or issued with warrants, or, in certain cases, with increasing interest rates), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, 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. We anticipate that a portion of our income may constitute original issue discount or other income required to be included in taxable income prior to receipt of cash.
 
 Because any original issue discount 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 though 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 debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.
 
 Furthermore, a company may face financial difficulty that requires us to work-out, modify or otherwise restructure our investment in the company. Any such restructuring may result in unusable capital losses and future non-cash income. Any restructuring may also result in our recognition of a substantial amount of non-qualifying income for purposes of the 90% Income Test.
 
 Gain or loss realized by us from 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. Such gain or loss generally will be long-term or short-term, depending on how long we held a particular warrant.
 
 Our investment in non-U.S. securities may be subject to non-U.S. income, withholding and other taxes. In that case, our yield on those securities would be decreased. Stockholders will generally not be entitled to claim a credit or deduction with respect to non-U.S. taxes paid by us.
 
 We anticipate that the SSN vehicles in which we invest may constitute PFICs. Because we acquire shares in PFICs (including equity tranche investments in SSN vehicles that are PFICs), we may be subject to U.S. federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by us to our stockholders. Additional charges in the nature of interest may be imposed on us in respect of deferred taxes arising from such distributions or gains. If we invest in a PFIC and elect to treat the PFIC as a “qualified electing fund” under the code, or QEF, in lieu of the foregoing requirements, we will be required to include in income each year a portion of the original earnings and net capital gain of the QEF, even if such income is not distributed to it. Alternatively, we can elect to mark-to-market at the end of
 
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 each taxable year our shares in a PFIC; in this case, we will recognize as ordinary income any increase in the value of such shares and as ordinary loss any decrease in such value to the extent it does not exceed prior increases included in income. Under either election, we may be required to recognize in a year income in excess of our distributions from PFICs and our proceeds from dispositions of PFIC stock during that year, and such income will nevertheless be subject to the Annual Distribution Requirement and will be taken into account for purposes of the 4% excise tax.
 
 If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation, or “CFC,” (including equity tranche investments in a SSN vehicle treated as CFC) we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains), whether or not the corporation makes an actual distribution during such year. This deemed distribution is required to be included in the income of a U.S. Shareholder of a CFC regardless of whether the shareholder has made a QEF election with respect to such CFC. In general, a foreign corporation will be classified as a CFC if more than 50% of the shares of the corporation, measured by reference to combined voting power or value, is owned (directly, indirectly or by attribution) by U.S. Shareholders. A “U.S. Shareholder,” for this purpose, is any U.S. person that possesses (actually or constructively) 10% or more of the combined voting power of all classes of shares of a corporation. If we are treated as receiving a deemed distribution from a CFC, we will be required to include such distribution in our investment company taxable income regardless of whether we receive any actual distributions from such CFC, and we must distribute such income to satisfy the Annual Distribution Requirement and the Excise Tax Avoidance Requirement.
 Although the Code generally provides that the income inclusions from a QEF or a CFC will be “good income” for purposes of the 90% Income Test to the extent that the QEF or the CFC distribute such income to us in the same taxable year to which the income is included in our income, the Code does not specifically provide whether these income inclusions would be “good income” for this 90% Income Test if we do not receive distributions from the QEF or CFC during such taxable year. As a result, if the SSNs in which we invest do not distribute all of their earnings and profits in the current year, we may have difficulty qualify as a RIC. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF or a CFC included in a RIC’s gross income would constitute “good income” for purposes of the 90% Income Test whether or not distributed currently. Although such rulings are not binding on the IRS except with respect to the taxpayers to whom such rulings were issued, under current law, we believe that the income inclusions from an SSN that is a QEF or a CFC would be “good income” for purposes of the 90% Income Test whether or not we receive a cash distribution from such SSNs in the same year as the required income inclusion. However, no guarantee can be made that the IRS would not assert that such income does not constitute “good income” for purposes of the 90% Income Test to the extent that we do not receive timely distributions of such income from the SSN.  If such income were not considered “good income” for purposes of the 90% Income Test, we may have difficulty qualifying as a RIC.
 The IRS and U.S. Treasury Department have issued proposed regulations that provide that the income inclusions from a QEF or a CFC would not be good income for purposes of the 90% Income Test unless we receive a cash distribution from such entity in the same year attributable to the included income. If these regulations are finalized, we will carefully monitor our investments in SSNs to avoid disqualification as a RIC.
 FATCA generally imposes a withholding tax of 30% on payments of U.S. source interest and dividends to certain non-U.S. entities, including certain non-U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its United States account holders and its United States owners. While existing U.S. Treasury regulations would also require withholding on payments of the gross proceeds from the sale of any property that could produce U.S. source interest and dividends, the U.S. Treasury Department has indicated in subsequent proposed regulations its intent to eliminate this requirement.  Most SSN vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If an SSN vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such SSN vehicle, which could materially and adversely affect our operating results and cash flows.
 Under Section 988 of the Code, gain or loss 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 are generally treated as ordinary income or loss.  Similarly, gain or loss on foreign currency forward contracts and the disposition of debt denominated in a foreign currency, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss.
 Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However, under the 1940 Act, 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 “Regulation-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 status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or to avoid the excise tax, we may make such dispositions at times that, from an investment standpoint, are not advantageous.
 
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 If we fail to satisfy the Annual Distribution Requirement or otherwise fail to qualify as a RIC in any taxable year, we will be subject to tax in that year on all of our taxable income, regardless of whether we make any distributions to our stockholders. In that case, all of such income will be subject to corporate-level U.S. federal income tax, reducing the amount available to be distributed to our stockholders. See “-Failure To Obtain RIC Tax Treatment.”
 As a RIC, we are not allowed to carry forward or carry back a net operating loss for purposes of computing our investment company taxable income in other taxable years. U.S. federal income tax law generally permits RICs to carry forward net capital losses indefinitely.  However, future transactions we engage in may cause our ability to use any capital loss carryforwards, and unrealized losses once realized, to be limited under Section 382 of the Code.
 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 and qualified dividend income 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 stock or 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 will monitor our transactions and may make certain tax elections in order to mitigate the effect of these provisions.
 We may invest in preferred securities or other securities the U.S. federal income tax treatment of which may not be clear or may be subject to recharacterization by the IRS. To the extent the U.S. federal income tax treatment of such securities or the income from such securities differs from the expected tax treatment, it could affect the timing or character of income recognized, requiring us to purchase or sell securities, or otherwise change our portfolio, in order to comply with the tax rules applicable to RICs under the Code.
 Taxation of U.S. Stockholders
 Whether an investment in shares of our common stock is appropriate for a U.S. stockholder will depend upon that person’s particular circumstances.  An investment in shares of our common stock by a U.S. stockholder may have adverse tax consequences.  The following summary generally describes certain U.S. federal income tax consequences of an investment in shares of our common stock by taxable U.S. stockholders and not by U.S. stockholders that are generally exempt from U.S. federal income taxation.  U.S. stockholders should consult their own tax advisors before making an investment in our common stock.
 Distributions by us generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our “investment company taxable income” (which is generally our net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to U.S. 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, such distributions, or, Qualifying Dividends, may be eligible for a maximum tax rate of 20%. In this regard, it is anticipated that distributions paid by us will generally not be attributable to dividends and, therefore, generally will not qualify for the preferential maximum rate applicable to Qualifying Dividends or for the corporate dividends received deduction. Distributions of our net capital gains (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by us as “capital gain dividends” will be taxable to a U.S. stockholder as long-term capital gains that are currently generally taxable at a maximum rate of 20% in the case of individuals, trusts or estates, regardless of a 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.
 We may decide to retain some or all of our long-term capital gain, but designate 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 his, her or its proportionate share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to his, her or its allocable share of the tax paid thereon by us. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder’s tax basis for his, her or its common stock. If the amount of tax that individual stockholders will be treated as having paid and for which they will receive a credit exceeds the tax they owe on the retained net capital gain, 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 U.S. stockholder’s liability for U.S. federal income tax. A U.S. 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 of our investment company taxable income as a “deemed distribution.”
 
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 For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for that year, we may, under certain circumstances, elect to treat a distribution 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 distribution in the taxable year in which the distribution is made. However, any distribution declared by us in October, November or December of any calendar year, payable to U.S. stockholders of record on a specified date in any such month and actually paid during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the distribution was declared.
 We may distribute taxable distributions that are payable in cash or shares of our common stock at the election of each U.S. stockholder.  Under certain applicable IRS guidance, distributions by publicly offered RICs that are payable in cash or in shares of stock at the election of stockholders are treated as taxable distributions. The IRS has published a ruling indicating that this rule will apply where the total amount of cash to be distributed is not less than 20% of the total distribution. Under this ruling, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). In no event will any stockholder electing to receive cash, receive less than the lesser of (a) the portion of the distribution such stockholder has elected to receive in cash or (b) an amount equal to his, her or its entire distribution times the percentage limitation on cash available for distribution. If we decide to make any distributions consistent with this ruling that are payable in part in our stock, taxable U.S. stockholders receiving such distributions will be required to include the full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain distribution) 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 pay 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, depending on the market price of our stock 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 distributions, including in respect of all or a portion of such distribution that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of our stock.
 If an investor purchases shares of our common stock 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 U.S. federal income tax on the distribution even though it represents a return of his, her or its investment.
 A U.S. stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise disposes of his, her or its shares of our common stock. 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 his, her or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may be disallowed if other substantially identical shares are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition. The ability to otherwise deduct capital loss may be subject to other limitations under the Code.
 In general, individual U.S. stockholders currently are generally subject to a maximum U.S. federal income tax rate of 20%  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 our 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 U.S. stockholders with net capital losses for a year ( i.e. , capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate U.S. stockholder in excess of $3,000 generally may be carried forward and used in subsequent tax years as provided in the Code. Corporate U.S. stockholders generally may not deduct any net capital losses for a year, but may carry back such losses for three years or carry forward such losses for five years.
 A “publicly offered regulated investment company” is a regulated investment company whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by at least 500 persons at all times during the taxable year.  If we are not a publicly offered regulated investment company for any period, a non-corporate stockholder’s pro rata portion of our affected expenses, including our management fees, will be treated as an additional distribution to the U.S. stockholder and will be deductible by such stockholder only to the extent permitted under the limitations described
 
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 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 regulated investment company, including advisory fees.  In particular, these expenses, referred to as miscellaneous itemized deductions, are deductible only to individuals to the extent they exceed 2% of such a stockholder’s adjusted gross income, and are not deductible for AMT purposes.  While we anticipate that we will constitute a publicly offered regulated investment company for our current taxable year, there can be no assurance that we will in fact so qualify for any of our taxable years.
 We or the applicable withholding agent will send to each of our U.S. stockholders, as promptly as possible after the end of each calendar year (but no later than 75 days 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 as well as such other information about us necessary for the preparation of our U.S. stockholders’ federal income tax returns. In addition, the U.S. federal tax status of each year’s distributions generally will be reported to the IRS. Distributions paid by us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to qualifying dividends. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder’s particular situation.
 We may be required to withhold U.S. federal income tax, or backup withholding, from all taxable distributions to any noncorporate 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 distribution income to the IRS and to respond to notices to that effect. An individual’s taxpayer identification number is his or her social security number. Backup withholding tax is not an additional tax, and any amount withheld may be refunded or credited against the U.S. stockholder’s U.S. federal income tax liability, provided that proper information is timely provided to the IRS.
 Under U.S. Treasury regulations, if a U.S. stockholder recognizes a loss with respect to shares of our stock of $2 million or more for a non-corporate U.S. stockholder or $10 million or more for a corporate stockholder in any single taxable year (or a greater loss over a combination of years), the stockholder must file with the IRS a disclosure statement on IRS Form 8886 (or successor form).  Direct stockholders of portfolio securities in many cases are exempted from this reporting requirement, but under current guidance, stockholders of a RIC are not exempted.  Future guidance may extend the current exception from this reporting requirement to 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 advisors to determine the applicability of these regulations in light of their individual circumstances.
 Taxation of Non-U.S. Stockholders
 This subsection applies to non-U.S. stockholders, only. If you are not a non-U.S. stockholder, this subsection does not apply to you and you should refer to “Taxation of U.S. Stockholders,” above.
 Whether an investment in our shares is appropriate for a Non-U.S. stockholder will depend upon that person’s particular circumstances. An investment in our shares by a Non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax advisors before investing in our common stock.
 Distributions of our investment company taxable income to Non-U.S. stockholders (including interest income and realized net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if paid to Non-U.S. stockholders directly) 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. No withholding is required and the distributions generally are not subject to U.S. federal income tax if (i) the distributions are properly reported to our stockholders as “interest-related dividends” or “short-term capital gain dividends,” (ii) the distributions were derived from sources specified in the Code for such dividends and (iii) certain other requirements were satisfied. No assurance can be given as to whether any of our distributions will be reported as eligible for this exemption from withholding.
 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 own tax advisors.)
 Actual or deemed distributions of our net capital gains to a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale or other disposition of our common stock, will not be subject to U.S. federal withholding tax and generally will not be subject to U.S. federal income tax unless (i) 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
 
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 maintained by the Non-U.S. stockholder in the United States or (ii) in the case of an Non-U.S. individual stockholder, the stockholder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale or the receipt of the distributions or gains and certain other conditions are met.
 If we distribute our net capital gains in the form of deemed rather than actual distributions, 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 tax we pay on the capital gains deemed to have been distributed. 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 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). Accordingly, investment in the shares may not be appropriate for a Non-U.S. stockholder.
 A Non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to U.S. federal withholding 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 otherwise meets documentary evidence requirements for establishing that it is a Non-U.S. stockholder or otherwise establishes an exemption from backup withholding.
 Legislation commonly referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” generally imposes a 30% withholding tax on payments of certain types of income to foreign financial institutions, or “FFIs” unless such FFIs either (i) enter into an agreement with the U.S. Treasury to report certain required information with respect to accounts held by U.S. persons (or held by foreign entities that have U.S. persons as substantial owners) or (ii) reside in a jurisdiction that has entered into an intergovernmental agreement, or “IGA” with the United States to collect and share such information and are in compliance with the terms of such IGA and any enabling legislation or regulations. The types of income subject to the tax include U.S. source interest and dividends. While existing U.S. Treasury regulations would also require withholding on payments of the gross proceeds from the sale of any property that could produce U.S. source interest and dividends, the U.S. Treasury Department has indicated in subsequent proposed regulations its intent to eliminate this requirement. The information required to be reported includes the identity and taxpayer identification number of each account holder that is a U.S. person and transaction activity within the holder’s account. In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not FFIs unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a Non-U.S.  stockholder and the status of the intermediaries through which they hold their shares, Non-U.S. stockholders could be subject to this 30% withholding tax with respect to distributions on their shares and potentially proceeds from the sale of their shares. Under certain circumstances, a Non-U.S. stockholder might be eligible for refunds or credits of such taxes. Non-U.S. stockholders may also be subject to U.S. estate tax with respect to their investment in our common stock. Non-U.S. persons should consult their own tax advisors 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.
 Failure to Maintain RIC Tax Treatment
 If we were unable to maintain tax treatment as a RIC, we would be subject to corporate-level U.S. federal income tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. Distributions, including distributions of net long term capital gain, would generally be taxable to our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of a stockholder’s tax basis, and any remaining distributions would be treated as a capital gain.
 If we fail to meet the RIC requirements for more than two consecutive years and then seek to re-qualify as a RIC, we would be required to recognize gain to the extent of any unrealized appreciation in our assets unless we made a special election to pay corporate-level U.S. federal income tax on any such unrealized appreciation during the succeeding 5-year period.
 Possible Legislative or Other Actions Affecting Tax Considerations
 Prospective investors should recognize that the present U.S. federal income tax treatment of an investment in our stock may be modified by legislative, judicial or administrative action at any time, and that any such action may affect investments and commitments previously made.  The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process any by the IRS and the U.S. Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes.  Revisions in U.S. federal tax laws and interpretations thereof could adversely affect the tax consequences of an investment in our stock.
 
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 The discussion set forth herein does not constitute tax advice, and potential investors should consult their own tax advisors concerning the tax considerations relevant to their particular situation.
 
 Item 1A. Risk Factors
 
 Investing in our common stock involves a number of significant risks. In addition to the other information contained in this annual report on Form 10-K, you should consider carefully the following information before making an investment in us. The following should not be considered a complete summary of all the risks associated with an investment, but 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 per share of our common stock could decline, and you may lose all or part of your investment.
 
 Risks Relating to Our Business and Structure
 
 Except for the investments described in this annual report on Form 10-K, we have not identified specific investments that we will make with the proceeds of our offering, and you will not have the opportunity to evaluate our future investments prior to purchasing shares of our common stock.
 
 Except for the investments described in this annual report on Form 10-K, neither we nor our Adviser has identified, made or contracted to make any investments. As a result, you will not be able to evaluate the economic merits, transaction terms or other financial or operational data concerning our future investments prior to purchasing shares of our common stock. You must rely on our Adviser and our board of directors to implement our investment policies, evaluate our investment opportunities and structure the terms of our investments. Because investors are not able to evaluate our future investments in advance of purchasing shares of our common stock, other than those investments described in this annual report on Form 10-K, our offering may entail more risk than other types of offerings. This may hinder your ability to achieve your own personal investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives.
 
 We have not established any limit on the amount of funds we may use from available sources, such as borrowings, if any, or proceeds from our offering, to fund distributions (which may reduce the amount of capital we ultimately invest in assets).
 
 For a significant time after the commencement of our offering, a substantial portion of our distributions, if any, will result from expense waivers from our Adviser, which are subject to repayment by us, and may also consist, in whole or in part, of a return of capital. In addition, we may fund our cash distributions to stockholders from any sources of funds legally available to us, including offering proceeds, and borrowings. If we borrow money to fund cash distributions, the costs of such borrowings will be borne by us and, indirectly, by our stockholders. Stockholders should understand that any such distributions are not based on our investment performance, and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such expense waivers. Stockholders should also understand that our future repayments may reduce the distributions that stockholders would otherwise receive. There can be no assurance that we will achieve such performance in order to sustain these distributions, or be able to pay distributions at all.
 
 A failure on our part to maintain our qualification as a business development company would significantly reduce our operating flexibility.
 
 If we fail to continuously qualify as a business development company, we might become subject to regulation as a registered closed-end investment company under the 1940 Act, which would significantly decrease our operating flexibility. In addition, failure to comply with the requirements imposed on business development companies by the 1940 Act could cause the SEC to bring an enforcement action against us. For additional information on the qualification requirements of a business development company, see “Business”.
 
 Regulations governing our operation as a business development company and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.
 
 In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things, satisfy an annual distribution requirement. As a result, in order to fund new investments, we may need to periodically access the capital markets to raise cash. We may do so by issuing “senior securities,” including borrowing money from banks or other financial institutions and issuing preferred stock, up to the maximum amount allowed under the 1940 Act—which allows us to borrow only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% of our gross assets less all of our liabilities not represented by senior securities, immediately after each issuance of senior securities. Our ability to issue different types of securities is also limited. Compliance with these requirements may unfavorably limit our investment opportunities and reduce our ability, in comparison to other companies, to profit from favorable spreads between the rates at which we can borrow and the rates at which
 
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 we can lend. As a BDC, therefore, we may need to issue equity more frequently than our privately-owned competitors, which may lead to greater stockholder dilution.
 
 If the value of our assets declines, we may be unable to satisfy the asset coverage test, which would prohibit us from making distributions and could prevent us from qualifying as a RIC. If we cannot satisfy the asset coverage test, we may be required to sell a portion of our investments and, depending on the nature of our debt financing, repay a portion of our indebtedness at a time when such sales may be disadvantageous.
 
 If we issue preferred stock, it would rank senior to our common stock in our capital structure and preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences (including as to distributions) and privileges more favorable than those of our common stockholders. The presence of preferred stock could have the effect of delaying or preventing a change in control or other transaction that might provide a premium price of our common stockholders or otherwise be in your best interest. Holders of our common stock would directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue. We currently do not intend to issue any preferred stock.
 
 We generally are not able to issue or sell our common stock at a price below net asset value per share, which may be a disadvantage as compared with other public companies. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value per share of the common stock if our board of directors and independent directors determine that such sale is in our best interests and the best interests of our stockholders, and our stockholders (as well as those stockholders that are not affiliated with us) approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any underwriting commission or discount). If our common stock trades at a discount to our net asset value per share, this restriction could adversely affect our ability to raise capital.
 
 We also may make rights offerings to our stockholders at prices less than net asset value per share, subject to applicable requirements of the 1940 Act. If we raise additional funds by issuing more shares of our common stock or issuing senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders may decline at that time and our stockholders may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future on terms favorable to us or at all.
 
 In addition, we may in the future seek to securitize our portfolio securities to generate cash for funding new investments. To securitize loans, we would likely create a wholly-owned subsidiary and contribute a pool of loans to the subsidiary. We would then sell interests in the subsidiary on a non-recourse basis to purchasers and we would retain all or a portion of the equity in the subsidiary. An inability to successfully securitize our loan portfolio could limit our ability to grow our business or fully execute our business strategy and may decrease our earnings, if any. The securitization market is subject to changing market conditions and we may not be able to access this market when we would otherwise deem appropriate. Moreover, the successful securitization of our portfolio might expose us to losses as the residual investments in which we do not sell interests will tend to be those that are riskier and more apt to generate losses. The 1940 Act also may impose restrictions on the structure of any securitization.
 
 A significant portion of our investment portfolio will be recorded at fair value as determined in good faith by our board of directors and, as a result, there could be uncertainty as to the actual market value of our portfolio investments.
 
 Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value, as determined by our board of directors. Since most of our investments will not be publicly-traded or actively traded on a secondary market, our board of directors will determine their fair value quarterly in good faith.
 
 Factors that may be considered in determining the fair value of our investments include: dealer quotes for securities traded on the secondary market for institutional investors, the nature and realizable value of any related collateral, the earnings of the portfolio company and its ability to make payments on its indebtedness, the markets in which the portfolio company does business, comparison to comparable publicly-traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value per share on a given date to materially understate or overstate the value that we may ultimately realize upon the sale of one or more of our investments.
 
 Because our business model depends to a significant extent upon the business relationships of our Adviser, 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.
 
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 We expect that our Adviser will depend on its relationships and those of its affiliates with private sponsors, investment banks and commercial banks, and we may rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our Adviser or its affiliates fail to maintain their existing relationships or develop new relationships with other sponsors or sources of investment opportunities, we may not be able to grow our investment portfolio. In addition, individuals with whom our Adviser’s and its affiliates’ professionals have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.
 
 The amount and timing of distributions are uncertain and distributions may be funded from the proceeds of our offering and may represent a return of capital.
 
 The amount of any distributions we pay is uncertain. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our distributions to our stockholders may exceed our earnings, particularly during the period before we have substantially invested the net proceeds from our offering. We may fund distributions from the uninvested proceeds of our public offering and borrowings, and we have not established limits on the amount of funds we may use from net offering proceeds or borrowings to make any such distributions. If we borrow money to fund distributions, the costs of such borrowings will be borne by us and, indirectly, by our stockholders. Therefore, portions of the distributions that we pay may represent a return of your capital rather than a return on your investment, which will lower your tax basis in your shares and reduce the amount of funds we have for investment in targeted assets.
 
 We may not be able to pay you distributions, and our distributions may not grow over time. Our ability to pay distributions might be adversely affected by, among other things, the effect of one or more of the risk factors described in this annual report on Form 10-K. In particular, if the current period of market disruption and instability caused by the Wuhan Virus pandemic continues for an extended period of time, our ability to declare and pay distributions on our shares may be adversely impacted. Under such circumstances, our distributions may not be consistent with historical levels, may not grow over time, and may partially comprise a return of capital; and it is possible that investors may not receive distributions at all. For more information regarding the Wuhan Virus pandemic, see “— Disruptions or instability in capital markets could negatively impact our ability to raise capital and could have a material adverse effect on our business, financial condition and results of operations.” In addition, the inability to satisfy the asset coverage test applicable to us as a BDC can limit our ability to pay distributions.
 
 We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code or do not satisfy the annual distribution requirement.
 
 To maintain RIC status and be relieved of U.S. federal taxes on the income and gains we distribute to our stockholders, we must meet the following annual distribution, source-of-income and asset-diversification requirements.
 •The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders with respect to each taxable year at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See “Business - Certain U.S. Federal Income Tax Considerations.” Because we may use debt financing, we are subject to an asset coverage ratio requirement under the 1940 Act and we may be subject to certain financial covenants under our debt arrangements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources or are prohibited from making distributions, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. See “Risks Related to Debt Financing.” •The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each year from dividends, interest, gains from the sale of stock or securities or similar sources. •The asset-diversification requirement will be satisfied if we meet certain asset-diversification 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 will be in private companies, and therefore will be 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 status or to meet the annual distribution requirement for any reason and are subject to corporate-level U.S. federal 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.
 
 
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 Our board of directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.
 
 Our board of directors has the authority to modify or waive our current 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 per share, operating results and value of our stock. 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.
 
 Our board of directors has substantial discretion over the use of the proceeds of our offering .
 
 Our board of directors will have significant flexibility in investing the net proceeds of our offering and may use the net proceeds from our offering in ways with which investors may not agree or for purposes other than those contemplated at the time of our offering.
 
 If we internalize our management functions, your interest in us could be diluted, and we could incur other significant costs and face other significant risks associated with being self-managed.
 
 Our board of directors may decide in the future to internalize our management functions. If we do so, we may elect to negotiate to acquire our Adviser’s assets, investment personnel and personnel of its affiliates. At this time, we cannot anticipate the form or amount of consideration or other terms relating to any such internalization transaction. Such consideration could take many forms, including cash payments, promissory notes and shares of our common stock. The payment of such consideration could result in dilution of your interests as a stockholder and could reduce the earnings per share attributable to your investment.
 
 In addition, while we would no longer bear the costs of the various fees and expenses we expect to pay to our Adviser under the Investment Advisory Agreement, we would incur the compensation and benefits costs of our officers and other employees and consultants that we now expect will be paid by our Adviser or its affiliates. In addition, we may issue equity awards to officers, employees and consultants, which awards would decrease net income and may further dilute your investment. We cannot reasonably estimate the amount of fees we would save or the costs we would incur if we became self-managed. If the expenses we assume as a result of internalization are higher than the expenses we avoid paying to our Adviser, our earnings per share would be lower as a result of the internalization than they otherwise would have been, potentially decreasing the amount of funds available to distribute to our stockholders and the value of our shares. As currently organized, we will not have any employees. If we elect to internalize our operations, we would employ personnel and would be subject to potential liabilities commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances, all of which could result in substantially higher litigation costs to us.
 
 If we internalize our management functions, we could have difficulty integrating these functions as a stand-alone entity. In addition, we could have difficulty retaining the management personnel we would employ. Currently, individuals utilized by our Adviser and its affiliates perform asset management and general and administrative functions, including accounting and financial reporting, for multiple entities. These personnel have a great deal of know-how and experience. We may fail to properly identify the appropriate mix of personnel and capital needs to operate as a stand-alone entity. An inability to manage an internalization transaction effectively could result in our incurring excess costs and/or suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. Such deficiencies could cause us to incur additional costs, and our management’s attention could be diverted from most effectively managing our investments.
 
 If we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us.
 
 Borrowings, also known as leverage, magnify the potential for gain or loss on invested equity capital. The use of leverage to partially finance our investments, through borrowings from banks and other lenders, will increase the risk of investing in our common stock. If the value of our assets decreases, leveraging would cause our net asset value per share to decline more sharply than it otherwise would have had we not leveraged. Similarly, any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make distributions. Leverage is generally considered a speculative investment technique.
 
 Because we intend to distribute substantially all of our income to our stockholders in connection with our election to be treated as a RIC, we will continue to need additional capital to finance our growth. If additional funds are unavailable or not available on favorable terms, our ability to grow will be impaired.
 
 
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 In order to qualify for the tax benefits available to RICs and to eliminate our liability for U.S. federal income and excise taxes, we intend to distribute to our stockholders substantially all of our annual taxable income and capital gains, except that we may retain certain net capital gains for investment, and treat such amounts as deemed distributions to our stockholders. If we elect to treat any amounts as deemed distributions, we must pay income taxes at the corporate rate on such deemed distributions on behalf of our stockholders. As a result of these requirements, we will likely need to raise capital from other sources to grow our business. As a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which includes all of our borrowings and any outstanding preferred stock, of at least 150%. At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. These requirements limit the amounts we may borrow. Because we will continue to need capital to grow our investment portfolio, these limitations may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so.
 
 While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms or at all. Also, as a business development company, we generally will not be permitted to issue equity securities at a price below net asset value per share without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value per share and share price could decline. Lastly, any additional equity raised will dilute the interest of current investors.
 
 In selecting and structuring investments appropriate for us, our Adviser will consider the investment and tax objectives of the Company and our stockholders as a whole, not the investment, tax or other objectives of any stockholder individually.
 
 Our stockholders may have conflicting investment, tax and other objectives with respect to their investments in us. The conflicting interests of individual stockholders may relate to or arise from, among other things, the nature of our investments, the structure or the acquisition of our investments, and the timing of disposition of our investments. As a consequence, conflicts of interest may arise in connection with decisions made by our Adviser, including with respect to the nature or structuring of our investments that may be more beneficial for one stockholder than for another stockholder, especially with respect to stockholders’ individual tax situations.
 
 We may pursue strategic acquisitions.
 
 We may pursue growth through acquisitions of other BDCs or registered investment companies, acquisitions of critical business partners or other strategic initiatives. Attempts to expand our business involve a number of special risks, including some or all of the following:
 
 •the required investment of capital and other resources; •the assumption of liabilities in any acquired business; •the disruption of our ongoing business; and •increasing demands on our operational and management systems and controls. 
 If we are unable to consummate or successfully integrate development opportunities, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully.
 
 Our growth strategy may include the selective development or acquisition of other BDCs, funds, asset management businesses, advisory businesses or other businesses or financial products complementary to our business where we think it can add substantial value or generate substantial returns. The success of this strategy will depend on, among other things: (a) the availability of suitable opportunities, (b) the level of competition from other companies that may have greater financial resources, (c) our ability to value potential development or acquisition opportunities accurately and negotiate acceptable terms for those opportunities, (d) our ability to identify and enter into mutually beneficial relationships with venture partners and (e) our ability to properly manage conflicts of interest. Moreover, even if we are able to identify and successfully complete an acquisition, we may encounter unexpected difficulties or incur unexpected costs associated with integrating and overseeing the operations of the new business or activities. If we are not successful in implementing our growth strategy, our business and results of operations may be adversely affected.
 
 Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.
 
 In November 2019, the SEC published a proposed rulemaking regarding the ability of a BDC (or a registered investment company) to use derivatives and other transactions that create future payment or delivery obligations (except reverse repurchase agreements and similar financing transactions). If adopted as proposed, BDCs that use derivatives would be subject to a value-at-risk (“VaR”) leverage limit, certain other derivatives risk management program and testing requirements and requirements related to board reporting. These new requirements would apply unless the BDC qualified as a “limited derivatives user,” as defined in the SEC’s
 
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 proposal. A BDC that enters into reverse repurchase agreements or similar financing transactions would need to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the BDC’s asset coverage ratio. Under the proposed rule, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. If the BDC cannot meet this test, it is required to treat unfunded commitments as a derivatives transaction subject to the requirements of the rule. Collectively, these proposed requirements, if adopted, may limit our ability to use derivatives and/or enter into certain other financial contracts.
 
 We entered into a non-exclusive, royalty-free license to use the “Prospect” name, which may be terminated if our Adviser or another affiliate of Prospect Capital Management  is no longer our investment adviser.
 
 We entered into a royalty-free license agreement with an affiliate of our Adviser, pursuant to which we were granted a non-exclusive license to use the “Prospect” name. Under this license agreement, we have the right to use the “Prospect.” name for so long as our Adviser or another affiliate of Prospect Capital Management is our investment adviser. Other than with respect to this limited license, we have no legal right to the “Prospect” name or logo.
 
 Risks Related to our Adviser and Its Affiliates
 
 We will rely in our Adviser and its investment personnel for the selection of our assets and the monitoring of our investments.
 
 We will have no internal employees. We will depend on the ability, diligence, skill and network of business contacts of our Adviser and its investment committee to identify potential investments, to negotiate such acquisitions, to oversee the management of the investments, and to arrange their timely disposition. The departure of any of the members of our Adviser could have a material adverse effect on our ability to achieve our investment objectives. There can be no assurances that the individuals affiliated with the Adviser who will manage our portfolio will continue to be affiliated with Prospect Capital Management or the Adviser, or that Prospect Capital Management or the Adviser will be able to obtain suitable replacements if they leave. In addition, we can offer no assurance that our Adviser will remain our investment adviser, or that we will continue to have access to its investment professionals or their information and deal flow.
 
 There are significant potential conflicts of interest which could adversely impact our investment returns.
 
 Our executive officers and directors, and the principals of our Adviser, serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by their affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. In addition, the principals of our Adviser may manage other funds which may from time to time have overlapping investment objectives with ours and, accordingly, may invest in asset classes similar to those targeted by us. If this should occur, the principals of our Adviser may face conflicts of interest in the allocation of investment opportunities to us and such other funds. Although our Adviser’s investment professionals may endeavor to create independent teams to represent conflicting parties and to allocate investment opportunities in a fair and equitable manner, it is possible that we may not be given the opportunity to participate in certain investments made by such other funds. Finally, our Adviser and its respective affiliates, including our officers and certain of our directors, face conflicts of interest as a result of compensation arrangements between us and certain of our portfolio companies, which could result in actions that are not in the best interests of our stockholders. In light of such potential conflicts, and as required under the Advisers Act, our Adviser has adopted a Code of Ethics that, among other things, is intended to provide a framework of principles and procedures for resolving conflicts of interest in a manner consistent with our Adviser’s fiduciary obligations to its clients.
 
 The involvement of our Adviser’s investment professionals in our valuation process may create conflicts of interest.
 
 Our portfolio investments will generally not be in publicly-traded securities. As a result, the value of these securities will not be readily available. We will value these securities at fair value as determined in good faith by our board of directors. In connection with that determination, investment professionals from our Adviser will prepare valuations based upon the most recent financial statements and projected financial results available from our investments. The participation of our Adviser’s investment professionals in our valuation process could result in a conflict of interest as our Adviser’s management fee is based, in part, on our gross assets.
 
 Our fee structure may induce our Adviser to cause us to borrow and make speculative investments.
 
 
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 We will pay management and incentive fees to our Adviser based on our total assets, including indebtedness. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after payment of such fees and other expenses resulting in a lower rate of return than one might achieve through direct investments. Our base management fee is payable based upon our average total assets, which would include any borrowings. This may encourage our Adviser to use leverage to make additional investments and grow our asset base, which would involve the risks attendant to leverage discussed elsewhere in this annual report on Form 10-K. In addition, the incentive fee payable by us to our Adviser may create an incentive for it to use leverage and make investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement, which could result in higher investment losses, particularly during cyclical economic downturns.
 
 The incentive fee payable by us to our Adviser also may create an incentive for our Adviser to favor investments that have a deferred interest feature or no interest income, but higher potential total returns. As our Adviser has agreed to waive any incentive fee on current income which it could have received in accordance with the Advisers Act, it could potentially be incentivized to seek riskier investments with greater capital gains, while eschewing investments with an increased current income feature.
 
 In view of these factors, among other things, our board of directors is charged with protecting our interests by monitoring how our Adviser addresses these and other potential conflicts of interests associated with its services and compensation. While our board of directors will not review or approve each investment, our independent directors will periodically review our Adviser’s services and portfolio decisions and performance, as well as the appropriateness of its compensation in light of such factors.
 
 Risks Relating to Our Investments
 
 Our investments in prospective portfolio companies may be risky, and we could lose all or part of our investment.
 
 Our investments in syndicated senior secured first lien loans, syndicated senior secured second lien loans, senior secured bonds, subordinated debt and equity of private U.S. companies, including middle market companies, may be risky and there is no limit on the amount of any such investments in which we may invest.
 
 Syndicated Senior Secured First Lien Loans, Syndicated Senior Secured Second Lien Loans and Senior Secured Bonds . There is a risk that any collateral pledged by portfolio companies in which we have taken a security interest 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. To the extent our debt investment is collateralized by the securities of a portfolio company’s subsidiaries, such securities may lose some or all of their value in the event of the bankruptcy or insolvency of the portfolio company. Also, in some circumstances, our security interest may be contractually or structurally subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the debt. Secured debt that is under-collateralized involves a greater risk of loss. In addition, second lien secured debt is granted a second priority security interest in collateral, which means that any realization of collateral will generally be applied to pay senior secured debt in full before second lien secured debt is paid. Consequently, the fact that debt is secured does not guarantee that we will receive principal and interest payments according to the debt’s terms, or at all, or that we will be able to collect on the debt should we be forced to enforce its remedies.
 
 Subordinated Debt . Our subordinated debt investments will generally rank junior in priority of payment to senior debt and will generally be unsecured. This may result in a heightened level of risk and volatility or a loss of principal, which could lead to the loss of the entire investment. These investments may involve additional risks that could adversely affect our investment returns. To the extent interest payments associated with such debt are deferred, such debt may be subject to greater fluctuations in valuations, and such debt could subject we and its stockholders to non-cash income. Because we will not receive any principal repayments prior to the maturity of some of its subordinated debt investments, such investments will be of greater risk than amortizing loans.
 
 Equity Investments . We may make select equity investments. In addition, in connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional consideration. The equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experiences.
 
 Non-U.S. Securities . We may invest in non-U.S. securities, which may include securities denominated in U.S. dollars or in non-U.S. currencies, to the extent permitted by the 1940 Act. For example, the SSNs in which we may invest generally consist of a special purpose vehicle (typically formed in the Cayman Islands or another similar foreign jurisdiction) formed to purchase the senior secured loans and issue rated debt securities and equity tranches and/or unrated debt securities (generally treated as equity interests). Because evidences of ownership of such securities usually are held outside the United States, we would be subject to
 
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 additional risks if we invested in non-U.S. securities, which include possible adverse political and economic developments, seizure or nationalization of foreign deposits and adoption of governmental restrictions which might adversely affect or restrict the payment of principal and interest on the non-U.S. securities to investors located outside the country of the issuer, whether from currency blockage or otherwise. Because non-U.S. securities may be purchased with and payable in foreign currencies, the value of these assets as measured in U.S. dollars may be affected unfavorably by changes in currency rates and exchange control regulations.
 
 Below Investment Grade Risk. In addition, we may invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “high yield” or “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be difficult to value and illiquid.
 
 Investing in small and mid-sized companies involves a number of significant risks.
 
 Investing in small and mid-sized companies involves a number of significant risks. Among other things, these companies:
 •May have shorter operating histories, narrower product lines, smaller market shares and/or significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; •May have limited financial resources and limited access to capital markets and may be unable to meet their obligations under their debt instruments, some of which we may hold or may be senior to us; •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 the company and, in turn, on us. As well, limited resources may make it difficult to attract the necessary talent or invest in the necessary infrastructure to help the company grow; •Generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing 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; and •Generally have less publicly available information about their businesses, operations and financial condition. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment. 
 In addition, in the course of providing significant managerial assistance to certain of our portfolio companies, certain of our officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources.
 
 An investment strategy focused primarily on privately-held companies presents certain challenges, including the lack of available information about these companies.
 
 We will invest primarily in privately-held companies. These investments are typically illiquid. As such, we may have difficulty exiting an investment promptly at a desired price or outside of a normal amortization schedule for debt investments. Private companies also have reduced access to the capital markets, resulting in diminished capital resources and ability to withstand financial distress. In addition, little public information generally exists about these companies, which may include a lack of audited financial statements and ratings by third parties. We must therefore rely on the ability of our Adviser to obtain adequate information to evaluate the potential risks of investing in these companies. These companies and their financial information may not be subject to 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. These factors could affect our investment returns.
 
 Defaults by our portfolio companies will harm our operating results.
 
 The failure of a portfolio company in which we make a debt investment to satisfy financial or operating covenants imposed by it 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 the ability of the company to meet its obligations under the debt or equity securities that we holds. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company, which may include the waiver of certain financial covenants. Certain of our portfolio companies may be more likely to fail to satisfy financial or operating covenants under the market conditions caused by the Wuhan Virus pandemic, which continue for an extended period of time. For more information regarding the Wuhan Virus pandemic, see “ – Disruptions or instability in capital markets could negatively impact our ability to raise capital and could have a material adverse effect on our business, financial condition and results of operations.”
 
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 Our portfolio companies may incur debt that ranks equally with, or senior to, our debt investments in such companies.
 
 For our debt investments, we intend to invest primarily in first lien, second lien and, to a lesser extent, subordinated debt issued by private U.S. companies, including middle market private U.S. 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 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 proceeds. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on a proportionate basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.
 
 If we make unsecured investments, those investments might not generate sufficient cash flow to service their debt obligations to us.
 We may make unsecured debt investments and debt investments that are subordinated to other obligations of the obligor. Unsecured investments often reflect a greater possibility that adverse changes in the financial condition of the obligor or in general economic conditions (including, for example, a substantial period of rising interest rates or declining earnings) or both may impair the ability of the obligor to make payment of principal and interest. If we make an unsecured investment in a company, that company may be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service its debt obligations to us and to more senior lenders.
 
 If we invest in the securities and obligations of distressed and bankrupt issuers, we might not receive interest or other payments.
 
 We are authorized to invest in the securities and obligations of distressed and bankrupt issuers, including debt obligations that are in covenant or payment default. Such investments generally are considered speculative. The repayment of defaulted obligations is subject to significant uncertainties. Defaulted obligations might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer of those obligations might not make any interest or other payments.
 
 There may be circumstances where our debt investments could be 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, a bankruptcy court might recharacterize our debt investment and subordinate all or a portion of our claim to that of other creditors. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business or in instances where we exercise control over the borrower or render significant managerial assistance.
 
 We generally will not control the portfolio companies in which we make debt investments.
 
 We do not expect to control our portfolio companies in which we make debt investments, even though we may have board representation or board observation rights, and our debt agreements with such portfolio companies may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we make debt investments 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. Due to the lack of liquidity for our debt investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.
 
 To the extent original issue discount (“OID”) 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 OID instruments. To the extent OID 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 the following:
 •OID instruments 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. 
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 •For accounting purposes, cash distributions to stockholders representing original issue discount income do not come from paid-in capital, although they may be paid from the offering proceeds. 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. •OID creates risk of non-refundable cash payments to our Adviser based on non-cash accruals that may never be realized. •Interest rates payable on OID instruments, including payment-in-kind (“PIK”) loans are higher because the deferred interest payments are discounted to reflect the time-value of money and because PIK instruments generally represent a significantly higher credit risk than coupon loans. •OID and PIK instruments may have unreliable valuations because the accruals require judgments about collectability of the deferred payments and the value of the associated collateral. •An election to defer PIK interest payments by adding them to the principal of such instruments increases our total assets, which increases future base management fees, and, because interest payments will then be payable on a larger principal amount, the election also increases our Adviser’s future income incentive fees at a compounding rate. •Market prices of PIK instruments and other zero coupon instruments are affected to a greater extent by interest rate changes, and may be more volatile than instruments that pay interest periodically in cash. While PIK instruments are usually less volatile than zero coupon debt instruments, PIK instruments are generally more volatile than cash-pay securities. •The deferral of PIK interest on a loan increases its loan-to-value ratio, which is a measure of the riskiness of a loan. •Even if the conditions for income accrual under GAAP are satisfied, a borrower could still default when actual payment is due upon the maturity of such loan. •The required recognition of OID, including PIK, interest for U.S. federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of our investment company taxable income that must, nevertheless, be distributed in cash to investors to avoid it being subject to corporate-level U.S. federal income and excise taxes. The lack of liquidity in our investments may adversely affect our business.
 
 We will make investments primarily in companies whose securities are not publicly-traded, and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly-traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. In addition, 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. Our investments will usually be subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The illiquidity of most 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. In addition, certain of our investments may be more difficult to dispose of at a favorable price under market conditions caused by the Wuhan Virus pandemic, which may continue for an extended period of time. For more information regarding the Wuhan Virus pandemic, see “— Disruptions or instability in capital markets could negatively impact our ability to raise capital and could have a material adverse effect on our business, financial condition and results of operations.”
 
 We may not have the funds or ability to make additional investments in the companies in which we invest.
 
 After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to the company or have the opportunity to increase our investment. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative effect 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, may dilute our interest in the company or may reduce the expected yield on the investment.
 
 The companies in which we invest may incur debt that ranks equally with, or senior to, our investments in such companies.
 
 We will invest in all levels of the capital structure of our portfolio companies. These companies may have, or may be permitted to obtain, additional financing which may rank equally with, or senior to, our investment. By their terms, such financings may entitle the holders to receive payments of interest or principal on or before the dates on which we are entitled to receive such payments. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a company, holders of instruments ranking senior to our investment would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior investors, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of financing ranking equally with our investments, we would have to share on a proportionate basis any distributions with other investors holding such financing in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the portfolio company.
 
 The disposition of our investments may result in contingent liabilities.
 
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 Most of our investments will involve private securities. In connection with their disposition, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that our representations turn out to be inaccurate or with respect to certain potential liabilities. These indemnification obligations may require us to pay money to the purchasers of our equity securities as satisfaction of their indemnity claims, which claims must be satisfied through our return of certain distributions previously made to us.
 
 Second priority liens on collateral securing loans that we make to a company may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.
 
 Certain loans that we make to portfolio companies will be secured on a second priority basis by the same collateral securing such companies’ senior secured debt. The first priority liens on the collateral will secure the obligations of the companies to their senior lenders and may secure certain other future debt that may be permitted to be incurred by the company under the agreements governing the senior loans. The holders of senior secured obligations will generally control the liquidation of the collateral and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before we receive any funding. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by second priority liens after payment in full of all senior secured obligations. If such proceeds are not sufficient to repay amounts owed to junior lenders, then we, to the extent we are not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company’s remaining assets, if any.
 
 The rights we may have with respect to the collateral securing the loans we make to a company with outstanding senior debt may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the senior lenders. Under such agreements, at any time that senior secured obligations are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the senior secured obligations: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past defaults under collateral documents. We may not have the ability to control or direct such actions, even if our rights are adversely affected.
 
 We generally will not control companies to which we provide debt.
 
 We do not expect to control portfolio companies in which we make debt investments, even though we may have board representation or board observation rights and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that the management of such a portfolio company may make business decisions with which we disagree or, as representative of the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors. Due to the lack of liquidity for our investments in non-publicly-traded companies, we may not be able to dispose of our interests in a portfolio company as readily as we would like or at an appropriate valuation. As a result, a company may make decisions that could decrease the value of our holdings.
 
 We may incur lender liability as a result of our lending activities.
 
 In recent years, a number of judicial decisions have upheld the right of borrowers and others to sue lending institutions on the basis of various evolving legal theories generally referred to as “lender liability.” Lender liability is generally based on the idea that a lender has either violated a contractual or implied duty of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of fiduciary duties owed to the borrower, its stockholders and its other creditors. As a lender, we may be subject to allegations of lender liability, which could be costly to defend and a distraction to our management and could result in significant liability.
 
 We may not realize gains from our private equity investments.
 
 We may make direct private equity investments in portfolio companies. In addition, when we invest in certain debt investments, we may acquire warrants to purchase equity securities. Our goal in such investments will be primarily to realize gains upon our disposition of such equity interests. However, our equity interests may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our private equity investments, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests.
 
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 We will experience fluctuations in our quarterly operating results.
 
 We will 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 rates payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in, and the timing of, our 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 period should not be relied on as being indicative of our performance in future periods.
 
 We may focus our investments in companies in a particular industry or industries.
 If we focus our investments in companies in a particular industry or industries, any adverse conditions that disproportionately impact that industry or industries may have a magnified adverse effect on our operating results.
 
 We may from time to time enter into total return swaps or other derivative transactions which exposes it to certain risks, including credit risk, market risk, liquidity risk and other risks similar to those associated with the use of leverage.
 
 We may from time to time enter into total return swaps or other derivative transactions that seek to modify or replace the investment performance of a particular reference security or other asset. These transactions are typically individually negotiated, non-standardized agreements between two parties to exchange payments, with payments generally calculated by reference to a notional amount or quantity. Swap contracts and similar derivative contracts are not traded on exchanges; rather, banks and dealers act as principals in these markets. These investments may present risks in excess of those resulting from the referenced security or other asset. Because these transactions are not an acquisition of the referenced security or other asset itself, the investor has no right directly to enforce compliance with the terms of the referenced security or other asset and has no voting or other consensual rights of ownership with respect to the referenced security or other asset. In the event of insolvency of a counterparty, we will be treated as a general creditor of the counterparty and will have no claim of title with respect to the referenced security or other asset.
 
 A total return swap is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the referenced security or other assets underlying the total return swap during a specified period, in return for periodic payments based on a fixed or variable interest rate.
 
 A total return swap is subject to market risk, liquidity risk and risk of imperfect correlation between the value of the total return swap and the debt obligations underlying the total return swap. In addition, we may incur certain costs in connection with a total return swap that could in the aggregate be significant.
 
 A derivative transaction is also subject to the risk that a counterparty will default on its payment obligations thereunder or that we will not be able to meet its obligations to the counterparty. In some cases, we may post collateral to secure its obligations to the counterparty, and we may be required to post additional collateral upon the occurrence of certain events such as a decrease in the value of the reference security or other asset. In some cases, the counterparty may not collateralize any of its obligations to us.
 
 Derivative investments effectively add leverage to a portfolio by providing investment exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. In addition to the risks described above, such arrangements are subject to risks similar to those associated with the use of leverage.
 
 Our portfolio companies may be highly leveraged.
 
 Some of our portfolio companies may be highly leveraged, which may have adverse consequences to these companies and to we as an investor. These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.
 
 Changes relating to the LIBOR calculation process may adversely affect the value of the LIBOR-indexed, floating-rate debt securities in our portfolio.
 
 In the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association, or the “BBA”, in connection with the calculation of LIBOR across a range of maturities and currencies may have been under- reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from
 
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 reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.
 
 Actions by the BBA, regulators or law enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined. Potential changes, or uncertainty related to such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. 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 for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities. On July 27, 2017, the FCA announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021, or the “FCA Announcement.” Furthermore, in the United States, efforts to identify a set of alternative U.S. dollar reference interest rates include proposals by the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Bank of New York. On August 24, 2017, the Federal Reserve Board requested public comment on a proposal by the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, to produce three new reference rates intended to serve as alternatives to LIBOR. These alternative rates are based on overnight repurchase agreement transactions secured by U.S. Treasury Securities. On December 12, 2017, following consideration of public comments, the Federal Reserve Board concluded that the public would benefit if the Federal Reserve Bank of New York published the three proposed reference rates as alternatives to LIBOR, or the “Federal Reserve Board Notice.” In April 2018, the Federal Reserve System, in conjunction with the Alternative Reference Rate Committee, announced the replacement of LIBOR with a new index, calculated by short term repurchase agreements collateralized by U.S. Treasury securities, called the Secured Overnight Financing Rate, or the “SOFR”. On June 12, 2019, the Staff from the SEC’s Division of Corporate Finance, Division of Investment Management, Division of Trading and Markets, and Office of the Chief Accountant issued a statement about the potentially significant effects on financial markets and market participants when LIBOR is discontinued in 2021 and no longer available as a reference benchmark rate. The Staff encouraged all market participants to identify contracts that reference LIBOR and begin transitions to alternative rates.
 
 At this time, it is not possible to predict the effect of the FCA Announcement or other regulatory changes or announcements, any establishment of alternative reference rates, including SOFR and its market acceptance, or any other reforms to LIBOR that may be enacted in the United Kingdom, the United States or elsewhere. As such, the potential effect of any such event on our net investment income cannot yet be determined. The CLOs we are invested in generally contemplate a scenario where LIBOR is no longer available by requiring the CLO administrator to calculate a replacement rate primarily through dealer polling on the applicable measurement date. However, there is uncertainty regarding the effectiveness of the dealer polling processes, including the willingness of banks to provide such quotations, which could adversely impact our net investment income. Recently, the CLOs we are invested in have included, or have been amended to include, language permitting the CLO investment manager to implement a market replacement rate (like SOFR) upon the occurrence of certain material disruption events. However, we cannot ensure that all CLOs in which we are invested will have such provisions, nor can we ensure the CLO investment managers will undertake the suggested amendments when able. In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLO would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on our net investment income and portfolio returns.
 
 Risks Relating to our Investments in CLOs
 
 Our investments in CLOs may be riskier and less transparent to us and our stockholders than direct investments in the underlying companies.
 
 Under our investment strategy following completion of the Merger, we may invest up to 30% of our investment in CLOs, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of CLOs, which involve a significant number of risks. Generally, there may be less information available to us regarding the underlying debt investments held by CLOs than if we had invested directly in the debt of the underlying companies. As a result, our stockholders will not know the details of the underlying securities of the CLOs in which we will invest. Our investments in the equity and junior debt tranches of CLOs are subject to the risk of leverage associated with the debt issued by such CLOs and the repayment priority of senior debt holders in such CLOs. Our investments in portfolio companies may be risky, and it could lose all or part of our investment.
 
 Our financial results may be affected adversely if one or more of our significant equity or junior debt investments in a CLO vehicle defaults on our payment obligations or fails to perform as we expect.
 
 
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 Under the new investment strategy following completion of the Merger, we may invest up to 30% of our portfolio in private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of CLOs, which involve a number of significant risks. CLOs are typically highly levered up to approximately 10 times, and therefore the junior debt and equity tranches that we will invest in are subject to a higher risk of total loss. We will generally have the right to receive payments only from the CLOs, and will generally not have direct rights against the underlying borrowers or the entities that sponsored the CLOs. Although it is difficult to predict whether the prices of indices and securities underlying CLOs will rise or fall, these prices, and, therefore, the prices of the CLOs, will be influenced by the same types of political and economic events that affect issuers of securities and capital markets generally.
 
 The investments we make in CLOs will generally be thinly traded or have only a limited trading market. CLO investments are typically privately offered and sold, in the primary and secondary markets. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLOs carry additional risks, including, but not limited to: (i) the possibility that distributions from the underlying senior secured loans will not be adequate to make interest or other payments; (ii) the quality of the underlying senior secured loans may decline in value or default; and (iii) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO or unexpected investment results. Further, our investments in equity and junior debt tranches of CLOs would be subordinate to the senior debt tranches thereof.
 
 Investments in structured vehicles, including equity and junior debt instruments issued by CLOs, involve risks, including credit risk and market risk. Changes in interest rates and credit quality may cause significant price fluctuations. Additionally, changes in the underlying senior secured loans held by a CLO may cause payments on the instruments we hold to be reduced, either temporarily or permanently. Structured investments, particularly the subordinated interests in which we invest, are less liquid than many other types of securities and may be more volatile than the senior secured loans underlying the CLOs in which we invests.
 
 CLOs typically will have no significant assets other than their underlying senior secured loans; payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans.
 
 CLOs typically will have no significant assets other than their underlying senior secured loans. Accordingly, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans, net of all management fees and other expenses. Payments to us as a holder of CLO junior securities are and will be made only after payments due on the senior secured notes, and, where appropriate, the junior secured notes, have been made in full. This means that relatively small numbers of defaults of senior secured loans may adversely impact our return on our CLO investments.
 
 Our CLO investments will be exposed to leveraged credit risk.
 
 Generally, when we invest in CLOs, it will be in a subordinated position with respect to realized losses on the senior secured loans underlying our investments in the equity and junior debt tranches of CLOs. The leveraged nature of CLOs, in particular, magnifies the adverse impact of senior secured loan defaults. CLO investments represent a leveraged investment with respect to the underlying senior secured loans. Therefore, changes in the market value of the CLO investments could be greater than the change in the market value of the underlying senior secured loans, which are subject to credit, liquidity and interest rate risk.
 
 There is the potential for interruption and deferral of cash flow from CLO investments.
 
 If certain minimum collateral value ratios and/or interest coverage ratios are not met by a CLO, primarily due to senior secured loan defaults, then cash flow that otherwise would have been available to pay distributions to we on our investments in the equity and junior debt tranches of CLOs may instead be used to redeem any senior notes or to purchase additional senior secured loans, until the ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the holders of the CLO investments, which would adversely impact our return on our CLO investments.
 
 Investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.
 
 Our CLO investment strategy will allow investments in foreign CLOs. Investing in foreign entities may expose we to additional risks not typically associated with investing in U.S. issuers. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Further, we, and the CLOs in which it invests, may have difficulty enforcing creditor’s rights in foreign jurisdictions.
 
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 In addition, the underlying companies of the CLOs in which we invest may be foreign, which may create greater exposure for us to foreign economic developments.
 
 The payment of underlying portfolio manager fees and other charges on CLO investments could adversely impact our return on our CLO investments.
 
 We may invest in CLO investments where the underlying portfolio securities may be subject to management, administration and incentive or performance fees, in addition to those payable by us. Payment of such additional fees could adversely impact the returns we achieve on our CLO investments.
 
 The inability of a CLO collateral manager to reinvest the proceeds of the prepayment of senior secured loans may adversely affect us.
 
 There can be no assurance that for any CLO investment, in the event that any of the senior secured loans of a CLO underlying such investment are prepaid, the CLO collateral manager will be able to reinvest such proceeds in new senior secured loans with equivalent investment returns. If the CLO collateral manager cannot reinvest in new senior secured loans with equivalent investment returns, the interest proceeds available to pay interest on the rated liabilities and investments may be adversely affected, which in turn could affect our return on such investment.
 
 Our CLO investments are subject to prepayments and calls, increasing re-investment risk.
 Our CLO investments and/or the underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on their value. Prepayment rates are influenced by changes in interest rates and a variety of economic, geographic and other factors beyond our control and consequently cannot be predicted with certainty. In addition, for a CLO collateral manager there is often a strong incentive to refinance well performing portfolios once the senior tranches amortize. The yield to maturity of the investments will depend on the amount and timing of payments of principal on the loans and the price paid for the investments. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments of the debt.
 
 Furthermore, our CLO investments generally will not contain optional call provisions, other than a call at the option of the holders of the equity tranches for the senior notes and the junior secured notes to be paid in full after the expiration of an initial period in the deal (referred to as the “non-call period”).
 
 The exercise of the call option is by the relevant percentage (usually a majority) of the holders of the equity tranches and, therefore, where we does not hold the relevant percentage it will not be able to control the timing of the exercise of the call option. The equity tranches also generally have a call at any time based on certain tax event triggers. In any event, the call can only be exercised by the holders of equity tranches if they can demonstrate (in accordance with the detailed provisions in the transaction) that the senior notes and junior secured notes will be paid in full if the call is exercised.
 
 Early prepayments and/or the exercise of a call option otherwise than at our request may also give rise to increased re-investment risk with respect to certain investments, as we may realize excess cash earlier than expected. If we are unable to reinvest such cash in a new investment with an expected rate of return at least equal to that of the investment repaid, this may reduce our net income and, consequently, could have an adverse impact on our ability to pay dividends.
 
 We will have limited control of the administration and amendment of senior secured loans owned by the CLOs in which we invest.
 
 The terms and conditions of target securities may be amended, modified or waived only by the agreement of the underlying security holders. Generally, any such agreement must include a majority or a super majority (measured by outstanding amounts) or, in certain circumstances, a unanimous vote of the security holders. Consequently, the terms and conditions of the payment obligation arising from the CLOs in which we invest be modified, amended or waived in a manner contrary to our preferences.
 
 Senior secured loans of CLOs may be sold and replaced resulting in a loss to us. The senior secured loans underlying our CLO investments may be sold and replacement collateral purchased within the parameters set out in the relevant CLO indenture between the CLO and the CLO trustee and those parameters may typically only be amended, modified or waived by the agreement of a majority of the holders of the senior notes and/or the junior secured notes and/or the equity tranche once the CLO has been established. If these transactions result in a net loss, the magnitude of the loss from the perspective of the equity tranche would be increased by the leveraged nature of the investment.
 
 In addition, we will not be able to directly enforce any rights and remedies in the event of a default of a senior secured loan held by a CLO vehicle. In addition, the terms and conditions of the senior secured loans underlying our CLO investments may be
 
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 amended, modified or waived only by the agreement of the underlying lenders. Generally, any such agreement must include a majority or a super majority (measured by outstanding loans or commitments) or, in certain circumstances, a unanimous vote of the lenders. Consequently, the terms and conditions of the payment obligations arising from senior secured loans could be modified, amended or waived in a manner contrary to our preferences.
 
 We will have limited control of the administration and amendment of any CLO in which we invest.
 
 The terms and conditions of target securities may be amended, modified or waived only by the agreement of the underlying security holders. Generally, any such agreement must include a majority or a super majority (measured by outstanding amounts) or, in certain circumstances, a unanimous vote of the security holders. Consequently, the terms and conditions of the payment obligation arising from the CLOs in which we invest may be modified, amended or waived in a manner contrary to our preferences.
 
 Senior secured loans of CLOs may be sold and replaced resulting in a loss to us. The senior secured loans underlying our CLO investments may be sold and replacement collateral purchased within the parameters set out in the relevant CLO indenture between the CLO and the CLO trustee and those parameters may typically only be amended, modified or waived by the agreement of a majority of the holders of the senior notes and/or the junior secured notes and/or the equity tranche once the CLO has been established. If these transactions result in a net loss, the magnitude of the loss from the perspective of the equity tranche would be increased by the leveraged nature of the investment.
 
 Non-investment grade debt involves a greater risk of default and higher price volatility than investment grade debt.
 The senior secured loans underlying our CLO investments are expected typically to be BB or B rated (non-investment grade, which are often referred to as “high-yield” or “junk”) and in limited circumstances, unrated, senior secured loans. Non-investment grade securities are predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due and therefore involve a greater risk of default and higher price volatility than investment grade debt.
 
 We will have no influence on management of underlying investments managed by non-affiliated third party CLO collateral managers.
 
 We are not responsible for and will have no influence over the asset management of the portfolios underlying the CLO investments we hold as those portfolios are managed by non-affiliated third party CLO collateral managers. Similarly, we will not be responsible for and have no influence over the day-to-day management, administration or any other aspect of the issuers of the individual securities. As a result, the values of the portfolios underlying our CLO investments could decrease as a result of decisions made by third party CLO collateral managers.
 
 The application of the risk retention rules under Section 941 of the Dodd-Frank Act to CLOs may have broader effects on the CLO and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for us.
 
 Section 941 of the Dodd-Frank Act added a provision to the Exchange Act, requiring the seller, sponsor or securitizer of a securitization vehicle to retain no less than five percent of the credit risk in assets it sells into a securitization and prohibiting such securitizer from directly or indirectly hedging or otherwise transferring the retained credit risk. The responsible federal agencies adopted final rules implementing these restrictions on October 22, 2014. The risk retention rules became effective with respect to CLOs two years after publication in the Federal Register. Under the final rules, the asset manager of an CLO is considered the sponsor of a securitization vehicle and is required to retain five percent of the credit risk in the CLO, which may be retained horizontally in the equity tranche of the CLO or vertically as a five percent interest in each tranche of the securities issued by the CLO. Although the final rules contain an exemption from such requirements for the asset manager of a CLO if, among other things, the originator or lead arranger of all of the loans acquired by the CLO retain such risk at the asset level and, at origination of such asset, takes a loan tranche of at least 20% of the aggregate principal balance, it is possible that the originators and lead arrangers of loans in this market will not agree to assume this risk or provide such retention at origination of the asset in a manner that would provide meaningful relief from the risk retention requirements for CLO managers.
 
 We believe that the U.S. risk retention requirements imposed for CLO managers under Section 941 of the Dodd-Frank Act has created some uncertainty in the market in regard to future CLO issuance. Given that certain CLO managers may require capital provider partners to satisfy this requirement, we believe that this may create additional risks for us in the future.
 
 On February 9, 2018, a panel of the United States Court of Appeals for the District of Columbia Circuit ruled (the “D.C. Circuit Ruling”) that the federal agencies exceeded their authority under the Dodd-Frank Act in adopting the final rules as applied to asset managers of open-market CLOs. On April 5, 2018, the United States District Court for the District of Columbia entered an order implementing the D.C. Circuit Ruling and thereby vacated the U.S. Risk Retention Rules insofar as they apply to CLO managers of “open market CLOs.”
 
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 As of the date of hereof, there has been no petition for writ of certiorari filed requesting the case to be heard by the United States Supreme Court. Since there hasn’t been a successful challenge to the D.C. Circuit Ruling and the United States District Court for the District of Columbia has issued the above described order implementing the D.C. Circuit Ruling, collateral managers of open market CLOs are no longer required to comply with the U.S. Risk Retention Rules at this time. As such, it is possible that some collateral managers of open market CLOs will decide to dispose of the notes constituting the “eligible vertical interest” or “eligible horizontal interest” they were previously required to retain, or decide to take other action with respect to such notes that is not otherwise permitted by the U.S. risk retention rules. As a result of this decision, certain CLO managers of “open market CLOs” will no longer be required to comply with the U.S. risk retention rules solely because of their roles as managers of “open market CLOs,” and there may be no “sponsor” of such securitization transactions and no party may be required to acquire and retain an economic interest in the credit risk of the securitized assets of such transactions.
 
 There can be no assurance or representation that any of the transactions, structures or arrangements currently under consideration by or currently used by CLO market participants will comply with the U.S. risk retention rules to the extent such rules are reinstated or otherwise become applicable to open market CLOs. The ultimate impact of the U.S. risk retention rules on the loan securitization market and the leveraged loan market generally remains uncertain, and any negative impact on secondary market liquidity for securities comprising an CLO may be experienced due to the effects of the U.S. risk retention rules on market expectations or uncertainty, the relative appeal of other investments not impacted by the U.S. risk retention rules and other factors.
 
 Risks Relating to Economic Conditions
 
 Disruptions or instability in capital markets, including as a result of the Wuhan Virus pandemic, could negatively impact our ability to raise capital and could have a material adverse effect on our business, financial condition and results of operations.
 
 From time to time, the global capital markets may experience periods of disruption and instability, including as a result of the Wuhan Virus pandemic, which could materially and adversely impact the broader financial and credit markets and reduce the availability to us of debt and equity capital. For example, in December 2019, a novel strain of coronavirus surfaced in Wuhan, China and has now been declared a global pandemic. The Wuhan Virus pandemic has resulted in the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories globally, as well as border closings, quarantines, cancellations, disruptions to supply chains and customer activity, and general concern and uncertainty. As the potential impact on global markets from Wuhan Virus is difficult to predict, the extent to which the Wuhan Virus pandemic may negatively affect our operating results or the duration of any potential business disruption is uncertain. Any potential impact to results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the Wuhan Virus pandemic and the actions taken by authorities and other entities to contain the Wuhan Virus pandemic or treat its impact, all of which are beyond our control. Additionally, the Wuhan Virus outbreak may exacerbate other pre-existing political, social and economic risks in certain countries. The impact of the outbreak may be short term or may last for an extended period of time. These potential impacts, while uncertain, could adversely affect our operating results.
 
 With respect to the U.S. credit markets (in particular for middle-market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following, among other things: (i) government imposition of various forms of shelter in place orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle-market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.
 
 Additionally, between 2008 and 2009, instability in the global capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the repricing of credit risk in the broadly syndicated credit market and the failure of major domestic and international financial institutions. In particular, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial firms declined, impairing their capital positions and abilities to lend and invest. We believe that such value declines were exacerbated by widespread forced liquidations as leveraged
 
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 holders of financial assets, faced with declining prices, were compelled to sell to meet margin requirements and maintain compliance with applicable capital standards. Such forced liquidations also impaired or eliminated many investors and investment vehicles, leading to a decline in the supply of capital for investment and depressed pricing levels for many assets. These events significantly diminished overall confidence in the debt and equity markets, engendered unprecedented declines in the values of certain assets, caused extreme economic uncertainty and significantly reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. While market conditions have experienced relative stability in recent years, there have been continuing periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves in the future.
 
 Current and future volatility and dislocation in the capital markets could create a challenging environment in which to raise or access capital. For example, the continued global market impacts of the Wuhan Virus pandemic, or the re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time, could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms. Significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments will not be publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity) and impairments of the market values or fair market values of our investments, even if unrealized, must be reflected in our financial statements for the applicable period, which could result in significant reductions to our net asset value for the period. With certain limited exceptions, we are only allowed to borrow amounts or issue debt securities if our asset coverage, as calculated pursuant to the 1940 Act, equals at least 150%. At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. For a discussion of the risks involved with the reduction of our asset coverage requirement 150%, see “Risk Factors—Risks Related to Business Development Companies—Recent legislation may allow us to incur additional leverage.”
 
 Equity capital may also be difficult to raise during periods of adverse or volatile market conditions. Subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. If we are unable to raise capital or refinance existing debt on acceptable terms, then we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies. Significant changes in the capital markets may also affect the pace of our investment activity and the potential for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes.
 
 The Wuhan Virus pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.
 
 As of the date of this annual report on Form 10-K, there is an outbreak of a highly contagious form of a novel coronavirus, which the World Health Organization has declared a global pandemic, the United States has declared a national emergency, and for the first time in its history, every state in the United States is or has been under a federal disaster declaration. Many states, including those in which we and our portfolio companies operate, have issued orders requiring the closure of non-essential businesses and/or requiring residents to stay at home. This Wuhan Virus pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. Potential consequences of the current unprecedented measures taken in response to the spread of the Wuhan Virus, and current market disruptions and volatility on our business include, but are not limited to:
 •sudden, unexpected and/or severe declines in the market price of our securities or net asset value; •inability of the Company to accurately or reliably value its portfolio; •inability of the Company to comply with certain asset coverage ratios that would prevent the Company from paying dividends to our common stockholders and that could result breaches of covenants or events of default under our credit agreement or debt indentures; •inability of the Company to pay any dividends and distributions or service its debt; •inability of the Company to maintain its status as a regulated investment company under the Code; •potentially severe, sudden and unexpected declines in the value of our investments; •increased risk of default or bankruptcy by the companies in which we invest; •increased risk of companies in which we invest being unable to weather an extended cessation of normal economic activity and thereby impairing their ability to continue functioning as a going concern; 
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 •reduced economic demand resulting from mass employee layoffs or furloughs in response to governmental action taken to slow the spread of the Wuhan Virus, which could impact the continued viability of the companies in which we invest; •companies in which we invest being disproportionally impacted by governmental action aimed at slowing the spread of the Wuhan Virus or mitigating its economic effects; •limited availability of new investment opportunities; •inability for us to replace our existing leverage when it becomes due or replace it on terms as favorable as our existing leverage; •a reduction in interest rates, including interest rates based on LIBOR and similar benchmarks, which may adversely impact our ability to lend money at attractive rates; and •general threats to the Company’s ability to operate successfully as a business development company. 
 The Wuhan Virus pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) materially and adversely impacted the value and performance of certain of our portfolio companies. The Wuhan Virus pandemic is having a particularly adverse impact on industries in which certain of our portfolio companies operate, including energy, hospitality, travel, retail and restaurants. Certain of our portfolio companies in other industries have also been significantly impacted. The Wuhan Virus pandemic is continuing as of the date of this annual report on Form 10-K, and its extended duration may have further adverse impacts on our portfolio companies, including for the reasons described in this annual report on Form 10-K. Although on March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which contains provisions intended to mitigate the adverse economic effects of the Wuhan Virus pandemic, it is uncertain whether, or how much, our portfolio companies will be able to benefit from the CARES Act or any other subsequent legislation intended to provide financial relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.
 
 The effects described above on our portfolio companies have, for certain of our portfolio companies to date, impacted their ability to make payments on their loans on a timely basis and in some cases have required us to amend certain terms, including payment terms. In addition, an extended duration of the Wuhan Virus pandemic may impact the ability of our portfolio companies to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake similar amendment actions with respect to other of our investments or to restructure our investments. The amendment or restructuring of our investments may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our investments to permit a portfolio company to pay a portion of its interest through payment-in-kind, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.
 
 The Wuhan Virus pandemic has adversely impacted the fair value of our investments as of June 30, 2020 , and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments. The impact of the Wuhan Virus pandemic may not yet be fully reflected in the valuation of our investments as our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that is often from a time period earlier, generally two to three months, than the quarter for which we are reporting. Additionally, we may not have yet received information or certifications from our portfolio companies that indicate any or the full extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the Wuhan Virus pandemic. As a result, our valuations at June 30, 2020 may not show the complete or continuing impact of the Wuhan Virus pandemic and the resulting measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses after June 30, 2020 , which could have a material adverse effect on our business, financial condition and results of operations.
 
 Although it is difficult to predict the extent of the impact of the Wuhan Virus outbreak on the underlying CLO vehicles we invest in, the failure by a CLO vehicle to satisfy certain financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event the CLO vehicle fails certain tests, holders of debt senior to us may be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting CLO vehicle or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows.
 
 
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 The volatility and disruption to the global economy from the Wuhan Virus pandemic has affected, and is expected to continue to affect, the pace of our investment activity, which may have a material adverse impact on our results of operations. Such volatility and disruption have also led to the increased credit spreads in the private debt capital markets.
 
 In response to the Wuhan Virus pandemic, our Adviser instituted a work from home policy until it is deemed safe to return to the office. Such a policy of an extended period of remote working by our Adviser and/or its affiliate’s employees could strain our technology resources and introduce operational risks, including heightened cybersecurity risk. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the Wuhan Virus pandemic.
 
 Market conditions may make it difficult for us to raise equity capital because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. Moreover, these market conditions may make it difficult to access or obtain new indebtedness with similar terms to our existing indebtedness or otherwise have a negative effect on our cost of capital.
 
 It is virtually impossible to determine the ultimate impact of the Wuhan Virus at this time. Accordingly, an investment in the Company is subject to an elevated degree of risk as compared to other market environments.
 
 Adverse economic conditions or increased competition for investment opportunities could delay deployment of our capital, reduce returns and result in losses.
 
 Adverse economic conditions may make it difficult to find suitable investments promptly, efficiently or effectively in a manner that is most beneficial to our stockholders. Any delay in investment, or inability to find suitable investments, could adversely affect our performance, retard or reduce distributions and reduce our overall return to investors. We will compete for investments with other BDCs and investment funds (including private equity funds and mezzanine funds), as well as commercial banks and other traditional financial services companies and other sources of funding. Moreover, alternative investment vehicles, such as hedge funds, increasingly make investments in small to mid-sized private U.S. companies. As a result, competition for investment opportunities in private U.S. companies is intense and may 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 better pricing and more flexible structuring for portfolio companies than we are able to do. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure and, if we do, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of loss of capital. A significant part of our competitive advantage stems from the fact that the market for investments in private U.S. companies is underserved by traditional commercial banks and other financial sources. A significant increase in the number or the size of our competitors in this target market could force us to accept less attractive investment terms. Further, many of our competitors have greater experience operating under, or are not subject to, the regulatory restrictions imposed on us as a BDC.
 
 Economic recessions or downturns could impair a company in which we invest and harm our operating results.
 
 Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay our debt investments during these periods. In that case, 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 our senior or second lien secured loans. A prolonged recession may further decrease the value of such collateral and result in losses of value in our portfolio and a 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 lenders not to extend credit to us on terms we deem acceptable. These events could prevent us from increasing investments and harm our operating results.
 
 Changes in interest rates may affect our cost of capital and net investment income.
 
 Since we intend to use debt to finance investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. We expect that our long-term fixed rate investments will be financed primarily with equity and long term debt. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates when we have debt outstanding, our cost of funds will increase, which could reduce our net investment income. We may occasionally use interest rate risk management techniques, primarily in highly volatile market conditions, in an effort to limit our exposure to interest rate fluctuations, but we will not use such techniques as a means of enhancing our returns. These techniques may include various
 
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 interest rate hedging activities to the extent permitted by the 1940 Act. These activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. Also, we have limited experience in entering into hedging transactions, and we will initially have to purchase or develop such expertise.
 
 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 various 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 U.S. and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide. The U.S. and global capital markets experienced extreme volatility and disruption during the economic downturn that began in mid-2007, and the U.S. economy was in a recession for several consecutive calendar quarters during the same period. In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service their sovereign debt obligations. Risks resulting from such debt crisis, including any austerity measures taken in exchange for bailout of certain nations, and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally. In June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (“Brexit”) and, subsequently, on March 29, 2017, the U.K. government began the formal process of leaving the European Union. Brexit created political and economic uncertainty and instability in the global markets (including currency and credit markets), and especially in the United Kingdom and the European Union. Under current Prime Minister Boris Johnson, the House of Commons passed the Brexit deal on December 20, 2019 and the U.K. formally left the European Union on January 31, 2020. The U.K. is currently in a transition period until December 31, 2020, where agreements surrounding trade and other aspects of the U.K.’s future relationship with the European Union will need to be finalized. Failure to come to terms on a free trade deal could result in checks and tariffs on U.K. goods traveling to the European Union and thus prolong the economic uncertainty. There is continued concern about national-level support for the Euro and the accompanying coordination of fiscal and wage policy among European Economic and Monetary Union member countries. In addition, the fiscal and monetary policies of foreign nations, such as Russia and China, may have a severe impact on the worldwide and U.S. financial markets.
 
 The Chinese capital markets have also experienced periods of instability over the past several years. The current political climate has also intensified concerns about a potential trade war between the U.S. and China in connection with each country’s recent or proposed tariffs on the other country’s products. These market and economic disruptions and the potential trade war with China have affected, and may in the future affect, the U.S. capital markets, which could adversely affect our business, financial condition or results of operations.
 
 The current global financial market situation, as well as various social and political circumstances in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility and economic uncertainties or deterioration in the United States and worldwide. For example, the Wuhan Virus pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The outbreak of the Wuhan Virus may have a material adverse impact on the ability of our portfolio companies to fulfill their end customers’ orders due to supply chain delays, limited access to key commodities or technologies or other events that impact their manufacturers or their suppliers. Such events have affected, and may in the future affect, the global and U.S. capital markets, and our business, financial condition or results of operations.
 
 Additionally, the U.S. government’s credit and deficit concerns, the European sovereign debt crisis, and the potential trade war with China could cause interest rates to be volatile, which may negatively impact our ability to access the debt markets on favorable terms.
 
 The Republican Party currently controls the executive branch and the senate portion of the legislative branch of government, which increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Wall Street Reform and Consumer Protection Act and the authority of the Federal Reserve and the Financial Stability Oversight Council. For example, in March 2018, the U.S. Senate passed a bill that eased financial regulations and reduced oversight for certain entities. The United States may also potentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States. We cannot predict which, if any, of these actions will be taken or, if taken, their effect on the financial stability of the United States. Such actions could have a significant adverse effect on our business, financial condition and results of operations. We cannot predict the effects of these or similar events in the future on the U.S. economy and securities markets or on our
 
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 investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.
 
 On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act, which increased from $50 billion to $250 billion the asset threshold for designation of “systemically important financial institutions” or “SIFIs” subject to enhanced prudential standards set by the Federal Reserve Board, staggering application of this change based on the size and risk of the covered bank holding company. On May 30, 2018, the Federal Reserve Board voted to consider changes to the Volcker Rule that would loosen compliance requirements for all banks. The effect of this change and any further rules or regulations are and could be complex and far-reaching, and the change and any future laws or regulations or changes thereto could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.
 
 Events outside of our control, including public health crises, may negatively affect our results of operations and financial performance.
 
 Periods of market volatility may occur in response to pandemics or other events outside of our control. These types of events could adversely affect our results of operations and financial performance. For example, the Wuhan Virus pandemic has adversely affected global economic activity and greatly contributed to significant deterioration and volatility in financial markets across the world, including signals of an uptick in illiquid or inactive markets, which may cause a change in valuation methodology and/or technique as well as the observability of inputs to be used in valuation techniques. Depending on the severity and length of the outbreak, this pandemic could present material uncertainty and risk with respect to us, including an adverse effect on our portfolio companies’ operations and their financial condition, the ability of such portfolio companies to provide underlying financial information in a timely manner, expected declines in the valuation of our investments in the portfolio companies, collectability of amounts due from others, and our overall performance. The rapid development and fluidity of this situation precludes management from making an estimate as to the ultimate adverse impact of the pandemic on the value of our investments, liquidity, financial condition, and results of operations for fiscal year 2020.
 
 Capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets in the United States and abroad, which may have a negative impact on our business and operations.
 
 From time to time, capital markets may experience periods of disruption and instability. For example, between 2007 and 2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk and the failure of major financial institutions. Despite actions of the United States federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. While the adverse effects of these conditions have abated to a degree, global financial markets experienced significant volatility following the downgrade by Standard & Poor’s on August 5, 2011 of the long-term credit rating of U.S. Treasury debt from AAA to AA+. These market conditions have historically had, and could again have, a material adverse effect on debt and equity capital markets in the United States and Europe, which could have a materially negative impact on our business, financial condition and results of operations. We and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital. The Company is working to navigate the significant challenges created by the unprecedented Wuhan Virus pandemic. If adverse market conditions, including as a result of the Wuhan Virus pandemic, continue or increase in severity and duration, equity capital may be difficult to raise because subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without general approval by our stockholders, which we are currently seeking, and approval of the specific issuance by our board of directors. In addition, our ability to incur indebtedness or issue preferred stock is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness or issue preferred stock. The debt capital that may be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.
 
 Current market conditions and market conditions may in the future make it difficult to extend the maturity of or refinance our existing indebtedness, including the final maturity of our revolving credit facility in May 2029, and any failure to do so could have a material adverse effect on our business. The re-appearance of market conditions similar to those experienced from 2007 through 2009 for any substantial length of time or worsened market conditions, including as a result of U.S. government shutdowns or the perceived creditworthiness of the United States, could make it difficult to extend the maturity of, or refinance, our existing indebtedness, or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms
 
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 and conditions than what we currently experience. Further, if we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
 
 The illiquidity of our investments may make it difficult for us to sell such investments, if required. As a result, we may realize significantly less than the value at which we have recorded our investments if forced to liquidate quickly.
 
 Given the extreme volatility and dislocation that the capital markets have historically experienced, many BDCs have faced, and may in the future face, a challenging environment in which to raise capital. We may in the future have difficulty accessing debt and equity capital, and a severe disruption in the global financial markets or deterioration in credit and financing conditions could have a material adverse effect on our business, financial condition and results of operations. In addition, significant changes in the capital markets, including the extreme volatility and disruption, have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material adverse impact on our business, financial condition or results of operations.
 
 The Adviser does not know how long the financial markets will continue to be affected by these events and cannot predict the effects of these or similar events in the future on the United States economy and securities markets or on our investments. The Adviser monitors developments and seeks to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that it will be successful in doing so; and the Adviser may not timely anticipate or manage existing, new or additional risks, contingencies or developments, including regulatory developments in the current or future market environment.
 
 We are required to record certain of our assets at fair value, as determined in good faith by our board of directors in accordance with our valuation policy. As a result, volatility in the capital markets may have a material adverse effect on our investment valuations and our net asset value, even if we plan to hold investments to maturity.
 
 Future 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 will be 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, any of which could harm us and our stockholders, potentially with retroactive effect.
 
 Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth in this annual report on Form 10-K and may result in our investment focus shifting from the areas of expertise of our Adviser to other types of investments in which our Adviser may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.
 
 Efforts to comply with the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with the Sarbanes-Oxley Act may adversely affect us.
 
 We are subject to the Sarbanes-Oxley Act and the related rules and regulations promulgated by the SEC. Under current SEC rules, our management will be required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and related rules and regulations of the SEC. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting. As a result, we expect to incur significant additional expenses in the near term, which may negatively impact our financial performance and our ability to pay distributions. This process also will result in a diversion of management’s time and attention. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with the Sarbanes-Oxley Act and related rules and regulations, we may be adversely affected.
 
 Terrorist attacks, acts of war or natural disasters may affect any market for our common stock, impact the businesses in which we invest and harm our business, operating results and financial condition.
 
 
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 Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic or global economies and create additional uncertainties, which may negatively affect the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.
 
 Risks Relating to Our Offering and Our Common Stock
 
 Investors will not know the purchase price per share at the time they submit their subscription agreements and could receive fewer shares of our common stock than anticipated if our board of directors determines to increase the offering price to comply with the requirement that we not sell shares below net asset value.
 
 Our shares are currently offered at an offering price of $9.33 per share, but may, to the extent permitted or required under the rules and regulations of the SEC, be sold at a price necessary to ensure that shares are not sold at a price per share, after deducting applicable upfront selling commissions and dealer manager fees, that is below our net asset value per share, if our net asset value per share: (i) declines more than 10% from the net asset value per share as of the effective date of our registration statement or (ii) increases to an amount that is greater than the net proceeds per share as stated in in our registration statement or any prospectus related thereto.
 
 In general, we will not sell our shares at a net offering price below our net asset value per share unless we obtain the requisite approval from our stockholders. Our board of directors may change the offering price at any time such that the public offering price, net of sales load, is equal to or greater than net asset value per share when we sell shares of common stock. As a result, your purchase price may be higher than the prior subscription closing price per share, and therefore you may receive a smaller number of shares than if you had subscribed at the prior subscription closing price.
 
 Delays in the application of offering proceeds to our investment program may adversely affect our results.
 
 To the extent that there are significant delays in the application of the initial or subsequent proceeds of our offering to our investment program, from time to time, due to market conditions, the relative lack of suitable investment candidates or the time needed for transaction due diligence and execution, it will be more difficult to achieve our investment objectives and our returns may be adversely affected.
 
 We are conducting a “best efforts” offering, and if we are unable to raise substantial funds, we will be limited in the number and type of investments we may make, and the value of your investment in us may be reduced in the event our assets under-perform.
 
 Our offering is being made on a best efforts basis, whereby our Dealer Manager and broker-dealers participating in the offering are only required to use their best efforts to sell our shares and have no firm commitment or obligation to purchase any of the shares. To the extent that less than the maximum number of shares is subscribed for, the opportunity for diversification of our investments may be decreased and the returns achieved on those investments may be reduced as a result of allocating all of our expenses among a smaller capital base.
 
 The shares sold in our offering will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever. Therefore, if you purchase shares in our offering, you will have limited liquidity.
 
 The shares offered by us in our offering are illiquid assets for which there is not expected to be any secondary market nor is it expected that any will develop in the foreseeable future. Therefore, if you purchase shares you will likely have limited ability to sell your shares.
 
 We are not obligated to complete a liquidity event by a specified date; therefore, it will be difficult for an investor to sell his or her common shares.
 
 We intend to seek to complete a liquidity event for our stockholders within five to seven years following the completion of our offering period. However, because we may extend our offering indefinitely, the timing of any liquidity event is uncertain and may also be extended indefinitely. Accordingly, stockholders should consider that they may not have access to the money they invest for an indefinite period of time until we complete a liquidity event. We may determine not to pursue a liquidity event if we believe that then-current market conditions are not favorable for a liquidity event, and that such conditions will improve in the future. A liquidity event could include (1) a listing of our common stock on a national securities exchange; (2) a merger or another transaction
 
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 approved by our board of directors in which our stockholders likely will receive cash or shares of a publicly traded company, including potentially a company that is an affiliate of us or (iii) the sale of all or substantially all of our assets either on a complete portfolio basis or individually followed by a liquidation. While our intention is to seek to complete a liquidity event within five to seven years following the completion of our offering period, there can be no assurance that a suitable transaction will be available or that market conditions for a liquidity event will be favorable during that timeframe. As such, there can be no assurance that we will complete a liquidity event at all.
 
 Should we not be able to complete a liquidity event within seven years following the end of our offering, subject to the authority of the independent directors or the rights of the stockholders to postpone liquidation, we will cease to make investments in new portfolio companies and will begin the orderly liquidation of our assets (which may include allowing our debt securities to mature and disposing of our equity interests to the extent feasible.) However, upon the vote of a majority of stockholders eligible to vote at any stockholder meeting we may suspend the liquidation of the company for such time as the stockholders may agree or we may extend the date upon which we must cease to make investments in new portfolio companies and begin an orderly liquidation of our assets for up to three consecutive periods of 12 months each upon the vote of a majority of our independent directors.
 
 In making a determination of what type of liquidity event is in the best interest of our stockholders, our board of directors, including our independent directors, may consider a variety of criteria, including, but not limited to, market conditions, portfolio diversification, portfolio performance, our financial condition, potential access to capital as a listed company, market conditions for the sale of our assets or listing of our common stock, internal management considerations and the potential for stockholder liquidity. If our shares are listed, we cannot assure you a public trading market will develop. Since a portion of the offering price from the sale of shares in our offering will be used to pay expenses and fees, the full offering price paid by stockholders will not be invested. As a result, even if we do complete a liquidity event, you may not receive a return of all of your invested capital.
 
 Forced liquidation and being publicly listed may have adverse impact on the value of our common stock.
 
 Because we intend to seek a liquidity event not more than seven years after completion of our offering, subject to the authority of the independent directors or the rights of the stockholders to postpone liquidation, we may be forced to seek a listing or a liquidation when market conditions are not favorable which may have an adverse impact on the value of our shares.
 
 The trading price of our common stock, if we become listed, may fluctuate substantially. The price of our common stock that will prevail in the market in the future will depend on many factors, some of which are beyond our control and may not be directly related to our operating performance. In fact, shares of publicly-traded closed-end investment companies frequently trade at a discount to their net asset value per share. If our shares are eventually listed on a national exchange, we would not be able to predict whether our common stock would trade above, at or below net asset value per share. This risk is separate and distinct from the risk that our net asset value per share may decline.
 
 You should also be aware that if a market for our stock is established, the potential volatility of our stock price may make us more susceptible to securities litigation, as other publicly-traded entities have experienced. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.
 
 We established the offering price for our shares of common stock on an arbitrary basis, and the offering price may not accurately reflect the value of our assets.
 
 The price of shares of our common stock was established on an arbitrary basis and is not based on the amount or nature of our assets or our book value. Therefore, at any given time, the offering price may be higher than the value of our investments.
 
 Our Dealer Manager may be unable to sell a sufficient number of shares for us to achieve our investment objectives.
 
 The success of our offering, and correspondingly our ability to implement our business strategy, is dependent upon the ability of our Dealer Manager to establish and maintain a network of licensed securities brokers-dealers and other agents. There is therefore no assurance that it will be able to sell a sufficient number of shares to allow us to have adequate funds to construct a portfolio of a sufficiently broad array of assets. If our Dealer Manager fails to perform, we may not be able to raise adequate proceeds through our offering to implement our investment strategy. As a result, we may be unable to achieve our investment objectives, and you could lose some or all of the value of your investment.
 
 Although we have offered to repurchase your shares on a quarterly basis through our share repurchase program, the terms of any such repurchases will be limited. As a result, you will have limited opportunities to sell your shares.
 
 
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 Beginning with the second quarter of 2016, we commenced offers to allow you to submit your shares on a quarterly basis for repurchase pursuant to our share repurchase program at a price equal to the net offering price in effect as of the date of such repurchase. However, the share repurchase program will include numerous restrictions that limit your ability to sell your shares. We intend to limit the number of shares repurchased pursuant to our proposed share repurchase program as follows: (1) we currently intend to limit the number of shares repurchased during any calendar year to the number of shares we can repurchase with the proceeds we receive from the sale of shares of our common stock under our distribution reinvestment plan (at the discretion of our board of directors, we may also use cash on hand, cash available from borrowings and cash from liquidation of securities investments as of the end of the applicable period to repurchase shares); (2) we do not expect to repurchase shares in any calendar year in excess of 10% of the weighted average number of shares outstanding in the prior calendar year, or 2.5% in any quarter; and (3) to the extent that the number of shares submitted to us for repurchase exceeds the number of shares that we are able to purchase, we will repurchase shares on a pro rata basis, not on a first-come, first-served basis. Our assets may be depleted to fulfill repurchases under our share repurchase program.
 
 We will have no obligation to repurchase shares if the repurchase would violate applicable restrictions on distributions under federal or Maryland law that prohibit distributions that would cause a corporation to fail to meet statutory tests of solvency. These limits may prevent us from accommodating all repurchase requests made in any year. Our board of directors may amend, suspend or terminate the share repurchase program upon 30 days’ notice. We will notify you of such developments (1) in our quarterly reports or (2) by means of a separate mailing to you, accompanied by disclosure in a current or periodic report under the Exchange Act. During our offering, we will also include this information in a prospectus supplement or post-effective amendment to our registration statement, as then required under federal securities laws. In addition, although we have adopted a share repurchase program, we have discretion to not repurchase your shares, to suspend the plan, and to cease repurchases. Further, the plan has many limitations and should not be relied upon as a method to sell shares promptly and at a desired price.
 
 The timing of our share repurchase offers pursuant to our share repurchase program may be at a time that is disadvantageous to our stockholders.
 
 When we make quarterly repurchase offers pursuant to the share repurchase program, we may offer to repurchase shares at a price that is lower than the price you paid for shares in our offering. As a result, to the extent you have the ability to sell your shares to us as part of our share repurchase program, the price at which you may sell your shares, which we expect to be the net offering price in effect as of the date of such repurchase, may be lower than what you paid in connection with your purchase of shares in our offering.
 
 In addition, if you choose to participate in our share repurchase program, you will be required to provide us with notice of your intent to participate prior to knowing what the net asset value per share will be on the repurchase date. Although you will have the ability to withdraw your repurchase request prior to the repurchase date, to the extent you seek to sell your shares to us as part of our periodic share repurchase program, you will be required to do so without knowledge of what the repurchase price of our shares will be on the repurchase date.
 
 We may be unable to invest a significant portion of the net proceeds of our offering on acceptable terms in the timeframe contemplated by this annual report on Form 10-K.
 
 Delays in investing the net proceeds of our offering may impair our performance. We cannot assure you that we will be able to identify any investments that meet our investment objectives or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of our offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.
 
 We anticipate that, depending on market conditions, it generally will take us between 30-90 days for us to fully invest the initial proceeds we receive in connection with our offering in securities meeting our investment objectives and providing sufficient diversification of our portfolio. During this period, we will invest the net proceeds of our offering primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, which may produce returns that are significantly lower than the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objectives. As a result, any distributions that we pay during this period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objectives.
 
 Your interest in us will be diluted if we issue additional shares, which could reduce the overall value of your investment.
 
 Potential investors in our offering do not have preemptive rights to any shares we issue in the future. Pursuant to our charter, a majority of our entire board of directors may amend our charter to increase the number of our authorized shares of stock without
 
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 stockholder approval. After your purchase in our offering, our board of directors may elect to sell additional shares in this or future public offerings, issue equity interests in private offerings or issue share-based awards to our independent directors or to members of, or professionals utilized by, our Adviser or Administrator. To the extent we issue additional equity interests after your purchase in our offering, your percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, you may also experience dilution in the book value and fair value of your shares.
 
 Our Distribution Reinvestment Plan will dilute the interest of those who do not opt-in.
 
 We currently have a distribution reinvestment plan that requires participants to opt-in to re-invest distributions paid. For those investors who do not opt in to the distribution reinvestment plan their interest in us will be diluted over time, relative to those investors who do opt-in to have their distributions used to purchase additional shares of our common stock.
 
 We may issue preferred stock as a means to access additional capital, which could adversely affect common stockholders and subject us to specific regulation under the 1940 Act.
 
 We may issue preferred stock as a means to increase flexibility in structuring future financings and acquisitions. However, preferred stock has rights and preferences that would adversely affect the holders of common stock, including preferences as to cash distributions and preferences upon the liquidation or dissolution of the Company. As well, every issuance of preferred stock will be required to comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock.
 
 Certain provisions of our charter and bylaws as well as provisions of the Maryland General Corporation Law could deter takeover attempts and have an adverse impact on the value of our common stock.
 
 Our charter and bylaws, as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a third party from attempting to acquire us. Under the Maryland General Corporation Law, “control shares” acquired in a “control share acquisition” have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by employees who are directors of the corporation. Our bylaws contain a provision exempting from the Control Share Acquisition Act under the Maryland General Corporation Law any and all acquisitions by any person of our shares of stock. Our board of directors may amend the bylaws to remove that exemption in whole or in part without stockholder approval if our board of directors determines that removing that exemption is in our best interest and the best interests of our stockholders. The Control Share Acquisition Act (if we amend our bylaws to be subject to that Act) may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Under the Maryland General Corporation Law, specified “business combinations,” including certain mergers, consolidations, issuances of equity securities and other transactions, between a Maryland corporation and any person who owns 10% or more of the voting power of the corporation’s outstanding voting stock, and certain other parties, (each an “interested stockholder”), or an affiliate of the interested stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter any of the specified business combinations must be approved by a super majority vote of the stockholders unless, among other conditions, the corporation’s common stockholders receive a minimum price for their shares.
 
 Under the Maryland General Corporation Law, certain statutory provisions permit a corporation that is subject to the Exchange Act and that has at least three outside directors to be subject to certain corporate governance provisions that may be inconsistent with the corporation’s charter and bylaws. Among other provisions, a board of directors may classify itself without the vote of stockholders. Further, the board of directors, by electing into certain statutory provisions and notwithstanding any contrary provision in the charter or bylaws, may (i) provide that a special meeting of stockholders will be called only at the request of stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting, (ii) reserve for itself the right to fix the number of directors, and (iii) retain for itself the exclusive power to fill vacancies created by the death, removal or resignation of a director and (iv) require the approval of two-thirds of votes entitled to be cast in the election of the directors in order to remove a director. Our board of directors has already elected to be subject to the statutory provision providing that our board of directors has the sole power to fill any vacancy, and unrelated to these statutory provisions, our charter and bylaws already provide that its board of directors has the sole power to set the size of its board of directors. A corporation may be prohibited by its charter or by resolution
 
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 of its board of directors from electing any of the provisions of the statute. We are not prohibited from implementing any or all of the remaining provisions of the statute.
 
 Additionally, our board of directors may, without stockholder action, authorize the issuance of shares of stock in one or more classes or series, including preferred stock; and our board of directors may, without stockholder action, amend our charter to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. These anti-takeover provisions may inhibit a change of control in circumstances that could give the holders of our common stock the opportunity to realize a premium over the value of our common stock.
 
 Risks Related to Debt Financing
 
 Our use of borrowed money will magnify the potential for gain or loss on amounts invested in our common stock and may increase the risk of investing in our common stock.
 
 Through our wholly-owned financing subsidiary, Prospect Flexible Fund, Inc. (the “SPV”), we recently established a Credit Facility with RBC which we intend to use to make investments. The SPV is a wholly-owned subsidiary of the Company that was formed to facilitate the transactions under the Credit Facility. Under the terms of the Credit Facility, the SPV holds certain of the securities that would otherwise be owned by the Company to be used as the borrowing base and collateral under the Credit Facility. Income paid on these investments is distributed to the Company pursuant to a waterfall after taxes, fees, expenses, and debt service. The lenders under the Credit Facility have a security interest in the investments held by the SPV. Although these investments are owned by the SPV, because the SPV is a wholly-owned subsidiary of the Company, the Company is subject to all of the benefits and risks associated with the Credit Facility and the investments held by the SPV. The use of borrowings and other types of financing, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our shares. If we use leverage to partially finance our investments, through borrowing from banks and other lenders we, and therefore you, will experience increased risks of investing in our common stock. Any lenders and debt holders would have fixed dollar claims on our assets that are superior to the claims of our stockholders. If the value of our assets increases, then leverage would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leverage would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make distributions to stockholders. Leverage is generally considered a speculative investment technique. In addition, the decision to utilize leverage will increase our assets and, as a result, will increase the amount of base management fees payable to or Adviser.
 
 Our use of borrowed funds to make investments will expose us to risks typically associated with leverage.
 
 We may borrow money or incur debt to leverage our capital structure. As a result:
 
 •shares of our common stock would be exposed to incremental risk of loss; therefore, a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if it did not use leverage; •any depreciation in the value of our assets may magnify losses associated with an investment and could totally eliminate the value of an asset to us; •if we do not appropriately match the assets and liabilities of our business and interest or dividend rates on such assets and liabilities, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage; •our ability to pay dividends on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150%, and any amounts used to service indebtedness would not be available for such dividends; •any credit facility we may enter into would be subject to periodic renewal by our lenders, whose continued participation cannot be guaranteed; •any credit facility we may enter into may include covenants restricting our operating flexibility or affecting our investment or operating policies, and may require us to pledge assets or provide other security for such indebtedness; and •we, and indirectly our stockholders, will bear the entire cost of issuing and paying interest on any debt. 
 Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of interest expense. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below. The calculation assumes (i) $40.9 million in total assets, (ii) an average cost of funds of 3.19%, (iii) $21 million in debt outstanding and (iv) $19.6 million of shareholders’ equity.
 
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 Assumed Return on Our Portfolio (net of expenses)(10)%(5)%—%5%10%Corresponding Return to Stockholder(24.8)%(14.1)%(3.4)%7.3%18.0%
 
 If we default under our Credit Facility or any subsequent credit facility or are unable to amend, repay or refinance any such facility on commercially reasonable terms, or at all, we may suffer material adverse effects on our business, financial condition, results of operations and cash flows.
 
 In connection with our Credit Facility with RBC, a significant portion of our assets have been assigned to the SPV and pledged as collateral under the Credit Facility. In the event that of a default under the Credit Facility or any other future borrowing facility, our business could be adversely affected as we (through our SPV) may be forced to sell all or a portion of our investments quickly and prematurely at what may be disadvantageous prices to us in order to meet our outstanding payment obligations and/or support covenants and working capital requirements under any credit or borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
 
 Following any such default, the agent for the lenders under any such credit or borrowing facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, if the lender exercises our right to sell the assets pledged under a credit facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of our outstanding borrowings. Moreover, such deleveraging of us could significantly impair our ability to effectively operate our business in the manner in which we expect. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate any dividends that it may pay to our stockholders.
 
 Incurring leverage creates conflicts of interests for our investment adviser.
 
 Under the Investment Advisory Agreement, the base management fee payable to the Adviser is based on our average total assets (including amounts borrowed for investment purposes). Consequently, the Adviser may benefit when we incur additional debt or increases the use of leverage to acquire additional assets. This fee structure may encourage the Adviser to cause us to borrow more money to finance additional investments. In addition, under the Investment Advisory Agreement, the Adviser will receive an income incentive fee based on our performance. As a result, the Adviser could be encouraged to use additional leverage or take additional risk to increase the return on our investments.
 
 Risks Related to Business Development Companies
 
 The requirement that we invest a sufficient portion of our assets in qualifying assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a BDC.
 
 As a BDC, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. See “Business”. 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 companies in which we have invested, which could result in the dilution of our position, or could require us to dispose of investments at an inopportune time in order to comply with the 1940 Act. If we were forced to sell non-qualifying investments in the portfolio for compliance purposes, the proceeds from such sale could be significantly less than the current value of such investments. Further, any failure by us to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us or expose us to the claims of private litigants. In addition, if approved by a majority of our stockholders, we may elect to withdraw our status as a BDC. If we withdraw our election or 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 operating costs.
 
 Recent legislation may allow us to incur additional leverage.
 
 The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from
 
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 an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so.
 
 At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%, which will apply to the Company effective as of March 16, 2019, the day immediately after the 2019 Annual Meeting. As a result, we are required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As a non-traded BDC, we are also required to offer to repurchase our outstanding shares at the rate of 25% per quarter over four calendar quarters. At the discretion of our board of directors, we may use cash on hand, cash available from borrowings, cash available from the issuance of new shares and cash from the sale of our investments to fund the aggregate purchase price payable as a result of the repurchase offer. If a substantial number of Eligible Stockholders elect to participate in the special repurchase offers, our assets could be significantly depleted. In addition, payment for repurchasing shares may require us to liquidate our portfolio holdings earlier than our Adviser would otherwise have caused these holdings to be liquidated. In such an event, we may be forced to sell assets at significantly depressed prices due to market conditions or otherwise, which may result in losses.
 
 Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases,  then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Leverage is generally considered a speculative investment technique. See “Risks Related to Debt Financing.”
 
 U.S. Federal Income Tax Risks
 
 We cannot predict how tax reform legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.
 
 Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. In December 2017, the U.S. House of Representatives and U.S. Senate passed tax reform legislation, which the President signed into law. Such legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment. We cannot predict with certainty how any changes in the tax laws might affect us, our stockholders, or our portfolio investments. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders of such qualification, or could have other adverse consequences. Stockholders are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.
 
 We may be subject to certain corporate-level U.S. federal income taxes if we fail to qualify for taxation as a RIC.
 
 To maintain RIC tax treatment under the Code, we must meet the following annual distribution, source-of-income and asset-diversification requirements. See “Business - Certain U.S. Federal Income Tax Considerations.”
 
 •The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders with respect to each taxable year at least 90% of our net ordinary income and realized net short-term capital gain in excess of realized net long-term capital loss, if any. We will be subject to corporate-level U.S. federal income tax on any of our undistributed income or gain. Because we may use debt financing, we are subject to an asset coverage ratio requirement under the 1940 Act and may in the future become subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources or are prohibited from making distributions, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. •The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each year from dividends, interest, gains from the sale of stock or securities or similar sources. 
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 •The asset-diversification requirement will be satisfied if we meet certain asset-diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement, (i) 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 securities, if such other securities of any one issuer do not represent more than 5% of the value of our total assets and we do not hold more than 10% of the outstanding voting securities of the issuer, and (ii) 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 any one issuer, of any 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 will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. 
 If we fail to qualify for RIC tax treatment for any reason and are subject to corporate-level U.S. federal 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. We may also be subject to certain U.S. federal excise taxes, as well as state, local and foreign taxes.
 
 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 original issue discount (such as debt instruments with payment-in-kind (“PIK”) interest, or issued with warrants, or, in certain cases, with increasing interest rates), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, 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. We anticipate that a portion of our income may constitute original issue discount or other income required to be included in taxable income prior to receipt of cash. Further, we may elect to amortize market discounts and include such amounts in our taxable income in the current year, instead of upon disposition, as an election not to do so would limit our ability to deduct interest expenses for tax purposes.
 
 Because any original issue discount 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 though 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 debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, see “Business - Certain U.S. Federal Income Tax Considerations—Taxation as a Regulated Investment Company.”
 
 You may receive shares of our common stock as distributions, which could result in adverse tax consequences to you.
 
 In order to satisfy the annual distribution requirement applicable to RICs, we may have the ability to declare a portion of a distribution in shares of our common stock instead of in cash. Based on certain guidance issued by the IRS, distributions from a publicly offered RIC that are payable in stock or cash at the election of shareholders will be treated as taxable dividends that may satisfy our minimum distribution requirements even if the total amount of cash to be distributed is limited, provided that at least 20% of such dividend is payable in cash. If too many shareholders elect to receive their distribution in cash, we must allocate the cash available for distribution among the shareholders electing to receive cash (with the balance of the distribution paid in shares of our common stock). Taxable shareholders receiving such dividends will be required to include the full amount of the dividend 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. taxable shareholder may be required to pay U.S. federal income tax with respect to such dividends in excess of any cash received.
 
 You may have current tax liability on distributions you elect to reinvest in our common stock but would not receive cash from such distributions to pay such tax liability.
 
 If you participate in our distribution reinvestment plan, you will be deemed to have received, and for U.S. federal income tax purposes will be taxed on, the amount reinvested in our common stock to the extent the amount reinvested was not a tax-free
 
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 return of capital. As a result, unless you are a tax-exempt entity, you may have to use funds from other sources to pay your tax liability on the value of our common stock received from the distribution.
 
 If we do not qualify as a “publicly offered regulated investment company,” as defined in the Code, you will be taxed as though you received a distribution of some of our expenses.
 
 A “publicly offered regulated investment company” is a regulated investment company whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by at least 500 persons at all times during the taxable year. If we are not a publicly offered regulated investment company for any period, a non-corporate stockholder’s pro rata portion of our affected expenses, including our management fees, will be treated as an additional distribution 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, these expenses, referred to as miscellaneous itemized deductions, are currently not deductible (and beginning in 2026, will be deductible only to the extent they exceed 2% of such a stockholder’s adjusted gross income), and are not deductible for alternative minimum tax purposes. While we anticipate that we will constitute a publicly offered regulated investment company for our current taxable year, there can be no assurance that we will in fact so qualify for any of our taxable years.
 
 Our investments in CLO vehicles may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income.
 
 The CLO vehicles in which we will invest generally will constitute PFICs. Because we will acquire investments in PFICs (including equity tranche investments or SSNs in CLO vehicles that are PFICs), we may be subject to U.S. federal income tax on a portion of any “excess distribution” or gain from the disposition of such investments even if such income is distributed as a taxable dividend by us to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our share of the PFIC’s income for each year regardless of whether we receive any distributions from such PFIC. We must nonetheless distribute such income to maintain our status as a RIC. If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (“CFC”) (including equity tranche investments or SSNs in a CLO vehicle treated as a CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC tax treatment regardless of whether or not the CFC makes an actual distribution during such year.
 
 If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities in order to raise cash to make our required distributions. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, see “Certain U.S. Federal Income Tax Considerations.”
 
 If a CLO vehicle in which we invest fails to comply with certain U.S. tax disclosure requirements, such CLO may be subject to withholding requirements that could materially and adversely affect our operating results and cash flows .
 
 Legislation commonly referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” imposes a withholding tax of 30% on payments of U.S. source interest and dividends to certain non-U.S. entities, including certain non-U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding our United States account holders and our United States owners. While existing U.S. Treasury regulations would also require withholding on payments of the gross proceeds from the sale of any property that could produce U.S. source interest or dividends, the U.S. Treasury Department has indicated in subsequent proposed regulations its intent to eliminate this requirement. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.
 
 
 Item 1B. Unresolved Staff Comments
 
 Not applicable.
 
 
 Item 2. Properties
 
 
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 We do not own any real estate or other physical properties materially important to our operation. Our principal executive offices are located at 10 East 40th Street, New York, New York 10016, where we occupy our office space pursuant to our Administration Agreement with Prospect Administration. The office facilities, which are shared with the Investment Adviser and Administrator, consist of approximately 32,500 square feet, with various leases expiring up to and through 2023. We believe that our office facilities are suitable and adequate for our business as currently conducted.
 
 
 Item 3. Legal Proceedings
 
 From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to intellectual property, employment, tax, regulation, contract or other matters. The resolution of such matters as may arise will be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any material legal proceedings as of June 30, 2020 .
 
 
 Item 4. Mine Safety Disclosures
 
 Not applicable.
 
 
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 PART II
 
 
 Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
 
 Market Information
 
 There is no established public trading market for our common stock, and we do not expect one to develop. Therefore, there is a risk that a shareholder may not be able to sell our stock at a time or price acceptable to the shareholder, or at all.
 
 Continuous Public Offering of Common Stock
 
 Through our Dealer Manager, we are conducting a continuous public offering of our shares of our common stock on a "best efforts" basis. On June 14, 2011, the Company filed its Registration Statement with the SEC to register its offering. The Registration Statement was declared effective by the SEC on September 4, 2012 and the Company commenced its initial offering. The Company's initial offering terminated on March 1, 2016 and it commenced the follow-on offering of our shares on March 17, 2016.
 
 In our ongoing follow-on offering, we are currently offering our common stock at an offering price of $9.33 per share. However, if our net asset value increases, our offering price will be adjusted to ensure that shares are not sold at a price per share, after deduction of selling commissions and dealer manager fees, that is below our net asset value per share. In connection with each closing of sales of our shares in our offering, our board of directors or a committee thereof is required within 48 hours of the time of such closing, to make the determination that we are not selling shares of our common stock at a price which, after deducting the sales load, is below our then current net asset value per share. The board of directors or a committee thereof will consider the following factors, among others, in making such determination:
 
 •The net asset value per share of our common stock disclosed in the most recent periodic report we filed with the SEC; •Our management’s assessment of whether any material change in our net asset value per share has occurred (including through the realization of net gains on the sale of our portfolio investments) from the period beginning on the date of the most recently disclosed net asset value per share to the period ending two days prior to the date of the closing; and •The magnitude of the difference between the net asset value per share disclosed in the most recent periodic report we filed with the SEC and our management’s assessment of any material change in the net asset value per share since the date of the most recently disclosed net asset value per share, and the offering price of the shares of our common stock at the date of closing. 
 Importantly, this determination does not require that we calculate net asset value per share in connection with each closing and sale of shares of our common stock, but instead it involves the determination by the board of directors or a committee thereof that, at the time at which the closing and sale is made, we are not selling shares of our common stock at a price which, after deducting the sales load, is materially below the then current net asset value per share.
 
 Moreover, to the extent that there is even a remote possibility that we may (i) issue shares of our common stock at a price which, after deducting the sales load, is materially below the then current net asset value per share of our common stock at the time at which the closing and sale is made or (ii) trigger the undertaking (which we provided to the SEC in our registration statement to suspend the offering of shares of our common stock pursuant to our registration statement if our net asset value per share fluctuates by certain amounts in certain circumstances until our registration statement is amended, our board of directors or a committee thereof will elect, in the case of clause (i) above, either to postpone the closing until such time that there is no longer the possibility of the occurrence of such event or to undertake to determine net asset value per share within two days prior to any such sale to ensure that such sale will not be at a price which, after deducting the sales load, is materially below our then current net asset value per share, and, in the case of clause (ii) above, to comply with such undertaking or to undertake to determine net asset value per share to ensure that such undertaking has not been triggered.
 
 As of June 30, 2020 , 2,363,011 shares were outstanding, 18,968 of which are held by Craig Faggen, Director of the Company.
 
 Holders
 
 Set forth below is a chart describing the authorized classes and the single class of our securities outstanding as of August 27, 2020 :
 
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 (1) Title of Class(2) Amount Authorized(3) Amount Held by Us or for Our Account(4) Amount OutstandingExclusive of AmountUnder Column (3)Class A Common Stock37,500,000—2,367,478Class T Common Stock37,500,000——
 
 As of August 27, 2020 , we had 1,037 record holders of our common stock. No shares of our common stock have been authorized for issuance under any equity compensation plan. Effective March 2, 2016, all shares of our common stock issued and outstanding at that time were automatically converted into an equal number of shares of Class A common stock.
 
 Repurchase Program
 
 We do not intend to list our shares on any securities exchange during our offering and for a substantial period thereafter and we do not expect a public market for our shares to develop in the foreseeable future, if ever. Therefore, stockholders should not expect to be able to sell their shares promptly or at a desired price. No stockholder will have the right to require us to repurchase any of his or her shares. Because no public market will exist for our shares, and none is expected to develop, stockholders will not be able to liquidate their investment prior to our listing, liquidation or other liquidity event, other than through our share repurchase program, or, in limited circumstances, as a result of transfers of shares to other eligible investors.
 
 We commenced our share repurchase program in the second quarter of 2016 in our capacity as TPIC. Repurchases are made on such terms as may be determined by our board of directors in its complete and absolute discretion unless, in the judgment of the independent directors of our board of directors, such repurchases would not be in the best interests of our stockholders or would violate applicable law. Under the Maryland General Corporation Law, a Maryland corporation may not make a distribution to stockholders, including pursuant to our share repurchase program, if, after giving effect to the distribution, (i) the corporation would not be able to pay its indebtedness in the ordinary course or (ii) the corporation’s total assets would be less than its total liabilities plus preferential amounts payable on dissolution with respect to preferred stock. We anticipate conducting such repurchase offers in accordance with the requirements of Rule 13e-4 of the Exchange Act and the 1940 Act. In months in which we repurchase shares, we expect to conduct repurchases on the same date that we hold our closings for the sale of shares in our offering.
 
 The board also will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:
 
 •The effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales); •The liquidity of our assets (including fees and costs associated with disposing of assets); •Our investment plans and working capital requirements; •The relative economies of scale with respect to our size; •Our history in repurchasing shares or portions thereof; and •The condition of the securities markets. 
 We currently intend to limit the number of shares to be repurchased during any calendar year to the number of shares we can repurchase with the proceeds we receive from the sale of shares of our common stock under our distribution reinvestment plan. At the discretion of our board of directors, we may also use cash on hand, cash available from borrowings and cash from liquidation of securities investments as of the end of the applicable period to repurchase shares. In addition, we do not expect to repurchase shares in any calendar year in excess of 10% of the weighted average number of shares outstanding in the prior calendar year, or 2.5% in each quarter though the actual number of shares that we offer to repurchase may be less in light of the limitations noted above. Our board of directors reserves the right, in its sole discretion, to limit the number of shares to be repurchased by applying the limitations on the number of shares to be repurchased, noted above. We further anticipate that we will offer to repurchase such shares on each date of repurchase at a price equal to the current net offering price on each date of repurchase. If the amount of repurchase requests exceeds the number of shares we seek to repurchase, we will repurchase shares on a pro-rata basis. As a result, we may repurchase less than the full amount of shares that you submit for repurchase. If we do not repurchase the full amount of your shares that you have requested to be repurchased, or we determine not to make repurchases of our shares, you may not be able to dispose of your shares. Any periodic repurchase offers will be subject in part to our available cash and compliance with the 1940 Act.
 
 
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 The board of directors will require that we repurchase shares or portions thereof from you pursuant to written tender offer materials only on terms they determine to be fair to us and to all of our stockholders. Repurchases of your shares by us will be paid in cash. Repurchases will be effective after receipt and acceptance by us of all eligible written submissions of shares from our stockholders. Our Adviser, our directors and their respective affiliates are prohibited from receiving a fee in any repurchase by us of our shares.
 
 When the board of directors determines that we will offer to repurchase shares, we will furnish tender offer materials to you describing the terms of repurchase, and containing information you should consider in deciding whether and how to participate in the repurchase opportunity.
 
 Any tender offer presented to our stockholders will remain open for a minimum of 20 business days following the commencement of the tender offer. In the materials that we will send to our stockholders, we will include the date that the tender offer will expire. All tenders for repurchase requests must be received prior to the expiration of the tender offer in order to be valid. If there are any material revisions to the tender offer materials (not including the price at which shares may be tendered) sent to our stockholders, we will send revised materials reflecting such changes and will extend the tender offer period by a minimum of an additional five business days. If the price at which shares may be tendered is changed, we will extend the tender offer period by a minimum of an additional ten business days.
 
 In order to submit shares to be tendered, stockholders will be required to complete a letter of transmittal, which will be included in the materials sent to our stockholders, as well as any other documents required by the letter of transmittal. At any time prior to the expiration of the tender offer, stockholders may withdraw their tenders by submitting a notice of withdrawal to us. If shares have not been accepted for payment by us, tenders may be withdrawn any time prior to 40 business days following the expiration of the tender offer.
 
 We will not repurchase shares, or fractions thereof, if such repurchase will cause us to be in violation of the securities or other laws of the United States, Maryland or any other relevant jurisdiction.
 
 If any of our Adviser’s affiliates holds shares, any such affiliates may tender shares in connection with any repurchase offer we make on the same basis as any other stockholder. Except for the initial capital contribution of our Adviser, our Adviser will not tender its shares for repurchase as long as our Adviser remains our investment adviser.
 
 We intend to rely on an exemptive order from the SEC to provide relief from Rule 102 of Regulation M under the Exchange Act in connection with our proposed share repurchase program. If we modify any of the material terms of our proposed share repurchase program, including the price at which we would offer to make repurchases, we will reflect such revisions in a sticker supplement to the prospectus.
 
 You have the option of placing a transfer on death, or “TOD,” designation on your shares purchased in our offering. A TOD designation transfers ownership of your shares to your designated beneficiary upon your death. This designation may only be made by individuals, not entities, who are the sole or joint owners with right of survivorship of the shares. However, this option is not available to residents of the states of Louisiana or North Carolina. If you would like to place a TOD designation on your shares, you must check the TOD box on the subscription agreement and you must complete and return the transfer on death form available upon request to us in order to effect the designation.
 
 Since the Merger, we have completed two tender offers pursuant to our share repurchase program.
 
 On January 21, 2020, under our share repurchase program, we made an offer to purchase up to the number of shares of our issued and outstanding Class A common stock we could repurchase with the proceeds we received from the issuance of shares under our distribution reinvestment plan prior to the expiration of the this tender offer. This tender offer was for cash at a price equal to the net offering price per share determined as of February 21, 2020 (“Purchase Price”). The offer expired at 4:00 P.M., Eastern Time, on February 19, 2020 and a total of 166,707 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased 19,743 shares validly tendered and not withdrawn at a price equal to $10.70 per share for an aggregate purchase price of approximately $211,246.
 
 On June 9, 2020, under our share repurchase program, we made an offer to purchase up to the number of shares of our issued and outstanding Class A common stock we could repurchase with the proceeds we received from the issuance of shares under our distribution reinvestment plan prior to the expiration of this tender offer. This tender offer was for cash at a price equal to the net offering price per share determined as of July 10, 2020 (“Purchase Price”). The offer expired at 4:00 P.M., Eastern Time, on July 8, 2020 and a total of 65,266 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased 28,786 shares validly tendered and not withdrawn at a price equal to $8.25 per share for an aggregate purchase price of approximately $237,488.
 
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 Special Repurchase Offer
 
 At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. Because our securities are not listed on a national securities exchange, pursuant to the requirements of the SBCA we were required to commence four repurchase offers, which we refer to as the special repurchase offer, in accordance with the requirements of Section 61(a)(2)(D)(ii) of the 1940 Act, to allow all of the former stockholders of TPIC, as of March 15, 2019 (the date of the 2019 Annual Meeting) (the “Eligible Stockholders”) to tender to us up to 100% of their shares that were held as of that date. Former stockholders of PWAY and stockholders who purchased or acquired their shares after that date were not eligible to participate in the special repurchase offer. The special repurchase offer was separate and apart from our share repurchase program discussed below.
 
 The special repurchase offer consisted of four quarterly tender offers. Each of the four tender offers that is part of the special repurchase offer allowed the Eligible Stockholders to tender for repurchase up to 25% of their shares held as of the date of the 2019 Annual Meeting.  The repurchase price for any shares tendered during the special repurchase offer was equal to the NAV per share of our common stock as of the date of each such repurchase. Each Eligible Stockholder had not less than 20 business days from the date of notice of such tender offer to elect to tender their shares back to us.
 
 The following table summarizes the shares repurchased during each tender offer period of the special repurchase offer:
 
 Special Repurchase Offer Tender PeriodShares RepurchasedDollar AmountPrice Paid per Share05/24/2019 – 06/24/201949,900$495,506$9.9309/06/2019 – 10/04/201934,489326,2629.4611/21/2019 – 12/24/201951,715460,7868.9103/12/2020 – 04/09/202052,987426,5468.05189,091$1,709,100
 
 
 Completed Share Repurchases
 
 As a result of PWAY being the accounting survivor of the Merger, PWAY and FLEX’s share repurchases for the most recent interim periods are disclosed below.
 
 Below is a summary of transactions with respect to shares of common stock during each tender offer:
 
 
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 Quarterly Offer DateRepurchase DateSharesRepurchasedPercentage of SharesTendered That WereRepurchasedRepurchase Price Per ShareAggregateConsideration forRepurchased SharesYear ended June 30, 2017September 30, 2016N/A——%$—$—December 31, 2016January 25, 2017772100%$14.00$10,803March 31, 2017April 27, 2017359100%$14.02$5,034Total for year ended June 30, 20171,131$15,837Year ended June 30, 2018June 30, 2017July 31, 20174,80161%$13.61$65,335September 30, 2017October 30, 20175,24681%$13.57$71,189December 31, 2017January 23, 20185,689100%$13.56$77,152March 31, 2018April 30, 201822,245100%$13.03$289,865Total for year ended June 30, 201837,981$503,541Year ended June 30, 2019June 30, 2018August 7, 201831,715100%Class A:$12.67Class I: $12.70$401,849September 30, 2018November 13, 201819,180100%Class A:$11.35$217,695December 31, 2018February 15, 201917,749100%Class A:$10.80$191,672June 30, 2019(*)June 27, 201949,916100%Class A:$9.93$495,169Total for year ended June 30, 2019118,560$1,306,385Year ended June 30, 2020September 30, 2019(*)October 8, 201934,489100%$9.46$326,262December 31, 2019(*)December 27, 201951,715100%$8.91460,786March 31, 2020February 21, 202019,74312%$10.70211,246March 31, 2020(*)April 14, 202052,987100%$8.05426,546Total for year ended June 30, 2020158,934$1,424,840(*)This represents a Special Repurchase Offer
 
 Recent Sales of Unregistered Securities
 
 There were no sales of unregistered securities in the year ended June 30, 2020 .
 
 Distributions
 
 As a result of PWAY being the accounting survivor of the Merger, the distributions of FLEX and PWAY are discussed below.
 
 General
 Subject to our board of directors’ sole discretion and applicable legal restrictions, our board of directors authorizes and declares a monthly distribution amount per share of our common stock. We will then calculate each stockholder’s specific distribution amount for the month using record and declaration dates, and your distributions will begin to accrue on the date we accept your subscription for shares of our common stock. From time to time, we may also pay interim distributions at the discretion of our
 
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 board of directors. Each year a statement on Internal Revenue Service Form 1099-DIV (or any successor form) identifying the source of the distribution (i.e., (i) paid from investment company taxable income, which is generally our net ordinary income plus our realized net short-term capital gains in excess of realized net long-term capital gains, (ii) paid from net capital gain, which is our realized net long-term capital gains in excess of realized net-short term capital losses, and/or (iii) a return of paid-in capital surplus, which is generally a nontaxable distribution) will be mailed to our stockholders. We can offer no assurance that we will achieve results that will permit the payment of any distributions or that our board of directors will declare any distributions.
 
 We may fund our cash distributions to stockholders from any sources of funds legally available to us, 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 expense reimbursements from our Adviser. We have not established limits on the amount of funds we may use from available sources to make distributions.
 
 It is possible that a portion of the distributions we make will represent a return of capital. A return of capital generally is a return of stockholders’ investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with our continuous public offering, including any fees payable to our Adviser. Moreover, a return of capital will generally not be taxable, but will reduce each stockholder’s cost basis in our common stock, and will result in a higher reported capital gain or lower reported capital loss when the common stock on which such return of capital was received is sold. Stockholders will be notified of the sources of our distributions (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of capital). See “Business - Certain U.S. Federal Income Tax Considerations—Taxation as a Regulated Investment Company.”
 
 We intend to make our regular distributions in the form of cash, out of assets legally available for distribution, unless stockholders elect to receive their distributions in additional shares of our common stock under our distribution reinvestment plan. Although distributions paid in the form of additional shares of common stock to stockholders who elect to participate in our dividend reinvestment plan will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, such stockholders will not receive any corresponding cash distributions with which to pay any such applicable taxes. Stockholders receiving distributions in the form of additional shares of common stock will be treated as receiving a distribution in the amount of the fair market value of our shares of common stock. If stockholders hold shares in the name of a broker or financial intermediary, they should contact such broker or financial intermediary regarding their option to elect to receive distributions in additional shares of our common stock under our distribution reinvestment plan in lieu of cash.
 
 To maintain RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary income and realized net short-term capital gain in excess of realized net long-term capital loss, if any. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute, or be deemed to distribute, during each calendar year an amount at least equal to the sum of (1) 98% of our net ordinary income for the calendar year, (2) 98.2% of our recognized capital gain in excess of recognized capital loss for the one-year period ending on October 31 of the calendar year and (3) any ordinary income or capital gains recognized, but not distributed, in preceding years and on which we paid no U.S. federal income tax. We can offer no assurance that we will achieve results that will permit the payment of any distributions and, if we issue senior securities, we will be prohibited from paying distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings. See “Business - Certain U.S. Federal Income Tax Considerations—Taxation as a Regulated Investment Company.”
 
 We have adopted an “opt in” distribution reinvestment plan for our common stockholders. As a result, if we make a distribution, then stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of our common stock.
 
 The following tables reflect the cash distributions per share that were declared and paid on common stock by FLEX and PWAY during the fiscal years ended June 30, 2020, June 30, 2019 and June 30, 2018, respectively:
 
 
 
 
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 Fiscal year 2020Record DatePayment dateFLEX Class A Common Shares, per shareFLEX Class A Common Shares, AmountJuly 5, 12, 19 and 26, 2019July 29, 20190.05240124,512August 2, 9, 16, 23 and 30, 2019September 2, 20190.06550156,184September 6, 13, 20 and 27, 2019October 3, 20190.05240125,345October 4, 11, 18 and 25, 2019October 31, 20190.05240124,308November 1, 8, 15, 22 and 29, 2019December 4, 20190.06550155,217December 6, 13, 20 and 27, 2019January 3, 20200.05240124,568January 3, 10, 17, 24 and 31, 2020February 7, 20200.06986162,910February 7, 14, 21 and 28, 2020March 6, 20200.06112143,127March 6, 13, 20 and 27, 2020April 3, 20200.06112144,513April 3, 10, 17 and 24, 2020May 1, 20200.06112146,195May 1, 8, 15, 22 and 29, 2020June 5, 20200.07640179,431June 5, 12, 19, and 26, 2020July 6, 20200.04716111,447
 The following FLEX distributions were declared on May 14, 2020:
 Record DatePayment dateAmount per FLEX Class A Common SharesJuly 6, 10, 17, 24 and 31, 2020August 7, 2020$0.05895August 7, 14, 21 and 28, 2020September 4, 2020$0.04716
 
 PWAY (Accounting Survivor) – Pre-Merger
 
 The following tables reflect the distributions per share that PWAY declared and paid or were payable to its stockholders during the nine months period ended March 31, 2019. Stockholders of record as of each respective record date were entitled to receive the distribution.
 
 For the Year EndedPer Class A Share(a)PWAY Class A Common Shares, AmountPer Class I Share(a)PWAY Class I Common Shares, AmountFiscal 2019July 5, 12, 19 and 26, 2018$0.06392$40,009$0.06404$2,115August 2, 9, 16, 23 and 30, 2018$0.06405$38,180$0.06415$2,098September 6, 13, 20 and 27, 2018$0.06076$36,312$0.06092$1,994October 4, 11, 19 and 26, 2018$0.05960$35,707$0.05976$1,957November 1, 8, 15, 23 and 29, 2018$0.05925$34,900$0.05940$1,946December 6, 14, 21 and 28, 2018$0.05460$31,826$0.05476$1,794January 3, 10, 17, 24 and 31, 2019$0.05035$29,431$0.05048$1,655February 1, 8, 15 and 22, 2019$0.05300$30,573$0.05314$1,744March 1, 8, 15, 22 and 28, 2019$0.05385$30,658$0.05400$1,772
 (a)Total amount per share represents the total distribution rate for the record dates indicated.
 
 The following tables reflect the distributions per share that PWAY declared and paid or were payable to its stockholders duringthe fiscal years ended June 30, 2018. Stockholders of record as of each respective record date were entitled to receivehe distribution.
 
 
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 For the Year EndedPer Class A Share(a)Per Class I Share(a)Distribution AmountFiscal 2018July 7, 14, 21 and 28, 2017$0.07088$0.07088$44,525August 4, 11, 18 and 25, 2017$0.07088$0.0708844,974September 1, 8, 15, 22 and 29, 2017 (b)$0.08860$0.0886056,963October 6, 13, 20 and 27, 2017$0.07088$0.0708846,861November 2, 9, 16 and 25, 2017$0.07088$0.0708846,902November 30, 2017, December 7, 14, 21 and 28, 2017(b)$0.07825$0.0782552,121January 4, 11, 18 and 25, 2018$0.06224$0.0622441,850February 1, 8, 15 and 22, 2018$0.06880$0.0688045,786March 1, 8, 15, 22 and 29, 2018$0.08365$0.0837056,049April 5, 12, 19 and 26, 2018$0.06580$0.0658544,514May 3, 10, 17 and 24, 2018$0.06500$0.0651042,632May 31, 2018, June 7, 14, 21 and 28, 2018$0.06475$0.0648542,568Total declared and distributed for the year ended June 30, 2018$565,745
 
 
 The tax character of PWAY’s distributions declared and paid to its stockholders during the nine months ended March 31, 2019 and fiscal years ended June 30, 2018, 2017 and 2016 were as follows:
 
 Nine Month Ended March 31, 2019Year Ended June 30, 2018Year Ended June 30, 2017Year Ended June 30, 2016Source of DistributionDistribution AmountPercentageDistribution AmountPercentageDistribution AmountPercentageDistribution AmountPercentageOrdinary income$23,7327%$——%$——%$——%Capital gain——%161,75328.6%——%——%Return of capital300,90793%403,76671.4%504,515100%279,850100%$324,639100%$565,519100%$504,515100%$279,850100%
 
 For income tax purposes, dividends paid and distributions made to shareholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of dividends paid to shareholders during the tax years ended December 31, 2019 was as follows:
 
 Unaudited TPICJanuary 1, 2019 - March 31, 2019Unaudited FLEXApril 1, 2019 - December 31, 2019Unaudited Twelve Months Ended December 31, 2019Ordinary income$48,359$—$48,359Return of capital113,9751,221,1011,335,076Total$162,334$1,221,101$1,383,435
 
 For the tax year ending December 31, 2019, the tax character of dividends paid to shareholders through June 30, 2020 is expected to be $48,359 ordinary income and $1,335,076 return of capital. However, due to the difference between our fiscal and tax year ends, the final determination of the tax character of dividends between ordinary income, capital gains and return of capital will not be made until we file our tax return for the tax year ending December 31, 2019.
 
 
 Item 6. Selected Financial Data
 
 
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 The following selected financial data for the year ended June 30, 2020 reflects FLEX's financial data for the twelve months then ended. The following selected financial data for the year ended June 30, 2019 reflects nine month's of PWAY's financial data and three months of FLEX financial data. The following selected financial data for the years ended June 30, 2018, 2017, 2016 and 2015 is all derived from PWAY’s financial statements. PWAY has omitted selected financial data for the period from September 2, 2014 (date of effectiveness) to June 30, 2015 because PWAY had not met its minimum offering requirement and had not commenced investment operations during such period. PWAY is the accounting survivor in connection with the Merger and its historical financial statements will be included in the reports that FLEX files with the SEC following the Merger. PWAY’s fiscal year end was June 30 and as a result of it being the accounting survivor, FLEX’s fiscal year end is also June 30 following the Merger. The following selected financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and financial statements and notes thereto contained in “Item 8. Financial Statements and Supplementary Data” of this report. Historical data is not necessarily indicative of the results to be expected for any future period.
 
 The selected financial data and other financial information regarding PWAY contained in this annual report on Form 10-K reflect PWAY’s status as an interval fund and not as a business development company. Because of this and other factors discussed in this annual report on Form 10-K, the historical financial information of PWAY is not necessarily indicative or predictive of the future financial results of FLEX following the Merger.
 
 Year Ended June 30,Statements of operations data:20202019201820172016Total investment income$3,342,618$1,410,726$1,298,317$1,179,924$536,609Total operating expenses3,484,0402,943,9311,984,8801,655,3971,318,664Less: Expense reimbursement from sponsor(708,464)(309,881)(1,205,356)(865,348)(1,196,002)Waiver of organization costs paid by the Adviser—(1,492,252)———Net operating expenses2,775,5761,141,798779,524790,049122,662Net investment income (loss)$567,042$268,928$518,793$389,875$413,947Total net realized and unrealized gain (loss) on investments$(2,884,692)$(1,052,816)$(523,918)$375,807$(9,428)Net increase (decrease) in net assets resulting from operations$(2,317,650)$(783,888)$(5,125)$765,682$404,519Per share data (PWAY Class R, Class RIA and Class I)(5):NAV (at period end)N/AN/AN/A$13.53$12.81Net investment income (loss)(1)N/AN/AN/A$0.71$1.21Net realized and unrealized (loss) gain (1)N/AN/AN/A$0.68$(0.03)Net increase in net assets resulting from operations (1)N/AN/AN/A$1.39$1.18Return of capital distributions to stockholders(2)N/AN/AN/A$(0.92)$(0.75)Offering costs(1)N/AN/AN/A$0.03$(0.62)Other(3)N/AN/AN/A$0.22$(0.8)Per share data (PWAY Class A)(5)(6):NAV (at period end)N/AN/A$12.71N/AN/ANet investment income (loss)(1)N/AN/A$0.79N/AN/ANet realized and unrealized (loss) gain (1)N/AN/A$(0.80)N/AN/ANet increase in net assets resulting from operations (1)N/AN/A$(0.01)N/AN/A
 
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 Return of capital distributions to stockholders(2)N/AN/A$(0.86)N/AN/AOffering costs(1)N/AN/AN/AN/AN/AOther(3)N/AN/A$0.05N/AN/APer share data (PWAY Class I)(5)(6):NAV (at period end)N/AN/A$12.73N/AN/ANet investment income (loss)(1)N/AN/A$0.81N/AN/ANet realized and unrealized (loss) gain (1)N/AN/A$(0.79)N/AN/ANet increase in net assets resulting from operations (1)N/AN/A$0.02N/AN/AReturn of capital distributions to stockholders(2)N/AN/A$(0.86)N/AN/AOffering costs(1)N/AN/AN/AN/AN/AOther(3)N/AN/A$0.04N/AN/APer share data (FLEX Class A)(8):NAV (at period end)$8.28$9.88N/AN/AN/ANet investment income (loss)(1)$0.24$0.91N/AN/AN/ANet realized and unrealized (loss) gain (1)$(1.22)$(1.11)N/AN/AN/ANet increase in net assets resulting from operations (1)$(0.98)$(0.20)N/AN/AN/AReturn of capital distributions to stockholders(2)$(0.57)$(0.54)N/AN/AN/ADividends from net investment income(2)$(0.15)$(0.03)Offering costs(1)$—$0.61N/AN/AN/AOther(3)$0.10$0.15N/AN/AN/AStatements of Assets and Liabilities data:Total investment portfolio$36,663,703$24,019,563$10,940,179$12,060,436$8,378,866Total assets41,900,95333,058,83711,921,18213,074,6668,865,053Credit Facility payable21,000,0005,500,0001,350,0002,625,0001,250,000Total liabilities22,342,5539,648,1223,568,0184,668,9222,888,698Total net assets$19,558,400$23,410,715$8,353,164$8,405,744$5,976,355Other data:Total return for PWAY Class R, RIA and I(4)(7)N/AN/AN/A13.2%(1.75)%Total return for PWAY Class A(4)(5)(6)N/AN/A0.18%N/AN/ATotal return for PWAY Class I(4)(5)(6)N/AN/A0.33%N/AN/ATotal return for FLEX Class A(8)7.52%N/AN/AN/A
 
 (1) Calculated based on weighted average shares outstanding.
 
 (2) The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the last twelve months. Distributions per share are rounded to the nearest $0.01.
 
 
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 (3) The amount shown represents the balancing figure derived from the other figures in the schedule and is primarily attributable to the accretive effects from the sales of PWAY’s shares and the effects of share repurchases during the last twelve months.
 
 (4) Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the period and assumes that distributions are reinvested in accordance with PWAY’s distribution reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since PWAY’s shares are not publicly traded.
 
 (5) On October 31, 2017, PWAY converted to an interval fund. As such, all Class R shares were converted to PWAY Class A Shares and all Class I and Class RIA shares were converted to PWAY Class I Shares.
 
 (6) The per share data and total return include the shareholder activity prior to PWAY’s conversion to an interval fund. PWAY Class A Shares include the activity for Class R shares prior to such conversion and PWAY Class I Shares include activity for PWAY Class I Shares and Class RIA shares prior to such conversion.
 
 (7) PWAY has omitted the financial highlights for the period from September 2, 2014 (date of effectiveness) to June 30, 2015 since PWAY had not met its minimum offering requirement and had not commenced investment operations during such period.
 
 (8) Data presented includes the shareholder activity of PWAY Class A and Class I shares prior to the merger and conversion into shares of the Company.
 
 
 
 
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 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this annual report on Form 10-K (the "Annual Report"). In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking information that involves risks and uncertainties. Our actual results may differ significantly from any results expressed or implied by these forward-looking statements due to the factors discussed in Part I, “Item 1A. Risk Factors” and “Forward-Looking Statements” appearing elsewhere herein.
 
 The terms “FLEX,” “the Company,” “we,” “us” and “our” mean Prospect Flexible Income Fund, Inc. (formerly known as TP Flexible Income Fund, Inc.) unless the context specifically requires otherwise.
 
 Overview
 We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to generate current income and, as a secondary objective, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. We intend to meet our investment objective by primarily lending to and investing in the debt of privately-owned U.S. middle market companies, which we define as companies with annual revenue between $50 million and $2.5 billion. We have elected and intend to continue to qualify annually to be taxed for U.S. federal income tax purposes as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code").
 On March 31, 2019, Pathway Capital Opportunity Fund, Inc. (“PWAY”) merged with and into us (the “Merger”).  As the combined surviving company, we were renamed as TP Flexible Income Fund, Inc. (we were formerly known as Triton Pacific Investment Corporation, Inc. (“TPIC”)).  In connection with the Merger, Prospect Flexible Income Management, LLC (the "Adviser"), an affiliate of PWAY, became our investment adviser, and Prospect Administration LLC (the "Administrator" or "Prospect Administration"), an affiliate of the Adviser, became our administrator. Although PWAY merged with and into us, PWAY is considered the accounting survivor of the Merger and its historical financial statements are included and discussed herein and in other applicable reports that we file with the SEC.
 
 On and effective August 5, 2020, we changed our name to Prospect Flexible Income Fund, Inc. from TP Flexible Income Fund, Inc. by filing Articles of Amendment to our Fourth Articles of Amendment and Restatement, as amended and supplemented.
 
 We have engaged Triton Pacific Securities, LLC (the "Dealer Manager") to serve as the dealer manager for our offering. The dealer manager is not required to sell any specific number or dollar amount of shares but will use its best efforts to sell the shares offered.
 
 We are offering for sale a maximum amount of $300,000,000 our shares of common stock on a "best efforts" basis. We are currently offering to sell our Class A Shares up to the maximum offering amount, at an offering price of $9.03 per Class A Share. As of August 27, 2020 , we have sold a total of 2,367,478 shares of common stock, including 198,792 shares issued pursuant to our distribution reinvestment plan, for gross proceeds of approximately $31,652,992 , including the reduction due to ( $2,761,851 ) in shares repurchased pursuant to the Company’s share repurchase program and 14,815 shares of common stock sold to Triton Pacific Adviser, LLC, our former investment adviser (the “Former Adviser”) in exchange for gross proceeds of $200,003. As a result of the Merger, the Company issued 775,193 shares.
 
 On March 11, 2020, the World Health Organization declared the Wuhan Virus a global pandemic and recommended containment and mitigation measures worldwide. As of the year ended  June 30, 2020 , and subsequent to June 30, 2020 , the Wuhan Virus pandemic has had a significant impact on the U.S. and global economy and on us. We have experienced an increase in unrealized depreciation of our investment portfolio due to decreases in fair value of its investments attributable to the impact of the Wuhan Virus pandemic on the markets.
 
 The extent of the impact of the Wuhan Virus pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy, all of which are highly uncertain and cannot be predicted. To the extent our portfolio companies are adversely impacted by the effects of the Wuhan Virus pandemic, it may have a material adverse impact on its future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of our portfolio companies.
 Our Adviser
 
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 Our Adviser is a Delaware limited liability company and is registered as an investment adviser under the Advisers Act. Our Adviser is controlled by Prospect Capital Management, who owns a majority of its voting units. Mr. Eliasek is the principal officer of the Adviser.
 
 Fourth Quarter Highlights
 Investment Transactions
 We seek to be a long-term investor with our portfolio companies. During the three months and twelve months ended June 30, 2020 , we purchased investment securities (excluding short-term securities) of $1,675,000 and $23,678,340, respectively. During the same three month and twelve month period, sales and redemptions of investment securities (excluding short-term securities) were $2,286,635 and $8,271,306, respectively, resulting in a total net portfolio decline of ($611,634) for the three months ended June 30, 2020 and a total net portfolio growth of $15,407,034 for the twelve months ended June 30, 2020 .
 Debt Issuances and Redemptions
 During the three months and twelve months ended June 30, 2020 , we drew an additional $0 and $15,500,000, respectively, on our Credit Facility (as defined herein) for a total of $21,000,000 outstanding on our credit facility as of June 30, 2020 . See "Credit Facility".
 On March 12, 2020, we made an offer to the Eligible Stockholders as part of the Special Repurchase Offer (the "Offer") to purchase up to 402,917.5 shares of the Company’s issued and outstanding Class A common stock, par value $0.001 per share, at a price equal to the net asset value per share determined as of April 14, 2020.  The Offer expired at 4:00 P.M., Eastern Time, on April 9, 2020 and a total of 52,987 shares were validly tendered and not withdrawn pursuant to the Offer. In accordance with the terms of the Offer, the Company purchased all of the shares validly tendered and not withdrawn at a price equal to $8.05 per share for an aggregate purchase price of approximately $ 426,546 .
 On June 9, 2020, under our share repurchase program, we made an  offer to purchase (the "Tender Offer") up to the number of shares of our issued and outstanding Class A common stock we can repurchase with the proceeds we receive from the issuance of shares under our distribution reinvestment plan prior to the expiration of the Tender Offer. The Tender Offer is for cash at a price equal to the net offering price per share determined as of July 10, 2020 (“Purchase Price”). The offer expired at 4:00 P.M., Eastern Time, on July 8, 2020 and a total of 65,266 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased 28,786 shares validly tendered and not withdrawn at a price equal to $8.25 per share for an aggregate purchase price of approximately $237,488.
 Equity Issuances
 As part of the dividend reinvestment plan, we issued 7,087, 7,095 and 11,449 shares of our common stock on April 3, 2020, May 1, 2020 and June 5, 2020, respectively. On July 6, 2020 we issued 7,120 shares of our common stock in connection with the dividend reinvestment plan for June 2020 distributions.
 Investments
 We intend to primarily lend to and invest in the debt of privately-owned U.S. middle market companies. We may on occasion invest in smaller or larger companies if an attractive opportunity presents itself, especially when there are dislocations in the capital markets. We expect to focus primarily on making investments in syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt, of middle market companies in a broad range of industries. Syndicated secured loans refer to commercial loans provided by a group of lenders that are structured, arranged, and administered by one or several commercial or investment banks, known as arrangers. These loans are then sold (or syndicated) to other banks or institutional investors. Syndicated secured loans may have a first priority lien on a borrower’s assets (i.e., senior secured first lien loans), a second priority lien on a borrower’s assets (i.e., senior secured second lien loans), or a lower lien or unsecured position on the borrower’s assets (i.e., subordinated debt). We expect our target credit investments will typically have initial maturities between three and ten years and generally range in size between $1 million and $100 million, although the investment size will vary with the size of our capital base. We expect that the majority of our debt investments will bear interest at floating interest rates, but our portfolio may also include fixed-rate investments. We also expect to make our investments directly through the primary issuance by the borrower or in the secondary market.
 We will generally source our investments primarily through our Adviser. We believe the investment management team of our Adviser has a significant amount of experience in the credit business, including originating, underwriting, principal investing and loan structuring. Our Adviser, through Prospect Capital Management, has access to 95 professionals, 42 of whom perform investment advisory functions.
 
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 We expect to dynamically allocate our assets in varying types of investments based on our analysis of the credit markets, which may result in our portfolio becoming more concentrated in particular types of credit instruments (such as senior secured loans) and less invested in other types of credit instruments. The loans in which we intend to invest are often rated by a nationally recognized ratings organization, and generally carry a rating below investment grade (rated lower than “Baa3” by Moody’s Investors Service or lower than “BBB-” by Standard & Poor’s Corporation - also known as “high yield” or “junk bonds”). However, we may also invest in non-rated debt securities.
 To seek to enhance our returns, we may employ leverage as market conditions permit and at the discretion of our Adviser, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act.
 As part of our investment objective to generate current income, we expect that at least 70% of our investments will consist primarily of syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt. We expect that up to 30% of our investments will consist of other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of collateralized loan obligations ("CLOs"), which we also refer to as subordinated structured notes ("SSNs"). The senior secured loans underlying our CLO investments are expected typically to be BB or B rated (non-investment grade, which are often referred to as “high yield” or “junk”) and in limited circumstances, unrated, senior secured loans.
 As a BDC, we are subject to certain regulatory restrictions in making our investments. For example, we have in the past and expect in the future to co-invest on a concurrent basis with certain affiliates, consistent with applicable regulations and our allocation procedures. On January 13, 2020, the parent company of the Adviser received an exemptive order from the SEC granting the ability to negotiate terms, other than price and quantity, of co-investment transactions with other funds managed by our Adviser or certain affiliates, including us, Prospect Capital Corporation and Priority Income Fund, Inc., subject to certain conditions included therein. Under the terms of the Order permitting us to co-invest with other funds managed by our Adviser or its affiliates, a majority of our independent directors who have no financial interest in the transaction must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, 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 objective and strategies. The Order also imposes reporting and record keeping requirements and limitations on transactional fees. We may only co-invest with certain entities affiliated with our Adviser in negotiated transactions originated by our Adviser or its affiliates in accordance with such Order and existing regulatory guidance. See Note 4 of the Consolidated Financial Statements. These co-investment transactions may give rise to conflicts of interest or perceived conflicts of interest among us and the other participating accounts. To mitigate these conflicts, our Adviser and its affiliates will seek to allocate portfolio transactions for all of the participating investment accounts, including us, on a fair and equitable basis, taking into account such factors as the relative amounts of capital available for new investments, the applicable investment programs and portfolio positions, the clients for which participation is appropriate and any other factors deemed appropriate. We intend to make all of our investments in compliance with the 1940 Act and in a manner that will not jeopardize our status as a BDC or RIC.
 As a BDC, we are permitted under the 1940 Act to borrow funds to finance portfolio investments. To enhance our opportunity for gain, we intend to employ leverage as market conditions permit. At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. As a result, we are allowed to increase our leverage capacity effective as of March 16, 2019. The use of leverage, although it may increase returns, may also increase the risk of loss to our investors, particularly if the level of our leverage is high and the value of our investments declines.
 Revenues
 We generate revenue in the form of dividends, interest and capital gains on the debt securities, equity interests and CLOs that we hold. In addition, we may generate revenue from our portfolio companies in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees will be recognized as earned.
 Expenses
 Our primary operating expenses will be the payment of advisory fees and other expenses under the Investment Advisory Agreement with the Adviser (the "Investment Advisory Agreement"). The advisory fees will compensate our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.
 We will bear all other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:
 •corporate and organizational expenses relating to offerings of our common stock, subject to limitations included in the investment advisory and management services agreement; 
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 •the cost of calculating our net asset value, including the cost of any third-party valuation services; •the cost of effecting sales and repurchase of shares of our common stock and other securities; •investment advisory fees; •fees payable to third parties relating to, or associated with, making investments and valuing investments, including fees and expenses associated with performing due diligence reviews of prospective investments; •transfer agent and custodial fees; •fees and expenses associated with marketing efforts; •federal and state registration fees; •federal, state and local taxes; •independent directors’ fees and expenses; •costs of proxy statements, stockholders’ reports and notices; •fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums; •direct costs such as printing, mailing, long distance telephone, and staff; •fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act; •costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; •brokerage commissions for our investments; •legal, accounting and other costs associated with structuring, negotiating, documenting and completing our investment transactions; •all other expenses incurred by our Adviser, in performing its obligations, subject to the limitations included in the Investment Advisory Agreement; and •all other expenses incurred by either our Administrator or us in connection with administering our business, including payments to our Administrator under the Administration Agreement (as defined herein) that will be based upon our allocable portion of its overhead and other expenses incurred in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our chief executive officer, chief compliance officer and chief financial officer and their respective staffs. Reimbursement of our Administrator for Administrative Services
 We will reimburse our Administrator for the administrative expenses necessary for its performance of services to us. Such costs will be reasonably allocated to us on the basis of assets, revenues, time records or other reasonable methods. However, such reimbursement is made in an amount equal to the lower of the Administrator’s actual costs or the amount that we would be required to pay for comparable administrative services in the same geographic location. We will not reimburse our Administrator for any services for which it receives a separate fee or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a controlling person of our Administrator.
 Merger
 Effective March 31, 2019, TPIC and PWAY entered into a tax free business combination. Concurrent with the Merger, TPIC, the legal acquirer, was renamed Prospect Flexible Income Fund, Inc. (formerly known as TP Flexible Income Fund, Inc.) As a result of the Merger the Company issued 775,193 shares of the Company’s common stock to the former shareholders of PWAY and all shares of PWAY were retired.
 For financial reporting purposes, the Merger was treated as a recapitalization of PWAY followed by the reverse acquisition of TPIC by PWAY for a purchase price equivalent to the fair value of TPIC’s net assets.
 Consistent with tax free business combinations of investment companies, for financial reporting purposes, the reverse merger accounting was recorded at fair value; however, the cost basis of the investments received from TPIC was carried forward to align ongoing financial reporting of the Company’s realized and unrealized gains and losses with amounts distributable to shareholders
 
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 for tax purposes. Further, the components of net assets of the Company reflect the combined components of net assets of both PWAY and TPIC.
 In accordance with the accounting and presentation for reverse acquisitions, the historical financial statements of the Company, prior to the date of the Merger reflect the financial positions and results of operations of PWAY, with the results of operations of TPIC being included commencing on April 1, 2019. Effective with the completion of the Merger, TPIC, changed its fiscal year end to be the last day of June consistent with PWAY’s fiscal year.
 In the Merger, common shareholders of PWAY received newly-issued common shares in the Company having an aggregate net asset value equal to the aggregate net asset value of their holdings of PWAY Class A and/or PWAY Class I common shares, as applicable, as determined at the close of business on March 27, 2019, as permitted by the Merger Agreement. The differences in net asset value between March 27, 2019 and March 31, 2019 were not material. Relevant details pertaining to the Merger are as follows:
 NAV/Share($)Conversion RatioTriton Pacific Investment Corporation, Inc.$10.48N/APathway Capital Opportunity Fund, Inc.: Class A$13.461.2848Pathway Capital Opportunity Fund, Inc.: Class I$13.501.2884
 Investments
 The cost, fair value and net unrealized appreciation (depreciation) of the investments of TPIC as of the date of the Merger, was as follows:
 TPICCost of investments$12,106,879Fair value of investments11,431,241Net unrealized appreciation (depreciation) on investments$(675,638)
 
 Common Shares
 
 The common shares outstanding, net assets applicable to common shares and NAV per common share outstanding immediately before and after the Merger were as follows:
 Accounting Acquirer - Prior to MergerPWAYClass APWAYClass ICommon shares outstanding570,43132,834Net assets applicable to common shares$7,679,839$443,296NAV per common share$13.46$13.50Legal Acquiring Fund - Prior to MergerTPICCommon shares outstanding1,614,221Net assets applicable to common shares$16,915,592NAV per common share$10.48Legal Acquiring Fund - Post MergerFLEXCommon shares outstanding2,403,349Net assets applicable to common shares$25,086,682NAV per common share$10.44
 Cost and Expenses
 In connection with the Merger, PWAY incurred certain associated costs and expenses of approximately $731,000, of which $709,000 of these costs and expenses were expensed by PWAY and $22,000 were expensed by the Company. In connection with the Merger, TPIC incurred certain associated costs and expenses of approximately $682,000, of which $636,000 were expensed by TPIC and $46,000 were expensed by the Company.
 
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 Purchase Price Allocation
 PWAY as the accounting acquirer acquired 32% of the voting interests of TPIC. The below table summarizes the purchase price allocation from TPIC:
 PWAY as acquirerValue of Common Stock Issued$17,052,546Assets acquired:Investments11,431,241Cash and cash equivalents5,055,456Other assets607,163Total assets acquired17,093,860Total liabilities assumed41,314Net assets acquired17,052,546Total purchase price$17,052,546
 
 Portfolio and Investment Activity
 During the three months and twelve months ended June 30, 2020 , we purchased investment securities (excluding short-term securities) of $1,675,000 and $23,678,340, respectively. During the same three month and twelve month period, sales and redemptions of investment securities (excluding short-term securities) were $2,286,635 and $8,271,306, respectively, resulting in a total net portfolio decline of ($611,634) for the three months ended June 30, 2020 and a total net portfolio growth of $15,407,034 for the twelve months ended June 30, 2020 . As of June 30, 2020 , our investment portfolio, with a total fair value of $36,663,703 , consisted of interests in 54 investments (82% in senior secured loans, 2% in senior secured notes, 2% in equity/other and 14% in CLO - subordinated notes). During the three months and twelve months ended June 30, 2020 , the investment activity continued to focus on repositioning the portfolio as a result of the Merger.
 During the year ended June 30, 2020, the U.S. loan market exhibited a heightened level of volatility. While U.S. loan prices remained relatively stable throughout February 2020, the increasingly negative sentiment associated with the economic ramifications of the rapid spread of Wuhan Virus led to a precipitous decline in U.S. loan prices in the quarter ended March 31, 2020. During quarter end June 30, 2020, U.S. loan prices rebounded and as a result, our portfolio increased in value during the three months ended June 30, 2020.
 
 During the fiscal year ended June 30, 2019, purchases of investment securities (excluding short-term securities) were $12,454,720. During the same period, sales and redemptions of investment securities (excluding short-term securities) were $9,854,278. As of June 30, 2019, our investment portfolio, with a total fair value of $24,019,563, consisted of interests in 53 investment companies (76% in senior secured bonds, 2% in senior secured notes, 2% in equity/other and 20% in CLO - subordinated notes). In connection with the Merger, the Company expected to have its portfolio repositioned, including by selling portfolio investments that were not “qualifying assets” under the 1940 Act, for cash and re-investing such proceeds in assets that were “qualifying assets” under the 1940 Act and consistent with the Company’s investment strategy. As of June 30, 2019, a substantial amount of such portfolio repositioning had been completed by the Company.
 Portfolio Holdings
 As of June 30, 2020 , our investment portfolio, with a total fair value of $ 36,663,703 , consisted of interests in 27 portfolio companies and 24 structured subordinated notes. The following table presents certain selected information regarding our portfolio composition and weighted average yields as of June 30, 2020 and June 30, 2019 :
 
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 As of June 30, 2020As of June 30, 2019Amortized CostFair ValueAs Percent of Total Fair ValueAmortized CostFair ValueAs Percent of Total Fair ValueSenior Secured Loans-First Lien$29,307,625$28,653,56178%$15,911,289$15,825,87066%Senior Secured Loans-Second Lien1,558,0721,213,1484%2,790,5772,505,22710%Equity/Other681,111786,9882%681,111570,8162%Senior Secured Notes955,986811,2672%444,957402,1632%Structured subordinated notes6,372,1195,198,73914%5,070,4364,715,48720%Total$38,874,913$36,663,703100%$24,898,370$24,019,563100%Number of portfolio companies2736Number of Structured subordinated notes2417% Variable Rate (based on fair value)(1)98%98%% Fixed Rate (based on fair value)(1)2%2%% Weighted Average Yield Variable Rate (based on principal outstanding)(1)(2)7%11%% Weighted Average Yield Fixed Rate (based on principal outstanding)(1)14%12%% Weighted Average Yield on Structured Subordinated Notes (based on cost)16%18%% Weighted Average Yield on Fixed Rate Debt, Variable Rate Debt and Structured Subordinated Notes (based on cost)(3)8%11%(1)The interest rate by type information is calculated using the Company’s debt portfolio and excludes equity investments.(2)The interest rate by type information is calculated using the Company’s debt portfolio and excludes structured subordinated notes.(3)The interest rate by type information is calculated excluding the Company’s equity investments.
 
 
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 The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2020 and June 30, 2019 :
 June 30, 2020IndustryInvestments at Amortized CostPercentage of PortfolioInvestments at Fair ValuePercentage of PortfolioStructured Finance$6,372,11916%$5,198,73914%Healthcare & Pharmaceuticals4,559,17012%4,911,75513%Services: Consumer4,684,68412%4,589,76813%High Tech Industries4,552,86612%4,508,94812%Telecommunications3,747,85210%3,580,44210%Media: Broadcasting & Subscription2,193,5886%2,031,5886%Services: Business1,980,9645%1,960,8505%Wholesale1,965,1375%1,807,7785%Construction & Building1,730,6004%1,644,0705%Media: Diversified and Production1,574,1654%1,644,0004%Transportation: Cargo1,469,0434%1,469,6474%Financial955,9862%811,2672%Consumer goods: Durable736,4902%705,2872%Banking, Finance, Insurance & Real Estate663,3052%663,3052%Beverage, Food & Tobacco480,7441%436,6731%Energy: Oil & Gas495,8431%365,0001%Media: Advertising, Printing & Publishing493,8601%332,8121%Retail218,4971%1,7740%Total$38,874,913100%$36,663,703100%June 30, 2019IndustryInvestments at Amortized CostPercentage of PortfolioInvestments at Fair ValuePercentage of PortfolioStructured Finance$5,070,43620%$4,715,48720%High Tech Industries3,978,29416%3,960,67115%Healthcare & Pharmaceuticals2,896,43112%2,975,99612%Services: Business2,800,94511%2,780,78812%Media: Broadcasting & Subscription1,718,6097%1,675,6947%Hotel, Gaming & Leisure1,329,6265%1,138,3415%Services: Consumer1,079,9414%1,100,0935%Media: Advertising, Printing & Publishing976,5094%947,1424%Retail1,146,3775%905,0204%Beverage, Food & Tobacco483,9712%498,6882%Transportation: Cargo496,2762%497,1812%Automotive493,9112%496,2262%Consumer500,0002%496,1342%Media: Diversified & Production489,5132%489,6852%Telecommunications497,5132%479,0042%Energy: Oil & Gas495,0612%461,2502%Financial444,9572%402,1632%Total$24,898,370100%$24,019,563100%
 We do not “control” any of our portfolio companies, as defined in the 1940 Act. We are an affiliate of Injured Workers Pharmacy, LLC (held through ACON IWP Investors I, L.L.C.). In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.
 
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 The following table shows the composition of our investment portfolio by level of control as of June 30, 2020 and June 30, 2019 :
 June 30, 2020June 30, 2019Level of ControlCost% of PortfolioFair Value(1)% of PortfolioCost% of PortfolioFair Value% of PortfolioAffiliate$472,3571%$786,9882%$472,3572%$570,8162%Non-Control/Non-Affiliate38,402,55699%35,876,71598%24,426,01398%23,448,74798%Total Investments$38,874,913100%$36,663,703100%$24,898,370100%$24,019,563100%(1) As of June 30, 2020, the fair value of our investments was negatively impacted by the uncertainty surrounding the impact of the Wuhan Virus pandemic. For more information, see “Valuation of Portfolio Investments”.
 
 
 Results of Operations
 Investment Income
 For the years ended June 30, 2020, 2019 and 2018 we generated $ 3,342,618 , $ 1,410,726 and $ 1,298,317 , respectively, in investment income in the form of interest and fees earned on our debt portfolio. Such revenues were primarily cash income and non-cash portions related to the accretion of discounts.
 For the year ended  June 30, 2020 , PIK interest included in interest income totaled $10,273. There was no PIK interest for the years ended June 30, 2019 and 2018 . Investment income for the years ended June 30, 2020 and 2019, increased due to the increase in assets and investments as a result of the Merger.
 Operating Expenses
 Total operating expenses before expense limitation support and waiver of offering costs totaled $ 3,484,040 , $ 2,943,931 and $ 1,984,880 for the years ended June 30, 2020, 2019 and 2018 respectively. These operating expenses consisted primarily of interest and credit facility expense, amortization of offering costs, base management fees, administrator costs, legal expense, audit and tax expense, and adviser shared service expense.
 The base management fees for the years ended June 30, 2020, 2019 and 2018 respectively, were $ 708,464 , $ 281,078 and $ 264,101 . The base management fees for the the years ended June 30, 2020 and 2019, increased as a result of the increase in assets as a result of the Merger.
 The interest and credit facility expense for the years ended June 30, 2020, 2019 and 2018 respectively, were $ 603,263 , $ 58,638 and $ 67,195 .
 The amortization of offering costs for the years ended June 30, 2020, 2019 and 2018 respectively, were $ 575,073 , $ 165,517 and $ 358,608 . The increase in offering costs was driven by the increased marketing efforts as a result of the Merger.
 The Adviser shared service expense for the years ended June 30, 2020, 2019 and 2018 respectively, were $ 0 , $ 19,028 and $ 216,184 .
 The legal expenses for the years ended June 30, 2020, 2019 and 2018 respectively, were $ 175,811 , $ 833,849 and $ 49,565 . The legal expenses for the year ended  June 30, 2019 were higher due to the costs incurred in order to close the Merger.
 Pursuant to the expense limitation support payment (discussed below), the sponsor reimbursed the Company $ (708,464) , $ (309,881) and $ (748,696) for the years ended June 30, 2020, 2019 and 2018 respectively.
 
 Net Investment Income
 Our net investment income totaled $ 567,042 , $ 268,928 and $ 518,793 for the years ended June 30, 2020, 2019 and 2018 respectively.
 Net Realized Gains/Losses from Investments
 We measure realized gains or losses by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized.
 For the years ended June 30, 2020, 2019 and 2018 respectively, we received proceeds from sales and repayments on unaffiliated investments of $8,271,306, $9,854,278 and $5,320,764, from which we realized gains (losses) of $ (1,552,290) , $(1,202,884) and $181,008.
 
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 Net Unrealized Gains/Losses on Investments
 Net change in unrealized gains (losses) on investments reflects the net change in the fair value of our investment portfolio. For the years ended June 30, 2020, 2019 and 2018 respectively, net change in unrealized gains (losses) totaled $ (1,332,402) , $ 150,069 and $ (704,926) , respectively. For the year ended June 30, 2020, the fair value of our investments was negatively impacted by the uncertainty surrounding the impact of the Wuhan Virus pandemic and its effect on market yields and fundamental portfolio company performance. For more information, see “Valuation of Portfolio Investments”.
 Financial Condition, Liquidity and Capital Resources
 We will generate cash primarily from the net proceeds of our offering, and from cash flows from fees (such as management fees), interest and dividends earned from our investments and principal repayments and proceeds from sales of our investments. Our primary use of funds will be investments in companies, and payments of our expenses and distributions to holders of our common stock.
 We believe that our current cash on hand and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations. This "Financial Condition, Liquidity and Capital Resources" section should be read in conjunction with Wuhan Virus Pandemic under the "Recent Developments" section below.
 The offering of our common stock represents a continuous offering of our shares. The initial offering of our common stock commenced on September 4, 2012 and terminated on March 1, 2016. On March 17, 2016, we commenced the follow-on offering of our common stock, which follow-on offering is currently ongoing. We intend to file post-effective amendments to our registration statement to allow us to continue our offering for three years. On September 26, 2019, we filed with  the SEC an amendment to our registration statement, which was declared effective September 26, 2019, in order to continue our continuous public offering of our shares.
 The Dealer Manager is not required to sell any specific number or dollar amount of shares but will use its best efforts to sell the shares offered. The minimum investment in shares of our common stock is $5,000.
 On May 14, 2020, the Company decreased its offering price from $11.38 per share to $8.78 per share. The decrease in the offering price is effective for all closings occurring on or after May 15, 2020. We will sell our shares on a continuous basis at a price of $8.78 per share. On August 12, 2020, our Board of Directors determined to change the public offering price per share of our Class A shares of common stock from $8.78 per share to $9.03 per share. The change in the public offering price will be effective as of August 12, 2020 and first applied to subscriptions in good order received on or after August 12, 2020. In addition, on August 26, 2020 , the Company increased its offering price from $9.03 per share to $9.33 per share. The increase in the offering price is effective for all closings occurring on or after August 26, 2020 . To the extent our net asset value increases, we will sell at a price necessary to ensure that shares are not sold at a price per share, after deduction of selling commissions and dealer manager fees, that is below our net asset value per share. In connection with each closing, our board of directors or a committee thereof is required, within 48 hours of the time that each closing and sale is made, to make the determination that we are not selling shares of our common stock at a price per share which, after deducting upfront selling commissions, if any, is below the then-current net asset value per share of the applicable class. Promptly following any such adjustment to the offering price per share, we will file a prospectus supplement with the SEC disclosing the adjusted offering price, and we appropriately publish the updated information.
 
 We may borrow funds to make investments at any time, including before we have fully invested the proceeds of our offering, to the extent we determine that additional capital would allow us to take advantage of investment opportunities, or if our board of directors determines that leveraging our portfolio would be in our best interests and the best interests of our stockholders. We have not yet decided, however, whether, and to what extent, we will finance portfolio investments using debt. We do not currently anticipate issuing any preferred stock.
 
 The North American Securities Administrators Association, in its Omnibus Guidelines Statement of Policy adopted on March 29, 1992 and as amended on May 7, 2007 and from time to time, requires that our sponsor and its affiliates have an aggregate financial net worth, exclusive of home, automobile and home furnishings, of 5% of the first $20,000 of both the gross amount of securities currently being offered and the gross amount of any originally issued direct participation program sold by our sponsor and its affiliates within the last 12 months, plus 1% of all amounts in excess of the first $20,000.  Based on these requirements, our sponsor and its affiliates have an aggregate net worth in excess of those amounts required by the Omnibus Guidelines Statement of Policy.
 
 Contractual Obligations
 We have entered into certain contracts under which we have material future commitments. On March 31, 2019, we entered into the Investment Advisory Agreement with Prospect Flexible Income Management, LLC in accordance with the 1940 Act. The Investment Advisory Agreement became effective upon consummation of the Merger. Prospect Flexible Income Management,
 
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 LLC serves as our investment adviser in accordance with the terms of the Investment Advisory Agreement. Payments under the Investment Advisory Agreement in each reporting period will consist of (i) a management fee equal to a percentage of the value of our gross assets and (ii) income and capital gains incentive fees based on our performance.
 On March 31, 2019, we entered into the Administration Agreement with Prospect Administration, which was amended and restated effective as of June 17, 2019, pursuant to which Prospect Administration furnishes us with administrative services necessary to conduct our day-to-day operations. The Administration Agreement with Prospect Administration initially became effective upon consummation of the Merger. We reimburse Prospect Administration for its allocable portion of overhead incurred by Prospect Administration in performing its obligations under the Administration Agreement, including rent and its allocable portion of the costs of our Chief Financial Officer and Chief Compliance Officer and her staff. We have engaged Bank of New York Mellon and affiliated entities to act as our custodian. We have also contracted with Phoenix American Financial Services to act as our transfer agent, plan administrator, distribution paying agent and registrar.
 If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under the Investment Advisory Agreement and the Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.
 Off-Balance Sheet Arrangements
 Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheet financings or liabilities.
 
 Credit Facility
 
 On May 16, 2019, we established a $50 million senior secured revolving credit facility (the “Credit Facility”) with Royal Bank of Canada, a Canadian chartered bank (“RBC”), acting as administrative agent. In connection with the credit facility, our wholly owned financing subsidiary, Prospect Flexible Funding, LLC (the "SPV"), as borrower, and each of the other parties thereto, entered into a Revolving Loan Agreement, dated as of May 16, 2019 (the “Loan Agreement”).  The SPV is a wholly-owned subsidiary of the Company that was formed to facilitate the transactions under the Credit Facility.  Under the terms of the Credit Facility, the SPV holds certain of the securities that would otherwise be owned by the Company to be used as the borrowing base and collateral under the Credit Facility.  Income paid on these investments is distributed to the Company pursuant to a waterfall after taxes, fees, expenses, and debt service. The lenders under the Credit Facility have a security interest in the investments held by the SPV.  Although these investments are owned by the SPV, because the SPV is a wholly-owned subsidiary of the Company, the Company is subject to all of the benefits and risks associated with the Credit Facility and the investments held by the SPV.
 
 The Credit Facility matures on May 21, 2029 and generally bears an interest at a rate of three-month LIBOR plus 1.55%. On May 11, 2020, the Company agreed to the  increased interest rate of three-month LIBOR plus 2.20% on the Credit Facility for the period between May 16, 2020 to November 15, 2020. The Credit Facility is secured by substantially all of the SPV’s properties and assets. Under the Loan Agreement, the SPV has made certain customary representations and warranties and is required to comply with various covenants, including reporting requirements and other customary requirements for similar credit facilities. The Loan Agreement includes usual and customary events of default for credit facilities of this nature.
 Recent Developments
 Management has evaluated all known subsequent events through the date the accompanying consolidated financial statements were available to be issued on August 27, 2020 and notes the following:
 Name Change
 
 Effective  August 5, 2020, we amended our articles of incorporation to change our name to Prospect Flexible Income Fund, Inc.  In addition, on August 5, 2020, we amended and restated our bylaws to reflect the change of our corporate name.
 
 Dealer Manager Agreement
 
 On August 6, 2020, we amended our dealer manager agreement with our dealer manager to reflect a change to the upfront sales load paid to our dealer manager in connection with the sale of our Class A Shares.  Under the amended dealer manager agreement, we will pay our dealer manager an upfront sales load of up to 9% of the gross proceeds received on Class A Shares sold in our offering all or a portion of which may be paid to selected broker-dealers and financial representatives. The upfront sales load consists of upfront selling commissions of up to 6.0% of the gross proceeds of Class A Shares sold in our offering and a dealer
 
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 manager fee of up to 3.0% of the gross offering proceeds of Class A Shares sold in our offering.  The amended dealer manager agreement became effective on August 26, 2020 .
 
 License Agreement
 
 On August 4, 2020, we entered into a license agreement with an affiliate of our Adviser, pursuant to which the affiliate granted us a non-exclusive, royalty free license to use the “Prospect” name. Under this license agreement, we have the right to use such name for so long as our Adviser or another affiliate of Prospect Capital Management is our investment adviser. Other than with respect to this limited license, we have no legal right to the “Prospect” name or logo.
 Sales of Common Stock
 For the period beginning July 1, 2020 and ending August 27, 2020 , the Company sold 17,295 shares of its common stock for gross proceeds of $ 156,000 and issued 15,959 shares pursuant to its distribution reinvestment plan in the amount of $ 131,658 .
 Investment Activity
 
 During the period beginning July 1, 2020 and ending August 27, 2020 , the Company made 2 investments totaling $1,189,063 . During the period beginning July 1, 2020 and ending August 27, 2020 , the Company sold 1 investment totaling $446,250 .
 
 On August 14, 2020, the Company funded $45,455 of the total $85,227 delayed draw term loan commitment for our investment in Amerilife Holdings, LLC portfolio company.
 
 Offering Price
 
 On August 12, 2020, the Company increased its offering price from $8.78 per share to $9.03 per share. The increase in the offering price is effective for all closings occurring on or after August 12, 2020. In addition, on August 26, 2020 , the Company increased its offering price from $9.03 per share to $9.33 per share. The increase in the offering price is effective for all closings occurring on or after August 26, 2020 .
 Repurchase Offer
 On June 9, 2020, under our share repurchase program, we made an  offer to purchase (the "Tender Offer") up to the number of shares of our issued and outstanding Class A common stock we can repurchase with the proceeds we receive from the issuance of shares under our distribution reinvestment plan prior to the expiration of the Tender Offer. The Tender Offer is for cash at a price equal to the net offering price per share determined as of July 10, 2020 (“Purchase Price”). The offer expired at 4:00 P.M., Eastern Time, on July 8, 2020 and a total of 65,266 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased 28,786 shares validly tendered and not withdrawn at a price equal to $8.25 per share for an aggregate purchase price of approximately $237,488.
 
 Distributions
 General
 We elected to be treated, beginning with our fiscal year ending December 31, 2012, and intend to qualify annually thereafter, as a RIC under the Code. To maintain RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of: (i) 98% of our ordinary income for the calendar year, (ii) 98.2% of our recognized capital gains in excess of recognized capital losses for the one-year period generally ending on October 31 of the calendar year and (iii) any ordinary income or capital gains recognized but not distributed in preceding years and on which we paid no federal income tax.
 While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. In that event, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.
 Our board of directors has authorized, and has declared, cash distributions on our common stock on a monthly basis since the second quarter of 2015 (in our capacity as TPIC). The amount of each such distribution is subject to our board of directors’ discretion and applicable legal restrictions related to the payment of distributions. We calculate each stockholder’s specific distribution amount for the month using record and declaration dates, and distributions will begin to accrue on the date we accept subscriptions for shares of our common stock. From time to time, we may also pay interim distributions at the discretion of our board of directors. Each year a statement on Internal Revenue Service Form 1099-DIV (or any successor form) identifying the source of the distribution (i.e.,(i) paid from investment company taxable income, which is generally our net ordinary income plus our realized net short-term capital gains in excess of realized net long-term capital gains, (ii) paid from net capital gain on the sale
 
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 of securities, which is our realized net long-term capital gains in excess of realized net-short term capital losses, and/or (iii) a return of paid-in capital surplus, which is generally a nontaxable distribution) will be mailed to our stockholders. Our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our offering. As a result, a portion of the distributions we make may represent a return of capital for tax purposes.
 We have adopted an “opt in” distribution reinvestment plan for our common stockholders. As a result, when we make a distribution, stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of our common stock. Any distributions reinvested under the plan will nevertheless remain taxable to U.S. stockholders.
 Related Party Transactions
 License Agreement
 
 We entered into a license agreement with an affiliate of our Adviser, pursuant to which the affiliate granted us a non-exclusive, royalty free license to use the “Prospect” name. Under this license agreement, we have the right to use such name for so long as our Adviser or another affiliate of Prospect Capital Management is our investment adviser. Other than with respect to this limited license, we have no legal right to the “Prospect” name or logo.
 Investment Advisory Agreement
 
 We have entered into the Investment Advisory Agreement with our Adviser. We will pay our Adviser a fee for its services under the Investment Advisory Agreement consisting of two components - a base management fee and an incentive fee. The cost of both the base management fee payable to the Adviser and any incentive fees it earns will ultimately be borne by our stockholders. See “-Investment Advisory Fees.”
 
 Certain members of our senior management hold an equity interest in our Adviser.  Members of our senior management also serve as principals of other investment managers affiliated with our Adviser that do and may in the future manage investment funds, accounts or other investment vehicles with investment objectives similar to ours.
 
 Administration Agreement
 On September 2, 2014, PWAY entered into an administration agreement with Prospect Administration LLC, an affiliate of the Adviser and in which certain members of our senior management hold an equity interest and act as principals. Pursuant to the agreement and plan of merger as amended and restated, between TPIC and PWAY, Prospect Administration LLC became the administrator for the Company pursuant to an administrative agreement, as amended and restated as of June 17, 2019 (the "Administration Agreement"). The Administrator performs, oversees and arranges for the performance of administrative services necessary for the operation of the Company. These services include, but are not limited to, accounting, finance and legal services. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s actual and allocable portion of expenses and overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and the Company’s allocable portion of the costs of its Chief Financial Officer and Chief Compliance Officer and her staff. For the years ended June 30, 2020, 2019 and 2018 administrative costs incurred by the Company and PWAY to the Administrator were $ 596,030 , $ 442,047 and $ 357,995 , respectively. As of June 30, 2020 and June 30, 2019 , $ 122,384 and $ 341,235 , respectively, was payable to the Administrator by the Company.
 
 Allocation of Expenses
 The cost of valuation services for CLOs is initially borne by Priority Income Fund, Inc. ("PRIS"), which then allocates to the Company its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , PRIS incurred $77,212, $61,311 and  $60,004, respectively, in expenses related to valuation services that are attributable to the Company. The Company reimburses PRIS for these expenses and includes them as part of valuation services on the Consolidated  Statements of Operations . As of June 30, 2020 and June 30, 2019 , $13,516 and $32,314, respectively, of expense is due to PRIS, which is presented as part of due to affiliates on the Consolidated  Statements of Assets and Liabilities .
 The cost of filing software is initially borne by PSEC, which then allocates to the Company its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , PSEC incurred $9,065, $9,390 and $10,162, respectively in expenses related to the filing services that are attributable to the Company. The Company reimburses PSEC for these expenses and includes them as part of general and administrative expenses on the Consolidated Statements of Operations . As of June 30, 2020 and June 30, 2019 , $0 and $2,348 was due to PSEC, respectively.
 
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 The cost of portfolio management software is initially borne by the Company, which then allocates to PSEC its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , the Company incurred $0, $11,058 and $23,603, respectively, in expenses related to the portfolio management software that is attributable to PSEC. PSEC reimburses the Company for these expenses and included them as part of general and administrative expenses on the Consolidated  Statements of Operations . As of June 30, 2020 and June 30, 2019 , $0 of expense is due from PSEC.
 Officers and Directors
 Certain officers and directors of the Company are also officers and directors of the Adviser and its affiliates. There were no fees paid to the independent directors of the Company as the Company did not exceed the minimum net asset value required (i.e., greater than $100 million) to receive a fee for the year ended  June 30, 2020 . The officers do not receive any direct compensation from the Company.
 Dealer Manager Agreement
 
 The Company and its Adviser have entered into a dealer manager agreement with Triton Pacific Securities, LLC pursuant to which the Company will pay the Dealer Manager a fee of up to 9.0% of gross proceeds raised in the Company's offering, some of which will be re-allowed to other participating broker-dealers. In addition to the upfront selling commissions and dealer manager fees, the Adviser may pay the Dealer Manager a fee (the "Additional Selling Commissions") equal to no more than 1.0% of the net asset value per share per year. The Dealer Manager will reallow all or a portion of the Additional Selling Commissions to participating broker-dealers. The Dealer Manager is an affiliated entity of the Former Adviser and is partially owned by one of our directors, Craig Faggen.
 
 Expense Limitation Agreement
 
 The Company has entered into an expense limitation agreement with the Adviser pursuant to which the Adviser, in its sole discretion,
 may waive a portion or all of the investment advisory fees that it is entitled to receive under the Investment Advisory Agreement
 in order to limit the Company's operating expenses to an annual rate, expressed as a percentage of the Company's average quarterly
 net assets, equal to 8.00%. See “Expense Limitation Agreement” below.
 
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 Expense Limitation Agreement
 Expense Reimbursement Agreement with our Former Adviser
 On March 27, 2014, we and our Former Adviser entered into an Expense Reimbursement Agreement. The Expense Reimbursement Agreement was amended and restated effective April 5, 2018. Under the Expense Reimbursement Agreement, as amended, our Former Adviser, in consultation with the Company, could pay up to 100% of both our organizational and offering expenses and our operating expenses, all as determined by us and our Former Adviser. The Expense Reimbursement Agreement stated that until the net proceeds to us from our offering are at least $25 million, our Former Adviser could pay up to 100% of both our organizational and offering expenses and our operating expenses. After we received at least $25 million in net proceeds from our offering, our Former Adviser could, with our consent, continue to make expense support payments to us in such amounts as was acceptable to us and our Former Adviser. The Expense Reimbursement Agreement terminated on December 31, 2018. Our Former Adviser had agreed to reimburse a total of $5,292,192 as of December 31, 2018. However, as part of the Merger, the Former Adviser agreed to waive any amounts owed to it under the Expense Reimbursement Agreement.
 Expense Limitation Agreement with the Adviser
 Concurrently with the closing of the Merger, we entered into an Expense Limitation Agreement with our Adviser (the “ELA”). Pursuant to the ELA, our Adviser, in its sole discretion, may waive a portion or all of the investment advisory fees that it is entitled to receive pursuant to the Investment Advisory Agreement in order to limit our Operating Expenses (as defined below) to an annual rate, expressed as a percentage of our average quarterly net assets, equal to 8.00% (the “Annual Limit”). For purposes of the ELA, the term “Operating Expenses” with respect to the Company, is defined to include all expenses necessary or appropriate for the operation of the Company, including but not limited to our Adviser’s base management fee, any and all costs and expenses that qualify as line item “organization and offering” expenses in the consolidated financial statements of the Company as the same are filed with the SEC and other expenses described in the Investment Advisory Agreement, but does not include any portfolio transaction or other investment-related costs (including brokerage commissions, dealer and underwriter spreads, prime broker fees and expenses and dividend expenses related to short sales), interest expenses and other financing costs, extraordinary expenses and acquired fund fees and expenses. Upfront shareholder transaction expenses (such as sales commissions, dealer manager fees, and similar expenses) are not Operating Expenses. On April 30, 2020, the Company's board of directors approved extending the Expense Limitation Agreement for an additional 12-month term ending on April 30, 2021
 Any amount waived pursuant to the ELA is subject to repayment to our Adviser (an “ELA Reimbursement”) by us within the three years following the end of the quarter in which the waiver was made by our Adviser. If the ELA is terminated or expires pursuant to its terms, our Adviser maintains its right to repayment for any waiver it has made under the ELA, subject to the Repayment Limitations (discussed below).
 Any ELA Reimbursement can be made solely in the event that we have sufficient excess cash on hand at the time of any proposed ELA Reimbursement and shall be limited to the lesser of (i) the excess of the Annual Limit applicable to such quarter over the Company’s actual Operating Expenses for such quarter and (ii) the amount of ELA Reimbursement which, when added to the Company’s expenses for such quarter, permits the Company to pay the then-current aggregate quarterly distribution to its shareholders, at a minimum annualized rate of at least 6.00% (based on the gross offering prices of Company shares) (the “Distribution”) from the sum of (x) the Company’s net investment income (loss) for such quarter plus (y) the Company’s net realized gains (losses) for such quarter (collectively, the “Repayment Limitations”). For the purposes of the calculations pursuant to (i) and (ii) of the preceding sentence, any ELA Reimbursement will be treated as an expense of the Company for such quarter, without regard to the GAAP treatment of such expense. In the event that the Company is unable to make a full payment of any ELA Reimbursements due for any applicable quarter because the Company does not have sufficient excess cash on hand, any such unpaid amount shall become a payable of the Company for accounting purposes and shall be paid when the Company has sufficient cash on hand (subject to the Repayment Limitations); provided, that in the case of any ELA Reimbursements, such payment shall be made no later than the date that is three years following the end of the quarter in which the applicable waiver was made by our Adviser.
 Investment Advisory Fees
 Pursuant to the Investment Advisory Agreement, we pay the Adviser a fee for investment advisory and management services consisting of a base management fee and an incentive fee. The cost of both the base management fee payable to the Adviser and any incentive fees it earns will ultimately be borne by our stockholders.
 Base Management Fee . The base management fee is calculated at an annual rate of 1.75% (0.4375% quarterly) of our average total assets, which includes any borrowings for investment purposes. For the first quarter of our operations following the Merger, the base management fee was calculated based on the average value of our total assets as of the date of the Investment Advisory Agreement and at the end of the calendar quarter in which the date of the Investment Advisory Agreement fell, and was appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Subsequently, the base management fee
 
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 is payable quarterly in arrears, and is calculated based on the average value of our total assets at the end of the two most recently completed calendar quarters, and is appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial month or quarter is appropriately pro-rated. At the Adviser’s option, the base management fee for any period may be deferred, without interest thereon, and paid to the Adviser at any time subsequent to any such deferral as the Adviser determines.
 
 Incentive Fee . The incentive fee consists of two parts: (1) the subordinated incentive fee on income and (2) the capital gains incentive fee.
 Subordinated Incentive Fee on Income. The first part of the incentive fee, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based upon our “pre-incentive fee net investment income” for the immediately preceding calendar quarter. For purposes of this fee, “pre-incentive fee net investment income” means interest income, dividend income and distribution cash flows from equity investments and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, expenses reimbursed under the Investment Advisory Agreement and the Administration Agreement, any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the organization and offering expenses and incentive fees on income and capital gains). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind 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, realized capital losses or unrealized capital appreciation or depreciation. The subordinated incentive fee on income is subject to a quarterly fixed preferred return to investors, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, of 1.5% (6.0% annualized), subject to a “catch up” feature. Operating expenses are included in the calculation of the subordinated incentive fee on income.
 We will pay our Adviser a subordinated incentive fee on income for each calendar quarter as follows:
 •No incentive fee will be payable to our Adviser in any calendar quarter in which our pre-incentive fee net investment income does not exceed the preferred return rate of 1.5%. •100% 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 preferred return but is less than or equal to 1.875% in any calendar quarter (7.5% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the preferred return but is less than or equal to 1.875%) as the “catch-up.” The effect of the “catch-up” provision is that, if our pre-incentive fee net investment income reaches 1.875% in any calendar quarter, our Adviser will receive 20.0% of our pre-incentive fee net investment income as if a preferred return did not apply. •20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.875% in any calendar quarter (7.5% annualized) will be payable to our Adviser. This reflects that once the preferred return is reached and the catch-up is achieved, 20.0% of all pre-incentive fee net investment income thereafter will be allocated to our Adviser. Capital Gains Incentive Fee . The second part of the incentive fee, which is referred to as the capital gains 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 20.00% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year. In determining the capital gains incentive fee payable to the Adviser, we calculate the aggregate realized capital gains, aggregate realized capital losses and aggregate unrealized capital depreciation, as applicable, with respect to each investment that has been in our portfolio. For the purpose of this calculation, an “investment” is defined as the total of all rights and claims which may be asserted against a portfolio company arising from our participation in the debt, equity, and other financial instruments issued by that company. Aggregate realized capital gains, if any, equal the sum of the differences between the aggregate net sales price of each investment and the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate realized capital losses equal the sum of the amounts by which the aggregate net sales price of each investment is less than the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate unrealized capital depreciation equals the sum of the differences, if negative, between the aggregate valuation of each investment and the aggregate amortized cost basis of such investment as of the applicable calendar year-end. At the end of the applicable calendar year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee involves netting aggregate realized capital gains against aggregate realized capital losses on a since-inception basis and then reducing this amount by the aggregate unrealized capital depreciation. If this number is positive, then the capital gains incentive fee payable is equal to 20.00% of such amount, less the aggregate amount of any capital gains incentive fees paid since inception. Operating expenses are not taken into account when determining capital gains incentive fees.
 
 
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 Asset Coverage
 In accordance with the 1940 Act, the Company is currently only allowed to borrow amounts such that its “asset coverage,” as defined in the 1940 Act, is at least 150% after such borrowing. “Asset coverage” generally refers to a company’s total assets, less all liabilities and indebtedness not represented by “senior securities,” as defined in the 1940 Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. “Senior securities” for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.
 On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum “asset coverage” ratio from 200% to 150%, so long as certain approval and disclosure requirements are satisfied. In addition, for BDCs like the Company whose securities are not listed on a national securities exchange, the Company is also required to offer to repurchase its outstanding shares at the rate of 25% per quarter over four calendar quarters. Under the existing 200% minimum asset coverage ratio, the Company is permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity, and under the 150% minimum asset coverage ratio, the Company will be permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a) of the 1940 Act, as amended, permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1 to 1 to a maximum of 2 to 1.
 
 At the 2019 Annual Meeting, stockholders approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, and subject to certain additional disclosure requirements and the repurchase obligations described above, the minimum asset coverage ratio applicable to the Company was reduced from 200% to 150%, effective as of March 16, 2019.
 
 Below is the asset coverage for the twelve month ended June 30, 2020 and the year ended June 30, 2019.
 
 Revolving Credit FacilityTotal Amount OutstandingAsset Coverage per Unit(1)Involuntary Liquidating Preference per Unit(2)Average Market Value per Unit(2)June 30, 2020$21,000,000$1,931——March 31, 2020$21,000,000$1,914——December 31, 2019$21,000,000$2,018——September 30, 2019$15,500,000$2,461——June 30, 2019$5,500,000$5,256——(1) The asset coverage ratio is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by secured senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit.(2) This column is inapplicable.
 
 
 On April 8, 2020, in connection with the outbreak of the Wuhan Virus pandemic, the SEC issued an Order Under Sections 6(c), 17(d), 38(a) and 57(i) of the Investment Company Act of 1940 and Rule 17d-1 Thereunder Granting Exemptions from Specified Provisions of the Investment Company Act and Certain Rules Thereunder, the 1940 Act Release No. 33837 (Apr. 8, 2020) (the “April 2020 Order”), which provides exemptions from certain requirements of the 1940 Act. Section II of the April 2020 Order (i) affords BDCs greater flexibility in calculating asset coverage ratios for purposes of the 1940 Act asset coverage requirements, (ii) requires a BDC’s board of directors, including a required majority of such board, as defined in Section 57(o) of the 1940 Act, to determine that the issuance or sale of covered senior securities is permitted by this April 2020 Order and is in the best interests of the BDC and its stockholders, (iii) requires prior disclosure on Form 8-K of an election to rely on Section II of the April 2020 Order, and (iv) includes certain limitations on new investments, among other requirements detailed in the April 2020 Order. The Company has not taken advantage of the relief provided by the April 2020 Order.
 
 
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 Critical Accounting Policies
 The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) pursuant to the requirements for reporting on Form 10-Q, ASC 946, Financial Services—Investment Companies (“ASC 946”), and Articles 3, 6 and 12 of Regulation S-X. Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Our consolidated financial statements include the accounts of Prospect Flexible Funding, LLC. All intercompany balances and transactions have been eliminated in consolidation.
 Valuation of Portfolio Investments
 The Company determines the fair value of its investment portfolio each quarter. The fair values of the Company’s investments are determined in good faith by the Company’s board of directors. The Company’s board of directors is solely responsible for the valuation of the Company’s portfolio investments at fair value as determined in good faith pursuant to the Company’s valuation policy and consistently applied valuation process.
 In connection with that determination, the Adviser provides the Company’s board of directors with portfolio company valuations which are based on relevant inputs which may include indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services.
 We follow guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which classifies the inputs used to measure fair values into the following hierarchy:
 Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
 Level 2. Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in an inactive market, or other observable inputs other than quoted prices.
 Level 3. Unobservable inputs for the asset or liability.
 In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.
 Securities that are publicly-traded are valued at the reported closing price on the valuation date. Securities traded in the over-the-counter market are valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We value over-the-counter securities by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent pricing agent and screened for validity by such service. As a result of the volatility and disruption to the global economy from the Wuhan Virus pandemic (as further discussed in Note 8 to the consolidated financial statements), certain market quotations were not deemed to represent fair value.
 When market quotations are not readily available or when such market quotations are deemed not to represent fair value, our board of directors has approved a multi-step valuation process for each quarter, as described below, and such investments are classified in Level 3 of the fair value hierarchy:
 1.Each portfolio company or investment is reviewed by investment professionals of the Adviser with the independent valuation firms engaged by our board of directors. 2.The independent valuation firms prepare independent valuations based on their own independent assessments and issue their reports. 3.The audit committee of our board of directors (the “Audit Committee”) reviews and discusses with the independent valuation firms the valuation reports, and then makes a recommendation to our board of directors of the value for each investment. 4.Our board of directors discusses valuations and determines the fair value of such investments in our portfolio in good faith based on the input of the Adviser, the respective independent valuation firms and the Audit Committee. 
 Our non-CLO investments are valued utilizing broker quotes, yield technique, enterprise value (“EV”) technique, net asset value technique, liquidation technique, discounted cash flow technique, or a combination of techniques, as appropriate. The yield technique uses loan spreads for loans and other relevant information implied by market data involving identical or comparable assets or liabilities. Under the EV technique, the EV of a portfolio company is first determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i.e., “waterfall” allocation). To determine the EV, we
 
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 typically use a market (multiples) valuation approach that considers relevant and applicable market trading data of guideline public companies, transaction metrics from precedent merger and acquisitions transactions, and/or a discounted cash flow technique. The net asset value technique, an income approach, is used to derive a value of an underlying investment by dividing a relevant earnings stream by an appropriate capitalization rate. The liquidation technique is intended to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio company’s assets. The discounted cash flow technique converts future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate discount rate. The fair value measurement is based on the net present value indicated by current market expectations about those future amounts.
 Our investments in bonds and loans are classified as Level 3 fair value measured securities under ASC 820.
 The types of factors that are taken into account in fair value determination include, as relevant, market changes in expected returns for similar investments, performance improvement or deterioration, security covenants, call protection provisions, and information rights, the nature and realizable value of any collateral, the issuer’s ability to make payments and its earnings and cash flows, the principal markets in which the issuer does business, publicly available financial ratios of peer companies, comparisons to traded securities, enterprise values, and other relevant factors.
 Our investments in CLOs are classified as Level 3 fair value measured securities under ASC 820 and are valued using a discounted multi-path cash flow model. The CLO structures are analyzed to identify the risk exposures and to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows from the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market as well as certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the multi-path cash flows. We are not responsible for and have no influence over the asset management of the portfolios underlying the CLO investments we hold, as those portfolios are managed by non-affiliated third-party CLO collateral managers. The main risk factors are default risk, prepayment risk, interest rate risk, downgrade risk, and credit spread risk.
 
 Impact of the novel coronavirus (the "Wuhan Virus") pandemic
 
 During the first quarter of 2020, our operating results were negatively impacted by the uncertainty surrounding the Wuhan Virus pandemic, which has caused severe disruptions in the global economy and negatively impacted the fair value and performance of our investment portfolio. For the year ended  June 30, 2020 , the resulting changes in net unrealized depreciation on investments were largely due to widening credit spreads as market participants expected a higher yield on similar investments given the significant market volatility generated by the Wuhan Virus pandemic. To a lesser extent, the changes in net unrealized depreciation on investments for the quarter for certain of our portfolio companies also reflected other factors such as specific industry concerns, uncertainty about the duration of business shutdowns and near-term liquidity needs. For additional information concerning the Wuhan Virus pandemic and its potential impact on our business and our operating results, see Part II - Other information, Item 1A. Risk Factors, “Risk Factors - The Wuhan Virus pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”
 Valuation of Other Financial Assets and Financial Liabilities
 ASC 825, Financial Instruments, specifically ASC 825-10-25, permits an entity to choose, at specified election dates, to measure eligible items at fair value (the "Fair Value Option"). We have not elected the Fair Value Option to report selected financial assets and financial liabilities.
 Investment Risks
 Our investments are subject to a variety of risks. Those risks include the following:
 Market Risk
 Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.
 Credit Risk
 Credit risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.
 Liquidity Risk
 
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 Liquidity risk represents the possibility that we may not be able to rapidly adjust the size of our investment positions in times of high volatility and financial stress at a reasonable price.
 Interest Rate Risk
 Interest rate risk represents a change in interest rates, which could result in an adverse change in the fair value of an interest-bearing financial instrument.
 Prepayment Risk
 Many of our debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the security and making us less likely to fully earn all of the expected income of that security and reinvesting in a lower yielding instrument.
 Structured Credit Related Risk
 CLO investments may be riskier and less transparent to us than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans.
 Revenue Recognition
 Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Accretion of such purchase discounts or amortization of such premiums is calculated using the effective interest method as of the settlement date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or bond, any unamortized discount or premium is recorded as interest income. The Company records dividend income on the ex-dividend date. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. Loans are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Unpaid accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans are either applied to the cost basis or interest income, depending upon management’s judgment of the collectibility of the loan receivable. Non-accrual loans are restored to accrual status when past due principal and interest is paid and in management’s judgment, is likely to remain current and future principal and interest collections when due are probable. Interest received and applied against cost while a loan is on non-accrual, and PIK interest capitalized but not recognized while on non-accrual, is recognized prospectively on the effective yield basis through maturity of the loan when placed back on accrual status, to the extent deemed collectible by management. As of June 30, 2020, the Company did not have any loans on non-accrual status. Loan origination fees are capitalized and the Company accretes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees are recorded as interest income. Upfront structuring fees are recorded as fee income when earned. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.
 Some of our loans and other investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, we capitalize the accrued interest (reflecting such amounts in the basis as additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point that we believe PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. We do not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if we believe that PIK is expected to be realized.
 Interest income from investments in Structured Subordinated Notes (typically preferred shares, income notes or subordinated notes of CLO funds) is recorded based on an estimation of an effective yield to expected maturity utilizing assumed future cash flows in accordance with ASC 325-40, Beneficial Interest in the Securitized Financial Assets . The Company monitors the expected cash inflows from CLO equity investments, including the expected residual payments, and the estimated effective yield is determined and updated periodically. In accordance with ASC 325-40, Beneficial Interest in Securitized Financial Assets , investments in CLOs are periodically assessed for other-than-temporary impairment (“OTTI”). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down to its fair value as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.
 Due from and to Adviser
 
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 Amounts due from the Adviser are for amounts waived under the ELA (as such term is defined in Note 4) and amounts due to the Adviser are for base management fees, incentive fees, operating expenses paid on our behalf and offering and organization expenses paid on our behalf. The due from and due to Adviser balances are presented net on the Consolidated Statements of Assets and Liabilities as of June 30, 2020  and are presented gross on the Consolidated Statements of Assets and Liabilities as of June 30, 2019 . All balances due from and to the Adviser are settled quarterly.
 Paid-In-Kind Interest
 The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. For the years ended June 30, 2020 and 2019, PIK interest included in interest income totaled $10,273 and $166, respectively. The Company stops accruing PIK interest when it is determined that PIK interest is no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to the stockholders in the form of distributions, even though the Company has not yet collected the cash.
 Offering Costs and Expenses
 The Company will incur certain costs and expenses in connection with registering to sell shares of its common stock. These costs and expenses principally relate to certain costs and expenses for advertising and sales, printing and marketing costs, professional and filing fees. Offering costs incurred by the Company are capitalized to deferred offering costs on the Consolidated Statements of Assets and Liabilities and amortized to expense over the 12 month period following such capitalization on a straight line basis. Prior to the Merger, there were offering and organizational costs due to the PWAY's investment adviser (as such term is defined in Note 4).
 Dividends and Distributions
 Dividends and distributions to common stockholders are recorded on the record date. The amount, if any, to be paid as a monthly dividend or distribution is approved by our board of directors quarterly and generally depends on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board deems relevant from time to time. Net realized capital gains, if any, are distributed at least annually.
 Financing Costs
 We record origination expenses related to our Revolving Credit Facility as deferred financing costs. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation of our Revolving Credit Facility. (See Note 11 to the consolidated financial statements for further discussion).
 Per Share Information
 Net increase or decrease in net assets resulting from operations per share is calculated using the weighted average number of common shares outstanding for the period presented. In accordance with ASC 946, convertible securities are not considered in the calculation of net asset value per share. As of June 30, 2020 , there were no issued convertible securities.
 Net Realized and Net Change in Unrealized Gains or Losses
 Gains or losses on the sale of investments are calculated by using the specific identification method. The Company measures 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. 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 gains or losses when gains or losses are realized.
 Federal and State Income Taxes
 The Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and intends to continue to comply with the requirements of the Code applicable to RICs. As a RIC, the Company is required to distribute at least 90% of its investment company taxable income and intends to distribute (or retain through a deemed distribution) all of its investment company taxable income and net capital gain to stockholders; therefore, the Company has made no provision for income taxes. The character of income and gains that the Company will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.
 If the Company does not distribute (or is not deemed to have distributed) at least 98% of its annual ordinary income and 98.2% of its net capital gains in the calendar year earned, it will generally be required to pay an excise tax equal to 4% of the amount by which 98% of its annual ordinary income and 98.2% of its capital gains exceeds the distributions from such taxable income for
 
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 the year. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, it accrues excise taxes, if any, on estimated excess taxable income. As of June 30, 2020 , the Company does not expect to have any excise tax due for the 2020 calendar year. Thus, the Company has not accrued any excise tax for this period.
 If the Company fails to satisfy the annual distribution requirement or otherwise fails to qualify as a RIC in any taxable year, it would be subject to tax on all of its taxable income at regular corporate income tax rates. The Company would not be able to deduct distributions to stockholders, nor would it be required to make distributions. Distributions would generally be taxable to the Company’s individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of its current and accumulated earnings and profits, provided certain holding period and other requirements are met. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. To qualify again to be taxed as a RIC in a subsequent year, the Company would be required to distribute to its shareholders its accumulated earnings and profits attributable to non-RIC years. In addition, if the Company failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, it would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.
 The Company follows ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns 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 recorded as a tax benefit or expense in the current year. As of June 30, 2020 , the Company did not record any unrecognized tax benefits or liabilities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, its major tax jurisdiction is federal. The Company’s federal tax returns for the tax years ended December 31, 2017 and thereafter remain subject to examination by the Internal Revenue Service.
 Recent Accounting Pronouncements
 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses  (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic No. 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact, if any, of adopting this ASU on our consolidated financial statements.
 
 In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The standard will modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. ASU No. 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted upon issuance of this ASU. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.
 
 In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the year ended  June 30, 2020 .
 
 Tax Cuts and Jobs Act
 On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed the Code, including a reduction in the corporate income tax rate, a new limitation on the deductibility of interest expense, and significant changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Act also authorizes the IRS to issue regulations with respect to the new provisions. We cannot predict how the changes in the Tax Act, or regulations or other guidance issued under it, might affect us, our business or the business of our portfolio companies. However, our portfolio companies
 
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 may or may not make certain elections under the Tax Act that could materially increase their taxable earnings and profits. Any such increase in the taxable earnings and profits of a portfolio company may result in the characterization of certain distributions sourced from sale proceeds as dividend income, which may increase our distributable taxable income.
 
 
 
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 Item 7A: Quantitative and Qualitative Disclosures About Market Risk.
 
 We are subject to financial market risks, including changes in interest rates and equity price risk. Uncertainty with respect to the economic effects of the Wuhan Virus outbreak has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks, including those listed below. For additional information concerning the Wuhan Virus pandemic and its potential impact on our business and our operating results, see Part I, Item 1A. Risk Factors, “Risk Factors - The Wuhan Virus pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”
 We are subject to financial market risks, including changes in interest rates. As of June 30, 2020 , 98% (based on fair value) of our investments paid variable interest rates and 2% paid fixed rates (considering interest rate flows for floating rate instruments, excluding our investments in equity and structured subordinated notes). A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to certain variable rate investments we hold and to declines in the value of any fixed rate investments we may hold in the future.
 The following table shows the estimated annual impact of changes in interest rates (considering interest rate flows for floating rate instruments, excluding our investments in equity and structured subordinated notes) on our interest income, interest expense and net interest income, assuming no changes in our investment portfolio in effect as of June 30, 2020 :
 LIBOR Basis Point ChangeInterest IncomeInterest ExpenseNet Investment IncomeUp 300 basis points$945,884$630,000$315,884Up 200 basis points$630,590$420,000$210,590Up 100 basis points$315,295$210,000$105,295Down 100 basis points$(52,450)$—$(52,450)Down 200 basis points$(67,529)$—$(67,529)Down 300 basis points$(67,529)$—$(67,529)
 
 Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. 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.
 
 We may also face risk due to the lack of liquidity in the marketplace which could prevent us from raising sufficient funds to adequately invest in a broad pool of assets. We are subject to other financial market risks, including changes in interest rates. However, at this time, with no portfolio investments, this risk is immaterial.
 
 In addition, we may have risk regarding portfolio valuation. See “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Investments.”
 
 
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 Item 8. Financial Statements and Supplementary Data
 
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm91Consolidated Statements of Assets and Liabilities as of June 30, 2020 and June 30, 201992Consolidated Statements of Operations for the years ended June 30, 2020, 2019 and 201893Consolidated Statements of Changes in Net Assets for the years ended June 30, 2020, 2019 and 201894Consolidated Statements of Cash Flows for the years ended June 30, 2020, 2019 and 201897Consolidated Schedules of Investments as of June 30, 2020 and June 30, 201998Notes to Consolidated Financial Statements104
 
 
 
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 Report of Independent Registered Public Accounting Firm
 
 Shareholders and Board of Directors
 TP Flexible Income Fund, Inc. (now known as Prospect Flexible Income Fund, Inc.)
 New York, New York
 Opinion on the Consolidated Financial Statements
 We have audited the accompanying consolidated statements of assets and liabilities of TP Flexible Income Fund, Inc. (now known as Prospect Flexible Income Fund, Inc.) and its subsidiary (the “Company”), including the consolidated schedules of investments, as of June 30, 2020 and 2019, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended June 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2020 and 2019, 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 June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
 Basis for Opinion
 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 and 2019, by correspondence with the custodians, our brokers or the underlying investee. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
 
 /s/ BDO USA, LLP
 
 We have served as the Company's auditor since 2013.
 
 New York, New York
 
 August 27, 2020
 
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
 
 AssetsJune 30, 2020June 30, 2019Investments at fair value:Affiliate investments (amortized cost of $472,357 and $472,357, respectively)$786,988$570,816Non-control/non-affiliate investments (amortized cost of $38,402,556 and $24,426,013, respectively)35,876,71523,448,747Total investments (amortized cost of $38,874,913 and $24,898,370, respectively)36,663,70324,019,563Cash3,602,6626,730,743Deferred financing costs (Note 11)522,163457,651Prepaid expenses and other assets385,597427,944Receivable for investments sold381,075952,631Deferred offering costs281,203292,429Interest receivable64,55046,887Due from Adviser (Note 4)—128,852Due from Affiliate (Note 4)—2,137Total Assets41,900,95333,058,837LiabilitiesRevolving Credit Facility (Note 11)21,000,0005,500,000Payable for investments purchased690,0001,961,399Accrued audit fees178,550369,762Due to Administrator (Note 4)122,384341,235Dividends payable111,447126,128Due to Affiliates (Note 4)94,97554,205Interest payable61,62728,063Accrued legal fees55,241486,537Accrued expenses28,329157,873Payable for shares repurchased—495,506Due to Adviser (Note 4)—127,414Total Liabilities22,342,5539,648,122Commitments and Contingencies (Note 10)——Net Assets$19,558,400$23,410,715Components of Net AssetsCommon Stock, par value $0.001 per share (75,000,000 shares authorized; 2,363,011 and 2,370,011 shares issued and outstanding, respectively) (Note 3)$2,363$2,370Paid-in capital in excess of par (Note 3)27,133,94430,105,995Total distributable earnings (loss) (Note 6)(7,577,907)(6,697,650)Net Assets$19,558,400$23,410,715Net Asset Value Per Share (Note 12)$8.28$9.88
 
 See notes to consolidated financial statements.
 
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Year Ended June 30,20202019(1)2018(1)Investment IncomeInterest income from non-control/non-affiliate investments$2,344,372$808,522$823,444Interest income from structured credit securities998,246602,204474,873Total Investment Income3,342,6181,410,7261,298,317Operating ExpensesBase management fees (Note 4)708,464281,078264,101Interest expense and credit facility expenses (Note 11)603,26358,63867,195Administrator costs (Note 4)596,030442,047357,995Amortization of offering costs575,073165,517358,608Audit and tax expense260,398599,126178,947Legal expense175,811833,84949,565Transfer agent’s fees and expenses167,78196,630132,577Insurance expense157,910103,804111,403Valuation services129,710155,788145,457General and administrative109,600155,45027,620Adviser shared service expense (Note 4)—19,028216,184Report and notice to shareholders—5,33356,160Miscellaneous expense—27,643—Due diligence expense——16,463Shareholder fees——11,382Excise taxes——(8,777)Total Operating Expenses3,484,0402,943,9311,984,880Waiver of offering costs (Note 4)(2)—(1,492,252)—Expense support reimbursement (Note 4)(2)——(456,660)Expense limitation payment (Note 4)(3)(708,464)(309,881)(748,696)Total Net Operating Expenses2,775,5761,141,798779,524Net Investment Income567,042268,928518,793Net Realized and Net Change in Unrealized Gains (Losses) on InvestmentsNet realized gains (losses):Non-control/non-affiliate investments(1,552,290)(1,202,885)181,008Net realized gains (losses)(1,552,290)(1,202,885)181,008Net change in unrealized gains (losses):Non-control/non-affiliate investments(1,548,574)87,240(704,926)Affiliate investments216,17262,829—Net change in unrealized gains (losses)(1,332,402)150,069(704,926)Net Realized and Net Change in Unrealized Gains (Losses) on Investments(2,884,692)(1,052,816)(523,918)Net Increase (Decrease) in Net Assets Resulting from Operations$(2,317,650)$(783,888)$(5,125)Net increase (decrease) in net assets resulting from operations per share (Note 12)(4)$(0.98)$(0.20)$(0.01)Distributions declared per share$0.72$0.57$0.86(1) See Notes 1 and 9.(2) This balance relates to organization and offering costs that were no longer reimbursable to PWAY's former investment adviser, Pathway Capital Opportunity Fund Management, LLC, as a result of the Merger.(3) For the nine months ended June 30, 2019 and the year ended June 30, 2018, this amount relates to fees waived and/or expenses that were paid or absorbed by the former investment adviser to PWAY under the PWAY Expense Limitation Agreement as well as fees waived by the Investment Adviser under the Expense Limitation Agreement. Refer to Note 4.(4) For the years ended June 30, 2020, 2019 and 2018, the weighted average common shares outstanding were 2,366,005, 1,297,582 and 622,683, respectively.
 See notes to consolidated financial statements.
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 
 Common StockFor the Year Ended June 30, 2020SharesParPaid-in Capital in Excess of ParDistributable Earnings (Loss)Net AssetsBalance as of June 30, 20192,370,011$2,370$29,986,710$(6,578,365)$23,410,715Net decrease in net assets resulting from operationsNet investment income———567,042567,042Net realized gains (losses) on investments———(1,552,290)(1,552,290)Net change in unrealized gains (losses) on investments———(1,332,402)(1,332,402)Distributions to Shareholders (Note 5)Distributions from earnings-FLEX Class A common shares———(346,714)(346,714)Return of capital distributions -FLEX Class A common shares——(1,351,043)—(1,351,043)Capital TransactionsShares issued65,39565734,355—734,420Commissions and fees on shares issued——(44,423)—(44,423)Shares issued through reinvestment of dividends86,53987897,848—897,935Repurchase of common shares(158,934)(159)(1,424,681)—(1,424,840)Tax Reclassification of Net Assets (Note 6)——(1,664,822)1,664,822—Total Increase (Decrease) for the year ended June 30, 2020(7,000)$(7)$(2,852,766)$(999,542)$(3,852,315)Balance as of June 30, 20202,363,011$2,363$27,133,944$(7,577,907)$19,558,400
 
 See notes to consolidated financial statements.
 
 
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 
 Common StockFor the Year Ended June 30, 2019SharesParPaid-in Capital in Excess of ParDistributable Earnings (Loss)Total Net AssetsBalance as of June 30, 2018657,370$6,574$8,859,427$(512,837)$8,353,164Net decrease in net assets resulting from operationsNet investment income———268,928268,928Net realized gains (losses) on investments———(1,202,885)(1,202,885)Net change in unrealized gains (losses) on investments———150,069150,069Distributions to Shareholders (Note 5)Distributions from earnings -PWAY Class A (Previously Class R)———(22,485)(22,485)Distributions from earnings -PWAY Class I (Previously Class RIA and I)———(1,247)(1,247)Return of capital distributions -PWAY Class A  (Previously Class R)——(285,101)—(285,101)Return of capital distributions -PWAY Class I (Previously Class RIA and I)——(15,806)—(15,806)Return of capital distributions -FLEX Class A common shares——(410,967)—(410,967)Capital TransactionsShares issued2,530328,077—28,080Commissions and fees on shares sold——(1,010)—(1,010)Shares issued through reinvestment of dividends28,585159320,674—320,833Repurchase of common shares(118,560)(736)(1,305,649)—(1,306,385)Offering costs (Note 4)——482,981—482,981Tax Reclassification of Net Assets——899,819(899,819)—Recapitalization and merger (Notes 1, 3 and 9)1,800,086(3,630)21,533,550(4,477,374)17,052,546Total Increase (Decrease) for the year ended June 30, 20191,712,641$(4,204)$21,246,568$(6,184,813)$15,057,551Balance as of June 30, 20192,370,011$2,370$30,105,995$(6,697,650)$23,410,715
 
 See notes to consolidated financial statements.
 
 
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 
 Common StockFor the Year Ended June 30, 2018SharesParPaid-in Capital in Excess of ParDistributable Earnings (Loss)Total Net AssetsBalance as of June 30, 2017621,376$6,214$8,457,153$(57,623)$8,405,744Net decrease in net assets resulting from operationsNet investment income———518,793518,793Net realized gains (losses) on investments—181,008181,008Net change in unrealized gains (losses) on investments———(704,926)(704,926)Distributions to Shareholders (Note 5)Distributions from earnings -PWAY Class A (Previously Class R)———(153,615)(153,615)Distributions from earnings -PWAY Class I (Previously Class RIA and I)———(8,138)(8,138)Return of capital distributions -PWAY Class A  (Previously Class R)——(383,567)—(383,567)Return of capital distributions -PWAY Class I (Previously Class RIA and I)——(20,199)—(20,199)Capital TransactionsShares issued52,780528789,372—789,900Commissions and fees on shares sold——(51,969)—(51,969)Shares issued through reinvestment of dividends21,195212283,462—283,674Repurchase of common shares(37,981)(380)(503,161)—(503,541)Tax Reclassification of Net Assets——288,336(288,336)—Total Increase (Decrease) for the year ended June 30, 201835,994$360$402,274$(455,214)$(52,580)Balance as of June 30, 2018657,370$6,574$8,859,427$(512,837)$8,353,164
 
 See notes to consolidated financial statements.
 
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 
 Year Ended June 30,202020192018Cash flows from operating activities:Net increase (decrease) in net assets resulting from operations$(2,317,650)$(783,888)$(5,125)Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:Amortization of offering costs575,073165,517358,608Purchases of investments(23,678,340)(12,454,720)(4,551,898)Repayments and sales of portfolio investments8,271,3069,854,2785,230,764Net change in unrealized gains (losses) on investments1,332,402(150,069)704,926Net realized loss on investments1,552,2901,202,884(181,008)Accretion of purchase discount on investments, net(111,531)(100,517)—Amortization of fixed income premium or discounts——(82,530)Waiver of offering costs—(1,975,233)—Amortization of deferred financing costs60,4885,704—Paid-in-kind interest(10,273)——Changes in other assets and liabilities:(Increase) Decrease in operating assetsReceivable for investments sold571,556(952,631)—Interest receivable(17,663)166,691(5,413)Due from Adviser (Note 4)128,852(10,743)(118,109)Deferred offering costs (Note 4)(563,847)—(227,362)Prepaid expenses42,347(42,950)4,473Due from Affiliate (Note 4)2,13712,017(12,018)Increase (Decrease) in operating liabilitiesDue to Adviser (Note 4)(127,414)126,874119,558Accrued expenses(129,544)104,2986,298Accrued legal fees(431,296)486,537—Accrued audit fees(191,212)254,23933,025Due to Administrator (Note 4)(218,851)295,40213,302Payable for investments purchased(1,271,399)1,961,399—Due to Affiliates (Note 4)40,77033,25313,744Interest payable33,56422,955116Net cash provided by (used in) operating activities(16,458,235)(1,778,703)1,301,351Cash flows from investing activities:Cash acquired in connection with merger (Note 9)—5,055,456—Net cash provided by (used in) investing activities—5,055,456—Cash flows from financing activities:Gross proceeds from shares issued (Note 3)734,42028,080809,900Commissions and fees on shares issued(44,423)(1,010)(52,366)Distributions paid to stockholders(814,497)(331,213)(293,792)Repurchase of common shares(1,920,346)(810,879)(503,541)Financing costs paid and deferred(125,000)(463,355)—Borrowings under Revolving Credit Facility (Note 11)15,500,0005,500,000325,000Repayments under Revolving Credit Facility (Note 11)—(1,350,000)(1,600,000)Offering costs—482,981—Offering costs paid and deferred—(188,336)—Net cash provided by (used in) financing activities13,330,1542,866,268(1,314,799)Net increase (decrease) in cash(3,128,081)6,143,021(13,448)Cash at beginning of year6,730,743587,722601,170Cash at end of year$3,602,662$6,730,743$587,722Supplemental disclosures:Cash paid for interest$509,211$29,979$67,079Purchases of investments settled net of proceeds from sale of investments$(15,407,034)$(2,600,442)$678,866Non-cash financing activities:Value of shares issued through reinvestment of dividends$897,935$320,833$283,674Net assets (exclusive of cash) of $11,997,090 acquired as a result of recapitalization and merger (Note 9)$—$11,997,090$—
 See notes to consolidated financial statements.
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 Portfolio Company / Security TypeIndustryAcquisition DateCoupon/Yield (b)FloorLegalMaturityPrincipal/ QuantityAmortized Cost (d)June 30, 2020 Fair Value (c)% of  Net AssetsNon-Control/Non-Affiliate Investments (less than 5.00% voting control):Senior Secured Loans-First Lien(j)(l)(n)Amerilife Holdings, LLC (Delayed Draw - $85,227 Commitment)(g)(m)Banking, Finance, Insurance & Real Estate2/6/20201ML+4.00% (5.00%)—3/18/2027$—$—$——%Amerilife Holdings, LLC(g)Banking, Finance, Insurance & Real Estate2/6/20201ML+4.00% (4.17%)—3/18/2027664,773$663,305663,3053.39%CareerBuilder(g)(k)Services: Consumer7/27/20173ML+6.75% (7.75%)1.007/31/2023969,272901,368880,4234.50%Correct Care Solutions Group Holdings, LLC(g)(k)Healthcare & Pharmaceuticals4/2/20191ML+5.50% (5.67%)—10/1/20252,075,7932,035,3452,048,02610.47%Digital Room Holdings, Inc(g)(k)Media: Broadcasting & Subscription5/14/20196ML+5.00% (6.45%)—5/21/20261,980,0001,952,3871,871,8009.57%GK Holdings, Inc.(i)(o)Media: Broadcasting & Subscription1/30/20153ML+6.00% (7.94%)1.001/20/2021118,125117,70384,1640.43%Global Tel*Link Corporation(g)(k)Telecommunications4/5/20191ML+4.25% (4.43%)—11/28/20251,977,3931,921,6931,846,2429.44%Help/Systems Holdings, Inc.(g)High Tech Industries11/14/20193ML+4.75% (5.75%)1.0011/19/20261,496,2501,482,5271,482,9577.58%Janus International Group, LLC(g)(k)Construction & Building7/9/20196ML+4.50% (5.57%)1.002/12/20251,730,6001,730,6001,644,0708.41%Keystone Acquisition Corp.(g)(k)Healthcare & Pharmaceuticals4/10/20193ML+5.25% (6.25%)1.005/1/20242,076,7422,051,4672,076,74110.62%McAfee LLC(g)High Tech Industries9/17/20171ML+3.75% (3.93%)—9/30/2024240,445238,500234,8681.20%The Octave Music Group, Inc.(g)Consumer goods: Durable2/26/20201ML+5.25% (6.25%)1.005/29/2025743,534736,490705,2873.61%PGX Holdings, Inc.(g)Services: Consumer4/2/20191ML+5.25% (6.25%)1.009/29/2023706,546702,636706,5463.61%Quidditch Acquisition, Inc.(g)Beverage, Food & Tobacco3/16/20183ML+7.00% (7.31%)—3/21/2025488,812480,745436,6732.23%Research Now Group, Inc. & Survey Sampling International LLC(g)Services: Business4/2/20193ML+5.50% (6.50%)1.0012/20/20241,980,9641,980,9641,960,85010.03%Rocket Software, Inc.(g)(k)High Tech Industries4/2/20191ML+4.25% (4.42%)—11/28/20252,075,8542,059,0142,038,28110.42%Securus Technologies Holdings, Inc.(g)(k)Telecommunications7/31/20191ML+4.50% (5.50%)1.0011/1/20241,979,6951,826,1591,734,2008.87%Shutterfly, Inc.(g)(k)Media: Diversified and Production11/14/20193ML+6.00% (6.31%)—9/25/20261,741,9351,574,1651,644,0008.41%Sorenson Communications, LLC(g)(k)Services: Consumer4/26/20193ML+6.50% (6.81%)—4/29/20241,357,9401,343,0571,347,8296.89%Staples, Inc.(g)(k)Wholesale11/18/20191ML+5.00% (6.31%)—4/16/20261,989,9501,965,1381,807,7789.24%Transplace Holdings, Inc.(g)Transportation: Cargo4/10/20196ML+3.75% (4.82%)1.0010/7/20241,486,2941,469,0431,469,6477.51%Upstream Newco, Inc.(g)Services: Consumer10/24/20191ML+4.50% (4.68%)—11/20/20261,745,6251,737,6221,654,9708.46%Vero Parent Inc. (Sahara)(g)High Tech Industries8/11/20173ML+6.25% (6.61%)—8/16/2024340,436337,697314,9041.61%Total Senior Secured Loans-First Lien$29,307,625$28,653,561146.50%Senior Secured Loans-Second Lien(j)(l)(n)Encino Acquisition Partners Holdings, LLC(g)Energy: Oil & Gas9/25/20181ML+6.75% (7.75%)1.0010/29/2025$500,000$495,842$365,0001.87%FullBeauty Brands Holding(f)Retail2/7/20197%—1/31/202511,8259,7421,7740.01%GK Holdings, Inc.(i)(o)Media: Broadcasting & Subscription1/30/20153ML+10.25% (12.19%)1.001/21/2022125,000123,49875,6240.39%Inmar, Inc.(g)Media: Advertising, Printing&Publishing4/25/20176ML+8.00% (9.07%)1.005/1/2025500,000493,860332,8121.70%McAfee LLC(g)High Tech Industries9/27/20171ML+8.50% (9.50%)1.009/29/2025437,500435,130437,9382.24%Total Senior Secured Loans-Second Lien$1,558,072$1,213,1486.21%Senior Secured Notes(a)(j)(l)Ace Cash Express, Inc.(k)Financial12/8/201712.00%N/A12/15/2022$1,000,000$955,986$811,2674.15%Total Senior Secured Notes$955,986$811,2674.15%Structured Subordinated Notes(a)(e)(j)(l)Apidos CLO XXIVStructured Finance5/17/201920.83%N/A10/20/2030$250,000$158,111$144,2370.74%Apidos CLO XXVIStructured Finance7/25/201920.52%N/A7/18/2029250,000176,714171,1890.88%
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 Portfolio Company / Security TypeIndustryAcquisition DateCoupon/Yield (b)FloorLegalMaturityPrincipal/ QuantityAmortized Cost (d)June 30, 2020 Fair Value (c)% of  Net AssetsCalifornia CLO IX, Ltd.Structured Finance12/13/201923.03%N/A7/16/2032500,000183,350219,3161.12%Carlyle Global Market Strategies CLO 2014-4-R, Ltd.Structured Finance4/7/201716.89%N/A7/15/2030250,000183,549152,0900.78%Carlyle Global Market Strategies CLO 2017-5, Ltd.Structured Finance12/18/201713.44%N/A1/22/2030500,000480,053388,6801.99%Galaxy XIX CLO, Ltd.Structured Finance12/5/201615.57%N/A7/24/2030250,000172,025107,7700.55%GoldenTree Loan Opportunities IX, Ltd.Structured Finance7/19/201714.57%N/A10/29/2029250,000192,349132,0520.68%Madison Park Funding XIII, Ltd.Structured Finance11/6/201521.73%N/A4/22/2030250,000174,573163,9950.84%Madison Park Funding XIV, Ltd.Structured Finance11/16/201514.66%N/A10/22/2030250,000183,577141,3540.72%Octagon Investment Partners XIV, Ltd.Structured Finance12/1/201715.14%N/A7/16/2029850,000540,175412,5902.11%Octagon Investment Partners XV, Ltd.Structured Finance5/23/201918.90%N/A7/19/2030500,000284,052261,4831.34%Octagon Investment Partners XXI,Ltd.(k)Structured Finance1/6/201613.69%N/A2/14/2031387,538233,443161,6500.83%Octagon Investment Partners 30, Ltd.Structured Finance11/16/201712.72%N/A3/17/2030475,000439,458338,2561.73%Octagon Investment Partners 31, Ltd.Structured Finance12/20/201930.01%N/A7/20/2030250,000150,012142,5430.73%Octagon Investment Partners 36, Ltd.Structured Finance12/20/201924.76%N/A4/15/2031500,000405,831366,6021.87%Octagon Investment Partners 39, Ltd.Structured Finance1/9/202023.29%N/A10/21/2030250,000188,817176,0100.90%OZLM XII, Ltd.Structured Finance1/17/20170.33%N/A4/30/2027275,000197,010117,7120.60%Sound Point CLO II, Ltd.Structured Finance5/16/201915.39%N/A1/26/20311,500,000870,827675,9043.45%Sound Point CLO VII-R, Ltd.Structured Finance8/23/201919.90%N/A10/23/2031150,00060,83251,6530.25%Sound Point CLO XVIII, Ltd.Structured Finance5/16/201914.01%N/A1/21/2031250,000236,191204,7421.05%THL Credit Wind River 2013-1 CLO, Ltd.Structured Finance11/1/20179.84%N/A7/22/2030325,000241,512145,7690.75%Venture XXXIV CLO, Ltd.Structured Finance7/30/201917.97%N/A10/15/2031250,000212,471195,3251.00%Voya IM CLO 2013-1, Ltd.(k)Structured Finance6/9/20168.67%N/A10/15/2030278,312190,763136,4710.70%Voya CLO 2016-1, Ltd.Structured Finance1/22/201615.31%N/A1/21/2031250,000216,424191,3460.97%Total Structured Subordinated Notes(e)$6,372,119$5,198,73926.58%Equity/Other(a)(j)(l)FullBeauty Brands Holding, Common Stock(h)(i)Retail2/7/2019N/AN/AN/A72208,754——%Total Equity/Other$208,754$——%Total Non-Control/Non-Affiliate Investments$38,402,556$35,876,715183.44%Affiliate Investments (5.00% to 24.99% voting control):Equity/Other(a)(j)(l)ACON IWP Investors I, L.L.C.(h)(i)Healthcare & Pharmaceuticals4/30/2015N/AN/AN/A$472,357$472,357$786,9884.02%Total Equity/Other$472,357$786,9884.02%Total Affiliate Investments$472,357$786,9884.02%Total Portfolio Investments$38,874,913$36,663,703187.46%
 (a)Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. Of the Company’s total investments as ofJune 30, 2020,16%are non-qualifying assets as a percentage of total assets. (b)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") which reset monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or the prime lending rate ("Prime") and the current contractual interest rate in effect atJune 30, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor. The one-month ("1ML"), two-month ("2ML"), three-month ("3ML"), and six-month ("6ML") LIBOR rates are based on the applicable LIBOR rate for each investment on its reset date. (c)Fair value is determined by the Company’s board of directors (see Note 2). (d)See Note 6 for a discussion of the tax cost of the portfolio. (e)The structured subordinated notes and preference/preferred shares are considered equity positions in the Collateralized Loan Obligations (“CLOs”), which is referred to as "Subordinated Structured Notes", or "SSN". The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 payments to debt holders and fund expenses. The current estimated yield is calculated using amortized cost based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.
 (f)This investment has contractual payment-in-kind (“PIK”) interest. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. (g)Security is held by Prospect Flexible Funding, LLC, our SPV, and is pledged as collateral for the Credit Facility and such security is not available as collateral to our general creditors (see Note 11). The fair values of the investments held by the SPV atJune 30, 2020andJune 30, 2019were $29,705,147 and $15,859,230, respectively, representing 81% and 66% of our total investments, respectively. (h)Affiliated investment as defined by the 1940 Act, whereby the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. Affiliated funds that are managed by an affiliate of Triton Pacific Adviser, LLC also hold investments in this security. The aggregate fair value of non-controlled, affiliated investments atJune 30, 2020represented 4.02% of the Company’s net assets. Fair value as ofJune 30, 2020along with transactions during the year endedJune 30, 2020in affiliated investments were as follows: Non-controlled, Affiliated InvestmentsNumber of SharesFair Valueat June 30, 2019Gross Additions (Cost)*Gross Reductions(Cost)**Unrealized Change in FMVNet Realized Gain (Loss)Fair Valueat June 30, 2020Interest & DividendsCredited to IncomeACON IWP Investors I, L.L.C.472,357$570,816$—$—$216,172—$786,988$—Total$570,816$—$—$216,172$—$786,988$—
 *Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
 **Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
 (i)    Represents non-income producing security that has not paid interest or dividends in the year preceding the reporting date.
 (j)Investments are valued using significant unobservable inputs and are categorized as Level 3 investments in accordance with ASC 820. See Notes 2 and 8 within the accompanying notes to the consolidated financial statements. (k)Acquisition date represents the date of FLEX's initial investment. Follow-on acquisitions have occurred on the following dates to arrive at FLEX's current investment (excluding effects of capitalized PIK interest, premium/original issue discount
 amortization/accretion, and partial repayments):
 Portfolio CompanyInvestmentFollow-On Acquisition DatesFollow-On Acquisitions (Excluding initial investment cost)Ace Cash Express, Inc.Senior Secured Notes7/15/2019$493,625CareerBuilderSenior Secured Loans-First Lien6/5/2020690,000Correct Care Solutions Group Holdings, LLCSenior Secured Loans-First Lien4/10/2019, 7/25/20191,327,000Digital Room Holdings, IncSenior Secured Loans-First Lien7/16/2019490,000Global Tel*Link CorporationSenior Secured Loans-First Lien7/9/2019, 7/16/20191,436,250Janus International Group, LLCSenior Secured Loans-First Lien8/7/20191,498,125Keystone Acquisition Corp.Senior Secured Loans-First Lien4/23/2019, 8/2/20191,576,000Octagon Investment Partners XXI, Ltd.Structured subordinated notes2/14/1935,015Rocket Software, Inc.Senior Secured Loans-First Lien6/28/2019, 7/30/20191,327,272Securus Technologies Holdings, Inc.Senior Secured Loans-First Lien8/2/2019908,750Shutterfly, Inc.Senior Secured Loans-First Lien11/18/2019, 11/20/20191,361,250Sorenson Communications, LLCSenior Secured Loans-First Lien5/27/2020985,000Staples, Inc.Senior Secured Loans-First Lien2/3/2020980,031Voya IM CLO 2013-1, Ltd.Structured subordinated notes10/17/2017, 7/1/201920,584
 (l)None of the investments qualify as restricted securities. (m)Delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 4.00%.  As of June 30, 2020, we had $85,227 of delayed draw term loan commitments to our portfolio companies. There were no delayed draw term loan commitments as of June 30, 2019. (n)Syndicated investments which were originated by a financial institution and broadly distributed. (o)Investment on non-accrual status as of the reporting date (see Note 2). 
 See notes to consolidated financial statements.
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 Portfolio Company / Security TypeIndustryAcquisition DateCoupon/Yield (b)FloorLegalMaturityPrincipal/ QuantityAmortized Cost (d)June 30, 2019 Fair Value (c)% of  Net AssetsNon-Control/Non-Affiliate Investments (less than 5.00% voting control):Senior Secured Loans-First Lien(k)(m)LSF9 Atlantis Holdings, LLC(g)Retail4/21/20171ML+6.00% (8.42%)1.005/1/2023$475,000$470,292$446,5971.91%California Pizza Kitchen, Inc.(g)Hotel, Gaming & Leisure8/19/20166ML+6.00% (8.53%)1.008/23/2022340,375337,013333,5681.42%CareerBuilder(g)Services: Consumer7/27/20173ML+6.75% (9.08%)1.007/31/2023356,625346,152355,7341.52%Correct Care Solutions Group Holdings, LLC(g)Healthcare & Pharmaceuticals4/2/20191ML+5.50% (7.94%)—10/1/20251,246,8671,203,0241,206,5005.15%Deluxe Entertainment Services Group, Inc.Services: Business10/24/20163ML+5.50% (8.08%)1.002/28/2020326,662317,103292,3621.25%Digital Room Holdings, IncMedia: Broadcasting & Subscription5/14/20191ML+5.00% (7.40%)—5/21/20261,500,0001,477,8791,477,3506.31%GK Holdings, Inc.Media: Broadcasting & Subscription1/30/20153ML+6.00% (8.33%)1.001/20/2021119,375118,197101,4690.43%Global Tel*Link Corporation(g)Telecommunications4/5/20191ML+4.25% (6.65%)—11/29/2025498,747497,513479,0042.05%GoWireless Holdings, Inc.(g)Retail12/21/20171ML+6.50% (8.94%)1.0012/22/2024462,500457,874450,7461.93%Help/Systems Holdings, Inc.(g)High Tech Industries4/2/20193ML+3.75% (6.08%)—3/28/2025997,481983,926991,2474.23%InfoGroup Inc.(g)Media: Advertising, Printing & Publishing3/28/20173ML+5.00% (7.33%)1.004/3/2023488,750483,922477,1422.04%J.D Power and Associates(g)Automotive4/2/20191ML+3.75% (6.19%)1.009/7/2023498,719493,911496,2262.12%Keystone Acquisition Corp.(g)Healthcare & Pharmaceuticals4/10/20193ML+5.25% (7.58%)1.005/1/2024748,096737,058731,2643.12%McAfee LLC(g)High Tech Industries9/27/20171ML+3.75% (6.15%)1.009/30/2024242,892240,488242,9301.04%PGX Holdings, Inc.(g)Services: Consumer4/2/20191ML+5.25% (7.66%)1.009/29/2020744,359733,789744,3593.18%Prospect Medical Holdings, Inc.(g)Healthcare & Pharmaceuticals2/16/20181ML+5.50% (7.94%)1.002/22/2024493,750483,992467,4162.00%Quidditch Acquisition, Inc.(g)Beverage, Food & Tobacco3/16/20181ML+7.00% (9.40%)1.003/21/2025493,750483,971498,6882.13%SCS Holdings I Inc.(g)Services: Business5/22/20193ML+4.25% (6.57%)—7/1/20261,250,0001,246,8751,250,2565.34%Research Now Group, Inc.(g)Services: Business4/2/20193ML+5.50% (8.08%)1.0012/20/2024748,101748,101748,1013.20%Rocket Software, Inc.(g)High Tech Industries4/2/20191ML+4.25% (6.69%)—11/28/20251,246,8751,240,0281,221,9385.22%SESAC Holdco II LLC(g)Media: Diversified & Production4/16/20191ML+3.25% (5.40%)1.002/23/2024498,724489,513489,6852.09%Sorenson Communications, LLCConsumer4/26/20193ML+6.50% (8.83%)1.004/29/2024500,000500,000496,1342.12%Transplace Holdings, Inc.(g)Transportation: Cargo4/10/20191ML+3.75% (6.15%)1.0010/5/2024498,737496,276497,1812.12%Travel Leaders Group, LLC(g)Hotel, Gaming & Leisure1/19/20171ML+4.00%  (6.38%)1.001/25/2024495,000495,029496,6482.12%Vero Parent Inc. (Sahara)(g)High Tech Industries8/11/20171ML+4.50% (6.90%)1.008/16/2024343,901340,497343,2561.47%Wirepath LLC(g)Services: Business7/31/20171ML+4.00% (6.44%)1.008/5/2024491,297488,866490,0692.09%Total Senior Secured Loans-First Lien$15,911,289$15,825,87067.6%Senior Secured Loans-Second Lien(k)(m)Encino Acquisition Partners Holdings, LLC(g)Energy: Oil & Gas9/25/20181ML+6.75% (9.19%)1.0010/29/2025$500,000$495,061$461,2501.97%FullBeauty Brands Holding(l)Retail2/7/20197.00%—1/31/202511,1279,4577,6770.03%GK Holdings, Inc.Media: Broadcasting & Subscription1/30/20153ML+10.25% (12.58%)1.001/21/2022125,000122,53396,8750.41%Inmar(g)Media: Advertising, Printing & Publishing4/25/20173ML+8.00% (10.60%)1.005/1/2025500,000492,587470,0002.01%McAfee LLC(g)High Tech Industries9/27/20171ML+8.50% (10.90%)1.009/29/2025437,500434,677444,1541.90%Neustar, Inc.(g)High Tech Industries3/2/20171ML+8.00% (10.44%)1.008/8/2025749,792738,678717,1463.06%
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 Portfolio Company / Security TypeIndustryAcquisition DateCoupon/Yield (b)FloorLegalMaturityPrincipal/ QuantityAmortized Cost (d)June 30, 2019 Fair Value (c)% of  Net AssetsNPC International, Inc.(g)Hotel, Gaming & Leisure3/30/20171ML+7.50% (9.94%)1.004/18/2025500,000497,584308,1251.32%Total Senior Secured Loans-Second Lien$2,790,577$2,505,22710.7%Senior Secured Notes(a)(j)Ace Cash Express, Inc.Financial12/15/201712.00%N/A12/15/2022$450,000$444,957$402,1631.72%Total Senior Secured Notes$444,957$402,1631.72%Structured subordinated notes(a)(e)(f)(k)Apidos CLO XXIVStructured Finance5/17/201923.23%N/A10/20/2030$250,000$156,400$162,3830.69%Carlyle Global Market Strategies CLO 2014-4-R, Ltd.Structured Finance4/12/201721.64%N/A7/15/2030250,000170,233179,1080.77%Carlyle Global Market Strategies CLO 2017-5, Ltd.Structured Finance1/30/201817.03%N/A1/22/2030500,000493,001466,1651.99%Galaxy XIX CLO, Ltd.Structured Finance12/8/201614.11%N/A7/24/2030250,000170,747128,7000.55%GoldenTree Loan Opportunities IX, Ltd.Structured Finance7/27/201715.39%N/A10/29/2029250,000188,924154,0570.66%Madison Park Funding XIII, Ltd.Structured Finance11/12/201522.24%N/A4/22/2030250,000178,423182,9500.78%Madison Park Funding XIV, Ltd.Structured Finance11/19/201516.25%N/A10/22/2030250,000188,558180,1190.77%Octagon Investment Partners XIV, Ltd.Structured Finance12/6/201718.01%N/A7/16/2029850,000556,194479,1862.05%Octagon Investment Partners XV, Ltd.Structured Finance5/23/201922.82%N/A7/19/2030500,000270,348297,3261.27%Octagon Investment Partners XXI, Ltd.Structured Finance1/13/201616.05%N/A2/14/2031387,538223,038206,6010.88%Octagon Investment Partners 30, Ltd.Structured Finance11/21/201716.18%N/A3/17/2030475,000456,377405,2481.73%OZLM XII, Ltd.Structured Finance1/20/201710.59%N/A4/30/2027275,000219,453171,5240.73%Sound Point CLO II, Ltd.Structured Finance5/16/201920.73%N/A1/26/20311,500,000902,022881,6083.77%Sound Point CLO XVIII, Ltd.Structured Finance5/16/201919.05%N/A1/21/2031250,000245,476246,3381.05%Voya IM CLO 2013-1, Ltd.Structured Finance6/14/201614.81%N/A10/15/2030278,312188,161159,6830.68%Voya CLO 2016-1, Ltd.Structured Finance2/25/201620.38%N/A1/21/2031250,000217,902221,7410.95%THL Credit Wind River 2013-1 CLO, Ltd.Structured Finance11/3/201712.4%N/A7/30/2030325,000245,179192,7500.82%Total Structured subordinated notes(e)(f)$5,070,436$4,715,48720.14%Equity/Other(a)(k)FullBeauty Brands Holding, Common Stock(i)Retail2/7/2019N/AN/AN/A72208,754——%Total Equity/Other$208,754$——%Total Non-Control/Non-Affiliate Investments$24,426,013$23,448,747100.16%Total Affiliate Investments (5.00% to 24.99% voting control):Equity/Other(a)(k)ACON IWP Investors I, L.L.C.(h)(i)Healthcare & Pharmaceuticals4/30/2015N/AN/AN/A$472,357$472,357$570,8162.44%Total Equity/Other$472,357$570,8162.44%Total Affiliate Investments$472,357$570,8162.44%Total Portfolio Investments$24,898,370$24,019,563102.6%
 
 (a)Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. Of the Company’s total investments as of June 30, 2019, 17% are non-qualifying assets as a percentage of assets. 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 (b)The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) which reset monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at June 30, 2019. Certain investments are subject to a LIBOR or Prime interest rate floor. As of June 30, 2019, the one-month ("1ML"), two-month ("2ML"), three-month ("3ML"), and six-month ("6ML") LIBOR rates were 2.40%, 2.33%, 2.32%, and 2.20%, respectively. (c)Fair value is determined by the Company’s board of directors (see Note 2). (d)See Note 6 for a discussion of the tax cost of the portfolio. (e) The structured subordinated notes and preference/preferred shares are considered equity positions in the Collateralized Loan Obligations (“CLOs”). The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield is based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.
 (f)All structured subordinated notes are co-investments with other entities managed by an affiliate of the Adviser (see Note 4). (g)The senior structured loan is held as collateral at the SPV, Prospect Flexible Funding, LLC as of June 30, 2019. (h)Affiliated investment as defined by the 1940 Act, whereby the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. Affiliated funds that are managed by an affiliate of Triton Pacific Adviser, LLC also hold investments in this security. The aggregate fair value of non-controlled, affiliated investments at June 30, 2019 represented 2.44% of the Company’s net assets. Fair value as of June 30, 2019 along with transactions during the period ended June 30, 2019 in affiliated investments were as follows: Non-controlled, Affiliated InvestmentsNumber of SharesFair Valueat March 31, 2019Gross Additions (Cost)*Gross Reductions(Cost)**Unrealized Change in FMVNet Realized Gain (Loss)Fair Valueat June 30, 2019Interest & DividendsCredited to IncomeACON IWP Investors I, L.L.C.472,357$507,988$—$—$62,828—$570,816$—Total$507,988$—$—$62,828$—$570,816$—
 *Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
 **Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
 (i)    Represents non-income producing security that has not paid a dividend in the year preceding the reporting date.
 (j)All investments in this category are categorized as Level 2 investments in accordance with ASC 820. See Note 2 within the accompanying notes to the consolidated financial statements. (k)   All investments in this category are valued using significant unobservable inputs and are categorized as Level 3 investments in accordance with ASC 820. See Notes 2 and 7 within the accompanying notes to the consolidated financial statements.
 (l)   This investment has contractual payment-in-kind (“PIK”) interest. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date.
 (m) Syndicated investments which were originated by a financial institution and broadly distributed.
 
 See notes to consolidated financial statements.
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 
 
 NOTE 1 - NATURE OF OPERATIONS
 TP Flexible Income Fund, Inc. (f/k/a Triton Pacific Investment Corporation, Inc.) (the “Company”, "FLEX", “our”, “us”, “we”), incorporated in Maryland on April 29, 2011, is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). On and effective August 5, 2020, the Company changed its name to Prospect Flexible Income Fund, Inc. from TP Flexible Income Fund, Inc. (the “Name Change”) by filing Articles of Amendment (the “Articles of Amendment”) to its Fourth Articles of Amendment and Restatement, as amended and supplemented. Our investment objective is to generate current income and, as a secondary objective, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. We intend to meet our investment objective by primarily lending to and investing in the debt of privately-owned U.S. middle market companies, which we define as companies with annual revenue between $50 million and $2.5 billion. We expect that at least 70% of our portfolio of investments will consist primarily of syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt, and that up to 30% of our portfolio of investments will consist of other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of a type of pools of broadly syndicated loans known as collateralized loan obligations ("CLOs"), which we also refer to as subordinated structured notes ("SSNs"). Pursuant to our Articles of Incorporation, as amended, restated and supplemented, the Company is authorized to issue 75,000,000 shares of common stock with a par value of $0.001 per share. Additionally, the Company is authorized to issue 25,000,000 shares of preferred stock with a par value of $0.001 per share. The Company is currently offering for sale a maximum of $300,000,000 of shares of common stock on a “best efforts” basis pursuant to a registration statement on Form N-2 filed with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended, which was declared effective on June 24, 2020 (the “Offering”). On June 25, 2014, the Company met its minimum offering requirement of $2,500,000 and released all shares held in escrow.
 On March 31, 2019, Pathway Capital Opportunity Fund, Inc. (“PWAY”) merged with and into us (the “Merger”).  As the combined surviving company, we were renamed TP Flexible Income Fund, Inc. (we were formerly known as Triton Pacific Investment Corporation, Inc. (“TPIC”)).  In connection with the Merger, Prospect Flexible Income Management, LLC (the "Adviser"), an affiliate of PWAY, became our investment adviser, and Prospect Administration LLC, an affiliate of the Adviser, became our administrator. Although PWAY merged into us in connection with the Merger, PWAY is considered the accounting survivor of the Merger and its historical financial statements are included and discussed in this report. The Company adopted PWAY’s fiscal year end of June 30.
 The Adviser was formed in Delaware as a private investment management firm and is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended, or the Advisers Act. The Adviser oversees the management of our activities and is responsible for making the investment decisions with respect to our investment portfolio, subject to the oversight of our board of directors.
 
 On May 16, 2019, we formed a wholly-owned subsidiary TP Flexible Funding, LLC (the “SPV”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at the SPV. This subsidiary has been consolidated since operations commenced.  On and effective August 5, 2020, the Company changed the name of the SPV to Prospect Flexible Funding, LLC.
 
 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation and Consolidation. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) pursuant to the requirements for reporting on Form 10-K, ASC 946, Financial Services - Investment Companies (“ASC 946”), and Articles 3, 6 and 12 of Regulation S-X. Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Our consolidated financial statements include the accounts of FLEX and the SPV. All intercompany balances and transactions have been eliminated in consolidation.
 Reclassifications. Certain reclassifications have been made in the presentation of prior consolidated financial statements and accompanying notes to conform to the presentation as of and for the year ended  June 30, 2020 .
 Management Estimates and Assumptions. The preparation of the consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income, expenses, and gains and losses during the reported period. Changes in the economic environment, financial markets, creditworthiness of the issuers of our investment portfolio and any other parameters used in determining these estimates could cause actual results to differ, and these differences could be material.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Cash. All cash balances are maintained with high credit quality financial institutions which are members of the Federal Deposit Insurance Corporation. Cash held at financial institutions, at times, may exceed the Federal Deposit Insurance Corporation ("FDIC") insured limit.
 Valuation of Portfolio Investments. The Company determines the fair value of its investment portfolio each quarter. The fair values of the Company’s investments are determined in good faith by the Company’s board of directors. The Company’s board of directors is solely responsible for the valuation of the Company’s portfolio investments at fair value as determined in good faith pursuant to the Company’s valuation policy and consistently applied valuation process.
 In connection with that determination, the Adviser provides the Company’s board of directors with portfolio company valuations which are based on relevant inputs which may include indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services.
 We follow guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which classifies the inputs used to measure fair values into the following hierarchy:
 Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
 Level 2. Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in an inactive market, or other observable inputs other than quoted prices.
 Level 3. Unobservable inputs for the asset or liability.
 In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.
 Securities that are publicly-traded are valued at the reported closing price on the valuation date. Securities traded in the over-the-counter market are valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We value over-the-counter securities by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent pricing agent and screened for validity by such service. As a result of the volatility and disruption to the global economy from the Wuhan Virus pandemic (as further discussed in Note 8), certain market quotations were not deemed to represent fair value.
 When market quotations are not readily available or when such market quotations are deemed not to represent fair value, our board of directors has approved a multi-step valuation process for each quarter, as described below, and such investments are classified in Level 3 of the fair value hierarchy:
 1.Each portfolio company or investment is reviewed by investment professionals of the Adviser with the independent valuation firms engaged by our board of directors. 2.The independent valuation firms prepare independent valuations based on their own independent assessments and issue their reports. 3.The audit committee of our board of directors (the “Audit Committee”) reviews and discusses with the independent valuation firms the valuation reports, and then makes a recommendation to our board of directors of the value for each investment. 4.Our board of directors discusses valuations and determines the fair value of such investments in our portfolio in good faith based on the input of the Adviser, the respective independent valuation firms and the Audit Committee. 
 Our non-CLO investments are valued utilizing broker quotes, yield technique, enterprise value (“EV”) technique, net asset value technique, liquidation technique, discounted cash flow technique, or a combination of techniques, as appropriate. The yield technique uses loan spreads for loans and other relevant information implied by market data involving identical or comparable assets or liabilities. Under the EV technique, the EV of a portfolio company is first determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i.e., “waterfall” allocation). To determine the EV, we typically use a market (multiples) valuation approach that considers relevant and applicable market trading data of guideline public companies, transaction metrics from precedent merger and acquisitions transactions, and/or a discounted cash flow technique. The net asset value technique, an income approach, is used to derive a value of an underlying investment by dividing a relevant earnings stream by an appropriate capitalization rate. The liquidation technique is intended to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio company’s assets. The discounted cash flow technique converts future cash flows or earnings to a range of fair values
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 from which a single estimate may be derived utilizing an appropriate discount rate. The fair value measurement is based on the net present value indicated by current market expectations about those future amounts.
 Our investments in bonds and loans are classified as Level 3 fair value measured securities under ASC 820.
 The types of factors that are taken into account in fair value determination include, as relevant, market changes in expected returns for similar investments, performance improvement or deterioration, security covenants, call protection provisions, and information rights, the nature and realizable value of any collateral, the issuer’s ability to make payments and its earnings and cash flows, the principal markets in which the issuer does business, publicly available financial ratios of peer companies, comparisons to traded securities, the principal market, enterprise values, and other relevant factors.
 Our investments in CLOs are classified as Level 3 fair value measured securities under ASC 820 and are valued using a discounted multi-path cash flow model. The CLO structures are analyzed to identify the risk exposures and to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows from the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market as well as certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the multi-path cash flows. We are not responsible for and have no influence over the asset management of the portfolios underlying the CLO investments we hold, as those portfolios are managed by non-affiliated third-party CLO collateral managers. The main risk factors are default risk, prepayment risk, interest rate risk, downgrade risk, and credit spread risk.
 Valuation of Other Financial Assets and Financial Liabilities. ASC 825, Financial Instruments, specifically ASC 825-10-25, permits an entity to choose, at specified election dates, to measure eligible items at fair value (the "Fair Value Option"). We have not elected the Fair Value Option to report selected financial assets and financial liabilities. See Note 11 for the disclosure of the fair value of our outstanding debt and the market observable inputs used in determining fair value.
 Investment Risks
 Our investments are subject to a variety of risks. Those risks include the following:
 Market Risk
 Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.
 Credit Risk
 Credit risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.
 Liquidity Risk
 Liquidity risk represents the possibility that we may not be able to rapidly adjust the size of our investment positions in times of high volatility and financial stress at a reasonable price.
 Interest Rate Risk
 Interest rate risk represents a change in interest rates, which could result in an adverse change in the fair value of an interest-bearing financial instrument.
 Prepayment Risk
 Many of our debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the security and making us less likely to fully earn all of the expected income of that security and reinvesting in a lower yielding instrument.
 Structured Credit Related Risk
 CLO investments may be riskier and less transparent to us than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans.
 Investment Classification . We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of more than 25% of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through the possession outright or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.
 As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of June 30, 2020 and June 30, 2019 , our qualifying assets as a percentage of total assets, stood at 83.78% and 82.79%, respectively.
 Investment Transactions. Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Amounts for investments traded but not yet settled are reported in Payable for investments purchased and Receivable for investments sold on the Consolidated Statements of Assets and Liabilities .
 Revenue Recognition. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Accretion of such purchase discounts or amortization of such premiums is calculated using the effective interest method as of the settlement date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or bond, any unamortized discount or premium is recorded as interest income. The Company records dividend income on the ex-dividend date. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. Loans are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Unpaid accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans are either applied to the cost basis or interest income, depending upon management’s judgment of the collectibility of the loan receivable. Non-accrual loans are restored to accrual status when past due principal and interest is paid and in management’s judgment, is likely to remain current and future principal and interest collections when due are probable. Interest received and applied against cost while a loan is on non-accrual, and PIK interest capitalized but not recognized while on non-accrual, is recognized prospectively on the effective yield basis through maturity of the loan when placed back on accrual status, to the extent deemed collectible by management. As of June 30, 2020, the Company did not have any loans on non-accrual status. Loan origination fees are capitalized and the Company accretes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees are recorded as interest income. Upfront structuring fees are recorded as fee income when earned. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.
 Some of our loans and other investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, we capitalize the accrued interest (reflecting such amounts in the basis as additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point that we believe PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. We do not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if we believe that PIK is expected to be realized.
 Interest income from investments in Structured Subordinated Notes (typically preferred shares, income notes or subordinated notes of CLO funds) is recorded based on an estimation of an effective yield to expected maturity utilizing assumed future cash flows in accordance with ASC 325-40, Beneficial Interest in the Securitized Financial Assets . The Company monitors the expected cash inflows from CLO equity investments, including the expected residual payments, and the estimated effective yield is determined and updated periodically. In accordance with ASC 325-40, Beneficial Interest in Securitized Financial Assets , investments in CLOs are periodically assessed for other-than-temporary impairment (“OTTI”). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down to its fair value as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.
 Due from and to Adviser. Amounts due from the Adviser are for amounts waived under the ELA (as such term is defined in Note 4) and amounts due to the Adviser are for base management fees, incentive fees, operating expenses paid on our behalf and offering and organization expenses paid on our behalf. The due from and due to Adviser balances are presented net on the Consolidated Statements of Assets and Liabilities as of June 30, 2020  and are presented gross on the Consolidated Statements of Assets and Liabilities as of June 30, 2019 . All balances due from and to the Adviser are settled quarterly.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Paid-In-Kind Interest. The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. For the years ended June 30, 2020 and 2019, PIK interest included in interest income totaled $10,273 and $166, respectively. The Company stops accruing PIK interest when it is determined that PIK interest is no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to the stockholders in the form of distributions, even though the Company has not yet collected the cash.
 Offering Costs and Expenses. The Company will incur certain costs and expenses in connection with registering to sell shares of its common stock. These costs and expenses principally relate to certain costs and expenses for advertising and sales, printing and marketing costs, professional and filing fees. Offering costs incurred by the Company are capitalized to deferred offering costs on the Consolidated Statements of Assets and Liabilities and amortized to expense over the 12 month period following such capitalization on a straight line basis. Prior to the Merger, there were offering and organizational costs due to the PWAY's investment adviser (as such term is defined in Note 4).
 Dividends and Distributions. Dividends and distributions to common stockholders are recorded on the record date. The amount, if any, to be paid as a monthly dividend or distribution is approved by our board of directors quarterly and generally depends on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board deems relevant from time to time. Net realized capital gains, if any, are distributed at least annually.
 Financing Costs. We record origination expenses related to our Revolving Credit Facility as deferred financing costs. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation of our Revolving Credit Facility. (See Note 11 for further discussion).
 Per Share Information. Net increase or decrease in net assets resulting from operations per share is calculated using the weighted average number of common shares outstanding for the period presented. In accordance with ASC 946, convertible securities are not considered in the calculation of net asset value per share. As of June 30, 2020 , there were no issued convertible securities.
 Net Realized and Net Change in Unrealized Gains or Losses. Gains or losses on the sale of investments are calculated by using the specific identification method. The Company measures 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. 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 gains or losses when gains or losses are realized.
 Federal and State Income Taxes. The Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and intends to continue to comply with the requirements of the Code applicable to RICs. As a RIC, the Company is required to distribute at least 90% of its investment company taxable income and intends to distribute (or retain through a deemed distribution) all of its investment company taxable income and net capital gain to stockholders; therefore, the Company has made no provision for income taxes. The character of income and gains that the Company will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.
 If the Company does not distribute (or is not deemed to have distributed) at least 98% of its annual ordinary income and 98.2% of its net capital gains in the calendar year earned, it will generally be required to pay an excise tax equal to 4% of the amount by which 98% of its annual ordinary income and 98.2% of its capital gains exceeds the distributions from such taxable income for the year. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, it accrues excise taxes, if any, on estimated excess taxable income. As of June 30, 2020 , the Company does not expect to have any excise tax due for the 2020 calendar year. Thus, the Company has not accrued any excise tax for this period.
 If the Company fails to satisfy the annual distribution requirement or otherwise fails to qualify as a RIC in any taxable year, it would be subject to tax on all of its taxable income at regular corporate income tax rates. The Company would not be able to deduct distributions to stockholders, nor would it be required to make distributions. Distributions would generally be taxable to the Company’s individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of its current and accumulated earnings and profits, provided certain holding period and other requirements are met. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. To qualify again to be taxed as a RIC in a subsequent year, the Company would be required to distribute to its shareholders its accumulated earnings and profits attributable to non-RIC years. In addition, if the Company failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, it would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.
 The Company follows ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns 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 recorded as a tax benefit or expense in the current year. As of June 30, 2020 , the Company did not record any unrecognized tax benefits or liabilities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, its major tax jurisdiction is federal. The Company’s federal tax returns for the tax years ended December 31, 2017 and thereafter remain subject to examination by the Internal Revenue Service.
 Recent Accounting Pronouncements
 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses  (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic No. 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact, if any, of adopting this ASU on our consolidated financial statements.
 
 In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The standard will modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. ASU No. 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted upon issuance of this ASU. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.
 
 In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the year ended  June 30, 2020 .
 
 Tax Cuts and Jobs Act
 On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed the Code, including a reduction in the corporate income tax rate, a new limitation on the deductibility of interest expense, and significant changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Act also authorizes the IRS to issue regulations with respect to the new provisions. We cannot predict how the changes in the Tax Act, or regulations or other guidance issued under it, might affect us, our business or the business of our portfolio companies. However, our portfolio companies may or may not make certain elections under the Tax Act that could materially increase their taxable earnings and profits. Any such increase in the taxable earnings and profits of a portfolio company may result in the characterization of certain distributions sourced from sale proceeds as dividend income, which may increase our distributable taxable income.
 
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 NOTE 3 - SHARE TRANSACTIONS
 Below is a summary of transactions with respect to shares of common stock of FLEX during the year ended  June 30, 2020 :
 Year Ended June 30,2020FLEX Class A Common SharesSharesAmountShares issued65,395$734,420Shares issued through reinvestment of distributions86,539897,935Repurchase of common shares(158,934)(1,424,840)Net increase (decrease) from capital transactions(7,000)207,515
 Below is a summary of transactions with respect to shares of common stock of PWAY and FLEX during the year ended  June 30, 2019 :
 
 FLEX- Class A SharesPWAY- Class A Shares(1)PWAY-Class I Shares(1)TotalYear Ended June 30, 2019SharesAmountSharesAmountSharesAmountSharesAmountShares issued2,530$28,080—$——$—2,530$28,080Shares issued through reinvestment of distributions14,048150,56214,376168,3811611,89028,585320,833Repurchase of common shares(49,916)(495,169)(68,301)(806,866)(343)(4,350)(118,560)(1,306,385)Recapitalization and merger (Refer to Note 9)(1)775,1938,123,135(570,431)(7,679,839)(32,834)(443,296)171,928—Net increase (decrease) from capital transactions741,855$7,806,608(624,356)$(8,318,324)(33,016)$(445,756)84,483$(957,472)
 
 (1) As part of the Merger each outstanding Class A and Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock as consideration for the Merger. From and after the Merger date of March 31, 2019 (Effective Time), shares of PWAY common stock are no longer outstanding and cease to exist (Refer to Note 9).
 
 Below is a summary of transactions with respect to shares of common stock of PWAY during the year ended  June 30, 2018 :
 
 PWAY - Class R SharesPWAY - Class RIA SharesPWAY - Class A SharesPWAY - Class I SharesTotalYear Ended June 30, 2018SharesAmountSharesAmountSharesAmountSharesAmountSharesAmountShares issued41,068$629,900—$—11,712$160,000—$—52,780$789,900Shares issued through reinvestment of distributions9,224124,160941,26411,752156,5921251,65821,195283,674Repurchase of common shares(10,046)(136,524)——(27,935)(367,017)——(37,981)(503,541)Transfer of shares (out)(1)(628,825)(8,501,714)(6,454)(87,258)——(26,437)(357,428)(661,716)(8,946,400)Transfer of shares in(1)————628,8258,501,71432,891444,686661,7168,946,400Net increase (decrease) from capital transactions(588,579)$(7,884,178)(6,360)$(85,994)624,354$8,451,2896,579$88,91635,994$570,033
 
 (1) This represents the transfer of shares that occurred as pat of the conversion to an interval fund.
 Status of Continuous Public Offering
 The proceeds from the issuance of common stock as presented on the accompanying Consolidated Statements of Changes in Net Assets and Consolidated Statements of Cash Flows are presented net of selling commissions and dealer manager fees. The tables above are presented gross of selling commissions and dealer manager fees for the years ended June 30, 2020, 2019 and 2018 .
 The net increase (decrease) from capital transactions during the years ended June 30, 2020, 2019 and 2018 also includes reinvested stockholder distributions as noted in the tables above.
 
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 Merger Shares
 Upon consummation of the Merger, each outstanding Class A and Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock. This resulted in 775,193 shares of TPIC common stock being issued to former PWAY investors and all outstanding PWAY shares were retired. For financial reporting purposes, the conversion of PWAY shares to TPIC shares was accounted for as a recapitalization of PWAY (see Note 9).
 Share Repurchase Program
 The Company intends to continue to conduct quarterly tender offers pursuant to its share repurchase program. The Company’s board of directors will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase shares of common stock and under what terms:
 
 •the effect of such repurchases on the Company’s qualification as a RIC (including the consequences of any necessary asset sales); •the liquidity of the Company’s assets (including fees and costs associated with disposing of assets); •the Company’s investment plans and working capital requirements; •the relative economies of scale with respect to the Company’s size; •the Company’s history in repurchasing shares of common stock or portions thereof; and •the condition of the securities markets. The Company currently intends to limit the number of shares of common stock to be repurchased during any calendar year to the number of shares of common stock it can repurchase with the proceeds it receives from the issuance of shares of common stock under its distribution reinvestment plan. At the discretion of the Company’s board of directors, the Company may also use cash on hand, cash available from borrowings and cash from the liquidation of securities investments as of the end of the applicable period to repurchase shares of common stock. In addition, the Company will limit the number of shares of common stock to be repurchased in any calendar year to 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter, though the actual number of shares of common stock that the Company offers to repurchase may be less in light of the limitations noted above.
 Our board of directors reserves the right, in its sole discretion, to limit the number of shares to be repurchased for each class by applying the limitations on the number of shares to be repurchased, noted above, on a per class basis. We further anticipate that we will offer to repurchase such shares on each date of repurchase at a price equal to the current net offering price on each date of repurchase. If the amount of repurchase requests exceeds the number of shares we seek to repurchase, we will repurchase shares on a pro-rata basis. As a result, we may repurchase less than the full amount of shares that stockholders submit for repurchase. If we do not repurchase the full amount of the shares that stockholders have requested to be repurchased, or we determine not to make repurchases of our shares, stockholders may not be able to dispose of their shares. Any periodic repurchase offers will be subject in part to our available cash and compliance with the 1940 Act.
 Special Repurchase Offer
 At the 2019 Annual Meeting of TPIC's stockholders (the "2019 Annual Meeting"), TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. Because our securities are not listed on a national securities exchange, pursuant to the requirements of the Small Business Credit Availability Act (the "SBCAA") we were required to conduct four quarterly tender offers (the "Special Repurchase Offer" or "Special Repurchase Offers") that, taken together, allowed all of the former stockholders of TPIC (the "Eligible Stockholders") as of March 15, 2019, the date of the 2019 Annual Meeting, to have those shares that such Eligible Stockholders held as of that date to be repurchased by us. PWAY stockholders who became our stockholders in connection with the Merger were not eligible to participate in these Special Repurchase Offers. In addition, shares of our common stock acquired after the date of the 2019 Annual Meeting were not eligible for repurchase in these Special Repurchase Offers. These Special Repurchase Offers were separate and apart from our share repurchase program discussed above.
 
 The Special Repurchase Offer consisted of four quarterly tender offers, the first of which occurred in the second calendar quarter of 2019, the second of which occurred in the third calendar quarter of 2019, the third of which occurred in the fourth calendar quarter of 2019 and the last of which occurred in the first calendar quarter of 2020. Each of the four tender offers that were part of the Special Repurchase Offer allowed the Eligible Stockholders to tender for repurchase up to 25% of their shares held as of the date of the 2019 Annual Meeting.  The repurchase price for any shares tendered during the Special Repurchase Offer was equal to the net asset value per share of our common stock as of the date of each such repurchase.
 
 In connection with each tender offer that was part of the Special Repurchase Offer, we provided notice to all Eligible Stockholders describing the terms of the Special Repurchase Offer and other information such Eligible Stockholders should consider in deciding
 
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 whether to tender their shares to us in the Special Repurchase Offer. These documents are available on our website at www.flexbdc.com . Each Eligible Stockholder had not less than 20 business days from the date of that notice to elect to tender their shares back to us.
 
 The payment for the eligible shares that were tendered in each Special Repurchase Offer was paid promptly at the end of the applicable Special Repurchase Offer in accordance with the 1940 Act. At the discretion of our board of directors, we used cash on hand, cash available from borrowings, cash available from the issuance of new shares of our common stock and cash from the sale of our investments to fund the aggregate purchase price payable as a result of any Special Repurchase Offer.
 
 Below is a summary of transactions with respect to shares of common stock during each tender offer:
 Quarterly Offer DateRepurchase Effective DateSharesRepurchasedPercentage of SharesTendered That WereRepurchasedRepurchase Price Per ShareAggregateConsideration forRepurchased SharesYear ended June 30, 2020September 30, 2019(1)October 8, 201934,489100%$9.46$326,262December 31, 2019(1)December 27, 201951,715100%$8.91460,786March 31, 2020February 21, 202019,74312%$10.70211,246June 30, 2020(1)April 14, 202052,987100%$8.05426,546Total for the year ended June 30, 2020158,934$1,424,840Year ended June 30, 2019June 30, 2018(2)August 7, 201831,716100%Class A:$12.67Class I: $12.70$401,849September 30, 2018(2)November 13, 201819,180100%Class A:$11.35217,695December 31, 2018(2)February 15, 201917,748100%Class A:$10.80191,672June 30, 2019(1)June 27, 201949,916100%Class A:$9.93495,169Total for the year ended June 30, 2019118,560$1,306,385Year ended June 30, 2018(2)June 30, 2017(3)July 31, 20174,80161%Class R: $13.61$65,335September 30, 2017(3)October 30, 20175,24681%Class R: $13.5771,189December 31, 2017January 23, 20185,689100%Class A: $13.5677,152March 31, 2018April 30, 201822,245100%Class A: $13.03289,865Total for year ended June 30, 201837,981$503,541
 (1)Subsequent to the Merger on March 31, 2019, FLEX Class A common shares were tendered in a Special Repurchase Offer. (2)As part of the Merger each outstanding Class A and Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock as consideration for the Merger. From and after the Merger date of March 31, 2019 (Effective Time), shares of PWAY common stock are no longer outstanding and cease to exist. (3)  On October 31, 2017, PWAY converted to an interval fund. As such, all Class R shares were converted to PWAY Class A shares.
 
 
 
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 NOTE 4 - RELATED PARTY TRANSACTIONS AND ARRANGEMENTS
 Administration Agreement
 On September 2, 2014, PWAY entered into an administration agreement with Prospect Administration LLC (the “Administrator”), an affiliate of the Adviser. Pursuant to the agreement and plan of merger as amended and restated, between TPIC and PWAY, Prospect Administration LLC became the administrator for the Company pursuant to an administrative agreement, as amended and restated as of June 17, 2019 (the "Administration Agreement"). The Administrator performs, oversees and arranges for the performance of administrative services necessary for the operation of the Company. These services include, but are not limited to, accounting, finance and legal services. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s actual and allocable portion of expenses and overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and the Company’s allocable portion of the costs of its Chief Financial Officer and Chief Compliance Officer and her staff. For the years ended June 30, 2020, 2019 and 2018 administrative costs incurred by the Company and PWAY to the Administrator were $ 596,030 ,  $ 442,047 and $ 357,995 , respectively. As of June 30, 2020 and June 30, 2019 , $ 122,384 and $ 341,235 , respectively, was payable to the Administrator by the Company.
 Investment Advisory Agreement
 The Company entered into an Investment Advisory Agreement, dated March 31, 2019, with our Adviser (the “Investment Advisory Agreement”). We pay our Adviser a fee for its services under the Investment Advisory Agreement consisting of two components - a base management fee and an incentive fee. The cost of both the base management fee payable to the Adviser and any incentive fees it earns will ultimately be borne by our stockholders.
 Base Management Fee . The base management fee is calculated at an annual rate of 1.75% (0.4375% quarterly) of our average total assets, which includes any borrowings for investment purposes. Prior to the Merger, PWAY paid a base management fee to its investment adviser of  2% annually. For the first quarter of our operations commencing with the date of the Investment Advisory Agreement, the base management fee was calculated based on the average value of our total assets as of the date of the Investment Advisory Agreement and at the end of the calendar quarter in which the date of the Investment Advisory Agreement fell, and was appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Subsequently, the base management fee is payable quarterly in arrears, and is calculated based on the average value of our total assets at the end of the two most recently completed calendar quarters, and is appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial month or quarter is appropriately pro-rated. At the Adviser’s option, the base management fee for any period may be deferred, without interest thereon, and paid to the Adviser at any time subsequent to any such deferral as the Adviser determines. For the the years ended June 30, 2019 and 2018 , PWAY paid routine non-compensation overhead expenses of its investment adviser in an amount up to 0.0625% per quarter (0.25% annualized) of PWAY's average total assets which totaled $ 19,028 and $ 216,184 , respectively, which is presented as adviser shared service expense on the Consolidated Statement of Operations . Adviser shared service expense is no longer in effect post Merger.
 The total base management fee incurred by the Adviser was $ 708,464 and $128,852 during the the years ended June 30, 2020 and 2019, respectively, which was waived by the Adviser. The total base management fee incurred to the favor of PWAY’s investment adviser was $152,226 and $ 264,101 during the years ended June 30, 2019 and 2018 . After the waiver, there were $0 and $1,438 in base management fees due to the Adviser as of June 30, 2020 and June 30, 2019 .
 Incentive Fee- Subordinated Incentive Fee on Income. The first part of the incentive fee, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based upon our “pre-incentive fee net investment income” for the immediately preceding calendar quarter. For purpose of this fee “pre-incentive fee net investment income” means interest income, dividend income and distribution cash flows from equity investments and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, expenses reimbursed under the Investment Advisory Agreement and the Administration Agreement, any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the organization and offering expenses and incentive fees on income and capital gains). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind 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, 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 preferred return, or “hurdle,” of 1.5% per quarter (6.0% annualized) and a “catch-up” feature measured as of the end of each calendar quarter as discussed below. The subordinated incentive fee on income for each calendar quarter is paid to our Adviser as follows: (1) no incentive fee is payable to our Adviser in any calendar quarter in which our pre-incentive fee net investment income does not exceed the fixed preferred return rate of 1.5%; (2) 100% 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 fixed preferred return but is less than or equal to 1.875% in any calendar quarter (7.5% annualized);
 
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 and (3) 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.875% in any calendar quarter (7.5% annualized). This reflects that once the fixed preferred return is reached and the catch-up is achieved, 20.0% of all pre-incentive fee net investment income thereafter is allocated to our Adviser. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.
 Incentive Fee- Capital Gains Incentive Fee . The second part of the incentive fee, which is referred to as the capital gains 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 20.00% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year. In determining the capital gains incentive fee payable to our Adviser, we calculate the aggregate realized capital gains, aggregate realized capital losses and aggregate unrealized capital depreciation, as applicable, with respect to each investment that has been in our portfolio. For the purpose of this calculation, an “investment” is defined as the total of all rights and claims which may be asserted against a portfolio company arising from our participation in the debt, equity, and other financial instruments issued by that company. Aggregate realized capital gains, if any, equal the sum of the differences between the aggregate net sales price of each investment and the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate realized capital losses equal the sum of the amounts by which the aggregate net sales price of each investment is less than the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate unrealized capital depreciation equals the sum of the differences, if negative, between the aggregate valuation of each investment and the aggregate amortized cost basis of such investment as of the applicable calendar year-end. At the end of the applicable calendar year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee involves netting aggregate realized capital gains against aggregate realized capital losses on a since-inception basis and then reducing this amount by the aggregate unrealized capital depreciation. If this number is positive, then the capital gains incentive fee payable is equal to 20.00% of such amount, less the aggregate amount of any capital gains incentive fees paid since inception. Operating expenses are not taken into account when determining capital gains incentive fees.
 There were no incentive fees payable as of June 30, 2020 or June 30, 2019 . During the years ended June 30, 2020, 2019 and 2018 , there were no incentive fees incurred.
 Co-Investments
 On January 13, 2020, the parent company of the Adviser received an exemptive order from the SEC (the “Order”),which superseded a prior co-investment exemptive order granted on February 10, 2014, granting the ability to negotiate terms other than price and quantity of co-investment transactions with other funds managed by the Adviser or certain affiliates, including Prospect Capital Corporation (“PSEC”) and Priority Income Fund, Inc. (“PRIS”), where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions included therein.
 Under the terms of the order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company’s independent directors must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching of the Company or its stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies. In certain situations where co-investment with one or more funds managed or owned by the Adviser or its affiliates is not covered by the Order, such as when there is an opportunity to invest in different securities of the same issuer, the personnel of the Adviser or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. Moreover, except in certain circumstances, when relying on the Order, the Company will be unable to invest in any issuer in which one or more funds managed or owned by the Adviser or its affiliates has previously invested.
 Allocation of Expenses
 The cost of valuation services for CLOs is initially borne by PRIS, which then allocates to the Company its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , PRIS incurred $77,212, $61,311 and  $60,004, respectively, in expenses related to valuation services that are attributable to the Company. The Company reimburses PRIS for these expenses and includes them as part of valuation services on the Consolidated  Statements of Operations . As of June 30, 2020 and June 30, 2019 , $13,516 and $32,314, respectively, of expense is due to PRIS, which is presented as part of due to affiliates on the Consolidated  Statements of Assets and Liabilities .
 The cost of filing software is initially borne by PSEC, which then allocates to the Company its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , PSEC incurred $9,065, $9,390 and $10,162, respectively in expenses related to the filing services that are attributable to the Company. The Company reimburses PSEC for these expenses and includes them
 
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 as part of general and administrative expenses on the Consolidated Statements of Operations . As of June 30, 2020 and June 30, 2019 , $0 and $2,348 was due to PSEC, respectively.
 The cost of portfolio management software is initially borne by the Company, which then allocates to PSEC its proportional share of such expense. During the years ended June 30, 2020, 2019 and 2018 , the Company incurred $0, $11,058 and $23,603, respectively, in expenses related to the portfolio management software that is attributable to PSEC. PSEC reimburses the Company for these expenses and included them as part of general and administrative expenses on the Consolidated  Statements of Operations . As of June 30, 2020 and June 30, 2019 , $0 of expense is due from PSEC.
 Officers and Directors
 Certain officers and directors of the Company are also officers and directors of the Adviser and its affiliates. There were no fees paid to the independent directors of the Company as the Company did not exceed the minimum net asset value required (i.e., greater than $100 million) to receive a fee for the year ended  June 30, 2020 . The officers do not receive any direct compensation from the Company.
 Expense Limitation and Expense Reimbursement Agreements
 Expense Reimbursement Agreement with TPIC and the Former Adviser
 Prior to the Merger, Triton Pacific Adviser, LLC served as our investment adviser (the “Former Adviser”). On March 27, 2014, TPIC and the Former Adviser entered into an Expense Reimbursement Agreement. The Expense Reimbursement Agreement was amended and restated effective April 5, 2018. Under the Expense Reimbursement Agreement, as amended, the Former Adviser, in consultation with TPIC, could pay up to 100% of both of TPIC’s organizational and offering expenses and TPIC’s operating expenses, all as determined by TPIC and the Former Adviser. The Expense Reimbursement Agreement stated that until the net proceeds to TPIC from its offering were at least $25 million, the Former Adviser could pay up to 100% of both of TPIC’s organizational and offering expenses and TPIC’s operating expenses. After TPIC received at least $25 million in net proceeds from its offering, the Former Adviser could, with TPIC’s consent, continue to make expense support payments to TPIC in such amounts as was acceptable to TPIC and the Former Adviser. The Expense Reimbursement Agreement terminated on December 31, 2018. The Former Adviser had agreed to reimburse a total of $5,292,192 as of December 31, 2018. However, as part of the Merger, the Former Adviser agreed to waive any amounts owed to it under the Expense Reimbursement Agreement.
 PWAY’s Expense Support and Expense Limitation Agreement
 PWAY entered into an expense support and conditional reimbursement agreement (the “Expense Support Agreement”) with Pathway Capital Opportunity Fund Management, LLC (the “PWAY Adviser”), whereby the PWAY Adviser agreed to reimburse PWAY for operating expenses in an amount equal to the difference between distributions to its stockholders for which a record date occurred in each quarter less the sum of PWAY's net investment income, the net realized capital gains/losses and dividends and other distributions paid to PWAY from its portfolio investments during such period (“Expense Support Reimbursement”). To the extent that there were no dividends or other distributions to PWAY's stockholders for which a record date had occurred in any given quarter, then the Expense Payment for such quarter was equal to such amount necessary in order for available operating funds for the quarter to equal zero.  PWAY had a conditional obligation to reimburse the PWAY Adviser for any amounts funded by the PWAY Adviser under the Expense Support Agreement. Following any calendar quarter in which Available Operating Funds in such calendar quarter exceeded the cumulative distributions to stockholders for which a record date occurred in such calendar quarter (“Excess Operating Funds”) on a date mutually agreed upon by the PWAY Adviser and PWAY (each such date, a “Reimbursement Date”), PWAY paid such Excess Operating Funds, or a portion thereof, to the extent that PWAY had cash available for such payment, to the PWAY Adviser until such time as all Expense Payments made by the PWAY Adviser to PWAY had been reimbursed; provided that (i) the operating expense ratio as of such Reimbursement Date was equal to or less than the operating expense ratio as of the Expense Payment Date attributable to such specified Expense Payment; (ii) the annualized distribution rate, which included all regular cash distributions paid and excluded special distributions or the effect of any stock dividends paid, as of such Reimbursement Date was equal to or greater than the annualized distribution rate as of the Expense Payment Date attributable to such specified Expense Payment; and (iii) such specified Expense Payment Date was not earlier than three years prior to the Reimbursement Date. PWAY received $456,660 in Expense Support Reimbursement for the year ended June 30, 2018. The Expense Support Agreement including any amendments, terminated on October 31, 2017.
 The PWAY Adviser and PWAY entered into an Expense Limitation Agreement on October 31, 2017 under which the PWAY Adviser agreed contractually to waive its fees and to pay or absorb the operating expenses of PWAY, including offering expenses, any shareholder servicing fees, and other expenses described in the Investment Advisory Agreement of PWAY, but not including any portfolio transaction or other investment-related costs (including brokerage commissions, dealer and underwriter spreads, prime broker fees and expenses and dividend expenses related to short sales), interest expenses and other financing costs, distribution fees, extraordinary expenses and acquired fund fees and expenses, to the extent that they exceeded the expense limitation per class on a per annum basis of PWAY’s average weekly net assets, through October 31, 2018 (the “Expense Limitation”). In consideration of the PWAY Adviser’s agreement to limit PWAY’s expenses, PWAY agreed to repay the PWAY Adviser in the amount of any
 
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 fees waived and PWAY expenses paid or absorbed, subject to the limitations that: (1) the reimbursement was made only for fees and expenses incurred not more than three years following the end of the fiscal quarter in which they were incurred; and (2) the reimbursement was not made if it would cause the Expense Limitation, or any lower limit had been put in place, to be exceeded.  PWAY received Expense Limitation payments from the PWAY adviser of $ 309,881 and $ 748,696 , respectively, for the years ended June 30, 2019 and 2018 . On October 31, 2018, the Expense Limitation Agreement expired.
 On May 11, 2018, the PWAY Adviser agreed to permanently waive its right to any reimbursement (the “Waiver”) to which it was entitled pursuant to the Expense Support Agreement, and any amendments, or the Expense Limitation Agreement, between PWAY and the PWAY Adviser, in the event PWAY (i) consummates a transaction (a “Transaction”) in which PWAY (x) merges with and into another company, or (y) sells all or substantially all of its assets to one or more third parties, or (ii) liquidates its assets and dissolves in accordance with PWAY’s charter and bylaws (a “Dissolution” and together with a Transaction, an “Exit Event”). The Waiver was effective on August 10, 2018 which is when PWAY’s board of directors approved an Exit Event via a merger with TPIC. As such, PWAY is no longer obligated to reimburse the PWAY Adviser per the Waiver. This resulted in a reversal of offering costs in the amount of $1,975,233 of which $1,492,252 is presented as a reduction to expenses on the Consolidated Statements of Operations for the year ended  June 30, 2019 and $482,981 is presented as an increase to paid-in capital on the Consolidated Statements of Changes in Net Assets for the year ended  June 30, 2019 .
 Expense Limitation Agreement with the Adviser
 Concurrently with the closing of the Merger, we entered into an Expense Limitation Agreement with our Adviser (the “ELA”). Pursuant to the ELA, our Adviser, in its sole discretion, may waive a portion or all of the investment advisory fees that it is entitled to receive pursuant to the Investment Advisory Agreement in order to limit our Operating Expenses (as defined below) to an annual rate, expressed as a percentage of our average quarterly net assets, equal to 8.00% (the “Annual Limit”). For purposes of the ELA, the term “Operating Expenses” with respect to the Company, is defined to include all expenses necessary or appropriate for the operation of the Company, including but not limited to our Adviser’s base management fee, any and all costs and expenses that qualify as line item “organization and offering” expenses in the consolidated financial statements of the Company as the same are filed with the SEC and other expenses described in the Investment Advisory Agreement, but does not include any portfolio transaction or other investment-related costs (including brokerage commissions, dealer and underwriter spreads, prime broker fees and expenses and dividend expenses related to short sales), interest expenses and other financing costs, extraordinary expenses and acquired fund fees and expenses. Upfront shareholder transaction expenses (such as sales commissions, dealer manager fees, and similar expenses) are not Operating Expenses. As part of the ELA, our Adviser waived its investment advisory fees of $ 708,464 and $ 281,078 for the years ended June 30, 2020 and 2019, respectively.
 Any amount waived pursuant to the ELA is subject to repayment to our Adviser (an “ELA Reimbursement”) by us within the three years following the end of the quarter in which the waiver was made by our Adviser. If the ELA is terminated or expires pursuant to its terms, our Adviser maintains its right to repayment for any waiver it has made under the ELA, subject to the Repayment Limitations (discussed below).
 An ELA Reimbursement can be made solely in the event that we have sufficient excess cash on hand at the time of any proposed ELA Reimbursement and shall be limited to the lesser of (i) the excess of the Annual Limit applicable to such quarter over the Company’s actual Operating Expenses for such quarter and (ii) the amount of ELA Reimbursement which, when added to the Company’s expenses for such quarter, permits the Company to pay the then-current aggregate quarterly distribution to its shareholders, at a minimum annualized rate of at least 6.00% (based on the gross offering prices of Company shares) (the “Distribution”) from the sum of (x) the Company’s net investment income (loss) for such quarter plus (y) the Company’s net realized gains (losses) for such quarter (collectively, the “Repayment Limitations”). For the purposes of the calculations pursuant to (i) and (ii) of the preceding sentence, any ELA Reimbursement will be treated as an expense of the Company for such quarter, without regard to the GAAP treatment of such expense. To the extent the Company books accruals for any such reimbursements, such accruals shall be booked in accordance with GAAP.  In the event that the Company is unable to make a full payment of any ELA Reimbursements due for any applicable quarter because the Company does not have sufficient excess cash on hand, any such unpaid amount shall become a payable of the Company for accounting purposes and shall be paid when the Company has sufficient cash on hand (subject to the Repayment Limitations); provided, that in the case of any ELA Reimbursements, such payment shall be made no later than the date that is three years following the end of the quarter in which the applicable waiver was made by our Adviser.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 The following table provides information regarding liabilities incurred by the Adviser pursuant to the ELA:
 Period EndedELA Reimbursement Payable to the AdviserELA Reimbursement Payment to the AdviserUnreimbursed ELA ReimbursementOperating Expense RatioAnnualized Distribution RateEligible to be Repaid ThroughJune 30, 2019$128,852$—$128,8525.54%6.00%June 30, 2022September 30, 2019$157,409$—$157,4092.84%6.00%September 30, 2022December 31, 2019$182,205$—$182,2053.68%6.00%December 31, 2022March 31, 2020$185,935$—$185,9353.39%7.00%March 31, 2023June 30, 2020$182,915$—$182,9153.76%7.00%June 30, 2023Total$837,316$837,316
 Dealer Manager Agreement
 The Company and its Adviser have entered into a dealer manager agreement with Triton Pacific Securities, LLC ("TPS") pursuant to which the Company will pay the dealer manager a fee of up to 6% of gross proceeds raised in the Company's offering, some of which will be re-allowed to other participating broker-dealers.  In addition to the upfront selling commissions and dealer manager fees, the Adviser may pay TPS a fee (the "Additional Selling Commissions") equal to no more than 1.0% of the net asset value per share per year. TPS will reallow all or a portion of the Additional Selling Commissions to participating broker-dealers. TPS is an affiliated entity of the Former Adviser and is partially owned by one of our directors, Craig Faggen.
 For the the years ended June 30, 2020 and 2019, TPS incurred offering expenses of $208,228 and $52,440, respectively. As of June 30, 2020 and June 30, 2019 , the Company owes TPS $798 and $20,718, respectively, related to offering costs and general and administrative expenses which is included in Due to Affiliate on the Consolidated  Statements of Assets and Liabilities . Offering costs of $80,661 as of June 30, 2020 are also included in Due to Affiliate on the Consolidated  Statements of Assets and Liabilities .
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 NOTE 5 - DISTRIBUTIONS
 As of June 30, 2020 and June 30, 2019 , dividend payable is $ 111,447 and $ 126,128 , respectively, which is presented as dividends payable on the Consolidated Statements of Assets and Liabilities .
 The following table reflects the cash distributions per share that the Company and PWAY declared and paid on its common stock during the years ended June 30, 2020, 2019 and 2018 :
 DistributionsFor the Year EndedFLEX Class A Common Shares, per shareFLEX Class A Common Shares, Amount DistributedJune 30, 2020July 5, 12, 19 and 26, 2019$0.05240$124,512August 2, 9, 16, 23 and 30, 2019$0.06550$156,184September 6, 13, 20 and 27, 2019$0.05240$125,345October 4, 11, 18 and 25, 2019$0.05240$124,308November 1, 8, 15, 22 and 29, 2019$0.06550$155,217December 6, 13, 20 and 27, 2019$0.05240$124,568January 3, 10, 17, 24 and 31, 2020$0.06986$162,910February 7, 14, 21 and 28, 2020$0.06112$143,127March 6, 13, 20 and 27, 2020$0.06112$144,513April 3, 10, 17 and 24, 2020$0.06112$146,195May 1, 8, 15, 22 and 29, 2020$0.07640$179,431June 5, 12, 19, and 26, 2020$0.04716$111,447Total for the Year Ended June 30, 2020$1,697,757June 30, 2019April 5, 12, 19 and 26, 2019$0.05260$126,413May 3, 10, 17, 24 and 31, 2019$0.06575$158,426June 7, 14, 21, and 28, 2019$0.05240$126,128Total for the Year Ended June 30, 2019$410,967DistributionsFor the Year EndedPWAY Class A Common Shares, per share(1)PWAY Class A Common Shares, Amount DistributedJune 30, 2019July 5, 12, 19 and 26, 2018$0.06392$40,009August 2, 9, 16, 23 and 30, 2018$0.06405$38,180September 6, 13, 20 and 27, 2018$0.06076$36,312October 4, 11, 19 and 26, 2018$0.05960$35,707November 1, 8, 15, 23 and 29, 2018$0.05925$34,900December 6, 14, 21 and 28, 2018$0.05460$31,826January 3, 10, 17, 24 and 31, 2019$0.05035$29,431February 1, 8, 15 and 22, 2019$0.05300$30,573March 1, 8, 15, 22 and 28, 2019$0.05385$30,658Total for the Year Ended June 30, 2019$307,596June 30, 2018July 7, 14, 21 and 28, 2017(2)$0.07088$42,199August 4, 11, 18 and 25, 2017(2)$0.07088$42,647September 1, 8, 15, 22 and 29, 2017(2)$0.08860$54,052October 6, 13, 20 and 27, 2017(2)$0.07088$44,531
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 November 2, 9, 16 and 25, 2017$0.07088$44,571November 30, 2017, December 7, 14, 21 and 28, 2017$0.07825$49,546January 4, 11, 18 and 25, 2018$0.06224$39,547February 1, 8, 15 and 22, 2018$0.06880$43,520March 1, 8, 15, 22 and 29, 2018$0.08365$53,290April 5, 12, 19 and 26, 2018$0.06580$42,342May 3, 10, 17 and 24, 2018$0.06500$40,483May 31, 2018, June 7, 14, 21 and 28, 2018$0.06475$40,427Total for the Year Ended June 30, 2018$537,155DistributionsFor the Year EndedPWAY Class I Common Shares, per share(1)PWAY Class I Common Shares, Amount DistributedJune 30, 2019July 5, 12, 19 and 26, 2018$0.06404$2,115August 2, 9, 16, 23 and 30, 2018$0.06415$2,098September 6, 13, 20 and 27, 2018$0.06092$1,994October 4, 11, 19 and 26, 2018$0.05976$1,957November 1, 8, 15, 23 and 29, 2018$0.05940$1,946December 6, 14, 21 and 28, 2018$0.05476$1,794January 3, 10, 17, 24 and 31, 2019$0.05048$1,655February 1, 8, 15 and 22, 2019$0.05314$1,744March 7, 14, 21 and 27, 2019$0.05400$1,772Total for the Year Ended June 30, 2019$17,075June 30, 2018July 7, 14, 21 and 28, 2017(3)$0.07088$2,326August 4, 11, 18 and 25, 2017(3)$0.07088$2,327September 1, 8, 15, 22 and 29, 2017(3)$0.08860$2,911October 6, 13, 20 and 27, 2017(3)$0.07088$2,330November 2, 9, 16 and 25, 2017$0.07088$2,331November 30, 2017, December 7, 14, 21 and 28, 2017$0.07825$2,575January 4, 11, 18 and 25, 2018$0.06224$2,303February 1, 8, 15 and 22, 2018$0.06880$2,266March 1, 8, 15, 22 and 29, 2018$0.08370$2,759April 5, 12, 19 and 26, 2018$0.06585$2,172May 3, 10, 17 and 24, 2018$0.06510$2,149May 31, 2018, June 7, 14, 21 and 28, 2018$0.06485$2,141Total for the Year Ended June 30, 2018$28,590(1) As part of the Merger each outstanding Class A and Class I share of PWAY common stock was canceled and retired. From and after the Merger date of March 31, 2019 (Effective Time), shares of PWAY common stock are no longer outstanding and cease to exist.(2) These amounts represent the distributions paid to PWAY Class R which converted into PWAY Class A.(3) These amounts represent the distributions paid to PWAY Class I & RIA which converted into PWAY Class I.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 The following FLEX distributions were previously declared and have record dates subsequent to June 30, 2020 : Record DatePayment dateFLEX Class A Common Shares, per shareJuly 6, 10, 17, 24 and 31, 2020August 7, 2020$0.05895August 7, 14, 21 and 28, 2020September 4, 2020$0.04716
 The Company has adopted an “opt in” distribution reinvestment plan for its stockholders. As a result, if the Company makes a cash distribution, its stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a stockholder’s ability to participate in the distribution reinvestment plan.
 The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, 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 the Company on account of preferred and common equity investments in portfolio companies and expense reimbursements from the Adviser. The Company has not established limits on the amount of funds it may use from available sources to make distributions.
 During the the years ended June 30, 2020 and 2019, the Company's officers and directors did not purchase any shares of our stock.
 
 NOTE 6 - INCOME TAXES
 On March 31, 2019, in connection with the Merger, PWAY’s outstanding shares were cancelled and retired in exchange for TPIC common stock. The Merger should qualify as a “tax-free reorganization” within the meaning of Section 368(a) of the Code, and the merger agreement constituted a “plan of reorganization” for such purposes. As such, this transaction was intended to qualify as a nontaxable merger under Section 368 of the Code. Due to this transaction, PWAY dissolved for income tax purposes as of March 31, 2019. As such, PWAY filed a final tax return for the nine-month period ended March 31, 2019. The Company will continue to file its income tax returns using a calendar year end. The Company will reflect all items of income, deduction, gain, and loss generated from the assets obtained from the merger transaction beginning on April 1, 2019. Former PWAY shareholders received a final Form 1099-DIV for the 2019 year reflecting the character of PWAY’s distributions made between January 1, 2019 and March 31, 2019. The Company’s shareholders received a Form 1099-DIV for the 2019 calendar year reflecting TPIC’s distributions made between January 1, 2019 and March 31, 2019 and FLEX’s distributions made between April 1, 2019 and December 31, 2019.
 
 While our fiscal year end for financial reporting purposes is June 30 of each year, our tax year end is December 31 of each year. The information presented in this footnote is based on our tax year end for each period presented, unless otherwise specified. The tax return for the tax year ended December 31, 2019 has not been filed. Taxable income and all amounts related to taxable income for the tax year ended December 31, 2019 are estimates and will not be fully determined until the Company’s tax return is filed.
 For income tax purposes, dividends paid and distributions made to shareholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of dividends paid to shareholders during the tax years ended December 31, 2019 was as follows:
 
 Unaudited TPICJanuary 1, 2019 - March 31, 2019Unaudited FLEXApril 1, 2019 - December 31, 2019Unaudited Twelve Months Ended December 31, 2019Ordinary income$48,359$—$48,359Return of capital113,9751,221,1011,335,076Total$162,334$1,221,101$1,383,435
 
 For the tax year ending December 31, 2019, the tax character of dividends paid to shareholders is expected to be $48,359 ordinary income and $1,335,076 return of capital. However, the final determination of the tax character of dividends between ordinary income, capital gains and return of capital will not be made until we file our tax return for the tax year ending December 31, 2019.
 
 The estimated tax character of dividends paid to the Company's shareholders during the six months ended June 30, 2020 is expected to be as follows:
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Unaudited FLEXJanuary 1, 2020 - June 30, 2020Ordinary income$346,714Return of capital540,910Total$887,624
 However, the final determination of the tax character of dividends between ordinary income, capital gains and return of capital will not be made until we file our tax return for the tax year ending December 31, 2020.
 
 The Company's cost basis of investments as of June 30, 2020 for tax purposes was $37,805,562, resulting in an estimated net unrealized loss of $1,141,859. The gross unrealized gains and losses as of June 30, 2020 were $679,115 and $1,820,974, respectively.
 
 The Company's cost basis of investments as of June 30, 2019 for tax purposes was $24,475,896, resulting in an estimated net unrealized loss of $459,480. The gross unrealized gains and losses as of June 30, 2019 were $406,188 and $865,668, respectively.
 
 Taxable income generally differs from net increase in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The following estimates the net decrease in net assets resulting from operations to taxable income, which will be included as part of our tax return for the tax year ended December 31, 2019.
 
 Unaudited TPICJanuary 1, 2019 - March 31, 2019Unaudited FLEXApril 1, 2019 - December 31, 2019Unaudited Twelve Months Ended December 31, 2019Net increase in net assets resulting from operations$(775,946)$(1,838,219)$(2,614,165)Net realized loss on investments(1,672)1,880,5421,878,870Net unrealized (gains) losses on investments61,423(522,667)(461,244)Other temporary book-to-tax differences—(468,283)(468,283)Permanent differences659,270372,9111,032,181Taxable income before deductions for distributions$(56,925)$(575,716)$(632,641)
 
 In general, we may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which may include differences in the book and tax basis of certain assets and liabilities, amortization of offering costs, expense payments, nondeductible federal excise taxes and net operating losses, among other items. For the tax year ended December 31, 2019, we increased total distributable earnings (loss) by $1,664,822 and decreased additional paid in capital by $1,664,822.
 PWAY Income Taxes - Pre-Merger
 As of March 31, 2019, PWAY’s cost basis of investments for tax purposes was $8,993,783 resulting in an estimated net unrealized loss of $811,740. As of March 31, 2019, the gross unrealized gains and losses were $198,628 and $1,010,368, respectively. As a result of the tax-free reorganization on March 31, 2019, PWAY’s tax basis in its assets have been carried over to the Company.
 
 For the short tax year ended March 31, 2019, PWAY had no cumulative taxable income in excess of cumulative distributions. For the short tax year ended March 31, 2019, PWAY estimated $100,642 in capital loss carryforwards available for future use. This amount will be available for utilization by the Company beginning with the tax year ended December 31, 2019.
 TPIC/FLEX Income Taxes - Pre-Merger
 Prior to the merger, the TPIC’s cost basis of investments for tax purposes was $12,106,882 resulting in an estimated net unrealized loss of $675,641. Prior to the merger, the gross unrealized gains and losses were $70,589 and $746,230 respectively.
 
 For the tax year ended December 31, 2018, TPIC had no cumulative taxable income in excess of cumulative distributions.
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 For the tax year ended December 31, 2018, TPIC had $1,360,148 capital loss carryforwards available for future use. Combined with PWAY’s capital loss carryforward of $100,642, the Company will have a combined capital loss carryforward of $1,460,790 available for future utilization.
 
 The tax character of distributions declared and paid to PWAY's shareholders during the nine months ended March 31, 2019 was as follows:
 Nine Months EndedMarch 31, 2019(1)Ordinary income$23,732Return of capital300,907Total$324,639
 (1) PWAY dissolved for income tax purposes as of March 31, 2019. As such, PWAY filed a final tax return for the nine-month period ended March 31, 2019.
 The character of distributions declared and paid to PWAY's shareholders during the years ended June 30, 2018 and 2017 was as follows:
 Year EndedJune 30, 2018Year EndedJune 30, 2017Capital gain161,753—Return of capital403,766504,515Total$565,519$504,515
 
 Taxable income generally differs from net increase in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The following reconciles the net decrease in net assets resulting from operations to taxable income for the tax years ended June 30, 2018, and 2017 as well as the nine months ended March 31, 2019.
 Nine Months EndedMarch 31, 2019Year EndedJune 30, 2018Year EndedJune 30, 2017Net increase in net assets resulting from operations$163,573$(5,126)$765,862Net realized loss on investments45,453(181,007)(17,839)Net unrealized (gains) losses on investments769,197704,925(357,968)Other temporary book-to-tax differences(83,713)(230,457)(133,592)Permanent differences(899,819)(855,526)(653,844)Taxable income before deductions for distributions$(5,309)$(567,191)$(397,381)
 In general, we may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which may include differences in the book and tax basis of certain assets and liabilities, amortization of offering costs, expense payments, nondeductible federal excise taxes and net operating losses, among other items. For the year ended June 30, 2019, we increased accumulated net investment loss by $894,510 and increased additional paid in capital by $894,510.
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 NOTE 7 - INVESTMENT PORTFOLIO
 At June 30, 2020, we had investments in 51 long-term portfolio investments and CLOs, which had an amortized cost of $38,874,913 and a fair value of $36,663,703 . At June 30, 2019, we had investments in 53 long-term portfolio investments and CLOs, which had an amortized cost of $24,898,370 and a fair value of $24,019,563 .
 
 The original cost basis of debt placement and equity securities acquired, including follow-on investments for existing portfolio companies, payment-in-kind interest, and structuring fees, totaled $23,678,340 and $12,454,720 during the years ended June 30, 2020 and June 30, 2019, respectively. Debt repayments and considerations from sales of equity securities of approximately $8,271,306 and $9,854,278 were received during the years ended June 30, 2020 and June 30, 2019, respectively.
 The following tables summarize the composition of the Company’s investment portfolio at amortized cost and fair value as of June 30, 2020 and June 30, 2019 :
 June 30, 2020Investments atAmortizedCost(1)Investments at Fair ValueFair Value Percentage ofTotal PortfolioSenior Secured Loans-First Lien$29,307,625$28,653,56178%Senior Secured Loans-Second Lien1,558,0721,213,1484%Senior Secured Notes955,986811,2672%Structured Subordinated Notes6,372,1195,198,73914%Equity/Other681,111786,9882%Total Portfolio Investments$38,874,913$36,663,703100%June 30, 2019Investments atAmortizedCost(1)Investments at Fair ValueFair ValuePercentage of Total PortfolioSenior Secured Loans-First Lien$15,911,289$15,825,87066%Senior Secured Loans-Second Lien2,790,5772,505,22710%Senior Secured Notes444,957402,1632%Structured Subordinated Notes5,070,4364,715,48720%Equity/Other681,111570,8162%Total Portfolio Investments$24,898,370$24,019,563100%(1) Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2020 and June 30, 2019 :
 June 30, 2020IndustryInvestments at Fair ValuePercentage of PortfolioStructured Finance$5,198,73914%Healthcare & Pharmaceuticals4,911,75513%Services: Consumer4,589,76813%High Tech Industries4,508,94812%Telecommunications3,580,44210%Media: Broadcasting & Subscription2,031,5886%Services: Business1,960,8505%Wholesale1,807,7785%Construction & Building1,644,0705%Media: Diversified and Production1,644,0004%Transportation: Cargo1,469,6474%Financial811,2672%Consumer goods: Durable705,2872%Banking, Finance, Insurance & Real Estate663,3052%Beverage, Food & Tobacco436,6731%Energy: Oil & Gas365,0001%Media: Advertising, Printing & Publishing332,8121%Retail1,7740%Total$36,663,703100%June 30, 2019IndustryInvestments at Fair ValuePercentage of PortfolioStructured Finance$4,715,48720%High Tech Industries3,960,67115%Healthcare & Pharmaceuticals2,975,99612%Services: Business2,780,78812%Media: Broadcasting & Subscription1,675,6947%Hotel, Gaming & Leisure1,138,3415%Services: Consumer1,100,0935%Media: Advertising, Printing & Publishing947,1424%Retail905,0204%Beverage, Food & Tobacco498,6882%Transportation: Cargo497,1812%Automotive496,2262%Consumer496,1342%Media: Diversified & Production489,6852%Telecommunications479,0042%Energy: Oil & Gas461,2502%Financial402,1632%Total$24,019,563100%
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
 The following table presents the fair value of our investments disaggregated into the three levels of the ASC 820 valuation hierarchy as of June 30, 2020 and June 30, 2019 , respectively:
 As of June 30, 2020Level 1Level 2Level 3TotalPortfolio InvestmentsSenior Secured Loans-First Lien$—$—$28,653,561$28,653,561Senior Secured Loans-Second Lien——1,213,1481,213,148Equity/Other——786,988786,988Senior Secured Notes——811,267811,267Structured Subordinated Notes——5,198,7395,198,739Total Portfolio Investments$—$—$36,663,703$36,663,703As of June 30, 2019Level 1Level 2Level 3TotalPortfolio InvestmentsSenior Secured Loans-First Lien$—$—$15,825,870$15,825,870Senior Secured Loans-Second Lien——2,505,2272,505,227Equity/Other——570,816570,816Senior Secured Notes—402,163—402,163Structured Subordinated Notes——4,715,4874,715,487Total Portfolio Investments$—$402,163$23,617,400$24,019,563
 
 Investments for which market quotations are readily available are typically valued at such market quotations. In order to validate market quotations, management and the independent valuation firm look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. In determining the range of values for debt instruments where market quotations are not available, except CLOs and debt investments in controlling portfolio companies, management and the independent valuation firm estimated corporate and security credit ratings and identified corresponding yields to maturity for each loan from relevant market data. A discounted cash flow technique was then applied using the appropriate yield to maturity as the discount rate, to determine a range of values. In determining the range of values for debt investments of controlled companies and equity investments, the enterprise value was determined by applying a market approach such as using earnings before income interest, tax, depreciation and amortization (“EBITDA”) multiples, net income and/or book value multiples for similar guideline public companies and/or similar recent investment transactions and/or an income approach, such as the discounted cash flow technique. The enterprise value technique may also be used to value debt investments which are credit impaired. For stressed debt and equity investments, asset recovery analysis was used.
 In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.
 Our portfolio consists of residual interests in CLOs, which involve a number of significant risks. CLOs are typically very highly levered (10 - 14 times), and therefore the residual interest tranches that we invest in are subject to a higher degree of risk of total loss. In particular, investors in CLO residual interests indirectly bear risks of the underlying loan investments held by such CLOs. We generally have the right to receive payments only from the CLOs, and generally do not have direct rights against the underlying borrowers or the entity that sponsored the CLOs. While the CLOs we target generally enable the investor to acquire interests in a pool of senior loans without the expenses associated with directly holding the same investments, the prices of indices and securities underlying our CLOs will rise or fall. These prices (and, therefore, the prices of the CLOs) will be influenced by the
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 same types of political and economic events that affect issuers of securities and capital markets generally. The failure by a CLO investment in which we invest to satisfy financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event that a CLO fails certain tests, holders of debt senior to us would be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting CLO or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows.
 The interests we have acquired in CLOs are generally thinly traded or have only a limited trading market. CLOs are typically privately offered and sold, even in the secondary market. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLO residual interests carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) our investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO investment or unexpected investment results. Our net asset value may also decline over time if our principal recovery with respect to CLO residual interests is less than the cost of those investments. Our CLO investments and/or the CLOs’ underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on our value.
 An increase in LIBOR would materially increase the CLO’s financing costs. Since most of the collateral positions within the CLOs have LIBOR floors, there may not be corresponding increases in investment income (if LIBOR increases but stays below the LIBOR floor rate of such investments) resulting in materially smaller distribution payments to the residual interest investors.
 On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021 (the “FCA Announcement”). Furthermore, in the United States, efforts to identify a set of alternative U.S. dollar reference interest rates include proposals by the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Bank of New York. On August 24, 2017, the Federal Reserve Board requested public comment on a proposal by the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, to produce three new reference rates intended to serve as alternatives to LIBOR. These alternative rates are based on overnight repurchase agreement transactions secured by U.S. Treasury Securities. On December 12, 2017, following consideration of public comments, the Federal Reserve Board concluded that the public would benefit if the Federal Reserve Bank of New York published the three proposed reference rates as alternatives to LIBOR (the “Federal Reserve Board Notice”). The Federal Reserve Bank of New York said that the publication of these alternative rates is targeted to commence by mid-2018.
 At this time, it is not possible to predict the effect of the FCA Announcement, the Federal Reserve Board Notice, or other regulatory changes or announcements, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted in the United Kingdom, the United States or elsewhere. As such, the potential effect of any such event on our net investment income cannot yet be determined. The CLOs in which the Company is invested generally contemplate a scenario where LIBOR is no longer available by requiring the CLO administrator to calculate a replacement rate primarily through dealer polling on the applicable measurement date. However, there is uncertainty regarding the effectiveness of the dealer polling processes, including the willingness of banks to provide such quotations, which could adversely impact our net investment income. Recently, the CLOs we are invested in have included, or have been amended to include, language permitting the CLO investment manager to implement a market replacement rate (like SOFR) upon the occurrence of certain material disruption events. However, we cannot ensure that all CLOs in which we are invested will have such provisions, nor can we ensure the CLO investment managers will undertake the suggested amendments when able. In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLO would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on the Company’s net investment income and portfolio returns.
 We hold more than a 10% interest in certain foreign corporations that are treated as controlled foreign corporations (“CFC”) for U.S. federal income tax purposes (including our residual interest tranche investments in CLOs). Therefore, we are treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporations in an amount equal to our pro rata share of the corporation’s income for that tax year (including both ordinary earnings and capital gains). We are required to include such deemed distributions from a CFC in our taxable income and we are required to distribute at least 90% of such income to maintain our RIC status, regardless of whether or not the CFC makes an actual distribution during such year.
 If we acquire shares in “passive foreign investment companies” (“PFICs”) (including residual interest tranche investments in CLOs that are PFICs), we may be subject to federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our
 
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 share of the PFIC’s income for each year regardless of whether we receive any distributions from such PFICs. We must nonetheless distribute such income to maintain our status as a RIC.
 Legislation enacted in 2010 imposes a withholding tax of 30% on payments of U.S. source interest and dividends paid after December 31, 2013, or gross proceeds from the disposition of an instrument that produces U.S. source interest or dividends paid after December 31, 2016, to certain non-U.S. entities, including certain non-U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its United States account holders and its United States owners. Most CLOs in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to residual interest and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.
 If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices management would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose.
 A portion of the Company’s portfolio is concentrated in CLOs, which is subject to a risk of loss if that sector experiences a market downturn. The Company is subject to credit risk in the normal course of pursuing its investment objectives. The Company’s maximum risk of loss from credit risk for the portfolio of CLO investments is the inability of the CLOs collateral managers to return up to the cost value due to defaults occurring in the underlying loans of the CLOs.
 Investments in CLOs residual interests generally offer less liquidity than other investment grade or high-yield corporate debt, and may be subject to certain transfer restrictions. The Company’s ability to sell certain investments quickly in response to changes in economic and other conditions and to receive a fair price when selling such investments may be limited, which could prevent the Company from making sales to mitigate losses on such investments. In addition, CLOs are subject to the possibility of liquidation upon an event of default of certain minimum required coverage ratios, which could result in full loss of value to the CLOs interests and junior debt investors.
 
 The fair value of the Company’s investments may be significantly affected by changes in interest rates. The Company’s investments in senior secured loans through CLOs are sensitive to interest rate levels and volatility. In the event of a significant rising interest rate environment and/or economic downturn, loan defaults may increase and result in credit losses which may adversely affect the Company’s cash flow, fair value of its investments and operating results. In the event of a declining interest rate environment, a faster than anticipated rate of prepayments is likely to result in a lower than anticipated yield.
 
 The significant unobservable input used to value our investments based on the yield technique and discounted cash flow technique is the market yield (or applicable discount rate) used to discount the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest/dividend payments. Increases or decreases in the market yield (or applicable discount rate) would result in a decrease or increase, respectively, in the fair value measurement. Management and the independent valuation firms consider the following factors when selecting market yields or discount rates: risk of default, rating of the investment and comparable company investments, and call provisions.
 The significant unobservable inputs used to value our investments based on the EV analysis may include market multiples of specified financial measures such as EBITDA, net income, or book value of identified guideline public companies, implied valuation multiples from precedent M&A transactions, and/or discount rates applied in a discounted cash flow technique. The independent valuation firm identifies a population of publicly traded companies with similar operations and key attributes to that of the portfolio company. Using valuation and operating metrics of these guideline public companies and/or as implied by relevant precedent transactions, a range of multiples of the latest twelve months EBITDA, or other measure such as net income or book value, is typically calculated. The independent valuation firm utilizes the determined multiples to estimate the portfolio company’s EV generally based on the latest twelve months EBITDA of the portfolio company (or other meaningful measure). Increases or decreases in the multiple would result in an increase or decrease, respectively, in EV which would result in an increase or decrease in the fair value measurement of the debt of controlled companies and/or equity investment, as applicable. In certain instances, a discounted cash flow analysis may be considered in estimating EV, in which case, discount rates based on a weighted average cost of capital and application of the capital asset pricing model may be utilized.
 Changes in market yields, discount rates, EBITDA multiples, each in isolation, may change the fair value measurement of certain of our investments. Generally, an increase in market yields, discount rates or capitalization rates, or a decrease in EBITDA (or other) multiples may result in a decrease in the fair value measurement of certain of our investments.
 Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially
 
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 from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.
 In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the currently assigned valuations.
 As of June 30, 2020, $ 35,065,448 of our loans to portfolio companies, at fair value, bear interest at floating rates and have LIBOR
 floors ranging from 0.0% to 1.0%. As of June 30, 2020, $ 1,598,255 of our loans to portfolio companies, at fair value, bear interest at fixed ranging from 0.0% to 12.0%. As of June 30, 2019, $ 23,046,584 of our loans to portfolio companies, at fair value, bore interest at floating rates and have LIBOR floors ranging from 0.0% to 1.0%. As of June 30, 2019, $ 972,979 of our loans to portfolio companies, at fair value, bore interest at fixed rates ranging from 0.0% to 12.0%.
 
 Impact of the novel coronavirus (“Wuhan Virus”) pandemic
 The U.S. capital markets are experiencing a period of extreme volatility and disruption. In December 2019, a novel strain of coronavirus (the "Wuhan Virus") surfaced in Wuhan, China and the World Health Organization has declared a global pandemic, the United States has declared a national emergency and for the first time in its history, every state in the United States is under a federal disaster declaration. Many states, including those in which we and our portfolio companies operate, have issued orders requiring the closure of non-essential businesses and/or requiring residents to stay at home. The Wuhan Virus pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.
 
 The Wuhan Virus pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) materially and adversely impacted the value and performance of certain of our portfolio companies and SSN investments. The Wuhan Virus pandemic is having a particularly adverse impact on industries in which certain of our portfolio companies operate, including energy, hospitality, travel, retail and restaurants. Certain of our portfolio companies in other industries have also been significantly impacted. The Wuhan Virus pandemic is continuing as of the filing date of this Annual Report, and its extended duration may have further adverse impacts on our portfolio companies and SSN investments after June 30, 2020 , including for the reasons described herein. Although on March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which contains provisions intended to mitigate the adverse economic effects of the Wuhan Virus pandemic, it is uncertain whether, or how much, our portfolio companies will be able to benefit from the CARES Act or any other subsequent legislation intended to provide financial relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.
 
 As a BDC, we are required to carry our investments at fair value as determined in good faith by our board of directors. Depending on market conditions, we could incur substantial losses in future periods, which could have a material adverse impact on our business, financial condition, and results of operations.
 
 Although it is difficult to predict the extent of the impact of the Wuhan Virus outbreak on the underlying CLO vehicles we invest in, the failure by a CLO vehicle to satisfy certain financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event the CLO vehicle fails certain tests, holders of debt senior to us may be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting CLO vehicle or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows.
 
 The Wuhan Virus pandemic has adversely impacted the fair value of our investments as of June 30, 2020 , and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments. The impact of the Wuhan Virus pandemic may not yet be fully reflected in the valuation of our investments as our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that is often from a time period earlier, generally two to three months, than the quarter for which we are reporting. Additionally, we may not have yet received information
 
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 or certifications from our portfolio companies that indicate any or the full extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the Wuhan Virus pandemic. As a result, our valuations at June 30, 2020 may not show the complete or continuing impact of the Wuhan Virus pandemic and the resulting measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses after June 30, 2020 , which could have a material adverse effect on our business, financial condition and results of operations.
 The following is a reconciliation for the years ended June 30, 2020 and 2019, of investments for which significant unobservable inputs (Level 3) were used in determining fair value:
 Non-Control/Non-Affiliate Investments (less than 5.00% voting control)SeniorSecuredLoans -First LienSeniorSecuredLoans -Second LienSenior Secured NotesEquity/OtherStructuredSubordinatednotesTotalFair Value at June 30, 2019$15,825,870$2,505,227$—$—$4,715,487$23,046,584Net realized (losses) on investments(903,927)(648,363)———(1,552,290)Net change in unrealized gains (losses) on investments(436,619)(59,603)(47,354)—(818,431)(1,362,007)Net realized and unrealized gains (losses) on investments(1,340,546)(707,966)(47,354)—(818,431)(2,914,297)Purchases of investments20,839,017———1,355,69822,194,715Payment-in-kind interest10,18687———10,273Accretion (amortization) of purchase discount and premium, net133,2125,6548,921—(54,015)93,772Repayments and sales of portfolio investments(7,671,388)(589,854)———(8,261,242)Transfers within Level 3(1)——————Transfers into Level 3(1)4,166,783—849,700——5,016,483Transfers out of Level 3(1)(3,309,573)————(3,309,573)Fair Value at June 30, 2020$28,653,561$1,213,148$811,267$—$5,198,739$35,876,715Net change in unrealized gains (losses) attributable to Level 3 investments still held at the end of the year$(634,998)$(267,241)$(47,354)$—$(818,431)$(1,768,024)(1) Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. Transfers out of Level 3 during the quarter ended December 31, 2019 were due to increased quantity and reliability of broker quotes. Transfers into Level 3 were due to decreased observability of the inputs and decreased quantity and reliability of broker quotes during the quarter ended March 31, 2020. There were no changes in the observability of the inputs during the quarter ended June 30, 2020.
 
 
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 Affiliate Investments (5.00% to 24.99% voting control)Equity/OtherTotalFair Value at June 30, 2019$570,816$570,816Net realized (losses) on investments——Net change in unrealized gains (losses) on investments216,172216,172Net realized and unrealized gains (losses) on investments216,172216,172Fair Value at June 30, 2020$786,988$786,988Net change in unrealized gains (losses) attributable to Level 3 investments still held at the end of the period$216,172$216,172(1) Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. Transfers out of Level 3 during the quarter ended December 31, 2019 were due to increased observability of the inputs. Transfers into Level 3 were due to decreased observability of the inputs during the quarter ended March 31, 2020. There were no changes in the observability of the inputs during the quarter ended June 30, 2020.
 Non-Control/Non-Affiliate Investments (less than 5.00% voting control)SeniorSecuredLoans -First LienSeniorSecuredLoans -Second LienEquity/OtherStructuredSubordinatednotesTotalFair Value at June 30, 2018$—$—$—$3,127,896$3,127,896Net realized (losses) on investments(331,840)(59,082)—(16,627)(407,549)Net change in unrealized gains (losses) on investments247,240(176,660)—(19,976)50,604Net realized and unrealized gains (losses) on investments(84,600)(235,742)—(36,603)(356,945)Purchases of investments10,880,621——1,574,10012,454,721Distributions received from investments———(56,437)(56,437)Payment-in-kind interest—166——166Accretion (amortization) of purchase discount and premium, net(20,009)3,626—106,53190,148Repayments and sales of portfolio investments(1,571,761)(1,564,458)——(3,136,219)Assets acquired via merger (Note 9)6,621,6184,301,635——10,923,253Transfers within Level 3(1)—————Transfers in out of Level 3(1)—————Fair Value at June 30, 2019$15,825,869$2,505,227$—$4,715,487$23,046,583Net change in unrealized gains (losses) attributable to Level 3 investments still held at the end of the period$—$—$—$(37,682)$(37,682)(1) Transfer are assumed to have occurred at the beginning of the quarter during which the asset was transferred. There were no transfers in or out of Level 3 during the year ended June 30, 2019.
 
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 Affiliate Investments (5.00% to 24.99% voting control)Equity/OtherTotalFair Value at June 30, 2018$—$—Net realized (losses) on investments——Net change in unrealized gains (losses) on investments62,82962,829Net realized and unrealized gains (losses) on investments62,82962,829Purchases of investments——Repayments and sales of portfolio investments——Accretion (amortization) of purchase discount and premium, net——Assets acquired via merger (Note 9)507,988507,988Transfers within Level 3(1)——Transfers in (out) of Level 3(1)——Fair Value at June 30, 2019$570,817$570,817Net change in unrealized gains (losses) attributable to Level 3 investments still held at the end of the period$—$—(1) Transfer are assumed to have occurred at the beginning of the quarter during which the asset was transferred. There were no transfers in or out of Level 3 during the year ended June 30, 2019.
 The following table provides quantitative information regarding significant unobservable inputs used in the fair value measurement of Level 3 investments as of June 30, 2020 :
 Unobservable InputsAsset CategoryFair ValuePrimary Valuation TechniqueInputsRangeWeighted AverageSenior Secured First Lien Debt$3,595,102Market quotesIndicative dealer quotes71.25%-97.68%92.69%Senior Secured First Lien Debt25,058,459Discounted Cash Flow (Yield Analysis)Market Yield4.38%-12.50%7.22%Senior Secured Second Lien Debt1,213,148Market quotesIndicative dealer quotes15.00%-100.10%80.15%Senior Secured Notes811,267Discounted Cash Flow (Yield Analysis)Market Yield21.48%-22.64%22.06%Equity/Other786,988Enterprise Value Waterfall (Market Approach)EBITDA multiples (x)0.00x-7.50x7.50xSubordinated Structured Notes5,198,739Discounted Cash FlowDiscount Rate17.83%- 32.90%(1)24.13%(1)36,663,703(1) Represents the implied discount rate based on our internally generated single-cash flows that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm.
 
 
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 The following table provides quantitative information regarding significant unobservable inputs used in the fair value measurement of Level 3 investments as of June 30, 2019 :
 Unobservable InputsAsset CategoryFair ValuePrimary Valuation TechniqueInputsRangeWeighted AverageSenior Secured First Lien Debt$15,825,870Market quotesIndicative dealer quotes85.00-101.0098.30Senior Secured Second Lien Debt2,505,227Market quotesIndicative dealer quotes61.63-101.5290.79Equity/Other570,816Enterprise Value Waterfall (Market Approach)EBITDA multiples (x)0.00x-8.00x8.00xSubordinated Structured Notes4,715,487Discounted Cash FlowDiscount Rate17.67%- 23.12%(1)20.57%(1)Total$23,617,400(1) Represents the implied discount rate based on our internally generated single-cash flows that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm.
 For the years ended June 30, 2020 and 2019, there were structuring fees of $1,875 and $0, respectively, as part of interest income on the Consolidated Statements of Operations . For the years ended June 30, 2020 and 2019, accelerated original issue discount due to repayments included in interest income totaled $41,689 and $0, respectively.
 
 NOTE 9 - MERGER
 Effective March 31, 2019, TPIC and PWAY entered into a tax free business combination. Concurrent with the Merger, TPIC, the legal acquirer, was renamed TP Flexible Income Fund, Inc. As a result of the Merger, the Company issued 775,193 shares of the Company’s common stock to the former shareholders of PWAY and all shares of PWAY were retired. On and effective August 5, 2020, the Company changed its name to Prospect Flexible Income Fund, Inc. from TP Flexible Income Fund, Inc. (the “Name Change”) by filing Articles of Amendment (the “Articles of Amendment”) to its Fourth Articles of Amendment and Restatement, as amended and supplemented.
 For financial reporting purposes, the Merger was treated as a recapitalization of PWAY followed by the reverse acquisition of TPIC by PWAY for a purchase price equivalent to the fair value of TPIC’s net assets.
 Consistent with tax free business combinations of investment companies, for financial reporting purposes, the reverse merger accounting was recorded at fair value; however, the cost basis of the investments received from TPIC was carried forward to align ongoing financial reporting of the Company’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Further, the components of net assets of the Company reflect the combined components of net assets of both PWAY and TPIC.
 In accordance with the accounting and presentation for reverse acquisitions, the historical financial statements of the Company, prior to the date of the Merger reflect the financial positions and results of operations of PWAY, with the exception of the components of net assets described above, with the results of operations of TPIC being included commencing on April 1, 2019. Effective with the completion of the Merger, TPIC, changed its fiscal year end to be the last day of June consistent with PWAY’s fiscal year.
 In the Merger, common shareholders of PWAY received newly-issued common shares in the Company having an aggregate net asset value equal to the aggregate net asset value of their holdings of PWAY Class A and/or PWAY Class I common shares, as applicable, as determined at the close of business on March 27, 2019, as permitted by the Merger agreement. The differences in net asset value between March 27, 2019 and March 31, 2019 were not material. Relevant details pertaining to the Merger are as follows:
 NAV/Share($)Conversion RatioTriton Pacific Investment Corporation, Inc.$10.48N/APathway Capital Opportunity Fund, Inc.: Class A$13.461.2848Pathway Capital Opportunity Fund, Inc.: Class I$13.501.2884
 
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 Investments
 The cost, fair value and net unrealized appreciation (depreciation) of the investments of TPIC as of the date of the Merger, was as follows:
 TPICCost of investments$12,106,879Fair value of investments11,431,241Net unrealized appreciation (depreciation) on investments$(675,638)
 Common Shares
 The common shares outstanding, net assets applicable to common shares and NAV per common share outstanding immediately before and after the Merger were as follows:
 Accounting Acquirer - Prior to MergerPWAYClass APWAYClass ICommon shares outstanding570,43132,834Net assets applicable to common shares$7,679,839$443,296NAV per common share$13.46$13.50Legal Acquiring Fund - Prior to MergerTPICCommon shares outstanding1,614,221Net assets applicable to common shares$16,915,592NAV per common share$10.48Legal Acquiring Fund - Post MergerFLEXCommon shares outstanding2,403,349Net assets applicable to common shares$25,086,682NAV per common share$10.44
 Cost and Expenses
 In connection with the Merger, PWAY incurred certain associated costs and expenses of approximately $731,000, of which $709,000 of these costs and expenses were expensed by PWAY and $22,000 were expensed by the Company. In connection with the Merger, TPIC incurred certain associated costs and expenses of approximately $682,000, of which $636,000 were expensed by TPIC and $46,000 were expensed by the Company.
 Purchase Price Allocation
 PWAY as the accounting acquiror acquired 32% of the voting interests of TPIC. The below summarized the purchase price allocation from TPIC:
 PWAY as acquirerValue of Common Stock Issued$17,052,546Assets acquired:Investments11,431,241Cash and cash equivalents5,055,456Other assets607,163Total assets acquired17,093,860Total liabilities assumed41,314Net assets acquired17,052,546Total purchase price$17,052,546
 
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 NOTE 10 - COMMITMENTS AND CONTINGENCIES
 The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.
 The Company has a conditional obligation to reimburse the Adviser for any amounts funded by the Adviser under the Expense Limitation Agreement for any payments made by the Adviser. The Expense Limitation Agreement payments are subject to repayment by the Company within the three years following the end of the quarter in which the payment was made by the Adviser; provided that any such repayments shall be subject to the then-applicable expense limitation, if any, and the limit that was in effect at the time when the Adviser made the payment that is subject to repayment.
 The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.
 
 As of June 30, 2020 , the Company had an unfunded commitment relating to Amerilife Holdings, LLC for $85,227.
 
 NOTE 11 - CREDIT FACILITY
 
 PWAY – Pre-Merger
 On August 25, 2015, PWAY closed on a credit facility with BNP Paribas Prime Brokerage International, Ltd. (the “Revolving Credit Facility”). The Revolving Credit Facility included an accordion feature which allowed commitments to be increased up to $25,000,000 in the aggregate. Interest on borrowings under the Revolving Credit Facility was three-month LIBOR plus 120 basis points with no minimum LIBOR floor. The Revolving Credit Facility closed prior to the Merger.
 During the year ended  June 30, 2019 , PWAY recorded $24,871 of interest expense related to PWAY's Revolving Credit Facility.
 During the period from July 1, 2018 through March 22, 2019 (the last day PWAY's Revolving Credit Facility was outstanding), the average stated interest rate (i.e., the rate in effect plus the spread) was 3.75% for PWAY's Revolving Credit Facility. During the period from July 1, 2018 through March 22, 2019 (the last day PWAY's Revolving Credit Facility was outstanding), average outstanding borrowings was approximately $912,000 for PWAY's Revolving Credit Facility.
 
 As permitted by ASC 825-10-25, we have not elected to value our Revolving Credit Facility at fair value. The fair value of the Revolving Credit Facility was $0 as of June 30, 2019 since there was no amount outstanding.
 
 FLEX – Post-Merger
 
 On May 16, 2019, the Company established a $50 million senior secured revolving credit facility (the “Credit Facility”) with Royal Bank of Canada, a Canadian chartered bank, acting as administrative agent. In connection with the Credit Facility, the SPV, as borrower, and each of the other parties thereto entered into a Revolving Loan Agreement, dated as of May 16, 2019 (the “Loan Agreement”).
 
 The Credit Facility matures on May 21, 2029 and interest on borrowings under the Credit Facility when established was three-month LIBOR plus 1.55%. On May 11, 2020, the Company agreed to the increased interest rate of three-month LIBOR plus 2.20% on the Credit Facility for the period between May 16, 2020 to November 15, 2020. The Credit Facility is secured by substantially all of the SPV’s properties and assets. Under the Loan Agreement, the SPV has made certain customary representations and warranties and is required to comply with various covenants, including reporting requirements and other customary requirements for similar credit facilities. The Loan Agreement includes usual and customary events of default for credit facilities of this nature.
 As of June 30, 2020 and June 30, 2019 , we had $21,000,000 and $5,500,000, respectively outstanding on our Credit Facility. As of June 30, 2020 and June 30, 2019 , the investments used as collateral for the Credit Facility had an aggregate fair value of $29,705,147 and $15,859,230, respectively, which represents 81% and 90%, respectively, of our total investments. As permitted by ASC 825-10-25, we have not elected to value our Credit Facility which is categorized as Level 2 under ASC 820 as of June 30, 2020 .
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 In connection with the origination of the Credit Facility, we incurred $588,355 fees, all of which are being amortized over the term of the facility in accordance with ASC 470-50. As of June 30, 2020 and June 30, 2019 , $ 522,163 and $ 457,651 , respectively, remains to be amortized and is reflected as deferred financing costs on the Consolidated Statements of Assets and Liabilities .
 
 During the year ended  June 30, 2020 , we recorded $ 603,263 of interest costs and amortization of financing costs on the Credit Facility as interest expense.
 
 For the year ended  June 30, 2020 , the average stated interest rate (i.e., rate in effect plus the spread) was 3.19%. For the year ended  June 30, 2020 , average outstanding borrowings for Credit Facility was $17,267,760. From May 16, 2019 (the date the Company entered into the Credit Facility) to June 30, 2019, the average stated interest rate (i.e., rate in effect plus the spread) was 3.99% and the average outstanding borrowings for Credit Facility was $5,500,000.
 
 As permitted by ASC 825-10-25, we have not elected to value our Credit Facility at fair value. The fair value of the Credit Facility was $21,000,0000 and is categorized as Level 2 under ASC 820 as of June 30, 2020 .
 
 
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 TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 NOTE 12- FINANCIAL HIGHLIGHTS
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Year EndedYear EndedYear EndedYear EndedJune 30, 2020June 30, 2019(e)June 30, 2018June 30, 2018Class AClass IPer Share Data(a):Net asset value at beginning of period9.88$9.89$13.53$13.53Net investment income0.240.910.790.81Net realized and unrealized (losses) on investments(1.22)(1.11)(0.80)(0.79)Net increase (decrease) in net assets resulting from operations(0.98)(0.20)(0.01)0.02Distributions(b)Return of capital distributions(0.57)(0.54)(0.62)(0.62)Dividends from net investment income(0.15)(0.03)(0.24)(0.24)Total Distributions(0.72)(0.57)(0.86)(0.86)Offering costs0.61——Other(c)0.100.150.050.04Net asset value at end of year$8.28$9.88$12.71$12.73Total return based on net asset value(d)(10.13)%7.52%0.18%0.33%Supplemental Data:Net assets at end of year$19,558,402$23,410,715$7,933,028$420,136Average net assets$21,234,189$12,536,923$8,314,166$439,787Average shares outstanding2,366,0051,297,582622,68332,914Ratio to average net assets:Total annual expenses16.41%23.48%22.69%22.43%Total annual expenses (after expense support agreement/expense limitation agreement)13.07%9.11%8.91%8.73%Net investment income2.67%2.15%5.92%6.04%Portfolio Turnover24.56%93.42%37.42%37.42%(a) Calculated based on weighted average shares outstanding.(b) The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the year. Distributions per share are rounded to the nearest $0.01.(c)  The amount shown represents the balancing figure derived from the other figures in the schedule, and is primarily attributable to the accretive effects from the sales of the Company’s shares and the effects of share repurchases during the year.(d) Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the year and assumes that distributions are reinvested in accordance with the Company’s distribution reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since the Company’s shares are not publicly traded.(e) Data presented for the three and nine months ended March 31, 2019 includes the shareholder activity of PWAY Class A and Class I shares, prior to the merger and conversion into shares of the Company. The net asset value per share at beginning of year has been adjusted by the exchange ratio used in the merger.
 
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Year EndedPeriod EndedJune 30, 2017June 30, 2016(a)Per Share Data(b):Net asset value, beginning of year or period$12.81$13.80Net investment income0.711.21Net realized and unrealized gains (losses) on investments0.68(0.03)Net increase in net assets resulting from operations1.391.18Return of capital distributions(c)(0.92)(0.75)Offering costs0.03(0.62)Other(d)0.22(0.80)Net asset value, end of year or period$13.53$12.81Total return, based on NAV(e)13.20%(1.75)%Supplemental Data:Net assets, end of year or period$8,405,744$5,976,355Average net assets$7,508,410$3,597,990Average shares outstanding550,843341,596Ratio to average net assets:Expenses without expense support payment22.05%36.65%Expenses after expense support payment10.52%3.41%Net investment income5.19%11.50%Portfolio turnover27.54%4.27%(a)The net asset value at the beginning of the period is the net offering price as of August 25, 2015, which is the date that the Company satisfied its minimum offering requirement by raising over $2.5 million from selling shares to persons not affiliated with the Company or the Adviser (the “Minimum Offering Requirement”), and as a result, broke escrow and commenced making investments.(b)Calculated based on weighted average shares outstanding.(c)The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the year or period. Distributions per share are rounded to the nearest $0.01.(d)The amount shown represents the balancing figure derived from the other figures in the schedule, and is primarily attributable to the accretive effects from the sales of the Company’s shares and the effects of share repurchases during the year or period.(e)Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the year or period and assumes that distributions are reinvested in accordance with the Company’s dividend reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since the Company’s shares are not publicly traded. For the period less than one year, total return is not annualized.
 
 Revolving Credit FacilityTotal Amount OutstandingAsset Coverage per Unit(1)Involuntary Liquidating Preference per Unit(2)Average Market Value per Unit(2)June 30, 2020$21,000,000$1,931——March 31, 2020$21,000,000$1,914——December 31, 2019$21,000,000$2,018——September 30, 2019$15,500,000$2,461——June 30, 2019$5,500,000$5,256——(1) The asset coverage ratio is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by secured senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit.(2) This column is inapplicable.
 
 
 NOTE 13 - SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
 
 The following table sets forth selected financial data for each quarter within the year ended  June 30, 2020 . Investment IncomeNet Investment IncomeQuarter EndedTotalPer Share(1)Per Share (PWAY Class A)(1)(2)Per Share (PWAY Class I)(1)(2)TotalPer Share(1)Per Share (PWAY Class A)(1)(2)Per Share (PWAY Class I(1)(2)September 30, 2017$306,5550.48(3)N/AN/A$141,6640.22(3)N/AN/ADecember 31, 2017344,359N/A0.520.52111,885N/A0.170.17March 31, 2018322,245N/A0.480.48127,841N/A0.190.19June 30, 2018325,158N/A0.490.49137,402N/A0.210.21September 30, 2018314,140N/A0.490.49(279,116)N/A(0.43)(0.44)December 31, 2018284,830N/A0.460.46(46,857)N/A(0.08)(0.07)March 31, 2019251,386N/A0.410.411,304,197N/A2.132.17June 30, 2019560,3700.23N/AN/A(709,296)(0.30)N/AN/ASeptember 30, 2019748,6440.31N/AN/A150,7240.06N/AN/ADecember 31, 2019853,8480.36N/AN/A50,5840.02N/AN/AMarch 31, 2020900,3710.38N/AN/A219,8210.09N/AN/AJune 30, 2020839,7550.35N/AN/A145,9130.06N/AN/A(1)Per share amounts are calculated using the weighted average number of common shares outstanding for the period presented. As such, the sum of the quarterly per share amounts above will not necessarily equal the per share amounts for the fiscal year.(2)Data presented for December 31, 2017-March 31, 2019 includes the shareholder activity of PWAY Class A and Class I shares, prior to the merger.(3)The financial data for the period ended September 30, 2017 is presented before the conversion to the an interval fund where there was only one class outstanding.
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 Net Realized and Unrealized (Losses) GainsNet Increase in Net Assets from OperationsQuarter EndedTotalPer Share(1)Per Share (PWAY Class A)(1)(2)Per Share (PWAY Class I(1)(2)TotalPer Share(1)Per Share (PWAY Class A)(1)(2)Per Share (PWAY Class I(1)(2)September 30, 2017$70,2580.11(3)N/AN/A$211,9220.33(3)N/AN/ADecember 31, 2017(91,732)N/A(0.14)(0.14)20,154N/A0.030.04March 31, 2018(199,405)N/A(0.30)(0.30)(71,564)N/A(0.11)(0.11)June 30, 2018(303,039)N/A(0.46)(0.46)(165,637)N/A(0.25)(0.25)September 30, 2018(142,584)N/A(0.22)(0.23)(421,700)N/A(0.65)(0.66)December 31, 2018(847,927)N/A(1.36)(1.37)(894,784)N/A(1.43)(1.44)March 31, 2019175,862N/A0.290.281,480,059N/A2.422.45June 30, 2019(238,167)(0.10)N/AN/A(947,463)(0.40)N/AN/ASeptember 30, 2019(744,821)(0.31)N/AN/A(594,097)(0.25)N/AN/ADecember 31, 2019(347,245)(0.15)N/AN/A(296,661)(0.13)N/AN/AMarch 31, 2020(2,566,076)(1.09)N/AN/A(2,346,255)(1.00)N/AN/AJune 30, 2020773,4500.32N/AN/A919,3630.38N/AN/A(1)Per share amounts are calculated using the weighted average number of common shares outstanding for the period presented. As such, the sum of the quarterly per share amounts above will not necessarily equal the per share amounts for the fiscal year.(2)Data presented for December 31, 2017-March 31, 2019 includes the shareholder activity of PWAY Class A and Class I shares, prior to the merger.(3)The financial data for the period ended September 30, 2017 is presented before the conversion to the an interval fund where there was only one class outstanding.
 
 NOTE 14 - NET INCREASE IN NET ASSETS PER SHARE
 The following information sets forth the computation of net increase in net assets resulting from operations per share during the years ended June 30, 2020, 2019 and 2018 .
 
 Year Ended June 30,202020192018Net increase in net assets resulting from operations(2,317,650)(783,888)(5,125)Weighted average common shares outstanding2,366,0051,297,582622,683Net increase (decrease) in net assets resulting from operations per share(0.98)(0.20)(0.01)
 
 
 NOTE 15 - SUBSEQUENT EVENTS
 Management has evaluated all known subsequent events through the date the accompanying consolidated financial statements were available to be issued on August 27, 2020 and notes the following:
 Name Change
 Effective  August 5, 2020, we amended our articles of incorporation to change our name to Prospect Flexible Income Fund, Inc.  In addition, on August 5, 2020, we amended and restated our bylaws to reflect the change of our corporate name.
 
 Dealer Manager Agreement
 
 
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  TP FLEXIBLE INCOME FUND, INC. (NOW KNOWN AS PROSPECT FLEXIBLE INCOME FUND, INC.)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - June 30, 2020
 
 On August 6, 2020, we amended our dealer manager agreement with our dealer manager to reflect a change to the upfront sales load paid to our dealer manager in connection with the sale of our Class A Shares.  Under the amended dealer manager agreement, we will pay our dealer manager an upfront sales load of up to 9% of the gross proceeds received on Class A Shares sold in our offering all or a portion of which may be paid to selected broker-dealers and financial representatives. The upfront sales load consists of upfront selling commissions of up to 6.0% of the gross proceeds of Class A Shares sold in our offering and a dealer manager fee of up to 3.0% of the gross offering proceeds of Class A Shares sold in our offering.  The amended dealer manager agreement became effective on August 26, 2020 .
 
 License Agreement
 
 On August 4, 2020, we entered into a license agreement with an affiliate of our Adviser, pursuant to which the affiliate granted us a non-exclusive, royalty free license to use the “Prospect” name. Under this license agreement, we have the right to use such name for so long as our Adviser or another affiliate of Prospect Capital Management is our investment adviser. Other than with respect to this limited license, we have no legal right to the “Prospect” name or logo.
 Sales of Common Stock
 For the period beginning July 1, 2020 and ending August 27, 2020 , the Company sold 17,295 shares of its common stock for gross proceeds of $ 156,000 and issued 15,959 shares pursuant to its distribution reinvestment plan in the amount of $ 131,658 .
 Investment Activity
 
 During the period beginning July 1, 2020 and ending August 27, 2020 , the Company made 2 investments totaling $1,189,063 . During the period beginning July 1, 2020 and ending August 27, 2020 , the Company sold 1 investment totaling $446,250 .
 
 On August 14, 2020, the Company funded $45,455 of the total $85,227 delayed draw term loan commitment for our investment in Amerilife Holdings, LLC portfolio company.
 
 Offering Price
 
 On August 12, 2020, the Company increased its offering price from $8.78 per share to $9.03 per share. The increase in the offering price is effective for all closings occurring on or after August 12, 2020. In addition, on August 26, 2020 , the Company increased its offering price from $9.03 per share to $9.33 per share. The increase in the offering price is effective for all closings occurring on or after August 26, 2020 .
 Repurchase Offer
 On June 9, 2020, under our share repurchase program, we made an  offer to purchase (the "Tender Offer") up to the number of shares of our issued and outstanding Class A common stock we can repurchase with the proceeds we receive from the issuance of shares under our distribution reinvestment plan prior to the expiration of the Tender Offer. The Tender Offer is for cash at a price equal to the net offering price per share determined as of July 10, 2020 (“Purchase Price”). The offer expired at 4:00 P.M., Eastern Time, on July 8, 2020 and a total of 65,266 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased 28,786 shares validly tendered and not withdrawn at a price equal to $8.25 per share for an aggregate purchase price of approximately $237,488.
 
 On August 25, 2020, our Board of Directors declared a series of distributions for the months of September through November
 2020 reflected in the following table. Common stockholders of record as of each respective record date will be entitled to receive the distribution.
 Monthly Cash Shareholder DistributionRecord DatesPayment DateTotal Amount ($ per share)September 2020September 4, 11, 18 and 25, 2020October 2, 2020$0.05012October 2020October 2, 9, 16, 23 and 30, 2020November 6, 2020$0.06265November 2020November 6, 13, 20 and 27, 2020December 4, 2020$0.05012
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
 Not applicable.
 
 Item 9A: Controls and Procedures.
 
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 Evaluation of Disclosure Controls and Procedures
 As of June 30, 2020 , we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating 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 such possible controls and procedures. We are continually monitoring and assessing the Wuhan Virus situation to determine any potential impact on the design and operating effectiveness of our internal controls over financial reporting.
 Change in Internal Control Over Financial Reporting
 There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2020 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 Report of Management on Internal Control Over Financial Reporting
 
 Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of June 30, 2020 . Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2020 based upon criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management determined that the Company’s internal control over financial reporting was effective as of June 30, 2020 based on the criteria on Internal Control—Integrated Framework (2013) issued by COSO. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.
 
 
 Item 9B. Other Information
 
 Not applicable.
 
 
 
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 Item 10. Directors, Executive Officers and Corporate Governance
 
 Section 16(a) Beneficial Ownership Reporting Compliance
 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. To the Company’s knowledge, during the fiscal year ended June 30, 2020 , the Company’s officers, directors and greater than 10% stockholders had complied with all Section 16(a) filing requirements.
 
 The information required by Item 10 is hereby incorporated by reference from our 2020 Proxy Statement.
 
 Code of Ethics
 We, Prospect Flexible Income Management, LLC and Prospect Administration, LLC have each adopted a 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 each 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. For information on how to obtain a copy of each code of ethics, see “Available Information” in Part I of this annual report on Form 10-K.
 
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 Item 11. Executive Compensation
 
 The information required by Item 11 is hereby incorporated by reference from our 2020 Proxy Statement.
 
 
 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 2020 Proxy Statement.
 
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
 
 The information required by Item 13 is hereby incorporated by reference from our 2020 Proxy Statement.
 
 
 Item 14. Principal Accountant Fees and Services
 
 The information required by Item 14 is hereby incorporated by reference from our 2020 Proxy Statement.
 
 
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 Item 15. Exhibits and Financial Statement Schedules
 The following documents are filed as part of this annual report on Form 10-K:
 (1)Financial Statements - Financial statements are included in Item 8. See the Index to the Consolidated Financial Statements on page F-1 of this annual report on Form 10-K.(2)Financial Statement Schedules - None. We have omitted financial statement schedules because they are not required or are not applicable, or the required information is shown in the consolidated statements or notes to the consolidated financial statements included in this annual report on Form 10-K.(3)Exhibits - The below provides a list of all exhibits filed as a part of this annual report on Form 10-K, including those incorporated by reference.
 Please note that the agreements included as exhibits to this annual report on Form 10-K are included to provide information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement that have been made solely for the benefit of the other parties to the applicable agreement and may not describe the actual state of affairs as of the date they were made or at any other time.
 
 The following exhibits are filed as part of this report or hereby incorporated into this report by reference to exhibits previously filed with the SEC (according to the number assigned to them in Item 601 of Regulation S-K):
 
 a. Financial Statements - See the Index to Consolidated Financial Statements in Item 8 of this report.
 b. Exhibit No. - The following exhibits are filed or incorporated as part of this report.
 
 Exhibit No.  Description
 
 3.1 Fourth Amended Articles of Incorporation(1)
 3.2 Articles Supplementary(2)
 3.3 Articles Supplementary(3)
 3.4 Articles of Merger of the Registrant(4)
 3.5 Articles of Amendment(5)
 3.6 Second Amended and Restated Bylaws(6)
 4 Description of Securities *
 10.1Investment Advisory Agreement, by and between TP Flexible Income Fund, Inc. and Prospect Flexible Income Management, LLC(7) 10.2Expense Limitation Agreement, by and between TP Flexible Income Fund, Inc. and Prospect Flexible Income Management, LLC(8) 10.3 Distribution Reinvestment Plan(9)
 10.4Amended and Restated Dealer Manager Agreement, by and between Prospect Flexible Income Fund, Inc. and Triton Pacific Securities, LLC(10) 10.5Global Custody Agreement between the Registrant and The Bank of New York Mellon Trust Company, National Association(11) 10.6First Amended and Restated Administration Agreement, by and between TP Flexible Income Fund, Inc. and Prospect Administration LLC(12) 10.7Agreement and Plan of Merger, dated August 10, 2018, between the Registrant and Pathway Capital Opportunity Fund, Inc.(13) 10.8Amended and Restated Agreement and Plan of Merger, dated February 12, 2019, between the Registrant and Pathway Capital Opportunity Fund, Inc.(14) 10.9Revolving Loan Agreement, dated as of May 16, 2019, by and among TP Flexible Funding, LLC, as borrower; Prospect Flexible Income Management, LLC, as collateral manager; the Lenders from time to time party thereto; Royal Bank of Canada, as administrative agent; and US Bank National Association, as collateral custodian and document custodian(15) 10.10License Agreement between the Registrant and Prospect Capital Investment Management, LLC(16) 14Amended Code of Ethics(17) 21Subsidiary of the Registrant: Prospect Flexible Funding, LLC (Delaware) 31.1Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 
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 32.1Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 32.2Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * ________________________
 
 *    Filed herewith.
 
 (1)Incorporated by reference to Exhibit 2(a) to the Post-Effective Amendment No. 7 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-174873) filed with the SEC on November 1, 2013. (2)Incorporated by reference to Exhibit 2(a)(1) to the Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-206730) filed with the SEC on March 3, 2016. (3)Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on September 23, 2019. (4)Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 1, 2019. (5)Incorporated by reference to Exhibit 2(a)(4) to the Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-230251) filed with the SEC on August 8, 2020. (6)Incorporated by reference to Exhibit 2(b)(1) to the Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-230251) filed with the SEC on August 8, 2020. (7)Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on April 1, 2019. (8)Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on April 1, 2019. (9)Incorporated by reference to Exhibit 2(e) to the Post-Effective Amendment No. 6 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-174873) filed with the SEC on July 8, 2013. (10)Incorporated by reference to Exhibit 2(h) to the Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-230251) filed with the SEC on August 8, 2020. (11)Incorporated by reference to Exhibit 2(j) to the Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-206730) filed with the SEC on April 3, 2017. (12)Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on June 20, 2019. (13)Incorporated by reference to Annex A to the Registrant’s Registration Statement on Form N-14 (SEC File No. 333-226861) filed with the SEC on August 13, 2018. (14)Incorporated by reference to Annex A to the Registrant’s Amendment No. 1 to Registration Statement on Form N-14 (SEC File No. 333-226861) filed with the SEC on February 13, 2019. (15)Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on May 22, 2019. (16)Incorporated by reference to Exhibit 2(k)(5) to the Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-230251) filed with the SEC on August 8, 2020. (17)Incorporated by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K, filed on April 26, 2019. 
 
 Item 16. Form 10-K summary
 Not applicable.
 
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 SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 27, 2020 .
 
 PROSPECT FLEXIBLE INCOME FUND, INC. (FORMERLY KNOWN AS TP FLEXIBLE INCOME FUND, INC.)
 
 By: /s/ M. Grier Eliasek
 M. Grier Eliasek
 Chief Executive Officer
 (Principal Executive Officer)
 
 By: /s/ Kristin Van Dask
 Kristin Van Dask
 Chief Financial Officer
 (Principal Accounting and Financial Officer)
 
 
 
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