UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



(Mark
One)



|☒ | ANNUAL REPORT PURSUANT
    TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------
|  | For the fiscal year ended: December 31,
    2018                                         





OR



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



Commission
file number 333-174873



Triton
Pacific Investment Corporation, Inc.



(Exact
name of registrant as specified in its charter)





|Maryland                                                      |  | 45-2460782                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdictionof incorporation or organization) |  | (I.R.S. EmployerIdentification No.)





| | 6701 Center Drive West,
    Suite 1450
    Los Angeles, CA 90045 | 
| | ---------------------------------------------------------------- | 
| | (Address of principal
    executive offices)                     | 





[(310)
943-4990

(Registrant’s telephone number, including area code)



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



|Title
    of each class |  | Name
    of exchange on which registered
|----------------------- |  | ----------------------------------------
|None                    |  | Not
    applicable                      



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



Common
Stock, $0.001 par value per share



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



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



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  ☒    No  ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files).    Yes  ☒   No  ☐












Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.05 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐



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





|Large accelerated filer | ☐                                                      | Accelerated filer   ☐        
|----------------------- | ------------------------------------------------------ | -----------------------------
|                        |                                                        |                              
|Non-accelerated filer   | ☒    (Do not check if a smaller reporting
    company) | Smaller reporting company   ☐



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



There
is no established market for the Registrant’s shares of common stock. The Registrant is currently conducting an
ongoing public offering of its shares of common stock pursuant to a Registration Statement on Form N-2, which shares are
currently being offered and sold at $12.21 per share, with discounts available for certain categories of purchasers, or at a price
necessary to ensure that shares are not sold at a price, net of sales load, below net asset value per share.



As
of March 29, 2019, there were 1,614,220.76 shares of the registrant’s Class A common stock, $0.001 par value, outstanding.










Table
of Contents



|              |                                                                                                                  |     | Page
|------------- | ---------------------------------------------------------------------------------------------------------------- | --- | ----
|Part
    I.   |                                                                                                                  |     |     
|              | Statement
    Regarding Forward Looking Information                                                              |     | 1   
|Item 1.       | Business                                                                                                         |     | 1   
|Item 1A.      | Risk
    Factors                                                                                                 |     | 16  
|Item 1B.      | Unresolved
    Staff Comments                                                                                    |     | 48  
|Item 2.       | Properties                                                                                                       |     | 48  
|Item 3.       | Legal
    Proceedings                                                                                            |     | 48  
|Item 4.       | Mine
    Safety Disclosures                                                                                      |     | 48  
|              |                                                                                                                  |    
|Part
    II.  |                                                                                                                  |     |     
|Item 5.       | Market
    for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |     | 49  
|Item 6.       | Selected
    Financial Data                                                                                      |     | 55  
|Item 7.       | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations                        |     | 56  
|Item 7A.      | Quantitative
    and Qualitative Disclosures About Market Risk                                                   |     | 80  
|Item 8.       | Financial
    Statements and Supplementary Data                                                                  |     | 81  
|Item 9.       | Changes
    in and Disagreements with Accountants on Accounting and Financial Disclosure                         |     | 109 
|Item 9A.      | Controls
    and Procedures                                                                                      |     | 109 
|Item 9B.      | Other
    Information                                                                                            |     | 110 
|              |                                                                                                                  |    
|Part
    III. |                                                                                                                  |     |     
|Item 10.      | Directors,
    Executive Officers and Corporate Governance                                                       |     | 110 
|Item 11.      | Executive
    Compensation                                                                                       |     | 116 
|Item 12.      | Security
    Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters               |     | 116 
|Item 13.      | Certain
    Relationships and Related Transactions and Director Independence                                     |     | 118 
|Item 14.      | Principal
    Accountant Fees and Services                                                                       |     | 118 
|              |                                                                                                                  |    
|Part
    IV.  |                                                                                                                  |     |     
|Item 15.      | Exhibits,
    Financial Statement Schedules                                                                      |     | 120 
|              |                                                                                                                 
|Signatures    |                                                                                                                  | 122












PART
I



STATEMENT REGARDING FORWARD LOOKING INFORMATION



The
following information contains statements that constitute forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). These statements generally are characterized by the use of terms such as “may,” “should,”
“plan,” “anticipate,” “estimate,” “intend,” “predict,” “believe”
and “expect” or the negative of these terms or other comparable terminology. Although we believe that the expectations
reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially
from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following:
the current global economic downturn, increased direct competition, changes in government regulations or accounting rules, changes
in local, national and global capital market conditions, our ability to obtain credit lines or credit facilities on satisfactory
terms, changes in interest rates, availability of proceeds from our offering of shares, our ability to identify suitable investments,
our ability to close on identified investments, inaccuracies of our accounting estimates, our ability to locate suitable borrowers
for our loans and the ability of such borrowers to make payments under their respective loans. Given these uncertainties, we caution
you not to place undue reliance on such statements, which apply only as of the date hereof. We undertake no obligation to publicly
release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances
or to reflect the occurrence of unanticipated events. The forward-looking statements should be read in light of the risk factors
identified in the “Risk Factors” section of this report.



|Item 1. | Business
|------- | --------



General



We
are a publicly registered, non-traded fund focused on private equity, structured as a business development company that primarily
makes equity, structured equity and debt investments in small to mid-sized private U.S. companies. Our investment objectives are
to maximize our portfolio’s total return by generating long-term capital appreciation from our private equity investments and
current income from our debt investments. We are an externally managed, closed-end, non-diversified management investment
company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended.



On
August 10, 2018, we entered into a definitive agreement with Pathway Capital Opportunity Fund, Inc. (“PWAY”) pursuant
to which PWAY will merge with and into us, with Triton Pacific Investment Corporation, Inc. (“TPIC”) as the combined
surviving company, which will be renamed as TP Flexible Income Fund, Inc. That definitive agreement was amended effective February
12, 2019. In this report, we refer to the merger with PWAY as the “Merger” and the definitive agreement (as amended)
with PWAY relating to the Merger as the “Merger Agreement.” The boards of directors of both PWAY and TPIC approved
the Merger. The Merger is subject to a number of conditions to closing, including approval by our stockholders and the stockholders
of PWAY and is expected to close after the date of this report.



If
completed, the Merger will result in significant changes to us, including the following:



| | ● | New
                                         Investment Adviser. Prospect Flexible Income Management, LLC, who we refer to as
                                         the New Adviser, will serve as our investment adviser. The New Adviser is an affiliate
                                         of PWAY and the investment professionals of PWAY’s investment adviser have investment
                                         discretion at the Adviser.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Increased
                                         Leverage. Following the Merger, our asset coverage ratio requirement will be reduced
                                         from 200% to 150%, which will allow us to incur double the maximum amount of leverage
                                         that was previously permitted. As a result, we will be able to borrow substantially more
                                         money and take on substantially more debt than we are currently able to. Leverage may
                                         increase the risk of loss to investors and is generally considered a speculative investment
                                         technique.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





1







| | ● | Special
                                         Repurchase Offer. As a condition to being able to increase our leverage, we will
                                         offer to repurchase certain of our outstanding shares. In connection with this special
                                         repurchase offer, stockholders should be aware that:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | Only
                                         stockholders of TPIC as of the date of our annual stockholder meeting, will be allowed
                                         to participate in the special repurchase offer, and they may have up to 100% of their
                                         shares repurchased (former stockholders of PWAY will not be able to participate).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | If
                                         a substantial number of the eligible stockholders take advantage of this opportunity,
                                         it could minimize or eliminate the expected benefits of the Merger and it could:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | significantly
                                         decrease our asset size;
| | - | -------------------------------------------------------------------------------



| | ■ | require
                                         us to sell our investments earlier than the Adviser would have otherwise desired, which
                                         may result in selling investments at inopportune times or significantly depressed prices
                                         and/or at losses; or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | cause
                                         us to incur additional leverage solely to meet repurchase requests.
| | - | ------------------------------------------------------------------------------------------------------------------



| | ● | New
                                         Board of Directors.Following the Merger, the composition of our board of directors
                                         will change and will consist of Craig J. Faggen, our current President and Chief Executive
                                         Officer, M. Grier Eliasek, PWAY’s President and Chief Executive Officer, Andrew
                                         Cooper, William Gremp and Eugene Stark. Messrs. Cooper, Gremp and Stark are all currently
                                         independent directors of PWAY.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Triton
Pacific Adviser is currently responsible for sourcing potential investments, conducting due diligence on prospective investments,
analyzing investment opportunities, structuring investments and monitoring our portfolio on an ongoing basis. In addition, we
intend to elect and qualify to be treated, for U.S. federal income tax purposes, as a regulated investment company (“RIC”),
under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).



We
are currently offering for sale a maximum of $300,000,000 of our 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 (the “Offering”). Our initial offering commenced on September 4, 2012 and expired on March 1,
2016 and in that initial offering, we sold a total of 672,670.79 shares of our common stock for the gross proceeds of $9,893,780.
On March 17, 2016, we commenced the follow-on offering of our common stock when our registration statement was declared effective
by the SEC. We have filed post-effective amendments to the registration for our follow-on offering, the most recent of which was
filed on February 22, 2019 and will not be declared effective (if at all) until after the Merger is completed. On March 13, 2019,
we filed a registration statement with the SEC in order to continue our continuous public offering of shares for an additional
three years. The registration statement for this follow-on offering is still under review by the SEC.



Effective
March 2, 2016, our shares of common stock were divided into two classes, Class A and Class T. We are currently offering only Class
A shares and intend to offer Class T shares in the future, subject to obtaining a satisfactory exemption relief order from the
SEC, with each class having its own different upfront sales load and fee and expense structure. We may offer additional classes
of shares in the future. We intend to apply for exemptive relief from the SEC with respect to this multiple share class structure,
including our distribution fee and contingent deferred sales charge arrangements. As a condition of such relief, we will be required
to comply with provisions that would not otherwise be applicable to us. The exemptive relief order from the SEC may require us
to supplement or amend the terms set forth in this prospectus, including the terms of the Class A shares currently being offered.
There can be no assurance that the SEC will issue an order permitting such relief.



Investment
Objectives – Pre Merger



Prior
to the closing of the Merger, our investment objective was to maximize our portfolio’s total return by generating current income
from our debt investments and long-term capital appreciation from our equity investments. We attempted to meet our investment
objectives by:





2







| | ● | Focusing
                                         primarily on private equity investments and debt investments likely to generate current
                                         income in small and mid-sized private U.S. companies, which we define as companies with
                                         annual revenue of from $10 million to $250 million at the time of investment;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Leveraging
                                         the experience and expertise of our Adviser, its Sub-Adviser and its affiliates in sourcing,
                                         evaluating and structuring transactions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Employing
                                         disciplined underwriting policies and rigorous portfolio management;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | ● | Developing
                                         our equity portfolio through our Adviser’s Value Enhancement Program, more fully
                                         discussed below in “Investment Objectives and Policies – Investment Process”;
                                         and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Maintaining
                                         a well-balanced portfolio consisting of both debt and equity investments with variable
                                         risk-reward profiles.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our
Adviser engaged ZAIS Group, LLC to act as our investment sub-adviser. ZAIS assists our Adviser with identifying, evaluating, negotiating
and structuring debt investments and will make investment recommendations for approval by our Adviser. ZAIS is a registered investment
adviser under the Advisers Act and had approximately $6 billion in assets under management as of December 31, 2018. ZAIS is not
an affiliate of us or our Adviser and does not own any of our shares. The appointment of ZAIS as our sub-adviser was approved
by our stockholders at a special meeting held on September 16, 2014.



During
2018, we generated the majority of our current income by investing in senior secured loans, second lien secured loans and, to
a lesser extent, subordinated loans of private U.S. companies. We purchase interests in loans through secondary market transactions
in the “over-the-counter” market for institutional loans or directly from our target companies as primary market investments.
In connection with our debt investments, we on occasion receive equity interests such as warrants or options as additional consideration.
The senior secured and second lien secured loans in which we invest generally will have stated terms of three to seven years and
any subordinated investments that we make generally will have stated terms of up to ten years. However, there is no limit on the
maturity or duration of any security we may hold in our portfolio. 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). However,
we may also invest in non-rated debt securities.



Our
investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and long-term
capital appreciation from our equity investments. We will seek to meet our investment objectives by:



| | ● | Focusing
                                         primarily on private equity investments and debt investments likely to generate current
                                         income in small and mid-sized private U.S. companies, which we define as companies with
                                         annual revenue of from $10 million to $250 million at the time of investment;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Leveraging
                                         the experience and expertise of our Adviser, its Sub-Adviser and its affiliates in sourcing,
                                         evaluating and structuring transactions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Employing
                                         disciplined underwriting policies and rigorous portfolio management;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | ● | Developing
                                         our equity portfolio through our Adviser’s Value Enhancement Program, more fully
                                         discussed below in “Investment Objectives and Policies – Investment Process”;
                                         and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Maintaining
                                         a well-balanced portfolio consisting of both debt and equity investments with variable
                                         risk-reward profiles.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





3







Post-Merger



If
the Merger is completed, our investment objectives will change and will focus on generating 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. Our target credit
investments are expected to typically have initial maturities between three and ten years and generally range in size between
$1 million and $100 million, although the investment size may 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.



Following
the Merger, we expect to make our investments directly through the primary issuance by the borrower or in the secondary market.
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 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 CLOs. The senior secured loans underlying our CLO investments are expected typically to
be BB or B rated (non-investment grade, which is often referred to as “high yield” or “junk”) and in limited
circumstances, unrated, senior secured loans. Our investment portfolio is expected to consistent primarily of debt securities.



We
intend to seek to engage in a “liquidity event,” within five to seven years following the completion of our offering
period, whereby we will seek to provide liquidity to our investors, such as (i) a listing of our shares on a national securities
exchange, (ii) the sale of all or substantially all of our assets followed by a liquidation, or (iii) a merger or other transaction
approved by our board of directors in which our stockholders will receive cash or shares of another company. However, there can
be no assurance that we will be able to complete a liquidity event within such time frame. (We define the term “offering
period” as the three-year period following the commencement of our next follow-offering, although we may, in our discretion,
extend the term of the offering indefinitely.)



We
will be subject to certain regulatory restrictions in making our investments. If the Merger is completed, we will be subject to
an 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 by our New Adviser or certain affiliates, including 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 New 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 New Adviser in negotiated transactions originated by our New Adviser or its affiliates in accordance with such Order
and existing regulatory guidance. 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 New 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 Company Act and in a manner that will not jeopardize our status
as a BDC or RIC.





4







Status
of Our Continuous Public Offering



Since
commencing our continuous public offering and through March 29, 2019, we have sold 1,614,220.76 shares of our common stock for
gross proceeds of approximately $23,432,560.



About
our Adviser



Our
Adviser is registered as an investment adviser under the Adviser Act. Our Adviser and Triton Pacific Group, Inc. are under the
common control of Craig Faggen, who is also our Chairman and Chief Executive Officer. Triton Pacific Group, Inc. is an investment
management firm that focuses primarily on private equity investments through its subsidiary, Triton Pacific Capital Partners and
affiliated investment funds. Since 2001, TPCP has focused on debt and equity investments in small to mid-sized private companies
generally with revenues of less than $250 million. Since its inception, affiliates of TPCP have invested in the aggregate about
$160 million in private companies with an estimated aggregate enterprise value at the time of investment of more than $600 million.



Craig
J. Faggen, Ivan Faggen, Joseph Davis and Thomas Scott currently make up the investment committee of our Adviser. Each of them
has extensive investment, operational and advisory experience, primarily working with small to mid-sized companies. Members of
this team have been working together sourcing, structuring, investing and managing investments in small to middle market companies
for over ten years.



If
the Merger is completed, following the Merger, our Adviser and Sub-Adviser will cease to serve as our investment adviser and investment
sub-adviser, respectively, and Prospect Flexible Income Management, LLC (the “New Adviser”) will begin to serve as
our investment adviser. The New Adviser is registered as an investment adviser under the Advisers Act and will provide services
to us pursuant to the terms of an investment advisory agreement between us and the New Adviser, or the New Investment Advisory
Agreement. Our New Adviser’s investment activities will be led by a team of investment professionals from the investment
and operations team of Prospect Capital Management. Our New 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. Our New 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 New Adviser to assist it in managing our portfolio and operations, provided that they are supervised
at all times by our New Adviser’s management team.



Our
board of directors includes a majority of independent directors and oversees and monitors the activities of our Adviser and our
Sub-Adviser, as well as our investment portfolio and performance and annually reviews the compensation paid to our Adviser and
Sub-Adviser. See “Investment Adviser 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 the Adviser and our Adviser
has the right to terminate the investment advisory agreement upon 120 days’ written notice to us. Both our Adviser and Sub-Adviser
have the right to terminate the sub-advisory agreement without penalty upon 60 days’ written notice to the other party.



About
our Sub-adviser



Our
Adviser has engaged ZAIS Group, LLC to act as our investment sub-adviser. ZAIS assists our Adviser with identifying, evaluating,
negotiating and structuring debt investments and makes investment recommendations for approval by our Adviser. ZAIS is a registered
investment adviser under the Advisers Act and had approximately $6.0 billion in assets under management as of December 31, 2018.
ZAIS is not an affiliate of us or our Adviser and does not own any of our shares. The appointment of ZAIS as our sub-adviser was
approved by our stockholders at a special meeting held on September 16, 2014. Vincent Ingato will be initially responsible for
the day-to-day management of the debt investments managed by our Sub-Adviser. Mr. Ingato has more than 20 years of investment
experience, primarily investing in debt and other credit oriented securities If the Merger is completed, ZAIS will no longer serve
as our Sub-Adviser.





5







Market
Opportunity



The
following contains a discussion of our market opportunity following the completion of the Merger.



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.



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 Thomson Reuters LPC, institutional leveraged loan issuance (senior secured loans and
second lien secured loans) reached a record high in 2017 at approximately $919 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 $954 billion as of September 2017, 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 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.





6







(Graphics)



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. 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. With rates resetting in an environment where the prevailing base rate
is increasing, the income stream from a floating rate instrument will 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. 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, which typically never reset. Therefore, as short-term
rates rise, the value of a high yield bond should decline while the value of a floating rate loan should remain stable.



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
Objectives and Strategy



The
following contains a discussion of our investment objectives and strategy following the completion of the Merger.



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. Our target credit investments are expected to typically have initial maturities between three
and ten years and generally range in size between $1 million and $100 million, although the investment size may vary with the
size of our capital base. We expect that the majority of our debt investments will bear interest at





7







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.







As
part of our investment objective to generate current income, 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 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 CLOs. The senior secured
loans underlying our CLO investments are expected typically to be BB or B rated (non-investment grade, which is often referred
to as “high yield” or “junk”) and in limited circumstances, unrated, senior secured loans. Our investment
portfolio is expected to consistent primarily of debt securities.



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 choose 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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 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 New 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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





8







(both
common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of CLOs. Our New 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 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 New
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



(GRAPHICS)





As
a BDC, we are permitted under the Company Act to borrow funds to finance portfolio investments. To enhance our opportunity for
gain, we intend to employ leverage as market conditions permit. At our 2019 Annual Meeting, our stockholders will be asked to
approve a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. If approved, we will be allowed
to increase our leverage capacity. 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. For a discussion of
the risks of leverage, see “Risk Factors – Risks Relating to Our Business and Structure.”



Following
approval by our stockholders at the 2019 Annual Meeting, we will commence four repurchase offers, which we refer to as the special
repurchase offer, to allow all of the Eligible Stockholders (stockholders as of the date of the 2019 Annual Meeting) to tender
to us up to 100% of their shares that were held as of that date, as required by the Company Act and the Small Business Credit
Availability Act (the “SBCA”). Shares purchased or acquired after that date are not eligible for repurchase under
the special repurchase offer. The special repurchase offer is separate and apart from our share repurchase program. See “—Special
Repurchase Offer.”





9







Investment
Process



The
investment professionals employed by our New Adviser have spent their careers developing the resources necessary to invest in
private companies. Our transaction process is highlighted below.



Our
Transaction Process



(GRAPHICS)



Sourcing



In
order to source transactions, our New 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 New Adviser and its affiliates.
With respect to syndicate and club deals, the investment professionals of our New 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 New Adviser’s proprietary origination
channel, our New Adviser will seek to leverage the relationships with private equity sponsors and financial intermediaries. We
believe that the broad networks of our New 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 New Adviser’s professionals will 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 New 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 will be 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 New 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 New Adviser will recommend investment opportunities for its approval. Our New 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.





10







Approval.After completing its internal transaction process, our New Adviser will make formal recommendations for review and approval
by our New 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 New Adviser’s investment committee.



Post-Investment
Monitoring



Portfolio
Monitoring. Our New Adviser intends to monitor our portfolio with a focus toward anticipating negative credit events. To maintain
portfolio company performance and help to ensure a successful exit, our New 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 New 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 New 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 New 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 New 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 New 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.



Post-Merger
Business Growth



We
may grow our business and attempt to increase assets under management by pursuing growth through acquisitions of other BDCs or
registered investment companies, acquisitions of critical business partners or other strategic initiatives. We intend to pursue
acquisitions of other businesses or financial products complementary to our business when we believe such acquisitions can add
substantial value or generate substantial returns. Over the past several years, we have been in contact with various potential
merger partners and have recently had some





11







conversations
with other funds about possible merger transactions involving us. However, to date, we have not entered into any commitments relating
to any acquisitions or other strategic transactions (other than the Merger) and there can be no assurance that any such complimentary
business opportunities will be identified or that any such acquisitions will be completed.



Qualifying
Assets



Under
the Company Act, a business development company may not acquire any asset other than assets of the type listed in Section 55(a)
of the Company 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 Company
                                         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 Company 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.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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 business development company 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.





12







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 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 common stock
if our asset coverage, as defined in the Company Act, is at least equal to 200% immediately after each such issuance. (If the
Merger is completed, this requirement will decrease to 150%.) 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”. 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.”



Code
of Ethics



We
have adopted a code of ethics in accordance with Rule 17j-1 under the Company 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. We have attached our code of ethics as an exhibit to the registration statement of which this
prospectus is a part. You may also read and copy the code of ethics at the SEC’s Public Reference Room located at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. In addition, the code of ethics is available on the EDGAR Database on the SEC’s Internet site at
www.sec.gov.





13







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.



Introduction



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 there exist compelling long-term reasons to do so.



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 votes proxies with respect to our portfolio securities by making
a written request for proxy voting information to our Chief Compliance Officer, 6701 Center Drive West, Suite 1450, Los Angeles,
CA 90045.





14







Other
Matters



We
will be periodically examined by the SEC for compliance with the Company 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 involved in the conduct of such person’s office.



Securities
Exchange Act and Sarbanes-Oxley Act Compliance



We
are 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
                                         are 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 are 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 are 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.



Tax
Status



We
have elected to be treated for U.S. federal income tax purposes, and intend to qualify annually thereafter, 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 ordinary income or
capital gain that we distribute to our stockholders from our tax earnings and profits. 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. To obtain and maintain our RIC tax treatment, we must meet specified source-of-income
and asset diversification requirements and distribute annually at least 90% of our ordinary income and net short-term capital
gain in excess of net long-term capital loss, if any. See “Material U.S. Federal Income Tax Considerations.”



License
Agreement



We
have entered into a license agreement with Triton Pacific Group, Inc. pursuant to which it has agreed to grant us a non-exclusive,
royalty-free license to use the name and brand “Triton Pacific”, its related trademarks and other proprietary property.
Under this agreement, we will have a right to use the “Triton Pacific” name and brand, for so long as our Adviser
or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we will have no legal
right to the “Triton Pacific” name and brand. Triton Pacific Group, Inc. is controlled by Craig Faggen, its president
and our chairman of the board and chief executive officer.





15







Employees



We
do not currently have any employees. Each of our executive officers is a principal, officer or employee of Triton Pacific Adviser
(or an affiliate), which manages and oversees our investment operations.



Corporate
Information



Our
executive offices are located at 6701 Center Drive West, Suite 1450, Los Angeles, CA 90045 and our telephone number is (310) 943-4990.



Both
our quarterly reports on Form 10-Q and our annual reports on Form 10-K will be made available on our website at www.tritonpacificbdc.com
at the end of each fiscal quarter and fiscal year, as applicable, as will any interim reports on Form 8-K that we file from time
to time with the SEC. These reports will also be available on the SEC’s website atwww.sec.gov.



|Item 1A. | Risk Factors
|-------- | ------------



Investing
in our common stock involves a number of significant risks. In addition to the other information contained in this prospectus,
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 report, 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 report, neither we, our Adviser or our Sub-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 report, 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 resulted from expense reimbursements
from our Adviser, which are subject to repayment by us within three years. The purpose of this arrangement was to reduce our operating
expenses; to avoid such distributions being characterized as returns of capital for tax purposes and to attempt to ensure that
no portion of our distributions to stockholders will be paid from our offering proceeds. Beginning with the year ended December
31, 2016, the Adviser began to reimburse less than 100% of our expenses and for the year ended December 31, 2018.the Adviser did
not reimburse us for any of our expenses. As a result, a portion of the distributions we have paid in the past, and may continue
to pay, come from offering proceeds. Stockholders should understand that any such distributions are not based on our investment





16







performance,
and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser again agrees to make
expense reimbursements. Stockholders should also understand that our future repayments will reduce the distributions that they
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.



Our
ability to enter into transactions with our affiliates is restricted.



We
are currently prohibited under the Company Act from participating in certain transactions with certain of our affiliates without
the prior approval of our independent directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5%
or more of our outstanding voting securities will be deemed to be our affiliate for purposes of the Company Act and we will generally
be prohibited from buying or selling any securities (other than our securities) from or to such affiliate, absent the prior approval
of our disinterested directors. The Company Act also prohibits certain “joint” transactions with certain of our affiliates,
which could include investments in the same companies (whether at the same or different times), without prior approval of our
disinterested directors and, in some cases, the SEC. Except under certain circumstances, if a person acquires more than 25% of
our voting securities, we are prohibited from buying or selling any security (other than any security of which we are the issuer)
from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons.
Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. As a result of
these restrictions, we may be prohibited from buying or selling any security (other than any security of which we are the issuer)
from or to any company owned, in whole or in significant part, by a private equity fund managed by our Adviser or its affiliates,
which may limit the scope of investment opportunities that would otherwise be available to us without obtaining an exemptive relief
order from the SEC. There is no assurance that a satisfactory exemptive relief order from the SEC will be obtained.



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 Company Act, which would significantly decrease our operating flexibility. In addition, failure to
comply with the requirements imposed on business development companies by the Company Act could cause the SEC to bring an enforcement
action against us.



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 Company Act—which allows us to borrow only in amounts such that
our asset coverage, as defined in the Company Act, equals at least 200% of our gross assets less all of our liabilities not represented
by senior securities, immediately after each issuance of senior securities. (If the Merger is completed, this percentage will
be reduced to 150%.) 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 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.





17







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 Company 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 Company 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 Company 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.





18







Because
our business model depends to a significant extent upon the business relationships of our Adviser (and, if the Merger is completed,
the New Adviser), the inability of our Adviser (or New Adviser) to maintain or develop these relationships, or the failure of
these relationships to generate investment opportunities, could adversely affect our business.



We
expect that our Adviser, Sub-Adviser and, if the Merger is completed, our New Adviser, will depend on their relationships with
private equity 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, New Adviser and Sub-Adviser 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, New Adviser’s and Sub-Adviser’s
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. 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 prospectus. 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 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
                                         obtain and maintain RIC status and be relieved of federal taxes on the income and gains
                                         we distribute to our stockholders, we must meet the following annual distribution, income
                                         source and asset diversification requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | The annual
                               distribution requirement for a RIC will be satisfied if we distribute to our stockholders on an
                               annual basis 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. We will be subject to a 4% nondeductible
                               federal excise tax, however, to the extent that we do not satisfy certain additional minimum distribution
                               requirements on a calendar-year basis. See “Material U.S. Federal Income Tax Considerations.”
                               Because we may use debt financing, we are subject to an asset coverage ratio requirement under
                               the Company 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, we could fail
                               to qualify for RIC tax treatment and thus become subject to corporate-level income tax. See “Risks
                               Related to Debt Financing.”
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | The income
                               source requirement will be satisfied if we obtain at least 90% of our gross income for each year
                               from distributions, 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





19







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 income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available
for distribution and the amount of our distributions.



Our
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.



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 and personnel. 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 employ. Currently, individuals employed 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





20







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.



In
order to qualify for the tax benefits available to RICs and to eliminate its liability for U.S. federal income and excise taxes,
we intend to distribute to our stockholders substantially all of our annual taxable income, 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 business development company, 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 200%. Our Board of Directors have 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 and Sub-Adviser (and, if the Merger is completed, New 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 (or New 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:





21









| | ●  | 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.



Risks
Related to our Adviser and Its Affiliates



We
will rely on 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 if the Merger is completed, the New Adviser), our Sub-Adviser and their investment committee to identify potential investments,
to negotiate such acquisitions, to oversee the management of the investments, and to arrange their timely disposition. We are
the first business development company or registered investment company sponsored by our Adviser. The departure of any of the
members of our Adviser, New Adviser or Sub-Adviser could have a material adverse effect on our ability to achieve our investment
objectives. There can be no assurances that the individuals currently employed by the Adviser, New Adviser or Sub-Adviser who
will manage our portfolio will continue to be employed by the Adviser, New Adviser or Sub-Adviser or that the Adviser, New Adviser
or Sub-Adviser will be able to obtain suitable replacements if they leave. In addition, we can offer no assurance that our Adviser
(or, following the Merger, our New Adviser) will remain our investment adviser, that our Sub-Adviser will remain our sub-adviser
or that we will continue to have access to their 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, New Adviser and Sub-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. For example, Mr. Faggen, our president and chief executive officer, and
the president of our Adviser, as well as other members of TPCP and its affiliates who may also be members of the investment committee
of our Adviser, manage and will continue to manage other funds which are currently in their investment phase or, though fully
invested, are continuing to be actively managed. In addition, if the Merger is completed, Mr. Eliasek will serve as our president
and chief executive officer, and the president of our New Adviser, and may manage and will continue to manage other funds which
are also currently in their investment phase or, though fully invested, are continuing to be actively managed. In addition, in
the future, the principals of our Adviser (and New Adviser) or Sub-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, New Adviser and Sub-Adviser may face conflicts of interest in the allocation
of investment opportunities to us and such





22







other
funds. Although our Adviser’s, New Adviser’s and Sub-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. 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 (or New 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 (or New 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
(or New Adviser’s) investment professionals in our valuation process could result in a conflict of interest as our Adviser’s
(and New 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.



We
will pay management and incentive fees to our Adviser and New 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 will be payable based upon our gross assets, which would include any borrowings. This may
encourage our Adviser and New 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 prospectus. In addition, the incentive fee payable by us to our Adviser
and New 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 and New Adviser also may create an incentive
for our Adviser and New Adviser to favor investments that have a deferred interest feature or no interest income, but higher potential
total returns.



In
view of these factors, among other things, our board of directors is charged with protecting our interests by monitoring how our
Adviser and New 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





23







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 experience.



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 Company Act. Because evidences of ownership of such securities usually are held outside the United
States, we would be subject to 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;





24







| | ● | 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 and New 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 hold. 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.



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.





25







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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





26







Thus,
although a distribution of OID income comes from the cash invested by the stockholders, the Company 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 taxation.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.





27







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.



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





28







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.



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.





29







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.



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.



If
the Merger is completed, under our new investment strategy, we may invest up to 30% of our investment portfolio in CLOs, including
private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of CLOs.
Generally, there may be less information available to us regarding the underlying





30







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.



If
the Merger is completed, under the new investment strategy, 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 invest.



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.





31







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. 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 may be 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”).





32







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 do 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 it invests.



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.



We
will have limited control of the administration and amendment of any CLO in which we invest.



We
will not 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 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,





33







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
will not be responsible for and will have no influence over the asset management of the portfolios underlying the CLO investments
we will hold as those portfolios will be 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 a CLO is considered the sponsor
of a securitization vehicle and is required to retain five percent of the credit risk in the CLO, which may be retained horizontally
in the equity tranche of the CLO or vertically as a five percent interest in each tranche of the securities issued by the CLO.
Although the final rules contain an exemption from such requirements for the asset manager of a CLO if, among other things, the
originator or lead arranger of all of the loans acquired by the CLO retain such risk at the asset level and, at origination of
such asset, takes a loan tranche of at least 20% of the aggregate principal balance, it is possible that the originators and lead
arrangers of loans in this market will not agree to assume this risk or provide such retention at origination of the asset in
a manner that would provide meaningful relief from the risk retention requirements for CLO managers.



We
believe that the U.S. risk retention requirements imposed for CLO managers under Section 941 of the Dodd-Frank 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.”



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





34







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 a 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



Future
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.



From
time to time, the global capital markets may experience periods of disruption and instability, 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, 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 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.



Future
volatility and dislocation in the capital markets could create a challenging environment in which to raise or access capital.
For example, 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 Company Act, equals at least 200%. If the Merger is completed, our asset coverage
ratio requirement will decrease 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.”





35







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.



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,





36







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 interest rate hedging activities to the extent
permitted by the Company 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.



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 prospectus 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.



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.



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





37







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 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.  (We define the term “offering period” as the three-year period following the commencement
    of our follow-on offering, although we may, in our discretion, extend the term of the offering indefinitely.) However, because
    we may extend this 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 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.





38







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.



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.



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 the
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.





39







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 our prospectus.



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.



In
addition, even if we are able to raise significant proceeds in our offering, we will not be permitted to use such proceeds to
co-invest with certain entities affiliated with our Adviser in transactions originated by our Adviser unless we first obtain an
exemptive order from the SEC and receive approval from our independent directors. We have applied for an exemptive order, and
the SEC has granted exemptive relief for co-investments to other BDCs in the past. However, there can be no assurance that we
will obtain such relief.



We
anticipate that, depending on market conditions, it may take us several months to invest the proceeds of 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 stockholder
approval. After your purchase in our offering, our board 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 employees of 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 Company 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.





40







As
well, every issuance of preferred stock will be required to comply with the requirements of the Company Act. The Company 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 Company 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. See “Description of Our Securities—Business Combinations.”



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 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.





41







Risks
Related to Debt Financing



If
we borrow money, which we currently intend to do, the potential for gain or loss on amounts invested in our common stock will
be magnified and may increase the risk of investing in our common stock.



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.



If
we use borrowed funds to make investments, it will expose us to risks typically associated with leverage.



We
may borrow money or incur debt to leverage our capital structure. As a result:





| | (GRAPHICS) | 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;                                   
| | ---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |            |                                                                                                                                                                                                                                                                                 
| | (GRAPHICS) | 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 we;                                                                                                                       
| |            |                                                                                                                                                                                                                                                                                 
| | (GRAPHICS) | 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;
| |            |                                                                                                                                                                                                                                                                                 
| | (GRAPHICS) | our ability to pay dividends on our common stock may be restricted
    if our asset coverage ratio, as provided in the Company Act, is not at least 150%, and any amounts used to service indebtedness
    would not be available for such dividends;                           
| |            |                                                                                                                                                                                                                                                                                 
| | (GRAPHICS) | any credit facility we may enter into would be subject to periodic
    renewal by our lenders, whose continued participation cannot be guaranteed;                                                                                                                              



| | (GRAPHICS) | 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
| | ---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42







| | (GRAPHICS) | we, and indirectly our stockholders, will bear the entire
cost of issuing and paying interest on any debt.
| | ---------- | ----------------------------------------------------------------------------------------------------------



If
we enter into and subsequently defaults under any 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.



If
we enter into a credit facility, a significant portion of our assets may be pledged as collateral under such credit facility.
In the event that we default under such a credit facility or any other future borrowing facility, our business could be adversely
affected as we 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 or New 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 (or New Adviser) to
cause us to borrow more money to finance additional investments. In addition, under the New Investment Advisory Agreement, the
New Adviser will receive an income incentive fee based on our performance. As a result, the New 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 “Regulation” below. 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 Company 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 Company 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





43







substantially
greater regulation under the Company 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
Company 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 Company 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.



If
the Merger is completed, our asset coverage ratio requirement will decrease from 200% to 150%, which will apply to the Company
the day immediately after the 2019 Annual Meeting. As a result, we will 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 will also be 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. Payment for 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.”



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





44







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 taxes regardless of whether we continue to qualify as a RIC.



To
obtain and maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset
diversification requirements. See “Material U.S. Federal Income Tax Considerations.”



| | (GRAPHICS) | The
                                         annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders
                                         on an annual basis 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 Company 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, we could fail to qualify for RIC tax treatment
                                         and thus become subject to corporate-level income tax.
| | ---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (GRAPHICS) | The
                                         source-of-income requirement will be satisfied if we obtain at least 90% of our gross
                                         income for each year from distributions, interest, gains from the sale of stock or securities
                                         or similar sources.
| | ---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (GRAPHICS) | 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 securities; if such other
                                         securities of any one issuer do not represent more than 5% of the value of our assets
                                         or more than 10% of the outstanding voting securities of the issuer, and 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 tax treatment for any reason and are subject to corporate income tax, the resulting corporate
taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.
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
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.





45







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 income tax. For additional discussion regarding the tax implications of a RIC, see “Material
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. As long as a portion of such distribution is paid in cash (which portion can
be as low as 10% for our taxable years ending on or before December 31) and certain requirements are met, the entire distribution
to the extent of our current and accumulated earnings and profits would be a dividend for U.S. federal income tax purposes. If
the portion of the distribution payable in cash is less than the total amount of cash payable to all stockholders electing to
receive the distribution in cash, the amount of cash available for distribution will be pro-rated among all stockholders and the
remaining portion of the distribution would be paid in shares of our common stock. As a result, a stockholder would be taxed on
the entire distribution in the same manner as a cash distribution, even though all or a portion of the distribution was paid in
shares of our common stock.



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 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, 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 to an individual 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 after our first tax
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 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





46







income
is distributed as a taxable dividend by we 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 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, it 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 it 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 “Certain Material 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, or gross proceeds from the disposition of an instrument that produces
U.S. source interest or dividends paid after December 31, 2018, 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. 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.



If
we do not receive timely distributions from our CLO investments, we could have difficulty qualifying as a RIC.



As
discussed above, we are required to include in our taxable income our proportionate share of the income of certain CLO investments
to the extent that such CLOs are PFICs for which we have made a qualifying electing fund, or “QEF” election or are
CFCs. To the extent that such CLOs fail to distribute their earnings and profits each year, we may have difficulty qualifying
as a RIC. To qualify as a RIC, we must, among other thing, derive in each taxable year at least 90% of our gross income from certain
sources specified in the Code, or the “90% Income Test.” Although the Code generally provides that the income inclusions
from a QEF or a CFC will be “good income” for purposes of this 90% Income Test to the extent that the QEF or the CFC
distribute such income to we 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. 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. Such rulings are not binding on the IRS except with respect to the taxpayers to whom such rulings were
issued. Although we believe that the income inclusions from a CLO that is a QEF or a CFC would be “good income” for
purposes of the 90% Income Test whether or not such income is distributed in the same year, recently, the IRS and U.S. Treasury
Department 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 such income were not considered “good income” for purposes of the 90% Income Test, we may have difficulty
qualifying as a RIC if the CLOs in which it invests do distribute such income each year.





47







|Item 1B. | Unresolved Staff
    Comments
|-------- | -----------------------------



There
are no unresolved comments at this time.



|Item 2. | Properties
|------- | ----------



We
do not own any real estate or other physical properties materially important to our operation. We believe that the office facilities
of the Advisor are suitable and adequate for our business as it is contemplated to be conducted.



|Item 3. | Legal Proceedings
|------- | -----------------



None
of us, our Advisors or our Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any
material legal proceeding threatened against us, or against our Advisors or Administrator. From time to time, we, our Advisors
or Administrator may be a party to certain legal proceedings in the ordinary course of, or incidental to the normal course of,
our business, including the enforcement of our rights under contracts with our portfolio companies. While we cannot predict the
outcome of these legal proceedings with certainty, we do not expect that these proceedings will have a material adverse effect
on our results of operations or financial condition.



|Item 4. | Mine Safety Disclosures
|------- | -----------------------



Not
applicable.



48











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



We are currently selling
our shares of common stock on a continuous basis. On June 14, 2011, our company filed our Registration Statement with the SEC to
register our Offering. The Registration Statement was declared effective by the SEC on September 4, 2012 and our company commenced
its initial Offering. Our initial offering terminated on March 1, 2016 and we commenced the follow-on offering of our shares on
March 17, 2016.



In our ongoing follow-on
offering, we are currently offering at an offering price of $12.21 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. Therefore, persons who subscribe for shares of our common stock in our
offering must submit subscriptions for a certain dollar amount, rather than a number of shares of common stock and, as a result,
may receive fractional shares of our common stock. 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 the registration statement to which this prospectus
is a part) to suspend the offering of shares of our common stock pursuant to this prospectus if our net asset value per share fluctuates
by certain amounts in certain circumstances until the prospectus 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.





49







As of December 31,
2018, 1,598,577.90 shares were outstanding, 17,126.28 of which are held by our Adviser, Triton Pacific Adviser. Set forth below
is a chart that presents the use of proceeds from the Offering since we commenced our Offering on September 4, 2012.





|                                                |  | Year Ended December 31, |            |  |        |   |           |        |  |  |            |  |  |        |          
|----------------------------------------------- |  | ----------------------- | ---------- |  | ------ | - | --------- | ------ |  |  | ---------- |  |  | ------ | ---------
|                                                |  | 2018                    |            |  | 2017   |   |           | 2016   |  |  | 2015       |  |  | 2014   |          
|                                                |  | Shares                  |            |  | Amount |   |           | Shares |  |  | Amount     |  |  | Shares |          
|Gross proceeds from Offering                    |  |                         | 158,266.54 |  |        | $ | 2,080,405 |        |  |  | 440,963.13 |  |  | $      | 6,385,593
|Reinvestment of Distributions                   |  |                         | 29,466.05  |  |        |   | 346,702   |        |  |  | 22,461.05  |  |  |        | 291,697  
|Commissions and Dealer Manager Fees             |  |                         |            |  |        |   | (199,991  | )      |  |  |            |  |  |        | (606,188 
|Net Proceeds to Company from Share Transactions |  |                         | 187,732.59 |  |        | $ | 2,227,116 |        |  |  | 463,424.18 |  |  | $      | 6,071,102





Holders



Set forth below is a chart describing the
single class of our securities outstanding as of March 29, 2019:



|                     |  |                   |            |  |                                      |  |   |                                                       | 
|-------------------- |  | ----------------- | ---------- |  | ------------------------------------ |  | - | ----------------------------------------------------- | 
|Title of Class       |  | Amount Authorized |            |  | Amount Held by Us or for Our Account |  |   | Amount Outstanding Exclusive of Amount Under Column 3 | 
|Class A Common Stock |  |                   | 37,500,000 |  |                                      |  | — |                                                       | 
|Class T Common Stock |  |                   | 37,500,000 |  |                                      |  | — |                                                       | 



As of March 29, 2019,
we had 727 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



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 90% of the current 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





50







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 Company Act.



The following table
provides information concerning the Company’s repurchase of shares of common stock during the years ended December 31, 2018,
2017 and 2016 (no repurchases prior to fiscal year 2016):





|For
    the Three Months Ended |  | Repurchase
    Date    |  | Shares
    Repurchased |           |  | Percentage
    of Shares Tendered That Were Repurchased |     |  | Average
    Price Paid per Share |   |       | Aggregate
    Consideration for Repurchased Shares | 
|------------------------------ |  | ---------------------- |  | ---------------------- | --------- |  | ------------------------------------------------------- | --- |  | -------------------------------- | - | ----- | -------------------------------------------------- | 
|Fiscal
    2018                |  |                        |  |                        |           |  |                                                         |     |  |                                  |   |       |                                                    | 
|March
    31, 2018             |  | March
    28, 2018     |  |                        | 6,388.01  |  |                                                         | 11% |  |                                  | $ | 12.11 |                                                    | 
|Total                          |  |                        |  |                        | 6,388.01  |  |                                                         | 11% |  |                                  |   | 12.11 |                                                    | 
|Fiscal
    2017                |  |                        |  |                        |           |  |                                                         |     |  |                                  |   |       |                                                    | 
|March 31, 2017                 |  | January
    20, 2017   |  |                        | 8,482.60  |  |                                                         | 27% |  |                                  | $ | 13.87 |                                                    | 
|June 30, 2017                  |  | May
    12, 2017       |  |                        | 1,936.81  |  |                                                         | 6%  |  |                                  |   | 13.55 |                                                    | 
|September 30, 2017             |  | September
    25, 2017 |  |                        | 5,968.22  |  |                                                         | 9%  |  |                                  |   | 12.30 |                                                    | 
|December
    31, 2017          |  | December
    22,2017   |  |                        | 6,212.40  |  |                                                         | 10% |  |                                  |   | 12.11 |                                                    | 
|Total                          |  |                        |  |                        | 22,600.03 |  |                                                         | 12% |  |                                  |   | 12.94 |                                                    | 
|Fiscal
    2016                |  |                        |  |                        |           |  |                                                         |     |  |                                  |   |       |                                                    | 
|September 30, 2016             |  | July
    15, 2016      |  |                        | 8,482.60  |  |                                                         | 50% |  |                                  | $ | 13.80 |                                                    | 
|December
    31, 2016          |  | October
    14, 2016   |  |                        | 8,482.60  |  |                                                         | 48% |  |                                  |   | 13.80 |                                                    | 
|Total                          |  |                        |  |                        | 16,965.20 |  |                                                         | 49% |  |                                  | $ | 13.80 |                                                    | 





Special Repurchase Offer



At our 2019 Annual
Meeting, our stockholders will be asked to approve a proposal allowing us to modify our asset coverage ratio requirement from 200%
to 150%. If this proposal is approved, because our securities are not listed on a national securities exchange, pursuant to the
requirements of the SBCA we are required to conduct four special repurchase offers that, taken together, will allow all of the
Eligible Stockholders (stockholders as of 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 will
not be eligible to participate in these special repurchase offers. In addition, shares of our common stock acquired after the date
of the 2019 Annual Meeting will not be eligible for repurchase in these special repurchase offers. These special repurchase offer
will be separate and apart from our share repurchase program discussed above.



The special repurchase
offer will consist of four quarterly tender offers, with the first occurring in the second fiscal quarter of 2019 and the remainder
occurring in each of the following three fiscal quarters.  Each of the four tender offers that is part of the special repurchase
offer will allow 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 will be 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 is part of the special repurchase offer, we plan to provide notice to all Eligible Stockholders describing
the terms of the special repurchase offer and other information such Eligible Stockholders should consider in deciding whether
to tender their shares to us in the special repurchase offer.



The payment for the
eligible shares that are tendered in each special repurchase offer is expected to be paid promptly at the end of the applicable
special repurchase offer in accordance with the Company Act. 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 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. If substantial numbers of
the Eligible Stockholders take advantage of this opportunity, it could significantly decrease our asset size, require us to sell
our investments earlier than our Adviser would have otherwise desired, which may result in selling investments at





51







inopportune
times or significantly depressed prices and/or at losses, or cause us to incur additional leverage solely to meet repurchase requests.



Recent Sales of Unregistered Securities



There were no sales
of unregistered securities in the year ended December 31, 2018.



Distributions



On January 15, 2015,
our board of directors declared a quarterly cash distribution for the fourth quarter of 2014 of $0.07545 per share payable on January
30, 2015, to stockholders of record as of January 20, 2015. In addition, on April 2, 2015, our board of directors declared a cash
distribution for the first quarter of 2015 of $0.116 per share payable on April 13, 2015, to stockholders of record as of April
6, 2015. Commencing in April 2015, and subject to our board of directors’ discretion and applicable legal restrictions, our
board of directors began to authorize and declare a monthly distribution amount per share of our common stock, payable in advance.
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. To date, we
have paid monthly distributions as follows (all distributions to date have been to Class A Shares):





52









|                   |  |  | Distribution |        
|------------------ |  |  | ------------ | -------
|Fiscal 2018        |  |  | Per Share    |        
|January 29, 2018   |  |  | $            | 0.03370
|February 28, 2018  |  |  | $            | 0.03370
|March 28, 2018     |  |  | $            | 0.03370
|April 26, 2018     |  |  | $            | 0.03370
|May 29, 2018       |  |  | $            | 0.03370
|June 27, 2018      |  |  | $            | 0.03370
|July 27, 2018      |  |  | $            | 0.03370
|August 27, 2018    |  |  | $            | 0.03370
|September 25, 2018 |  |  | $            | 0.03370
|October 25, 2018   |  |  | $            | 0.03370
|November 23, 2018  |  |  | $            | 0.03370
|December 26, 2018  |  |  | $            | 0.03370
|                   |  |  |              |        
|Fiscal 2017        |  |  |              |        
|January 27, 2017   |  |  | $            | 0.04000
|February 24, 2017  |  |  | $            | 0.04000
|March 23, 2017     |  |  | $            | 0.04000
|April 27, 2017     |  |  | $            | 0.04000
|May 25, 2017       |  |  | $            | 0.04000
|June 23, 2017      |  |  | $            | 0.04000
|July 21, 2017      |  |  | $            | 0.04000
|August 29, 2017    |  |  | $            | 0.03417
|September 28, 2017 |  |  | $            | 0.03417
|October 26, 2017   |  |  | $            | 0.03417
|November 27, 2017  |  |  | $            | 0.03370
|December 26, 2017  |  |  | $            | 0.03370
|                   |  |  |              |        
|Fiscal 2016        |  |  |              |        
|January 22, 2016   |  |  | $            | 0.04500
|February 16, 2016  |  |  | $            | 0.04500
|March 23, 2016     |  |  | $            | 0.04500
|April 21, 2016     |  |  | $            | 0.04500
|May 19, 2016       |  |  | $            | 0.04500
|June 23, 2016      |  |  | $            | 0.04500
|July 21, 2016      |  |  | $            | 0.04000
|August 25, 2016    |  |  | $            | 0.04000
|September 22, 2016 |  |  | $            | 0.04000
|October 20, 2016   |  |  | $            | 0.04000
|November 18, 2016  |  |  | $            | 0.04000
|December 20, 2016  |  |  | $            | 0.04000





The per share amount
of distributions on Class A and Class T shares will likely differ because of different allocations of class-specific expenses.
For example, distributions on Class T shares will likely be lower than on Class A shares because Class T shares are subject
to an annual distribution fee for a period of time. From time to time, we may also pay special interim distributions in the form
of cash or shares of our common stock at the discretion of our board of directors. For example, our board of directors may periodically
declare stock distributions in order to reduce the net asset value per share of a share class if necessary to ensure that we do
not sell shares of the applicable class at a price per share, after deducting upfront selling commissions, if any, that is below
the net asset value per share of the applicable class. The timing and amount of any future distributions to stockholders will be
subject to applicable legal restrictions and the sole discretion of our board of directors.



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.
To date, all distributions have been funded solely from net investment income from operations and capital gains proceeds from the
sale of assets.





53







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 “Material U.S. Federal Income Tax Considerations.”



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 will generally be subject to U.S. federal, state, and local taxes in the same
manner as cash distributions, stockholders who elect to participate in our distribution reinvestment plan 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 obtain and 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% of our capital gain in excess of capital loss for the one-year
period ending on October 31 of the calendar year and (3) any net ordinary income and net capital gain for preceding years that
were not distributed during such years and on which we paid no U.S. federal excise 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 Company Act or if distributions
are limited by the terms of any of our borrowings.



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.



We intend to use newly
issued shares to implement the plan. The number of shares we will issue to you is determined by dividing the total dollar amount
of the distribution payable to you by a price equal to the net offering price in effect that shares of the class are sold in the
offering on such closing date, or if there is then no current offering, the most recent net asset value per share of the class
of the Company’s shares as determined by our board of directors.



There will be no sales
load or other sales charges to you if you elect to participate in the distribution reinvestment plan. We will pay our Administrator’s
fees for its services with respect to the plan.



If you receive distributions
in the form of stock, you generally are subject to the same federal, state and local tax consequences as you would be had you elected
to receive your distributions in cash. Your basis for determining gain or loss upon the sale of stock received in a distribution
from us will be equal to the total dollar amount of the distribution payable in cash. Any stock received in a distribution will
have a holding period for tax purposes commencing on the day following the day on which the shares are credited to your account.



The Company’s
net investment income (loss) on a tax basis for the years ended December 31, 2018, 2017 and 2016 was $(341,574), $(192,563) and
$335,572, respectively. As of December 31, 2018, 2017 and 2016, the Company had $(3,554,321), $(2,126,246) and $32,116, respectively,
of undistributed (overdistributed) net investment income and realized gains on a tax basis.





54







The following table
sets forth a reconciliation between GAAP-basis net investment income (loss) and tax-basis net investment income (loss) during the
years ended December 31, 2018, 2017 and 2016:





|                                                          |  | Year
    Ended December 31,
|--------------------------------------------------------- |  | ---------------------------
|                                                          |  | 2018                       
|GAAP
    basis net investment income (loss)               |  | $                          
|Reversal of incentive
    fee accrual on unrealized gains |  |                            
|Other
    book-tax differences                            |  |                            
|Tax-basis
    net investment income (loss)                |  | $                          





The determination of
the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based
upon the Company’s taxable income for the full year and distributions paid for the full year. The actual tax characteristics
of distributions to stockholders are reported to stockholders annually on Form 1099-DIV.



As of December 31,
2018, 2017 and 2016, the components of accumulated earnings on a tax basis were as follows:





|                                                                                      |  | Year
    Ended December 31,
|------------------------------------------------------------------------------------- |  | ---------------------------
|                                                                                      |  | 2018                       
|Distributable realized gains (long-term
    capital gains)                            |  | $                          
|Distributable ordinary income (loss) (income
    and short-term capital gains (loss)) |  |                            
|Net unrealized appreciation
    (depreciation) on investments                         |  |                            
|Total                                                                                 |  | $                          





There is no material
difference between the aggregate book cost and tax costs of the Company’s investments for federal income tax purposes.



|Item 6. | Selected Financial Data
|------- | -----------------------



The following selected
financial data for the year ended December 31, 2018, 2017, 2016, 2015 and 2014 is derived from our financial statements. The
following selected financial data for Triton Pacific Investment Company, Inc. should be read in conjunction with “Item 7.—Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. —Financial Statements
and Supplementary Data” included elsewhere in this report.





55









|                                                                           |  |      |            |   |      |   |            |      | Year Ended December 31, |   |            |   | 
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | ----------------------- | - | ---------- | - | 
|                                                                           |  | 2018 |            |   | 2017 |   |            | 2016 |                         |   | 2015       |   | 
|Statements of operations data:                                             |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Total investment income                                                    |  | $    | 1,164,891  |   |      | $ | 817,448    |      |                         | $ | 440,748    |   | 
|Operating expenses                                                         |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Total operating expenses                                                   |  |      | 1,506,465  |   |      |   | 1,090,524  |      |                         |   | 741,022    |   | 
|Less: Expense reimbursement from sponsor                                   |  |      | -          |   |      |   | (80,847    | )    |                         |   | (671,062   | ) | 
|Net operating expenses                                                     |  |      | 1,506,465  |   |      |   | 1,009,677  |      |                         |   | 69,960     |   | 
|Net investment income (loss)                                               |  |      | (341,574   | ) |      |   | (192,229   | )    |                         |   | 370,788    |   | 
|Total net realized and unrealized gain (loss) on investments               |  |      | (469,986   | ) |      |   | (1,424,740 | )    |                         |   | (156,351   | ) | 
|Net increase (decrease) in net assets resulting from operations            |  | $    | (811,560   | ) |      | $ | (1,616,969 | )    |                         | $ | 214,437    |   | 
|Per share data:                                                            |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Net investment income (loss)—basic(1)                                      |  | $    | (0.22      | ) |      | $ | (0.16      | )    |                         | $ | 0.48       |   | 
|Net investment income (loss)—diluted(1)                                    |  |      | (0.22      | ) |      |   | (0.16      | )    |                         |   | 0.48       |   | 
|Net increase (decrease) in net assets resulting from operations—basic(1)   |  | $    | (0.53      | ) |      | $ | (1.34      | )    |                         | $ | 0.34       |   | 
|Net increase (decrease) in net assets resulting from operations—diluted(1) |  |      | (0.53      | ) |      |   | (1.34      | )    |                         |   | 0.34       |   | 
|Distributions declared(2)                                                  |  | $    | 0.40       |   |      | $ | 0.45       |      |                         | $ | 0.51       |   | 
|Balance sheet data:                                                        |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Total assets                                                               |  | $    | 17,711,708 |   |      | $ | 18,114,859 |      |                         | $ | 14,565,014 |   | 
|Total liabilities                                                          |  |      | 140,787    |   |      |   | 1,265,622  |      |                         |   | 1,336,312  |   | 
|Total net assets                                                           |  | $    | 17,570,921 |   |      | $ | 16,849,237 |      |                         | $ | 13,228,702 |   | 
|Other data:                                                                |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Total return(3)                                                            |  |      | -4.2       | % |      |   | -8.9       | %    |                         |   | 2.2        | % | 
|Number of portfolio company investments at period end                      |  |      | 29         |   |      |   | 32         |      |                         |   | 35         |   | 
|Total portfolio investments for the period                                 |  | $    | 4,426,250  |   |      | $ | 7,112,875  |      |                         | $ | 6,285,875  |   | 
|Proceeds from sales and prepayments of investments                         |  | $    | 4,142,312  |   |      | $ | 4,308,024  |      |                         | $ | 1,110,406  |   | 
|                                                                           |  |      |            |   |      |   |            |      |                         |   |            |   | 
|Weighted average common shares outstanding - basic and diluted             |  |      | 1,522,181  |   |      |   | 1,203,418  |      |                         |   | 777,680    |   | 





|(1) | The per share data was derived by using the weighted average shares outstanding during the years ended December 31, 2018, 2017, 2016, 2015 and 2014, respectively.                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.                                                                                                
|(3) | The total return for each year presented was calculated by taking the net asset value per share as of the end of the applicable year, adding the cash distributions per share which were declared during the applicable year.



|Item 7. | Management’s Discussion
and Analysis of Financial Condition and Results of Operations Statement Regarding Forward-Looking Information
|------- | -------------------------------------------------------------------------------------------------------------------------------------



The following discussion
and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing
elsewhere in this annual report on Form 10-K.



Except as otherwise
specified, references to “we,” “us,” “our,” or the “Company,” refer to Triton Pacific
Investment Corporation, Inc.



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 Triton Pacific Adviser, 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 ability of our portfolio companies to achieve their objectives;
| | - |  | -------------------------------------------------------------------





56







| | ● |  | 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 Triton Pacific Adviser, LLC and its Sub-Adviser to locate suitable investments for us and to monitor and administer our investments;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | ● |  | the ability of Triton Pacific Adviser, LLC, its Sub-Adviser 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; 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. 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
in our last post-effective, amended registration statement filed on form N-2 dated June 25, 2018, filed with the SEC on June 22,
2018.



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.



Overview



We are a publicly registered,
non-traded fund focused on private equity, structured as a business development company that primarily makes equity, structured
equity, and debt investments in small to mid-sized private U.S. companies.  Structured equity refers to derivative investment
products, including convertible notes and warrants, designed to facilitate highly customized risk-return objectives. Our private
equity investments will generally take the form of direct investments in common and preferred equity, as well as structured equity
investments such as convertible notes and warrants. We are an externally managed, closed-end, non-diversified management investment
company that has elected to be treated as a business development company under the Company Act. Triton Pacific Adviser, LLC (“Triton
Pacific Adviser”), which is a registered investment adviser under the Investment Advisers Act of 1940, as amended, (the “Advisers
Act”) serves as our investment adviser and TFA Associates, LLC serves as our administrator. Each of these companies is affiliated
with Triton Pacific Group, Inc., a private equity investment management firm, and its subsidiary, Triton Pacific Capital Partners,
LLC (“TPCP”), a private equity investment fund management company, each focused on debt and equity investments in small
to mid-sized private companies.



On August 10, 2018,
we entered into a definitive agreement with Pathway Capital Opportunity Fund, Inc. (“PWAY”) pursuant to which PWAY
will merge with and into us, with Triton Pacific Investment Corporation, Inc. (“TPIC”) as the combined surviving company,
which will be renamed as TP Flexible Income Fund, Inc. That definitive agreement was amended effective February 12, 2019. In this
report, we refer to the merger with PWAY as the “Merger” and the definitive agreement (as amended) with PWAY relating
to the Merger as the “Merger Agreement.” The boards of directors of both PWAY and TPIC approved the Merger. The Merger
is subject to a number of conditions to closing, including approval by our stockholders and the stockholders of PWAY and is expected
to close after the date of this report.



If completed, the Merger
will result in significant changes to us, including the following:





57







| | ● | New Investment Adviser. Prospect
Flexible Income Management, LLC, who we refer to as the New Adviser, will serve as our investment adviser. The New Adviser is an
affiliate of PWAY and the investment professionals of PWAY’s investment adviser have investment discretion at the Adviser.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Increased Leverage. Following the
Merger, our asset coverage ratio requirement will be reduced from 200% to 150%, which will allow us to incur double the maximum
amount of leverage that was previously permitted. As a result, we will be able to borrow substantially more money and take on substantially
more debt than we are currently able to. Leverage may increase the risk of loss to investors and is generally considered a speculative
investment technique.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Special Repurchase Offer. As a
condition to being able to increase our leverage, we will offer to repurchase certain of our outstanding shares. In connection
with this special repurchase offer, stockholders should be aware that:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | Only stockholders of TPIC as of the date of our annual stockholder meeting, will be allowed
to participate in the special repurchase offer, and they may have up to 100% of their shares repurchased (former stockholders of
PWAY will not be able to participate).
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | If a substantial number of the eligible stockholders take advantage of this opportunity, it
could minimize or eliminate the expected benefits of the Merger and it could:
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ▪ | significantly
decrease our asset size;
| | - | --------------------------------------



| | ▪ | require
us to sell our investments earlier than the Adviser would have otherwise desired, which may result in selling investments at inopportune
times or significantly depressed prices and/or at losses; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ▪ | cause
us to incur additional leverage solely to meet repurchase requests.
| | - | -------------------------------------------------------------------------



| | ● | New Board of Directors.Following
the Merger, the composition of our board of directors will change and will consist of Craig J. Faggen, our current President and
Chief Executive Officer, M. Grier Eliasek, PWAY’s President and Chief Executive Officer, Andrew Cooper, William Gremp and
Eugene Stark. Messrs. Cooper, Gremp and Stark are all currently independent directors of PWAY.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Investment Objectives – Pre-Merger



We primarily make debt
investments likely to generate current income and equity investments in small to mid-sized private U.S. companies either alone
or together with other private equity sponsors. Our investment objective is to generate current income and long-term capital appreciation.



Triton Pacific Adviser
is responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing investment opportunities,
structuring investments and monitoring our portfolio on an ongoing basis. In addition, we have elected and intend to annually qualify
to be treated, for U.S. federal income tax purposes, as a regulated investment company (“RIC”), under subchapter M
of the Internal Revenue Code of 1986, as amended (the “Code”).



Our investment objectives
are to maximize our investment portfolio’s total return by generating long-term capital appreciation from our private equity
investments and current income from our debt investments. We intend to make both our debt and private equity investments in small
to mid-sized private U.S. companies either alone or together with other private equity sponsors.



We are offering for
sale a maximum of $300,000,000 of our common stock. We commenced our initial continuous public offering of shares through our initial
registration statement (File No. 333-174873) that was declared effective by the SEC on September 4, 2012. Rule 415 promulgated
under the Securities Act requires that a registration statement not be used for more than three years from its effective date,
subject to a 180-day grace period. On September 2, 2015, we filed a registration statement with the SEC (File No. 333-206730) in
order to continue our continuous public offering of shares for an additional three years. The registration statement for our follow-on
offering was declared effective by the SEC on March 17, 2016. We filed post-effective amendments to





58







our
registration statement on May 2, 2017, which was declared effective by the SEC on May 3, 2017, and on June 22, 2018, which was
declared effective on June 25, 2018. We filed our most-recent post-effective amendment to our registration statement on February
22, 2019, which amendment has not been declared effective. On March 13, 2019, we filed a registration statement with the SEC in
order to continue our continuous public offering of shares for an additional three years or until all of the shares registered
herein are sold. The registration statement for this follow-on offering is still under review by the SEC.



As of March 29, 2019,
we have sold a total of 1,614,220.76 shares of common stock for gross proceeds of approximately $23,432,560, including shares issued
pursuant to our distribution reinvestment plan in the amount of $1,041,647, including the reduction due to $604,017 in shares repurchased
pursuant to the Company’s Repurchase Program, and 14,815 shares of common stock sold to Triton Pacific Adviser in exchange
for gross proceeds of $200,003.



Our investment objective
is to maximize our portfolio’s total return by generating current income from our debt investments and long-term capital appreciation
from our equity investments. We will seek to meet our investment objectives by:



-Focusing primarily on debt and
equity investments in small and mid-sized private U.S. companies, which we define as companies with annual revenue of from $10
million to $ 250 million at the time of investment;



-Leveraging the experience and
expertise of our Adviser, its Sub-Adviser and its affiliates in sourcing, evaluating and structuring transactions;



-Employing disciplined underwriting
policies and rigorous portfolio management;



-Developing our equity portfolio
through our Adviser’s Value Enhancement Program, more fully discussed below in “Investment Objectives and Policies
– Investment Process”; and



-Maintaining a well-balanced
portfolio.



We intend to be active
in both debt and equity investing. We will seek to provide current income to our investors through our debt investments while seeking
to enhance our investors’ overall returns through long term capital appreciation of our equity investments. We intend to
be opportunistic in our investment approach, allocating our investments between debt and equity, depending on:



-Investment opportunities



-Market conditions



-Perceived Risk



Depending on the amount
of capital we raise in the Offering and subject to subsequent changes in our capital base, we expect that our investments will
generally range between $250,000 and $25 million per portfolio company, although this range may change in the discretion of our
Adviser, subject to oversight by our board of directors. Prior to raising sufficient capital to finance investments in this range
and as a strategy to manage excess cash, we may make smaller and differing types of investments in, for example, high quality debt
securities, and other public and private yield-oriented debt and equity securities, directly and through our Sub-Adviser.



Our Adviser has engaged
ZAIS to act as our investment sub-adviser. ZAIS assists our Adviser with identifying, evaluating, negotiating and structuring syndicated
debt investments and makes investment recommendations for approval by our Adviser. is a Delaware limited liability company and
is a registered investment adviser under the Advisers Act and had approximately $6.0 billion in assets under management as of December
31, 2018. ZAIS is not an affiliate of us or our Adviser and does not own any of our shares.



We will generally source
our private equity investments through third party intermediaries and our debt investments primarily through our Adviser and Sub-Adviser.
We will invest only after we conduct a thorough evaluation of the risks and strategic opportunities of an investment and a price
(or interest rate in the case of debt





59







investments)
has been established that reflects the intrinsic value of the investment opportunity. We will endeavor to identify the best exit
strategy for each private equity investment, including methodology (for example, a sale, company redemption, or public offering)
and an appropriate time horizon. We will then attempt to influence the growth and development of each portfolio company accordingly
to maximize our potential return on investment using such exit strategy or another strategy that may become preferable due to
changing market conditions. We anticipate that the holding period for most of our private equity investments will range from four
to six years, but we will be flexible in order to take advantage of market opportunities or to overcome unfavorable market conditions.



We intend to generate
the majority of our current income by investing in senior secured loans, second lien secured loans and, to a lesser extent, subordinated
loans of small to mid-sized private U.S. companies. We may purchase interests in loans through secondary market transactions in
the “over-the-counter” market for institutional loans or directly from our target companies as primary market investments.
In connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional
consideration. The senior secured and second lien secured loans in which we invest generally will have stated terms of three to
seven years and any subordinated investments that we make generally will have stated terms of up to ten years. However, there is
no limit on the maturity or duration of any security we may hold in our portfolio. 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 “junk bonds”). However, we may also invest in non-rated debt securities.



As a BDC, we are subject
to certain regulatory restrictions in making our investments. For example, we generally will not be permitted to co-invest alongside
our Adviser, including TPCP and certain of its affiliates, unless we obtain an exemptive order from the SEC or the transaction
is otherwise permitted under existing regulatory guidance, such as syndicated transactions where price is the only negotiated term,
and approval from our independent directors. We have applied for an exemptive relief order for co-investments, though there is
no assurance that such exemptions will be granted, and in either instance, conflicts of interests with affiliates of our Adviser
might exist. Should such conflicts of interest arise, we and the Adviser have developed policies and procedures for dealing with
such conflicts which require the Adviser to (i) execute such transactions for all of the participating investment accounts, including
ours, on a fair and equitable basis, taking into account such factors as the relative amounts of capital available for new investments,
the then-current investment objectives and portfolio positions of each party, and any other factors deemed appropriate and (ii)
endeavor to obtain the advice of Adviser personnel not directly involved with the investment giving rise to the conflict as to
such appropriateness and other factors as well as the fairness to all parties of the investment and its terms. We intend to make
all of our investments in compliance with the Company Act and in a manner that will not jeopardize our status as a BDC or RIC.



As a BDC, we are permitted
under the Company Act to borrow funds to finance portfolio investments. To enhance our opportunity for gain, we intend to employ
leverage as market conditions permit. The Company 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 Company 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. If we receive stockholder approval, we would be allowed to increase
our leverage capacity on the first day after such approval. Alternatively, the legislation allows the majority of our independent
directors to approve an increase in our leverage capacity, and such approval would become effective after one year. In either case,
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 would
also be required to offer to repurchase our outstanding shares at the rate of 25% per quarter over four calendar quarters.



At a meeting held on
April 18, 2018, our Board of Directors, including a “required majority” (as defined in Section 57(o) of the Company
Act) approved the application of the modified asset coverage requirements from 200% asset coverage to 150% asset coverage. 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 April 18, 2019. We intend to seek stockholder approval
to accelerate the decrease of





60







the
required asset coverage ratio from 200% to 150%, which would give us the ability to increase the amount of leverage we could incur
effective the day after stockholder approval is received.



Investment Objectives – Post
Merger



If the Merger is completed,
our investment objectives will change and will focus on generating 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. Our target credit investments are expected to typically have initial
maturities between three and ten years and generally range in size between $1 million and $100 million, although the investment
size may 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.



Following the Merger,
we expect to make our investments directly through the primary issuance by the borrower or in the secondary market. 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 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 CLOs. The senior secured loans underlying our CLO investments are expected typically to be BB or B rated
(non-investment grade, which is often referred to as “high yield” or “junk”) and in limited circumstances,
unrated, senior secured loans. Our investment portfolio is expected to consistent primarily of debt securities.



We intend to seek to
engage in a “liquidity event,” within five to seven years following the completion of our offering period, whereby
we will seek to provide liquidity to our investors, such as (i) a listing of our shares on a national securities exchange, (ii)
the sale of all or substantially all of our assets followed by a liquidation, or (iii) a merger or other transaction approved by
our board of directors in which our stockholders will receive cash or shares of another company. However, there can be no assurance
that we will be able to complete a liquidity event within such time frame. (We define the term “offering period” as
the three-year period following the commencement of our most-recent follow-on offering, although we may, in our discretion, extend
the term of the offering indefinitely.)



We will be subject
to certain regulatory restrictions in making our investments. If the Merger is completed, we will be subject to an 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 by our New Adviser or certain affiliates, including 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 New 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 New Adviser in negotiated transactions originated by our New Adviser or its affiliates in accordance with such Order and existing
regulatory guidance. 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 New 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





61







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 Company Act and in a manner that will not jeopardize our status as a BDC
or RIC



Revenues



We currently generate
revenue in the form of dividends, interest and capital gains on the debt securities and equity interests 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 are the payment of advisory fees and other expenses under our investment adviser agreement. The advisory fees will compensate
our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.



We also 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;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 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;
| | - | -------------------------------------------------------------------------------------------------------------------------------





62









| | ● | costs associated with our reporting and
compliance obligations under the Company 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 adviser 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 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 TFA Associates, LLC
for Administrative Services



We will reimburse TFA
Associates 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
TFA Associates.



Portfolio and Investment Activity



During the year ended
December 31, 2018, we made investments in portfolio companies totaling $4,426,250. During the same period, we sold investments
and received principal payments for proceeds of $4,412,312. As of December 31, 2018, our investment portfolio, with a total fair
value of $11,882,849, consisted of interests in 29 portfolio companies (59.3% in first lien senior secured loans, 36.5% in second
lien senior secured loans, and 4.2% in equity). The portfolio companies that comprised our portfolio as of such date had an average
annual EBITDA of approximately $169.2 million. As of December 31, 2018, the investments in our portfolio were purchased at a weighted
average price of 98.3% of par or stated value, the weighted average credit rating of the investments in our portfolio that were
rated (constituting 95.8% of our portfolio based on the fair value of our investments) was B3 based upon the Moody’s scale.
Our estimated gross annual portfolio yield was 7.82% based upon the amortized cost of our investments and was 8.59% on the debt
portfolio alone. Our gross annual portfolio yield represents the expected yield to be generated by us on our investment portfolio
based on the composition of our portfolio as of December 31, 2018. The portfolio yield does not represent an actual investment
return to stockholders.



Total Portfolio Activity



The following tables
present certain selected information regarding our portfolio investment activity for the years ended December 31, 2018, 2017 and
2016:





|                        |  | Year Ended December 31, |           
|----------------------- |  | ----------------------- | ----------
|Net Investment Activity |  | 2018                    |           
|Purchases               |  | $                       | 4,426,250 
|Sales and Redemptions   |  |                         | (4,142,312
|Net Portfolio Activity  |  | $                       | 283,938   







63









The following table
presents the composition of the total purchases for the years ended December 31, 2018, 2017 and 2016.









|                                 |  | December 31, 2018 |           |  | December 31, 2017         |  |      | December 31, 2016 | 
|-------------------------------- |  | ----------------- | --------- |  | ------------------------- |  | ---- | ----------------- | 
|                                 |  | Purchases         |           |  | Percentage  of  Portfolio |  |      | Purchases         | 
|Senior Secured Loans—First Lien  |  | $                 | 2,943,750 |  |                           |  | 67%  |                   | 
|Senior Secured Loans—Second Lien |  |                   | 1,482,500 |  |                           |  | 33%  |                   | 
|Subordinated Debt                |  |                   | -         |  |                           |  | 0%   |                   | 
|Equity/Other                     |  |                   | -         |  |                           |  | 0%   |                   | 
|Total                            |  | $                 | 4,426,250 |  |                           |  | 100% |                   | 







The following tables
summarize the composition of our investment portfolio at amortized cost and fair value as of December 31, 2018, 2017 and 2016:









|                                 |  | December 31, 2018                |            |  | December 31, 2017         |   |            | December 31, 2016                            | 
|-------------------------------- |  | -------------------------------- | ---------- |  | ------------------------- | - | ---------- | -------------------------------------------- | 
|                                 |  | Investments at Amortized
Cost(1) |            |  | Investments at
Fair Value |   |            | Fair Value
Percentage of
Total
    Portfolio | 
|Senior Secured Loans—First Lien  |  | $                                | 7,371,419  |  |                           | $ | 7,050,980  |                                              | 
|Senior Secured Loans—Second Lien |  |                                  | 4,635,777  |  |                           |   | 4,336,218  |                                              | 
|Subordinated Debt                |  |                                  | 0          |  |                           |   | -          |                                              | 
|Equity/Other                     |  |                                  | 500,000    |  |                           |   | 495,651    |                                              | 
|Total                            |  | $                                | 12,507,196 |  |                           | $ | 11,882,849 |                                              | 







| | (1) | Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion
of discounts, as applicable, on investments.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------





|                                                                         |  | December 31,
2018 |  | December 31,
2017 |  | December 31,
2016 |  | December 31,
2015
|------------------------------------------------------------------------ |  | ----------------- |  | ----------------- |  | ----------------- |  | -----------------
|Number of Portfolio Companies                                            |  | 29                |  | 32                |  | 35                |  | 22               
|% Variable Rate (based on fair value)                                    |  | 95.8%             |  | 95.5%             |  | 82.3%             |  | 62.1%            
|% Fixed Rate (based on fair value)                                       |  | 0.0%              |  | 0.0%              |  | 6.1%              |  | 11.0%            
|% Non-Income Producing Equity or Other Investments (based on fair value) |  | 4.2%              |  | 4.5%              |  | 11.6%             |  | 26.9%            
|Average Annual EBITDA of Portfolio Companies                             |  | 169.2MM           |  | 162.3MM           |  | 114.6MM           |  | $101.6MM         
|Weighted Average Credit Rating of Investments that were Rated            |  | B3                |  | B2                |  | B2                |  | B2               
|% of Investments on Non-Accrual                                          |  | —                 |  | —                 |  | —                 |  | —                
|Gross Portfolio Yield Prior to Leverage (based on amortized cost)        |  | 0.1%              |  | 0.0%              |  | 6.7%              |  | 5.4%             





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 December 31, 2018, 2017 and 2016:





64









|                                         |  | December 31, 2018 |            |  | December 31, 2017 |  |        | December 31, 2016 | 
|---------------------------------------- |  | ----------------- | ---------- |  | ----------------- |  | ------ | ----------------- | 
|                                         |  | Fair              |            |  | Percentage of     |  |        | Fair              | 
|Industry Classification                  |  | Value             |            |  | Portfolio         |  |        | Value             | 
|Automotive Repair, Services, and Parking |  | $                 | -          |  |                   |  | 0.0%   |                   | 
|Beverage, Food & Tobacco                 |  |                   | 1,678,908  |  |                   |  | 14.1%  |                   | 
|Business Services                        |  |                   | 3,079,325  |  |                   |  | 25.9%  |                   | 
|Construction & Building                  |  |                   | 417,375    |  |                   |  | 3.5%   |                   | 
|Consumer Services                        |  |                   | 1,284,399  |  |                   |  | 10.8%  |                   | 
|Energy: Oil & Gas                        |  |                   | 792,894    |  |                   |  | 6.7%   |                   | 
|Environmental                            |  |                   | 490,000    |  |                   |  | 4.1%   |                   | 
|Healthcare & Pharmaceuticals             |  |                   | 1,461,343  |  |                   |  | 12.2%  |                   | 
|High Tech Industries                     |  |                   | 751,045    |  |                   |  | 6.3%   |                   | 
|Hotel, Gaming & Leisure                  |  |                   | 494,806    |  |                   |  | 4.2%   |                   | 
|Media: Diversified and Production        |  |                   | 293,255    |  |                   |  | 2.5%   |                   | 
|Metals & Mining                          |  |                   | 495,625    |  |                   |  | 4.2%   |                   | 
|Paper and Allied Products                |  |                   | -          |  |                   |  | 0.0%   |                   | 
|Retail                                   |  |                   | -          |  |                   |  | 0.0%   |                   | 
|Specialty Finance                        |  |                   | -          |  |                   |  | 0.0%   |                   | 
|Telecommunications                       |  |                   | 459,394    |  |                   |  | 3.9%   |                   | 
|Wholesale Trade-Nondurable Goods         |  |                   | 184,480    |  |                   |  | 1.6%   |                   | 
|Total                                    |  | $                 | 11,882,849 |  |                   |  | 100.0% |                   | 





We do not “control”
any of our portfolio companies, each as defined in the Company Act. We are an affiliate of Injured Workers Pharmacy, LLC (held
through ACON IWP Investors I, L.L.C.). In general, under the Company 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.



Portfolio Asset Quality



In addition to various
risk management and monitoring tools, our Subadviser uses an investment rating system to characterize and monitor the expected
level of returns on each investment in our debt portfolio. All of the investments included in our Subadviser’s rating systems
refer to non-rated debt securities or rated debt securities that 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 “junk bonds”).  These ratings are on a scale of 1 to 8 as follows:



| | 1 | Highest quality obligors, minimal medium-term default risk; possibly moving towards investment grade status.
| | - | ------------------------------------------------------------------------------------------------------------



| | 2 | High quality obligors, but not likely to move towards investment grade in the medium term; performing at or in excess of expected
levels; solid liquidity; conservative credit statistics.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3 | Credits of with a history of performing with leverage (repeat issuers); moderate credit statistics currently performing at
or in excess of expected levels; solid liquidity; no expectation of covenant defaults or third party ratings downgrades.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4 | Credits new to the leveraged loan universe; currently performing within a range of expected performance; moderate to aggressive
credit statistics.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | 5 | Credits new to the leveraged loan universe; currently performing within a range of expected performance; aggressive credit
statistics or weak industry characteristics.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6 | Credits placed in this category are experiencing potential liquidity problems but the issues are not imminent (more than 12
months).
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | 7 | Credits placed in this category are experiencing nearer-term liquidity problems (within 12 months).
| | - | ---------------------------------------------------------------------------------------------------



| | 8 | Credits placed in this category have experienced either a technical or actual payment default which may require a write-down
within our respective portfolios.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------





65









Categories 1 through 5 are performing in line with expectation,
while categories 6-8 are closely watched for or have experienced liquidity problems and/or default.



The following table
shows the distribution of our investments on the 1 to 8 scale at fair value as of December 31, 2018, 2017 and 2016:





|                  |  |  | December 31, 2018 |            |  | December 31, 2017 |  |       | December 31, 2016 | 
|----------------- |  |  | ----------------- | ---------- |  | ----------------- |  | ----- | ----------------- | 
|Investment Rating |  |  | Fair Value        |            |  | Percentage        |  |       | Fair Value        | 
|1                 |  |  | $                 | -          |  |                   |  | 0.0   | %                 | 
|2                 |  |  |                   | 238,318    |  |                   |  | 2.1   | %                 | 
|3                 |  |  |                   | 2,417,885  |  |                   |  | 21.2  | %                 | 
|4                 |  |  |                   | 3,261,849  |  |                   |  | 28.6  | %                 | 
|5                 |  |  |                   | 4,677,494  |  |                   |  | 41.2  | %                 | 
|6                 |  |  |                   | 607,652    |  |                   |  | 5.3   | %                 | 
|7                 |  |  |                   | 171,500    |  |                   |  | 1.5   | %                 | 
|8                 |  |  |                   | 12,500     |  |                   |  | 0.1   | %                 | 
|                  |  |  | $                 | 11,387,198 |  |                   |  | 100.0 | %                 | 





On June 30, 2017, The
Company made the decision to write down the carrying value of its investment in Javlin Financial LLC (“Javlin Financial”).
The decision was due to performance issues within Javlin Financial’s core business and a breakdown in restructuring negotiations
between the Company, its lenders, and Javlin Financial’s controlling shareholder. The full realized loss for the investments
in Javlin was recognized in the fourth quarter of 2018.



Results
of Operations



Investment
Income



For the years ended
December 31, 2018, 2017 and 2016, we generated $1,164,891, $817,448 and $440,748 respectively, in investment income in the form
of interest and fees earned on our debt portfolio. Such revenues represent $1,131,352 of cash income and $33,359 in non-cash portions
related to the accretion of discounts and paid-in-kind interest for the year ended December 31, 2018. For the year ended December
31, 2017, such revenues represent $766,194 of cash income and $51,254 in non-cash portions related to the accretion of discounts
and paid-in-kind interest for the year ended December 31, 2017. For the year ended December 31, 2016, such revenues represent $384,234
of cash income and $56,514 in non-cash portions related to the accretion of discounts and paid-in-kind interest.



Operating Expenses



Total operating expenses
before reimbursement from the sponsor totaled $1,506,465 for the year ended December 31, 2018, and consisted of base management
fees, adviser and administrator reimbursements, professional fees, insurance expense, directors’ fees and other general and
administrative fees. The base management fees for the year were $359,120 and the incentive fees for the year were $0. Pursuant
to the Expense Reimbursement Agreement (discussed below), the sponsor reimbursed the Company $0 for the year ended December 31,
2018.



Total operating expenses
before reimbursement from the sponsor totaled $1,090,524 for the year ended December 31, 2017, and consisted of base management
fees, adviser and administrator reimbursements, professional fees, insurance expense, directors’ fees and other general and
administrative fees. The base management fees for the year were $334,224 and the incentive fees for the year were ($334). Pursuant
to the Expense Reimbursement Agreement (discussed below), the sponsor reimbursed the Company $80,847 for the year ended December
31, 2017.





66









Total operating expenses
before reimbursement from the sponsor totaled $741,022 for the year ended December 31, 2016, and consisted of base management fees,
adviser and administrator reimbursements, professional fees, insurance expense, directors’ fees and other general and administrative
fees. The base management fees for the year were $225,492 and the incentive fees for the year were ($35,216). Pursuant to the Expense
Reimbursement Agreement (discussed below), the sponsor reimbursed the Company $671,062 for the year ended December 31, 2016.



Our other general and
administrative expenses totaled $70,278, $27,459 and $17,718 for the years ended December 31, 2018, 2017, and 2016, respectively,
and consisted of the following:





|                     |  | Year Ended December 31, |       
|-------------------- |  | ----------------------- | ------
|                     |  | 2018                    |       
|Licenses and permits |  | $                       | 1,036 
|Taxes                |  |                         | 800   
|Printing fees        |  |                         | 19,333
|Outside Services     |  |                         | 2,278 
|Travel expenses      |  |                         | 39,737
|Other                |  |                         | 7,094 
|Total                |  | $                       | 70,278





Net Investment Income



Our net investment
income (loss) totaled $(341,574) , ($192,229) and $370,788 ($(0.22), ($0.16) and $0.48 per share based on weighted average shares
outstanding, respectively) for the years ended December 31, 2018, 2017 and 2016, 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 year ended
December 31, 2018, we received proceeds from sales and repayments on unaffiliated investments of $4,142,312, from which we realized
a net gain of $56,240. We fully realized the unrealized loss at Javlin Financial for a net realized loss of $(1,416,389.) The net
realized loss for the year ended December 31, 2018 was $(1,360,149). For the year ended December 31, 2017, we received proceeds
from sales and repayments of $4,308,024, from which we realized a net gain of $91,436. For the year ended December 31, 2016, we
received proceeds from sales and repayments of $1,110,406, from which we realized a net gain of $19,731.



Net Unrealized Appreciation/Depreciation
on Investments



Net change in unrealized
appreciation on investments reflects the net change in the fair value of our investment portfolio. For the years ended December
31, 2018, 2017 and 2016, net unrealized appreciation (depreciation) totaled $890,163 , ($1,516,176) and ($176,082), respectively.
For the year ended December 31, 2018, this unrealized appreciation consisted of $(483,974) in depreciation on unaffiliated investments,
and $1,374,137 in unrealized appreciation on affiliated investments due to the realization of prior unrealized losses at Javlin
Financial.



Changes in Net Assets from Operations



For the year ended
December 31, 2018, we recorded a net income of $(811,560) versus net income of ($1,616,969) for the year ended December 31, 2017
and net income of $214,437 for the year ended December 31, 2016.





67









Based on 1,522,181.72
weighted average common shares outstanding for the year ended December 31, 2018, basic and diluted, our per share net decrease
in net assets resulting from operations was $(0.53) for the year ended December 31, 2018.



Based on 1,203,418.47
weighted average common shares outstanding for the year ended December 31, 2017, basic and diluted, our per share net decrease
in net assets resulting from operations was ($1.34) for the year ended December 31, 2017.



Based on 777,680 weighted
average common shares outstanding for the year ended December 31, 2016, basic and diluted, our per share net increase in net assets
resulting from operations was $0.28 for the year ended December 31, 2016.



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.



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 March 13, 2019, we filed a registration statement with the SEC in order to continue our continuous
public offering of shares for an additional three years. The registration statement for this follow-on offering is still under
review by the SEC.



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.



We will sell our shares
on a continuous basis at a price of $12.21 per share. 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.
The Dealer Manager for our offering is an affiliate of our Adviser.



During the year ended
December 31, 2018, we sold 187,732.59 shares of our common stock for gross proceeds of $2,427,107 at an average price per share
of $12.93. The gross proceeds received during the year ended December 31, 2018 include reinvested stockholder distributions of
$346,702 for which we issued 29,466.05 shares of common stock. The sales commissions and dealer manager fees related to the sale
of our common stock were $199,991 for the year ended December 31, 2018. These sales commissions and fees include $38,416 retained
by the dealer manager, Triton Pacific Securities, LLC, which is an affiliated entity of the Adviser and TFA, and is partially owned
by one of our directors, Craig Faggen. Our offering expenses are capitalized as deferred offering expenses and then subsequently
expensed over a 12-month period.



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.





68









Contractual Obligations



We have entered into
certain contracts under which we have material future commitments. On July 27, 2012, we entered into the investment advisory agreement
with Triton Pacific Adviser, LLC in accordance with the 1940 Act. The investment advisory agreement became effective on June 25,
2014, the date that we met the minimum offering requirement. Triton Pacific Adviser serves as our investment advisor in accordance
with the terms of our investment advisory agreement. Payments under our 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) a capital gains incentive
fee based on our performance.



On July 27, 2012, we
entered into the administration agreement with TFA Associates, LLC pursuant to which TFA Associates furnishes us with administrative
services necessary to conduct our day-to-day operations. TFA Associates is reimbursed for administrative expenses it incurs on
our behalf in performing its obligations. Such costs are reasonably allocated to us on the basis of assets, revenues, time records
or other reasonable methods. We do not reimburse TFA Associates 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 TFA Associates. At
the time of our offering, our Administrator has contracted with Bank of New York Mellon and affiliated entities to provide additional
administrative services, while we have directly 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 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.



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
obtain and 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 capital gains in excess of capital losses for the one-year period generally ending
on October 31 of the calendar year (unless an election is made by us to use our taxable year) and (iii) any ordinary income and
net capital gains for preceding years that were not distributed during such 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.





69









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. 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., paid from ordinary
income, paid from net capital gain on the sale of securities, and/or a return of paid-in capital surplus which is 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.



The following table
reflects the cash distributions per share that we have declared and paid on our common stock for our past three fiscal years:





70









|                   |  |  | Distribution |        
|------------------ |  |  | ------------ | -------
|Fiscal 2018        |  |  | Per Share    |        
|January 29, 2018   |  |  | $            | 0.03370
|February 28, 2018  |  |  | $            | 0.03370
|March 28, 2018     |  |  | $            | 0.03370
|April 26, 2018     |  |  | $            | 0.03370
|May 29, 2018       |  |  | $            | 0.03370
|June 27, 2018      |  |  | $            | 0.03370
|July 27, 2018      |  |  | $            | 0.03370
|August 27, 2018    |  |  | $            | 0.03370
|September 25, 2018 |  |  | $            | 0.03370
|October 25, 2018   |  |  | $            | 0.03370
|November 23, 2018  |  |  | $            | 0.03370
|December 26, 2018  |  |  | $            | 0.03370
|                   |  |  |              |        
|Fiscal 2017        |  |  |              |        
|January 27, 2017   |  |  | $            | 0.04000
|February 24, 2017  |  |  | $            | 0.04000
|March 23, 2017     |  |  | $            | 0.04000
|April 27, 2017     |  |  | $            | 0.04000
|May 25, 2017       |  |  | $            | 0.04000
|June 23, 2017      |  |  | $            | 0.04000
|July 21, 2017      |  |  | $            | 0.04000
|August 29, 2017    |  |  | $            | 0.03417
|September 28, 2017 |  |  | $            | 0.03417
|October 26, 2017   |  |  | $            | 0.03417
|November 27, 2017  |  |  | $            | 0.03370
|December 26, 2017  |  |  | $            | 0.03370
|                   |  |  |              |        
|Fiscal 2016        |  |  |              |        
|January 22, 2016   |  |  | $            | 0.04500
|February 16, 2016  |  |  | $            | 0.04500
|March 23, 2016     |  |  | $            | 0.04500
|April 21, 2016     |  |  | $            | 0.04500
|May 19, 2016       |  |  | $            | 0.04500
|June 23, 2016      |  |  | $            | 0.04500
|July 21, 2016      |  |  | $            | 0.04000
|August 25, 2016    |  |  | $            | 0.04000
|September 22, 2016 |  |  | $            | 0.04000
|October 20, 2016   |  |  | $            | 0.04000
|November 18, 2016  |  |  | $            | 0.04000
|December 20, 2016  |  |  | $            | 0.04000





Our distributions previously
were paid quarterly in arrears.  On January 15, 2015, our board of directors declared a quarterly cash distribution for
the fourth quarter of 2014 of $0.07545 per share payable on January 30, 2015, to stockholders of record as of January 20, 2015.
In addition, on April 2, 2015, our board of directors declared a cash distribution for the first quarter of 2015 of $0.116 per
share payable on April 13, 2015, to stockholders of record as of April 6, 2015. Commencing in April 2015, and subject to our
board of directors’ discretion and applicable legal restrictions, our board of directors began to authorize and declare a
monthly distribution amount per share of our common stock, payable in advance.  We then 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.  No distributions were declared for the years before 2015.



We may fund our 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 us on account of preferred and common equity investments in portfolio companies and expense reimbursements
from the Adviser. We have not established limits on the amount of funds it may use from available sources to make distributions.





71









The following table
reflects the sources of the cash distributions on a tax basis that we paid on our common stock during the years ended December
31, 2018, 2017 and 2016:







|                                                          |  | 2018                |         |  | 2017       |   |     | 2016                | 
|--------------------------------------------------------- |  | ------------------- | ------- |  | ---------- | - | --- | ------------------- | 
|Source of Distribution                                    |  | Distribution Amount |         |  | Percentage |   |     | Distribution Amount | 
|Offering proceeds                                         |  | $                   | -       |  |            | $ | -   |                     | 
|Borrowings                                                |  |                     | -       |  |            |   | -   |                     | 
|Net investment income (prior to expense reimbursement)(1) |  |                     | -       |  |            |   | -   |                     | 
|Short-term capital gains proceeds from the sale of assets |  |                     | 28,982  |  |            |   | 5   | %                   | 
|Long-term capital gains proceeds from the sale of assets  |  |                     | 92,622  |  |            |   | 15  | %                   | 
|Distributions from common equity (return of capital)      |  |                     | 494,910 |  |            |   | 80  | %                   | 
|Expense reimbursement from sponsor                        |  |                     | -       |  |            |   | -   |                     | 
|Total                                                     |  | $                   | 616,514 |  |            |   | 100 | %                   | 














| | (1) | During the year ended December 31, 2018, 97.1% of the
Company’s gross investment income was attributable to cash income earned, and 2.9% was attributable to non-cash accretion
of discount.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Related Party Transactions



We have entered into
an investment and advisory agreement with Triton Pacific Adviser in which our senior management holds equity interest. Members
of our senior management also serve as principals of other investment managers affiliated with Triton Pacific Adviser that currently
manage, and may in the future manage, investment funds, accounts or other investment vehicles with investment objectives similar
to ours.



If the Merger is completed,
, we will enter into an investment and advisory agreement with Prospect Flexible Income Management, LLC in which certain members
of our senior management hold an equity interest. 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.



We have entered into
an administration agreement with TFA Associates in which our senior management holds equity interest and act as principals.



We have entered into
a dealer manager agreement with Triton Pacific Securities, LLC and will pay them a fee of up to 10% of gross proceeds raised in
the offering, some of which will be re-allowed to other participating broker-dealers. Triton Pacific Securities, LLC is an affiliated
entity of Triton Pacific Adviser. If the Merger is completed, Triton Pacific Securities is expected to continue to serve as our
dealer manager for our ongoing offering, however the fee we pay them is expected to decrease to up to 6% of gross proceeds raised
in the offering, some of which will be re-allowed to other participating broker-dealers.



We have entered into
a license agreement with Triton Pacific Group, Inc. under which Triton Pacific Group, Inc. has granted us a non-exclusive, royalty-free
license to use the name “Triton Pacific” for specified purposes in our business. Under this agreement, we have the
right to use the “Triton Pacific” name, subject to certain conditions, for so long as Triton Pacific Adviser or one
of its affiliates remains our investment advisor. Other than with respect to this limited license, we have no legal right to the
“Triton Pacific” name. This license agreement is expected to terminate if the Merger is completed.



We have entered into
an expense support and conditional reimbursement agreement with Triton Pacific Adviser pursuant to which the Adviser will pay up
to 100% of the Company’s organization, offering and operating expenses, subject to repayment by us to the Adviser, in order
for the Company to achieve a reasonable level of expenses relative to its investment income, as determined by the Company and the
Adviser. That agreement terminated effective December 31, 2018. (See “Expense Reimbursement Agreement”, below.)





72









Management Fee



Pre-Merger



Pursuant to the investment
advisory agreement, we pay our Adviser a fee for investment advisory and management services consisting of a base management fee
and an incentive fee. The base management fee is calculated at a quarterly rate of 0.5% of our average gross assets (including
amounts borrowed for investment purposes) and payable quarterly in arrears. For the first quarter of our operations, the base management
fee was calculated based on the initial value of our gross assets. Subsequently, the base management fee for any calendar quarter
is calculated based on the average value of our gross assets at the end of that and the immediately preceding quarters, appropriately
adjusted for any share issuances or repurchases during that quarter. The base management fee may or may not be taken in whole or
in part at the discretion of our Adviser. All or any part of the base management fee not taken as to any quarter shall be accrued
without interest and may be taken in such other quarter as our Adviser shall determine. The base management fee for any partial
quarter will be appropriately pro-rated.



Though, in accordance
with the Advisers Act, the Adviser could have received an incentive fee on both current income earned and income from capital gains,
the Adviser agreed to waive any incentive fees from current income. As such, the Adviser is paid an incentive fee only upon the
realization of a capital gain from the sale of an investment. The incentive fee is calculated and payable quarterly in arrears
or as of the date of our liquidation or the termination of the investment advisory agreement, and equals 20% of our realized capital
gains on a cumulative basis from inception through the end of each quarter, computed net of all realized capital losses and unrealized
capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.



For purposes of the
foregoing: (1) the calculation of the incentive fee shall include any capital gains that result from cash distributions that are
treated as a return of capital, (2) any such return of capital will be treated as a decrease in our cost basis for the relevant
investment and (3) all fiscal year-end valuations will be determined by us in accordance with GAAP, applicable provisions of the
Company Act and our pricing procedures. In determining the incentive fee payable to our Adviser, we will calculate the aggregate
realized capital gains, aggregate realized capital losses and aggregate unrealized capital depreciation, as applicable, with respect
to each of the investments in our portfolio. For this purpose, aggregate realized capital gains, if any, will equal the sum of
the positive differences between the net sales prices of our investments, when sold, and the cost of such investments since inception.
Aggregate realized capital losses will equal the sum of the amounts by which the net sales prices of our investments, when sold,
is less than the original cost of such investments since inception. Aggregate unrealized capital depreciation will equal the sum
of the difference, if negative, between the valuation of each investment as of the applicable date and the original cost of such
investment. At the end of the applicable period, the amount of capital gains that serves as the basis for our calculation of the
capital gains incentive fee will equal the aggregate realized capital gains less aggregate realized capital losses and less aggregate
unrealized capital depreciation with respect to our portfolio investments. If this number is positive at the end of such period,
then the incentive fee for such period will be equal to 20% of such amount, less the aggregate amount of any incentive fees paid
in all prior periods.



While the investment
advisory agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains
incentive fee, pursuant to an interpretation of an American Institute of Certified Public Accountants, or AICPA, Technical Practice
Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive fee expense and related
accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to our Advisor as if our entire
portfolio was liquidated at its fair value as of the balance sheet date even though our Adviser is not entitled to an incentive
fee with respect to unrealized gains unless and until such gains are actually realized.



The organizational
and offering expense and other expense reimbursements may include a portion of costs incurred by our Adviser or its members or
affiliates on our behalf for legal, accounting, printing and other offering expenses, including for marketing, salaries and direct
expenses of its employees, employees of its affiliates and others while engaged in registering and marketing the shares of our
common stock, which shall include development of marketing and marketing presentations and training and educational meetings and
generally coordinating the marketing process for us and may also include amounts reimbursed by us to our Dealer Manager for actual
bona fide due diligence expenses incurred by our Dealer Manager or participating broker-dealers in an aggregate amount that is
reasonable in relation to the gross proceeds raised in our offering and which are supported by detailed, itemized invoices. None
of the reimbursements referred to above will exceed actual expenses incurred by our Adviser, its members or affiliates. Our Adviser
will reimburse to us, without recourse or reimbursement by us, any organizational and offering expenses to the extent those expenses,
when aggregated with sales load, exceed 15.0%.





73









Post-Merger



Following the Merger,
we will enter into a new investment advisory agreement (the “New Advisory Agreement”) with the New Adviser. Pursuant
to which we will continue to pay the New Adviser a fee for investment advisory and management services consisting of a base management
fee and an incentive fee.



Base Management
Fee. The base management fee will be calculated at an annual rate of 1.75% (0.4375% quarterly) of our average total assets,
which will include any borrowings for investment purposes. For the first quarter of our operations following the Merger, the base
management fee will be calculated based on the average value of our total assets as of the date of the New Advisory Agreement and
at the end of the calendar quarter in which the date of the New Advisory Agreement falls, and will be appropriately adjusted for
any share issuances or repurchases during the current calendar quarter. Subsequently, the base management fee will be payable quarterly
in arrears, and will be calculated based on the average value of our total assets at the end of the two most recently completed
calendar quarters, and will be appropriately adjusted for any share issuances or repurchases during the then current calendar quarter.
Base management fees for any partial month or quarter will be appropriately pro-rated. At the New Adviser’s option, the base
management fee for any period may be deferred, without interest thereon, and paid to the New 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,
will be calculated and payable quarterly in arrears based upon our “pre-incentive fee net investment income” for the
immediately preceding 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
our operating expenses for the quarter (including the base management fee, expenses reimbursed under the New Advisory Agreement
and our new Administration Agreement, any interest expense and dividends paid on any issued and outstanding preferred shares, but
excluding the organization and offering expenses and subordinated incentive fee on income). 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 will be 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 New Adviser a subordinated
incentive fee on income for each calendar quarter as follows:



| | ● | No incentive fee will be payable to our
New 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 New Adviser will receive 20.0% of our pre-incentive fee net investment income as if a preferred return did not apply.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





74









| | ● | 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 New 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 New 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 New 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 New Adviser, we will
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.



Expense Reimbursement Agreement



On March 27, 2014,
we and our Adviser agreed to an Expense Support and Conditional Reimbursement Agreement, or the Expense Reimbursement Agreement.).
The Expense Reimbursement Agreement was amended and restated effective April 5, 2018. Under the Expense Reimbursement Agreement,
as amended, our Adviser, in consultation with the Company, may pay up to 100% of both our organizational and offering expenses
and our operating expenses, all as determined by us and our Adviser. As used in the Expense Reimbursement Agreement, operating
expenses refer to third party operating costs and expenses incurred by us, as determined under generally accepted accounting principles
for investment management companies. Organizational and offering expenses include expenses incurred in connection with the organization
of our company and expenses incurred in connection with our offering, which are recorded as a component of equity. The Expense
Reimbursement Agreement states that until the net proceeds to us from our offering are at least $25 million, our Adviser will 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 Adviser may, with our consent, continue to make expense support payments to us in such amounts
as are acceptable to us and our Adviser. Any expense support payments shall be paid by the Adviser to the Company in any combination
of cash, and/or offsets against amounts otherwise due from the Company to the Adviser.



Under the Expense Reimbursement
Agreement as amended, once we have received at least $25 million in net proceeds from our offering, we are required to reimburse
our Adviser for any expense support payments we received from them occurring within three years of the date on which we incurred
such expenses However, with respect to any expense support payments attributable to our operating expenses, (i) we will only
reimburse our Adviser for expense support payments made by our Adviser to the extent that the payment of such reimbursement (together
with any other reimbursement paid during such fiscal year) does not cause “other operating expenses” (as defined below)
(on an annualized basis and net of any expense reimbursement payments received by us during such fiscal year) to exceed the percentage
of our average net assets attributable to shares of our common stock represented by “other operating expenses” during
the fiscal year in which such expense support payment from our Adviser was made (provided, however, that this clause (i) shall
not apply to any reimbursement payment which relates to an expense support payment from our Adviser made during the same fiscal
year); and (ii) we will not reimburse our Adviser for expense support payments made by our Adviser if the annualized rate
of regular cash distributions declared by us at the time of such reimbursement payment is less than the annualized rate of regular
cash distributions declared by us at the time our Adviser made the expense support payment to which such reimbursement relates.
“Other operating expenses” means our total operating expenses excluding base management fees, incentive fees, organization
and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses.





75









In addition, with respect
to any expense support payment attributable to our organizational and offering expenses, we will only reimburse our Adviser for
expense support payments made by our Adviser to the extent that the payment of such reimbursement (together with any other reimbursement
for organizational and offering expenses paid during such fiscal year) is limited to 15% of cumulative gross sales proceeds including
the sales load (or dealer manager fee) paid by us.



Under the Expense Reimbursement
Agreement, any unreimbursed expense support payments may be reimbursed by us within a period not to exceed three years from the
end of the quarter in which we incurred the expense.



The expense reimbursement
agreement terminated on December 31, 2018. Our Adviser has agreed to reimburse a total of $5,292,192 as of December 31, 2018. However,
as part of the Merger, if the Merger is completed, the Adviser agreed to waive any amounts owed to it under the Expense Reimbursement
Agreement.



Below is a table that
provides information regarding expense support payments incurred by our Adviser pursuant to the Expense Support Agreement as well
as other information relating to our ability to reimburse our Adviser for such payments:





|Quarter Ended      |  | Amount of Expense Payment Obligation |  | Amount of Offering Cost Payment Obligation |  | Operating Expense
Ratio as of the
Date Expense
Payment Obligation
Incurred(1) |  | Annualized Distribution Rate as of the Date
Expense Payment
Obligation Incurred(2) |  | Eligible for Reimbursement
Through
|------------------ |  | ------------------------------------ |  | ------------------------------------------ |  | ----------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | ----------------------------------
|September 30, 2012 |  | $21,826                              |  | $0                                         |  | 432.69%                                                                       |  | -                                                                                  |  | September 30, 2015                
|December 31, 2012  |  | $26,111                              |  | $0                                         |  | 531.09%                                                                       |  | -                                                                                  |  | December 31, 2015                 
|March 31, 2013     |  | $30,819                              |  | $0                                         |  | N/A                                                                           |  | -                                                                                  |  | March 31, 2016                    
|June 30, 2013      |  | $59,062                              |  | $0                                         |  | N/A                                                                           |  | -                                                                                  |  | June 30, 2016                     
|September 30, 2013 |  | $65,161                              |  | $0                                         |  | N/A                                                                           |  | -                                                                                  |  | September 30, 2016                
|December 31, 2013  |  | $91,378                              |  | $0                                         |  | 455.09%                                                                       |  | -                                                                                  |  | December 31, 2016                 
|March 31, 2014     |  | $68,293                              |  | $0                                         |  | 148.96%                                                                       |  | -                                                                                  |  | March 31, 2017                    
|June 30, 2014      |  | $70,027                              |  | $898,518                                   |  | 23.17%                                                                        |  | -                                                                                  |  | June 30, 2017                     
|September 30, 2014 |  | $92,143                              |  | $71,060                                    |  | 20.39%                                                                        |  | -                                                                                  |  | September 30, 2017                
|December 31, 2014  |  | $115,777                             |  | $90,860                                    |  | 11.15%                                                                        |  | -                                                                                  |  | December 31, 2017                 
|March 31, 2015     |  | $134,301                             |  | $106,217                                   |  | 13.75%                                                                        |  | 2.01%                                                                              |  | March 31, 2018                    
|June 30, 2015      |  | $166,549                             |  | $167,113                                   |  | 14.10%                                                                        |  | 3.20%                                                                              |  | June 30, 2018                     
|September 30, 2015 |  | $147,747                             |  | $240,848                                   |  | 10.45%                                                                        |  | 3.20%                                                                              |  | September 30, 2018                
|December 31, 2015  |  | $136,401                             |  | $280,376                                   |  | 7.41%                                                                         |  | 3.60%                                                                              |  | December 31, 2018                 
|March 31, 2016     |  | $157,996                             |  | $232,895                                   |  | 6.00%                                                                         |  | 3.52%                                                                              |  | March 31, 2019                    
|June 30, 2016      |  | $206,933                             |  | $285,878                                   |  | 4.95%                                                                         |  | 3.52%                                                                              |  | June 30, 2019                     
|September 30, 2016 |  | $201,573                             |  | $223,020                                   |  | 4.52%                                                                         |  | 3.13%                                                                              |  | September 30, 2019                
|December 31, 2016  |  | $104,561                             |  | $168,876                                   |  | 4.45%                                                                         |  | 3.11%                                                                              |  | December 31, 2019                 
|March 31, 2017     |  | $80,847                              |  | $252,875                                   |  | 4.21%                                                                         |  | 3.19%                                                                              |  | March 31, 2020                    
|June 30, 2017      |  | $0                                   |  | $176,963                                   |  | 3.98%                                                                         |  | 3.18%                                                                              |  | June 30, 2020                     
|September 30, 2017 |  | $0                                   |  | $119,188                                   |  | 4.19%                                                                         |  | 3.00%                                                                              |  | September 30, 2020                
|December 31, 2017  |  | $0                                   |  | $0                                         |  | N/A                                                                           |  | N/A                                                                                |  | N/A                               





| | (1) | “Operating
Expense Ratio” includes all expenses borne by us, except for organizational and offering expenses, base management and incentive
fees owed to the Adviser, financing fees and costs, interest expense, brokerage commissions and extraordinary
expenses.we did not achieve its minimum offering amount until June 25, 2014 and as a result, did not invest
the proceeds from the offering and realize any income from investments prior to the end of its fiscal quarter.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





76









| | (2) | “Annualized
Distribution Rate” equals the annualized rate of distributions paid to stockholders based on the amount of the regular cash
distribution paid immediately prior to the date the expense support payment obligation was incurred by the Adviser. “Annualized
Distribution Rate” does not include special cash or stock distributions paid to stockholders. we did not achieve its minimum
offering amount until June 25, 2014 and as a result, did not have an opportunity to invest the proceeds from the offering and
realize any income from investments or pay any distributions to stockholders prior to the end of its fiscal quarter.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Beginning the year
ended December 31, 2016, the Adviser began to reimburse less than 100% of operating expenses, and for the year ended December 31,
2017, the Adviser did not reimburse any operating expenses after the first quarter. Additionally, the Adviser did not reimburse
any operating or offering expenses for the fourth quarter of 2017 and for all of 2018. Of these offering and operating expenses,
$3,080,587 has exceeded the three-year period for repayment and will not be repayable by the Company.



The chart below, on
a cumulative basis, discloses the components of the Reimbursement due from Sponsor reflected on the chart above:





|                                     |  | December 31, |            |   | December 31, |   |            | December 31, | 
|------------------------------------ |  | ------------ | ---------- | - | ------------ | - | ---------- | ------------ | 
|                                     |  | 2018         |            |   | 2017         |   |            | 2016         | 
|Operating Expenses                   |  | $            | 1,977,504  |   |              | $ | 1,977,504  |              | 
|Offering Costs                       |  |              | 3,314,687  |   |              |   | 3,314,687  |              | 
|Due to related party offset          |  |              | (4,949,476 | ) |              |   | (4,707,407 | )            | 
|Reimbursements received from Adviser |  |              | (342,715   | ) |              |   | (342,715   | )            | 
|Other amounts due to affiliates      |  |              | 1,511      |   |              |   | 15,559     |              | 
|Total due from affiliates            |  | $            | 1,511      |   |              | $ | 257,628    |              | 





Operating Expensesare the
amounts reimbursed by the Adviser for our operating costs and Offering Costs are the cumulative amount of organizational
and offering expenses reimbursed to us by the Adviser and subject to future reimbursement per the terms of our expense reimbursement
agreement.



Due to related party offsetrepresents
the cash the Adviser paid directly for our operating and offering expenses and Reimbursements received from sponsorare
the amounts the Adviser paid in cash to us for reimbursement of our operating and offering costs.



Expense Limitation Agreement



If the Merger is completed,
we will enter into an expense limitation agreement with our New Adviser (the “ELA”). Pursuant to the ELA, our New 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
New 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 fund, is defined to include all expenses necessary or appropriate for the operation of the
fund, including but not limited to our New Adviser’s base management fee, any and all costs and expenses that qualify as
line item “organization and offering” expenses in the financial statements of the fund as the same are filed with the
SEC and other expenses described in the New 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.



Any amount waived pursuant
to the ELA is subject to repayment to our New Adviser (an “ELA Reimbursement”) by us within the three years following
the end of the quarter in which the waiver was made by our New Adviser. If the ELA is terminated or expires pursuant to its terms,
our New Adviser maintains its right to repayment for any waiver it has made under the ELA, subject to the Repayment Limitations
(discussed below).





77









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 fund’s actual Operating
Expenses for such quarter and (ii) the amount of ELA Reimbursement which, when added to the fund’s expenses for such quarter,
permits the fund 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 fund shares) (the “Distribution”) from the sum of (x) the fund’s
net investment income (loss) for such quarter plus (y) the fund’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 fund for such quarter, without regard to the GAAP treatment of such
expense.  In the event that the fund is unable to make a full payment of any ELA Reimbursements due for any applicable quarter
because the fund does not have sufficient excess cash on hand, any such unpaid amount shall become a payable of the fund for accounting
purposes and shall be paid when the fund 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 New Adviser.



Critical Accounting Policies



This discussion of
our expected operating plans is based upon our expected financial statements, which will be prepared in accordance with accounting
principles generally accepted in the United States, or GAAP. The preparation of these financial statements will require our management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the
economic environment, financial markets and any other parameters used in determining such estimates could cause actual results
to differ. In addition to the discussion below, we will describe our critical accounting policies in the notes to our future financial
statements.



Valuation of Investments



Our board of directors
has established procedures for the valuation of our investment portfolio. These procedures are detailed below.



Investments for which
market quotations are readily available will be valued at such market quotations. For most of our investments, market quotations
will not be available. With respect to investments for which 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 each quarter, as described
below:







| | 1. | Each portfolio company or investment will be valued by our Adviser, potentially with assistance
from one or more independent valuation firms engaged by our board of directors;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The independent valuation firm, if involved, will conduct independent appraisals and make an independent
assessment of the value of each investment;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | The audit committee of our board of directors will review and discuss the preliminary valuation
prepared by our Adviser and that of the independent valuation firm, if any; and
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | The board of directors will discuss the valuations
and determine the fair value of each investment in our portfolio in good faith based on the input of our Adviser, the independent
valuation firm, if any, and the audit committee.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Investments will be
valued utilizing a cost approach, a market approach, an income approach, or a combination of approaches, as appropriate. The cost
approach is most likely only to be used early in the life of an investment or if we determine that there has been no material change
in the investment since purchase. The market



78







approach uses prices and other relevant information generated by market transactions
involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to
convert future amounts (for example, cash flows or earnings) to a single present value amount, calculated using an appropriate
discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts.
In following these approaches, the types of factors that we may take into account in fair value pricing our investments include,
as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable
market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value
of any collateral, the Company’s ability to make payments, its earnings and discounted cash flows, the markets in which the
Company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, the principal market
and enterprise values, among other factors.



We have adopted Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements, which defines
fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands
disclosures about fair value measurements.



ASC Topic 820 provides
a consistent definition of fair value which focuses on exit price and prioritizes, within a measurement of fair value, the use
of market-based inputs over entity-specific inputs. It defines fair value as the price an entity would receive when an asset is
sold or when a liability is transferred in an orderly transaction between market participants at the measurement date. In addition,
ASC Topic 820 provides a framework for measuring fair value and establishes a three-level hierarchy for fair value measurements
based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels of
valuation hierarchy established by ASC Topic 820 are defined as follows:



Level 1: Quoted prices in active
markets for identical assets or liabilities, accessible by the company 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 markets that are not
active, 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 has been determined based on the lowest
level of input that is significant to the fair value measurement. Our 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.



In accordance with
ASC Topic 820, the fair value of our investments is defined as the price that we would receive upon selling an investment in an
orderly transaction to an independent buyer in the principal or most advantageous market in which that investment is transacted.



Revenue Recognition



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





79









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



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



Payment-in-Kind Interest



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



Organization and Offering Expenses



The Company has incurred
certain expenses in connection with the registration of shares of its common stock for sale as discussed in Note 1 – Description
of Business and Summary of Significant Accounting Policies. These costs principally relate to professional fees, fees paid to the
SEC and fees paid to the Financial Industry Regulatory Authority. These costs were included in deferred offering costs in the accompanying
balance sheets. Simultaneous with the sale of common shares, the deferred offering costs will be reclassified to stockholders’
equity upon the issuance of shares.



Federal Income Taxes



We elected to be treated,
beginning with our fiscal year ending December 31, 2012, and intend to qualify annually thereafter, as a RIC under Subchapter M
of the Code. As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital
gains that we distribute to our stockholders from our tax earnings and profits. To maintain our RIC tax treatment, we must, among
other things, meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our
ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------



We are subject to financial
market risks, including changes in interest rates. As of December 31, 2018, 100% of our debt investments paid variable interest
rates. 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 effect over a twelve-month period of changes in interest rates on our interest income, interest expense and net interest
income, assuming no changes in our investment portfolio and borrowing arrangements in effect as of December 31, 2018:





|LIBOR
    Basis Point Change |  | Percentage
    
    Change in  Net
Interest Income |      
|---------------------------- |  | -------------------------------------------------- | -----
|Down
    25 basis points     |  |                                                    | 0.00 
|Current
    LIBOR            |  |                                                    | 0.00 
|Up
    100 basis points      |  |                                                    | 31.44
|Up
    200 basis points      |  |                                                    | 42.68
|Up
    300 basis points      |  |                                                    | 53.93







80









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 “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments.”



|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------



Index to Financial Statements



|                                                                                                      | Page
|----------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firm                                               | 82  
|Consolidated Statement of Financial Position as of December 31, 2018 and 2017                         | 83  
|Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016            | 84  
|Consolidated Statements of Changes in Net Assets for the years ended December 31, 2018, 2017 and 2016 | 85  
|Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016            | 86  
|Consolidated Schedule of Investments for the years ended December 31, 2018, and 2017                  | 87  
|Notes to Consolidated Financial Statements                                                            | 90  



81







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







|To the Board of Directors of               
|-------------------------------------------
|Triton Pacific Investment Corporation, Inc.



|Opinion on the Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|We have audited the accompanying consolidated statements of financial position, including
    the     consolidated schedules of investments of Triton Pacific Investment Corporation, Inc.(a Maryland corporation) (the
    “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, changes in
    net assets, and cash flows for each of the three years in the period ended December 31, 2018 and the related notes and
    financial highlights (collectively referred to as the “financial statements”). In our opinion, the financial
    statements     present fairly,     in all material respects, the financial position of Triton Pacific Investment Corporation
    as of December     31, 2018 and 2017,     and the results of its operations and its cash flows for each of the three years in
    the period ended     December 31, 2018 in     conformity with accounting principles generally accepted in the United States
    of America.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|Basis for Opinion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Our procedures included confirmation of securities owned as of December 31, 2018 and 2017 by correspondence with the
custodian or by other auditing procedures where a reply from the custodian was not received. We believe that our audits
provide a reasonable basis for our opinion.





|Chicago, Illinois                                   
|----------------------------------------------------
|March 29, 2019                                      
|                                                    
|We have served  as the Company’s auditor since 2012.



82









TRITON PACIFIC INVESTMENT CORPORATION,
INC.

CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION

DECEMBER 31, 2018 AND 2017





|                                                                                                      |  | December 31, |            | December 31,
|----------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ------------
|                                                                                                      |  | 2018         |            | 2017        
|ASSETS                                                                                                |  |             
|                                                                                                      |  |              |            |             
|Affiliate investments, at fair value (amortized cost - $500,000 and $1,916,389 respectively)          |  | $            | 495,651    |             
|Non-affiliate investments, at fair value (amortized cost - $12,007,196 and $11,633,659, respectively) |  |              | 11,387,198 |             
|Cash                                                                                                  |  |              | 5,583,241  |             
|Principal and interest receivable                                                                     |  |              | 41,317     |             
|Prepaid expenses                                                                                      |  |              | 2,500      |             
|Reimbursement due from adviser (see Note 4)                                                           |  |              | —          |             
|Due from affiliates                                                                                   |  |              | 1,511      |             
|Deferred offering costs                                                                               |  |              | 200,290    |             
|TOTAL ASSETS                                                                                          |  | $            | 17,711,708 |             
|                                                                                                      |  |              |            |             
|                                                                                                      |  |              |            |             
|LIABILITIES AND NET ASSETS                                                                            |  |              |            |             
|                                                                                                      |  |              |            |             
|LIABILITIES                                                                                           |  |              |            |             
|Payable for investments purchased                                                                     |  | $            | —          |             
|Accounts payable and accrued liabilities                                                              |  |              | 812        |             
|Due to related parties (see Note 4)                                                                   |  |              | 139,975    |             
|TOTAL LIABILITIES                                                                                     |  |              | 140,787    |             
|                                                                                                      |  |              |            |             
|COMMITMENTS AND CONTINGENCIES (see
    Note 9)                                                        |  |              |            |             
|                                                                                                      |  |              |            |             
|NET ASSETS                                                                                            |  |              |            |             
|Common stock, $0.001 par value,                                                                       |  |              |            |             
|75,000,000 shares authorized,                                                                         |  |              |            |             
|1,598,577.90 and 1,417,233.32 shares issued and outstanding, respectively                             |  |              | 1,598      |             
|Capital in excess of par value                                                                        |  |              | 21,183,465 |             
|Accumulated (overdistributed) underdistributed net realized gains                                     |  |              | (1,416,390 | )           
|Accumulated distributions in excess of net investment income                                          |  |              | (1,573,404 | )           
|Accumulated unrealized depreciation on investments                                                    |  |              | (624,348   | )           
|TOTAL NET ASSETS                                                                                      |  |              | 17,570,921 |             
|                                                                                                      |  |              |            |             
|TOTAL LIABILITIES AND NET ASSETS                                                                      |  | $            | 17,711,708 |             
|                                                                                                      |  |              |            |             
|Net asset value per share of common stock at year end                                                 |  | $            | 10.99      |             



The accompanying notes are an integral
part of these statements.





83







TRITON PACIFIC INVESTMENT CORPORATION,
INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2018, 2017 AND
2016





|                                                                               |  | Year Ended   |            |   | Year Ended   |   |            | Year Ended   | 
|------------------------------------------------------------------------------ |  | ------------ | ---------- | - | ------------ | - | ---------- | ------------ | 
|                                                                               |  | December 31, |            |   | December 31, |   |            | December 31, | 
|                                                                               |  | 2018         |            |   | 2017         |   |            | 2016         | 
|                                                                               |  |              |            |   |              |   |            |              | 
|INVESTMENT INCOME                                                              |  |              |            |   |              |   |            |              | 
|Interest from affiliate investments                                            |  | $            | -          |   |              | $ | 19,488     |              | 
|Interest from non-control/ non-affiliate investments                           |  |              | 1,149,149  |   |              |   | 752,578    |              | 
|Fee income from non-control/ non-affiliate investments                         |  |              | 15,742     |   |              |   | 45,382     |              | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Total investment income                                                        |  |              | 1,164,891  |   |              |   | 817,448    |              | 
|                                                                               |  |              |            |   |              |   |            |              | 
|OPERATING EXPENSES                                                             |  |              |            |   |              |   |            |              | 
|Management fees                                                                |  |              | 359,120    |   |              |   | 334,224    |              | 
|Capital gains incentive fees (see Notes 2 and 4)                               |  |              | -          |   |              |   | (334       | )            | 
|Administrator expense                                                          |  |              | 318,093    |   |              |   | 301,986    |              | 
|Professional fees                                                              |  |              | 416,423    |   |              |   | 338,552    |              | 
|Insurance expense                                                              |  |              | 79,262     |   |              |   | 77,015     |              | 
|Offering expense                                                               |  |              | 263,289    |   |              |   | 11,622     |              | 
|Other operating expenses                                                       |  |              | 70,278     |   |              |   | 27,459     |              | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Total operating expenses                                                       |  |              | 1,506,465  |   |              |   | 1,090,524  |              | 
|Expense reimbursement from sponsor                                             |  |              | -          |   |              |   | (80,847    | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Net operating expenses                                                         |  |              | 1,506,465  |   |              |   | 1,009,677  |              | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Net investment income (loss)                                                   |  |              | (341,574   | ) |              |   | (192,229   | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|REALIZED AND UNREALIZED GAIN/(LOSS)                                            |  |              |            |   |              |   |            |              | 
|Net realized gain (loss) on unaffiliated investments                           |  |              | 56,240     |   |              |   | 91,436     |              | 
|Net realized gain (loss) on affiliated investments                             |  |              | (1,416,389 | ) |              |   | -          |              | 
|Net increase (decrease) in unrealized appreciation on unaffiliated investments |  |              | (483,974   | ) |              |   | (159,389   | )            | 
|Net increase (decrease) in unrealized appreciation on affiliated investments   |  |              | 1,374,137  |   |              |   | (1,356,787 | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Total net realized and unrealized loss on investments                          |  |              | (469,986   | ) |              |   | (1,424,740 | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|NET INCREASE (DECREASE) IN NET ASSETS  FROM OPERATIONS                         |  | $            | (811,560   | ) |              | $ | (1,616,969 | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|PER SHARE INFORMATION - Basic and Diluted                                      |  |              |            |   |              |   |            |              | 
|Net increase (decrease) in net assets resulting from operations per share      |  | $            | (0.53      | ) |              | $ | (1.34      | )            | 
|                                                                               |  |              |            |   |              |   |            |              | 
|Weighted average common shares outstanding - basic and diluted                 |  |              | 1,522,181  |   |              |   | 1,203,418  |              | 



The accompanying notes are an integral
part of these statements.



84







TRITON PACIFIC INVESTMENT CORPORATION,
INC.

CONSOLIDATED STATEMENTS OF CHANGES IN
NET ASSETS

YEARS ENDED DECEMBER 31, 2018, 2017 AND
2016





|                                                                     |  | For the Year Ended 
December 31, |            |   | For the Year Ended 
December 31, |   |            | For the Year Ended 
December 31, | 
|-------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | -------------------------------- | 
|                                                                     |  | 2018                             |            |   | 2017                             |   |            | 2016                             | 
|Operations                                                           |  |                                  |            |   |                                  |   |            |                                  | 
|Net investment income (loss)                                         |  | $                                | (341,574   | ) |                                  | $ | (192,229   | )                                | 
|Net realized gain (loss) on investments                              |  |                                  | (1,360,149 | ) |                                  |   | 91,436     |                                  | 
|Net increase (decrease) in unrealized appreciation on investments    |  |                                  | 890,163    |   |                                  |   | (1,516,176 | )                                | 
|Net increase (decrease) in net assets resulting from operations      |  |                                  | (811,560   | ) |                                  |   | (1,616,969 | )                                | 
|Stockholder distributions (see Note 5)                               |  |                                  |            |   |                                  |   |            |                                  | 
|Distributions from net investment income                             |  |                                  | (494,910   | ) |                                  |   | (493,061   | )                                | 
|Distributions from net realized gain on investments                  |  |                                  | (121,604   | ) |                                  |   | (47,998    | )                                | 
|Net decrease in net assets resulting from stockholder distributions  |  |                                  | (616,514   | ) |                                  |   | (541,059   | )                                | 
|Capital share transactions                                           |  |                                  |            |   |                                  |   |            |                                  | 
|Issuance of common stock (see Note 3)                                |  |                                  | 1,880,415  |   |                                  |   | 5,779,405  |                                  | 
|Reinvestment of stockholder distributions (see Note 3)               |  |                                  | 346,702    |   |                                  |   | 291,697    |                                  | 
|Repurchase of shares of common stock                                 |  |                                  | (77,359    | ) |                                  |   | (292,539   | )                                | 
|Net increase in net assets resulting from capital share transactions |  |                                  | 2,149,758  |   |                                  |   | 5,778,563  |                                  | 
|                                                                     |  |                                  |            |   |                                  |   |            |                                  | 
|Total increase in net assets                                         |  |                                  | 721,684    |   |                                  |   | 3,620,535  |                                  | 
|Net assets at beginning of year                                      |  |                                  | 16,849,237 |   |                                  |   | 13,228,702 |                                  | 
|Net assets at end of year                                            |  | $                                | 17,570,921 |   |                                  | $ | 16,849,237 |                                  | 
|Accumulated distributions in excess of net investment income         |  | $                                | (1,573,404 | ) |                                  | $ | (736,923   | )                                | 
|Accumulated (overdistributed) underdistributed net realized gains    |  | $                                | (1,416,390 | ) |                                  | $ | 65,363     |                                  | 



The accompanying notes are an integral
part of these statements.



85







TRITON PACIFIC INVESTMENT CORPORATION,
INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2018, 2017 AND
2016





|                                                                                                                                                    |  | Year Ended   |            |   | Year Ended   |   |            | Year Ended   | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ------------ | - | ---------- | ------------ | 
|                                                                                                                                                    |  | December 31, |            |   | December 31, |   |            | December 31, | 
|                                                                                                                                                    |  | 2018         |            |   | 2017         |   |            | 2016         | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                |  |              |            |   |              |   |            |              | 
|Net increase (decrease) in net assets resulting from operations                                                                                     |  | $            | (811,560   | ) |              | $ | (1,616,969 | )            | 
|Adjustments to reconcile net increase (decrease) in net assets resulting
    from operations to net cash provided by (used in) operating activities |  |              |            |   |              |   |            |              | 
|Purchases of investments                                                                                                                            |  |              | (4,426,250 | ) |              |   | (7,112,875 | )            | 
|Proceeds from sales and repayments of investments                                                                                                   |  |              | 4,142,312  |   |              |   | 4,308,024  |              | 
|Net realized gain (loss) from investments                                                                                                           |  |              | 1,360,149  |   |              |   | (91,436    | )            | 
|Net change in unrealized appreciation (depreciation) on investments                                                                                 |  |              | (890,163   | ) |              |   | 1,516,176  |              | 
|Accretion of discount                                                                                                                               |  |              | (33,359    | ) |              |   | (31,766    | )            | 
|Net increase in paid-in-kind interest                                                                                                               |  |              | -          |   |              |   | (19,488    | )            | 
|Amortization of deferred offering costs                                                                                                             |  |              | 263,289    |   |              |   | 11,622     |              | 
|Change in assets and liabilities                                                                                                                    |  |              |            |   |              |   |            |              | 
|Principal and interest receivable                                                                                                                   |  |              | (290       | ) |              |   | (21,722    | )            | 
|Receivable for investments sold and repaid                                                                                                          |  |              | -          |   |              |   | -          |              | 
|Prepaid expenses                                                                                                                                    |  |              | 45,591     |   |              |   | (2,039     | )            | 
|Reimbursement due from Adviser                                                                                                                      |  |              | 257,628    |   |              |   | (151,045   | )            | 
|Due from affiliates                                                                                                                                 |  |              | (1,511     | ) |              |   | -          |              | 
|Payable for investments purchased                                                                                                                   |  |              | (990,000   | ) |              |   | (71,625    | )            | 
|Accounts payable and accrued liabilities                                                                                                            |  |              | (249,098   | ) |              |   | 24,910     |              | 
|Due to related parties                                                                                                                              |  |              | 114,263    |   |              |   | (7,401     | )            | 
|NET CASH USED BY OPERATING ACTIVITIES                                                                                                               |  |              | (1,218,999 | ) |              |   | (3,265,634 | )            | 
|                                                                                                                                                    |  |              |            |   |              |   |            |              | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                |  |              |            |   |              |   |            |              | 
|Issuance of common stock                                                                                                                            |  |              | 1,880,415  |   |              |   | 5,779,405  |              | 
|Payments on repurchases of shares of common stock                                                                                                   |  |              | (77,359    | ) |              |   | (292,539   | )            | 
|Stockholder distributions                                                                                                                           |  |              | (269,812   | ) |              |   | (249,362   | )            | 
|Increases in distributions payable                                                                                                                  |  |              | -          |   |              |   | (16,574    | )            | 
|Offering costs                                                                                                                                      |  |              | (379,509   | ) |              |   | (95,692    | )            | 
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                                                           |  |              | 1,153,735  |   |              |   | 5,125,238  |              | 
|                                                                                                                                                    |  |              |            |   |              |   |            |              | 
|NET INCREASE (DECREASE) IN CASH                                                                                                                     |  |              | (65,264    | ) |              |   | 1,859,604  |              | 
|                                                                                                                                                    |  |              |            |   |              |   |            |              | 
|CASH - BEGINNING OF YEAR                                                                                                                            |  | $            | 5,648,505  |   |              | $ | 3,788,901  |              | 
|                                                                                                                                                    |  |              |            |   |              |   |            |              | 
|CASH  - END OF YEAR                                                                                                                                 |  | $            | 5,583,241  |   |              | $ | 5,648,505  |              | 



The accompanying notes are an integral
part of these statements.





86









TRITON PACIFIC INVESTMENT CORPORATION,
INC.



CONSOLIDATED SCHEDULE OF INVESTMENTS



DECEMBER 31, 2018





|                                               |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|---------------------------------------------- |  | --------- |  |  | ------------------------------------- |  | ------------------- |  |  | ------------------- |  |  | ---------- |  |  | -------------------------------------- | --------- |  | --------------------- | --------- | ---------- | ----------------- | 
|Portfolio
    Company                          |  | Footnotes |  |  | Industry                              |  | Rate(b)             |  |  | Base
    Rate Floor |  |  | Maturity   |  |  | Principal
    Amount/ Number of Shares |           |  | Amortized
    Cost(d) |           |            | Fair
    Value(c) | 
|Senior
    Secured Loans—First Lien—40.13%     |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|LSF9
    Atlantis Holdings, LLC                |  |           |  |  | Telecommunications                    |  | L+6.00%
    (8.38%) |  |  | 2.38%               |  |  | 5/1/2023   |  |  | $                                      | 481,250   |  |                       | $         | 477,579    |                   | 
|California
    Pizza Kitchen, Inc.             |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+6.00% (8.53%)     |  |  | 2.53%               |  |  | 8/23/2022  |  |  |                                        | 342,125   |  |                       |           | 340,025    |                   | 
|CareerBuilder                                  |  |           |  |  | Business Services                     |  | L+6.75% (9.55%)     |  |  | 2.80%               |  |  | 7/31/2023  |  |  |                                        | 369,112   |  |                       |           | 357,632    |                   | 
|Deluxe
    Entertainment Services Group, Inc.  |  |           |  |  | Media: Diversified and
    Production |  | L+5.50% (8.03%)     |  |  | 2.53%               |  |  | 2/28/2020  |  |  |                                        | 331,362   |  |                       |           | 327,674    |                   | 
|Flavors
    Holdings, Inc. Tranche B           |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+5.75% (8.55%)     |  |  | 2.80%               |  |  | 4/3/2020   |  |  |                                        | 98,438    |  |                       |           | 97,342     |                   | 
|GK
    Holdings, Inc.                          |  |           |  |  | Business Services                     |  | L+6.00% (8.80%)     |  |  | 2.80%               |  |  | 1/20/2021  |  |  |                                        | 120,000   |  |                       |           | 119,709    |                   | 
|GoWireless
    Holdings, Inc.                  |  |           |  |  | Consumer Services                     |  | L+6.50% (9.02%)     |  |  | 2.52%               |  |  | 12/22/2024 |  |  |                                        | 475,000   |  |                       |           | 470,700    |                   | 
|InfoGroup
    Inc.                             |  |           |  |  | Business Services                     |  | L+5.00% (7.80%)     |  |  | 2.80%               |  |  | 4/3/2023   |  |  |                                        | 491,250   |  |                       |           | 487,704    |                   | 
|Isagenix
    International LLC                 |  |           |  |  | Healthcare & Pharmaceuticals          |  | L+5.75% (8.55%)     |  |  | 2.80%               |  |  | 6/14/2025  |  |  |                                        | 487,500   |  |                       |           | 482,986    |                   | 
|McAfee
    LLC                                 |  |           |  |  | Business Services                     |  | L+3.75% (6.27%)     |  |  | 2.52%               |  |  | 9/30/2024  |  |  |                                        | 244,116   |  |                       |           | 242,059    |                   | 
|Moran
    Foods, LLC                           |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+6.00% (8.80%)     |  |  | 2.80%               |  |  | 12/5/2023  |  |  |                                        | 343,000   |  |                       |           | 335,625    |                   | 
|Prospect
    Medical Holdings, Inc.            |  |           |  |  | Healthcare & Pharmaceuticals          |  | L+5.50% (7.94%)     |  |  | 2.44%               |  |  | 2/22/2024  |  |  |                                        | 496,250   |  |                       |           | 487,697    |                   | 
|Quidditch
    Acquisition, Inc.                |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+7.00% (9.47%)     |  |  | 2.47%               |  |  | 3/21/2025  |  |  |                                        | 496,250   |  |                       |           | 487,348    |                   | 
|Vero
    Parent Inc (Sahara)                   |  |           |  |  | Business Services                     |  | L+4.50% (7.02%)     |  |  | 2.52%               |  |  | 8/16/2024  |  |  |                                        | 345,634   |  |                       |           | 342,793    |                   | 
|Strike,
    LLC                                |  |           |  |  | Energy: Oil & Gas                     |  | L+8.00% (10.59%)    |  |  | 2.59%               |  |  | 11/30/2022 |  |  |                                        | 315,000   |  |                       |           | 308,192    |                   | 
|Travel
    Leaders Group, LLC                  |  |           |  |  | Hotel, Gaming &
    Leisure           |  | L+4.00% (6.46%)     |  |  | 2.46%               |  |  | 1/25/2024  |  |  |                                        | 497,500   |  |                       |           | 497,242    |                   | 
|TruGreen
    Limited Partnership               |  |           |  |  | Consumer Services                     |  | L+4.00% (6.42%)     |  |  | 2.42%               |  |  | 4/13/2023  |  |  |                                        | 342,169   |  |                       |           | 338,899    |                   | 
|Verdesian
    Life Sciences LLC                |  |           |  |  | Wholesale Trade-Nondurable
    Goods  |  | L+5.00% (7.53%)     |  |  | 2.53%               |  |  | 7/1/2020   |  |  |                                        | 196,256   |  |                       |           | 195,645    |                   | 
|Wirepath
    LLC                               |  |           |  |  | Consumer Services                     |  | L+4.00% (6.71%)     |  |  | 2.71%               |  |  | 8/5/2024   |  |  |                                        | 493,771   |  |                       |           | 491,728    |                   | 
|Yak
    Access LLC                             |  |           |  |  | Construction
    & Building           |  | L+5.00% (7.52%)     |  |  | 2.52%               |  |  | 7/11/2025  |  |  |                                        | 496,875   |  |                       |           | 482,840    |                   | 
|Total
    Senior Secured Loans—First Lien      |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  | $                                      | 7,462,858 |  |                       | $         | 7,371,419  |                   | 
|                                               |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|Senior
    Secured Loans—Second Lien—24.68%    |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|DG
    Investment Intermediate Holdings 2 Inc. |  |           |  |  | Business Services                     |  | L+6.75% (9.27%)     |  |  | 2.5%                |  |  | 2/2/2026   |  |  |                                        | 500,000   |  |                       |           | 497,785    |                   | 
|Encino
    Acquisition Partners Holdings, LLC  |  |           |  |  | Energy: Oil & Gas                     |  | L+6.75% (9.09%)     |  |  | 2.3%                |  |  | 10/29/2025 |  |  |                                        | 500,000   |  |                       |           | 495,088    |                   | 
|Flavors
    Holdings, Inc.                     |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+10.00% (12.80%)   |  |  | 2.8%                |  |  | 10/3/2021  |  |  |                                        | 125,000   |  |                       |           | 123,067    |                   | 
|FullBeauty
    Brands Holding                  |  |           |  |  | High Tech Industries                  |  | L+9.00% (11.53%)    |  |  | 2.5%                |  |  | 10/13/2023 |  |  |                                        | 250,000   |  |                       |           | 219,536    |                   | 
|GK
    Holdings, Inc.                          |  |           |  |  | Business Services                     |  | L+10.25% (13.05%)   |  |  | 2.8%                |  |  | 1/21/2022  |  |  |                                        | 125,000   |  |                       |           | 123,922    |                   | 
|Inmar                                          |  |           |  |  | Business Services                     |  | L+8.00% (10.52%)    |  |  | 2.5%                |  |  | 5/1/2025   |  |  |                                        | 500,000   |  |                       |           | 494,044    |                   | 
|McAfee
    LLC                                 |  |           |  |  | Business Services                     |  | L+8.50% (11.01%)    |  |  | 2.5%                |  |  | 9/29/2025  |  |  |                                        | 458,332   |  |                       |           | 455,789    |                   | 
|Neustar,
    Inc.                              |  |           |  |  | High Tech Industries                  |  | L+8.00% (10.52%)    |  |  | 2.5%                |  |  | 8/8/2025   |  |  |                                        | 749,792   |  |                       |           | 740,705    |                   | 
|NPC
    International, Inc.                    |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+7.50% (10.02%)    |  |  | 2.5%                |  |  | 4/18/2025  |  |  |                                        | 500,000   |  |                       |           | 499,086    |                   | 
|Oxbow
    Carbon LLC                           |  |           |  |  | Metals & Mining                       |  | L+7.50% (10.02%)    |  |  | 2.5%                |  |  | 1/4/2024   |  |  |                                        | 500,000   |  |                       |           | 495,758    |                   | 
|Patriot
    Container Corp.                    |  |           |  |  | Environmental                         |  | L+7.75% (10.26%)    |  |  | 2.5%                |  |  | 3/20/2026  |  |  |                                        | 500,000   |  |                       |           | 490,997    |                   | 
|Total
    Senior Secured Loans—Second Lien     |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  | $                                      | 4,708,124 |  |                       | $         | 4,635,777  |                   | 
|                                               |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|Equity/Other—2.82%                             |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|ACON
    IWP Investors I, L.L.C.               |  | (a)       |  |  | Healthcare & Pharmaceuticals          |  |                     |  |  |                     |  |  |            |  |  |                                        | 500,000   |  |                       |           | 500,000    |                   | 
|Total
    Equity/Other                         |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        | 500,000   |  |                       | $         | 500,000    |                   | 
|                                               |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 
|TOTAL
    INVESTMENTS—67.63%                   |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       | $         | 12,507,196 |                   | 
|OTHER ASSETS IN EXCESS OF LIABILITIES—32.37%   |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  | $                     | 5,688,072 |           
|NET
    ASSETS - 100.00%                       |  |           |  |  |                                       |  |                     |  |  |                     |  |  |            |  |  |                                        |           |  |                       |           |            |                   | 












| | (a) | 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 December
31, 2018 represented 2.82% of the Company’s net assets. Fair value as of December 31, 2018 along with transactions during
the period ended December 31, 2018 in affiliated investments were as follows:
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                             |  |                       |         |  |                                      |   |         | Year
    ended ended December 31, 2018 |  |   |                               | 
|-------------------------------------------- |  | --------------------- | ------- |  | ------------------------------------ | - | ------- | -------------------------------------- |  | - | ----------------------------- | 
|Non-controlled,
    Affiliated Investments   |  | Number
    of  Shares |         |  | Fair
    Value at  December 31, 2017 |   |         | Gross
    Additions  (Cost)*           |  |   | Gross
    Reductions (Cost)** | 
|ACON IWP
    Investors I, L.L.C.             |  |                       | 500,000 |  |                                      | $ | 537,903 |                                        |  | $ | -                             | 
|Javlin Capital, LLC,
    Convertible Note    |  |                       | 666,389 |  |                                      |   | -       |                                        |  |   | -                             | 
|Javlin Capital, LLC,
    C-2 Preferred Units |  |                       | 214,286 |  |                                      |   | -       |                                        |  |   | -                             | 
|Total                                        |  |                       |         |  |                                      | $ | 537,903 |                                        |  | $ | -                             | 







*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.



| | (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”) or Prime Rate (“Prime”
or “P”) which reset daily, 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 December 31, 2018. Certain investments are
subject to a LIBOR or Prime interest rate floor. As of December 31, 2018, the three-month London Interbank Offered Rate, or LIBOR,
was 2.79700%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Fair value and market value are determined by the Company’s
board of directors (see Note 7.)
| | --- | --------------------------------------------------------------------------------------------



| | (d) | See Note 5 for a discussion of the tax cost of the portfolio.
| | --- | -------------------------------------------------------------



The accompanying notes are an integral
part of these statements.





87







TRITON PACIFIC INVESTMENT CORPORATION,
INC.



CONSOLIDATED SCHEDULE OF INVESTMENTS



DECEMBER 31, 2017





|Portfolio
    Company                         |  | Footnotes |  |  | Industry                              |  | Rate(b)             |  |  | Base
     Rate  Floor |  |  | Maturity   |  |  | Principal
     Amount/ Number  of Shares |           |  | Amortized
    Cost(f) |   |           | Fair
    Value(c) | 
|--------------------------------------------- |  | --------- |  |  | ------------------------------------- |  | ------------------- |  |  | --------------------- |  |  | ---------- |  |  | ---------------------------------------- | --------- |  | --------------------- | - | --------- | ----------------- | 
|Senior
    Secured Loans—First Lien—45.65%    |  |           |  |  |                                       |  |                     |  |  |                       |  |  |            |  |  |                                          |           |  |                       |   |           |                   | 
|LSF9 Atlantis
    Holdings, LLC               |  |           |  |  | Telecommunications                    |  | L+6.00%
    (7.36%) |  |  | 1.4%                  |  |  | 5/1/2023   |  |  | $                                        | 493,750   |  |                       | $ | 489,235   |                   | 
|California Pizza Kitchen,
    Inc.            |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+6.00% (7.57%)     |  |  | 1.6%                  |  |  | 8/19/2022  |  |  |                                          | 345,625   |  |                       |   | 342,933   |                   | 
|CareCentrix, Inc.                             |  |           |  |  | Healthcare & Pharmaceuticals          |  | L+5.00% (6.69%)     |  |  | 1.7%                  |  |  | 7/8/2021   |  |  |                                          | 195,500   |  |                       |   | 192,300   |                   | 
|CareerBuilder                                 |  |           |  |  | Business Services                     |  | L+6.75% (8.44%)     |  |  | 1.7%                  |  |  | 7/27/2023  |  |  |                                          | 493,750   |  |                       |   | 479,771   |                   | 
|Coronado Group LLC                            |  |           |  |  | Metals & Mining                       |  | L+7.00% (8.33%)     |  |  | 1.3%                  |  |  | 6/6/2023   |  |  |                                          | 386,565   |  |                       |   | 372,948   |                   | 
|CRCI Holdings, Inc.                           |  |           |  |  | Business Services                     |  | L+5.50% (7.19%)     |  |  | 1.7%                  |  |  | 8/31/2023  |  |  |                                          | 324,563   |  |                       |   | 321,740   |                   | 
|Deluxe Entertainment
    Services Group, Inc. |  |           |  |  | Media: Diversified and
    Production |  | L+5.50% (6.88%)     |  |  | 1.4%                  |  |  | 2/28/2020  |  |  |                                          | 340,762   |  |                       |   | 333,958   |                   | 
|Flavors Holdings, Inc.
    Tranche B          |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+5.75% (7.44%)     |  |  | 1.7%                  |  |  | 4/3/2020   |  |  |                                          | 104,687   |  |                       |   | 102,670   |                   | 
|GK Holdings, Inc.                             |  |           |  |  | Business Services                     |  | L+6.00% (7.69%)     |  |  | 1.7%                  |  |  | 1/20/2021  |  |  |                                          | 121,250   |  |                       |   | 120,778   |                   | 
|GoWireless Holdings,
    Inc.                 |  |           |  |  | Consumer Services                     |  | L+6.50% (8.16%)     |  |  | 1.7%                  |  |  | 12/20/2024 |  |  |                                          | 500,000   |  |                       |   | 495,000   |                   | 
|IG Investments Holdings,
    LLC              |  |           |  |  | Business Services                     |  | L+3.50% (5.19%)     |  |  | 1.7%                  |  |  | 10/29/2021 |  |  |                                          | 345,543   |  |                       |   | 344,239   |                   | 
|InfoGroup Inc.                                |  |           |  |  | Business Services                     |  | L+5.00% (6.69%)     |  |  | 1.7%                  |  |  | 3/28/2023  |  |  |                                          | 496,250   |  |                       |   | 491,871   |                   | 
|Jackson Hewitt, Inc.                          |  |           |  |  | Business Services                     |  | L+7.00% (8.38%)     |  |  | 1.4%                  |  |  | 7/30/2020  |  |  |                                          | 186,139   |  |                       |   | 183,882   |                   | 
|McAfee LLC                                    |  |           |  |  | Business Services                     |  | L+4.50% (6.07%)     |  |  | 1.6%                  |  |  | 9/27/2024  |  |  |                                          | 249,375   |  |                       |   | 246,960   |                   | 
|Moran Foods, LLC                              |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+6.00% (7.57%)     |  |  | 1.6%                  |  |  | 12/5/2023  |  |  |                                          | 346,500   |  |                       |   | 337,622   |                   | 
|Pre-Paid Legal Services,
    Inc              |  |           |  |  | Consumer Services                     |  | L+5.25% (6.82%)     |  |  | 1.6%                  |  |  | 7/1/2019   |  |  |                                          | 317,021   |  |                       |   | 316,483   |                   | 
|Raley’s                                       |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+5.25% (6.82%)     |  |  | 1.6%                  |  |  | 5/18/2022  |  |  |                                          | 285,967   |  |                       |   | 285,967   |                   | 
|Sahara Parent Inc                             |  |           |  |  | Business Services                     |  | L+5.00% (6.69%)     |  |  | 1.7%                  |  |  | 8/16/2024  |  |  |                                          | 349,125   |  |                       |   | 345,783   |                   | 
|SITEL Worldwide Corporation                   |  |           |  |  | Business Services                     |  | L+5.50% (6.88%)     |  |  | 1.4%                  |  |  | 9/20/2021  |  |  |                                          | 195,500   |  |                       |   | 195,212   |                   | 
|Strike, LLC                                   |  |           |  |  | Energy: Oil & Gas                     |  | L+8.00% (9.50%)     |  |  | 1.5%                  |  |  | 11/30/2022 |  |  |                                          | 332,500   |  |                       |   | 323,942   |                   | 
|Travel Leaders Group,
    LLC                 |  |           |  |  | Hotel, Gaming &
    Leisure           |  | L+4.50% (5.92%)     |  |  | 1.4%                  |  |  | 1/25/2024  |  |  |                                          | 347,379   |  |                       |   | 345,866   |                   | 
|TruGreen Limited Partnership                  |  |           |  |  | Consumer Services                     |  | L+4.00% (5.54%)     |  |  | 1.5%                  |  |  | 4/13/2023  |  |  |                                          | 345,634   |  |                       |   | 341,640   |                   | 
|Verdesian Life Sciences
    LLC               |  |           |  |  | Wholesale Trade-Nondurable
    Goods  |  | L+5.00% (6.38%)     |  |  | 1.4%                  |  |  | 7/1/2020   |  |  |                                          | 208,335   |  |                       |   | 207,283   |                   | 
|Wirepath LLC                                  |  |           |  |  | Consumer Services                     |  | L+5.25% (6.87%)     |  |  | 1.6%                  |  |  | 8/5/2024   |  |  |                                          | 498,750   |  |                       |   | 496,340   |                   | 
|Total
    Senior Secured Loans—First Lien     |  |           |  |  |                                       |  |                     |  |  |                       |  |  |            |  |  | $                                        | 7,810,470 |  |                       | $ | 7,714,423 |                   | 
|                                              |  |           |  |  |                                       |  |                     |  |  |                       |  |  |            |  |  |                                          |           |  |                       |   |           |                   | 
|Senior
    Secured Loans—Second Lien—22.59%   |  |           |  |  |                                       |  |                     |  |  |                       |  |  |            |  |  |                                          |           |  |                       |   |           |                   | 
|Flavors Holdings, Inc.                        |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+10.00% (11.69%)   |  |  | 1.7%                  |  |  | 10/7/2021  |  |  |                                          | 125,000   |  |                       |   | 122,343   |                   | 
|FullBeauty Brands Holding                     |  |           |  |  | High Tech Industries                  |  | L+9.00% (10.57%)    |  |  | 1.6%                  |  |  | 10/13/2023 |  |  |                                          | 250,000   |  |                       |   | 218,903   |                   | 
|GK Holdings, Inc.                             |  |           |  |  | Business Services                     |  | L+10.25% (11.94%)   |  |  | 1.7%                  |  |  | 1/21/2022  |  |  |                                          | 125,000   |  |                       |   | 123,559   |                   | 
|Inmar                                         |  |           |  |  | Business Services                     |  | L+8.00% (9.42%)     |  |  | 1.4%                  |  |  | 5/1/2025   |  |  |                                          | 500,000   |  |                       |   | 493,103   |                   | 
|McAfee LLC                                    |  |           |  |  | Business Services                     |  | L+8.50% (10.07%)    |  |  | 1.6%                  |  |  | 9/26/2025  |  |  |                                          | 500,000   |  |                       |   | 496,986   |                   | 
|Neustar, Inc.                                 |  |           |  |  | High Tech Industries                  |  | L+8.00% (9.40%)     |  |  | 1.4%                  |  |  | 2/28/2025  |  |  |                                          | 750,000   |  |                       |   | 739,275   |                   | 
|NPC International, Inc.                       |  |           |  |  | Beverage, Food &
    Tobacco          |  | L+7.50 (9.05%)      |  |  | 1.6%                  |  |  | 3/28/2025  |  |  |                                          | 500,000   |  |                       |   | 498,135   |                   | 
|Oxbow Carbon LLC                              |  |           |  |  | Metals & Mining                       |  | L+7.00 (8.24%)      |  |  | 1.2%                  |  |  | 1/19/2020  |  |  |                                          | 250,000   |  |                       |   | 240,350   |                   | 
|Oxbow Carbon LLC                              |  |           |  |  | Metals & Mining                       |  | L+6.00 (10.50%)     |  |  | 4.5%                  |  |  | 1/4/2024   |  |  |                                          | 500,000   |  |                       |   | 495,034   |                   | 
|Rocket Software, Inc.                         |  |           |  |  | Business Services                     |  | L+9.50% (11.19%)    |  |  | 1.7%                  |  |  | 10/14/2024 |  |  |                                          | 500,000   |  |                       |   | 491,548   |                   | 
|Total
    Senior Secured Loans—Second Lien    |  |           |  |  |                                       |  |                     |  |  |                       |  |  |            |  |  | $                                        | 4,000,000 |  |                       | $ | 3,919,236 |                   | 









The accompanying notes are an integral
part of these statements.





88







TRITON PACIFIC INVESTMENT CORPORATION,
INC.



CONSOLIDATED SCHEDULE OF INVESTMENTS



DECEMBER 31, 2017 (CONTINUED)





|Portfolio
    Company                                |  | Footnotes       |  | Industry                         | Rate(b) |       |  | Base
    Rate Floor |  | Maturity |  |           | Principal
    Amount/ Number of Shares |  |   | Amortized
    Cost(f) |  |  | Fair
    Value(c) |           
|---------------------------------------------------- |  | --------------- |  | -------------------------------- | ------- | ----- |  | ------------------- |  | -------- |  | --------- | -------------------------------------- |  | - | --------------------- |  |  | ----------------- | ----------
|Subordinated
    Convertible Debt—0.00%              |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  |                   |           
|Javlin
    Capital LLC Subordinated Convertible Note |  | (a)
    (e)     |  | Specialty
    Finance            |         | 6.00% |  |                     |  |          |  | 3/31/2020 |                                        |  |   | 666,389               |  |  |                   | 666,389   
|Total
    Subordinated Convertible Debt              |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  | $ | 666,389               |  |  | $                 | 666,389   
|                                                     |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  |                   |           
|Equity/Other—3.19%                                   |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  |                   |           
|ACON
    IWP Investors I, L.L.C.                     |  | (a)             |  | Healthcare
    & Pharmaceuticals |         |       |  |                     |  |          |  |           |                                        |  |   | 500,000               |  |  |                   | 500,000   
|Javlin
    Capital LLC Class C-2 Preferred Units     |  | (a)
    (d) (e) |  | Specialty
    Finance            |         |       |  |                     |  |          |  |           |                                        |  |   | 214,286               |  |  |                   | 750,000   
|Total
    Equity/Other                               |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   | 714,286               |  |  | $                 | 1,250,000 
|                                                     |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  |                   |           
|TOTAL
    INVESTMENTS—71.43%                         |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  | $                 | 13,550,048
|OTHER
    ASSETS IN EXCESS OF LIABILITIES—28.57%     |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  | $ | 4,813,699             | 
|NET
    ASSETS - 100.00%                             |  |                 |  |                                  |         |       |  |                     |  |          |  |           |                                        |  |   |                       |  |  |                   |           










| | (a) | 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 December 31, 2017 represented
                                         68.24% of the Company’s net assets. Fair value as of December 31, 2017 along with
                                         transactions during the period ended December 31, 2017 in affiliated investments were
                                         as follows:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                             |  |                                     |           |  | Year
    Ended December 31, 2017 |   |        |                               | 
|-------------------------------------------- |  | ----------------------------------- | --------- |  | -------------------------------- | - | ------ | ----------------------------- | 
|Non-controlled,
    Affiliated Investments   |  | Fair
    Value at December 31, 2016 |           |  | Gross
    Additions (Cost)*      |   |        | Gross
    Reductions (Cost)** | 
|ACON
    IWP Investors I, L.L.C.             |  | $                                   | 691,072   |  |                                  | $ | -      |                               | 
|Javlin
    Capital, LLC, Convertible Note    |  |                                     | 646,901   |  |                                  |   | 19,488 |                               | 
|Javlin
    Capital, LLC, C-2 Preferred Units |  |                                     | 537,229   |  |                                  |   | -      |                               | 
|Total                                        |  | $                                   | 1,875,202 |  |                                  | $ | 19,488 |                               | 





*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.



| | (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”) or Prime Rate
                                         (“Prime” or “P”) which reset daily, 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 December 31, 2017. Certain investments
                                         are subject to a LIBOR or Prime interest rate floor. As of December 31, 2017, the three-month
                                         London Interbank Offered Rate, or LIBOR, was 1.69465%.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Fair
                                         value and market value are determined by the Company’s board of directors (see Note 7.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Security
                                         held within TPJ Holdings, Inc., a wholly-owned subsidiary of the Company. See Note 2
                                         for a discussion on the basis of consolidation.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | The
                                         investment is not a qualifying asset under the Investment Company Act of 1940, as amended.
                                         A business development company may not acquire any asset other than a qualifying asset,
                                         unless, at the time the acquisition is made, qualifying assets represent at least 70%
                                         of the business development company’s total assets. As of December 31, 2017, 100%
                                         of the Company’s total assets represented qualifying assets.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | See
                                         Note 5 for a discussion of the tax cost of the portfolio.
| | --- | ------------------------------------------------------------------------------------------------------



The accompanying notes are an integral
part of these statements.



89









TRITON PACIFIC INVESTMENT CORPORATION,
INC.

NOTES TO THE FINANCIAL STATEMENTS



NOTE 1 – DESCRIPTION
OF BUSINESS



Triton Pacific Investment Corporation,
Inc. (the “Company”), incorporated in Maryland on April 29, 2011, is publicly registered, non-traded fund focused on
private equity, structured as a business development company, that primarily makes structured equity and debt investments in small
to mid-sized private U.S. companies. Structured equity refers to derivative investment products, including convertible notes and
warrants, designed to facilitate highly customized risk-return objectives. Pursuant to the Articles of Incorporation, 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 under the Securities Act of 1933, as amended (the “Offering”).
On June 25, 2014, the Company met its minimum offering requirement of $2,500,000 and released all shares held in escrow.



The Company invests either alone or together
with other private equity sponsors. The Company is an externally managed, non-diversified closed-end investment company that has
elected to be treated as a business development company, or BDC, under the Investment Company Act of 1940, or the Company Act.
As a BDC, the Company is required to comply with certain regulatory requirements. The Company has elected to be treated for U.S.
federal income tax purposes, and intends to annually qualify as a regulated investment company, or RIC, under Subchapter M of the
Internal Revenue code of 1986, as amended, or the Code. As of December 31, 2018, the Company has one wholly-owned subsidiary through
which it held an interest in a non-controlled, affiliated portfolio company. The consolidated financial statements include both
the Company’s accounts and the accounts of its wholly-owned subsidiary as of December 31, 2018. All significant intercompany
transactions have been eliminated in consolidation. The Company’s consolidated subsidiary is subject to U.S. federal and
state income taxes. No taxes were accrued or paid by the wholly-owned subsidiary for the years ended December 31, 2018, 2017 and
2016.



As a BDC, we are subject to certain regulatory
restrictions in making our investments. For example, we generally will not be permitted to co-invest alongside our Adviser, including
TPCP and certain of its affiliates, unless we obtain an exemptive order from the SEC or the transaction is otherwise permitted
under existing regulatory guidance, such as syndicated transactions where price is the only negotiated term, and approval from
our independent directors. We have applied for an exemptive relief order for co-investments, though there is no assurance that
such exemptions will be granted, and in either instance, conflicts of interests with affiliates of our Adviser might exist. Should
such conflicts of interest arise, we and the Adviser have developed policies and procedures for dealing with such conflicts which
require the Adviser to (i) execute such transactions for all of the participating investment accounts, including ours, on a fair
and equitable basis, taking into account such factors as the relative amounts of capital available for new investments, the then-current
investment objectives and portfolio positions of each party, and any other factors deemed appropriate and (ii) endeavor to obtain
the advice of Adviser personnel not directly involved with the investment giving rise to the conflict as to such appropriateness
and other factors as well as the fairness to all parties of the investment and its terms. We intend to make all of our investments
in compliance with the Company Act and in a manner that will not jeopardize our status as a BDC or RIC.



Triton Pacific Adviser, LLC (“Adviser”)
serves as the Investment Adviser and TFA Associates, LLC (“TFA”) serves as the Administrator. Each of these entities
are affiliated with Triton Pacific Group, Inc., a private equity investment management firm, and its subsidiary Triton Pacific
Capital Partners, LLC, a private equity investment fund management company, each focused on debt and equity investments for small
to mid-sized private companies.



The Adviser was formed in Delaware as a
private investment management firm and is registered as an investment adviser with the Securities and Exchange Commission (“SEC”)
under the Investment Advisers Act of 1940, or the Advisers Act. The Adviser oversees the management of the Company’s activities
and is responsible for making the investment decisions for the portfolio.



On August 10, 2018, we entered into a definitive
agreement with Pathway Capital Opportunity Fund, Inc. (“PWAY”) pursuant to which PWAY will merge with and into us,
with Triton Pacific Investment Corporation, Inc.





90







(“TPIC”) as the combined surviving company, which will be renamed
as TP Flexible Income Fund, Inc. That definitive agreement was amended effective February 12, 2019. In this report, we refer to
the merger with PWAY as the “Merger” and the definitive agreement (as amended) with PWAY relating to the Merger as
the “Merger Agreement.” The boards of directors of both PWAY and TPIC approved the Merger. The Merger is subject to
a number of conditions to closing, including approval by our stockholders and the stockholders of PWAY and is expected to close
after the date of this report.



If completed, the Merger
will result in significant changes to us, including the following:



| | ● | New Investment Adviser. Prospect
Flexible Income Management, LLC, who we refer to as the New Adviser, will serve as our investment adviser. The New Adviser is an
affiliate of PWAY and the investment professionals of PWAY’s investment adviser have investment discretion at the Adviser.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Increased Leverage. Following the
Merger, our asset coverage ratio requirement will be reduced from 200% to 150%, which will allow us to incur double the maximum
amount of leverage that was previously permitted. As a result, we will be able to borrow substantially more money and take on substantially
more debt than we are currently able to. Leverage may increase the risk of loss to investors and is generally considered a speculative
investment technique.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Special Repurchase Offer. As a
condition to being able to increase our leverage, we will offer to repurchase certain of our outstanding shares. In connection
with this special repurchase offer, stockholders should be aware that:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | Only
                                         stockholders of TPIC as of the date of our annual stockholder meeting, will be allowed
                                         to participate in the special repurchase offer, and they may have up to 100% of their
                                         shares repurchased (former stockholders of PWAY will not be able to participate).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ○ | If
                                         a substantial number of the eligible stockholders take advantage of this opportunity,
                                         it could minimize or eliminate the expected benefits of the Merger and it could:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ▪ | significantly
                                         decrease our asset size;
| | - | -------------------------------------------------------------------------------



| | ▪ | require
                                         us to sell our investments earlier than the Adviser would have otherwise desired, which
                                         may result in selling investments at inopportune times or significantly depressed prices
                                         and/or at losses; or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ▪ | cause
                                         us to incur additional leverage solely to meet repurchase requests.
| | - | ------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                   

| | ● | New Board of Directors.Following
the Merger, the composition of our board of directors will change and will consist of Craig J. Faggen, our current President and
Chief Executive Officer, M. Grier Eliasek, PWAY’s President and Chief Executive Officer, Andrew Cooper, William Gremp and
Eugene Stark. Messrs. Cooper, Gremp and Stark are all currently independent directors of PWAY.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



Basis of Presentation.These
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”). The Company is considered an investment company under GAAP and follows the accounting and reporting guidance
applicable to investment companies under Accounting Standards Codification (“ASC”) 946, Financial Services –
Investment Companies . The Company has evaluated the impact of subsequent events through the date the consolidated financial statements
were issued and filed with the Securities and Exchange Commission.



Management Estimates and Assumptions.The preparation of audited, consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.





91







Cash.All cash balances are
maintained with high credit quality financial institutions which are members of the Federal Deposit Insurance Corporation. The
Company maintains cash balances that may exceed federally insured limits.



Valuation of Portfolio Investments.
The Company determines the net asset value of its investment portfolio each quarter. Securities that are publicly-traded are valued
at the reported closing price on the valuation date. Securities that are not publicly-traded are valued at fair value as determined
in good faith by the Company’s board of directors. 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.



Accounting Standards Codification Topic
820, Fair Value Measurement, or ASC Topic 820, issued by the Financial Accounting Standards Board, clarifies the definition of
fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim
and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from
the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These
tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such
as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no
activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring
an entity to develop its own assumptions.



With respect to investments for which market
quotations are not readily available, the Company undertakes a multi-step valuation process each quarter, as described below:



●     
the Company’s quarterly valuation process begins with the Adviser’s management team providing a preliminary valuation
of each portfolio company or investment to the Company’s board of directors, which valuation may be obtained from an independent
valuation firm or Adviser, if applicable;



●     
preliminary valuation conclusions are then documented and discussed with the Company’s board of directors;



●    
the Company’s board of directors reviews the preliminary valuation and the Adviser’s management team, together with
its independent valuation firm, if applicable, responds and supplements the preliminary valuation to reflect any comments provided
by the board of directors; and



●    
 the Company’s board of directors discusses valuations and determines the fair value of each investment in the Company’s
portfolio in good faith based on various statistical and other factors, including the input and recommendation of the Adviser and
any third-party valuation firm, if applicable.



Determination of fair value involves subjective
judgments and estimates. Accordingly, these notes to the Company’s financial statements refer to the uncertainty with respect
to the possible effect of such valuations and any change in such valuations on the Company’s financial statements. Below
is a description of factors that the Company’s board of directors may consider when valuing the Company’s debt and
equity investments.



Valuation of fixed income investments,
such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected
volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without
readily available market prices, the Company may incorporate these factors into discounted cash flow models to arrive at fair value.
Other factors that the Company’s board of directors may consider include the borrower’s ability to adequately service
its debt, the fair market value of the portfolio company in relation to the face amount of its outstanding debt and the quality
of collateral securing the Company’s debt investments. The determination of fair market value for the equity positions were
determined by considering, among other factors, various income scenarios and multiples of earnings before interest, taxes, depreciation
and amortization, or EBITDA, cash flows, net income, revenues, market comparables, book value multiples, economic profits and portfolio
multiples.





92







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.



Revenue Recognition.Security
transactions are accounted for on the trade date. The Company records interest income on an accrual basis to the extent it expects
to collect such amounts. 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. Loan origination fees,
original issue discount and market discount are capitalized and the Company amortizes 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 and original
issue discount 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.



Effective January 1, 2018, the Company
adopted ASC Topic 606, Revenue from Contracts with Customers, or ASC Topic 606. Using the cumulative effect method applied to in-scope
contracts with, the Company did not recognize a cumulative effect on stockholders’ equity in connection with the adoption
of the new revenue recognition guidance.



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 year ended December 31,
2018, interest income did not include any PIK interest. For the year ended December 31, 2017, interest income included $19,488
of PIK interest. For the year ended December 31, 2016, interest income included $37,682 of PIK interest. The Company stops accruing
PIK interest when it is determined that PIK interest is no longer collectible. As of July 1, 2017, the Company stopped accruing
PIK interest on the subordinated convertible note made by Javlin Financial LLC (“Javlin Financial”). 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.



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



Capital Gains Incentive Fees.
The Company has entered into an investment advisory agreement with the Adviser dated as of July 27, 2012. Pursuant to the terms
of the investment advisory agreement, the Incentive Fee shall be determined and payable in arrears as of the end of each quarter,
upon liquidation of the Company or upon termination of this Agreement, as of the termination date, and shall equal 20.0% of the
Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each quarter, computed
net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any
previously paid Incentive Fees. There were no fees accrued for the year ended December 31, 2018. The fees for the year ended December
31, 2017 were $($334), all of which was for Incentive Fees calculated on unrealized gains. The fees for the year ended December
31, 2016 were $($35,216), all of which was for Incentive Fees calculated on unrealized gains.



For purposes of calculating the foregoing:
(1) the calculation of the Incentive Fee shall include any capital gains that result from cash distributions that are treated as
a return of capital; (2) any such return of capital shall be treated as a decrease in the Company’s cost basis of an investment;
and (3) all fiscal year-end valuations shall be determined by the Company in accordance with generally accepted accounting principles,
applicable provisions of the Company Act (even if such valuation is made prior to the date on which the Company has elected to
be regulated as a BDC) and the Company’s pricing procedures. In determining the Incentive Fee payable to the Adviser, the
Company will calculate the aggregate realized capital gains, aggregate realized capital losses and aggregate unrealized capital
depreciation, as applicable, with respect to each of the investments in its portfolio. For this purpose, aggregate





93







realized capital
gains, if any, will equal the sum of the differences between the net sales price of each investment, when sold, and the original
cost of such investment since inception. Aggregate realized capital losses will equal the sum of the amounts by which the net sales
price of each investment, when sold, is less than the cost of such investment since inception. Aggregate unrealized capital depreciation
will equal the sum of the difference, if negative, between the valuation of each investment as of the applicable date and the original
cost of such investment. At the end of the applicable period, the amount of capital gains that serves as the basis for the Company’s
calculation of the Incentive Fees will equal the aggregate realized capital gains less aggregate realized capital losses and less
aggregate unrealized capital depreciation with respect to its portfolio of investments. If this number is positive at the end of
such period, then the Incentive Fees for such period will be equal to 20% of such amount, less the aggregate amount of any Incentive
Fees paid in respect of its portfolio in all prior periods.



Offering Costs.The Company
will incur certain expenses in connection with registering to sell shares of its common stock in connection with the Offering.
These costs principally relate to issuer costs for advertising and sales, printing and marketing costs, professional and filing
fees. Upon recognition or repayment to the Adviser of these costs, they will be capitalized as deferred offering expenses and then
subsequently expensed over a 12-month period. The Adviser may reimburse the Company for all or part of these amounts pursuant to
the Expense Support and Conditional Reimbursement Agreement (“Expense Reimbursement Agreement”) discussed below. As
of December 31, 2018, 2017 and 2016, $0, $3,314,687 and $2,765,661, respectively, of offering costs have been reclassified and
included as part of the Expense Reimbursement Agreement and accordingly included in Reimbursement due from the Adviser. Of these
Offering Expenses, $1,854,992 has exceeded the three-year period for repayment and will not be repayable by the Company. For the
year ended December 31, 2018, the Company incurred $379,509 in offering costs that were not reimbursed by the Sponsor, of which
$263,289 was expensed by the Company for the year ended December 31, 2018, and $11,622 was expensed by the Company for the year
ended December 31, 2017. Should the merger close, all amounts reimbursable under the Expense Reimbursement Agreement will no longer
be payable by the Company.



Distributions. Distributions
to the Company’s stockholders are recorded as of the record date. Subject to the discretion of the Company’s board
of directors and applicable legal restrictions, the Company intends to authorize and declare ordinary cash distributions on a monthly
basis and pay such distributions on a monthly basis.



Income Taxes.The Company
has elected to be treated for federal income tax purposes, and intends to annually qualify thereafter, as a regulated investment
company (“RIC”) under Subchapter M of the Code. Generally, a RIC is exempt from federal income taxes if it distributes
at least 90% of “Investment Company Taxable Income,” as defined in the Code, each year. Dividends paid up to 8.5 months
after the current tax year can be carried back to the prior tax year for determining the dividends paid in such tax year. The Company
intends to distribute sufficient dividends to maintain its RIC status each year. The Company is also subject to nondeductible federal
excise taxes if it does not distribute at least 98% of net ordinary income, 98.2% of capital gain income, if any, and any recognized
and undistributed income from prior years for which it paid no federal excise tax. The Company will generally endeavor each year
to avoid any federal excise taxes.



GAAP requires management to evaluate tax
positions taken by the Company and recognize a tax liability if the Company has taken an uncertain position that more likely than
not would not be sustained upon examination by the Internal Revenue Service or other tax authorities. Management has analyzed the
tax positions taken by the Company, and has concluded that as of December 31, 2018, 2017 and 2016, there are no uncertain positions
taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Company
is subject to routine audits by the Internal Revenue Service or other tax authorities, generally for three years after the tax
returns are filed; however, there are currently no audits for any tax periods in progress.



Recent Accounting Pronouncements.In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement—Disclosures Framework—Changes
to Disclosure Requirements of Fair Value Measurement (Topic 820), or ASU 2018-13. ASU 2018-13 introduces new fair value disclosure
requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the
impact of ASU 2018-13 on its financial statements.





94







NOTE 3 – SHARE TRANSACTIONS



Below is a summary of transactions with
respect to shares of the Company’s common stock during the years ended December 31, 2018, 2017 and 2016:







|                                                |  | Year Ended December 31, |           
|----------------------------------------------- |  | ----------------------- | ----------
|                                                |  | 2018                    |           
|                                                |  | Shares                  |           
|Gross proceeds from Offering                    |  |                         | 158,266.54
|Reinvestment of Distributions                   |  |                         | 29,466.05 
|Commissions and Dealer Manager Fees             |  |                         |           
|Net Proceeds to Company from Share Transactions |  |                         | 187,732.59





Status of Continuous Public Offering



During the years ended December 31, 2018,
2017 and 2016, the Company sold 158,266.54, 440,963.13, and 444,847.84 shares of common stock, respectively, for gross proceeds
of approximately $2,080,405, $6,385,593, and $6,683,706, at an average price per share of $13.14, $14.48, and $15.02, respectively.
The increase in Capital in excess of par value during the years ended December 31, 2018, 2017 and 2016 also includes reinvested
stockholder distributions of $346,702, $291,697, and $215,591, respectively, for which the Company issued 29,466.05, 22,461.05,
and 15,548.74 shares of common stock, respectively.



The proceeds from the issuance of common
stock as presented on the accompanying statements of changes in net assets and statements of cash flows are presented net of selling
commissions and dealer manager fees of $199,991, $606,188, and $581,515 for the years ended December 31, 2018, 2017 and 2016, respectively.



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 90% of the current 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





95







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 Company Act.



The following table provides information
concerning the Company’s repurchase of shares of common stock during the years ended December 31, 2018, 2017 and 2016 (no
repurchases were made prior to 2016):





|For the Three Months Ended |  | Repurchase
    Date |  | Shares
    
    Repurchased |           |  | Percentage
    of 
    Shares Tendered 
    That Were
    Repurchased |     |  | Average
    Price Paid 
    per Share |   |       | Aggregate
    
    Consideration for
    Repurchased
    Shares | 
|-------------------------- |  | ------------------- |  | --------------------------- | --------- |  | --------------------------------------------------------------------- | --- |  | ------------------------------------- | - | ----- | --------------------------------------------------------------- | 
|Fiscal 2018                |  |                     |  |                             |           |  |                                                                       |     |  |                                       |   |       |                                                                 | 
|March 31, 2018             |  | March 28, 2018      |  |                             | 6,388.01  |  |                                                                       | 11% |  |                                       | $ | 12.11 |                                                                 | 
|Total                      |  |                     |  |                             | 6,388.01  |  |                                                                       | 11% |  |                                       |   | 12.11 |                                                                 | 
|Fiscal 2017                |  |                     |  |                             |           |  |                                                                       |     |  |                                       |   |       |                                                                 | 
|March 31, 2017             |  | January 20, 2017    |  |                             | 8,482.60  |  |                                                                       | 27% |  |                                       | $ | 13.87 |                                                                 | 
|June 30, 2017              |  | May 12, 2017        |  |                             | 1,936.81  |  |                                                                       | 6%  |  |                                       |   | 13.55 |                                                                 | 
|September 30, 2017         |  | September 25, 2017  |  |                             | 5,968.22  |  |                                                                       | 9%  |  |                                       |   | 12.30 |                                                                 | 
|December 31, 2017          |  | December 22,2017    |  |                             | 6,212.40  |  |                                                                       | 10% |  |                                       |   | 12.11 |                                                                 | 
|Total                      |  |                     |  |                             | 22,600.03 |  |                                                                       | 12% |  |                                       |   | 12.94 |                                                                 | 
|Fiscal 2016                |  |                     |  |                             |           |  |                                                                       |     |  |                                       |   |       |                                                                 | 
|September 30, 2016         |  | July 15, 2016       |  |                             | 8,482.60  |  |                                                                       | 50% |  |                                       | $ | 13.80 |                                                                 | 
|December 31, 2016          |  | October 14, 2016    |  |                             | 8,482.60  |  |                                                                       | 48% |  |                                       |   | 13.80 |                                                                 | 
|Total                      |  |                     |  |                             | 16,965.20 |  |                                                                       | 49% |  |                                       | $ | 13.80 |                                                                 | 





NOTE 4 – RELATED PARTY TRANSACTIONS
AND ARRANGEMENTS



The Adviser and TFA and their affiliates
will receive compensation and reimbursement for services relating to our offering and the investment and management of its assets.



In connection with the Offering, the Company
has incurred registration, organization, operating and offering costs. Such costs have been advanced by the Adviser. As discussed
below, the Company has entered into an Expense Reimbursement Agreement with its Adviser. For the period from inception through
December 31, 2018, certain registration, organization, operating and offering costs have been accounted for under the Expense Reimbursement
Agreement and accordingly included in Reimbursement due from the Adviser on the statements of financial position.



The chart below, on a cumulative basis,
discloses the components of the Reimbursement due from Adviser reflected on the Statements of Financial Position:





|                                     |  | December 31, |            |   | December 31, |   |            | December 31, | 
|------------------------------------ |  | ------------ | ---------- | - | ------------ | - | ---------- | ------------ | 
|                                     |  | 2018         |            |   | 2017         |   |            | 2016         | 
|Operating Expenses                   |  | $            | 1,977,504  |   |              | $ | 1,977,504  |              | 
|Offering Costs                       |  |              | 3,314,687  |   |              |   | 3,314,687  |              | 
|Due to related party offset          |  |              | (4,949,476 | ) |              |   | (4,707,407 | )            | 
|Reimbursements received from Adviser |  |              | (342,715   | ) |              |   | (342,715   | )            | 
|Other amounts due to affiliates      |  |              | 1,511      |   |              |   | 15,559     |              | 
|Total due from affiliates            |  | $            | 1,511      |   |              | $ | 257,628    |              | 





Operating Expenses are the amounts
reimbursed by the Adviser for our operating costs and offering costs are the cumulative amount of organizational and
offering expenses reimbursed to us by the Adviser and subject to future reimbursement per the terms of our expense reimbursement
agreement.



96









Due to related party offset represents
the cash the Adviser paid directly for our operating and offering expenses and reimbursements received from sponsor are
the amounts the Adviser paid in cash to us for reimbursement of our operating and offering costs.



The Company compensates the Adviser for
investment services per an Investment Adviser Agreement (“Agreement”), approved by the Company’s directors, calculated
as the sum of (1) base management fee, calculated quarterly at 0.5% of the Company’s average gross assets payable quarterly
in arrears, and (2) an incentive fee upon capital gains determined and payable in arrears as of the end of each quarter or upon
liquidation of the Company or upon termination of Agreement at 20% of Company’s realized capital gains, as defined. The Agreement
expires July 2019 and may continue automatically for successive annual periods, as approved by the Company. It will terminate automatically
upon completion of the Merger. All management fees earned by the Adviser prior to January 1, 2014 were waived by the Adviser.



As a BDC, we will be subject to certain
regulatory restrictions in making our investments. For example, we generally will not be permitted to co-invest alongside our Adviser
and its affiliates unless we obtain an exemptive order from the SEC or the transaction is otherwise permitted under existing regulatory
guidance, such as syndicated transactions where price is the only negotiated term, and approval from our independent directors.
As of December 31, 2018, the Company has one affiliate investment in ACON IWP Investors I, L.L.C.



The Company compensates TFA for administration
services per an Administration Agreement for costs and expenses incurred with the administration and operation of the Company.
These costs include the allocable portion of the compensation and related expenses of certain personnel of TFA, providing administrative
services to the Company on behalf of the Adviser. The Company reimburses TFA no less than quarterly for all costs and expenses
incurred pursuant to this Agreement. TFA allocates the cost of such services to the Company based on factors such as total assets,
revenues, time allocations and/or other reasonable metrics. Such agreement expires July 2019 and may continue automatically for
successive annual periods, as approved by the Company. These fees have been reimbursed from the Adviser pursuant to the Expense
Reimbursement Agreement discussed below.



The following table describes the fees
and expenses incurred under the investment advisory and administration agreement and the dealer manager agreement during the years
ended December 31, 2018, 2017 and 2016:





|                               |  |                              |  |                                  |  | Year Ended December 31, |        
|------------------------------ |  | ---------------------------- |  | -------------------------------- |  | ----------------------- | -------
|Related Party                  |  | Source Agreement             |  | Description                      |  | 2018                    |        
|Triton Pacific Adviser, LLC    |  | Investment Adviser Agreement |  | Base Management Fees             |  | $                       | 359,120
|Triton Pacific Adviser, LLC    |  | Investment Adviser Agreement |  | Capital Gains Incentive Fees(1)  |  | $                       | -      
|TFA Associates, LLC            |  | Administration Agreement     |  | Administrative Services Expenses |  | $                       | 318,093
|Triton Pacific Securities, LLC |  | Dealer Manager Agreement     |  | Dealer Manager Fees(2)           |  | $                       | 38,416 
















| | (1) | During the years ended December 31, 2018, 2017 and 2016, the Company earned capital gains incentive
fees of $0, ($334), and ($35,216), respectively, based on the performance of its portfolio, of which were based on unrealized gains.
No capital gains incentive fees are actually payable by the Company with respect to unrealized gains unless and until those gains
are actually realized. See Note 2 for a discussion of the methodology employed by the Company in calculating the capital gains
incentive fees.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | During the years ended December 31, 2018, 2017 and 2016, the Company paid the Dealer Manager $199,991,
$606,188, and $581,515, respectively, in sales commissions and dealer fees. $38,416, $122,150, and $136,896 were retained by TPS,
respectively, and the remainder re-allowed to third party participating broker dealers.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Expense Reimbursement Agreement



On March 27, 2014, the Company and its
Adviser agreed to an Expense Support and Conditional Reimbursement Agreement, or the Expense Reimbursement Agreement. The Expense
Reimbursement Agreement was amended and restated effective November 17, 2014. Under the Expense Reimbursement Agreement, as amended,
the Adviser, in consultation with the Company, will pay up to 100% of both the Company’s organizational and offering expenses
and its operating expenses, all as determined by the Company and the Adviser. As used in the Expense Reimbursement Agreement, operating
expenses refer to third party operating costs and expenses incurred by the Company, as determined under GAAP for investment management
companies. Organizational and offering expenses include expenses incurred in connection with the organization of the Company and
expenses incurred in connection with its offering, which are recorded as a component of equity. The Expense Reimbursement Agreement





97







states that until the net proceeds to the Company from its offering are at least $25 million, the Adviser will pay up to 100% of
both the Company’s organizational and offering expenses and its operating expenses. After the Company receives at least $25
million in net proceeds from its offering, the Adviser may, with the Company’s consent, continue to make expense support
payments to the Company in such amounts as are acceptable to the Company and the Adviser. Any expense support payments shall be
paid by the Adviser to the Company in any combination of cash, and/or offsets against amounts otherwise due from the Company to
the Adviser.



Under the Expense Reimbursement Agreement
as amended, once the Company has received at least $25 million in net proceeds from its offering, during any quarter occurring
within three years of the date on which the Company incurred any expenses that are funded by the Adviser, the Company is required
to reimburse the Adviser for any expense support payments the Company received from them. However, with respect to any expense
support payments attributable to the Company’s operating expenses, (i) the Company will only reimburse the Adviser for
expense support payments made by the Adviser to the extent that the payment of such reimbursement (together with any other reimbursement
paid during such fiscal year) does not cause “other operating expenses” (as defined below) (on an annualized basis
and net of any expense reimbursement payments received by the Company during such fiscal year) to exceed the percentage of the
Company’s average net assets attributable to shares of its common stock represented by “other operating expenses”
during the fiscal year in which such expense support payment from the Adviser was made (provided, however, that this clause (i) shall
not apply to any reimbursement payment which relates to an expense support payment from the Adviser made during the same fiscal
year); and (ii) the Company will not reimburse the Adviser for expense support payments made by the Adviser if the annualized
rate of regular cash distributions declared by the Company at the time of such reimbursement payment is less than the annualized
rate of regular cash distributions declared by the Company at the time the Adviser made the expense support payment to which such
reimbursement relates. “Other operating expenses” means the Company’s total operating expenses excluding base
management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions
and extraordinary expenses.







|Quarter Ended      |  | Amount of
    Expense 
    Payment Obligation |  | Amount of
    Offering Cost 
    Payment Obligation |  | Operating
    Expense 
    Ratio as of the
    Date Expense Payment 
    Obligation 
    Incurred(1) |   | Annualized
    Distribution 
    Rate as of the Date 
    Expense Payment 
    Obligation Incurred(2) |      | Eligible for
    
    Reimbursement 
    Through
|------------------ |  | --------------------------------------------- |  | --------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------- | ---- | ------------------------------------------------
|September 30, 2012 |  | $21,826                                       |  | $0                                                  |  | 432.69                                                                                               | % |                                                                                                       | -    |                                                 
|December 31, 2012  |  | $26,111                                       |  | $0                                                  |  | 531.09                                                                                               | % |                                                                                                       | -    |                                                 
|March 31, 2013     |  | $30,819                                       |  | $0                                                  |  | N/A                                                                                                  |   |                                                                                                       | -    |                                                 
|June 30, 2013      |  | $59,062                                       |  | $0                                                  |  | N/A                                                                                                  |   |                                                                                                       | -    |                                                 
|September 30, 2013 |  | $65,161                                       |  | $0                                                  |  | N/A                                                                                                  |   |                                                                                                       | -    |                                                 
|December 31, 2013  |  | $91,378                                       |  | $0                                                  |  | 455.09                                                                                               | % |                                                                                                       | -    |                                                 
|March 31, 2014     |  | $68,293                                       |  | $0                                                  |  | 148.96                                                                                               | % |                                                                                                       | -    |                                                 
|June 30, 2014      |  | $70,027                                       |  | $898,518                                            |  | 23.17                                                                                                | % |                                                                                                       | -    |                                                 
|September 30, 2014 |  | $92,143                                       |  | $71,060                                             |  | 20.39                                                                                                | % |                                                                                                       | -    |                                                 
|December 31, 2014  |  | $115,777                                      |  | $90,860                                             |  | 11.15                                                                                                | % |                                                                                                       | -    |                                                 
|March 31, 2015     |  | $134,301                                      |  | $106,217                                            |  | 13.75                                                                                                | % |                                                                                                       | 2.01 | %                                               
|June 30, 2015      |  | $166,549                                      |  | $167,113                                            |  | 14.10                                                                                                | % |                                                                                                       | 3.20 | %                                               
|September 30, 2015 |  | $147,747                                      |  | $240,848                                            |  | 10.45                                                                                                | % |                                                                                                       | 3.20 | %                                               
|December 31, 2015  |  | $136,401                                      |  | $280,376                                            |  | 7.41                                                                                                 | % |                                                                                                       | 3.60 | %                                               
|March 31, 2016     |  | $157,996                                      |  | $232,895                                            |  | 6.00                                                                                                 | % |                                                                                                       | 3.52 | %                                               
|June 30, 2016      |  | $206,933                                      |  | $285,878                                            |  | 4.95                                                                                                 | % |                                                                                                       | 3.52 | %                                               
|September 30, 2016 |  | $201,573                                      |  | $223,020                                            |  | 4.52                                                                                                 | % |                                                                                                       | 3.13 | %                                               
|December 31, 2016  |  | $104,561                                      |  | $168,876                                            |  | 4.45                                                                                                 | % |                                                                                                       | 3.11 | %                                               
|March 31, 2017     |  | $80,847                                       |  | $252,875                                            |  | 4.21                                                                                                 | % |                                                                                                       | 3.19 | %                                               
|June 30, 2017      |  | $0                                            |  | $176,963                                            |  | 3.98                                                                                                 | % |                                                                                                       | 3.18 | %                                               
|September 30, 2017 |  | $0                                            |  | $119,188                                            |  | 4.19                                                                                                 | % |                                                                                                       | 3.00 | %                                               
|December 31, 2017  |  | $0                                            |  | $0                                                  |  | N/A                                                                                                  |   |                                                                                                       | N/A  |                                                 





|(1) | “Operating
    Expense Ratio” includes all expenses borne by us, except for organizational and offering expenses, base management and
    incentive fees owed to our Adviser, financing fees and costs, interest expense, brokerage commissions
    and extraordinary expenses.The Company did not achieve its minimum offering amount until June 25, 2014
    and as a result, did not invest the proceeds from the offering and realize any income from investments prior to the end of
    its fiscal quarter.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | “Annualized
Distribution Rate” equals the annualized rate of distributions paid to stockholders based on the amount of the regular cash
distribution paid immediately prior to the date the expense support payment obligation was incurred by our Adviser. “Annualized
Distribution Rate” does not include special cash or stock distributions paid to stockholders. The Company did not achieve
its minimum                                                                                                    





98







| | offering amount until June 25, 2014 and
    as a result, did not have an opportunity to invest the proceeds from the offering and realize any income from investments
    or pay any distributions to stockholders prior to the end of its fiscal quarter.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, with respect to any expense
support payment attributable to the Company’s organizational and offering expenses, the Company will only reimburse the Adviser
for expense support payments made by the Adviser to the extent that the payment of such reimbursement (together with any other
reimbursement for organizational and offering expenses paid during such fiscal year) is limited to 15% of cumulative gross sales
proceeds from the Company’s offering including the sales load (or dealer manager fee) paid by the Company.



The Company or the Adviser may terminate
the Expense Reimbursement Agreement at any time upon thirty days’ written notice; however, the Adviser has indicated that
it expects to continue such reimbursements until it deems that the Company has achieved economies of scale sufficient to ensure
that the Company bears a reasonable level of expenses in relation to its income. The Expense Reimbursement Agreement will automatically
terminate upon termination of the Investment Advisory Agreement or upon the Company’s liquidation or dissolution.



The Expense Reimbursement Agreement is,
by its terms, effective retroactively to the Company’s inception date of April 29, 2011 for operating expenses and from the
break of escrow on June 25, 2014 for offering expenses. As of December 31, 2018, $5,292,191 has been recorded as Reimbursement
due from the Adviser pursuant to the Expense Reimbursement Agreement. Of this, $4,849,476 representing an amount due to the Adviser,
was netted against the Reimbursement due from Adviser and $342,715 was paid to the Company by the Adviser.



Beginning the year ended December 31, 2016,
the Adviser began to reimburse less than 100% of operating expenses, and for the year ended December 31, 2017, the Adviser did
not reimburse any operating expenses after the first quarter. Additionally, the Adviser did not reimburse any offering expenses
for the fourth quarter of 2017, and no costs were reimbursed for the year ended December 31, 2018. Of these offering and operating
expenses, $3,080,587 has exceeded the three-year period for repayment and will not be repayable by the Company.



NOTE 5 – DISTRIBUTIONS



The following table reflects the cash distributions
per share that the Company declared and paid on its common stock during the years ended December 31, 2018, 2017 and 2016:





99









|                                                            |  |  | Distribution |        
|----------------------------------------------------------- |  |  | ------------ | -------
|Fiscal
    2018                                             |  |  | Per Share    |        
|January
                                         29, 2018   |  |  | $            | 0.03370
|February
                                         28, 2018  |  |  | $            | 0.03370
|March
                                         28, 2018     |  |  | $            | 0.03370
|April
                                         26, 2018     |  |  | $            | 0.03370
|May
                                         29, 2018       |  |  | $            | 0.03370
|June
                                         27, 2018      |  |  | $            | 0.03370
|July
                                         27, 2018      |  |  | $            | 0.03370
|August
                                         27, 2018    |  |  | $            | 0.03370
|September
                                         25, 2018 |  |  | $            | 0.03370
|October
                                         25, 2018   |  |  | $            | 0.03370
|November
                                         23, 2018  |  |  | $            | 0.03370
|December
                                         26, 2018  |  |  | $            | 0.03370
|                                                            |  |  |              |        
|Fiscal
                                         2017        |  |  |              |        
|January
                                         27, 2017   |  |  | $            | 0.04000
|February
                                         24, 2017  |  |  | $            | 0.04000
|March
                                         23, 2017     |  |  | $            | 0.04000
|April
                                         27, 2017     |  |  | $            | 0.04000
|May
                                         25, 2017       |  |  | $            | 0.04000
|June
                                         23, 2017      |  |  | $            | 0.04000
|July
                                         21, 2017      |  |  | $            | 0.04000
|August
                                         29, 2017    |  |  | $            | 0.03417
|September
                                         28, 2017 |  |  | $            | 0.03417
|October
                                         26, 2017   |  |  | $            | 0.03417
|November
                                         27, 2017  |  |  | $            | 0.03370
|December
                                         26, 2017  |  |  | $            | 0.03370
|                                                            |  |  |              |        
|Fiscal
                                         2016        |  |  |              |        
|January
                                         22, 2016   |  |  | $            | 0.04500
|February
                                         16, 2016  |  |  | $            | 0.04500
|March
                                         23, 2016     |  |  | $            | 0.04500
|April
                                         21, 2016     |  |  | $            | 0.04500
|May
                                         19, 2016       |  |  | $            | 0.04500
|June
                                         23, 2016      |  |  | $            | 0.04500
|July
                                         21, 2016      |  |  | $            | 0.04000
|August
                                         25, 2016    |  |  | $            | 0.04000
|September
                                         22, 2016 |  |  | $            | 0.04000
|October
                                         20, 2016   |  |  | $            | 0.04000
|November
                                         18, 2016  |  |  | $            | 0.04000
|December
                                         20, 2016  |  |  | $            | 0.04000





Prior to April 2015, the Company’s
distributions were paid quarterly in arrears.  On April 2, 2015, the Company authorized and declared a first quarter
cash distribution of $0.116 per share, to the stockholders of record as of April 13, 2015. Beginning April 2015, the Company commenced
the declaration and payment of monthly distributions, payable in advance, in each case, subject to the discretion of the Company’s
board of directors and applicable legal restrictions.



On January 21, 2019, February 27, 2019,
and March 25, 2019 the Company authorized and declared a cash distribution of $0.0337 per share for the months of January, February
and March 2019, to the stockholders of record as of January 25, 2018, February 28, 2018, and March 27, respectively. The timing
and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of
the Company’s board of directors.



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.



100











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.



The following table reflects the sources
of the cash distributions on a tax basis that the Company paid on its common stock during the years ended December 31, 2018, 2017
and 2016:





|                                                          |  | 2018                |         | 2017       |  | 2016               
|--------------------------------------------------------- |  | ------------------- | ------- | ---------- |  | -------------------
|Source of Distribution                                    |  | Distribution Amount |         | Percentage |  | Distribution Amount
|Offering proceeds                                         |  | $                   | -       |            |  | $                  
|Borrowings                                                |  |                     | -       |            |  |                    
|Net investment income (prior to expense reimbursement)(1) |  |                     | -       |            |  |                    
|Short-term capital gains proceeds from the sale of assets |  |                     | 28,982  |            |  |                    
|Long-term capital gains proceeds from the sale of assets  |  |                     | 92,622  |            |  |                    
|Distributions from common equity (return of capital)      |  |                     | 494,910 |            |  |                    
|Expense reimbursement from sponsor                        |  |                     | -       |            |  |                    
|Total                                                     |  | $                   | 616,514 |            |  |                    




















|(1) | During the year ended December 31, 2018, 97.1% of the Company’s gross investment income was attributable to cash income earned, and 2.9% was attributable to non-cash accretion of discount.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The Company’s net investment income
(loss) on a tax basis for the years ended December 31, 2018, 2017 and 2016 was $(341,574), ($192,563), and $335,572, respectively.
As of December 31, 2018, 2017 and 2016, the Company had $(2,929,973), $(611,736) and $30,450, respectively, of undistributed (overdistributed)
net investment income and realized gains on a tax basis.



The primary difference between the Company’s
GAAP-basis net investment income and its tax-basis net investment income (loss) is due to the reversal of the required accrual
for GAAP purposes of incentive fees on unrealized gains even though no such incentive fees on unrealized gains are payable by the
Company for the years ended December 31, 2018, 2017 and 2016.



The following table sets forth reconciliation
between GAAP basis net investment income and tax basis net investment income (loss) for the years ended December 31, 2018, 2017
and 2016:





|                                                          |  | Year
    Ended December 31,
|--------------------------------------------------------- |  | ---------------------------
|                                                          |  | 2018                       
|GAAP basis net investment income
    (loss)               |  | $                          
|Reversal of incentive fee accrual on unrealized
    gains |  |                            
|Other book-tax differences                                |  |                            
|Tax-basis net investment
    income (loss)                |  | $                          





The determination of the tax attributes
of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s
taxable income for the full year and distributions paid for the full year. The actual tax characteristics of distributions to stockholders
are reported to stockholders annually on Form 1099-DIV.



As of December 31, 2018, 2017 and 2016,
the components of accumulated earnings on a tax basis were as follows:





|                                                                                      |  | Year
    Ended December 31,
|------------------------------------------------------------------------------------- |  | ---------------------------
|                                                                                      |  | 2018                       
|Distributable realized gains (long-term
    capital gains)                            |  | $                          
|Distributable ordinary income (loss) (income
    and short-term capital gains (loss)) |  |                            
|Net unrealized appreciation
    (depreciation) on investments                         |  |                            
|Total                                                                                 |  | $                          







101







The aggregate cost of the Company’s
investments for U.S. federal income tax purposes totaled $13,173,585, $13,550,047, and $10,597,454 for the years ended December
31, 2018, 2017 and 2016, respectively. The aggregate net unrealized appreciation (depreciation) on investments on a tax basis was
$(624,348), $(1,514,510), and $1,666 as of December 31, 2018, 2017 and 2016, respectively.



NOTE 6 – INVESTMENT PORTFOLIO



The following table summarizes the composition
of the Company’s investment portfolio at amortized cost and fair value as of December 31, 2018, 2017 and 2016:





|                                     |  |                                       |            |  |                               |   |            |                                              |  |  |                                       |   |  |                               |            |  |                                              |   |            |                                       | 
|------------------------------------ |  | ------------------------------------- | ---------- |  | ----------------------------- | - | ---------- | -------------------------------------------- |  |  | ------------------------------------- | - |  | ----------------------------- | ---------- |  | -------------------------------------------- | - | ---------- | ------------------------------------- | 
|                                     |  | December
    31, 2018                 |            |  | December
    31, 2017         |   |            | December
    31, 2016                        | 
|                                     |  | Investments
    at Amortized 
Cost(1) |            |  | Investments
    at Fair Value |   |            | Fair
    Value Percentage of Total Portfolio |  |  | Investments
    at Amortized 
Cost(1) |   |  | Investments
    at Fair Value |            |  | Fair
    Value Percentage of Total Portfolio |   |            | Investments
    at Amortized 
Cost(1) | 
|Senior
    Secured Loans—First Lien  |  | $                                     | 7,371,419  |  |                               | $ | 7,050,980  |                                              |  |  | 60                                    | % |  | $                             | 7,714,423  |  |                                              | $ | 7,690,952  |                                       | 
|Senior
    Secured Loans—Second Lien |  |                                       | 4,635,777  |  |                               |   | 4,336,218  |                                              |  |  | 36                                    | % |  |                               | 3,919,236  |  |                                              |   | 3,806,683  |                                       | 
|Subordinated
    Debt                |  |                                       | 0          |  |                               |   | -          |                                              |  |  | 0                                     | % |  |                               | 666,389    |  |                                              |   | -          |                                       | 
|Equity/Other                         |  |                                       | 500,000    |  |                               |   | 495,651    |                                              |  |  | 4                                     | % |  |                               | 1,250,000  |  |                                              |   | 537,903    |                                       | 
|Total                                |  | $                                     | 12,507,196 |  |                               | $ | 11,882,849 |                                              |  |  | 100                                   | % |  | $                             | 13,550,048 |  |                                              | $ | 12,035,538 |                                       | 







|(1) | Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------



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 December
31, 2018, 2017 and 2016:





|                                             |  | December
    31, 2018 |            |  | December
    31, 2017 |  |       | December
    31, 2016 | 
|-------------------------------------------- |  | --------------------- | ---------- |  | --------------------- |  | ----- | --------------------- | 
|                                             |  | Fair                  |            |  | Percentage of         |  |       | Fair                  | 
|Industry
    Classification                  |  | Value                 |            |  | Portfolio             |  |       | Value                 | 
|Automotive
    Repair, Services, and Parking |  | $                     | -          |  |                       |  | 0.0   | %                     | 
|Beverage,
    Food & Tobacco                 |  |                       | 1,678,908  |  |                       |  | 14.1  | %                     | 
|Business
    Services                        |  |                       | 3,079,325  |  |                       |  | 25.9  | %                     | 
|Construction
    & Building                  |  |                       | 417,375    |  |                       |  | 3.5   | %                     | 
|Consumer
    Services                        |  |                       | 1,284,399  |  |                       |  | 10.8  | %                     | 
|Energy:
    Oil & Gas                        |  |                       | 792,894    |  |                       |  | 6.7   | %                     | 
|Environmental                                |  |                       | 490,000    |  |                       |  | 4.1   | %                     | 
|Healthcare
    & Pharmaceuticals             |  |                       | 1,461,343  |  |                       |  | 12.2  | %                     | 
|High
    Tech Industries                     |  |                       | 751,045    |  |                       |  | 6.3   | %                     | 
|Hotel,
    Gaming & Leisure                  |  |                       | 494,806    |  |                       |  | 4.2   | %                     | 
|Media:
    Diversified and Production        |  |                       | 293,255    |  |                       |  | 2.5   | %                     | 
|Metals
    & Mining                          |  |                       | 495,625    |  |                       |  | 4.2   | %                     | 
|Paper
    and Allied Products                |  |                       | -          |  |                       |  | 0.0   | %                     | 
|Retail                                       |  |                       | -          |  |                       |  | 0.0   | %                     | 
|Specialty
    Finance                        |  |                       | -          |  |                       |  | 0.0   | %                     | 
|Telecommunications                           |  |                       | 459,394    |  |                       |  | 3.9   | %                     | 
|Wholesale
    Trade-Nondurable Goods         |  |                       | 184,480    |  |                       |  | 1.6   | %                     | 
|Total                                        |  | $                     | 11,882,849 |  |                       |  | 100.0 | %                     | 





One second lien senior secured loan, FullBeauty,
Was on non-accrual status as of December 31, 2018. On February 2, 2019, Fullbeauty Brands Holding was restructured and second lien
holders received a pro rata share of a new junior loan and 10% of the new common stock.



On June 30, 2017, the Company made the
decision to write down the carrying value of its investment value in Javlin Financial. The decision was due to performance issues
within Javlin Financial’s core business and a breakdown in restructuring negotiations between the Company, its lenders, and
Javlin Financial’s controlling shareholder. The full realized loss for the investments in Javlin was recognized in the fourth
quarter of 2018.





102







NOTE 7 – FAIR VALUE OF FINANCIAL
INSTRUMENTS



Under existing accounting guidance, fair
value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly
transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes
that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer
broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk.
Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use
in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable
inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on
the best information available in the circumstances.



The Company classifies the inputs used
to measure these fair values into the following hierarchy as defined by current accounting guidance:



Level 1: Inputs
that are quoted prices (unadjusted) in active markets for identical assets or liabilities.



Level 2: Inputs
that are quoted prices for similar assets or liabilities in active markets.



Level 3: Inputs
that are unobservable for an asset or liability.



A financial instrument’s categorization
within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.



As of December 31, 2018, 2017 and 2016,
the Company’s investments were categorized as follows in the fair value hierarchy:



|                                                |  |                       |            |  |                       |   |            |                       | 
|----------------------------------------------- |  | --------------------- | ---------- |  | --------------------- | - | ---------- | --------------------- | 
|Valuation
    Inputs                            |  | December
    31, 2018 |            |  | December
    31, 2017 |   |            | December
    31, 2016 | 
|Level
    1—Price quotations in active markets  |  | $                     | -          |  |                       | $ | -          |                       | 
|Level
    2—Significant other observable inputs |  |                       | -          |  |                       |   | -          |                       | 
|Level
    3—Significant unobservable inputs     |  |                       | 11,882,849 |  |                       |   | 12,035,538 |                       | 
|Total                                           |  | $                     | 11,882,849 |  |                       | $ | 12,035,538 |                       | 





The Company’s investments as of December
31, 2018 consisted of debt securities that are traded on a private over-the-counter market for institutional investors, a subordinated
convertible note and two equity investments. The Company valued its debt investments 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 independent third-party pricing services
and screened for validity by such services. The determination of fair market value for the equity positions were determined by
considering, among other factors, various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization,
or EBITDA, cash flows, net income, revenues, market comparables, book value multiples, economic profits and portfolio multiples.



The Company may periodically benchmark
the bid and ask prices it receives from the third-party pricing services against the actual prices at which the Company purchases
and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management
in purchasing and selling these investments, the Company believes that these prices are reliable indicators of fair value. However,
because of the private nature of this marketplace (meaning actual transactions are not publicly reported), the Company believes
that these valuation inputs are classified as Level 3 within the fair value hierarchy. The Company’s board of directors reviewed
and approved the valuation determinations made with respect to these investments in a manner consistent with the Company’s
valuation process.



The significant unobservable inputs used
in the market approach of fair value measurement of our investments are the market multiples of EBITDA of comparable companies.
The Company selects a population of companies for each investment with similar operations and attributes of the portfolio company.
Using these guideline companies’ data, a range of multiples of enterprise value to EBITDA is calculated. The Company selects
percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based
on said multiple and generally the latest twelve months’ EBITDA of the portfolio company. Significant increases or decreases
in enterprise value may result in increases or decreases in the fair value estimate of the equity investment.





103







The following is a reconciliation for the
year ended December 31, 2018 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:





|                                                                                                                                                                                                       |  | For the year ended December 31, 2018 |           
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------ | ----------
|                                                                                                                                                                                                       |  | Senior Secured
Loans - First Lien    |           
|Fair value at beginning of period                                                                                                                                                                      |  | $                                    | 7,690,952 
|Accretion of discount (amortization of premium)                                                                                                                                                        |  |                                      | 24,393    
|Net realized gain (loss)                                                                                                                                                                               |  |                                      | 39,291    
|Net change in unrealized appreciation (depreciation)                                                                                                                                                   |  |                                      | (296,968  
|Purchases                                                                                                                                                                                              |  |                                      | 2,943,750 
|Paid-in-kind interest                                                                                                                                                                                  |  |                                      | -         
|Sales and redemptions                                                                                                                                                                                  |  |                                      | (3,350,436
|Net transfers in or out of Level 3                                                                                                                                                                     |  |                                      | -         
|Fair value at end of period                                                                                                                                                                            |  | $                                    | 7,050,982 
|                                                                                                                                                                                                       |  |                                      |           
|The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date |  | $                                    | (296,968  





The following is a reconciliation for the
year ended December 31, 2017 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:





|                                                                                                                                                                                                               |  | For the year
    ended December 31, 2017 |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ----------
|                                                                                                                                                                                                               |  | Senior 
    Secured
Loans - First Lien   |           
|Fair value
    at beginning of period                                                                                                                                                                          |  | $                                        | 6,761,313 
|Accretion
    of discount (amortization of premium)                                                                                                                                                            |  |                                          | 21,761    
|Net
    realized gain (loss)                                                                                                                                                                                   |  |                                          | 50,321    
|Net
    change in unrealized appreciation (depreciation)                                                                                                                                                       |  |                                          | (104,169  
|Purchases                                                                                                                                                                                                      |  |                                          | 4,392,250 
|Paid-in-kind
    interest                                                                                                                                                                                      |  |                                          | -         
|Sales
    and redemptions                                                                                                                                                                                      |  |                                          | (3,430,524
|Net
    transfers in or out of Level 3                                                                                                                                                                         |  |                                          | -         
|Fair value at end of
    period                                                                                                                                                                                |  | $                                        | 7,690,952 
|                                                                                                                                                                                                               |  |                                          |           
|The amount of total
    gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses
    relating to investments still held at the reporting date |  | $                                        | (104,169  





The following is a reconciliation for the
year ended December 31, 2016 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:





|                                                                                                                                                                                                               |  | For the year
    ended December 31, 2016 |          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---------
|                                                                                                                                                                                                               |  | Senior 
    Secured
Loans - First Lien   |          
|Fair value
    at beginning of period                                                                                                                                                                          |  | $                                        | 2,389,377
|Accretion
    of discount (amortization of premium)                                                                                                                                                            |  |                                          | 12,124   
|Net
    realized gain (loss)                                                                                                                                                                                   |  |                                          | 19,433   
|Net
    change in unrealized appreciation (depreciation)                                                                                                                                                       |  |                                          | 117,410  
|Purchases                                                                                                                                                                                                      |  |                                          | 5,083,375
|Paid-in-kind
    interest                                                                                                                                                                                      |  |                                          | -        
|Sales
    and redemptions                                                                                                                                                                                      |  |                                          | (860,406 
|Net
    transfers in or out of Level 3                                                                                                                                                                         |  |                                          | -        
|Fair value at end of
    period                                                                                                                                                                                |  | $                                        | 6,761,313
|                                                                                                                                                                                                               |  |                                          |          
|The amount of total
    gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses
    relating to investments still held at the reporting date |  | $                                        | 117,410  





The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of assets as of December 31, 2018 were as follows:





104









|Asset Category                  |  | Fair Value |            | Primary Valuation Technique |                    | Unobservable Inputs      |                          | Range         |                | Weighted Average
|------------------------------- |  | ---------- | ---------- | --------------------------- | ------------------ | ------------------------ | ------------------------ | ------------- | -------------- | ----------------
|Senior Secured First Lien Debt  |  |            | 7,050,980  |                             | Market quotes      |                          | Indicative dealer quotes |               | 49.00 - 100.50 |                 
|Senior Secured Second Lien Debt |  | 4,336,218  |            | Market quotes               |                    | Indicative dealer quotes |                          | 3.00 - 100.17 |                | 96.81           
|Equity/Other                    |  |            | 495,651    |                             | Market comparables |                          | EBITDA multiples (x)     |               | 6.50x - 8.50x  |                 
|Total                           |  | $          | 11,882,849 |                             |                    |                          |                          |               |                |                 





The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of assets as of December 31, 2017 were as follows:





|Asset
    Category                 |  | Fair
    Value |            | Primary
    Valuation Technique |                    | Unobservable
    Inputs      |                              | Range          |                    | Weighted
    Average
|---------------------------------- |  | -------------- | ---------- | ------------------------------- | ------------------ | ---------------------------- | ---------------------------- | -------------- | ------------------ | --------------------
|Senior
    Secured First Lien Debt |  |                | 7,690,952  |                                 | Market
    quotes  |                              | Indicative
    dealer quotes |                | 78.05
    - 102.00 |                     
|Senior Secured Second Lien Debt    |  | 3,806,683      |            | Market quotes                   |                    | Indicative dealer
    quotes |                              | 26.67 - 103.00 |                    | 98.55               
|Subordinated Debt                  |  |                | -          |                                 | Market comparables |                              | Book value multiples (x)     |                | N/A                |                     
|Equity/Other                       |  |                | -          |                                 | Market comparables |                              | Book value multiples (x)     |                | N/A                |                     
|Equity/Other                       |  |                | 537,903    |                                 | Market comparables |                              | EBITDA multiples
    (x)     |                | 7.15x - 9.15x      |                     
|Total                              |  | $              | 12,035,538 |                                 |                    |                              |                              |                |                    |                     





The valuation techniques and significant
unobservable inputs used in recurring Level 3 fair value measurements of assets as of December 31, 2016 were as follows:





|Asset
    Category                 |  | Fair
    Value |            | Primary
    Valuation Technique |                        | Unobservable
    Inputs      |                                    | Range          |                                 | Weighted
    Average
|---------------------------------- |  | -------------- | ---------- | ------------------------------- | ---------------------- | ---------------------------- | ---------------------------------- | -------------- | ------------------------------- | --------------------
|Senior
    Secured First Lien Debt |  | $              | 6,761,313  |                                 | Market
    quotes      |                              | Indicative
    dealer quotes       |                | 79.50
    - 102.00              |                     
|Senior Secured Second Lien Debt    |  | 1,967,658      |            | Market quotes                   |                        | Indicative dealer
    quotes |                                    | 58.00 - 102.19 |                                 | 94.31               
|Subordinated Debt                  |  |                | 646,901    |                                 | Distribution cash flow |                              | Discount rate/
    income multiple |                | 14.6% - 17.4%/ 2.4x
    - 34.0x |                     
|Equity/Other                       |  |                | 537,229    |                                 | Distribution cash flow |                              | Discount rate/
    income multiple |                | 14.6% - 17.4%/ 2.4x
    - 34.0x |                     
|Equity/Other                       |  |                | 691,072    |                                 | Market comparables     |                              | EBITDA multiples
    (x)           |                | 7.15x - 9.15x                   |                     
|Total                              |  | $              | 10,604,173 |                                 |                        |                              |                                    |                |                                 |                     





NOTE 8 – FINANCIAL HIGHLIGHTS



The following is a schedule of financial
highlights of the Company for the years ended December 31, 2018, 2017 and 2016:





105









|                                                                                |  | Year Ended December 31, 2018 |            |   | Year Ended December 31, 2017 |   |            | Year Ended December 31, 2016 | 
|------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---------------------------- | - | ---------- | ---------------------------- | 
|Per Share Data:                                                                 |  |                              |            |   |                              |   |            |                              | 
|Net asset value, beginning of period                                            |  | $                            | 11.89      |   |                              | $ | 13.55      |                              | 
|Results of operations(1)                                                        |  |                              |            |   |                              |   |            |                              | 
|Net investment income (loss)                                                    |  |                              | (0.22      | ) |                              |   | (0.16      | )                            | 
|Net realized and unrealized appreciation (depreciation) on investments(2)       |  |                              | (0.30      | ) |                              |   | (1.12      | )                            | 
|Net increase (decrease) in net assets resulting from operations                 |  |                              | (0.52      | ) |                              |   | (1.28      | )                            | 
|Stockholder distributions(3)                                                    |  |                              |            |   |                              |   |            |                              | 
|Distributions from net investment income                                        |  |                              | (0.32      | ) |                              |   | (0.41      | )                            | 
|Distributions from net realized gain on investments                             |  |                              | (0.08      | ) |                              |   | (0.04      | )                            | 
|Net decrease in net assets resulting from stockholder distributions             |  |                              | (0.40      | ) |                              |   | (0.45      | )                            | 
|Capital share transactions                                                      |  |                              |            |   |                              |   |            |                              | 
|Issuance of common stock(4)                                                     |  |                              | 0.02       |   |                              |   | 0.07       |                              | 
|Offering costs(1)                                                               |  |                              | -          |   |                              |   | -          |                              | 
|Net increase (decrease) in net assets resulting from capital share transactions |  |                              | 0.02       |   |                              |   | 0.07       |                              | 
|Net asset value, end of period                                                  |  | $                            | 10.99      |   |                              | $ | 11.89      |                              | 
|Shares outstanding, end of period                                               |  |                              | 1,598,578  |   |                              |   | 1,417,233  |                              | 
|Total return(5)                                                                 |  |                              | -4.2       | % |                              |   | -8.9       | %                            | 
|Ratio/Supplemental Data:                                                        |  |                              |            |   |                              |   |            |                              | 
|Net assets, end of period                                                       |  | $                            | 17,570,921 |   |                              | $ | 16,849,237 |                              | 
|Ratio of net investment income to average net assets                            |  |                              | -2.0       | % |                              |   | -1.3       | %                            | 
|Ratio of total operating expenses to average net assets                         |  |                              | 8.8        | % |                              |   | 7.3        | %                            | 
|Ratio of expenses reimbursed by sponsor to average net assets                   |  |                              | 0.0        | % |                              |   | 0.5        | %                            | 
|Ratio of expense recoupment payable to sponsor to average net assets            |  |                              | 0.0        | % |                              |   | 0.0        | %                            | 
|Ratio of capital gain incentive fee to average net assets                       |  |                              | 0.0        | % |                              |   | 0.0        | %                            | 
|Ratio of net operating expenses to average net assets                           |  |                              | 8.8        | % |                              |   | 6.7        | %                            | 
|Portfolio turnover(6)                                                           |  |                              | 24.1       | % |                              |   | 28.6       | %                            | 





|(1) | The per share data was derived by using the weighted average shares outstanding for the years ended December 31, 2018, 2017 and 2016.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(2) | The amount shown for a share outstanding throughout the year may not agree with the change in the aggregate gains and losses in portfolio securities for the year because of the timing of sales of the Company’s shares in relation to fluctuating market values for the portfolio.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.                                                                                                                                                       

|(4) | The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock in the Company’s continuous public offering and pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater than the net asset value per share results in an increase in net asset value per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | The total return for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share which were declared during the applicable calendar year and dividing the total by the net asset value per share at the beginning of the applicable year. The total return does not consider the effect of the sales load from the sale of the Company’s common stock. The total return includes the effect of the issuance of shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. The historical calculation of total return in the table should not be considered a representation of the Company’s future total return, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rate payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and are calculated in accordance with GAAP. These return figures do not represent an actual return to stockholders.
|(6) | Portfolio turnover for the nine months ended September 30, 2018 is not annualized.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

NOTE 9 – 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 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 these legal proceedings cannot





106







be predicted with certainty, the Company does not expect that any such proceedings will have
a material effect upon its financial condition or results of operations.



NOTE 10 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



The following are the quarterly results
of operations for the years ended December 31, 2018 and 2017. The following information reflects all normal recurring adjustments
necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily
indicative of results for any future period.





107









|                                                                                    |  | Quarter Ended |           
|----------------------------------------------------------------------------------- |  | ------------- | ----------
|                                                                                    |  | December 31,  |           
|                                                                                    |  | 2018          |           
|Investment income                                                                   |  | $             | 307,853   
|Operating expenses                                                                  |  |               |           
|Total operating expenses                                                            |  |               | 367,851   
|Net investment income (loss)                                                        |  |               | (59,998   
|Realized gain on investments                                                        |  |               | (1,393,109
|Net increase (decrease) in unrealized appreciation on investments                   |  |               | 976,609   
|Net increase (decrease) in net assets resulting from operations                     |  | $             | (476,498  
|Per share information-basic and diluted                                             |  |               |           
|Net investment income (loss) - Basic and diluted                                    |  | $             | (0.04     
|Net increase (decrease) in net assets resulting from operations - Basic and diluted |  | $             | (0.30     
|Weighted average shares outstanding - Basic and diluted                             |  |               | 1,584,482 







|                                                                                        |  | Quarter
    Ended |          
|--------------------------------------------------------------------------------------- |  | ----------------- | ---------
|                                                                                        |  | December 31,      |          
|                                                                                        |  | 2017              |          
|Investment
    income                                                                   |  | $                 | 220,782  
|Operating
    expenses                                                                  |  |                   |          
|Total operating expenses                                                                |  |                   | 335,898  
|Expense reimbursement
    from sponsor                                                  |  |                   | -        
|Net
    operating expenses                                                              |  |                   | 335,898  
|Net
    investment income (loss)                                                        |  |                   | (115,116 
|Realized gain on investments                                                            |  |                   | 302      
|Net increase (decrease)
    in unrealized appreciation on investments                   |  |                   | (66,150  
|Net
    increase (decrease) in net assets resulting from operations                     |  | $                 | (180,964 
|Per
    share information-basic and diluted                                             |  |                   |          
|Net investment income
    (loss) - Basic and diluted                                    |  | $                 | (0.08    
|Net increase (decrease)
    in net assets resulting from operations - Basic and diluted |  | $                 | (0.13    
|Weighted average shares
    outstanding - Basic and diluted                             |  |                   | 1,375,869





The sum of quarterly per share amounts
does not necessarily equal per share amounts reported for the years ended December 31, 2018 and 2017. This is due to changes
in the number of weighted-average shares outstanding and the effects of rounding for each period.



NOTE 11 – SUBSEQUENT EVENTS



Management has evaluated all known subsequent
events through the date the accompanying financial statements were available to be issued on March 29, 2019 and notes the following:



For the period beginning January 1, 2019
and ending March 29, 2019, the Company sold 7,661.93 shares of its common stock for total gross proceeds of $97,000, and issued
amounts pursuant to its distribution reinvestment plan in the amount of $90,903.





The
Company and PWAY announced that the shareholders of each of the Company and PWAY at separate shareholder
meetings held on March 15, 2019, overwhelmingly approved, among other matters, the merger between the Company and PWAY to create
TP Flexible Income Fund, Inc. (the “Fund”). The Boards of Directors of both the Company and PWAY previously
approved the merger, including the merger agreement.



At
the Company’s shareholder meeting, 96.2% of votes cast voted in favor of the merger. At the PWAY shareholder meeting, 96.0%
of votes cast voted in favor of the merger. Each meeting was attended, either in person or by proxy, by a quorum for shareholders
of record as of February 12, 2019.



The
merger is expected to close on or about March 31, 2019.



108







|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------



Not applicable.



|Item 9A. | Controls and Procedures
|-------- | -----------------------



Evaluation of Disclosure Controls
and Procedures



We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange
Act 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 for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls
and procedures, management recognizes 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 is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.



As required by Exchange
Act Rule 13(a)-15(b), we carried out an evaluation under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls
and procedures as of December 31, 2018 to determine that our disclosure controls and procedures were (a) designed to ensure that
the information we are required to disclose in our reports under the Exchange Act is recorded, processed and reported in an accurate
manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and
communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.



Management’s Annual Report
on Internal Control Over Financial Reporting



Our management is responsible
for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rules 13a-15(f)
and 15d-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the Company’s
principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP.



Our internal control
over financial reporting includes those policies and procedures that:



1. Pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and the dispositions of assets
of the Company;



2. 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 our management and board of directors; and



3. 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.



Because of its inherent
limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial
statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.



In connection with
the preparation of our annual financial statements, management has conducted an assessment of the effectiveness of our internal
control over financial reporting based on the framework set forth





109







in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management’s assessment included
an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those
controls.



Based on this evaluation,
we have concluded that, as of December 31, 2018, our internal control over financial reporting was effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles.



Changes in Internal Control over
Financial Reporting



For the year ended
December 31, 2018, there were no changes in our internal controls over financial reporting (as defined under Rule 13a-15(f) under
the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial
reporting.



|Item 9B. | Other Information
        
        None.
|-------- | ----------------------------------------



PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------



Board of Directors and Executive Officers.



The following contains
information regarding our board and executive officers as of the date of this report.



Our board of directors
consists of five members, a majority of whom are not “interested persons” as defined in Section 2(a)(19) of the 1940
Act. We refer to these individuals as our independent directors. The Chairman of the Board is Craig Faggen, who is an interested
director. As is described below under the heading “Audit Committee”, our board has an audit committee, consisting of
our three independent directors, who will be responsible for assuring the proper valuation of our assets and the net asset value
of our shares. Our leadership structure is designed to provide that we are led by a team with the necessary management experience
to guide us, while assuring an independent check on management decisions and our financial well-being.



Directors and Executive Officers



Information regarding
our board of directors is set forth below. We have divided the directors into two groups—interested directors and independent
directors. The address for each director is c/o Triton Pacific Investment Corporation, Inc., 6701 Center Drive, Suite 1450, Los
Angeles, CA 90045.



|Name (Age)              | Position Held                         | Director Since | Expiration of Current Term | Principal Occupation Past 5 Years
|----------------------- | ------------------------------------- | -------------- | -------------------------- | ---------------------------------
|                        |                                       |                |                            |                                  
|Interested Directors    |                                       |                |                            |                                  
|Craig J. Faggen (49)    | Chairman and CEO                      | 2012           | 2019                       | Private Equity Professional      
|Ivan Faggen (79)        | Director                              | 2012           | 2019                       | Private Equity Professional      
|                        |                                       |                |                            |                                  
|Independent Directors   |                                       |                |                            |                                  
|Ronald W. Ruther (83)   | Director, Audit Comm.                 | 2012           | 2019                       | Business Adviser                 
|Marshall Goldberg (78)  | Director, Audit Comm.                 | 2012           | 2019                       | Directorships                    
|William Pruitt (79)     | Director, Audit Comm.                 | 2012           | 2019                       | Directorships                    
|                        |                                       |                |                            |                                  
|Executive Officers      |                                       |                |                            |                                  
|Michael L. Carroll (43) | Chief Financial Officer and Secretary | --             | --                         | Financial Executive              





110







Biographical Information



Interested Directors:



Craig J. Faggen:Mr. Faggen served
as our Chairman of the Board and Chief Executive Officer prior to the Merger. Mr. Faggen has over 20 years of experience developing
and implementing strategic initiatives and structuring numerous complex capital markets transactions. For the past five years,
Mr. Faggen has served as the co-founder and Chief Executive Officer of Triton Pacific, which includes TPCP, and has been actively
involved in building its private equity division. As CEO of Triton Pacific, Mr. Faggen has overall firm oversight responsibilities.
Prior to co-founding Triton Pacific, he was a founder and a partner in the boutique investment banking firm Triton Pacific Capital,
LLC. There he was instrumental in the due diligence, structuring, and closing of several billion dollars of transactions. Prior
to co-founding Triton Pacific, Mr. Faggen worked in Arthur Andersen’s Capital Markets Group, where he acted as a financial
advisor to a number of public and private companies on various transactions including IPOs, securitized debt transactions, equity
private placements, dispositions and M&A related opportunities. Mr. Faggen received a B.A. in Economics from UCLA and a Master’s
Degree from MIT. Craig Faggen sits on the board of a number of private companies, most of which are portfolio companies of investment
funds managed or sponsored by Triton Pacific Capital Partners, LLC or its affiliates. Mr. Faggen does not sit on the board of any
other public companies. Mr. Faggen is the son of one of our directors, Ivan Faggen.



Ivan Faggen:Mr. Faggen has over
45 years of experience providing strategic advice and executing capital market transactions. He co-founded, with his son Craig
Faggen, and is actively involved in the business of Triton Pacific and TPCP. For the past five years, he has served as a partner
of Triton Pacific and TPCP and has been actively involved in their management and operations. Mr. Faggen spent over 33 years at
Arthur Andersen working with small and mid-size companies on a variety of strategic, operational, and financial issues. Prior to
his departure, he was one of seven Worldwide Directors of Arthur Andersen’s Industry Group. In that position, he not only
built an advisory practice with $300 million of annual revenues, but was also instrumental in facilitating hundreds of domestic
and international transactions. He received a B.S. in Business Administration from Wayne State University and is a retired CPA.
In addition, he served as Chairman of the Counselors of Real Estate, Chairman of the Counselors of Real Estate Foundation and was
a member of the advisory board of the Carlyle Group. Ivan Faggen sits on the board of a number of private companies, most of which
are portfolio companies of investment funds managed or sponsored by Triton Pacific Capital Partners, LLC or its affiliates. Mr.
Faggen does not sit on the board of any other public companies.



Independent Directors:



Ronald W. Ruther:For the past five
years, Mr. Ruther has served as an independent business advisor to small businesses, their owners and a coach to their CEOs. During
the past 20 years, he has served on many boards of directors for privately owned companies with annual sales ranging from $10 million
to over $150 million. As a Director, Mr. Ruther has served as Chairman of Governance, Audit and Compensation Committees. Prior
to this, Mr. Ruther was with Arthur Andersen & Co. for 32 years and took early retirement in 1992. As a tax partner for over
20 years and Head of the Tax Practice in Orange County, California, Mr. Ruther specialized in business consulting, mergers and
acquisitions, executive compensation, employee benefits and family wealth planning. His clients ranged from start-ups to large
public corporations. Mr. Ruther received a B.S. in Business from Northwestern University and a J.D. from Northwestern Law School.
He is a retired CPA and an inactive member of the Illinois Bar.



111









Marshall Goldberg:For the past
five years, Mr. Goldberg has served as the chair of a charitable initiative, an endowment committee and on the boards of several
community and charitable organizations. Prior to that, Mr. Goldberg, served in various capacities in a thirty-year career with
Prudential Financial Services, Inc. As Corporate Vice President for Agent Training and Manpower Development, he was responsible
for agency training for the company’s 35,000 person field force. Mr. Goldberg participated as a lead principal in the development
and introduction of its Universal Life insurance product which soon became the dominant variable life contract in the insurance
industry. As a Regional Marketing Vice President, he headed several sales organizations staffed by thousands of agents and field
staff. As Senior Vice President of the Prudential Home Mortgage Company, he led a national sales and production organization and
served on the risk management and enterprise management committees. Mr. Goldberg received a B.S.B.A. in Economics from the University
of Florida and acquired several financial services designations.



William Pruitt:For the past five
years, Mr. Pruitt has served as the general manager of Pruitt Enterprises, LP and president of Pruitt Ventures, Inc. Previously,
Mr. Pruitt served as the managing partner for the Florida, Caribbean and Venezuela operations of the independent auditing firm
of Arthur Andersen, LLP. Mr. Pruitt has been an independent board member of multiple boards, including Swisher Hygiene, Inc., NV5,
Inc., MAKO Surgical Corp., and PBSJ Corporation. Mr. Pruitt received a B.A. in Business Administration from the University of Miami
and is a CPA (inactive).



Executive Officers (who are not directors):



Michael Carroll, Chief Financial
Officer and Secretary:Mr. Carroll served as our Chief Financial Officer and secretary since inception and thorough the Merger.
He has extensive experience in the area of financial accounting and has spent several years at Triton Pacific managing fund finances
and investor relations. Prior to joining Triton Pacific, Mr. Carroll managed the business functions and accounts of various political
organizations and worked on Capitol Hill. Prior experiences include serving as Deputy Treasurer of Virginians for Jerry Kilgore,
a Richmond-based candidate committee, where Mr. Carroll managed the committees’ campaign contributions, totaling over $22
million. Mr. Carroll received a B.S. from Virginia Commonwealth University.



Section 16(a) Beneficial Ownership Reporting Compliance



Pursuant to Section 16(a)
of the Exchange Act, the Company’s directors and executive officers, and any persons holding more than 10% of its Shares,
are required to report their beneficial ownership and any changes therein to the SEC and the Company. Specific due dates for those
reports have been established, and the Company is required to report herein any failure to file such reports by those due dates.
Based on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors
and officers, the Company believes that during the fiscal year ended December 31, 2018, all Section 16(a) filing requirements
applicable to such persons were timely filed.



Code of Business Conduct and Ethics



The Company has adopted
a code of business conduct and ethics pursuant to Rule 17j-1 under the 1940 Act, which applies to, among others, its officers,
including its Chief Executive Officer and its Chief Financial Officer, as well as the members of the Board. The Company’s
code of business conduct and ethics will be supplied free of charge to any requestor by calling the Company at (310) 943-4990.
The Company intends to disclose any amendments to or waivers of required provisions of the code of business conduct and ethics
on Form 8-K, as required by the Exchange Act and the rules and regulations promulgated thereunder.



Risk Oversight and Board Structure



Board Leadership Structure



The Company’s
business and affairs are managed under the direction of the Board. Among other things, the Board sets broad policies for the Company
and approves the appointment of the Company’s investment advisers,





112







administrator and officers. The role of the Board, and
of any individual director, is one of oversight and not of management of the Company’s day-to-day affairs.



Under the Company’s
Amended and Restated Bylaws, the Board may designate one of the Company’s directors as chair to preside over meetings of
the Board and meetings of stockholders, and to perform such other duties as may be assigned to him or her by the Board. Prior to
the Merger, Mr. Craig Faggen held the dual positions of chairman of the Board and Chief Executive Officer of the Company and
since the Merger, Mr. M. Grier Eliasek has held these positions. Both are “interested persons” by virtue of his employment
with the Adviser and the Adviser, respectively. The Company believes that it is in the best interests of the Company’s stockholders
for Mr. Faggen and Mr. Eliasek to serve as Chief Executive Officer and Chairman of the Board because of their significant
experience in matters of relevance to the Company’s business. The Board has determined that the composition of the Audit
Committee (consisting solely of Independent Directors) is an appropriate means to address any potential conflicts of interest that
may arise from the Chairman’s status as CEO and an interested person of the Company. The Company believes that the Board’s
flexibility to determine its Chairman and reorganize its leadership structure from time to time is in the best interests of the
Company and its stockholders.



Each year, the Independent
Directors will designate an Independent Director to serve as the lead Independent Director on the Board. The designation of a lead
Independent Director is for a one-year term and a lead Independent Director may be eligible for re-election at the end of that
term. If the lead Independent Director is unavailable for a meeting, his or her immediate predecessor will serve as lead Independent
Director for such meeting. The lead Independent Director will preside over meetings of the Company’s Independent Board. The
lead Independent Director will also serve as a liaison between the Company’s Independent Board and the Company’s management
on a wide variety of matters, including agenda items for the Board meetings. Designation as such does not impose on the lead Independent
Director any obligations or standards greater than or different from those of the Company’s other directors. Mr. Ruther currently
serves as the Independent Board’s lead Independent Director.



All of the Independent
Directors play an active role on the Board. The Independent Directors compose a majority of the Board and are closely involved
in all material deliberations related to the Company. The Board believes that, with these practices, each Independent Director
has an equal involvement in the actions and oversight role of the Board and equal accountability to the Company and its stockholders.
The Independent Directors are expected to meet separately (i) as part of each regular Board meeting and (ii) with the
Company’s chief compliance officer, as part of at least one Board meeting each year. The Independent Director committee may
hold additional meetings at the request of the lead Independent Director or another Independent Director.



The Board believes
that its leadership structure—a chair of the Board with the requisite experience, a lead independent director, and committees
led by independent directors—is the optimal structure for the Company at this time because it allows the Company’s
directors to exercise informed and independent judgment, and allocates areas of responsibility among committees of independent
directors and the full Board in a manner that enhances effective oversight. The Board is of the opinion that having a majority
of independent directors is appropriate and in the best interest of the Company’s stockholders, but also believes that having
two interested persons serve as directors brings both corporate and financial viewpoints that are significant elements in its decision-making
process. The Board will review its leadership structure periodically as part of its annual self-assessment process and may
make changes to it at any time, including in response to changes in the characteristics or circumstances of the Company.



Board Role in Risk Oversight



The Board oversees
the Company’s business and operations, including certain risk management functions. Risk management is a broad concept comprising
many disparate elements (for example, investment risk, issuer and counterparty risk, compliance risk, operational risk, and business
continuity risk). The Board implements its risk oversight function both as a whole and through its committees. In the course of
providing oversight, the Board and its committees receive reports on the Company’s and the Advisers’ activities, including
reports regarding the Company’s investment portfolio and financial accounting and reporting. The Board also receives a quarterly
report from the Company’s chief compliance officer, who reports on the Company’s compliance with the federal and state
securities laws and the Company’s internal compliance policies and procedures as well as those of the Advisor, the managing
dealer for the Offering (the “Managing Dealer”), the Company’s administrator and the Company’s transfer
agent. The Audit Committee’s meetings with the Company’s independent public accounting firm also



113









contribute to its
oversight of certain internal control risks. In addition, the Board meets periodically with the Adviser to receive reports regarding
the Company’s operations, including reports on certain investment and operational risks, and the Independent Directors are
encouraged to communicate directly with senior members of the Company’s management.



The Board believes
that this role in risk oversight is appropriate for the Company at this time. The Company believes that there are robust internal
processes in place and a strong internal control environment to identify and manage risks. However, not all risks that may affect
the Company can be identified or processes and controls developed to eliminate or mitigate their occurrence or effects, and some
risks are beyond the control of the Company, the Adviser and the Company’s other service providers.



Meetings of the Board of Directors



During the fiscal year
of 2018, our board of directors held four board meetings and four Audit Committee meetings. All directors attended all of the meetings
of the board of directors and of the respective committees on which they serve, other than Mr. Goldberg who missed one board meeting
and one meeting of the Audit Committee due to health reasons. We require each director to make a diligent effort to attend all
board and committee meetings as well as each annual meeting of our stockholders.



Committees of the Board of Directors



Audit Committee



Our audit committee
is composed wholly of our independent directors. The audit committee is responsible for approving our independent accountants,
reviewing with our independent accountants the plans and results of the audit engagement, approving professional services provided
by our independent accountants, reviewing the independence of our independent accountants and reviewing the adequacy of our internal
accounting controls. The audit committee is also responsible for aiding our board of directors in fair value pricing debt and equity
securities that are not publicly-traded or for which current market values are not readily available and for determining the net
asset value of our shares. The board of directors and audit committee may utilize the services of an independent valuation firm
to help them determine the fair value of these securities. Messrs. Pruitt, Goldberg and Ruther served as the members of our audit
committee during 2018, and Mr. Ruther served as the chairman. Our board of directors determined that Mr. Ruther is an “audit
committee financial expert” as defined under relevant SEC rules. Messrs. Cooper, Gremp and Stark have served as the members
of our audit committee since the Merger, and Mr. Stark is the chairman. Our board of directors has determined that Mr. Stark is
an “audit committee financial expert” as defined under relevant SEC rules.



Nominating and Corporate Governance Committee



The board of directors
has not designated a separate Nominating and Corporate Governance committee. Instead, the entire board of directors performs the
functions of the Nominating and Corporate Governance committee. The Nominating and Corporate Governance committee does not have
a written charter. The board (acting as the Nominating and Corporate Governance Committee) is responsible for selecting, researching
and nominating directors for election by our stockholders, selecting nominees to fill vacancies on the board of directors or a
committee thereof, developing and recommending a set of corporate governance principles and overseeing the evaluation of our management.



The Nominating and
Corporate Governance Committee seeks candidates who possess the background, skills and expertise to make a significant contribution
to the board of directors, the Company and its stockholders. In considering possible candidates for election as a director, the
Nominating and Corporate Governance Committee takes into account, in addition to such other factors as it deems relevant, the desirability
of selecting directors who:



| | ● | are of high character and integrity;
| | - | ------------------------------------



| | ● | are accomplished in their respective fields, with superior credentials
and recognition;
| | - | ---------------------------------------------------------------------------------------





114







| | ● | have relevant expertise and experience upon which to be able to offer
advice and guidance to management;
| | - | --------------------------------------------------------------------------------------------------------



| | ● | have sufficient time available to devote to the affairs of the Company;
| | - | -----------------------------------------------------------------------



| | ● | are able to work with the other members of the board of directors
and contribute to the success of the Company;
| | - | ---------------------------------------------------------------------------------------------------------------



| | ● | can represent the long-term interests of the Company’s stockholders
as a whole; and
| | - | -----------------------------------------------------------------------------------



| | ● | are selected such that with the other members of the board of directors
represent a range of backgrounds and experience.
| | - | ------------------------------------------------------------------------------------------------------------------------



The Nominating and Corporate Governance
Committee has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees. In determining
whether to recommend a director nominee, the Nominating and Corporate Governance Committee considers and discusses diversity, among
other factors, with a view toward the needs of the board of directors as a whole. The Nominating and Corporate Governance Committee
generally conceptualizes diversity expansively to include, without limitation, concepts such as race, gender, national origin,
differences of viewpoint, professional experience, education, skill and other qualities that contribute to the board of directors,
when identifying and recommending director nominees. The Nominating and Corporate Governance Committee believes that the inclusion
of diversity as one of many factors considered in selecting director nominees is consistent with the Nominating and Corporate Governance
Committee’s goal of creating a board of directors that best serves the needs of the Company and its stockholders.



Stockholder Recommendation of Director
Candidates to the Nominating and Corporate Governance Committee



The Nominating and
Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance
Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above,
based on whether the candidate was recommended by a stockholder or not. Stockholders who wish to recommend individuals for consideration
by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written
recommendation to our secretary at the address set forth on the cover page of this report. Recommendations for individuals to be
considered for nomination at the 2020 Annual Meeting must be received by December 31, 2019. Recommendations received after
December 31, 2019 will not be considered for nomination at the 2020 Annual Meeting. Submissions must include the full name
of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years,
complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation
that the nominating stockholder is a beneficial or record owner of our stock. Any such submission must be accompanied by the written
consent of the proposed nominee to be named as a nominee and to serve as a director if elected.



Communications Between Stockholders
and the Board



The Board welcomes
communications from the Company’s stockholders. Stockholders may send communications to the Board or to any particular director
to the following address: c/o Triton Pacific Investment Corporation, Inc., 6701 Center Drive West, Suite 1450, Los Angeles, CA
90045. Stockholders should indicate clearly the director or directors to whom the communication is being sent so that each communication
may be forwarded directly to the appropriate director(s).



Compensation of Directors



The fees payable to an Independent Director shall be determined
based on the Company’s net assets as of the end of each fiscal quarter and be paid quarterly in arrears as follows:



|Net Asset Value            |  | Annual
    Cash Retainer Fee |        |  | Board Meeting Fee |   |       | Annual
    Audit Committee 
Chairperson Fee |  |   | Annual
    Audit Committee 
Member Fee |  |  | Audit
    Committee  Meeting Fee |      
|-------------------------- |  | ---------------------------- | ------ |  | ----------------- | - | ----- | ------------------------------------------- |  | - | -------------------------------------- |  |  | -------------------------------- | -----
|$0 to $25 million          |  |                              | -      |  |                   |   | -     |                                             |  |   | -                                      |  |  |                                  | -    
|$25 million to $75 million |  | $                            | 20,000 |  |                   | $ | 1,000 |                                             |  | $ | 10,000                                 |  |  | $                                | 2,500
|over $75 million           |  | $                            | 30,000 |  |                   | $ | 1,000 |                                             |  | $ | 12,500                                 |  |  | $                                | 2,500





115







|Item 11. | Executive Compensation
|-------- | ----------------------



None of our executive
officers will receive direct compensation from us. We do not currently have any employees and do not expect to have any employees
in the foreseeable future. The services necessary for the operation of our business will be provided to us by the officers and
the employees of our Adviser and Administrator pursuant to the terms of the investment adviser agreement and the administration
agreement, respectively.



Compensation Committee



Because none of our
executive officers are compensated by the Company, the board does not maintain a separate Compensation Committee. Instead, the
entire board performs the functions of the Compensation Committee. The Compensation Committee does not have a written charter.



Compensation Committee Interlocks
and Insider Participation



During the last fiscal
year, the entire Board performed the functions of the Compensation Committee. None of our executive officers has ever served as
a director of another entity any of whose executive officers served on our Compensation Committee.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
|-------- | ----------------------------------------------------------------------------------------------



The following table
sets forth the beneficial ownership of the persons who served as the Company’s directors, executive officers during 2018,
including each person known to the Company to beneficially own 5% or more of the outstanding Shares, and all of the Company’s
executive officers and directors as a group, both prior to and following the Merger.



Beneficial ownership
is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.
There are no Shares subject to options that are currently exercisable or exercisable within 60 days of December 31, 2018.



|                                                            |  |                                                   |           |     |               | 
|----------------------------------------------------------- |  | ------------------------------------------------- | --------- | --- | ------------- | 
|                                                            |  | Shares Beneficially Owned as of December 31, 2018 |          
|Name
and Address of Beneficial Owner                        |  | Number ofShares(1)                                |           |     | Percentage(2) | 
|5% Stockholders                                             |  |                                                   |           |     |               | 
|                                                            |  |                                                   |           |     |               | 
|None                                                        |  |                                                   |           |     |               | 
|                                                            |  |                                                   |           |     |               | 
|Interested Directors:(3)                                    |  |                                                   |           |     |               | 
|Craig Faggen                                                |  |                                                   | 17,126.68 | (4) |               | 
|Ivan Faggen                                                 |  |                                                   | -         |     |               | 
|                                                            |  |                                                   |           |     |               | 
|Independent Directors:(3)                                   |  |                                                   | -         |     |               | 
|Ronald W. Ruther                                            |  |                                                   | -         |     |               | 
|Marshall Goldberg                                           |  |                                                   | -         |     |               | 
|William Pruitt                                              |  |                                                   |           |     |               | 
|                                                            |  |                                                   |           |     |               | 
|Executive
Officers(3) Michael
L. Carroll                    |  |                                                   | -         |     |               | 
|                                                            |  |                                                   |           |     |               | 
|All executive officers and directors as a group (6 persons) |  |                                                   | 17,126.68 |     |               | 





116







|(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Assumes no other purchases or sales of our common stock since the most recently available SEC filings. This assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with respect to the present intent of the beneficial owners of our common stock listed in this table.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | Based on a total of 1,598,577.90 shares of our common stock issued and outstanding as of December 31, 2018.                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Address is c/o Triton Pacific Adviser, LLC, 6701 Center Drive, Suite 1450, Los Angeles, CA 90045.                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | The Company issued 14,815 shares of its common stock to Triton Pacific Adviser in exchange for gross proceeds of $200,003 and has received 2,311.28 shares through the Dividend Reinvestment Program.                                                                                                                                                                                                                                                                                   



Set forth below is the dollar range of
equity securities beneficially owned by each of our directors as of December 31, 2018. We are not part of a “family of investment
companies,” as that term is defined in the Investment 1940 Act of 1940, as amended (the “1940 Act”).



|Name of Director      |  | Dollar Range of Equity Securities Beneficially Owned(1)(2)
|--------------------- |  | ----------------------------------------------------------
|Interested Directors  |  |                                                           
|Craig Faggen          |  | Over $100,000 (3)                                         
|Ivan Faggen           |  | None                                                      
|Independent Directors |  |                                                           
|Ronald W. Ruther      |  | None                                                      
|Marshall Goldberg     |  | None                                                      
|William Pruitt        |  | None                                                      



|(1) | The dollar ranges are: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or over $100,000.
|--- | ---------------------------------------------------------------------------------------------------



|(2) | The dollar range of equity securities beneficially owned in the Company as of December 31, 2018.  Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                    
|(3) | The value of equity securities beneficially owned in the Company as of December 31, 2018.                                                                                                          



117







| | Item 13. | Certain Relationships and Related Transactions and
Director Independence
| | -------- | ------------------------------------------------------------------------



The Company has procedures
in place for the review, approval and monitoring of transactions involving the Company and certain persons related to the Company.
For example, the Company has a code of conduct that generally prohibits any employee, officer or director from engaging in any
transaction where there is a conflict between such individual’s personal interest and the interests of the Company. Waivers
to the code of conduct for any executive officer or member of the Board must be approved by the Board and are publicly disclosed
as required by applicable law and regulations. In addition, the Audit Committee is required to review and approve all related-party
transactions (as defined in Item 404 of Regulation S-K promulgated under the Exchange Act). Prior to the occurrence of a liquidity
event, all future transactions with affiliates of the Company will be on terms no less favorable than could be obtained from an
unaffiliated third party and must be approved by a majority of the Board, including a majority of the Independent Directors.



During 2018, the Company
compensated the Adviser for investment services per an Investment Adviser Agreement (“Advisory Agreement”), approved
by the Independent Directors, calculated as the sum of (1) base management fee, calculated quarterly at 0.5% of the Company’s
average gross assets payable quarterly in arrears, and (2) an incentive fee upon capital gains determined and payable in arrears
as of the end of each quarter or upon liquidation of the Company or upon termination of Former Agreement at 20% of Company’s
realized capital gains, as defined. The Company paid the Adviser $359,120 in base management fees during the year ended December
31, 2018. In addition, during the year ended December 31, 2018, the Company did not earn any capital gains incentive fees based
on the performance of its portfolio. No capital gains incentive fees are actually payable by the Company with respect to unrealized
gains unless and until those gains are actually realized. All management fees earned by the Adviser prior to January 1, 2014 were
waived by the Adviser.



On March 27, 2014, the
Company and the Adviser agreed to an Expense Support and Conditional Reimbursement Agreement, or the Expense Reimbursement Agreement.
A discussion of the Expense Reimbursement Agreement is included in Item 7.—Management’s Discussion and Analysis
of Financial Condition and Results of Operations – Expense Reimbursement Agreement” which discussion is incorporated
herein by reference.



During the year ended
December 31, 2018, the Company compensated TFA Associates, LLC (an affiliate of the Company) for administration services per an
Administration Agreement for costs and expenses incurred with the administration and operation of the Company. Such agreement expired
upon the closing of the Merger. During the year ended December 31, 2018, the Company paid TFA Associates $318,093 in administrative
fees.



The dealer manager for
the Company’s public offering is Triton Pacific Securities, LLC, which is one of the Company’s affiliates. During the
year ended December 31, 2018, the Company paid the dealer manager $199,991 in sales commissions and dealer fees. Of this amount,
$38,416 was retained by Triton Pacific Securities, and the remainder re-allowed to third party participating broker dealers.



Section 16(a) Beneficial Ownership
Reporting Compliance



Pursuant to Section 16(a)
of the Exchange Act, the Company’s directors and executive officers, and any persons holding more than 10% of its Shares,
are required to report their beneficial ownership and any changes therein to the SEC and the Company. Specific due dates for those
reports have been established, and the Company is required to report herein any failure to file such reports by those due dates.
Based on the Company’s review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors
and officers, the Company believes that during the fiscal year ended December 31, 2018, all Section 16(a) filing requirements
applicable to such persons were timely filed.



| | Item 14. | Principal Accountant Fees and Services
| | -------- | --------------------------------------



FGMK, LLC, served as
the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. The Company
knows of no direct financial or material indirect financial interest of FGMK in the Company.





118







Fees



Set forth in the table
below are audit fees and non-audit related fees billed to the Company by FGMK for professional services performed for the Company’s
fiscal years ended December 31, 2018 and December 31, 2017:



|Fiscal Year |      |  | Audit Fees |   |         | Audit-Related Fees(1) |  |   | Tax Fees(2) |  |  | All Other Fees(3) |       
|----------- | ---- |  | ---------- | - | ------- | --------------------- |  | - | ----------- |  |  | ----------------- | ------
|            | 2018 |  |            | $ | 114,148 |                       |  | $ | 15,775      |  |  | $                 | 10,500
|            | 2017 |  |            | $ | 117,332 |                       |  | $ | 6,820       |  |  | $                 | 9,092 



|(1) | “Audit-Related Fees” are those fees billed to the Company by FGMK for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.”
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | “Tax Fees” are those fees billed to the Company by FGMK in connection with tax consulting services, including primarily the review of the Company’s income tax returns.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | “All Other Fees” are those fees billed to the Company by FGMK in connection with permitted non-audit services.
|--- | --------------------------------------------------------------------------------------------------------------



During the fiscal years
ended December 31, 2018 and December 31, 2017, no non-audit fees were paid to FGMK for services rendered to our Adviser and any
entity controlling, controlled by or under common control with our Adviser that provides ongoing services to the Company.



The Company’s
Audit Committee reviews, negotiates and approves in advance the scope of work, any related engagement letter and the fees to be
charged by the independent registered public accounting firm for audit services and permitted non-audit services for the Company
and for permitted non-audit services for the Company’s investment adviser and any affiliates thereof that provide services
to the Company if such non-audit services have a direct impact on the operations or financial reporting of the Company. All of
the audit and non-audit services described above for which FGMK billed the Company for the fiscal years ended December 31, 2018
and December 31, 2017 were pre-approved by the Audit Committee.



119







PART IV





|Item
    15. | Exhibits and Financial Statement Schedules
|------------ | ------------------------------------------





|   |  |                                                                                                       |  |     
|-- |  | ----------------------------------------------------------------------------------------------------- |  | ----
|a. |  | The following financial statements are filed
    as part of this report in Part II, Item 8:           |  |     
|   |  |                                                                                                       |  | Page
|   |  | Report of Independent Registered Public Accounting Firm                                               |  | 79  
|   |  | Consolidated Statement of Financial Position as of December 31, 2018 and 2017                         |  | 80  
|   |  | Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016            |  | 81  
|   |  | Consolidated Statements of Changes in Net Assets for the years ended December 31, 2018, 2017 and 2016 |  | 82  
|   |  | Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016            |  | 83  
|   |  | Consolidated Schedule of Investments for the years ended December 31, 2018, and 2017                  |  | 84  
|   |  | Notes to Consolidated Financial Statements                                                            |  | 87  



|b.   |  | The
    following exhibits are filed or incorporated as part of this report.                                                                                                                                                                                                             
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Fourth Articles
    of Amendment and Restatement of Triton Pacific Investment Corporation. (Incorporated by reference to the Company’s
    registration statement on Form N-2 (File No. 333-174873) filed on November 1, 2013.)                                                          
|     | 
|3.2  |  | Amended and Restated
    Bylaws of the Company. (Incorporated by reference to the Company’s registration statement on Form N-2 (File
    No. 333-174873) filed on March 15, 2013.)                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                          
|3.3  |  | Articles Supplementary
    of the Company.  (Incorporated by reference to the Company’s Pre-Effective amendment no. 1 to registration
    statement on Form N-2 (File No. 333-206730) filed on March 3, 2016.)                                                                           
|     | 
|10.1 |  | Dealer Manager Agreement
    by and between Company and Triton Pacific Securities, LLC. (Incorporated by reference to the Company’s Post-Effective
    amendment no. 3 to registration statement on Form N-2 (File No. 333-206730) filed on April 3, 2017.)                              
|     | 
|10.2 |  | Form of Participating
    Dealer Agreement and Participating Dealer Agreement. (Incorporated by reference to the Company’s Post-Effective
    amendment no. 3 to registration statement on Form N-2 (File No. 333-206730) filed on April 3, 2017.)                                       
|     | 
|10.3 |  | License Agreement
    by and between Company and Triton Pacific Group, Inc. (Incorporated by reference to Exhibit 2(K) filed with Pre-Effective
    Amendment No. 1 to the Company’s registration statement on Form N-2 (File No. 333-174873) filed on June 14, 2011.)                   
|     | 
|10.4 |  | Administration Agreement
    by and between the Company and TFA Associates, LLC. (Incorporated by reference, Exhibit 2(K), filed with Pre-Effective
    Amendment No. 4 to the Company’s registration statement on Form N-2 (File No. 333-174873) filed on August 12, 2012.)             
|     | 
|10.5 |  | Investment Advisory
    Agreement by and between Company and Triton Pacific Adviser, LLC. (Incorporated by reference to Exhibit 2(g), filed
    with Post-Effective Amendment No. 6 to the Company’s registration statement on Form N-2 (File No. 333-174873) filed
    on July 8, 2013.)
|     | 
|10.6 |  | Investment Sub-Advisory
    Agreement dated July 24, 2014 between the Company and ZAIS Group, LLC (Incorporated by reference to Exhibit 10.1 to the
    Company’s Form 8-K filed with the SEC on July 30, 2014.)                                                                         





120









|10.7  |  | Amended
    and Restated Expense Support and Conditional Reimbursement Agreement by and between the Company and Adviser (Incorporated
    by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended September 30, 2014, filed with the SEC
    on November 19, 2014.)                                                                                                                                                      
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.8  |  | Indemnification
                                         Agreement dated November 17, 2014 between the Company and Adviser (Incorporated by
                                         reference to the Company’s Form 10-Q for the quarter ended September 30, 2014,
                                         filed with the SEC on November 19, 2014.)                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.9  |  | Agreement
                                    dated December 15, 2014 between the Company and its Independent Directors ((Incorporated
                                    by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on December
                                    17, 2014.)                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.10 |  | Global
                                    Custody Agreement dated March 7, 2014 between the Company and The Bank of New York Mellon
                                    Trust Company ((Incorporated by reference to Exhibit 2(j) to the Company’s Post-Effective
                                    amendment no. 3 to registration statement on Form N-2 (File No. 333-206730) filed on
                                    April 3, 2017.)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.11 |  | Agreement and Plan
    of Merger, dated August 10, 2018, between the Registrant and Pathway Capital Opportunity Fund, Inc. (Filed as 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)                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.12 |  | Amended and Restated
    Agreement and Plan of Merger, dated February 12, 2019, between the Registrant and Pathway Capital Opportunity Fund, Inc. (Filed
    as 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).                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|14.1  |  | Amended Code of
    Ethics of the Registrant (Incorporated by reference, Exhibit 2(R), filed with Pre-Effective Amendment No. 1 to the
    Company’s registration statement on Form N-2 (File No. 333-174873) filed on August 29, 2011.)                                                                                                                                                                                                       
|      | 
|31.1  |  | Certification of Chief Executive Officer of Triton Pacific Investment Incorporation., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                      
|      | 
|31.2  |  | Certification of Chief Financial Officer of Triton Pacific Investment Corporation., Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|32.1  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  (Filed herewith.)                                                                                                                                                                                                                                                                                                     





121







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 the 29th day of March 2019.



| |                                                 |  |                                  
| | ----------------------------------------------- |  | ---------------------------------
| | TRITON PACIFIC INVESTMENT CORPORATION,
    INC.
| |                                                 | 
| | By:                                             |  | /s/
    Craig J. Faggen          
| |                                                 |  | CRAIG
    J. FAGGEN              
| |                                                 |  | Chief
    Executive Officer      
| |                                                 |  | (Principal
    Executive Officer)
| |                                                 | 
| | By:                                             |  | /s/
    Michael L. Carroll       
| |                                                 |  | MICHAEL
    L. CARROLL           
| |                                                 |  | Chief
    Financial Officer      
| |                                                 |  | (Principal
    Financial Officer)



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.





|Signature                 |  | Title                                      |  | Date              
|------------------------- |  | ------------------------------------------ |  | ------------------
|                          |  |                                            |  |                   
|/s/
    Craig J. Faggen   |  | Director and Chairman of the Board and CEO |  | March 29,
    2019
|Craig J. Faggen           |  |                                            |  |                   
|                          |  |                                            |  |                   
|/s/
    Ivan Faggen       |  | Director                                   |  | March 29,
    2019
|Ivan Faggen               |  |                                            |  |                   
|                          |  |                                            |  |                   
|/s/
    Ronald Ruther     |  | Independent Director                       |  | March 29,
    2019
|Ronald Ruther             |  |                                            |  |                   
|                          |  |                                            |  |                   
|/s/
    William Pruitt    |  | Independent Director                       |  | March 29,
    2019
|William Pruitt            |  |                                            |  |                   
|                          |  |                                            |  |                   
|/s/
    Marshall Goldberg |  | Independent Director                       |  | March 29,
    2019
|Marshall Goldberg         |  |                                            |  |                   



122