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, 2017

or



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



Commission
File Number 814-01137



StHealth
Capital Investment Corp.

(Exact
Name of Registrant as Specified in Its Charter)



|Maryland                                                                                        |  | 47-1709055                              
|----------------------------------------------------------------------------------------------- |  | ----------------------------------------
|(State
        or Other Jurisdiction of
        
        Incorporation
        or Organization) |  | (I.R.S.
    Employer Identification No.)



|680 5th Avenue New
York, NY, 21st Floor      |  | 10022     
|-------------------------------------------- |  | ----------
|(Address of Principal
    Executive Offices) |  | (Zip Code)



646-512-9054

(Issuer’s
Telephone Number, Including Area Code)



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





|Title
    of each class                         | Trading Symbol(s) | Name
    of each exchange on which registered  
|----------------------------------------------- | ----------------- | -----------------------------------------------
|Common
    Stock, par value $0.001 per share    | None              | Not
    Registered on any exchange at this time
|Preferred
    Stock, par value $0.001 per share | None              | Not
    Registered on any exchange at this time





Securities
registered under Section 12(g) of the Exchange Act: None



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 15(d) of the Exchange 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 Exchange Act
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 in response to Item 405 of Regulation S-K (§ 229.405) 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 a “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.   (Check One)





|☐ Large
    Accelerated Filer | ☐ Accelerated
    Filer    
|----------------------------- | ---------------------------
|                              |                            
|☒ Non-accelerated
    Filer   | ☐
Smaller Reporting Company



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



The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold on June 30, 2017 was $8,279,000.



Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d)
of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒



As of August 16, 2019, the Company
had 2,726,758shares of its common stock, $0.001 par value per
share, outstanding.



DOCUMENTS
INCORPORATED BY REFERENCE



None.




















STHEALTH
CAPITAL INVESTMENT CORPORATION



ANNUAL
REPORT ON FORM 10-K

FOR
THE PERIOD ENDED DECEMBER 31, 2017



TABLE
OF CONTENTS



|PART I                                                                                                                | 3 
|--------------------------------------------------------------------------------------------------------------------- | --
|ITEM 1. BUSINESS                                                                                                      | 3 
|ITEM 1A. RISK FACTORS                                                                                                 | 11
|ITEM 2. PROPERTIES                                                                                                    | 27
|ITEM 3. LEGAL PROCEEDINGS                                                                                             | 27
|ITEM 4. MINE SAFETY DISCLOSURE                                                                                        | 27
|ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUTY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 28
|ITEM 6.  SELECTED FINANCIAL DATA                                                                                      | 29
|ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                         | 30
|ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   | 31
|Item 8. Financial Statements and Supplementary Data                                                                   | 32
|ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                          | 33
|ITEM 9A. CONTROLS AND PROCEDURES                                                                                      | 33
|ITEM 9B. OTHER INFORMATION                                                                                            | 33
|ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       | 34
|ITEM 11. EXECUTIVE COMPENSATION                                                                                       | 38
|ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               | 39
|ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    | 40
|ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       | 40
|ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   | 41



2







PART
I



Safe
Harbor Statement under the Private Securities Litigation Reform Act of 1995



Information
included in this Annual Report on Form 10-K (the “Form 10-K”) contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). We claim the protection of the safe harbor contained in the
Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this Form
10-K regarding our strategy, future operations, future financial position, projected expenses, prospects and plans and objectives
of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially different from our future results, performance
or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions
and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,”
“will,” “should,” “expect,” “anticipate,” “estimate,” “believe,”
“intend,” “future,” “plan,” or “project” or the negative of these words or other
variations on these words or comparable terminology. Forward-looking statements are based on assumptions that may be incorrect,
and there can be no assurance that any projections or other expectations included in any forward-looking statements will come
to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result
of various factors, including, but not limited to, a continued decline in general economic conditions nationally and internationally;
decreased demand for our products and services; market acceptance of our products; the ability to protect our intellectual property
rights; impact of any litigation or infringement actions brought against us; competition from other providers and products; risks
in product development; inability to raise capital to fund continuing operations; changes in government regulation; the ability
to complete customer transactions and capital raising transactions, and other factors, including the risk factors described in
greater detail in Item 1A of this Form 10-K under the heading “Risk Factors.” Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from
those anticipated, believed, estimated, expected, intended or planned. Except as required by applicable laws, we undertake no
obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other
events occur in the future.



ITEM
1. BUSINESS



As
used in this Annual Report, unless the context otherwise requires, the terms “StHealth,” “we,” “us,”
and the “Company” refer to StHealth Capital Investment Corp., a Maryland corporation.



Overview



The
Company’s investment objective is to generate capital appreciation and, to a lesser extent, current income. The Company
intends to achieve its investment objective by investing directly in originated debt and equity financings, in addition to syndicated
and traded transactions. The Company intends to focus on equity investments in a broad array of private U.S. small- and middle-market
companies that meet the Company’s investment objectives, which is defined as companies with annual revenue of approximately
$10 million to $2.5 billion at the time of investment. To achieve its investment objective, the Company will leverage the Investment
Committee’s (as defined below) extensive network of relationships with other sophisticated institutions to source, evaluate
and, as appropriate, partner with on transactions. There are no assurances that the Company will achieve its investment objective.
In the event that the Company invests in public companies, it will be limited to investing in such companies with capitalization
of less than $250 million. The Company will also invest primarily in established, stable enterprises with a history of operations
and positive cash flows and maintaining rigorous portfolio monitoring in an attempt to anticipate and pre-empt negative credit
events within its portfolio.



The
Company will seek mainly equity investment opportunities within the healthcare sector, which spans biopharmaceuticals, medical
technologies, diagnostics, biotechnology and life sciences, and any other key verticals within the sector (“Healthcare”)
and related companies which are at identifiable strategic or commercial “inflection points”. The Company may, from
time to time, invest in debt related securities that it deems consistent with its overall strategy. The Company’s Investment
Committee (defined below) has developed, over a long period of time, a broad and deep network of relationships throughout the
Healthcare and hospital spaces and the investment communities with which these industries are involved. The Company is able to
leverage these relationships across these spaces and communities to identify situations in which companies with established, unique,
and highly commercializable technologies: (a) are on the verge of entering into a strategic partnership with a major company/entity
which could facilitate significant commercialization and greatly increase the company’s value; or (b) can benefit from the Adviser’s
relationships to effect a strategic partnership/relationship with a major company/entity which likely results in significantly
higher levels of commercialization and increased value. While the Company will seek to primarily invest in Healthcare companies,
the Company may also invest in other sectors and industries, depending on available investment opportunities.



From
time to time, the Company may be exposed to significant market risk. The Company’s investment portfolio may be concentrated
and subject its holders of common stock to additional risks. The Company is subject to certain investment restrictions with respect
to leverage and type of investments, as described herein.



3









As
a Business Development Company (“BDC”), at least 70% of the Company’s assets must be assets of the type listed
in Section 55(a) of the 1940 Act, as described herein.



While
the Company has limited operating history, the Company does have an existing portfolio consisting of certain loan investments.
The Company entered into these investments at the direction of the predecessor investment manager. The Adviser’s management
team, in conjunction with the Company’s audit firm, is conducting an analysis and audit of the current portfolio in order
to assess a net asset value to the portfolio. However, it is important to note that the investments in the current portfolio may
have little or no value. Moreover, while the Adviser may seek to restructure some of the current portfolio investments, there
is no guarantee that the Adviser will be successful in doing so. As a result, Shareholders may experience significant losses and
may incur additional expenses as the Company seeks to reposition its current portfolio.



The
Adviser — StHealth Capital Advisors, LLC



The Company is managed by the Adviser.
Subject to the overall supervision of the Board of Directors, the Adviser is responsible for managing the business and activities
of the Company, including sourcing investment opportunities, conducting research, performing diligence on potential investments,
structuring the Company’s investments, and monitoring the Company’s portfolio companies on an ongoing basis through
a team of investment professionals. The Adviser is StHealth Capital Advisors LLC. The Adviser’s investment committee (the
“Investment Committee”) is led by Derek Taller, and David Lessen, and is supported by certain other members
of the Adviser. The biographies and experience of the Investment Committee are can be found on our website, www.sthealth.com. The
Investment Committee has significant experience in Healthcare-related investments, in identifying investments in the U.S. small-
and middle-market companies and evaluating and managing companies with established, unique, and highly commercializable technologies.



Market
Trends



The
Company believes there are currently, and will continue to be, significant investment opportunities in equity securities of U.S.
small- and middle-market companies, particularly in the Healthcare and related companies in the United States based on a combination
of the following factors:



Limited
availability of capital for U.S. small- and middle-market companies.The Company believes that regulatory and structural
changes in the market have reduced the amount of capital available to U.S. small- and middle-market companies. In particular,
the Company believes there are currently fewer providers of capital to small- and middle-market Healthcare companies. Traditional
middle market lenders, such as commercial and regional banks and commercial finance companies, have contracted their origination
and lending activities and are focusing on more liquid asset classes, or have exited the business altogether. The Company believes
the Basel III accord, and implementing regulations by the Federal Reserve, the Office of the Comptroller of the Currency and the
Federal Deposit Insurance Corporation, will significantly increase capital and liquidity requirements for banks, decreasing their
capacity to hold non-investment grade leveraged loans on their balance sheets.





Attractive
investment dynamics.The Investment Committee has a strategic focus on the Healthcare sector and related companies and
will seek to capitalize on what it perceives to be a deep and wide market opportunity in this sector. This investment approach
will align with the Investment Committee’s extensive executive, scientific and commercial experience in the Healthcare sector,
which spans biopharmaceuticals, medical technologies, diagnostics and other key verticals within the sector.



Conservative
capital structures.Following the credit crisis, which the Company defines broadly as occurring between mid-2007 and mid-2009,
lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically
to protect lenders during economic downturns. With more conservative capital structures, U.S. small- and middle-market companies
have exhibited higher levels of cash flows available to service their debt. In addition, U.S. small- and middle-market companies
often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process
and, when applicable, restructuring process.





4







Potential
Competitive Strengths



The
Company believes that the Adviser’s experience in investing in Healthcare sector companies, coupled with a disciplined approach
to sector analysis, portfolio construction and risk management should allow the Company to achieve attractive risk-adjusted returns
while preserving the Company’s capital. The Company believes that it has the following competitive strengths, which will
give it the opportunity to achieve its objectives:



Experienced
team with expertise in the Healthcare sector.Each of the members of the Investment Committee has extensive executive,
scientific and commercial experience in the Healthcare sector, which spans biopharmaceuticals, medical technologies, and other
key verticals within the sector. The members of the Investment Committee have diverse backgrounds with investing experience through
multiple business and credit cycles. The Company believes this experience provides the Adviser with an in-depth understanding
of the strategic, financial and operational challenges and opportunities of small- and middle-market Healthcare companies and
will afford it numerous tools to manage risk while preserving the opportunity for attractive risk-adjusted returns on its investments.

Distinctive
origination platform.The Company anticipates that a substantial majority of its investments will not be intermediated
and that its origination platform provides it the ability to originate investments without the assistance of investment banks
or other traditional Wall Street sources. The Investment Committee will be responsible for originating, underwriting, executing
and managing the assets of the Company’s transactions and for sourcing and executing opportunities directly. The Investment
Committee has significant experience in building and maintaining strong relationships with private equity sponsors and companies.



The Investment
Committee also maintains direct contact with financial sponsors, banks, corporate advisory firms, industry consultants, attorneys,
investment banks, “club” investors and other potential sources of investment opportunities. The Company believes the
Adviser’s ability to source through multiple channels will allow it to generate investment opportunities that have more attractive
risk-adjusted return characteristics than by relying solely on origination flow from investment banks or other intermediaries and
to be more selective investors.



Potential
long-term investment horizon. The Company believes its potential long-term investment horizon gives it flexibility, allowing
it to maximize returns on its investments. The Company intends to invest using a long-term focus, which it believes will provide
it with the opportunity to increase total returns on invested capital, as compared to other private company investment vehicles
or investment vehicles with daily liquidity requirements (e.g. open-ended mutual funds and ETFs).



Defensive,
income-oriented investment philosophy.The Adviser will employ a defensive investment approach focused on long-term credit
performance and principal protection. This investment approach will involve a multi-stage selection process for each investment
opportunity as well as ongoing monitoring of each investment made, with particular emphasis on early detection of credit deterioration.
This strategy is designed to minimize potential losses and achieve attractive risk-adjusted returns.



Investments
in U.S. Small- and Middle-Market Healthcare Companies. The Company’s portfolio of U.S. small and middle-market investments
has a focus on companies in the Healthcare sector, as the Adviser believes there is a large and growing opportunity in this sector.
Changes in the Healthcare sector are creating certain investment opportunities, and we believe, should produce attractive investment
opportunities. The Company believes some participants are better positioned to take advantage of these changes while others will
consolidate with stronger players. Based on our deep understanding of the Healthcare sector, the Company believes these developments
will create a changing landscape for years to come.



Active
portfolio monitoring.The Adviser will closely monitor the investments in the Company’s portfolio and take a proactive
approach to identifying and addressing sector- or company-specific risks. The Adviser will aim to receive and review detailed
financial information from portfolio companies no less than quarterly and seek to maintain regular dialogue with portfolio company
management teams regarding current and forecasted performance. The Company anticipates that many of its investments will have
financial covenants that the Company believes will provide an early warning of potential problems facing its borrowers, allowing
lenders, including the Company, to identify and carefully manage risk.



Investment
Selection



The
Adviser has identified the following investment criteria and guidelines that it believes are important in evaluating prospective
portfolio companies. However, not all of these criteria and guidelines will be met in connection with each of the Company’s
investments.



Established companies with positive cash flow.The
Company seeks to invest in companies with sound historical financial performance which the Company believes tend to be well-positioned
to maintain consistent cash flow to service and repay their obligations and maintain growth in their businesses or market share.
The Adviser will typically focus on companies with a history of profitability on an operating cash flow basis. The Adviser does
not intend to invest in start-up companies that have not achieved sustainable profitability and cash flow generation or companies
with speculative business plans.



5









Strong
competitive position in industry.The Adviser will analyze the strengths and weaknesses of target companies relative to
their competitors. The factors the Adviser will consider include relative product pricing, product quality, customer loyalty,
substitution risk, switching costs, patent protection, brand positioning and capitalization. The Company seeks to invest in companies
that have developed leading positions within their respective markets, are well positioned to capitalize on growth opportunities
and operate businesses, exhibit the potential to maintain sufficient cash flows and profitability to service their obligations
in a range of economic environments or are in industries with significant barriers to entry. The Company seeks companies that
demonstrate advantages in scale, scope, customer loyalty, product pricing, or product quality versus their competitors that when
compared to their competitors, may help to protect their market position and profitability.



Experienced
management team.The Company seeks to invest in companies that have experienced management teams. The Company also seeks
to invest in companies that have proper incentives in place, including having significant equity interests, to motivate management
to act in concert with its interests as investors.



Diversified
customer and supplier base.The Company generally seeks to invest in companies that have a diversified customer and supplier
base. Companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry
consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors.



Exit
strategy.While certain debt investments may be repaid through operating cash flows of the borrower, the Company expects
that the primary means by which it exits its investments will be through methods such as strategic acquisitions by other industry
participants, an initial public offering of common stock, a recapitalization, a refinancing or another transaction in the capital
markets. In addition, in connection with the Company’s investing activities, it may make commitments with respect to an
investment in a potential portfolio company substantially in excess of its final investment. In such situations, while the Company
may initially agree to fund up to a certain dollar amount of an investment, it may syndicate a portion of such amount such that
it is left with a smaller investment than what was reflected in its original commitment.



Private
equity sponsorship.Often the Company will seek to participate in transactions sponsored by what it believes to be high-quality
private equity firms. The Company believes that a private equity sponsor’s willingness to invest significant sums of equity
capital into a company is an explicit endorsement of the quality of their investment. Further, private equity sponsors of portfolio
companies with significant investments at risk have the ability and a strong incentive to contribute additional capital in difficult
economic times should operational issues arise.



Investments
in Healthcare portfolio companies and related industries.The Company will seek to invest primarily in Healthcare portfolio
companies and related industries.



Investment
Process Overview



Origination
and sourcing.The Adviser will seek to originate transactions through multiple channels. In addition to the decade long
relationships with leading financial intermediaries including investment banks, commercial banks, private equity investors and
other financial professionals, the Adviser’s transaction team will seek to identify potential investment opportunities in
companies to directly source transaction opportunities.



The
Adviser intends to make opportunistic equity investments. Through such opportunistic equity investments, the Company intends to
identify and capitalize on market price inefficiencies by investing in equity securities where the Company believes the value
of such securities reflects a lower value than what the fundamentals of the target company represent based on the fundamental
analysis of the company and the broader investment market as a whole. The Company will seek to allocate capital to companies that
have been misunderstood or mispriced by the market, and companies that are considered to be in the “development stage”
of operation and in need of growth capital. The Company believes there is an opportunity to earn positive returns when targeting
companies that possess defensible existing business models and have attractive growth potential.



Evaluation
process.In its initial review of an investment opportunity, the Adviser transaction team examines information furnished
by the target company and external sources, including rating agencies, if applicable, to determine whether the investment meets
the team’s basic investment criteria and other guidelines specified by the Adviser, within the context of proper allocation
of its portfolio among various issuers and industries, and offers an acceptable probability of attractive returns with identifiable
downside risk.



For
the majority of securities available on the secondary market, a comprehensive analysis is conducted and continuously maintained
by a dedicated research analyst, the results of which are available for the transaction team to review. In the case of a primary
transaction, the Adviser will conduct detailed due diligence investigations as necessary.



6









Before
undertaking an investment, the transaction team will conduct a thorough due diligence review of the opportunity to ensure the
company fits the team’s investment strategy, which may include:



| | ● | full
                                         operational analysis to identify the key risks and opportunities of the target’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.
| | - | ----------------------------------------------------------------------------------------------



When
possible, the Company’s Investment Committee will seek to structure transactions in such a way that the target companies
are required to bear the costs of due diligence, including those costs related to any outside consulting work the Company may
require.



Execution.The Adviser seeks to maintain a defensive approach toward its investment decisions by emphasizing risk control in its
transaction process, which includes (i) the pre-review of each opportunity by one of its portfolio managers to assess the general
quality, value and fit relative to the Company’s portfolio and (ii) where possible, transaction structuring with a focus
on preservation of capital in varying economic environments. The consummation of a transaction will require majority approval
from the members of the Investment Committee.



Portfolio monitoring.The
Adviser will monitor the Company’s portfolio with a focus toward anticipating negative credit events. To maintain portfolio
company performance and help to ensure a successful exit, the Adviser will work closely with 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, the Company
may occupy a seat or serve as an observer on a portfolio company’s board of directors or similar governing body.

Typically,
the Adviser will receive financial reports detailing operating performance, sales volumes, margins, cash flows, financial position
and other key operating metrics on a monthly and/or quarterly basis from the portfolio companies. The Adviser will use this data,
combined with due diligence gained through contact with the company’s customers, suppliers, competitors, market research
and other methods, to conduct an ongoing, rigorous assessment of the company’s operating performance and prospects.



In
addition to various risk management and monitoring tools, the Adviser will use an investment rating system to characterize and
monitor the expected level of returns on each investment in the Company’s portfolio. The Adviser will use an investment
rating scale of 1 to 5. The following is a description of the conditions associated with each investment rating:





Investment

Rating
         Summary Description

| | 1. | Investment
    exceeding expectations and/or capital gain expected.
| | -- | -------------------------------------------------------------------



| | 2. | Performing
    investment generally executing in accordance with the portfolio company’s business plan
| | -- | ------------------------------------------------------------------------------------------------------



| | 3. | Performing
    investment requiring closer monitoring.
| | -- | ------------------------------------------------------



| | 4. | Underperforming
    investment, but still expecting a positive return on investment.
| | -- | ------------------------------------------------------------------------------------



| | 5. | Underperforming
    investment with expected loss
| | -- | -------------------------------------------------







The
Adviser will continuously monitor and, when appropriate, will change the investment ratings assigned to each investment in the
Company’s portfolio. In connection with valuing the Company’s assets, the Board of Directors will review these investment
ratings on a quarterly basis. In the event that the Board of Directors or the Investment Committee determines that an investment
is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased,
they will attempt to sell the asset in the secondary market, if applicable, or to implement a plan to attempt to exit the investment
or to correct the situation. Concurrently, the Adviser will also evaluate the opportunity to exit an investment, through a trade-sale
or other liquidity event, opportunities that are outperforming where the Adviser believes it can capitalize on a rise in the value
of the business relative to the initial forecast and realize value for the benefit of investors.



The
amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes
in the composition of the portfolio as a result of new investments, repayment and exit activities. In addition, changes in the
grade of investments may be made to reflect the Company’s expectation of performance and changes in investment values.



7









Each
quarter, the Company will value investments in the 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, the Board of Directors will determine the fair value of
such investments in good faith, utilizing the input of the Investment Committee, the Company’s valuation committee, the
Adviser and any other professionals or materials that the Board of Directors deems worthy and relevant independent third-party
pricing services and independent third-party valuation firms, if applicable.



As
a BDC, the Company must offer, and provide upon request, managerial assistance to its portfolio companies. This assistance could
involve, among other things, monitoring the operations of the 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, the Adviser will provide such managerial assistance on the Company’s behalf to
portfolio companies that request this assistance. To the extent fees are paid for these services, the Company, rather than the
Adviser, will retain any fees paid for such assistance



Exit.The Company will
attempt to invest in securities that may be sold in a privately negotiated over-the-counter market, providing the Company a means
by which it may exit the positions. It expects that a large portion of the Company’s 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, the Company intends to focus primarily in investing in companies whose business models and growth prospects offer attractive
exit possibilities, including an initial public offering of equity securities, a merger, a sale or a recapitalization, in each
case with the potential for capital gains.



Structure
of Investments



The Company’s investment objective
is to generate capital appreciation and, to a lesser extent, current income. The Company anticipates that its portfolio will be
comprised of investments primarily in common equity, equity-linked and preferred equity securities, and to a lesser extent in senior
secured loans, second lien secured loans, and subordinated debt, of private U.S. small- and middle-market companies. As a non-principal
strategy, the Company may also invest in original discount instruments.



The
Adviser seeks to tailor the Company’s investment focus as market conditions evolve. Depending on market conditions, the
Company may increase or decrease its exposure to more senior portions of the capital structure, where returns tend to be weaker
in a more stable or growing economy, but more secure in weak economic environments. Senior secured 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 second lien
secured 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.
The Company will rely on the Adviser’s experience to structure investments, possibly using all levels of the capital structure,
which the Company believes will perform in a broad range of economic environments.





Equity and equity-related
securities. The Company intends to focus on equity investments. As a result, the Company will enter into investments in
preferred or common equity or convertible bonds, sometimes in conjunction with a private equity sponsor the Company believes to
be of high quality. The Company may also invest in preferred or common equity or convertible bonds of private, closely-held companies
that the Company believes are under-valued or under-appreciated opportunities where the Adviser’s experience and the Company’s
capital can aid in enhancing enterprise value within the target investment time horizon. In addition, the Company may receive
the right to make equity investments in a portfolio company whose debt securities the Company holds in connection with the next
equity financing round for that company. This right will provide the Company with the opportunity to further enhance its returns
over time through equity investments in the portfolio companies. In addition, the Company may hold equity-related securities consisting
primarily of warrants or other equity interests. In the future, the Company may achieve liquidity through a merger or acquisition
of a portfolio company, a public offering of a portfolio company’s stock or by exercising its right, if any, to require
a portfolio company to repurchase the equity-related securities the Company holds. With respect to any preferred or common equity
investments, the Company expects to target an annual investment return of at least 20%. There can be no assurance that any preferred
or common equity or convertible bond investment that the Company makes will generate such returns.

Senior secured debt.Senior
secured debt is situated at the top of the capital structure. Because these loans have priority in payment they carry the least
risk among all investments in a firm. Generally, the Company’s senior secured loans are expected to have maturities of two
to four years, offer some form of amortization, and have first priority security interests in the assets of the borrower. Generally,
the Company expects that the interest rate on the senior secured loans typically will have variable rates ranging between 3.0%
and 7.0% over a standard benchmark, such as the prime rate or LIBOR.



Second lien secured debt.Second
lien secured debt is immediately junior to senior secured loans and have substantially the same maturities, collateral and covenant
structures as senior secured loans. Second lien secured loans, however, are granted a second priority security interest in the
assets of the borrower. In return for this junior ranking, second lien secured loans generally offer higher returns compared to
senior secured debt. These higher returns come in the form of higher interest and in some cases the potential for equity participation
through warrants, though to a lesser extent than with subordinated loans. Generally, the Company expects these loans to carry a
fixed or a floating current yield of 6.0% to 10.0% over the prime rate or LIBOR. In addition, the Company may receive additional
returns from any warrants it may receive in connection with these investments.



8









Subordinated debt.In
addition to senior secured and second lien secured loans, the Company also may invest a portion of its assets in subordinated debt.
Subordinated debt investments usually rank junior in priority of payment to senior secured debt and second lien secured debt and
are often unsecured but are situated above preferred equity and common stock in the capital structure. In return for their junior
status compared to senior secured debt and second lien secured debt, subordinated debt investments typically offer higher returns
through both higher interest rates and possible equity ownership in the form of warrants, enabling the lender to participate in
the capital appreciation of the borrower. These warrants typically require only a nominal cost to exercise. The Company intends
to generally target subordinated debt with interest-only payments throughout the life of the security, with the principal due at
maturity. Typically, subordinated debt investments have maturities of five to ten years. Generally, the Company expects these securities
to carry a fixed or a floating current yield of 6.0% to 12.0% over the prime rate or LIBOR. In addition, the Company may receive
additional returns from any warrants it may receive in connection with these investments. In some cases, a portion of the total
interest may accrue or be structured to include payment in kind, or PIK components.



Non-U.S.
securities.The Company may invest in non-U.S. securities, which may include securities
denominated in U.S. dollars or in non-U.S. currencies, to the extent permitted by the 1940 Act.



Cash
and cash equivalents. The Company may maintain a certain level of cash or equivalent instruments
to make follow-on investments if necessary, in existing portfolio companies or to take advantage of new opportunities.



Portfolio
Valuation



The Company determines the net asset
value of the investment portfolio each quarter. The Board of Directors will establish a valuation committee to assist it in establishing
guidelines and making recommendations to the Board of Directors regarding the valuation of the investments. The valuation committee
will be comprised of all of the Company’s independent directors and certain of the Adviser’s investment professionals.



Securities
that are publicly-traded will be valued at the reported closing price on the valuation date. Securities that are not publicly-traded
will be valued at fair value as determined in good faith by the Board of Directors. In connection with that determination, the
Company expects that the Adviser will provide the Board of Directors with portfolio company valuations which will be based on
relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company
financial statements and forecasts, and valuations prepared by third-party valuation services.



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



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



| | ● | preliminary
                                         valuation conclusions will then be documented and discussed with the valuation committee;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         valuation committee will review the preliminary valuation and the Adviser’s management
                                         team, together with the Company’s independent valuation firm, if applicable, will
                                         respond and supplement the preliminary valuation to reflect any comments provided by
                                         the valuation committee; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         Board of Directors will discuss valuations and determine the fair value of each investment
                                         in the portfolio in good faith based on various statistical and other factors, including
                                         the input and recommendation of the Adviser, the valuation committee and any third-party
                                         valuation firm, if applicable.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Determination
of fair value involves subjective judgments and estimates. Accordingly, the notes to the Company’s financial statements
will 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 Board of Directors may consider when valuing
the 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 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.



9









For
convertible debt securities, fair value will generally approximate the fair value of the debt plus the fair value of an option
to purchase the underlying security (the security into which the debt may convert) at the conversion price. To value such an option,
a standard option pricing model may be used.



The
equity interests in portfolio companies for which there is no liquid public market will be valued at fair value. The Board of
Directors, in its analysis of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues
or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular
circumstances of a portfolio company or actual investment position. For example, adjustments to EBITDA may take into account compensation
to previous owners or acquisition, recapitalization, restructuring or other related items.



The
Board of Directors may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity
and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining
fair value. The Board of Directors may also consider the size and scope of a portfolio company and its specific strengths and
weaknesses, as well as any other factors it deems relevant in assessing the value. Generally, the value of the equity interests
in public companies for which market quotations are readily available will be based upon the most recent closing public market
price. Portfolio securities that carry certain restrictions on sale will typically be valued at a discount from the public market
value of the security.



If
the Company receives warrants or other equity-linked securities at nominal or no additional cost in connection with an investment
in a debt security, the Board of Directors will allocate the cost basis in the investment between the debt securities and any
such warrants or other equity-linked securities received at the time of origination. The Board of Directors will subsequently
value these warrants or other equity-linked securities received at fair value.



The
fair values of the investments will be determined in good faith by the Board of Directors in consultation with management. The
Board of Directors will be solely responsible for the valuation of the portfolio investments at fair value as determined in good
faith pursuant to the Company’s valuation policy and consistently applied valuation process. The Company intends to value
all of the Level 2 and Level 3 assets by using the midpoint of the prevailing bid and ask prices from dealers on the date of the
relevant period end provided by independent third-party pricing services and screened for validity by such services. For investments
for which the third-party pricing service is unable to obtain quoted prices, the Company intends to obtain bid and ask prices
directly from dealers who make a market in such investments. To the extent that the Company holds investments for which no active
secondary market exists and, therefore, no bid and ask prices can be readily obtained, the Company’s valuation committee
intends to utilize an independent third-party valuation service to value such investments.



The
Company will periodically benchmark the bid and ask prices it receive from the third-party pricing services and/or dealers, as
applicable, and valuations received from the third-party valuation service against the actual prices at which the Company purchases
and sell the investments. The Company believes that these prices will be reliable indicators of fair value. The Company’s
valuation committee and Board of Directors will review and approve the valuation determinations made with respect to these investments
in a manner consistent with the Company’s valuation process.



10







ITEM
1A. RISK FACTORS



As
described elsewhere in this document, StHealth Capital Partners LLC recently entered into an agreement to acquire the Adviser.
As a result of the execution of this agreement, there have been significant changes affecting the Company. There can be no assurance
that the changes resulting from the acquisition by StHealth Capital Partners LLC will be beneficial to the Shareholders.



The
Adviser has no prior experience managing a BDC or a RIC.



The
Adviser and the members of the Investment Committee have no prior experience in managing a BDC or a RIC. Therefore, the Adviser
may not be able to successfully operate the Company’s business or achieve its investment objectives. As a result, an investment
in the Company’s shares of common stock may entail more risk than the shares of common stock of a comparable company with
a substantial operating history.



The
1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to other types of investment
vehicles. For example, under the 1940 Act, BDCs are required to invest at least 70% of their total assets primarily in securities
of qualifying U.S. private or thinly-traded public companies. Moreover, qualification for RIC tax treatment under Subchapter M
of the Code requires satisfaction of source-of-income, diversification and other requirements. The failure to comply with these
provisions in a timely manner could prevent the Company from qualifying as a BDC or a RIC or could force it to pay unexpected
taxes and penalties, which could be material. The Adviser’s lack of experience in managing a portfolio of assets under such
constraints may hinder its ability to take advantage of attractive investment opportunities and, as a result, achieve the Company’s
investment objectives.



The
Company’s shares will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever.
Therefore, if Shareholders purchase shares in this offering, it is unlikely that they will be able to sell them and, if they are
able to do so, it is unlikely that they will receive a full return of their invested capital.



The
Company’s shares are illiquid assets for which there is not a secondary market and it is not expected that any will develop
in the foreseeable future. There can be no assurance that the Company will complete a liquidity event. Even if it does complete
a liquidity event, Shareholders may not receive a return of all of their invested capital. In addition, any shares repurchased
pursuant to the Company’s share repurchase program may be purchased at a price which may reflect a discount from the purchase
price Shareholders paid for the shares being repurchased. If the Company’s shares are listed, it cannot assure Shareholders
that a public trading market will develop.



The
Company is not obligated to complete a liquidity event by a specified date; therefore, it will be difficult for an investor to
sell his or her shares.



There
can be no assurance that the Company will complete a liquidity event by a specified date or at all.



The
net asset value of the Company’s common stock may fluctuate significantly.



The
net asset value of the market for shares of the Company’s common stock may be significantly affected by numerous factors,
some of which are beyond its control and may not be directly related to its operating performance. These factors include: (i)
changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; (ii) loss of RIC status (once obtained)
or BDC status; (iii) changes in earnings or variations in operating results; (iv) changes in the value of the Company’s
portfolio of investments; (v) changes in accounting guidelines governing valuation of the Company’s investments; (vi) any
shortfall in revenue or net income or any increase in losses from levels expected by investors; (vii) departure of the Company’s
investment adviser or certain of its key personnel; (viii) general economic trends and other external factors; and (ix) loss of
a major funding source.



The
Company has a limited operating history.



The
Company was formed on June 19, 2014 and did not commence operations until February 16, 2017. Notwithstanding the foregoing, following
the Acquisition and arrival of the new Investment Committee, the Company is looking to take advantage of the investment opportunities
in the Healthcare sector. There are no assurances that the new Investment Committee will be able to source attractive investment
opportunities for the Company. And as a result, the Company is subject to all of the business risks and uncertainties associated
with any new business, including the risk that it will not achieve its investment objectives and that the value of its common
stock could decline substantially.



While
the Company has limited operating history, the Company does have an existing portfolio consisting of certain loan investments.
The Company entered into these investments at the direction of the predecessor investment manager. The Adviser’s management
team, in conjunction with the Company’s audit firm, is conducting an analysis and audit of the current portfolio in order
to assess a net asset value to the portfolio. However, it is important to note that the investments in the current portfolio may
have little or no value. Moreover, while the Adviser may seek to restructure some of the current portfolio investments, there
is no guarantee that the Adviser will be successful in doing so. As a result, Shareholders may experience significant losses and
may incur additional expenses as the Company seeks to reposition its current portfolio.



11









An
investor may not have the opportunity to evaluate historical data or assess investments prior to purchasing its shares.



While
the Adviser has generally not identified, made or contracted to make all of the investments on the Company’s behalf, the
Adviser has identified Orchestra Biomed, Inc. (“Orchestra”) as an initial investment for the Company. Orchestra is
a therapeutic device company focused on the development and commercialization of high impact, data driven transformational solutions
for targeted high value unmet medical needs. Orchestra’s primary focus is on developing new therapies for cardiovascular
diseases which are the leading cause of death worldwide. Orchestra is being formed primarily through the combination of Caliber
Therapeutics, Inc. and Backbeat Medical, Inc. with the objective of creating a diversified therapeutic device company that is
able to secure financial resources broadly through the capital markets, deploy expert human resources for product development,
and optimize value realization by having flexibility to pursue strategic partnerships, including licensing and global distribution
arrangements, as well as direct commercialization or strategic asset transactions.



Aside
from the Orchestra investment, Shareholders will generally not be able to evaluate the economic merits, transaction terms or other
financial or operational data concerning future investments the Company makes using the proceeds from this offering prior to making
a decision to purchase its shares. Shareholders must rely on the Adviser to implement the Company’s investment policies,
to evaluate all of its investment opportunities and to structure the terms of the investments rather than evaluating them in advance
of purchasing shares of common stock. Because investors are not able to evaluate the Company’s investments in advance of
purchasing its shares, the public offering may entail more risk than other types of offerings. This additional risk may hinder
Shareholders’ ability to achieve their own personal investment objectives related to portfolio diversification, risk-adjusted
investment returns and other objectives.



The
Company may be unable to invest a significant portion of the net proceeds of its offering on acceptable terms in an acceptable
timeframe.



Delays
in investing the net proceeds of the offering may impair the Company’s performance. It cannot assure Shareholders that it
will be able to identify any investments that meet its investment objectives or that any investment that it makes will produce
a positive return. It may be unable to invest the net proceeds of its offering on acceptable terms within the time period that
it anticipates or at all, which could harm its financial condition and operating results.



Prior
to investing in securities of portfolio companies, the Company will invest the net proceeds of this 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 the Company expects
to achieve when its portfolio is fully invested in securities meeting its investment objectives. As a result, any distributions
that it pays while its portfolio is not fully invested in securities meeting its investment objectives may be lower than the distributions
that it may be able to pay when its portfolio is fully invested in securities meeting its investment objectives.



The
Company may pay distributions from offering proceeds, borrowings or the sale of assets to the extent its cash flows from operations,
net investment income or earnings are not sufficient to fund declared distributions.



The
Company may fund distributions from the un-invested proceeds of an offering and/or borrowings, if any, and it has not established
limits on the amount of funds it may use from net offering proceeds or borrowings to make any such distributions, if any. It may
pay distributions from the sale of assets to the extent distributions exceed its earnings or cash flows from operations. Distributions
from the proceeds of the Company’s offering or from borrowings could reduce the amount of capital it ultimately invests
in its portfolio companies.



A
Shareholder’s interest in the Company will be diluted if it issues additional shares, which could reduce the overall value
of an investment in the Company.



Investors
will not have preemptive rights to any shares the Company issues in the future. Its charter authorizes it to issue up to 550,000,000
shares of common stock. Pursuant to the charter, a majority of the Company’s entire Board of Directors may amend the charter
to increase the number of authorized shares of stock without Shareholder approval. After an investor purchases shares, the Board
of Directors may elect to sell additional shares in the future, issue equity interests in private offerings or issue share-based
awards to the Company’s independent directors or employees of the Adviser. To the extent the Company issues additional equity
interests after an investor purchases its shares, an investor’s percentage ownership interest in the Company will be diluted.
In addition, depending upon the terms and pricing of any additional offerings and the value of the Company’s investments,
an investor may also experience dilution in the book value and fair value of his or her shares.



12









Distribution
and Asset Coverage Ratio Requirements May Impact Company’s Ability to Grow.



In
order to satisfy the requirements applicable to RICs and to avoid payment of excise taxes, the Company intends to distribute to
its Shareholders substantially all of its ordinary income and capital gain net income except for certain net capital gains, which
it intends to retain and to elect to treat as deemed distributions to its Shareholders. As a BDC, the Company is generally required
to meet a coverage ratio of total assets to total senior securities, which would include all of its borrowings and any preferred
stock that it may issue in the future, of at least 200%. This requirement will limit the amount that the Company may borrow. Because
the Company will continue to need capital to grow its loan and investment portfolio, this limitation may prevent the Company from
incurring debt and require the Company to raise additional equity at a time when it may be disadvantageous to do so. While the
Company expects to be able to borrow and to issue additional debt and equity securities, there is no assurance that debt and equity
financing will be available to the Company on favorable terms or at all. In addition, as a BDC, the Company is not permitted to
issue equity securities priced below net asset value without Shareholder and independent director approval. However, if the Company
does obtain the necessary approvals to issue securities at prices below their net asset values, a Shareholder’s investment
in the Company will experience dilution as a result of such issuance. If additional funds are not available to the Company, the
Company could be forced to curtail or cease its lending and investment activities, and its net asset value could decrease.



Certain
provisions of the Company’s 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 the Company’s common stock



The
Maryland General Corporation Law, or the MGCL, and the Company’s charter and bylaws contain certain provisions that may
have the effect of discouraging, delaying or making difficult a change in control of the Company or the removal of its incumbent
directors. Under the Business Combination Act of the MGCL, certain business combinations between the Company and an “interested
shareholder” (defined generally to include any person who beneficially owns 10% or more of the voting power of the Company’s
outstanding shares) or an affiliate thereof are prohibited for five years and thereafter are subject to special shareholder voting
requirements, to the extent that such statute is not superseded by applicable requirements of the 1940 Act. However, the Board
of Directors has adopted a resolution exempting from the Business Combination Act any business combination between the Company
and any person to the extent that such business combination receives the prior approval of the Board of Directors, including a
majority of directors who are not interested persons as defined in the 1940 Act.



Under
the Control Share Acquisition Act of the MGCL, “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 directors who are employees of the corporation. The Company’s bylaws contain
a provision exempting from the Control Share Acquisition Act any and all acquisitions by any person of shares of its common stock,
but such provision may be repealed at any time (before or after a control share acquisition). However, the Company will amend
its bylaws to repeal such provision (so as to be subject to the Control Share Acquisition Act) only if the Board of Directors
determines that it would be in the Company’s best interests and if the staff of the SEC does not object to its determination
that its being subject to the Control Share Acquisition Act does not conflict with the 1940 Act. The Business Combination Act
(if the Board of Directors should repeal the resolution) and the Control Share Acquisition Act (if the Company amends its bylaws
to be subject to that Act) may discourage others from trying to acquire control of the Company and increase the difficulty of
consummating any offer. In addition, at any time that the Company has a class of equity securities registered under the Exchange
Act and it has at least three independent directors, certain provisions of the MGCL permit the Board of Directors, without Shareholder
approval and regardless of what is currently provided in the charter or bylaws, to implement certain takeover defenses, including
adopting a classified board or increasing the vote required to remove a director.



Moreover,
the Board of Directors may, without Shareholder action, authorize the issuance of shares of stock in one or more classes or series,
including preferred stock; and the Board of Directors may, without Shareholder action, amend the charter to increase the number
of shares of stock of any class or series that the Company has authority to issue.



These
provisions may inhibit a change of control in circumstances that could give the holders of the Company’s common stock the
opportunity to realize a premium over the value of such common stock.



Preferred
stock could be issued with rights and preferences that would adversely affect holders of the Company’s common stock



This
offering does not include an offering of preferred stock. However, under the terms of the Company’s articles of incorporation,
the Board of Directors is authorized to issue shares of preferred stock in one or more series without Shareholder approval, which
could potentially adversely affect the interests of existing Shareholders.



13









Risks
Related to the Company’s Investments



The
Company’s investments in prospective portfolio companies may be risky, and it could lose all or part of its investment.



The
Company’s investments in common and preferred equity, and to a lesser extent in senior secured loans, second lien secured
loans, and subordinated debt private U.S. companies, including small- and middle-market companies, may be risky and there is no
limit on the amount of any such investments in which the Company may invest.



Equity
investments. The Company expects to make investments primarily in preferred or common equity interests. In addition, when
it invests in senior secured loans, second lien secured loans or subordinated debt, it may acquire warrants to purchase equity
securities. The equity interests it receives may not appreciate in value and, in fact, may decline in value. Accordingly, the
Company may not be able to realize gains from its equity interests, and any gains that it does realize on the disposition of any
equity interests may not be sufficient to offset any other losses it experiences.



First lien
and second lien senior secured debt. There is a risk that any collateral pledged by portfolio companies in which the Company
has 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 the Company’s debt investment
is collateralized by the securities of a portfolio company’s subsidiaries, such securities may lose some or all of their
value in the event of the bankruptcy or insolvency of the portfolio company. Also, in some circumstances, the Company’s 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 loan. Loans that are under-collateralized involve a greater risk of loss. Consequently,
the fact that a loan is secured does not guarantee that the Company will receive principal and interest payments according to the
loan’s terms, or at all, or that the Company will be able to collect on the loan should it be forced to enforce its remedies.



Subordinated
debt. The Company’s subordinated debt investments will generally rank junior in priority of payment to senior loans
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 the Company’s
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 the Company and its Shareholders to non-cash income. Since the Company
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.



Non-U.S.
securities. The Company may invest in non-U.S. securities, which may include securities denominated in U.S. dollars or in
non-U.S. currencies, to the extent permitted by the 1940 Act. Because evidences of ownership of such securities usually are held
outside the United States, the Company would be subject to additional risks if it 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. Since 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.



In
addition, the Company intends to invest in securities that are rated below investment grade by rating agencies (rated lower than
“Baa3” by Moody’s Investors Service or lower than “BBB-” by Standard & Poor’s Corporation)
or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred
to as “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.



The
Company’s portfolio companies may incur debt that ranks equally with, or senior to, the Company’s investments in such
companies.



The
Company’s portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to,
the debt in which the Company invests. By their terms, such debt instruments may entitle the holders to receive payment of interest
or principal on or before the dates on which the Company is entitled to receive payments with respect to the debt instruments
in which it invests. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company,
holders of debt instruments ranking senior to the Company’s investment in that portfolio company would typically be entitled
to receive payment in full before the Company receives any proceeds. After repaying such senior creditors, such portfolio company
may not have any remaining assets to use for repaying its obligation to the Company. In the case of debt ranking equally with
debt instruments in which the Company invests, the Company would have to share on an equal basis any distributions with other
creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant
portfolio company.



14







The
Company’s portfolio companies may be highly leveraged.



Some
of the Company’s portfolio companies may be highly leveraged, which may have adverse consequences to these companies and
to the Company 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.



There
may be circumstances where the Company’s investments could be subordinated to claims of other creditors or the Company could
be subject to lender liability claims.



If
one of the Company’s portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent
to which the Company actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize
its investment and subordinate all or a portion of its claim to that of other creditors. In situations where a bankruptcy carries
a high degree of political significance, the Company’s legal rights may be subordinated to other creditors. The Company
may also be subject to lender liability claims for actions taken by the Company with respect to a borrower’s business or
in instances where it exercises control over the borrower or renders significant managerial assistance.



Prepayments
of the Company’s debt investments by its portfolio companies could adversely impact its results of operations and reduce
its return on equity.



The
Company is subject to the risk that the investments it makes in its portfolio companies may be repaid prior to maturity. When
this occurs, the Company will generally reinvest these proceeds in temporary investments, pending their future investment in new
portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and
the Company could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company
may also be at lower yields than the debt that was repaid. As a result, the Company’s results of operations could be materially
adversely affected if one or more of its portfolio companies elect to prepay amounts owed to it. Additionally, prepayments, net
of prepayment fees, could negatively impact its return on equity.



The
Company generally will not control its portfolio companies.



The
Company does not expect to control most of its portfolio companies, even though it may have board representation or board observation
rights, and its debt agreements with such portfolio companies may contain certain restrictive covenants. As a result, the Company
is subject to the risk that a portfolio company in which it invests may make business decisions with which it disagrees 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 the Company’s interests as debt investors.



Due
to the lack of liquidity for the Company’s investments in non-traded companies, it may not be able to dispose of its interests
in its portfolio companies as readily as it would like or at an appropriate valuation. As a result, a portfolio company may make
decisions that could decrease the value of the Company’s portfolio holdings.



The
Company will be exposed to risks associated with changes in interest rates.



The
Company is subject to financial market risks, including changes in interest rates. General interest rate fluctuations may have
a substantial negative impact on its investments and investment opportunities and, accordingly, have a material adverse effect
on its investment objectives and its rate of return on invested capital. In addition, an increase in interest rates would make
it more expensive to use debt for the Company’s financing needs, if any.



Interest
rates have recently been at or near historic lows. In the event of a rising interest rate environment, payments under floating
rate debt instruments would rise and there may be a significant number of issuers of such floating rate debt instruments that
would be unable or unwilling to pay such increased interest costs and may otherwise be unable to repay their loans. Investments
in floating rate debt instruments may also decline in value in response to rising interest rates if the interest rates of such
investments do not rise as much, or as quickly, as market interest rates in general. Similarly, during periods of rising interest
rates, fixed rate debt instruments may decline in value because the fixed rates of interest paid thereunder may be below market
interest rates.



Economic
recessions or downturns could impair the Company’s portfolio companies and harm its operating results.



Many
of the Company’s portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay the
Company’s debt investments during these periods. Therefore, the Company’s non-performing assets are likely to increase,
and the value of its portfolio is likely to decrease, during these periods. Adverse economic conditions may also decrease the
value of any collateral securing its first lien or second lien secured loans. A prolonged recession may further decrease the value
of such collateral and result in losses of value in its portfolio and a decrease in its revenues, net income and net asset value.
Unfavorable economic conditions also could increase its funding costs, limit its access to the capital markets or result in a
decision by lenders not to extend credit to the Company on terms it deems acceptable. These events could prevent the Company from
increasing investments and harm its operating results.



15









A
covenant breach by the Company’s portfolio companies may harm its operating results.



A
portfolio company’s failure to satisfy financial or operating covenants imposed by the Company 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 a portfolio company’s ability to meet its obligations under the debt or equity securities
that the Company holds. The Company may incur expenses to the extent necessary to seek recovery upon default or to negotiate new
terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.



Investing
in small- and middle-market companies involves a number of significant risks, any one of which could have a material adverse effect
on the Company’s operating results.



Investments
in small- and middle-market companies involve some of the same risks that apply generally to investments in larger, more established
companies. However, such investments have more pronounced risks in that they:



| | ● | may
have limited financial resources and may be unable to meet their obligations under their debt securities that the Company holds,
which may be accompanied by a deterioration in the value of any collateral pledged under such securities and a reduction in the
likelihood of the Company realizing any guarantees it may have obtained in connection with its investment;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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



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





| | ● | 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. In addition, the Company’s executive officers, directors and members
of the Adviser may, in the ordinary course of business, be named as defendants in litigation arising from the Company’s
investments in the portfolio companies; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | may
have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay
their outstanding indebtedness upon maturity.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Company may not realize gains from its equity investments.



Certain
investments that the Company may make may include warrants or other equity-linked securities. In addition, the Company may make
direct equity investments in portfolio companies. The equity interests it receives may not appreciate in value and, in fact, may
decline in value. Accordingly, the Company may not be able to realize gains from its equity interests, and any gains that it does
realize on the disposition of any equity interests may not be sufficient to offset any other losses it experiences. It also may
be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization
or public offering, which would allow the Company to sell the underlying equity interests. The Company may be unable to exercise
any put rights it acquires, which grant it the right to sell its equity securities back to the portfolio company, for the consideration
provided in its investment documents if the issuer is in financial distress.



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



The
Company intends to invest primarily in privately-held companies. Investments in private companies pose significantly greater risks
than investments in public companies. First, private companies have reduced access to the capital markets, resulting in diminished
capital resources and the ability to withstand financial distress. As a result, these companies, which may present greater credit
risk than public companies, may be unable to meet their obligations under their debt securities that the Company holds. Second,
the investments themselves often may be illiquid. The securities of many of the companies in which the Company invests will not
be publicly-traded or actively traded on the secondary market and, to the extent they are traded at all, will only trade on a
privately negotiated over-the-counter secondary market for institutional investors. In addition, such securities may be subject
to legal and other restrictions on resale. As such, the Company may have difficulty exiting an investment promptly or at a desired
price prior to maturity or outside of a normal amortization schedule. These investments may also be difficult to value because
little public information generally exists about private companies, requiring an experienced due diligence team to analyze and
value the potential portfolio company. Finally, these companies may not have third-party debt ratings or audited financial statements.
The Company must therefore rely on the ability of the Adviser to obtain adequate information through due diligence to evaluate
the creditworthiness and potential returns from investing in these companies. These companies and their financial information
will generally not be subject to the Sarbanes-Oxley Act and other rules and regulations that govern public companies. If the Company
is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and
it may lose money on its investments.



16









A
lack of liquidity in certain of the Company’s investments may adversely affect its business.



The
Company intends to invest in certain companies whose securities are not publicly-traded or actively traded on the secondary market
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 the Company’s investments may make it difficult for it to sell these investments when desired.
In addition, if it is required to liquidate all or a portion of its portfolio quickly, the Company may realize significantly less
than the value at which it had previously recorded these investments. The reduced liquidity of its investments may make it difficult
for it to dispose of them at a favorable price, and, as a result, the Company may suffer losses.



The
Company may not have the funds or ability to make initial or additional investments in its portfolio companies.



It
is possible that the Company will not be able to identify a sufficient number of attractive investment opportunities that meet
its investment criteria. In this case, it may not achieve the investment returns it would have received if it had not applied
its investment criteria to each available investment opportunity. In addition, it may not have the funds or ability to make additional
investments in its portfolio companies. There is no assurance that it 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 its part to make such an investment may have
a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for the Company to
increase its participation in a successful operation or may reduce the expected return on the investment.



The
Company’s investments may include original issue discount instruments.



To
the extent that the Company invests in original issue discount instruments, which is not contemplated as a principal part of its
investment strategy, and the accretion of original issue discount constitutes a portion of its income, it will be exposed to risks
associated with the requirement to include such non-cash income in taxable and accounting income prior to receipt of cash, including
the following:



| | ● | Original
                                         issue discount instruments may have unreliable valuations because the accruals require
                                         judgments about collectability;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | For
                                         accounting purposes, cash distributions to investors representing original issue discount
                                         income do not come from paid-in capital, although they may be paid from offering proceeds.
                                         Thus, although a distribution of original issue discount income may come from the cash
                                         invested by investors, the 1940 Act does not require that investors be given notice of
                                         this fact;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                         deferral of paid-in-kind, or PIK, interest may have a negative impact on liquidity, as
                                         it represents non-cash income that may require cash distributions to Shareholders in
                                         order to maintain the Company’s RIC election;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | PIK
                                         interest generates investment income and increases the incentive fees payable at a compounding
                                         rate. In addition, the deferral of PIK interest also reduces the loan-to-value ratio
                                         at a compounding rate; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Original
                                         issue discount may create a risk of non-refundable cash payments to the Adviser based
                                         on non-cash accruals that may never be realized.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Risks
Related to the Company’s Business and Structure



The
Board of Directors may change the Company’s operating policies and strategies without prior notice or Shareholder approval,
the effects of which may be adverse.



The
Board of Directors has the authority to modify or waive the Company’s current operating policies, investment criteria and
strategies without prior notice and without Shareholder approval. The Company cannot predict the effect any changes to its current
operating policies, investment criteria and strategies would have on its business, net asset value, operating results and the
value of its stock. However, the effects might be adverse, which could negatively impact its ability to pay Shareholders distributions
and cause Shareholders to lose all or part of their investment. Moreover, the Company will have significant flexibility in investing
the net proceeds of its public offering of common stock and may use the net proceeds from such offering in ways with which investors
may not agree or for purposes other than those contemplated in the Memorandum relating to the Company’s offering. Finally,
since the Company’s shares are not expected to be listed on a national securities exchange, Shareholders will be limited
in their ability to sell their shares in response to any changes in the Company’s investment policy, operating policies,
investment criteria or strategies.



17









The Company’s investments in the Healthcare sector are subject
to numerous risks, including competition, extensive government regulation and commercial difficulties.



The
Company’s investments in portfolio companies in the Healthcare sector, particularly in the biopharmaceuticals, and medical
technologies and facilities sub-sectors are subject to numerous risks. The successful and timely implementation of the business
model of the Company’s portfolio companies depends on their ability to adapt to changing technologies and introduce new
products. As competitors continue to introduce competitive products, the development and acquisition of innovative products and
technologies that improve efficacy, safety and cost-effectiveness are important to the success of such portfolio companies. The
success of new product offerings will depend on many factors, including the ability to properly anticipate and satisfy customer
needs, obtain regulatory approvals on a timely basis, develop and manufacture products in an economic and timely manner, obtain
or maintain advantageous positions with respect to intellectual property, and differentiate products from those of competitors.
Failure by the portfolio companies to introduce planned products or other new products or to introduce products on schedule could
have a material adverse effect on the Company’s business, financial condition and results of operations.



Further,
the development of products by biopharmaceuticals, devices, life sciences and facilities companies in the Healthcare sector requires
significant research and development, clinical trials and regulatory approvals.



Changes
in healthcare laws and other regulations applicable to some of our portfolio companies’ businesses may constrain their ability
to offer their products and services.



There
has also been an increased political and regulatory focus on healthcare laws in recent years, and new legislation could have a
material effect on the business and operations of some of the Company’s portfolio companies by increasing their compliance
and other costs of doing business, requiring significant systems enhancements, or rendering their products or services less profitable
or obsolete. In particular, the Food and Drug Administration (“FDA”), has established regulations, guidelines and
policies to govern the development and approval of pharmaceuticals and medical devices, as have foreign regulatory authorities,
which may affect some of the Company’s portfolio companies. Any change in regulatory requirements due to the adoption by
the FDA and/or foreign regulatory authorities of new legislation, regulations, or policies may require some of the portfolio companies
to amend existing clinical trial protocols or add new clinical trials to comply with these changes. Such amendments to existing
protocols and/or clinical trial applications or the need for new ones, may significantly impact the cost, timing and completion
of the clinical trials.



The
capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect
debt and equity capital markets in the United States and abroad, which may have a negative impact on the Company’s business
and operations.



From
time to time, capital markets may experience periods of disruption and instability. For example, between approximately 2008 and
2009, the global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets,
significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market
and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these
events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit
markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.
While market conditions have largely recovered from the events of that period, there have been continuing periods of volatility,
some lasting longer than others. For example, the referendum by British voters to exit the European Union in June 2016 and the
United Kingdom’s subsequent invocation of Article 50 of the Treaty on the European Union in March 2017 have led to further
disruption and instability in the global markets. Disruptions in the capital markets increased the spread between the yields realized
on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. There can be no assurance these
market conditions will not continue or worsen in the future. If similar adverse and volatile market conditions occur in the future,
the Company and other companies in the financial services sector may have to access, if available, alternative markets for debt
and equity capital in order to grow.



Equity
capital may be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions,
as a BDC, the Company is generally not able to issue additional equity at a price less than net asset value per unit or per share,
as applicable, without first obtaining approval for the issuance from its equity holders and its non-interested directors. Volatile
economic conditions may lead to strategic initiatives such as the recent increase in merger activity in the BDC space.



Volatility
and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The
reappearance of market conditions similar to those experienced from approximately 2008 through 2009 for any substantial length
of time could make it difficult to extend the maturity of or refinance the Company’s indebtedness or obtain new indebtedness
with similar terms, and any failure to do so could have a material adverse effect on the Company’s business. The debt capital
that will be available to the Company in the future, if at all, may be at a higher cost and on less favorable terms and conditions
than what the Company currently experiences. If the Company is unable to raise or refinance debt, then their equity investors
may not benefit from the potential for increased returns on equity resulting from leverage, and the Company may be limited in
its ability to fund existing portfolio companies, and the Company may be limited in its ability to make new investment commitments.



18









Significant
changes or volatility in the capital markets may also have a negative effect on the valuations of the investments. While the Company
investments are generally not publicly traded, applicable accounting standards requires it to assume as part of the valuation
process that investments are sold in a principal market to market participants (even if it plans on holding an investment through
its maturity).



Significant
changes in the capital markets may also affect the pace of the Company’s investment activity and the potential for liquidity
events involving the investments. Moreover, investments that are liquid at the time of purchase may subsequently become illiquid
due to events relating to the issuer, market events, economic conditions or investor perceptions. Thus, the illiquidity of the
investments may make it difficult for the Company to sell such investments to access capital if required, and as a result, the
Company could realize significantly less than the value at which it has recorded the investments if it were required to sell them
for liquidity purposes. In addition, a prolonged period of market illiquidity could adversely affect the Company’s portfolio
investments.



Uncertainty
about the financial stability of the United States, China and several countries in Europe could have a significant adverse effect
on the Company’s business, financial condition and results of operations.



Due
to federal budget deficit concerns, in August 2011 and then affirmed in August 2013, Standard & Poor’s Financial
Services LLC (“S&P”) downgraded the federal government’s credit rating from “AAA” to “AA+”.
Further, Moody’s Investor Services, Inc. and Fitch Ratings Inc. had warned that they may downgrade the federal government’s
credit rating. Further downgrades or warnings by S&P or other rating agencies, and the United States government’s credit
and deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the
perception of credit risk associated with the Company’s debt portfolio and its ability to access the debt markets on favorable
terms. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may
weigh heavily on the Company’s financial performance and the value of its equity.



Deterioration
in the economic conditions in the Eurozone and globally, including instability in financial markets, may pose a risk to the Company’s
business. In recent years, financial markets have been affected at times by a number of global macroeconomic and political events,
including the following: large sovereign debts and fiscal deficits of several countries in Europe and in emerging markets jurisdictions,
levels of non-performing loans on the balance sheets of European banks, the potential effect of any European country leaving the
Eurozone, the potential effect of the United Kingdom leaving the European Union, the potential effect of Scotland leaving the
United Kingdom, and market volatility and loss of investor confidence driven by political events, including the general elections
in the United Kingdom in June 2017 and in Germany in September 2017 and referenda in the United Kingdom in June 2016 and Italy
in December 2016. In addition, in the second quarter of 2015, stock prices in China experienced a significant drop, resulting
primarily from continued sell-off of shares trading in Chinese markets. In addition, in August 2015, Chinese authorities sharply
devalued China’s currency. Since then, the Chinese capital markets have continued to experience periods of instability.
Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal
bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you
that market disruptions in Europe, China or elsewhere, including the increased cost of funding for certain governments and financial
institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or, if
available, sufficient to stabilize countries and markets in Europe, China or elsewhere affected by a financial crisis. To the
extent uncertainty regarding any economic recovery in Europe, China or elsewhere negatively impacts consumer confidence and consumer
credit factors, the Company’s business, financial condition and results of operations could be significantly and adversely
affected.



These
market and economic disruptions have affected, and may in the future affect, the U.S. capital markets, which could adversely affect
the Company’s business, financial condition and results of operations.



As
a result of the 2016 U.S. election, the Republican Party currently controls both the executive and legislative branches of government,
which increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial
markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the “Dodd-Frank Act”) and the authority of the Federal Reserve and the Financial Stability Oversight Council.
These or other regulatory changes could result in greater competition from banks and other lenders with which the Company competes
for lending and other investment opportunities. The United States may also potentially withdraw from or renegotiate various trade
agreements and take other actions, such as imposing new trade tariffs, which would change current trade policies of the United
States or lead to a potential trade dispute. It is not possible to predict which, if any, of these actions will be taken or, if
taken, their effect on the financial stability of the United States. Such actions could have a material adverse effect on the
Company’s business, financial condition and results of operations.



19









The
Company’s ability to achieve its investment objectives depends on the ability of the Adviser to manage and support the Company’s
investment process. If the Adviser were to lose any members of its Investment Committee, the Company’s ability to achieve
its investment objectives could be significantly harmed.



Since
the Company has no employees, it will depend on the investment expertise, skill and network of business contacts of the Adviser.
The Adviser will evaluate, negotiate, structure, execute, monitor and service the Company’s investments. Its future success
will depend to a significant extent on the continued service and coordination of the Adviser and its senior management team. The
departure of any members of the Adviser’s senior management team could have a material adverse effect on the Company’s
ability to achieve its investment objectives.



The
Company’s ability to achieve its investment objectives will depend on the Adviser’s ability to identify, analyze,
invest in, finance and monitor companies that meet the Company’s investment criteria. The Adviser’s capabilities in
structuring the investment process, providing competent, attentive and efficient services to the Company, and facilitating access
to financing on acceptable terms depend on the employment of investment professionals in an adequate number and of adequate sophistication
to match the corresponding flow of transactions. To achieve the Company’s investment objectives, the Adviser may need to
hire, train, supervise and manage new investment professionals to participate in its investment selection and monitoring process.
The Adviser may not be able to find investment professionals in a timely manner or at all. Failure to support the Company’s
investment process could have a material adverse effect on its business, financial condition and results of operations.



Because
its business model depends to a significant extent upon relationships with private equity sponsors, investment banks and commercial
banks, the inability of the Adviser to maintain or develop these relationships, or the failure of these relationships to generate
investment opportunities, could adversely affect the Company’s business.



If
the Adviser fails to maintain its existing relationships with private equity sponsors, investment banks and commercial banks,
on which it relies to provide the Company with potential investment opportunities, or develop new relationships with other sponsors
or sources of investment opportunities, the Company may not be able to grow its investment portfolio. In addition, individuals
with whom the Adviser has relationships are not obligated to provide the Company with investment opportunities, and, therefore,
there is no assurance that such relationships will generate investment opportunities for the Company.



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



The
Company competes for investments with other BDCs and investment funds (including private equity funds, mezzanine funds and CLO
funds), as well as traditional financial services companies such as commercial banks and other sources of funding. Moreover, alternative
investment vehicles, such as hedge funds, have begun to invest in areas in which they have not traditionally invested, including
making investments in mid-sized private U.S. companies. As a result of these new entrants, competition for investment opportunities
in small- and middle-market private U.S. companies may intensify. Many of the Company’s competitors are substantially larger
and have considerably greater financial, technical and marketing resources than the Company does. For example, some competitors
may have a lower cost of capital and access to funding sources that are not available to it. In addition, some of its competitors
may have higher risk tolerances or different risk assessments than it has. These characteristics could allow its competitors to
consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than
the Company is able to do. It may lose investment opportunities if it does not match its competitors’ pricing, terms and
structure. If it is forced to match its competitors’ pricing, terms and structure, it may not be able to achieve acceptable
returns on its investments or may bear substantial risk of capital loss. A significant part of its competitive advantage stems
from the fact that the market for investments in small- and middle-market private U.S. companies is underserved by traditional
commercial banks and other financial sources. A significant increase in the number and/or the size of the Company’s competitors
in this target market could force it to accept less attractive investment terms. Furthermore, many of its competitors have greater
experience operating under, or are not subject to, the regulatory restrictions that the 1940 Act imposes on the Company as a BDC.



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



Under
the 1940 Act, the Company is required to carry its portfolio investments at market value or, if there is no readily available
market value, at fair value as determined by the Board of Directors. There will not be a public market for the securities of the
privately-held companies in which the Company intends to invest. As a result, it will value these securities quarterly at fair
value as determined in good faith by the Board of Directors.



Certain
factors that may be considered in determining the fair value of the Company’s investments include dealer quotes for securities
traded on the secondary market for institutional investors, the nature and realizable value of any collateral, the portfolio company’s
earnings 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, the Company’s determinations of fair value may differ materially from the values that would have
been used if a ready market for these non-traded securities existed. Due to this uncertainty, the Company’s fair value determinations
may cause its net asset value on a given date to materially understate or overstate the value that it may ultimately realize upon
the sale of one or more of its investments.



20









While
the Company has limited operating history, the Company does have an existing portfolio consisting of certain loan investments.
The Company entered into these investments at the direction of the predecessor investment manager. The Adviser’s management
team, in conjunction with the Company’s audit firm, is conducting an analysis and audit of the current portfolio in order
to assess a net asset value to the portfolio. However, it is important to note that the investments in the current portfolio may
have little or no value. Moreover, while the Adviser may seek to restructure some of the current portfolio investments, there
is no guarantee that the Adviser will be successful in doing so. As a result, Shareholders may experience significant losses and
may incur additional expenses as the Company seeks to reposition its current portfolio.



Declines
in market values or fair market values of the Company’s investments could result in significant net unrealized depreciation
of its portfolio, which, in turn, would reduce its net asset value.



Under
the 1940 Act, the Company is required to carry its investments at market value or, if no market value is ascertainable, at fair
value as determined in good faith by or under the direction of the Board of Directors. While most of the Company’s investments
are not publicly traded, applicable accounting standards require the Company to assume as part of its valuation process that its
investments are sold in a principal market to market participants (even if it plans on holding an investment through its maturity)
and impairments of the market values or fair market values of its investments, even if unrealized, must be reflected in its financial
statements for the applicable period as unrealized depreciation, which could result in significant reductions to the Company’s
net asset value for a given period.



There
is a risk that investors in the Company’s common stock may not receive distributions or that its distributions may not grow
over time.



The
Company cannot assure Shareholders that it will achieve investment results that will allow it to make a specified level of cash
distributions or year-to-year increases in cash distributions. All distributions will be paid at the discretion of the Board of
Directors and will depend on the Company’s earnings, its net investment income, its financial condition, maintenance of
its RIC status, compliance with applicable BDC regulations and such other factors as the Board of Directors may deem relevant
from time to time. In addition, due to the asset coverage test applicable to the Company as a BDC, it may be limited in its ability
to make distributions.



If
the Company internalizes its management functions, Shareholders’ interest in it could be diluted, and it could incur other
significant costs associated with being self-managed.



The
Board of Directors may decide in the future to internalize the Company’s management functions. If it does so, the Company
may elect to negotiate to acquire the Adviser’s assets and personnel. At this time, it cannot anticipate the form or amount
of consideration or other terms relating to any such acquisition. Such consideration could take many forms, including cash payments,
promissory notes and shares of the Company’s common stock. The payment of such consideration could result in dilution of
Shareholders’ interest and could reduce the earnings per share attributable to their investment.



In
addition, while the Company would no longer bear the costs of the various fees and expenses it expects to pay to the Adviser under
the investment advisory agreement, it would incur the compensation and benefits costs of its officers and other employees and
consultants that are being paid by the Adviser or its affiliates. In addition, it may issue equity awards to officers, employees
and consultants. These awards would decrease net income and may further dilute Shareholders’ investment in the Company.
The Company cannot reasonably estimate the amount of fees it would save or the costs it would incur if it became self-managed.
If the expenses it assumes as a result of an internalization are higher than the expenses it avoids paying to the Adviser, its
earnings per share would be lower as a result of the internalization than it otherwise would have been, potentially decreasing
the amount of funds available to distribute to Shareholders and the value of the Company’s shares. As it is currently organized,
it does not have any employees. If it elects to internalize its operations, it would employ personnel and would be subject to
potential liabilities commonly faced by employers, such as workers disability and compensation claims and other employee-related
liabilities and grievances.



If
it internalizes its management functions, it could have difficulty integrating these functions as a standalone entity. Individuals
employed by the Adviser and its affiliates may in the future 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.
The Company may fail to properly identify the appropriate mix of personnel and capital needs to operate as a standalone entity.
An inability to manage an internalization transaction effectively could thus result in the Company incurring excess costs and/or
suffering deficiencies in its disclosure controls and procedures or its internal control over financial reporting. Such deficiencies
could cause it to incur additional costs, and the Company’s management’s attention could be diverted from effectively
managing its investments.



21









Internalization
transactions have also, in some cases, been the subject of litigation. Even if these claims are without merit, the Company could
be forced to spend significant amounts of money defending such claims, which would reduce the amount of funds it has available
for investment in targeted assets.



Changes
in laws or regulations governing the Company’s operations or the operations of its business partners may adversely affect
its business or cause it to alter its business strategy.



The
Company and its 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 the
Company is permitted to make, any of which could harm it and its Shareholders, potentially with retroactive effect. Changes in
laws or regulations governing the operations of those with whom the Company does business, including selected broker-dealers and
other financial representatives selling its shares, could also have a material adverse effect on its business, financial condition
and results of operations.



In
addition, any changes to the laws and regulations governing the Company’s operations, including with respect to permitted
investments, may cause it to alter its investment strategy to avail itself of new or different opportunities or make other changes
to its business. Such changes could result in material differences to its strategies and plans as set forth in the Memorandum
and may result in its investment focus shifting from the areas of expertise of the Adviser to other types of investments in which
the Adviser may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse
effect on the Company’s results of operations and the value of Shareholders’ investments.



Significant
Financial and Other Resources to Comply with the Requirements of Being a Public Entity.



As
a public entity, the Company will be subject to the reporting requirements of the Exchange Act and requirements of the Sarbanes-Oxley
Act. These requirements may place a strain on the Company’s systems and resources. The Exchange Act requires that the Company
file annual, quarterly and current reports with respect to its business and financial condition. The Sarbanes-Oxley Act requires
that the Company maintain effective disclosure controls and procedures and internal controls over financial reporting, which are
discussed below. In order to maintain and improve the effectiveness of the Company’s disclosure controls and procedures
and internal controls, significant resources and management oversight will be required. The Company intends to implement procedures,
processes, policies and practices for the purpose of addressing the standards and requirements applicable to public companies.
These activities may divert management’s attention from other business concerns, which could have a material adverse effect
on the Company’s business, financial condition, results of operations and cash flows. The Company expects to incur significant
additional annual expenses related to these steps and, among other things, directors’ and officers’ liability insurance,
director fees, reporting requirements of the SEC, transfer agent fees, additional administrative expenses payable to the Administrator
to compensate them for hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and
similar expenses.



The
Company may experience fluctuations in its quarterly results.



The
Company could experience fluctuations in its quarterly operating results due to a number of factors, including its ability or
inability to make investments in companies that meet its investment criteria, the level of its 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
Company may be adversely impacted by cyber security breaches.



The
Company may be prone to operational and information security risks resulting from breaches in cyber security. A breach may cause
the Company to lose proprietary information, suffer data corruption, or lose operational capacity. Breaches in cyber security
include, among other behaviors, stealing or corrupting data maintained online or digitally, denial of service attacks on websites,
the unauthorized release of confidential information or various other forms of cyber-attacks. Cyber security breaches affecting
the Company, the Adviser, financial intermediaries and other third-party service providers may adversely impact the Company. For
instance, cyber security breaches may interfere with the processing of Shareholder transactions, impact the ability to calculate
net asset value, cause the release of private Shareholder information or confidential business information, impede investment
activities, subject the Company to regulatory fines or financial losses and/or cause reputational damage. The Company may also
incur additional costs for cyber security risk management purposes.



22









Risks
Related to the Adviser and Its Affiliates



The
Adviser is not presently registered as an investment adviser with any state securities regulator or with the SEC.



At
this time, the Adviser is ineligible to register with the SEC under the Advisers Act because the Company is presently its only
client and the Company currently has less than $25 million of assets under management. The Adviser is also not registered as an
investment adviser with any state securities regulator because of available exemptions to registration, or exclusions from investment
adviser status, under applicable state laws and regulations. The Adviser has agreed to perform its duties and obligations to the
Company and otherwise conduct its business and operations as if it were registered as an investment adviser with the SEC under
the Advisers Act. Among other things, The Adviser has adopted a code of ethics and compliance policies and procedures that are
comparable, in all material respects, with the compliance policies and procedures imposed on registered investment advisers. Nevertheless,
the Adviser is not subject to either state or SEC inspections or the regulatory requirements, including restrictions on conflicts
of interest, under state or federal laws and regulations that it would be subject to as a registered investment adviser.



The
Adviser and its affiliates, including the Company’s officers and some of its directors, will face conflicts of interest
caused by compensation arrangements with the Company and its affiliates, which could result in actions that are not in the best
interests of Shareholders.



The
Adviser and its affiliates will receive substantial fees from the Company in return for their services, and these fees could influence
the advice provided to the Company. Among other matters, the compensation arrangements could affect their judgment with respect
to public offerings of equity by the Company, which allow the dealer manager to earn additional dealer manager fees and the Adviser
to earn increased asset management fees. In addition, the decision to utilize leverage will increase the Company’s assets
and, as a result, will increase the amount of management fees payable to the Adviser.



The
Company may be obligated to pay the Adviser incentive compensation even if it incurs a net loss due to a decline in the value
of its portfolio.



The
New Advisory Agreement entitles the Adviser to receive incentive compensation on income regardless of any capital losses. In such
case, the Company may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in
the value of the Company’s portfolio or if it incurs a net loss for that quarter. Any incentive fee payable by the Company
that relates to its net investment income may be computed and paid on income that may include interest that has been accrued but
not yet received. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that
accrued interest previously included in the calculation of the incentive fee will become uncollectible. The Adviser is not under
any obligation to reimburse the Company for any part of the incentive fee it received that was based on accrued income that the
Company never received as a result of a default by an entity on the obligation that resulted in the accrual of such income, and
such circumstances would result in the Company paying an incentive fee on income it never received.



For
federal income tax purposes, the Company will be required to recognize taxable income in some circumstances in which it does not
receive a corresponding payment in cash and to make distributions with respect to such income to maintain its status as a RIC.
Under such circumstances, it may have difficulty meeting the annual distribution requirement necessary to maintain RIC tax treatment
under the Code. This difficulty in making the required distribution may be amplified to the extent that the Company is required
to pay an incentive fee with respect to such accrued income. As a result, it may have to sell some of its 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 it is not able to obtain cash from other sources, it may fail to qualify for RIC tax treatment and thus become
subject to corporate-level income tax.



There
may be conflicts of interest related to the obligations of the senior management and investment team of the Adviser to the Company’s
affiliates and to other clients.



The
members of the senior management and investment team of the Adviser serves or may serve as officers, directors, managers or principals
of entities that operate in the same or a related line of business as the Company does, or of investment funds managed by the
same personnel. In serving in these multiple and other capacities, they may have obligations to other clients or investors in
those entities, the fulfillment of which may not be in the Company’s best interests or in the best interest of Shareholders.
The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts or other
investment vehicles. For example, the Company relies on the Adviser to manage its day-to-day activities and to implement its investment
strategy. The Adviser and certain of its affiliates may in the future be involved with activities which are unrelated to the Company.
As a result of these activities, the Adviser, its employees and certain of its affiliates will have conflicts of interest in allocating
their time between the Company and other activities in which they may become involved, including the management of other entities
affiliated with the Adviser. The Adviser and its employees will devote only as much of its or their time to the Company’s
business as the Adviser and its employees, in their judgment, determine is reasonably required, which may be substantially less
than their full time.



23







There
may be conflicts of interest related to the allocation of investment opportunities among the Adviser or any of its affiliates.



Currently,
the Adviser does not engage in market transactions where order aggregation may arise, as the Adviser does not presently have any
client other than the Company but may have additional clients in the future that may have investment objectives similar to the
Company’s.



Subject
to certain 1940 Act restrictions on co-investments with affiliates, the Adviser may determine it appropriate for the Company and
one or more other investment accounts managed by the Adviser or an affiliate to participate in an investment opportunity. For
example, the Company generally will not be permitted to co-invest with certain entities affiliated with the Adviser in transactions
originated by the Adviser or an affiliate unless it obtains an exemptive order from the SEC. Moreover, the Company is not permitted
to co-invest alongside the Adviser or an affiliate. It presently does not have exemptive relief under the 1940 Act to engage in
such co-investments. Consequently, any co-investments it makes with one or more accounts managed by the Adviser or an affiliate
will be made in accordance with existing regulatory guidance and the allocation policies of the Adviser and its affiliates. The
Adviser seeks to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and
consistent with its allocation policy. However, the Company can offer no assurance that such opportunities will be allocated to
it fairly or equitably in the short-term or over time. To the extent it is able to make co-investments with investment accounts
managed by the Adviser or its affiliates, these co-investment opportunities may give rise to conflicts of interest or perceived
conflicts of interest among the Company and the other participating accounts. In addition, conflicts of interest or perceived
conflicts of interest may also arise in determining which investment opportunities should be presented to the Company and other
participating accounts. The Adviser will also utilize its allocation policies if the Company co-invests with other clients of
the Adviser in transactions where price is the only negotiated point. However, there can be no assurance that the Company will
be able to participate in all investment opportunities that are suitable for it.



The
time and resources that individuals employed by the Adviser devote to the Company may be diverted, and it may face additional
competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing another
entity that makes the same types of investments that the Company targets.



Neither
the Adviser nor individuals employed by the Adviser are prohibited from raising money for and managing another investment entity
that makes the same types of investments as those the Company targets. As a result, the time and resources that these individuals
may devote to the Company may be diverted. In addition, the Company may compete with any such investment entity for the same investors
and investment opportunities.



The
Company’s incentive fee may induce the Adviser to make speculative investments.



The
incentive fee payable by the Company to the Adviser may create an incentive for it to make investments on the Company’s
behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which
the incentive fee payable to the Adviser will be determined may encourage it to use leverage to increase the return on the Company’s
investments. In addition, the fact that the Company’s base management fee will be payable based upon its average monthly
gross assets, which would include any borrowings for investment purposes, may encourage the Adviser to use leverage to make additional
investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor holders
of the Company’s common stock. Such a practice could result in the Company investing in more speculative securities than
would otherwise be in its best interests, which could result in higher investment losses, particularly during cyclical economic
downturns.



Risks
Related to Business Development Companies



The
requirement that the Company invest a sufficient portion of its assets in qualifying assets could preclude it from investing in
accordance with its current business strategy; conversely, the failure to invest a sufficient portion of its assets in qualifying
assets could result in its failure to maintain its status as a BDC.



As
a BDC, the Company may not acquire any assets other than “qualifying assets” unless, at the time of such acquisition,
at least 70% of its total assets are qualifying assets. Therefore, it may be precluded from investing in what it believes are
attractive investments if such investments are not qualifying assets. Conversely, if the Company fails to invest a sufficient
portion of its assets in qualifying assets, it could lose its status as a BDC, which would have a material adverse effect on its
business, financial condition and results of operations. Similarly, these rules could prevent the Company from making additional
investments in existing portfolio companies, which could result in the dilution of its position, or could require it to dispose
of investments at an inopportune time to comply with the 1940 Act. If it 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.



Failure
to maintain the Company’s status as a BDC would reduce its operating flexibility.



If
the Company does not remain a BDC, it might be regulated as a closed-end investment company under the 1940 Act, which would subject
it to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease its operating flexibility.



24









Regulations
governing the Company’s operation as a BDC and a RIC will affect its ability to raise, and the way in which it raises, additional
capital or borrow for investment purposes, which may have a negative effect on its growth.



As
a result of the annual distribution requirement to qualify as a RIC, the Company may need to periodically access the capital markets
to raise cash to fund new investments. It may issue “senior securities,” as defined in the 1940 Act, including borrowing
money from banks or other financial institutions only in amounts such that the Company’s asset coverage, as defined in the
1940 Act, equals at least 200% after such incurrence or issuance. The Company’s ability to issue different types of securities
is also limited. Compliance with these requirements may unfavorably limit its investment opportunities and reduce its ability
in comparison to other companies to profit from favorable spreads between the rates at which it can borrow and the rates at which
it can lend. As a BDC, therefore, it intends to issue equity continuously at a rate more frequent than its privately-owned competitors,
which may lead to greater Shareholder dilution.



The
Company may in the future borrow for investment purposes. If the value of its assets decline, it may be unable to satisfy the
asset coverage test, which would prohibit it from paying distributions and could prevent it from qualifying as a RIC. If it cannot
satisfy the asset coverage test, it may be required to sell a portion of its investments and, depending on the nature of its debt
financing, repay a portion of its indebtedness at a time when such sales may be disadvantageous.



Under
the 1940 Act, the Company generally is prohibited from issuing or selling its common stock at a price per share, after deducting
selling commissions and dealer manager fees, that is below its net asset value per share, which may be a disadvantage as compared
with other public companies. The Company may, however, sell its common stock, or warrants, options or rights to acquire its common
stock, at a price below the then current net asset value of the common stock if the Board of Directors and independent directors
determine that such sale is in the Company’s best interests and the best interests of its Shareholders, and the Shareholders,
as well as those shareholders that are not affiliated with the Company, approve such sale.



The
Company’s ability to enter into transactions with its affiliates is restricted.



The
Company is prohibited under the 1940 Act from participating in certain transactions with certain of its affiliates without the
prior approval of a majority of the independent members of the Board of Directors and, in some cases, the SEC. Any person that
owns, directly or indirectly, 5% or more of the Company’s outstanding voting securities will be its affiliate for purposes
of the 1940 Act, and it will generally be prohibited from buying or selling any securities from or to such affiliate, absent the
prior approval of the Board of Directors. The 1940 Act also prohibits certain “joint” transactions with certain of
the Company’s affiliates, which could include investments in the same portfolio company (whether at the same or different
times), without prior approval of the Board of Directors and, in some cases, the SEC. If a person acquires more than 25% of the
Company’s voting securities, the Company will be prohibited from buying or selling any security from or to such person or
certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior
approval of the SEC. Similar restrictions limit the Company’s ability to transact business with its officers or directors
or their affiliates. As a result of these restrictions, the Company may be prohibited from buying or selling any security from
or to any portfolio company of a private equity fund managed by the Adviser without the prior approval of the SEC, which may limit
the scope of investment opportunities that would otherwise be available to the Company.



The
Company is uncertain of its sources for funding its future capital needs; if it cannot obtain debt or equity financing on acceptable
terms, its ability to acquire investments and to expand its operations will be adversely affected.



The
net proceeds from the sale of shares will be used for the Company’s investment opportunities, operating expenses and for
payment of various fees and expenses such as base management fees, incentive fees and other fees. Any working capital reserves
it maintains may not be sufficient for investment purposes, and it may require debt or equity financing to operate. Accordingly,
in the event that the Company develops a need for additional capital in the future for investments or for any other reason, these
sources of funding may not be available to it. Consequently, if it cannot obtain debt or equity financing on acceptable terms,
its ability to acquire investments and to expand its operations will be adversely affected. As a result, it would be less able
to allocate its portfolio among various issuers and industries and achieve its investment objectives, which may negatively impact
its results of operations and reduce its ability to make distributions to Shareholders.



Risks
Related to Debt Financing



If
the Company borrows money, the potential for gain or loss on amounts invested in it will be magnified and may increase the risk
of investing in it.



The
use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for gain or loss
on invested equity capital. If the Company uses leverage to partially finance its investments, through borrowing from banks and
other lenders, Shareholders will experience increased risks of investing in its common stock. If the value of its assets increases,
leverage would cause the net asset value attributable to its common stock to increase more sharply than it would have had the
Company not leveraged. Conversely, if the value of the Company’s assets decreases, leverage would cause net asset value
to decline more sharply than it otherwise would have had the Company not leveraged. Similarly, any increase in the Company’s
income in excess of interest payable on the borrowed funds would cause its net income to increase more than it would without the
leverage, while any decrease in its income would cause net income to decline more sharply than it would have had the Company not
borrowed. Such a decline could negatively affect its ability to make common stock distribution payments. Leverage is generally
considered a speculative investment technique. In addition, the decision to utilize leverage will increase the Company’s
assets and, as a result, will increase the amount of management fees payable to the Adviser.



25







Changes
in interest rates may affect the Company’s cost of capital and net investment income.



If
the Company uses debt to finance investments, its net investment income will depend, in part, upon the difference between the
rate at which it borrows funds and the rate at which it invests those funds. As a result, it can offer no assurance that a significant
change in market interest rates will not have a material adverse effect on its net investment income. In periods of rising interest
rates when the Company has debt outstanding, its cost of funds will increase, which could reduce its net investment income. It
expects that its long- term fixed-rate investments will be financed primarily with equity and long-term debt. It may use interest
rate risk management techniques in an effort to limit its exposure to interest rate fluctuations. These techniques may include
various interest rate hedging activities to the extent permitted by the 1940 Act. These activities may limit the Company’s
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 the Company’s business, financial
condition and results of operations. Also, the Company has limited experience in entering into hedging transactions, and it will
initially have to purchase or develop such expertise.



A
rise in the general level of interest rates can be expected to lead to higher interest rates applicable to the Company’s
debt investments. Accordingly, an increase in interest rates would make it easier for the Company to meet or exceed the incentive
fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to the Adviser with respect to
pre-incentive fee net investment income.



Federal
Income Tax Risks



The
Company will be subject to corporate-level income tax if it is unable to qualify as a RIC under Subchapter M of the Code or to
satisfy RIC distribution requirements.



To
qualify for and maintain RIC tax treatment under Subchapter M of the Code, the Company must meet the following annual distribution,
income source and asset diversification requirements:



| | ● | The
                                         annual distribution requirement for a RIC will be satisfied if the Company distributes
                                         to its Shareholders on an annual basis at least 90% of its net ordinary income and realized
                                         net short-term capital gains in excess of realized net long-term capital losses, if any.
                                         Because it may use debt financing, the Company is subject to an asset coverage ratio
                                         requirement under the 1940 Act and may in the future become subject to certain financial
                                         covenants under loan and credit agreements that could, under certain circumstances, restrict
                                         it from making distributions necessary to satisfy the distribution requirement. If it
                                         is unable to obtain cash from other sources, it could fail to qualify for RIC tax treatment
                                         and thus become subject to corporate-level income tax.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                         income source requirement will be satisfied if the Company obtains at least 90% of its
                                         income for each year from dividends, interest, gains from the sale of stock or securities
                                         or similar sources.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                         asset diversification requirement will be satisfied if the Company meets certain asset
                                         diversification requirements at the end of each quarter of its taxable year. To satisfy
                                         this requirement, at least 50% of the value of its assets must consist of cash, cash
                                         equivalents, U.S. government securities, securities of other RICs and other securities
                                         if such securities of any one issuer do not represent more than 5% of the value of its
                                         assets or more than 10% of the outstanding voting securities of such issuer; and no more
                                         than 25% of the value of its 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 the Company 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
                                         the Company having to dispose of certain investments quickly in order to prevent the
                                         loss of RIC status. Because most of its 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
the Company fails to qualify for or maintain RIC tax treatment for any reason and is subject to corporate income tax, the resulting
corporate taxes could substantially reduce its net assets, the amount of income available for distribution and the amount of its
distributions.



26









The
Company may have difficulty paying its required distributions if it recognizes income before or without receiving cash representing
such income.



For
federal income tax purposes, the Company may be required to recognize taxable income in circumstances in which it does not receive
a corresponding payment in cash. For example, if it holds debt obligations that are treated under applicable tax rules as having
original issue discount (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or debt instruments
that were issued with warrants), it 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 the Company in the same taxable
year. It may also have to include in income other amounts that it has 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. It anticipates
that a portion of its income may constitute original issue discount or other income required to be included in taxable income
prior to receipt of cash. Further, it may elect to amortize market discounts and include such amounts in its taxable income in
the current year, instead of upon disposition, as an election not to do so would limit its ability to deduct interest expenses
for tax purposes.



Because
any original issue discount or other amounts accrued will be included in the Company’s investment company taxable income
for the year of the accrual, the Company may be required to make a distribution to its Shareholders in order to satisfy the annual
distribution requirement, even though it will not have received any corresponding cash amount. As a result, it may have difficulty
meeting the annual distribution requirement necessary to qualify for and maintain RIC tax treatment under Subchapter M of the
Code. It may have to sell some of its 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 it is not able to obtain cash from other sources,
it may fail to qualify for or maintain RIC tax treatment and thus become subject to corporate-level income tax.



The
Company’s portfolio investments may present special tax issues.



Investments
in below-investment grade debt instruments and certain equity securities may present special tax issues for the Company. U.S.
federal income tax rules are not entirely clear about issues such as when the Company may cease to accrue interest, original issue
discount or market discount, when and to what extent deductions may be taken for bad debts or worthless debt in equity securities,
how payments received on obligations in default should be allocated between principal and interest income, as well as whether
exchanges of debt instruments in a bankruptcy or workout context are taxable. Such matters could cause the Company to recognize
taxable income for U.S. federal income tax purposes, even in the absence of cash or economic gain, and require it to make taxable
distributions to Shareholders to maintain its RIC status or preclude the imposition of either U.S. federal corporate income or
excise taxation. Additionally, because such taxable income may not be matched by corresponding cash received by the Company, it
may be required to borrow money or dispose of other investments to be able to make distributions to Shareholders. These and other
issues will be considered by the Company, to the extent determined necessary, in order that it minimize the level of any U.S.
federal income or excise tax that it would otherwise incur.



Legislative
or regulatory tax changes could adversely affect investors.



At
any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be
amended. Any of those new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation
of the Company or its Shareholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments
thereto could diminish the value of an investment in the Company’s shares or the value or the resale potential of its investments.



ITEM
2. PROPERTIES



The principal offices
of StHealth Capital Investment Corporation are located at 680 5th Avenue New York, NY, 21st Floor.
The lease agreement is on a month-to-month basis. The rent is $10,500 per month. Management believes that with respect to its facilities,
equivalent suitable space is available at similar rents.



ITEM
3. LEGAL PROCEEDINGS



The
Company is not currently a party to any pending legal proceedings that it believes will have a material adverse effect on its
business or financial conditions. The Company may, however, be subject to various claims and legal actions arising in the ordinary
course of business from time to time.



ITEM
4. MINE SAFETY DISCLOSURE



Not
applicable.



27







PART
II



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



Market
Information



As of December 31, 2017, the price per
share for the initial issue of our common stock was $1.50. Subsequent to the initial fundraising round of April 2017, we issued
1,886,131 shares of our common stock at $1.5 and $2.

The
common stock described herein has not been registered under the 1933 Act, the securities laws of any other state or the securities
laws of any other jurisdiction. The common stock will be offered and sold (i) in the United States under the exemption provided
by Section 4(a)(2) of the 1933 Act and Rule 506 of Regulation D promulgated thereunder and other exemptions of similar import
in the laws of the states and jurisdictions where the offering will be made, and (ii) outside of the United States in accordance
with Regulation S of the 1933 Act. The common stock described herein will constitute “restricted securities” under
the 1933 Act and as such will be subject to certain restrictions on transferability. The common stock may not be transferred or
sold unless the common stock has been registered under the 1933 Act or an exemption from registration is available. There is no
assurance that registration of the common stock under the 1933 Act or other securities laws will be affected.



Holders



As of August 16, 2019, there were 88
holders of record of our common stock.





Dividends



We
have never paid cash dividends on our securities and we do not anticipate paying any cash dividends on our shares of common stock
in the foreseeable future. We intend to retain any future earnings for reinvestment in our business. Any future determination
to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our financial condition,
results of operations, capital requirements and such other factors as our board of directors deems relevant.



Unregistered
Sales of Equity Securities



The
following is a summary of transactions by us during the twelve months ended December 31, 2017 involving sales of our securities
that were not registered under the Securities Act. Each sale was exempt from registration under either Section 4(2) of the Securities
Act or Section 3(a)(9) of the Securities Act because (i) the securities were offered and sold only to accredited investors; (ii)
there was no general solicitation or general advertising related to the offerings; (iii) each investor was given the opportunity
to ask questions and receive answers concerning the terms of and conditions of the offering and to obtain additional information;
(iv) the investors represented that they were acquiring the securities for their own account and for investment; and (v) the securities
were issued with restrictive legends where required.



From
January 1, 2017 to April 28, 2017, we issued approximately 829,516 shares of common stock and received gross proceeds of approximately
$8,279,000. The offering costs were $815,900 and the net proceeds were $7,463,100.







From February to August 2019, we issued
1,886,131 shares of our common stock and received gross proceeds of approximately $3,396,000.





28









Use
of Proceeds from Sales of Unregistered Securities



From
year ended December 31, 2017, we raised net proceeds of $7,463,100 through the unregistered sale of equity securities. Of those
proceeds, we deployed approximately $6,592,054 from our public offering in eight investments in seven portfolio companies, which
are described below:







|Portfolio 
Company                   |  | Security
        Type          |  | Interest
Rate (%) |                                 | Initial
Close |  | Term
(months) |  | Industry |    | Principal 
inception |                         | Principal 
12/31/17 |  
|------------------------------------ |  | ------------------------------ |  | ----------------- | ------------------------------- | ------------- |  | ------------- |  | -------- | -- | -------------------- | ----------------------- | ------------------- | -
|Senior Secured Loans                 |  |                                |  |                   |                                 |               |  |               |  |          |    |                      |                         |                     |  
|Evergreen Communities - affiliate    |  | Senior Secured Loan            |  |                   | 14.00%                          |               |  | 5/12/2017     |  |          | 12 |                      | Real Estate Development |                     | $
|Goodwin Family Trust( affiliate      |  | Senior Secured First Lien Loan |  |                   | 10.00%                          |               |  | 5/30/2017     |  |          | 16 |                      | Storage                 |                     | $
|Linden Energy Services Holdings, LP  |  | Senior Secured First Lien Loan |  |                   | 15.0%
        (7% cash, 8% PIK) |               |  | 7/20/2017     |  |          | 18 |                      | Oil and Gas Pipeline    |                     | $
|PaliGroup, LLC                       |  | Senior Secured Loan            |  |                   | 13.00%                          |               |  | 5/30/2017     |  |          | 12 |                      | Hospitality             |                     | $
|Pelorus Group                        |  | Senior Secured Loan            |  |                   | 15.0%                           |               |  | 7/25/2017     |  |          | 4  |                      | Real Estate Development |                     | $
|Unsecured Loans                      |  |                                |  |                   |                                 |               |  |               |  |          |    |                      |                         |                     |  
|First Capital Retail, LLC  affiliate |  | Unsecured Loan                 |  |                   | L (30 Day) + 9%                 |               |  | 2/24/2017     |  |          | 12 |                      | Retail                  |                     | $
|First Capital Retail, LLC  affiliate |  | Unsecured Loan                 |  |                   | L (30 Day) + 9%                 |               |  | 3/31/2017     |  |          | 12 |                      | Retail                  |                     | $
|WenCo Partners, LLC( affiliate       |  | Unsecured Loan                 |  |                   | L (30 Day) + 9%                 |               |  | 4/14/2017     |  |          | 12 |                      | Retail                  |                     | $
|                                     |  |                                |  |                   |                                 |               |  |               |  |          |    |                      |                         |                     | $







ITEM
6.  SELECTED FINANCIAL DATA



Not
applicable as we are a smaller reporting company.



29







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



The
following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31,
2017 and December 31, 2016 should be read in conjunction with our financial statements and the notes to those financial statements
that are included elsewhere in this Annual Report. This discussion contains forward-looking statements about our business and
operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including
those we describe under “Risk Factors” and elsewhere in this Annual Report. See “Special Note Regarding Forward
Looking Statements.”



Results
of Operations



Year
Ended December 31, 2017 Compared to Year Ended December 31, 2016



General
and Administrative



Our
general and administrative expenses for the year ended December 31, 2017 were $130,262, compared to $0 for the year ended December
31, 2016.



Management
fee – related party



Our
related party management fees for the year ended December 31, 2017 were $28,559, compared to $0 for the year ended December 31,
2016.



Professional
Fees



Our
professional fees for the year ended December 31, 2017 were $1,810,551, compared to $0 for the year ended December 31, 2016.



Interest
Income



Our
interest income for the year ended December 31, 2017 was $231,796, compared to $0 for the year ended December 31, 2016.



Loss
on Investment



Our
total loss on investment for the year ended December 31, 2017 was $4,914,237, compared to $0 for the year ended December 31, 2016.



Net
Loss



As
a result of the foregoing, for the year ended December 31, 2017, we recorded a net loss of $6,651,813 compared to a net loss of
$0 for the year ended December 31, 2016.



Liquidity
and Capital Resources



Operating
Activities



During
the year ended December 31, 2017, we used $964,027 of cash in operating activities primarily as a result of our net loss of $6,651,813
offset loss on investments of $4,914,237 and net changes in operating assets and liabilities of $773,549.



Investing
Activities



During
the year ended December 31, 2017, the Company used $6,592,054 in investing activities.



Financing
Activities



During
the year ended December 31, 2017, financing activities provided $7,463,100 in proceeds from issuance of common.



Going
Concern



For the year ended December 31, 2017,
the Company incurred a net loss of $6,651,813. These circumstances may raise some substantial doubt as to the Company’s ability
to continue as a going concern. It should be noted that the Company has been “stabilized” during the past fifteen months
since the purchase of the Advisor by StHealth Capital Partners in March 2018. The losses in 2017 were all associated with loans
originated by the previous management. The non-performing and impaired loans have all been written down severely or sold and we
do not expect further losses from the loan portfolio. The Company is essentially being “re-started” to focus on mainly
equity investments in mostly smaller and medium sized healthcare companies. The new management/ownership of the Advisor has extensive
relevant experience, both professional and educational, and broad relationships throughout the Healthcare and Financial sectors.
Currently, the Company has launched a capital raising program led by a Broker Dealer acting as the Dealer Manager and arranging
a syndicate of several additional Broker Dealers who will also sell our securities. From February to August 2019, we issued 1,886,131
shares of our common stock and received gross proceeds of approximately $3,396,000.



30









ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Not
applicable as we are a smaller reporting company.



31







Item
8. Financial Statements and Supplementary Data.



Index
to Financial Statements



StHealth
Capital Investment Corporation



December
31, 2017



|                                                                                                | Page
|----------------------------------------------------------------------------------------------- | ----
|                                                                                                |     
|Report of Independent Registered
    Public Accounting Firm                                     | F-1 
|                                                                                                |     
|Balance Sheet as of December
    31, 2017 and 2016                                              | F-2 
|                                                                                                |     
|Statement of Operations
    for the years ended December 31, 2017 and 2016                      | F-3 
|                                                                                                |     
|Statement of Changes in
    Stockholders’ Equity for the years ended December 31, 2017 and 2016 | F-4 
|                                                                                                |     
|Statement of Cash Flows
    for the years ended December 31, 2017 and 2016                      | F-5 
|                                                                                                |     
|Notes to Financial Statements
    for the years ended December 31, 2017 and 2016                | F-6 



32







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Shareholders and Board of Directors of

StHealth
Capital Investment Corporation



Opinion
on the Financial Statements



We
have audited the accompanying balance sheets of StHealth Capital Investment Corporation (the “Company”) as of December
31, 2017 and 2016, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results
of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.



Going
Concern Matter



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency
that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters
are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.



Basis
for Opinion



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



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



Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.



/s/
MaloneBailey, LLP

www.malonebailey.com

We
have served as the Company’s auditor since 2017

Houston,
Texas



August 19, 2019





F-1







|STHEALTH
    CAPITAL INVESTMENT CORPORATION                                                                                 
|----------------------------------------------------------------------------------------------------------------------------
|BALANCE
    SHEETS                                                                                                          
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Assets                                                                                                                      
|Cash                                                                                                                        
|Investment
    securities                                                                                                   
|Investment
    securities - affiliates                                                                                      
|Investment
    valuation allowance                                                                                          
|Prepaid
    expense                                                                                                         
|                                                                                                                            
|Total
    assets                                                                                                            
|                                                                                                                            
|Liabilities
    and stockholders’ equity                                                                                    
|                                                                                                                            
|Liabilities:                                                                                                                
|Accounts
    payable                                                                                                        
|Accrued
    expenses                                                                                                        
|                                                                                                                            
|Total
    liabilities                                                                                                       
|                                                                                                                            
|Stockholders’
    equity:                                                                                                   
|                                                                                                                            
|Preferred
    stock, par value $.001 per share; 50,000,000 shares authorized, none issued and outstanding                   
|Common stock, par
    value $.001 per share; 550,000,000 shares authorized, 840,627 and 11,111 shares issued and outstanding
|Additional
    paid-in capital                                                                                              
|Accumulated
    deficit                                                                                                     
|                                                                                                                            
|Total
    deficiency in stockholders’ equity                                                                                
|                                                                                                                            
|Total
    liabilities and deficiency in stockholders’ equity                                                                



See
accompanying notes to financial statements.



F-2







|STHEALTH
    CAPITAL INVESTMENT CORPORATION                       
|------------------------------------------------------------------
|STATEMENTS
    OF OPERATIONS                                      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Operating
    expenses:                                           
|General
    and administrative expense                            
|Management
    fee – related party                                
|Professional
    fees                                             
|Loss
    from operations                                          
|                                                                  
|Other
    income (expense)                                        
|Interest
    income                                               
|Loss
    on investment                                            
|Loss
    on investment - Affiliates                               
|Total
    other income (loss)                                     
|                                                                  
|Net
    income (loss)                                             
|                                                                  
|Income
    (loss) per share - basic and diluted                   
|                                                                  
|Weighted
    average common shares outstanding - basic and diluted



See
accompanying notes to financial statements.



F-3







|STHEALTH
    CAPITAL INVESTMENT CORPORATION                  
|-------------------------------------------------------------
|STATEMENT
    OF CHANGE IN STOCKHOLDEER’S EQUITY (DEFICIENCY)
|(Unaudited)                                                  
|                                                             
|                                                             
|                                                             
|Balance
    - December 31, 2015                              
|Net
    loss                                                 
|Balance
    - December 31, 2016                              
|Sale
    of common stock                                     
|Net
    loss                                                 
|Balance
    - December 31, 2017                              



See
accompanying notes to financial statements.



F-4







|STHEALTH
    CAPITAL INVESTMENT CORPORATION          
|-----------------------------------------------------
|CONDENSED
    CONSOLIDATED BALANCE SHEETS            
|                                                     
|                                                     
|                                                     
|                                                     
|Cash
    flows from operating activities:            
|Net
    income (loss)                                
|Adjustments
    to reconcile net income (loss) to net
|Investment
    impairments expense                   
|Investment
    impairments expense - affiliates      
|Changes
    in operating assets and liabilities:     
|Prepaid
    expenses                                 
|Accounts
    payable                                 
|Accrued
    liabilities                              
|                                                     
|Cash
    used by operating activities                
|                                                     
|Cash
    flows from investing activities:            
|Cash
    paid for investment                         
|Cash
    paid for investment - affiliates            
|                                                     
|Cash
    used by investing activities                
|                                                     
|Cash
    flows from financing activities:            
|Proceeds
    from sale of common stock               
|                                                     
|Cash
    provided by financing activities            
|                                                     
|Net
    increase (decrease) in cash                  
|Cash,
    beginning of period                        
|Cash,
    end of period                              
|                                                     
|Cash
    paid for interest                           
|Cash
    paid for taxes                              



See
accompanying notes to financial statements.



F-5







StHealth
Capital Investment Corporation

(formerly
First Capital Investment Corporation)



Notes
to Financial Statements



Note
1. Principal Business and Organization



First
Capital Investment Corporation (formerly Freedom Capital Corporation) (the “Company”), was incorporated under the
general corporation laws of the State of Maryland on June 19, 2014 and commenced operations upon raising $1.0 million (the “Minimum
Offering Requirement”), pursuant to an offering to sell up to $500,000,000 in shares of common stock at an initial offering
price of $10.00 per share on February 16, 2017. The U.S. Securities and Exchange Commission (the “SEC”) declared the
Company’s registration statement on N-2 (SEC File No. 333-202461) (the “Registration Statement”) for the Company’s
initial public offering effective on September 9, 2015. As of December 31, 2017, the Minimum Offering Requirement has been achieved.
The investment adviser of the Company is StHealth Capital Advisors LLC (formerly First Capital Investment Advisors LLC) (the “Adviser”).
The Adviser is an unregistered private investment advisory firm that still intends to register as an investment adviser with the
SEC at such time as it has at least $25 million in assets under management. The Adviser is an affiliate of the Company.



The
Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as
a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”),
and that intends to elect to be treated for federal income tax purposes, and intends to qualify annually thereafter, as a regulated
investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).



On
March 28, 2017, Freedom Capital Investment Management LLC (“FCIM”), the entity that owns FCIC Advisors, entered into
a Membership Interest Purchase Agreement with First Capital Real Estate Investments, LLC (“FCREI”) whereby FCREI agreed
to acquire all of the membership units of FCIM in exchange for a secured promissory note payable over time. FCREI is controlled
by Suneet Singal, who was appointed Chairman of the Company’s board of directors following the execution of the Membership
Interest Purchase Agreement. The acquisition of FCIM closed on April 3, 2017.



In
addition, the Membership Interest Purchase Agreement also provides for the acquisition by FCREI of The Bear Companies, an entity
controlled by Jeffrey McClure, the Company’s former President and Chief Executive Officer, and his wife, which owns Democracy
Funding LLC, the Company’s dealer manager in its public offering. The acquisition of The Bear Companies is contingent upon
approval of the change in control of Democracy Funding by FINRA. There can be no assurance as to whether or when an application
will be submitted to FINRA and, if submitted, whether FINRA will approve the change in control on the terms contemplated by the
Membership Interest Purchase Agreement.



On
December 20, 2016, the Company entered into a technology and investor services agreement with Phoenix American Financial Services,
Inc. (the “Investor Services Agreement”). Under the Investor Services Agreement, Phoenix American Financial Services,
Inc., through Phoenix Transfer, Inc., a transfer agent registered with the Securities and Exchange Commission, will provide transfer
agent and dividend disbursement services to the Company, subject to the direction and control of the Company’s board of
directors. StHealth Capital Advisors, pursuant to the Advisory Agreement, is responsible for providing administrative services
to the Fund and has separately engaged a third-party administrator to act in such capacity.



On
August 16, 2017, the Company held its 2017 Annual Meeting of Stockholders. At the meeting, the Company’s stockholders (i)
elected each of Suneet Singal, Dr. Bob Froehlich and Frank Grant as directors to serve one-year terms.



On
September 15, 2017, the Board appointed Jeff Davi to serve as an independent director of the Company and as a member of the Audit
Committee and Nominating and Corporate Governance Committee, effective immediately.



On
March 8, 2018, Dr. Robert Froehlich, the Chairman of the Board of Directors of the Company, and on March 13, 2018, Suneet Singal,
also a member of the Board, each submitted their resignations from the Board of Directors, effective as of such respective dates.



On
March 13, 2018, First Capital Master Advisor, LLC (“FCMA”), entered into a purchase agreement with StHealth Capital
Partners LLC (“StHealth”), whereby StHealth agreed to acquire all of the membership units owned by FCMA in the Adviser,
in exchange for a secured promissory note payable over time (the “Acquisition”). The investment advisory and administrative
services agreement (the “Advisory Agreement”) which was in place prior to the Acquisition, as required by Section
15 of the 1940 Act, provided for its automatic termination in the event of “assignment” (as defined in the 1940 Act).
The consummation of the Acquisition resulted in a change of control of the Adviser and therefore the automatic termination of
the Advisory Agreement, as required by the 1940 Act.



On
March 14, 2018, the Board appointed each of Derek Taller, as CEO, and Reid Maclellan, as Chief Operating Officer (“COO”),
of the Company. On March 29, 2018, the Board appointed David Lessen as CFO, Treasurer and Secretary of the Company.



F-6







On
June 29, 2018, the Company’s Board of Directors, including a majority of non-interested directors, approved a new investment
advisory and administrative services agreement (the “New Advisory Agreement”) between the Adviser and the Company.
In addition, pursuant to the 1940 Act, the New Advisory Agreement also requires the affirmative vote of the holders of a majority
of the Company’s outstanding voting securities. As a result, at a meeting held on June 29, 2018, the Board of Directors,
including a majority of the non-interested directors, recommended that the Shareholders of the Company approve the New Advisory
Agreement. The Company held an annual meeting of Shareholders (“Annual Meeting”), on August 7, 2018, during which
time Shareholders of record were asked to vote on the approval of the New Advisory Agreement. Additional information regarding
the Annual Meeting was provided in a proxy statement filed with the SEC.



On
August 7, 2018, the Company held the 2018 Annual Meeting of Shareholders. At the meeting, the Company’s Shareholders voted
on the following three proposals: (i) election of directors; (ii) approval of the Company’s Investment Advisory and Administrative
Services Agreement by and between the Company and StHealth Capital Advisors, LLC; and (iii) the ratification of the appointment
of Malone Bailey LLP as the Company’s independent public registered accounting firm for the fiscal year ending December
31, 2018. As of August 7, 2018, the shares of common stock outstanding and entitled to vote at the meeting represented 840,627
votes (840,627 shares of common stock representing 840,627 votes). Of the aggregate shares entitled to vote as of the record date,
439,405 shares of common stock representing 439,405 votes were present at the meeting in person or by proxy and each of these
shares, representing over 50% of the outstanding shares of the Company, voted in favor of each proposal described above.



On
August 7, 2018, the Company’s name was changed to StHealth Capital Investment Corp.



Note
2. Summary of Significant Accounting Policies



Basis
of Presentation: The accompanying audited financial statements of the Company have been prepared in accordance with U.S. generally
accepted accounting principles, or GAAP.



The
Company believes the significant accounting policies described below affect the more significant judgments and estimates used
in the preparation of its financial statements. Accordingly, the policies described below are the policies that the Company believes
are and will be the most critical to fully understanding and evaluating the Company’s historical financial condition and
results of operations.



Use
of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported 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.



Cash
and Cash Equivalents: The Company considers all highly liquid investments with original maturities of three months or less
to be cash equivalents. The Company’s cash and cash equivalents are maintained with a high credit quality financial institution,
which is a member of the Federal Deposit Insurance Corporation.



Revenue
Recognition for Interest Income:  Revenue from investment securities such as interest income is recognized as earned.



Valuation
of Portfolio Investments: The Company intends to determine the net asset value of its investment portfolio each quarter. Securities
that are publicly-traded will be valued at the reported closing price on the valuation date. Securities that are not publicly-traded
will be valued at fair value as determined in good faith by the Company’s board of directors - in accordance with ASC Topic
820 – Fair Value Measurements and Disclosures(“ASC Topic 820”).  ASC Topic 820 defines fair
value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the
categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs.  ASC
Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. In
connection with that determination, the Company expects that the Adviser will provide the Company’s board of directors with
portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values
of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation
services.



Organization Costs: Organization
costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertaining to
the Company’s organization. As of December 31, 2016, the Company had incurred organization costs of $46,064, which were paid
on its behalf by FCIM. Prior to February 10, 2017, these costs were expensed as incurred but, together with offering costs, were
limited to 1.5% of total proceeds raised. On February 10, 2017, the Company amended the Investment Advisory Agreement to reflect
that these costs are expensed as incurred but, together with offering costs, are limited to 2.0% of total proceeds raised. To the
extent the Company is unable to raise sufficient capital such that the expenses paid by the Adviser or its affiliates on behalf
of the Company are more than 2.0% of total proceeds at the end of the Offering, the Adviser will forfeit the right to reimbursement
of those costs. Since the amendment to the Investment Advisory Agreement was made following December 31, 2016, the Balance Sheet
as of December 31, 2016 shows that the Company expensed $1,500 in organization costs, rather than $2,000.



F-7







Offering
Costs: The Company’s offering costs include, among other things, legal fees and other costs pertaining to the preparation
of the Company’s Registration Statement relating to the Offering. Upon satisfaction of the Minimum Offering Requirement,
these costs are capitalized and amortized as an expense on a straight-line basis over a twelve-month period. During the period
from June 19, 2014 (Inception) to December 31, 2016, the Company had incurred offering costs of $1,834,325, which were funded
on behalf of the Company by FCIM. Prior to February 10, 2017, offering costs, together with organization costs, were limited to
1.5% of total proceeds raised. On February 10, 2017, the Company amended the Investment Advisory Agreement to reflect that offering
costs, together with organization costs, are limited to 2.0% of total proceeds raised. Offering costs, together with organization
costs are not due and payable to the Adviser to the extent they exceed that amount. No offering costs have been recorded on the
accompanying balance sheet as of December 31, 2016 or 2017, since the Minimum Offering Requirement had not been satisfied as of
December 31, 2016.



Income
Taxes: The Company intends to elect to be treated for federal income tax purposes, and intends to qualify annually thereafter,
as a RIC under Subchapter M of the Code but has not yet made the election. To qualify for and maintain its qualification as a
RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and distribute
to its stockholders, for each taxable year, at least 90% of its “investment company taxable income,” which is generally
the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term
capital losses. As a RIC, the Company will not have to pay corporate-level federal income taxes on any income that it distributes
to its stockholders. The Company intends to make distributions in an amount sufficient to maintain its RIC status each year and
to avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if it does
not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed
income from prior years for which it paid no federal income taxes. The Company has concluded that it does not have any uncertain
tax positions that meet the recognition of measurement criteria of ASC 740, Income Taxes,(“ASC 740”)
for the current period.



Recently
Issued or Adopted Accounting Standards: In February 2016, the FASB issued ASU 2016-02, Leases, which requires
lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease
term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative
disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the
use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may
elect to apply. The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein.
The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its financial statements.



Note
3. Going Concern



For the year ended December 31, 2017,
the Company incurred a net loss of $6,651,813. These circumstances may raise some substantial doubt as to the Company’s ability
to continue as a going concern. It should be noted that the Company has been “stabilized” during the past fifteen months
since the purchase of the Advisor by StHealth Capital Partners in March 2018. The losses in 2017 were all associated with loans
originated by the previous management. The non-performing and impaired loans have all been written down severely or sold and we
do not expect further losses from the loan portfolio. The Company is essentially being “re-started” to focus on mainly
equity investments in mostly smaller and medium sized healthcare companies. The new management/ownership of the Advisor has extensive
relevant experience, both professional and educational, and broad relationships throughout the Healthcare and Financial sectors.
Currently, the Company has launched a capital raising program led by a Broker Dealer acting as the Dealer Manager and arranging
a syndicate of several additional Broker Dealers who will also sell our securities. From February to August 2019, we issued 1,886,131
shares of our common stock and received gross proceeds of approximately $3,396,000.



Note
4. Compensation of the Advisor



On
August 7, 2018, the Company held the 2018 Annual Meeting of shareholders at which meeting the new Investment Advisory and Administrative
Services Agreement by and between the Company and StHealth Capital Advisors was approved,



The
Company will pay the Adviser a fee for its services under the New Advisory Agreement consisting of two components — a base
management fee and an incentive fee based on the Company’s performance. The cost of both the base management fee payable
to the Adviser and any incentive fees it earns will ultimately be borne by the Shareholders.



Base
management fee.The base management fee will be payable quarterly in arrears and will be calculated at an annual rate
of 2.0% of the Company’s average monthly gross assets during such period. The base management fee may or may not be taken
in whole or in part at the discretion of the Adviser. All or any part of the base management fee not taken as to any quarter will
be deferred without interest and may be taken in such other quarter as the Adviser shall determine. The base management fee for
any partial month or quarter will be appropriately prorated.



During
the year ended December 31, 2017, the base management fee paid to the advisor was $28,559.



F-8







Incentive
fee.Under the New Advisory Agreement, the incentive fee consists of two parts. The first part, which the Company refers
to as the subordinated incentive fee on interest or dividend income, will be calculated and payable quarterly in arrears based
upon the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter. The subordinated
incentive fee on interest or dividend income will be subject to a quarterly hurdle rate, or the rate of return that must be met
before incentive fees are payable to the Adviser, expressed as a rate of return on adjusted capital for the most recently completed
calendar quarter, of 0.496% (2.0% annualized), subject to a “catch up” feature. For this purpose, “pre-incentive
fee net investment income” means interest income, dividend income and any other income (including any other fees, other
than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or
other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s
operating expenses for the quarter (including the base management fee, expenses reimbursed to the Adviser under the New Advisory
Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive
fee). 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 PIK interest and zero-coupon securities), accrued income that the Company has 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 calculation of the subordinated incentive fee on interest or dividend income for each
quarter is as follows:



| | ● | No
                                         subordinated incentive fee on interest or dividend income is payable to the Adviser in
                                         any calendar quarter in which the Company’s pre-incentive fee net investment income
                                         does not exceed the hurdle rate of 0.496%;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 100%
                                         of the Company’s pre-incentive fee net investment income, if any, that exceeds
                                         the hurdle rate but is less than or equal to 0.619% in any calendar quarter (2.5% annualized)
                                         is payable to the Adviser. The Company refers to this portion of its pre-incentive fee
                                         net investment income (which exceeds the hurdle rate but is less than or equal to 0.619%)
                                         as the “catch-up.” The “catch-up” provision is intended to provide
                                         the Adviser with an incentive fee of 20.0% on all of the Company’s pre-incentive
                                         fee net investment income when its pre-incentive fee net investment income reaches 0.619%
                                         in any calendar quarter; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 20.0%
                                         of the amount of the pre-incentive fee net investment income, if any, that exceeds 0.619%
                                         in any calendar quarter (2.5% annualized) is payable to the Adviser once the hurdle rate
                                         is reached and the catch-up is achieved (20.0% of all pre-incentive fee net investment
                                         income thereafter is allocated to the Adviser).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
second part of the incentive fee, which the Company refers to as the incentive fee on capital gains, will be determined and payable
in arrears as of the end of each quarter (or upon termination of the New Advisory Agreement). This fee will equal 20.0% of the
Company’s incentive fee capital gains, which will equal the Company’s realized capital gains on a cumulative basis
from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized
capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. Incentive
fees not paid at the end of the calendar year in which they were earned will accrue until such time when the management chooses
to pay them.



Note
5. Capital Contribution by FCIM



In
2014, FCIM contributed an aggregate of $100,000 to purchase approximately 11,111 shares of common stock at $9.00 per share, which
represents the initial public offering price of $10.00 per share, net of selling commissions and dealer manager fees. FCIM will
not tender these shares of common stock for repurchase as long as FCIM remains an affiliate of the Adviser.



Note
6. Expense Reimbursement



The
Company’s primary operating expenses will be the payment of advisory fees and other expenses under the New Advisory Agreement
approved at the Shareholder’s Meeting on August 7, 2018, interest expense from financing facilities and other expenses necessary
for its operations. Its investment advisory fee will compensate the Adviser for its work in identifying, evaluating, negotiating,
executing, monitoring and servicing the Company’s investments. The Company will bear all other expenses of its operations
and transactions, including (without limitation) fees and expenses relating to:



| | ● | corporate
                                         and organization expenses relating to offerings of its common stock, subject to limitations
                                         included in the New Advisory Agreement;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         cost of calculating its net asset value, including the cost of any third-party pricing
                                         or valuation services;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         cost of effecting sales and repurchases of shares of its 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;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | interest
                                         payments on the Company’s debt or related obligations;
| | - | --------------------------------------------------------------------------------------------------------





F-9







| | ● | research
                                         and market data (including news and quotation equipment and services, and any computer
                                         hardware and connectivity hardware (e.g, telephone and fiber optic lines) incorporated
                                         into the cost of obtaining such research and market data);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | transfer
                                         agent, administrator and custodial fees;
| | - | ------------------------------------------------------------------------------------------



| | ● | fees
                                         and expenses associated with marketing efforts;
| | - | ---------------------------------------------------------------------------------------------



| | ● | federal
                                         and state registration fees;
| | - | -----------------------------------------------------------------------------



| | ● | federal,
                                         state and local taxes;
| | - | ------------------------------------------------------------------------



| | ● | fees
                                         and expenses of directors not also serving in an executive officer capacity for the Company
                                         or the Adviser;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | costs
                                         of proxy statements, Shareholders’ reports, notices and other filings;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | ● | 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 accounting, corporate governance, independent audits and
                                         outside legal costs;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | costs
                                         associated with the Company’s reporting and compliance obligations under the 1940
                                         Act and applicable federal and state securities laws, including compliance with the Sarbanes-Oxley
                                         Act;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | brokerage
                                         commissions for the Company’s investments;
| | - | ---------------------------------------------------------------------------------------------



| | ● | costs
                                         associated with the Company’s chief financial officer and chief compliance officer;
                                         and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | rent
                                         or depreciation, utilities, capital equipment or other costs of the Adviser’s own
                                         administrative items
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | all
                                         other expenses incurred by the Adviser, or the Company in connection with administering
                                         its business, including expenses incurred by the Adviser, in performing administrative
                                         services for the Company and administrative personnel paid by the Adviser, to the extent
                                         they are not controlling persons of the Adviser or any of its affiliates, subject to
                                         the limitations included in the New Advisory Agreement.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subject
to the limitations on reimbursement of the Adviser, the Corporation, either directly or through reimbursement to the Adviser,
shall bear all other costs and expenses of its operations and transactions, including expenses deemed to be “organization
and offering expenses” of the Corporation for purposes of Conduct Rule 2310(a)(12) of the Financial Industry Regulatory
Authority, such expenses, exclusive of commissions, the dealer manager fee and any discounts, are hereinafter referred to as “Organization
and Offering Expenses”; corporate and organizational expenses relating to offerings of shares of Common Stock, subject to
limitations included in the Investment Advisor Agreement. Notwithstanding the foregoing, the Corporation shall not be liable for
Organization and Offering Expenses to the extent that Organization and Offering Expenses, together with all prior Organization
and Offering Expenses, exceed 2.0% of the aggregate gross proceeds from the offering of the Corporation’s securities.



During
the year ended December 31, 2017, $222,796 was paid to advisor for Organization and Offering expenses.



Note
7. Capital Raising



From
January 1, 2017 to April 28, 2017, the Company issued approximately 829,516 shares of common stock and received gross proceeds
of approximately $8,279,000 The offering costs were $815,900 and therefore the net proceeds were $7,463,100.





F-10







Note
8. Investments



| | a) | Description
                                         of Investments
| | -- | -------------------------------------------------------------------



During
the year ended December 31, 2017, the Company deployed approximately $6,592,054 in proceeds from its public offering in eight
investments in seven portfolio companies, which are described below:





|Portfolio
    Company                                                                                                                             |  | Security Type                                                                                                                                                                                                                             |  | Interest Rate
                                         (%) |                                                                   | Initial Close |           | Term (months) |  | Industry |    | Principal
                                                                                inception |                             | Principal
                                                                                12/31/17 |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- | ----------------------------------------------------------------- | ------------- | --------- | ------------- |  | -------- | -- | --------------------------------------------------------------------------------------------------- | --------------------------- | -------------------------------------------------------------------------------------------------- | -
|Senior
    Secured Loans                                                                                                                          |  |                                                                                                                                                                                                                                           |  |                                                            |                                                                   |               |           |               |  |          |    |                                                                                                     |                             |                                                                                                    |  
|Evergreen
    Communities  - affiliate                                                                                                            |  | Senior
                                                      Secured
                                                      Loan                                                                                                           |  |                                                            | 14.00%                                                            |               | 5/12/2017 |               |  | 12       |    |                                                                                                     | Real
    Estate Development |                                                                                                    | $
|Goodwin
    Family Trust( affiliate                                                                                                               |  | Senior
                                                      Secured
                                                      First
                                         Lien Loan                                                       |  |                                                            | 10.00%                                                            |               | 5/30/2017 |               |  | 16       |    |                                                                                                     | Storage                     |                                                                                                    | $
|Linden
    Energy Services Holdings, LP                                                                                                           |  | Senior
                                                      Secured
                                                      First
                                         Lien
                                                      Loan |  |                                                            | 15.0% 
                                         (7% cash, 8% PIK) |               |           | 7/20/2017     |  |          | 18 |                                                                                                     |                             | Oil
    and Gas Pipeline                                                                           |  
|PaliGroup,
    LLC                                                                                                                                |  | Senior
                                                      Secured
                                                      Loan                                                                                                           |  |                                                            | 13.00%                                                            |               | 5/30/2017 |               |  | 12       |    |                                                                                                     | Hospitality                 |                                                                                                    | $
|Pelorus
    Group                                                                                                                                 |  | Senior
                                                      Secured
                                                      Loan                                                                                                           |  |                                                            | 15.0%                                                             |               | 7/25/2017 |               |  | 4        |    |                                                                                                     | Real
    Estate Development |                                                                                                    | $
|Unsecured
    Loans                                                                                                                               |  |                                                                                                                                                                                                                                           |  |                                                            |                                                                   |               |           |               |  |          |    |                                                                                                     |                             |                                                                                                    |  
|First
    Capital Retail, LLC affiliate                                                                                                           |  | Unsecured
                                                      Loan                                                                                                                                                                      |  |                                                            | L
                                         (30 Day) + 9%          |               |           | 2/24/2017     |  |          | 12 |                                                                                                     |                             | Retail                                                                                             |  
|First
    Capital Retail, LLC affiliate                                                                                                           |  | Unsecured
                                                      Loan                                                                                                                                                                      |  |                                                            | L
                                         (30 Day) + 9%          |               |           | 3/31/2017     |  |          | 12 |                                                                                                     |                             | Retail                                                                                             |  
|WenCo
                                         Partners,
                                                                           LLC(affiliate |  | Unsecured
                                                                           Loan                                                                                                                                                 |  |                                                            | L
                                         (30 Day) + 9%          |               |           | 4/14/2017     |  |          | 12 |                                                                                                     |                             | Retail                                                                                             |  
|                                                                                                                                                  |  |                                                                                                                                                                                                                                           |  |                                                            |                                                                   |               |           |               |  |          |    |                                                                                                     |                             |                                                                                                    |  



| | b) | Current
                                         Status of Investments
| | -- | ----------------------------------------------------------------------



At the end of 2017, Evergreen is carried
at $170,000 because of an impairment in pledge securities and was restructured in 2018 with an approximate 20% principal payoff
and loan remains current. As of December 31, 2018, Evergreen is carried at $110,000 due to repayment of $60,000. Goodwin Family
Trust is fully written down because of an impairment in the guarantee and the loan was restructured in 2018 with additional security
with a loan balance of $491,667 with accrued interest and penalties. Linden is fully written down because of early termination
of First Capital Investment Corp’s additional capital commitment requirements. PaliGroup was impaired due to lack of effective
security and was subsequently sold in 2018 for $1.25 million; Pelorus Group is fully written down due to lack of credit worthiness.
FC Retail is fully written down due to lack of credit worthiness. WenCo is discounted by 50% (carrying value of $257,817) due to
lack of underlying credit worthiness. The loan balance was restructured in 2018 to $663,105 after all penalties and payments. The
loan was also made secure with additional collateral. As of December 31, 2018, WenCo balance was $227,817 due to repayment of $30,000.
Subsequent to December 31, 2018, WenCo, Goodwin and Evergreen were sold for $250,000 plus a Promissory Note. The terms of the Promissory
Note relate to the recovery of principal of the sold loans as follows: first $310,000 recovery goes to buyer, then next $40,000
goes to the Company, any additional recovery allocate 40% to the Company and 60% to the buyer.





F-11







Note
9. Income Tax



Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets
as of December 31, 2017 and 2016 are summarized below.





|                                |  | 2016 |      | 2017 | 
|------------------------------- |  | ---- | ---- | ---- | 
|Net operating loss carryforward |  | $    | (510 | )    | 
|Total deferred tax assets       |  |      | (510 | )    | 
|Valuation allowance             |  |      | 510  |      | 
|Net deferred tax asset          |  |      | —    |      | 







In
assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon
the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December
31, 2017 and 2016, management was unable to determine if it is more likely than not that the Company’s deferred tax assets
will be realized, and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

No federal tax provision has been provided for the years ended December 31, 2017 and 2016 due to the losses incurred during such
periods. Reconciled below is the difference between the income tax rate computed by applying the U.S. federal statutory rate and
the effective tax rate for the years ended December 31, 2017 and 2016.





At
December 31, 2017 and 2016, the Company has available net operating loss carryforwards for federal and state income tax purposes
of approximately $1.7 million, and $1,500, respectively, which, if not utilized earlier, expire through 2036.



Note
10. Subsequent Events



During
May 2018, the PaliGroup loan was sold for $1.25 million and $1.1 million of the sale proceeds were used to purchase 220,000 Series
B Preferred shares of Orchestra Biomed (OBIO) at $5 per share, which is 110,000 shares at $10 given effect of 1:2 split.



During
April 3, 2019, we purchased 60,000 Series B-1 Preferred shares of Orchestra Biomed (OBIO) at $15 per share.





From February to August 2019, the Company
issued 1,886,131 shares of its common stock and received gross proceeds of approximately $3,396,000.









F-12







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



There
are not and have not been any disagreements between us and our accountants on any matter of accounting principles, practices or
financial statement disclosure.



ITEM
9A. CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



As
of the end of the period covered by this report, management performed, with the participation of our principal executive and principal
financial officers, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e)
and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to
be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.
Based on the evaluation, our principal executive and principal financial officers concluded that, as of December 31, 2017, our
disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting.



A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or
detected on a timely basis. We identified the following material weakness as of December 31, 2017: insufficient personnel resources
within the accounting function to segregate the duties over financial transaction processing and reporting.



To
remediate our internal control weakness, management intends to implement the following measures:



| | ● | Add
    sufficient accounting personnel or outside consultants to properly segregate duties and to effect a timely, accurate preparation
    of the financial statements.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Upon
    the hiring of additional accounting personnel or outside consultants, develop and maintain adequate written accounting policies
    and procedures.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



The
additional hiring is contingent upon our efforts to obtain additional funding and the results of our operations. Management expects
to secure funds in the coming fiscal year but provides no assurances that it will be able to do so.



Management’s
Report on Internal Control Over Financial Reporting



This
Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or
an attestation report of the Company’s registered public accounting firm due to a transition period established by rules
of the SEC for newly public companies.



ITEM
9B. OTHER INFORMATION



None.



33







PART
III



ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE



The following table sets forth the names, ages
and positions of our directors and executive officers as of August 16, 2019. Each director serves until removed or resigns,
or a successor is elected. Officers serve at the discretion of the Board and subject to any employment agreements as set forth
below.





|Name                 | Age | Position(s)                                                           
|-------------------- | --- | ----------------------------------------------------------------------
|                     |     |                                                                       
|Derek Taller         | 47  | Interested Director, Chief Executive Officer, President               
|Jeff Davi            | 51  | Independent Director                                                  
|Frank Grant          | 48  | Independent Director (as of July 24, 2019 no longer a Director)       
|David Lessen         | 59  | Chief Financial Officer, Chief Operating Officer, Treasurer, Secretary
|Anthony V.  Raftopol | 49  | Chief Compliance Officer                                              
|Robert Brown         | 65  | Independent Director                                                  







Biographical
information for our directors and executive officers is provided below. There are no family relationships between any of our executive
officers or directors.



Derek
Taller, Ph.D. - Director, Chief Executive Officer, President



Dr.
Derek Taller currently serves as the Chief Executive Officer of StHealth Capital. During the last 5 years Dr. Taller served as
Managing Director of LG Investments, a New York-based Multi-Family Office. Dr. Taller has a broad range of expertise in healthcare,
and has originated, structured and executed both public and private investment and financing deals. His expertise is further demonstrated
by his involvement in leading companies that he supported through managing multiple healthcare equity portfolios and forming fund
vehicles to help execute on lucrative corporate strategies and partnerships.



Dr.
Taller focuses on innovative product technologies, strategy, growth, management buyouts and global strategic alliances. His strategy
places emphasis on transformational healthcare and under the radar market opportunities through data analytics, superior innovation,
and globalization. He also focuses on a distribution channel for products through large hospital networks domestically and in
several overseas countries. Dr. Taller is also involved in policy making to advance the adoption of breakthrough medical products.



Prior
to StHealth Capital, Dr. Taller was a Senior Manager at Benchmark and was involved in the formation of a healthcare fund vehicle.
His buy-side experience also spans from being a Portfolio Manager at Xmark Partners to Stratix Asset Management where he managed
a healthcare fund for public investments. Also, Dr. Taller conducted research at New York Medical/Rockefeller, King’s College
London, Cancer Institute of New Jersey, UC Berkeley and UCSF. He holds a Ph.D. from the Cancer Institute of New Jersey-RWJ Medical
School and an A.B. in Molecular Biology from U.C. Berkeley.



Jeff
Davi - Independent Director



Mr.
Davi is a real estate broker and has significant experience in real estate sales residential and commercial, leasing, management
and financing. From 2011 until current he has been employed as a broker with Keller Williams in Carmel, California where he works
as a member of the Monterey Peninsula Home Team on real estate sales. He has been a licensed California real estate broker since
1992. He is also a principal at A.G. Davi Property Management, a family owned and operated property management company. Mr. Davi.



From
2004 to 2011, Mr. Davi served as the Commissioner of Real Estate for the State of California. As Real Estate Commissioner, he
was instrumental in passing legislation that helps better protect consumers from unscrupulous loan modification schemes. He is
a past member of the Board of Directors for the California Association of REALTORS®, selected REALTOR® of the year by
his peers and served as president of the Monterey County Association of REALTORS®.





34







Mr.
Davi currently serves as a member of the board of directors of Seneca Center, a nonprofit that offers community-based and family-based
service options for emotionally troubled children and their families. From 2010 to 2012, Mr. Davi served as a member of the California
Council on Criminal Justice. From 2007 to 2010, Mr. Davi served as a member of the Interdepartmental Task Force on Non-Traditional
Mortgages. Mr. Davi also has served as Chairman of the Board of REInfoLink, now known as MlsListings. He also served as president
of the Economic Development Corporation of Monterey County, was a co-founder of the Affordable Housing Steering Council of Monterey
County and was on the founding board of directors of the Monterey County Visitor and Convention Bureau. Mr. Davi graduated with
a B.S. from St. Mary’s College.



Frank
Grant - Independent Director



Mr.
Grant has served as Managing Director of Interstate Venture Capital, a venture capital and advisory firm that focuses on the world’s
most promising consumer-focused Internet and mobile companies, since November 2016. Prior to Interstate Venture Capital, and from
November 2011 to November 2016, Mr. Grant was a Partner with Stradling, a business law firm, representing entrepreneurs, emerging
growth companies, venture capital firms and investors, from July 2015 to November 2016. He focused his practice on assisting clients
in solving business problems, executing business strategies and achieving critical business objectives. Prior to Stradling, Mr.
Grant served as Senior Counsel at Perkins Coie, LLP, an international law firm headquartered in Seattle, Washington, from January
2012 to July 2015.



In
addition to investing, Mr. Grant regularly works with public and private companies in fundraising, corporate transactions, and
corporate governance matters. He has extensive experience with public and private mergers and acquisitions, asset acquisitions
and dispositions, private placements and venture capital financings. He assists private and public companies in the acquisition
and sale of full business enterprises, subsidiaries, divisions and other select assets. He also helps operating companies, management
groups, founders and investors in various transactions, including mergers and acquisitions, joint ventures, debt and equity financings,
distribution and supply arrangements and other strategic transactions. Mr. Grant also serves on the board of directors and the
audit committee of First Capital Real Estate Trust, a publicly-registered, non-traded real estate investment trust.



Mr.
Grant earned a M.B.A. from the Stanford Graduate School of Business, a J.D. from Stanford Law School and a B.A. with High Honors
in Economics from the University of California, Berkeley.





As of July 24, 2019 Mr. Grant was no
longer an Independent Director of the Company.







David
Lessen, Ph.D. - Chief Financial Officer



Dr.
David Lessen has over 25 years of financial experience, 12 of those years are healthcare sector related. He was previously the
Chief Financial Officer and member of the Board of Directors of Cerebral Assessment Systems where he sourced and managed investment
banking relationships, led capital raising and strategic partnership initiatives, restructured the company’s debt, and oversaw
treasury and accounting activities.





35







Cerebral
Assessment Systems produced Cognivue, the first FDA cleared medical device for the detection and measurement of dementia and cognitive
impairment. Concurrently, Dr. Lessen was a Managing Director at Atlas Financial Partners, which advises on and structures solutions
to the risks associated with its corporate clients’ benefits related financial liabilities.



Previously,
Dr. Lessen was a Managing Director at Broadpoint Gleacher, a Managing Director at UBS Investment Bank and held various capital
markets roles at Zurich Capital Markets, JP Morgan, Toronto Dominion and Goldman Sachs.



Dr.
Lessen received both a BSc in Mechanical Engineering and a master’s degree in Aerospace Engineering from Cornell University.
He received a Ph.D. in Theoretical and Applied Mechanics from Rensselaer Polytechnic Institute and an MBA from Cornell University’s
Johnson Graduate School of Management.



Anthony
V. Raftopol - Chief Compliance Officer



Anthony
Raftopol is a Dubai-based, United States-trained Partner with the firm of MENA LEGAL, focusing for almost 25 years on cross-border
transactions for the benefit of private and institutional investors to the Middle East and Eastern Europe. His clients are engaged
in a wide variety of fields, including transportation, infrastructure, construction, power generation, oil & gas, agriculture,
real estate, leisure properties and consumer products.



Throughout
his career, Mr. Raftopol has focused on lending and finance, and is currently CCO to StHealth Capital Investment Corporation,
a New York City-based, SEC-regulated fund focused on the international biotech and medical device sector. Mr. Raftopol is also
involved in fintech start-ups and represents several crypto-currency issuers in their global ICO offerings, as well as related
fintech infrastructure licensing and development.



Mr.
Raftopol has been a member of the Bar of the State of New York (USA) since 1995 and is also a member of the Bar of Bucharest,
Romania (status currently inactive). He is a graduate of the Boston University School of Law. In addition to his native English
and Romanian, Mr. Raftopol also speaks and works in several other European languages.



Robert
Brown - Independent Director



Dr.
Brown was formerly, a Board Member at the American Institute of Physics (AIP), AIP Publishing Treasurer, and Vice Chairman of
the Tesla Foundation Board. Dr. Brown led the American Institute of Physics (AIP) as Chief Executive Officer. The AIP comprises
around 120,000 scientists in total. Previously, Dr. Brown led technically the Nano plasmonic research activities at Rockwell Collins
Advanced Technology Center. He has also served as Executive Director of the UK Institute of Physics, and Head of Opto-electronics
Research and Development for Sharp Laboratories of Europe. His scientific & technical specialties are lasers, photonics, nanotechnology,
and photonic-medicine.



At
the UK Ministry of Defence’s ‘Royal Radar Establishment’ in Malvern, England, Dr. Brown was responsible for
inventing new detector, electronic correlator, APD photodetector, laser-diode, liquid- crystal display, and optical-fiber technologies
that have since been developed into successful products for experiments involving jet engines, macromolecules, US submarines,
and aboard the Space Shuttle. He holds 55 Patents and has published over 120 peer-reviewed research papers in various scientific
journals.



Dr.
Brown won the UK MoD Prize for “Outstanding Technology Transfer” and a Sharp Corporation (Japan) Prize for novel laser
diode invention. His UK Institute of Physics team collected the Queen’s Award for Enterprise in 2000 at Buckingham Palace,
London. He is an Adjunct Full Professor in the prestigious Beckman Laser Institute and Medical Clinic, and is a Visiting Professor
in the Department of Computer Science, at the University of California, Irvine. Previously he was CTO at Ostendo Technologies,
in Carlsbad, California, a specialist displays company.



He
is an elected member of the European Academy of the Sciences and Arts (Academia Europaea), and a Special Professor at the University
of Nottingham in the UK. He is a Fellow of the American Physical Society, at the UK Institute of Physics, and the Institute of
Electronic Engineers. He is also Editor-in-Chief of the “Handbook of Optoelectronics” published by CRC Press. He was
co-Editor-in- Chief of the CRC Press Book Series in “Optics and Optoelectronics”. He has been co-Chairman of the OSA’s
International Photon Correlation Conference four times, and editor of subsequent related special issues of Applied Optics.



He
has served as a consultant to many companies and government research centers in the USA and UK, most notably on NASA’s Microgravity
Experimental Advisory Board and on the UK Home Office (Homeland Security Department equivalent) Science and Technology Reference
Committee. Dr. Brown has extensive business experience in China, Japan, Russia, and South Korea, as well as in the USA and EU.



Dr.
Brown received a BSc in Physics from the University of London in 1973 and a PhD in Physics and Engineering from Royal Holloway,
University of London in 1983.





36







Involvement
in Certain Legal Proceedings



None
of the Company’s officers, directors or control persons has, within the last five years, been subject to any conviction,
order, judgment, decree, or finding required to be disclosed by the OTC Markets Guidelines for Providing Adequate Current Information.



Committees;
Audit Committee Financial Expert



The
Board of Directors has the following committees:



Audit
Committee



The
audit committee is responsible for selecting, engaging and discharging the independent accountants, reviewing the plans, scope
and results of the audit engagement with the independent accountants, approving professional services provided by the independent
accountants (including compensation therefor), reviewing the independence of the independent accountants and reviewing the adequacy
of the Company’s internal controls over financial reporting. The members of the audit committee are Frank Grant and Jeff
Davi, each of whom is independent. Mr. Grant serves as the chairman of the audit committee. The Board of Directors has determined
that Mr. Grant is an “audit committee financial expert” as defined under SEC rules.



Nominating
and Corporate Governance Committee



The
nominating and corporate governance committee selects and nominates directors for election by Shareholders, selects nominees to
fill vacancies on the Board of Directors or a committee thereof, develops and recommends to the Board of Directors a set of corporate
governance principles and oversees the evaluation of the Board of Directors. The nominating and corporate governance committee
considers candidates suggested by its members and other directors, as well as the Company’s management and Shareholders.
A Shareholder who wishes to recommend a prospective nominee for the Board of Directors must provide notice to the Company’s
corporate secretary in accordance with the requirements set forth in its bylaws. The members of the nominating and corporate governance
committee are Jeff Davi and Frank Grant, each of whom is independent. Mr. Grant serves as chairman of the nominating and corporate
governance committee.



Section
16(A) Beneficial Ownership Reporting Compliance



Section
16(a) of the Exchange Act requires our officers, directors, and persons owning more than ten percent of a registered class of
our equity securities (“ten percent stockholders”) to file reports of ownership and changes of ownership with the
SEC. To the best of our knowledge, based solely on review of the copies of such reports and amendments thereto furnished to us,
we believe that during the fiscal year ended December 31, 2017, all Section 16(a) filing requirements applicable to our officers,
directors, and ten percent stockholders were met.



Code
of Ethics



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



Code
of Ethics for StHealth Capital Partners LLC



StHealth
Capital Investments Corporation is committed to conducting business in accordance with applicable laws, rules and regulations
and the highest standards of business ethics, and to full and accurate disclosure — financial and otherwise — in compliance
with applicable law. This Code of Ethics and Business Conduct (this “Code”), applicable to the BDC’s Chief Executive
Officer, Chief Financial Officer and persons performing similar functions (together, “Senior Officers”) pursuant to
item 406 of Regulation S-X, as well as the BDC’s directors, officers, and employees (collectively with Senior Officers,
the “Covered Persons”) pursuant to the listing standards of NASDAQ Marketplace Rule 4350(n), sets forth policies to
guide you in the performance of your duties.



As a Covered Person,
you must comply with applicable law. Covered Persons also have a responsibility to conduct themselves in an honest and ethical
manner. You have responsibilities that include creating and fostering a culture of high ethical standards and a commitment to
compliance, maintaining a work environment that encourages the internal reporting of compliance concerns and promptly addressing
compliance concerns.



37







This Code recognizes
that Senior Officers are subject to certain conflicts of interest inherent in the operation of investment companies, because Senior
Officers currently or may in the future serve as Senior Officers of the BDC, as officers or employees of the BDC’s investment
advisor (the “Advisor”) and/or certain investors in the Advisor (collectively with the Advisor, “StHealth Capital
Advisors LLC”) and as officers or trustees/directors of other business development companies, registered investment companies
and unregistered investment funds advised by StHealth Capital Advisors LLC. This Code also recognizes that certain laws and regulations
applicable to, and certain policies and procedures adopted by, the BDC or StHealth Capital Advisors govern your conduct in connection
with many of the conflict of interest situations that arise in connection with the operations of the BDC, including:

| | ● |  | the
    Investment Company Act of 1940, and the rules and regulations promulgated thereunder by the Securities and Exchange Commission
    (the “1940 Act”);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● |  | the
    Investment Advisers Act of 1940, and the rules and regulations promulgated thereunder by the Securities and Exchange Commission
    (the “Advisers Act”);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● |  | the
    Code of Ethics adopted by the BDC pursuant to Section 59 and Rule 17j-1(c) under the 1940 Act (collectively, the “BDC’s
    1940 Act Code of Ethics”);
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● |  | one
    or more codes of ethics adopted by StHealth Capital Investments Corporation that have been reviewed and approved by those
    directors (the “Directors”) of the BDC that are not “interested persons” of the BDC (the “Independent
    Directors”) within the meaning of the 1940 Act (the “StHealth Capital Advisors 1940 Act Code of Ethics”
    and, together with the BDC’s 1940 Act Code of Ethics, the “1940 Act Codes of Ethics”);
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● |  | the
    policies and procedures adopted by the BDC to address conflict of interest situations, such as procedures under Rule 10f-3,
    Section 57(i) and Rule 17a-7 under the 1940 Act (collectively, the “BDC Policies”); and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● |  | StHealth
    Capital Investments Corporation general policies and procedures to address, among other things, conflict of interest situations
    and related matters (collectively, the “StHealth Policies”).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The provisions of the
1940 Act, the Advisers Act, the 1940 Act Codes of Ethics, the BDC Policies and the StHealth Policies are referred to herein collectively
as the “Additional Conflict Rules”.





This Code is different
from, and is intended to supplement, the Additional Conflict Rules. Accordingly, a violation of the Additional Conflict Rules
by a Covered Person is hereby deemed not to be a violation of this Code, unless and until the Governance Committee of the Directors
(the “Governance Committee”) shall determine that any such violation of the Additional Conflict Rules is also a violation
of this Code.

Changes
in Nominating Procedures



None.



ITEM
11. EXECUTIVE COMPENSATION



The
Company’s executive officers do not receive any direct compensation from the Company. The Company does not currently have
any employees and does not expect to have any employees. Services necessary for the Company’s business are provided by individuals
who are employees of the Adviser or by individuals who were contracted by the Company or by the Adviser to work on behalf of the
Company, pursuant to the terms of the Advisory Agreement. Each of the Company’s executive officers is an employee of the
Adviser or an outside contractor, and the Adviser manages the day-to-day investment operations and administration of the Company’s
portfolio. In addition, the Company will reimburse the Adviser for the Company’s allocable portion of expenses incurred
by the Adviser in performing its obligations under the New Advisory Agreement.



NARRATIVE
DISCLOSURE TO SUMMARY COMPENSATION TABLE



In
the event that the Board of Directors decides to internalize the company’s management functions. If it does so, the Company
may elect to negotiate to acquire the Advisor’s assets and personnel. At this time, it cannot anticipate the form or amount
of consideration or other terms relating to any such acquisition. Such consideration could take many forms, including cash payments,
promissory notes and shares of the Company’s common stock. The payment of such consideration could result in dilution of
Shareholders interest and could reduce the earnings per share attributable to their investment.



In
addition, the Company could incur the compensation and benefits costs of its officers and other employees and consultants that
are being paid by the Adviser or its affiliates. In addition, it may issue equity awards to officers, employees and consultants.
These awards would decrease net income and may further dilute Shareholders’ investment in the Company. The Company cannot
reasonably estimate the amount of fees it would save or the costs it would incur if it became self-managed. If the expenses it
assumes as a result of an internalization are higher than the expenses it avoids paying to the Adviser, its earnings per share
would be lower as a result of the internalization than it otherwise would have been, potentially decreasing the amount of funds
available to distribute to Shareholders and the value of the Company’s shares. As it is currently organized, it does not
have any employees. If it elects to internalize its operations, it would employ personnel and would be subject to potential liabilities
commonly faced by employers, such as workers disability and compensation claims and other employee-related liabilities and grievances.





38







Other
than as described above, we have no plans or arrangements with respect to remuneration received or that may be received by our
named executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement,
change of control) or a change of responsibilities following a change of control.



OUTSTANDING
EQUITY AWARDS AT STHEALTH CAPITAL INVESTMENT CORPORATION



None.



NARRATIVE DISCLOSURE OF COMPENSATION POLICIES
AND PRACTICES AS THEY RELATE TO THE COMPANY’S RISK MANAGEMENT

We
believe that our compensation policies and practices for all employees, including executive officers, do not create risks that
are reasonably likely to have a material adverse effect on us.



DIRECTOR
COMPENSATION



The
Company’s directors who do not also serve in an executive officer or interested director capacity for the Company, the Adviser,
any dealer manager, or who are otherwise affiliated therewith, will be entitled to receive annual cash retainer fees, fees for
attending in-person board and committee meetings and annual fees for serving as a committee chairperson, determined based on the
Company’s net assets as of the end of each fiscal quarter. These directors are Jeff Davi and Frank Grant. Amounts payable
under the arrangement will be determined and paid quarterly in arrears as follows:



|Net Assets                   |  | Annual Cash Retainer Fee |        |  | Board/Committee Meeting Fee |   |       | Annual Chairperson Fee | 
|---------------------------- |  | ------------------------ | ------ |  | --------------------------- | - | ----- | ---------------------- | 
|$0 to $100 million           |  | $                        | 12,000 |  |                             | $ | 500   |                        | 
|$100 million to $300 million |  | $                        | 25,000 |  |                             | $ | 1,000 |                        | 
|$300 million to $500 million |  | $                        | 40,000 |  |                             | $ | 1,000 |                        | 
|$500 million to $1 billion   |  | $                        | 60,000 |  |                             | $ | 1,500 |                        | 
|>$1 billion                  |  | $                        | 80,000 |  |                             | $ | 2,500 |                        | 



NARRATIVE
TO DIRECTOR COMPENSATION TABLE



The
Company will also reimburse each of the directors for all reasonable and authorized business expenses in accordance with its policies
as in effect from time to time, including reimbursement of reasonable out-of-pocket expenses incurred in connection with attending
each board meeting and each committee meeting not held concurrently with a board meeting.



The
Company will not pay compensation to directors who also serve in an executive officer or interested director capacity for the
Company, the Adviser, any dealer manager or who are otherwise affiliated therewith.



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



As of August 16, 2019, there were 2,726,758
shares of common stock outstanding. The following table sets forth certain information regarding the beneficial ownership of the
outstanding common shares as of August 16, 2019 by (i) each person who owns beneficially more than 5% of our outstanding common
stock; (ii) each of our executive officers and directors; and (iii) all of our executive officers and directors as a group. The
shares listed include as to each person any shares that such person has the right to acquire within 60 days from the date hereof.
Except as otherwise indicated, each such person has sole investment and voting power with respect to such shares, subject to community
property laws where applicable.



SECURITY
OWNERSHIP OF MANAGEMENT



|Name
    of
    Beneficial Owner                                          |  | Number of
    Shares 
    Beneficially Owned |         |  | Percentage
    Owned (%) | 
|------------------------------------------------------------------------- |  | -------------------------------------------- | ------- |  | ------------------------ | 
|Derek Taller                                                              |  |                                              | —       |  |                          | 
|David Lessen                                                              |  |                                              | —       |  |                          | 
|Anthony Raftopol                                                          |  |                                              | —       |  |                          | 
|Jeff Davi                                                                 |  |                                              | —       |  |                          | 
|Frank Grant                                                               |  |                                              | —       |  |                          | 
|Robert Brown                                                              |  |                                              | —       |  |                          | 
|All directors and
    named executive officers as a group (6 individuals) |  |                                              | —       |  |                          | 
|5% or More
    Shareholders                                               |  |                                              |         |  |                          | 
|Donald E Garlikov                                                         |  |                                              | 312,800 |  |                          | 
|Union Bancaire Privee                                                     |  |                                              | 250,000 |  |                          | 
|Robert W & Brenda
    E Tully JTWROS                                      |  |                                              | 183,333 |  |                          | 
|MSS Surgical LLC                                                          |  |                                              | 150,505 |  |                          | 









39







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



None.



ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



Fees



Aggregate
fees for professional services rendered to us by Malone Bailey LLP (“Malone Bailey”), our independent registered public
accounting firm engaged to provide accounting services for the fiscal years ended December 31, 2017 and December 31, 2016. The
following table sets forth the aggregate fees billed or expected to be billed by Malone Bailey for audit and non-audit services
in 2017 and 2016, including “out-of-pocket” expenses incurred in rendering these services. The nature of services
provided for each category is described following the table.



|                   |  | Year Ended 2017 |        |  | Year Ended 2016 |  
|------------------ |  | --------------- | ------ |  | --------------- | -
|Audit fees         |  | $               | 75,000 |  |                 | $
|Audit related fees |  |                 | —      |  |                 |  
|Tax fees           |  |                 | —      |  |                 |  
|All other fees     |  |                 | —      |  |                 |  
|Total              |  | $               | 75,000 |  |                 | $



Policy
on Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors



Consistent
with the SEC policies regarding auditor independence, our Board of Directors has responsibility for appointing, setting compensation
and overseeing the work of the independent auditor. In recognition of this responsibility, our Board of Directors has established
a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.



Prior
to engagement of the independent auditor for the next year’s audit, management will submit an aggregate of services expected
to be rendered during that year for each of the following four categories of services to the Board of Directors for approval.



1.  
Audit services include audit work performed in the preparation of financial statements, as well as work that generally
only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits, and attest services
and consultation regarding financial accounting and/or reporting standards.



2.  
Audit-Related services are for assurance and related services that are traditionally performed by the independent
auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required
to meet certain regulatory requirements.



3.  
Tax services include all services performed by the independent auditor’s tax personnel except those services
specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning,
and tax advice.



4.  
Other Fees are those associated with services not captured in the other categories.



40







ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



(a)
The following documents are filed as part of this Annual Report on Form 10-K.



(1)
Financial Statements: The list of financial statements required by this item is set forth in Item 8.



(2)
Financial Statement Schedules: All financial statement schedules called for under Regulation S-X are not required under the
related instructions, are not material or are not applicable and, therefore, have been omitted or are included in the consolidated
financial statements or notes thereto included elsewhere in this Annual Report on Form 10-K.



(b) The
following documents are filed as exhibits to this Annual Report on Form 10-K:



|Exhibit
    No. | Description                                                                                                                                                                         
|--------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1*           | Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.                                                                         
|                |                                                                                                                                                                                     
|31.2*           | Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.                                                                         
|                |                                                                                                                                                                                     
|32.1*           | Certification of Chief Executive Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|                |                                                                                                                                                                                     
|32.2*           | Certification of Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|* | Filed
    herewith
|- | ------------------



41







SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.



|                          | CompanyName
|------------------------- | -----------
|Date:
    August 19, 2019 |            
|                          | By:        
|                          |            



42