UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Quarterly Period Ended September 30, 2018~~

quarterly period ended December 31, 2019

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

~~For the transition period from to~~

Commission File Number 814-00908

~~Triton Pacific Investment Corporation, Inc.~~TP FLEXIBLE INCOME FUND, INC

. (Exact name of ~~registrant~~Registrant as specified in its charter)



Maryland		45-2460782
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10 East 40 ^th Street, 42^nd Floor New York, NY		10016
(Address of principal executive offices)		(Zip Code)

~~6701 Center Drive West, Suite 1450~~

~~Los Angeles, CA 90045~~

~~(Address of principal executive offices)~~

~~(310) 943-4990~~

(Registrant’s telephone number, including area ~~code)~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

code: (212) 448-0702

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

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

Yes x No o

Indicate by check mark whether the ~~registrant~~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☐~~

Yes o No o

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



Large accelerated filer	☐	o	Accelerated filer	☐
				o
Non-accelerated filer	~~☒ (Do not check if a smaller reporting company)~~	x	Smaller reporting company	☐o
			Emerging growth company	☐o

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

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

Asx

The number of ~~November 14, 2018, the Registrant had 1,580,469.90~~ shares of ~~Class A common stock, $0.001~~the issuer’s Common Stock, $.001 par value, ~~outstanding.~~

outstanding as of February 12, 2020 was 2,341,856.

TP FLEXIBLE INCOME FUND, INC.

TABLE OF CONTENTS

~~Part I—Financial Information~~			3

		Page
	Forward-Looking Statements	1
PART I	FINANCIAL INFORMATION
Item 1: 1.	Financial Statements	3 2
	Consolidated Statements of Assets and Liabilities as of December 31, 2019 (unaudited) and June 30, 2019	2
	Consolidated Statements of Operations for the three months and six months ended December 31, 2019 and 2018 (unaudited)	3
	Consolidated Statements of Changes in Net Assets for the three months and six months ended December 31, 2019 and 2018 (unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended December 31, 2019 and 2018 (unaudited)	6
	Consolidated Schedule of Investments as of December 31, 2019 (unaudited)	7
	Consolidated Schedule of Investments as of June 30, 2019	10
	Notes to Consolidated Financial Statements (unaudited)	13
Item 2: 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	28 46
Item 3: 3.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk	50 69
Item 4: 4.	Controls and ~~Procedures.~~Procedures	51 70
~~Part II—Other Information~~PART II	51OTHER INFORMATION
Item 1: 1.	Legal ~~Proceedings.~~Proceedings	51 70
Item ~~1A:~~ 1A.	Risk ~~Factors.~~Factors	51 70
Item 2: 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds	52 72
Item ~~3: Defaults~~3.	Default Upon Senior ~~Securities.~~Securities	53 72
Item 4: 4.	Mine Safety ~~Disclosures.~~Disclosures	53 72
Item 5: 5.	Other ~~Information.~~Information	53 72
Item ~~6: Exhibits.~~6.	54 Exhibits	72
~~SIGNATURES~~	55 Signatures	73

~~Part I—Financial Information~~

~~Item 1: Financial Statements~~

~~Triton Pacific Investment Corporation, Inc.~~

~~CONSOLIDATED StatementS of Financial Position~~

September 30,
2018 December 31,
(unaudited) 2017
ASSETS

Affiliate Investments, at fair value (amortized cost - $1,916,389 and $1,916,389, respectively) $ 501,742 $ 537,903
Non-affiliate Investments, at fair value (amortized cost - $13,189,371 and $11,633,659, respectively) 13,003,062 11,497,635
Cash 4,921,673 5,648,505
Principal and interest receivable 25,410 41,027
Prepaid expenses 10,697 48,091
Reimbursement due from Adviser (see Note 4) - 257,628
Due from affiliates 886 -
Deferred offering costs 205,174 84,070

TOTAL ASSETS $ 18,668,644 $ 18,114,859

LIABILITIES AND NET ASSETS

LIABILITIES
Payable for investments purchased $ 495,000 $ 990,000
Accounts payable and accrued liabilities 129,510 249,910
Due to related parties (see Note 4) 119,980 25,712
TOTAL LIABILITIES 744,490 1,265,622

COMMITMENTS AND CONTINGENCIES (see Note 9)

NET ASSETS
Common stock, $0.001 par value, 75,000,000 shares authorized, 1,573,804.22 and 1,417,233.32 shares issued and outstanding respectively 1,571 1,417
Capital in excess of par value 20,899,977 19,033,890
Accumulated undistributed net realized gains 37,415 65,363
Accumulated overdistributed net investment income (1,413,853 ) (736,923 )
Accumulated unrealized depreciation on investments (1,600,956 ) (1,514,510 )
TOTAL NET ASSETS 17,924,154 16,849,237

TOTAL LIABILITIES AND NET ASSETS $ 18,668,644 $ 18,114,859

Net asset value per share of common stock at period end $ 11.39 $ 11.89

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

~~Triton Pacific Investment Corporation,~~

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including, but not limited to, statements as to:

our future operating results;

our business prospects and the prospects of our portfolio companies;

changes in the economy;

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

the effect of investments that we expect to make;

our contractual arrangements and relationships with third parties;

actual and potential conflicts of interest with Prospect Flexible Income Management, LLC and its affiliates;

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

the ability of our portfolio companies to achieve their objectives;

the use of borrowed money to finance a portion of our investments;

the adequacy of our financing sources and working capital;

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

the ability of Prospect Flexible Income Management, LLC to locate suitable investments for us and to monitor and administer our investments;

the ability of Prospect Flexible Income Management, LLC and its affiliates to attract and retain highly talented professionals;

our ability to qualify and maintain our qualification as a RIC and as a BDC (each as defined herein); and

the effect of changes in laws or regulations affecting our operations or to tax legislation and our tax position.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The forward looking statements contained in this quarterly report involve risks and uncertainties and undue reliance should not be placed on them. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in our annual report on Form 10-K and our prospectus, dated September 26, 2019, which was filed with the SEC on September 30, 2019, as supplemented from time to time by prospectus supplements filed with the SEC.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K.

As a result of Pathway Capital Opportunity Fund, Inc.

(“PWAY”) being the accounting survivor of the Merger (as defined herein), certain financial information and performance of operations regarding PWAY are discussed herein. Such information may contain forward-looking statements that involve risks and uncertainties. Please see “Risk Factors” and above for a discussion of the uncertainties, risks and assumptions associated with such statements. You should read this quarterly report on form 10-Q in conjunction with the financial statements and related notes and other financial information appearing elsewhere herein.

TP FLEXIBLE INCOME FUND, INC. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

Item 1. Financial Statements ~~of Operations~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017~~

~~(Unaudited)~~

Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017
INVESTMENT INCOME
Interest from affiliate investments $ - $ - $ - $ 19,488
Interest from non-control/ non-affiliate investments 302,265 198,075 849,536 536,481
Fee income from non-control/ non-affiliate investments 277 29,413 7,502 40,697

Total investment income 302,542 227,488 857,038 596,666

OPERATING EXPENSES
Management fees 91,593 83,459 269,189 246,154
Capital gains incentive fees (see Notes 2 and 4) - - - (334 )
Administrator expense 66,558 70,495 215,786 213,473
Professional fees 134,179 99,062 368,899 214,914
Insurance expense 17,791 17,779 57,317 57,251
Offering expense 83,942 - 170,932 -
Other operating expenses 27,339 13,095 56,487 23,168

Total operating expenses 421,402 283,890 1,138,610 754,626

Expense reimbursement from Sponsor - - - (80,847 )

Net operating expenses 421,402 283,890 1,138,610 673,779

Net investment income/ (loss) (118,860 ) (56,402 ) (281,572 ) (77,113 )

REALIZED AND UNREALIZED GAIN/(LOSS)
Net realized gain on non-affiliated investments 3,740 26,569 32,960 91,134
Net decrease in unrealized appreciation on affiliate investments (782 ) (88,923 ) (36,161 ) (1,350,763 )
Net decrease in unrealized appreciation on non-control/ non-affiliate investments (13,607 ) (42,474 ) (50,285 ) (99,262 )

Total net realized and unrealized loss on investments (10,649 ) (104,828 ) (53,486 ) (1,358,891 )

NET DECREASE IN NET ASSETS FROM OPERATIONS $ (129,509 ) $ (161,230 ) $ (335,058 ) $ (1,436,004 )

PER SHARE INFORMATION - Basic and Diluted
Net decrease in net assets from operations per share $ (0.08 ) $ (0.13 ) $ (0.22 ) $ (1.26 )

Weighted average common shares outstanding - basic and diluted 1,544,718 1,266,225 1,500,612 1,143,880

~~The accompanying~~

Assets
December 31, 2019 June 30, 2019
(Unaudited) (Audited)
Investments at fair value:
Affiliate investments (cost of $472,357 and $472,357, respectively)
$ 694,589

$ 570,816

Non-control/non-affiliate investments (cost of $39,925,878 and $24,426,013, respectively)
38,428,241

23,448,747

Total investments (cost of $40,398,235 and $24,898,370, respectively)
39,122,830

24,019,563

Cash
3,342,807

6,730,743

Deferred financing costs (Note 11) 551,476
457,651

Prepaid expenses and other assets 348,724
427,944

Deferred offering costs 325,823
292,429

Interest receivable 71,396
46,887

Receivable for investments sold 65,000
952,631

Due from Affiliate (Note 4) 2,137
2,137

Due from Adviser (Note 4) —
128,852

Total Assets
43,830,193

33,058,837

Liabilities

Revolving Credit Facility (Note 11)
21,000,000

5,500,000

Payable for shares repurchased
460,786

495,506

Due to Administrator (Note 4)
288,156

341,235

Accrued audit fees 195,456
369,762

Payable for investments purchased
176,250

1,961,399

Dividends payable
124,569

126,128

Interest payable 80,902
28,063

Due to Affiliates (Note 4) 66,824
54,205

Accrued legal fees 39,270
486,537

Accrued expenses
26,770

157,873

Due to Adviser (Note 4)
—

127,414

Total Liabilities
22,458,983

9,648,122

Commitments and Contingencies (Note 10)
—

—

Net Assets
$ 21,371,210

$ 23,410,715

Components of Net Assets

Common Stock, par value $0.001 per share (75,000,000 shares authorized; 2,325,749 and 2,370,011 shares issued and outstanding, respectively) (Note 3)
$ 2,326

$ 2,370

Paid-in capital in excess of par (Note 3)
27,489,723

30,105,995

Total distributable earnings (loss) (Note 6)
(6,120,839 )
(6,697,650 )
Net Assets
$ 21,371,210

$ 23,410,715

Net Asset Value Per Share (Note 12)
$ 9.19

$ 9.88

See notes ~~are an integral part of these~~to consolidated financial statements.

~~Triton Pacific Investment Corporation, Inc.~~

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED ~~StatementS of~~STATEMENTS OF OPERATIONS

(unaudited)



	Three Months Ended December 31,						Six Months Ended December 31,
	2019⁽¹⁾			2018⁽¹⁾			2019⁽¹⁾			2018⁽¹⁾
Investment Income
Interest Income from non-control/non-affiliate investments	$	619,251		$	142,093		$	1,133,160		$	315,813
Interest income from structured credit securities	234,597			142,737			469,332			283,158
Total Investment Income	853,848			284,830			1,602,492			598,971

Operating Expenses
Base management fees (Note 4)	182,205			50,735			339,614			108,414
Interest expense and credit facility expenses (Note 11)	175,833			8,434			276,003			19,595
Administrator costs (Note 4)	173,523			17,125			337,316			85,875
Amortization of offering costs	151,288			34,054			271,894			64,500
Legal expense	86,263			141,674			111,621			580,843
Audit and tax expense	81,050			62,119			136,883			88,619
Transfer agent’s fees and expenses	39,205			(6,426		)	69,758			(10,934		)
Insurance expense	38,461			27,856			76,923			56,170
General and administrative	32,789			6,126			72,369			12,234
Valuation services (Note 4)	24,852			37,826			48,417			81,771
Adviser shared service expense (Note 4)	—			6,342			—			13,552
Report and notice to shareholders	—			—			—			5,333
Total Operating Expenses	985,469			385,865			1,740,798			1,105,972
Expense limitation payment (Note 4)	(182,205		)	(54,178		)	(339,614		)	(181,029		)
Total Net Operating Expenses	803,264			331,687			1,401,184			924,943
Net Investment Income (Loss)	50,584			(46,857		)	201,308			(325,972		)

Net Realized and Net Change in Unrealized Gains (Losses) on Investments
Net realized (losses):
Non-control/non-affiliate investments	(431,439		)	(40,098		)	(695,468		)	(45,453		)
Net realized (losses)	(431,439		)	(40,098		)	(695,468		)	(45,453		)
Net change in unrealized gains (losses) on:
Non-control/non-affiliate investments	(16,981		)	(807,829		)	(520,371		)	(945,059		)
Affiliate investments	101,175			—			123,773			—
Net change in unrealized gains (losses)	84,194			(807,829		)	(396,598		)	(945,059		)
Net Realized and Net Change in Unrealized Gains (Losses) on Investments	(347,245		)	(847,927		)	(1,092,066		)	(990,512		)
Net Decrease in Net Assets Resulting from Operations	$	(296,661	)	$	(894,784	)	$	(890,758	)	$	(1,316,484	)
Net decrease in net assets resulting from operations per share (Note 12)	$	(0.13	)	$	(1.12	)	$	(0.38	)	$	(1.61	)
Distributions declared per share	$	0.17		$	0.13		$	0.34		$	0.28

(1) See Notes 1 and 9.

See notes to consolidated financial statements.

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

~~NINE MONTHS ended SEPTEMBER 30, 2018 AND 2017~~

~~(Unaudited)~~

Nine months ended
September 30,
2018 2017
Operations
Net investment income/ (loss) $ (281,572 ) $ (77,113 )
Net realized gain on investments 32,960 91,134
Net decrease in unrealized appreciation on investments (86,446 ) (1,450,025 )
Net decrease in net assets resulting from operations (335,058 ) (1,436,004 )
Stockholder distributions (see Note 5)
Distributions from net investment income (395,356 ) (341,207 )
Distributions from net realized gain on investments (60,908 ) (59,732 )
Net decrease in net assets resulting from stockholder distributions (456,264 ) (400,939 )
Capital share transactions
Issuance of common stock (see Note 3) 1,686,734 4,817,586
Reinvestment of stockholder distributions (see Note 3) 256,864 214,336
Repurchase of shares of common stock (77,359 ) (217,307 )
Net increase in net assets from capital share transactions 1,866,239 4,814,615

Total increase in net assets 1,074,917 2,977,672
Net assets at beginning of period 16,849,237 13,228,702
Net assets at end of period $ 17,924,154 $ 16,206,374
Accumulated overdistributed net investment income $ (1,413,853 ) $ (431,069 )
Accumulated undistributed net realized gains $ 37,415 $ 14,444

~~The accompanying~~

(unaudited)

Common Stock
Three Months Ended December 31, 2019 Shares Par
Paid-in Capital in
Excess of Par⁽¹⁾

Distributable Earnings
(Loss)⁽¹⁾
Total Net Assets
Balance as of September 30, 2019 2,392,140
$ 2,392
$ 29,817,083
$ (7,172,462 ) $ 22,647,013
Net decrease in net assets resulting from operations
Net investment income —
—
—
50,584
50,584
Net realized (losses) on investments —
—
—
(431,439 ) (431,439 )
Net change in unrealized gains (losses) on investments —
—
—
84,194
84,194
Distributions to Shareholders (Note 5)
Return of capital distributions -FLEX Class A common shares —
—
(404,093 ) —
(404,093 )
Capital Transactions
Shares issued through reinvestment of dividends 19,813
20
211,979
—
211,999
Repurchase of common shares (86,204 ) (86 ) (786,962 ) —
(787,048 )
Tax Reclassification of Net Assets (Note 6) (1,348,284 ) 1,348,284
—
Total Increase (Decrease) for the three months ended December 31, 2019 (66,391 ) (66 ) (2,327,360 ) 1,051,623
(1,275,803 )
Balance as of December 31, 2019 2,325,749
$ 2,326
$ 27,489,723
$ (6,120,839 ) $ 21,371,210

(1) See Note 6 - Income Taxes.

Common Stock
Three Months Ended December 31, 2018 Shares Par Paid-in Capital in
Excess of Par
Distributable Earnings
(Loss)⁽²⁾
Total Net Assets
Balance as of September 30, 2018 630,353
$ 6,304
$ 8,390,165
$ (928,440 ) $ 7,468,029
Net decrease in net assets resulting from operations
Net investment (loss) —
—
—
(46,857 ) (46,857 )
Net realized (losses) on investments —
—
—
(40,098 ) (40,098 )
Net change in unrealized gains (losses) on investments —
—
—
(807,829 ) (807,829 )
Distributions to Shareholders (Note 5)
Return of capital distributions -PWAY Class A (Previously Class R) —
—
(102,423 ) —
(102,423 )
Return of capital distributions -PWAY Class I (Previously Class RIA and I) —
—
(5,697 ) —
(5,697 )
Capital Transactions
Shares issued through reinvestment of dividends 6,017
60
67,126
—
67,186
Repurchase of common shares (19,180 ) (192 ) (217,503 ) —
(217,695 )
Tax Reclassification of Net Assets —
—
6,096
(6,096 ) —
Total Increase (Decrease) for the three months ended December 31, 2018 (13,163 ) (132 ) $ (252,401 ) $ (900,880 ) $ (1,153,413 )
Balance as of December 31, 2018 617,190
$ 6,172
$ 8,137,764
$ (1,829,320 ) $ 6,314,616

(2) See Note 2 - Significant Accounting Policies.

See notes ~~are an integral part of these statements.~~

to consolidated financial statements

~~Triton Pacific Investment Corporation, Inc.~~

~~CONSOLIDATED Statements of CASH FLOWS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017~~

~~(Unaudited)~~

Nine months ended
September 30,
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in net assets resulting from operations $ (335,058 ) $ (1,436,004 )
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used by operating activities
Purchases of investments (4,426,250 ) (6,118,500 )
Proceeds from sales and repayments of investments 2,928,272 3,921,509
Net realized gain from investments (32,960 ) (91,134 )
Net change in unrealized appreciation (depreciation) on investments 86,445 1,450,025
Accretion of discount (24,773 ) (23,918 )
Net increase in paid-in-kind interest - (19,488 )
Amortization of deferred offering costs 170,932 -
Change in assets and liabilities
Principal and interest receivable 15,617 (7,301 )
Prepaid expenses 37,394 (21,803 )
Deferred transaction costs - -
Reimbursement due from Adviser 257,628 (224,004 )
Due from affiliates (886 ) -
Payable for investments purchased (495,000 ) 175,875
Accounts payable and accrued liabilities (120,400 ) 115,248
Due to related parties 94,268 (31,874 )
NET CASH USED BY OPERATING ACTIVITIES (1,844,771 ) (2,311,369 )

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,686,734 4,817,586
Payments on repurchases of shares of common stock (77,359 ) (217,307 )
Stockholder distributions (199,400 ) (186,603 )
Increases in distributions payable - (16,574 )
Offering costs (292,036 ) -
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,117,939 4,397,102

NET INCREASE (DECREASE) IN CASH (726,832 ) 2,085,733

CASH - BEGINNING OF PERIOD $ 5,648,505 $ 3,788,901

CASH - END OF PERIOD $ 4,921,673 $ 5,874,634

Supplemental schedule of non-cash investing activities
Reinvestment of stockholder distributions $ 256,864 $ 214,336

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

~~TRITON PACIFIC INVESTMENT CORPORATION,~~

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)



	Common Stock
Six Months Ended December 31, 2019	Shares		Par			Paid-in Capital in Excess of Par⁽¹⁾			Distributable Earnings (Loss)⁽¹⁾			Total Net Assets
Balance as of June 30, 2019	2,370,011		$	2,370		$	29,986,710		$	(6,578,365	)	$	23,410,715
Net decrease in net assets resulting from operations
Net investment income	—		—			—			201,308			201,308
Net realized (losses) on investments	—		—			—			(695,468		)	(695,468		)
Net change in unrealized gains (losses) on investments	—		—			—			(396,598		)	(396,598		)
Distributions to Shareholders (Note 5)
Return of capital distributions -FLEX Class A common shares			—			(810,134		)	—			(810,134		)
Capital Transactions
Shares issued	2,197		2			24,998						25,000
Commissions and fees on shares issued	—		—			(1,857		)	—			(1,857		)
Shares issued through reinvestment of dividends	39,745		40			425,252			—			425,292
Repurchase of common shares	(86,204	)	(86		)	(786,962		)	—			(787,048		)
Tax Reclassification of Net Assets (Note 6)	—		—			(1,348,284		)	1,348,284			—
Total Increase (Decrease) for the six months ended December 31, 2019	(44,262	)	$	(44	)	$	(2,496,987	)	$	457,526		$	(2,039,505	)
Balance as of December 31, 2019	2,325,749		$	2,326		$	27,489,723		$	(6,120,839	)	$	21,371,210

(1) See Note 6 - Income Taxes.



	Common Stock
Six Months Ended December 31, 2018	Shares		Par			Paid-in Capital in Excess of Par			Distributable Earnings (Loss)⁽¹⁾			Total Net Assets
Balance as of June 30, 2018	657,370		$	6,574		$	8,853,330		$	(506,740	)	$	8,353,164
Net decrease in net assets resulting from operations
Net investment (loss)	—		—			—			(325,972		)	(325,972		)
Net realized (losses) on investments	—		—			—			(45,453		)	(45,453		)
Net change in unrealized gains (losses) on investments	—		—			—			(945,059		)	(945,059		)
Distributions to Shareholders (Note 5)
Return of capital distributions -PWAY Class A (Previously Class R)	—		—			(216,926		)	—			(216,926		)
Return of capital distributions -PWAY Class I (Previously Class RIA and I)	—		—			(11,904		)	—			(11,904		)
Capital Transactions
Shares issued through reinvestment of dividends	10,716		107			126,203			—			126,310
Repurchase of common shares	(50,896	)	(509		)	(619,035		)	—			(619,544		)
Tax Reclassification of Net Assets	—		—			6,096			(6,096		)	—
Total Increase (Decrease) for the six months ended December 31, 2018	(40,180	)	$	(402	)	$	(715,566	)	$	(1,322,580	)	$	(2,038,548	)
Balance as of December 31, 2018	617,190		$	6,172		$	8,137,764		$	(1,829,320	)	$	6,314,616

(1) See Note 2 - Significant Accounting Policies.

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

See notes to consolidated financial statements.

(Unaudited)



	Six Months Ended December 31,
	2019			2018
Cash flows from operating activities:
Net decrease in net assets resulting from operations	$	(890,758	)	$	(1,316,484	)
Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash (used in) provided by operating activities:
Amortization of offering costs	271,894			64,500
Purchases of investments	(19,425,198		)	—
Repayments and sales of portfolio investments	3,275,274			2,068,610
Net change in unrealized loss on investments	396,598			945,059
Net realized loss on investments	695,468			45,453
Accretion of purchase discount on investments, net	(45,357		)	(62,766		)
Amortization of deferred financing costs	31,175			—
Paid-in-kind interest	(58		)	—
Changes in other assets and liabilities:
(Increase) Decrease in operating assets
Receivable for investments sold	887,631			—
Interest receivable	(24,509		)	43,455
Due from Adviser (Note 4)	128,852			114,411
Deferred offering costs (Note 4)	(305,288		)	—
Prepaid expenses	79,220			22,215
Due from Affiliate (Note 4)	—			(843		)
Increase (Decrease) in operating liabilities
Due to Adviser (Note 4)	(127,414		)	—
Accrued expenses	(131,103		)	1,304
Accrued legal fees	(447,267		)	—
Accrued audit fees	(174,306		)	—
Due to Administrator (Note 4)	(53,079		)	(22,846		)
Payable for investments purchased	(1,785,149		)	—
Due to Affiliates (Note 4)	12,619			15,798
Interest payable	52,839			7,112
Net cash (used in) provided by operating activities	(17,577,916		)	1,924,978
Cash flows from financing activities:
Gross proceeds from shares issued (Note 3)	25,000			—
Commissions and fees on shares issued	(1,857		)	—
Distributions paid to stockholders	(386,395		)	(145,088		)
Repurchase of common shares	(821,768		)	(619,544		)
Financing costs paid and deferred	(125,000		)	—
Borrowings under Revolving Credit Facility (Note 11)	15,500,000			—
Repayments under Revolving Credit Facility (Note 11)	—			(750,000		)
Net cash provided by (used in) financing activities	14,189,980			(1,514,632		)
Net (decrease) increase in cash	(3,387,936		)	410,346
Cash at beginning of period	6,730,743			587,722
Cash at end of period	$	3,342,807		$	998,068
Supplemental disclosure of cash flow financing activities:
Value of shares issued through reinvestment of dividends	$	425,292		$	126,310
Supplemental disclosures:
Cash paid for interest	$	191,989		$	12,483

See notes to consolidated financial statements.

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF ~~SEPTEMBER 30, 2018~~

~~(UNAUDITED)~~

Portfolio Company Footnotes Industry Rate (b) Floor Maturity Principal
Amount/ Number
of Shares Amortized
Cost^(f) Fair Value^(c)
Senior Secured Loans—First Lien—44.55%
LSF9 Atlantis Holdings, LLC Telecommunications L+6.00% (8.12%) 2.12 % 5/1/2023 $ 484,375 $ 480,491 $ 469,238
California Pizza Kitchen, Inc. Beverage, Food & Tobacco L+6.00% (8.39%) 2.39 % 8/19/2022 343,000 340,751 334,425
CareerBuilder Business Services L+6.75% (9.14%) 2.39 % 7/27/2023 369,112 357,002 369,804
Coronado Curragh LLC - Term Loan B Metals & Mining L+6.50% (8.89%) 2.39 % 3/29/2025 345,543 334,639 349,862
Coronado Curragh LLC - Term Loan C Metals & Mining L+6.50% (8.89%) 2.39 % 3/21/2025 94,475 92,018 95,656
Deluxe Entertainment Services Group, Inc. Media: Diversified and Production L+5.50% (7.84%) 2.34 % 2/28/2020 333,512 329,039 306,831
Flavors Holdings, Inc. Tranche B Beverage, Food & Tobacco L+5.75% (8.14%) 2.39 % 4/3/2020 98,839 97,511 92,415
GK Holdings, Inc. Business Services L+6.00% (8.39%) 2.39 % 1/20/2021 120,313 119,976 112,191
GoWireless Holdings, Inc. Consumer Services L+6.50% (8.74%) 2.24 % 12/20/2024 481,250 476,768 471,625
InfoGroup Inc. Business Services L+5.00% (7.39%) 2.39 % 3/28/2023 492,500 488,744 492,091
Isagenix International LLC Healthcare & Pharmaceuticals L+5.75% (8.14%) 2.39 % 4/25/2025 493,750 489,056 494,984
McAfee LLC Business Services L+4.50% (6.74%) 2.24 % 9/27/2024 247,500 245,353 249,843
Moran Foods, LLC Beverage, Food & Tobacco L+6.00% (8.24%) 2.24 % 12/5/2023 343,875 336,121 250,169
Prospect Medical Holdings, Inc. Healthcare & Pharmaceuticals L+5.50% (7.63%) 2.13 % 2/22/2024 497,500 488,527 505,584
Quidditch Acquisition, Inc. Beverage, Food & Tobacco L+7.00% (9.17%) 2.17 % 3/14/2025 497,500 488,237 506,206
Raley’s Beverage, Food & Tobacco L+5.25% (7.49%) 2.24 % 5/18/2022 187,277 187,277 188,447
Sahara Parent Inc Business Services L+5.00% (7.26%) 2.26 % 8/16/2024 346,500 343,533 347,713
Strike, LLC Energy: Oil & Gas L+8.00% (10.59%) 2.59 % 11/30/2022 319,375 312,126 324,166
Travel Leaders Group, LLC Hotel, Gaming & Leisure L+4.00% (6.16%) 2.16 % 1/25/2024 498,750 497,795 505,296
TruGreen Limited Partnership Consumer Services L+4.00% (6.13%) 2.13 % 4/13/2023 343,035 339,583 347,109
Verdesian Life Sciences LLC Wholesale Trade-Nondurable Goods L+5.00% (7.34%) 2.34 % 7/1/2020 199,417 198,695 190,443
Wirepath LLC Consumer Services L+4.50% (6.74%) 2.24 % 8/5/2024 495,009 492,873 497,793
Yak Access LLC Construction & Building L+5.00% (7.14%) 2.14 % 6/29/2025 500,000 485,424 483,750
Total Senior Secured Loans—First Lien $ 8,132,407 $ 8,021,538 $ 7,985,641

Senior Secured Loans—Second Lien—27.99%
DG Investment Intermediate Holdings 2 Inc. Business Services L+6.75% (8.99%) 2.24 % 2/1/2026 500,000 497,706 504,375
Encino Acquisition Partners Holdings, LLC Energy: Oil & Gas L+6.75% (7.75%) 1.00 % 9/26/2025 500,000 495,000 502,500
Flavors Holdings, Inc. Beverage, Food & Tobacco L+10.00% (12.39%) 2.39 % 10/7/2021 125,000 122,885 109,375
FullBeauty Brands Holding High Tech Industries L+9.00% (11.34%) 2.34 % 10/13/2023 250,000 219,377 22,000
GK Holdings, Inc. Business Services L+10.25% (12.64%) 2.39 % 1/21/2022 125,000 123,830 104,063
Inmar Business Services L+8.00% (10.24%) 2.24 % 5/1/2025 500,000 493,807 502,500
McAfee LLC Business Services L+8.50% (10.74%) 2.24 % 9/26/2025 500,000 497,338 511,250
Neustar, Inc. High Tech Industries L+8.00% (10.24%) 2.24 % 2/28/2025 749,792 740,292 746,043
NPC International, Inc. Beverage, Food & Tobacco L+7.50% (9.58%) 2.08 % 3/28/2025 500,000 498,846 506,250
Oxbow Carbon LLC Metals & Mining L+7.50% (9.74%) 2.24 % 1/4/2024 500,000 495,575 512,500
Patriot Container Corp. Environmental L+7.75% (9.96%) 2.21 % 3/16/2026 500,000 490,680 490,000
Rocket Software, Inc. Business Services L+9.50% (11.89%) 2.39 % 10/14/2024 500,000 492,497 506,565
Total Senior Secured Loans—Second Lien $ 5,249,792 $ 5,167,833 $ 5,017,421

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

DECEMBER 31, 2019 (unaudited)

~~TRITON PACIFIC INVESTMENT CORPORATION,~~

Portfolio Company /
Security Type Industry Acquisition
Date Coupon/Yield (b) Floor Legal
Maturity Principal/
Quantity Amortized Cost (d) Fair Value (c) % of Net Assets
Senior Secured Loans-First Lien
California Pizza Kitchen, Inc. ^(g)(k)
Hotel, Gaming & Leisure 8/19/2016 6ML+6.00% (7.91%) 1.00 8/23/2022 $ 338,625
$ 335,801
$ 295,493
1.38 %
CareerBuilder ^(g)(k)
Services: Consumer 7/27/2017 3ML+6.75% (8.85%) 1.00 7/31/2023 356,625
347,444
355,288
1.66 %
Correct Care Solutions Group Holdings, LLC ^(g)(k)(l)
Healthcare & Pharmaceuticals 4/2/2019 1ML+5.50% (7.20%) — 10/1/2025 2,086,330
2,042,046
2,055,914
9.62 %
Digital Room Holdings, Inc^(g)(k)(l)
Media: Broadcasting & Subscription 5/14/2019 1ML+5.00% (6.70%) — 5/21/2026 1,990,000
1,960,051
1,963,813
9.19 %
GK Holdings, Inc.^(k)
Media: Broadcasting & Subscription 1/30/2015 3ML+6.00% (8.10%) 1.00 1/20/2021 119,063
118,265
92,273
0.43 %
Global Tel*Link Corporation ^(g)(k)(l)
Telecommunications 4/5/2019 1ML+4.25% (5.95%) — 11/28/2025 1,988,703
1,927,878
1,896,611
8.87 %
GoWireless Holdings, Inc. ^(g)(k)
Retail 12/21/2017 1ML+6.50% (8.20%) 1.00 12/22/2024 450,000
445,799
433,874
2.03 %
Help/Systems Holdings, Inc. ^(g)(k)
High Tech Industries 11/14/2019 1ML+4.75% (6.52%) 1.00 11/19/2026 1,500,000
1,485,206
1,485,239
6.95 %
InfoGroup Inc. ^(g)(k)
Media: Advertising, Printing & Publishing 3/28/2017 3ML+5.00% (6.94%) 1.00 4/3/2023 486,250
482,069
457,075
2.14 %
Janus International Group, LLC ^(g)(k)(l)
Construction & Building 7/9/2019 1ML+4.50% (6.20%) — 2/12/2025 1,739,362
1,739,362
1,736,101
8.12 %
Keystone Acquisition Corp. ^(g)(k)(l)
Healthcare & Pharmaceuticals 4/10/2019 3ML+5.25% (7.19%) 1.00 5/1/2024 2,087,419
2,058,861
2,045,671
9.57 %
LSF9 Atlantis Holdings, LLC ^(g)(k)
Retail 4/21/2017 1ML+6.00% (7.74%) 1.00 5/1/2023 468,750
464,660
434,180
2.03 %
McAfee LLC ^(g)(j)
High Tech Industries 9/27/2017 1ML+3.75% (5.45%) 1.00 9/30/2024 241,669
239,495
243,028
1.14 %
PGX Holdings, Inc. ^(g)(k)
Services: Consumer 4/2/2019 1ML+5.25% (6.96%) 1.00 9/29/2020 733,077
726,763
659,036
3.08 %
Quidditch Acquisition, Inc. ^(g)(k)
Beverage, Food & Tobacco 3/16/2018 1ML+7.00% (8.70%) 1.00 3/21/2025 491,250
482,332
496,163
2.32 %
SCS Holdings I Inc. ^(g)(j)
Services: Business 5/22/2019 3ML+4.25% (6.35%) — 7/1/2026 1,243,750
1,240,850
1,251,536
5.86 %
Research Now Group, Inc. ^(g)(k)
Services: Business 4/2/2019 3ML+5.50% (7.41%) 1.00 12/20/2024 1,991,123
1,991,123
1,991,123
9.32 %
Rocket Software, Inc. ^(g)(k)(l)
High Tech Industries 4/2/2019 1ML+4.25% (5.95%) — 11/28/2025 2,086,364
2,067,974
2,035,520
9.52 %
Securus Technologies Holdings, Inc.^(g)(j)(l)
Telecommunications 7/31/2019 1ML+4.50% (6.20%) 1.00 11/1/2024 1,989,848
1,818,681
1,683,663
7.88 %
Shutterfly, Inc.^(g)^(k)(l)
Media: Diversified and Production 11/14/2019 3ML+6.00% (8.10%) 1.00 9/25/2026 2,000,000
1,818,826
1,860,800
8.71 %
Sorenson Communications, LLC ^(g)^(k)
Services: Consumer 4/26/2019 3ML+6.50% (8.60%) 1.00 4/29/2024 464,286
464,286
460,821
2.16 %
Staples, Inc.^(g)^(j)
Wholesale 11/18/2019 3ML+5.00% (6.69%) 1.00 4/16/2026 1,000,000
990,160
988,556
4.63 %
Transplace Holdings, Inc. ^(g)(k)
Transportation: Cargo 4/10/2019 1ML+3.75% (5.55%) 1.00 10/5/2024 1,493,674
1,474,409
1,494,615
6.99 %
Upstream Newco, Inc.^(g)(k)
Services: Consumer 11/20/2019 1ML+4.50% (6.20%) 1.00 11/20/2026 1,750,000
1,741,373
1,741,355
8.15 %
Vero Parent Inc. (Sahara) ^(g)(k)
High Tech Industries 8/11/2017 3ML+6.25% (8.16%) 1.00 8/16/2024 342,169
339,099
329,337
1.54 %
VT Topco, Inc. ^(g)(k)
Sovereign & Public Finance 7/26/2019 3ML+3.75% (5.85%) — 8/1/2025 994,965
992,625
994,035
4.65 %
Wirepath LLC ^(g)(k)
Services: Business 7/31/2017 3ML+4.00% (6.10%) 1.00 8/5/2024 488,822
486,631
425,275
1.99 %
Total Senior Secured Loans-First Lien $ 30,282,069
$ 29,906,395
139.93 %

Senior Secured Loans-Second Lien^(k)

Encino Acquisition Partners Holdings, LLC ^(g)
Energy: Oil & Gas 9/25/2018 1ML+6.75% (8.45%) 1.00 10/29/2025 $ 500,000
$ 495,454
$ 377,500
1.77 %
FullBeauty Brands Holding^(f)
Retail 2/7/2019 7.00% — 1/31/2025 11,185
9,638
1,063
— %
GK Holdings, Inc. Media: Broadcasting & Subscription 1/30/2015 3ML+10.25% (12.19%) 1.00 1/21/2022 125,000
123,018
90,625
0.42 %
Inmar, Inc. ^(g)
Media: Advertising, Printing&Publishing 4/25/2017 3ML+8.00% (10.10%) 1.00 5/1/2025 500,000
493,227
468,908
2.19 %
McAfee LLC ^(g)
High Tech Industries 9/27/2017 1ML+8.50% (10.20%) 1.00 9/29/2025 437,500
434,905
441,438
2.07 %
Neustar, Inc. ^(g)
High Tech Industries 3/2/2017 1ML+8.00% (9.70%) 1.00 8/8/2025 749,792
739,595
643,884
3.01 %
Total Senior Secured Loans-Second Lien $ 2,295,837
$ 2,023,418
9.46 %

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF ~~SEPTEMBER 30, 2018 (CONTINUED)~~

~~(UNAUDITED)~~

Portfolio Company Footnotes Industry Rate (b) Floor Maturity Principal
Amount/ Number
of Shares Amortized
Cost^(f) Fair Value^(c)
Subordinated Convertible Debt—0.00%
Javlin Capital LLC Subordinated Convertible Note (a) (e) Specialty Finance 6.00% 3/31/2020 666,389 666,389 -
Total Subordinated Convertible Debt $ 666,389 $ 666,389 $ -

Equity/Other—2.80%
ACON IWP Investors I, L.L.C. (a) Healthcare & Pharmaceuticals 500,000 500,000 501,742
Javlin Capital LLC Class C-2 Preferred Units (a) (d) (e) Specialty Finance 214,286 750,000 -
Total Equity/Other 714,286 $ 1,250,000 $ 501,742

TOTAL INVESTMENTS—75.34% $ 15,105,760 $ 13,504,804
OTHER ASSETS IN EXCESS OF LIABILITIES—24.66% $ 4,419,350
NET ASSETS - 100.0% $ 17,924,154

DECEMBER 31, 2019 (unaudited)



Portfolio Company / Security Type	Industry	Acquisition Date	Coupon/Yield (b)		Floor	Legal Maturity	Principal/ Quantity		Amortized Cost (d)		Fair Value (c)		% of Net Assets
Senior Unsecured Bonds ^(a)(j)
Ace Cash Express, Inc.^(l)	Financial	12/15/2017	12.00	%	N/A	12/15/2022	$	1,000,000	$	947,066	$	849,700	3.98	%
Total Senior Unsecured Bonds									$	947,066	$	849,700	3.98	%

Structured subordinated notes ^(a)(e)(k)
Apidos CLO XXIV	Structured Finance	5/17/2019	23.84	%	N/A	10/20/2030	$	250,000	$	156,567	$	161,210	0.75	%
Apidos CLO XXVI	Structured Finance	7/25/2019	22.82	%	N/A	7/18/2029	250,000		173,269		181,402		0.85	%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.	Structured Finance	4/12/2017	21.10	%	N/A	7/15/2030	250,000		174,745		172,093		0.81	%
Carlyle Global Market Strategies CLO 2017-5, Ltd.	Structured Finance	1/30/2018	15.34	%	N/A	1/22/2030	500,000		485,007		416,578		1.95	%
Galaxy XIX CLO, Ltd.	Structured Finance	12/8/2016	14.16	%	N/A	7/24/2030	250,000		170,578		121,929		0.57	%
GoldenTree Loan Opportunities IX, Ltd.	Structured Finance	7/27/2017	14.97	%	N/A	10/29/2029	250,000		190,038		146,553		0.69	%
Madison Park Funding XIII, Ltd.	Structured Finance	11/12/2015	23.00	%	N/A	4/22/2030	250,000		177,308		169,786		0.79	%
Madison Park Funding XIV, Ltd.	Structured Finance	11/19/2015	15.66	%	N/A	10/22/2030	250,000		181,673		162,334		0.76	%
Octagon Investment Partners XIV, Ltd.	Structured Finance	12/6/2017	16.07	%	N/A	7/16/2029	850,000		544,910		445,519		2.08	%
Octagon Investment Partners XV, Ltd.	Structured Finance	5/23/2019	21.04	%	N/A	7/19/2030	500,000		279,099		275,474		1.29	%
Octagon Investment Partners XXI, Ltd.^(l)	Structured Finance	1/13/2016	15.20	%	N/A	2/14/2031	387,538		224,581		187,395		0.88	%
Octagon Investment Partners 30, Ltd.	Structured Finance	11/21/2017	14.69	%	N/A	3/17/2030	475,000		446,963		383,530		1.79	%
Octagon Investment Partners 31, Ltd.	Structured Finance	12/20/2019	34.25	%	N/A	7/20/2030	250,000		146,887		151,369		0.71	%
Octagon Investment Partners 36, Ltd.	Structured Finance	12/20/2019	26.83	%	N/A	4/15/2031	500,000		402,931		405,901		1.90	%
OZLM XII, Ltd.	Structured Finance	1/20/2017	6.51	%	N/A	4/30/2027	275,000		206,007		145,600		0.68	%
Sound Point CLO II, Ltd.	Structured Finance	5/16/2019	18.58	%	N/A	1/26/2031	1,500,000		884,843		810,485		3.79	%
Sound Point CLO VII-R, Ltd.	Structured Finance	8/23/2019	25.67	%	N/A	10/23/2031	150,000		64,029		64,626		0.30	%
Sound Point CLO XVIII, Ltd.	Structured Finance	5/16/2019	17.18	%	N/A	1/21/2031	250,000		240,380		223,626		1.05	%
Symphony CLO IX, Ltd.	Structured Finance	12/13/2019	27.72	%	N/A	7/16/2032	500,000		177,856		256,360		1.20	%
THL Credit Wind River 2013-1 CLO, Ltd.	Structured Finance	11/3/2017	11.08	%	N/A	7/30/2030	325,000		239,118		175,291		0.82	%
Venture XXXIV CLO, Ltd.	Structured Finance	7/30/2019	21.49	%	N/A	10/15/2031	250,000		214,334		217,384		1.02	%
Voya IM CLO 2013-1, Ltd.^(l)	Structured Finance	6/14/2016	13.09	%	N/A	10/15/2030	278,312		193,112		158,391		0.74	%
Voya CLO 2016-1, Ltd.	Structured Finance	2/25/2016	19.28	%	N/A	1/21/2031	250,000		217,917		215,892		1.01	%
Total Structured subordinated notes^(e)									$	6,192,152	$	5,648,728	26.43	%

Equity/Other^(a)(k)
ACON IWP Investors I, L.L.C. ^(h)(i)	Healthcare & Pharmaceuticals	4/30/2015	N/A		N/A	N/A	$	472,357	$	472,357	$	694,589	3.25	%
FullBeauty Brands Holding, Common Stock⁽ⁱ⁾	Retail	2/7/2019	N/A		N/A	N/A	72		208,754		—		—	%
Total Equity/Other									$	681,111	$	694,589	3.25	%

Total Portfolio Investments									$	40,398,235	$	39,122,830	183.05	%

(a)

~~Affiliated investment~~Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as ~~defined by~~amended (the “1940 Act”). Under the 1940 Act, ~~whereby~~we may not acquire any non-qualifying asset unless, at the ~~Company owns between 5% and 25%~~time such acquisition is made, qualifying assets represent at least 70% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. Affiliated funds that are managed by an affiliate of Triton Pacific Adviser, LLC also hold investments in this security. The aggregate fair value of non-controlled, affiliated investments at September 30, 2018 represented 2.80% ofour total assets. Of the Company’s ~~net assets. Fair value~~total investments as of December 31, ~~2017 along with transactions during the nine months ended September 30, 2018 in affiliated investments were~~2019, 16% are non-qualifying assets as ~~follows):~~ a percentage of total assets.

Nine months ended September 30, 2018
Non-controlled, Affiliated Investments Number of
Shares Fair Value at
December 31, 2017 Gross Additions
(Cost)* Gross Reductions
(Cost)** Unrealized
Change in FMV Fair Value at
September 30, 2018 Net Realized
Gain (Loss) Interest & Dividends
Credited to Income
ACON IWP Investors I, L.L.C. 500,000 $ 537,903 $ - $ - $ (36,161 ) $ 501,742 $ - $ -
Javlin Capital, LLC, Convertible Note 666,389 - - - - - - -
Javlin Capital, LLC, C-2 Preferred Units 214,286 - - - - - - -
Total $ 537,903 $ - $ - $ (36,161 ) $ 501,742 $ - $ -

*Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

**Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.


(b)	~~Certain variable rate securities in~~The majority of the ~~Company’s portfolio~~investments bear interest at a rate that may be determined by ~~a publicly disclosed base rate spread.~~

~~As of September 30, 2018, the three-month~~reference to London Interbank Offered Rate (“LIBOR” or “L”) or which reset monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR ~~was 2.39600%.~~or Prime and the current contractual interest rate in effect at December 31, 2019. Certain investments are subject to a LIBOR or Prime interest rate floor. As of December 31, 2019, the one-month ("1ML"), two-month ("2ML"), three-month ("3ML"), and six-month ("6ML") LIBOR rates were 1.76%, 1.83%, 1.91%, and 1.91%, respectively.


(c)	Fair value and market value are determined by the Company’s board of directors (see Note ~~7.)~~2).

~~(d)~~

~~Security held within TPJ Holdings, Inc., a wholly-owned subsidiary of the Company. See Note 2 for a dicussion on the basis of consolidation.~~

~~(e)~~

The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company’s total assets. As of September 30, 2018, 100% of the Company’s total assets represented qualifying assets based on fair market value, though the company does own non-qualifying assets as noted by this footnote (e).

~~(f)~~(d)

See Note 56 for a discussion of the tax cost of the portfolio.

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

~~TRITON PACIFIC INVESTMENT CORPORATION,~~

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF DECEMBER 31, ~~2017~~

Portfolio Company Footnotes Industry Rate^(b) Base
Rate
Floor Maturity Principal
Amount/ Number
of Shares Amortized
Cost^(f) Fair Value^(c)
Senior Secured Loans—First Lien—45.65%
LSF9 Atlantis Holdings, LLC Telecommunications L+6.00% (7.36%) 1.4% 5/1/2023 $ 493,750 $ 489,235 $ 496,322
California Pizza Kitchen, Inc. Beverage, Food & Tobacco L+6.00% (7.57%) 1.6% 8/19/2022 345,625 342,933 339,577
CareCentrix, Inc. Healthcare & Pharmaceuticals L+5.00% (6.69%) 1.7% 7/8/2021 195,500 192,300 196,966
CareerBuilder Business Services L+6.75% (8.44%) 1.7% 7/27/2023 493,750 479,771 481,406
Coronado Group LLC Metals & Mining L+7.00% (8.33%) 1.3% 6/6/2023 386,565 372,948 390,431
CRCI Holdings, Inc. Business Services L+5.50% (7.19%) 1.7% 8/31/2023 324,563 321,740 325,781
Deluxe Entertainment Services Group, Inc. Media: Diversified and Production L+5.50% (6.88%) 1.4% 2/28/2020 340,762 333,958 334,586
Flavors Holdings, Inc. Tranche B Beverage, Food & Tobacco L+5.75% (7.44%) 1.7% 4/3/2020 104,687 102,670 97,098
GK Holdings, Inc. Business Services L+6.00% (7.69%) 1.7% 1/20/2021 121,250 120,778 97,364
GoWireless Holdings, Inc. Consumer Services L+6.50% (8.16%) 1.7% 12/20/2024 500,000 495,000 496,250
IG Investments Holdings, LLC Business Services L+3.50% (5.19%) 1.7% 10/29/2021 345,543 344,239 349,431
InfoGroup Inc. Business Services L+5.00% (6.69%) 1.7% 3/28/2023 496,250 491,871 493,769
Jackson Hewitt, Inc. Business Services L+7.00% (8.38%) 1.4% 7/30/2020 186,139 183,882 184,509
McAfee LLC Business Services L+4.50% (6.07%) 1.6% 9/27/2024 249,375 246,960 248,930
Moran Foods, LLC Beverage, Food & Tobacco L+6.00% (7.57%) 1.6% 12/5/2023 346,500 337,622 278,718
Pre-Paid Legal Services, Inc Consumer Services L+5.25% (6.82%) 1.6% 7/1/2019 317,021 316,483 318,275
Raley’s Beverage, Food & Tobacco L+5.25% (6.82%) 1.6% 5/18/2022 285,967 285,967 289,184
Sahara Parent Inc Business Services L+5.00% (6.69%) 1.7% 8/16/2024 349,125 345,783 341,598
SITEL Worldwide Corporation Business Services L+5.50% (6.88%) 1.4% 9/20/2021 195,500 195,212 196,314
Strike, LLC Energy: Oil & Gas L+8.00% (9.50%) 1.5% 11/30/2022 332,500 323,942 337,488
Travel Leaders Group, LLC Hotel, Gaming & Leisure L+4.50% (5.92%) 1.4% 1/25/2024 347,379 345,866 352,809
TruGreen Limited Partnership Consumer Services L+4.00% (5.54%) 1.5% 4/13/2023 345,634 341,640 351,036
Verdesian Life Sciences LLC Wholesale Trade-Nondurable Goods L+5.00% (6.38%) 1.4% 7/1/2020 208,335 207,283 187,502
Wirepath LLC Consumer Services L+5.25% (6.87%) 1.6% 8/5/2024 498,750 496,340 505,608
Total Senior Secured Loans—First Lien $ 7,810,470 $ 7,714,423 $ 7,690,952

Senior Secured Loans—Second Lien—22.59%
Flavors Holdings, Inc. Beverage, Food & Tobacco L+10.00% (11.69%) 1.7% 10/7/2021 125,000 122,343 101,250
FullBeauty Brands Holding High Tech Industries L+9.00% (10.57%) 1.6% 10/13/2023 250,000 218,903 73,334
GK Holdings, Inc. Business Services L+10.25% (11.94%) 1.7% 1/21/2022 125,000 123,559 93,125
Inmar Business Services L+8.00% (9.42%) 1.4% 5/1/2025 500,000 493,103 502,813
McAfee LLC Business Services L+8.50% (10.07%) 1.6% 9/26/2025 500,000 496,986 502,504
Neustar, Inc. High Tech Industries L+8.00% (9.40%) 1.4% 2/28/2025 750,000 739,275 759,844
NPC International, Inc. Beverage, Food & Tobacco L+7.50 (9.05%) 1.6% 3/28/2025 500,000 498,135 512,500
Oxbow Carbon LLC Metals & Mining L+7.00 (8.24%) 1.2% 1/19/2020 250,000 240,350 250,938
Oxbow Carbon LLC Metals & Mining L+6.00 (10.50%) 4.5% 1/4/2024 500,000 495,034 502,500
Rocket Software, Inc. Business Services L+9.50% (11.19%) 1.7% 10/14/2024 500,000 491,548 507,875
Total Senior Secured Loans—Second Lien $ 4,000,000 $ 3,919,236 $ 3,806,683

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

2019 (unaudited)

~~TRITON PACIFIC INVESTMENT CORPORATION, INC.~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS~~

~~AS OF DECEMBER 31, 2017 (CONTINUED)~~

Portfolio Company Footnotes Industry Rate^(b) Base
Rate
Floor Maturity Principal
Amount/ Number
of Shares Amortized
Cost^(f) Fair Value^(c)
Subordinated Convertible Debt—0.00%
Javlin Capital LLC Subordinated Convertible Note (a) (e) Specialty Finance 6.00% 3/31/2020 666,389 666,389 -
Total Subordinated Convertible Debt $ 666,389 $ 666,389 $ -

Equity/Other—3.19%
ACON IWP Investors I, L.L.C. (a) Healthcare & Pharmaceuticals 500,000 500,000 537,903
Javlin Capital LLC Class C-2 Preferred Units (a) (d) (e) Specialty Finance 214,286 750,000 -
Total Equity/Other 714,286 $ 1,250,000 $ 537,903

TOTAL INVESTMENTS—71.43% $ 13,550,048 $ 12,035,538
OTHER ASSETS IN EXCESS OF LIABILITIES—28.57% $ 4,813,699
NET ASSETS - 100.00% $ 16,849,237

~~(a)~~

(e)

The structured subordinated notes and preference/preferred shares are considered equity positions in the Collateralized Loan Obligations (“CLOs”), which is referred to as "Subordinated Structured Notes", or "SSN". The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield is based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.


(f)	This investment has contractual payment-in-kind (“PIK”) interest. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date.


(g)	The senior secured loan is held as collateral at the SPV, TP Flexible Funding, LLC as of December 31, 2019.

(h)

Affiliated investment as defined by the 1940 Act, whereby the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. Affiliated funds that are managed by an affiliate of Triton Pacific Adviser, LLC also hold investments in this security. The aggregate fair value of non-controlled, affiliated investments at December 31, ~~2017~~2019 represented ~~68.24%~~3.24% of the Company’s net assets. Fair value as of December 31, ~~2017~~2019 along with transactions during the period ended December 31, ~~2017~~2019 in affiliated investments were as follows:

Year Ended December 31, 2017
Non-controlled, Affiliated Investments Fair Value at
December 31, 2016 Gross Additions (Cost)* Gross Reductions
(Cost)** Fair Value at
December 31, 2017 Net Realized
Gain (Loss) Interest & Dividends
Credited to Income
ACON IWP Investors I, L.L.C. $ 691,072 $ - $ - $ 537,903 $ - $ -
Javlin Capital, LLC, Convertible Note 646,901 19,488 - - - 19,488
Javlin Capital, LLC, C-2 Preferred Units 537,229 - - - - -
Total $ 1,875,202 $ 19,488 $ - $ 537,903 $ - $ 19,488



Non-controlled, Affiliated Investments	Number of Shares	Fair Value at June 30, 2019		Gross Additions (Cost)*		Gross Reductions (Cost)**		Unrealized Change in FMV		Net Realized Gain (Loss)		Fair Value at December 31, 2019		Interest & Dividends Credited to Income
ACON IWP Investors I, L.L.C.	472,357	$	570,816	$	—	$	—	$	123,773	—		$	694,589	$	—
Total		$	570,816	$	—	$	—	$	123,773	$	—	$	694,589	$	—

(i) Represents non-income producing security that has not paid a dividend in the year preceding the reporting date.


(j)	Investment is categorized as Level 2 investments in accordance with ASC 820. See Note 2 within the accompanying notes to the consolidated financial statements.

(k) Investment(s) is (are) valued using significant unobservable inputs and is (are) categorized as Level 3 investments in accordance with ASC 820. See Notes 2 and 7 within the accompanying notes to the consolidated financial statements.


(l)	Acquisition date represents the date of FLEX's initial investment. Follow-on acquisitions have occurred on the following

dates to arrive at FLEX's current investment (excluding effects of capitalized PIK interest, premium/original issue discount

amortization/accretion, and partial repayments):



Portfolio Company	Investment	Follow-On Acquisition Dates	Follow-On Acquisitions (Excluding initial investment cost)
Ace Cash Express, Inc.	Senior Unsecured Bonds	7/15/2019	$	493,625
Correct Care Solutions Group Holdings, LLC	Senior Secured Loans-First Lien	4/10/2019, 7/25/2019	1,327,000
Digital Room Holdings, Inc	Senior Secured Loans-First Lien	7/16/2019	490,000
Global Tel*Link Corporation	Senior Secured Loans-First Lien	7/9/2019, 7/16/2019	1,436,250
Janus International Group, LLC	Senior Secured Loans-First Lien	8/7/2019	1,498,125
Keystone Acquisition Corp.	Senior Secured Loans-First Lien	4/23/2019, 8/2/2019	1,576,000
Octagon Investment Partners XXI, Ltd.	Structured subordinated notes	2/14/19	35,015
Rocket Software, Inc.	Senior Secured Loans-First Lien	6/28/2019, 7/30/2019	1,327,272
Securus Technologies Holdings, Inc.	Senior Secured Loans-First Lien	8/2/2019	908,750
Shutterfly, Inc.	Senior Secured Loans-First Lien	11/18/2019, 11/20/2019	1,361,250
Voya IM CLO 2013-1, Ltd.	Structured subordinated notes	10/17/17	17,553

See notes to consolidated financial statements.

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2019



Portfolio Company / Security Type	Industry	Acquisition Date	Coupon/Yield (b)	Floor	Legal Maturity	Principal/ Quantity		Amortized Cost (d)		Fair Value (c)		% of Net Assets
Senior Secured Loans-First Lien^(k)
LSF9 Atlantis Holdings, LLC ^(g)	Retail	4/21/2017	1ML+6.00% (8.42%)	1.00	5/1/2023	$	475,000	$	470,292	$	446,597	1.91	%
California Pizza Kitchen, Inc. ^(g)	Hotel, Gaming & Leisure	8/19/2016	6ML+6.00% (8.53%)	1.00	8/23/2022	340,375		337,013		333,568		1.42	%
CareerBuilder ^(g)	Services: Consumer	7/27/2017	3ML+6.75% (9.08%)	1.00	7/31/2023	356,625		346,152		355,734		1.52	%
Correct Care Solutions Group Holdings, LLC ^(g)	Healthcare & Pharmaceuticals	4/2/2019	1ML+5.50% (7.94%)	—	10/1/2025	1,246,867		1,203,024		1,206,500		5.15	%
Deluxe Entertainment Services Group, Inc.	Services: Business	10/24/2016	3ML+5.50% (8.08%)	1.00	2/28/2020	326,662		317,103		292,362		1.25	%
Digital Room Holdings, Inc	Media: Broadcasting & Subscription	5/14/2019	1ML+5.00% (7.40%)	—	5/21/2026	1,500,000		1,477,879		1,477,350		6.31	%
GK Holdings, Inc.	Media: Broadcasting & Subscription	1/30/2015	3ML+6.00% (8.33%)	1.00	1/20/2021	119,375		118,197		101,469		0.43	%
Global Tel*Link Corporation ^(g)	Telecommunications	4/5/2019	1ML+4.25% (6.65%)	—	11/29/2025	498,747		497,513		479,004		2.05	%
GoWireless Holdings, Inc. ^(g)	Retail	12/21/2017	1ML+6.50% (8.94%)	1.00	12/22/2024	462,500		457,874		450,746		1.93	%
Help/Systems Holdings, Inc. ^(g)	High Tech Industries	4/2/2019	3ML+3.75% (6.08%)	—	3/28/2025	997,481		983,926		991,247		4.23	%
InfoGroup Inc. ^(g)	Media: Advertising, Printing & Publishing	3/28/2017	3ML+5.00% (7.33%)	1.00	4/3/2023	488,750		483,922		477,142		2.04	%
J.D Power and Associates ^(g)	Automotive	4/2/2019	1ML+3.75% (6.19%)	1.00	9/7/2023	498,719		493,911		496,226		2.12	%
Keystone Acquisition Corp. ^(g)	Healthcare & Pharmaceuticals	4/10/2019	3ML+5.25% (7.58%)	1.00	5/1/2024	748,096		737,058		731,264		3.12	%
McAfee LLC ^(g)	High Tech Industries	9/27/2017	1ML+3.75% (6.15%)	1.00	9/30/2024	242,892		240,488		242,930		1.04	%
PGX Holdings, Inc. ^(g)	Services: Consumer	4/2/2019	1ML+5.25% (7.66%)	1.00	9/29/2020	744,359		733,789		744,359		3.18	%
Prospect Medical Holdings, Inc. ^(g)	Healthcare & Pharmaceuticals	2/16/2018	1ML+5.50% (7.94%)	1.00	2/22/2024	493,750		483,992		467,416		2.00	%
Quidditch Acquisition, Inc. ^(g)	Beverage, Food & Tobacco	3/16/2018	1ML+7.00% (9.40%)	1.00	3/21/2025	493,750		483,971		498,688		2.13	%
SCS Holdings I Inc. ^(g)	Services: Business	5/22/2019	3ML+4.25% (6.57%)	—	7/1/2026	1,250,000		1,246,875		1,250,256		5.34	%
Research Now Group, Inc. ^(g)	Services: Business	4/2/2019	3ML+5.50% (8.08%)	1.00	12/20/2024	748,101		748,101		748,101		3.20	%
Rocket Software, Inc. ^(g)	High Tech Industries	4/2/2019	1ML+4.25% (6.69%)	—	11/28/2025	1,246,875		1,240,028		1,221,938		5.22	%
SESAC Holdco II LLC ^(g)	Media: Diversified & Production	4/16/2019	1ML+3.25% (5.40%)	1.00	2/23/2024	498,724		489,513		489,685		2.09	%
Sorenson Communications, LLC	Consumer	4/26/2019	3ML+6.50% (8.83%)	1.00	4/29/2024	500,000		500,000		496,134		2.12	%
Transplace Holdings, Inc. ^(g)	Transportation: Cargo	4/10/2019	1ML+3.75% (6.15%)	1.00	10/5/2024	498,737		496,276		497,181		2.12	%
Travel Leaders Group, LLC ^(g)	Hotel, Gaming & Leisure	1/19/2017	1ML+4.00% (6.38%)	1.00	1/25/2024	495,000		495,029		496,648		2.12	%
Vero Parent Inc. (Sahara) ^(g)	High Tech Industries	8/11/2017	1ML+4.50% (6.90%)	1.00	8/16/2024	343,901		340,497		343,256		1.47	%
Wirepath LLC ^(g)	Services: Business	7/31/2017	1ML+4.00% (6.44%)	1.00	8/5/2024	491,297		488,866		490,069		2.09	%
Total Senior Secured Loans-First Lien								$	15,911,289	$	15,825,870	67.6	%

Senior Secured Loans-Second Lien^(k)
Encino Acquisition Partners Holdings, LLC ^(g)	Energy: Oil & Gas	9/25/2018	1ML+6.75% (9.19%)	1.00	10/29/2025	$	500,000	$	495,061	$	461,250	1.97	%
FullBeauty Brands Holding^(l)	Retail	2/7/2019	7.00%	—	1/31/2025	11,127		9,457		7,677		0.03	%
GK Holdings, Inc.	Media: Broadcasting & Subscription	1/30/2015	3ML+10.25% (12.58%)	1.00	1/21/2022	125,000		122,533		96,875		0.41	%
Inmar ^(g)	Media: Advertising, Printing & Publishing	4/25/2017	3ML+8.00% (10.60%)	1.00	5/1/2025	500,000		492,587		470,000		2.01	%
McAfee LLC ^(g)	High Tech Industries	9/27/2017	1ML+8.50% (10.90%)	1.00	9/29/2025	437,500		434,677		444,154		1.90	%
Neustar, Inc. ^(g)	High Tech Industries	3/2/2017	1ML+8.00% (10.44%)	1.00	8/8/2025	749,792		738,678		717,146		3.06	%

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2019



Portfolio Company / Security Type	Industry	Acquisition Date	Coupon/Yield (b)		Floor	Legal Maturity	Principal/ Quantity		Amortized Cost (d)		Fair Value (c)		% of Net Assets
NPC International, Inc. ^(g)	Hotel, Gaming & Leisure	3/30/2017	1ML+7.50% (9.94%)		1.00	4/18/2025	500,000		497,584		308,125		1.32	%
Total Senior Secured Loans-Second Lien									$	2,790,577	$	2,505,227	10.7	%

Senior Unsecured Bonds ^(a)(j)
Ace Cash Express, Inc.	Financial	12/15/2017	12.00	%	N/A	12/15/2022	$	450,000	$	444,957	$	402,163	1.72	%
Total Senior Unsecured Bonds									$	444,957	$	402,163	1.72	%

Structured subordinated notes ^(a)(e)(f)(k)
Apidos CLO XXIV	Structured Finance	5/17/2019	23.23	%	N/A	10/20/2030	$	250,000	$	156,400	$	162,383	0.69	%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.	Structured Finance	4/12/2017	21.64	%	N/A	7/15/2030	250,000		170,233		179,108		0.77	%
Carlyle Global Market Strategies CLO 2017-5, Ltd.	Structured Finance	1/30/2018	17.03	%	N/A	1/22/2030	500,000		493,001		466,165		1.99	%
Galaxy XIX CLO, Ltd.	Structured Finance	12/8/2016	14.11	%	N/A	7/24/2030	250,000		170,747		128,700		0.55	%
GoldenTree Loan Opportunities IX, Ltd.	Structured Finance	7/27/2017	15.39	%	N/A	10/29/2029	250,000		188,924		154,057		0.66	%
Madison Park Funding XIII, Ltd.	Structured Finance	11/12/2015	22.24	%	N/A	4/22/2030	250,000		178,423		182,950		0.78	%
Madison Park Funding XIV, Ltd.	Structured Finance	11/19/2015	16.25	%	N/A	10/22/2030	250,000		188,558		180,119		0.77	%
Octagon Investment Partners XIV, Ltd.	Structured Finance	12/6/2017	18.01	%	N/A	7/16/2029	850,000		556,194		479,186		2.05	%
Octagon Investment Partners XV, Ltd.	Structured Finance	5/23/2019	22.82	%	N/A	7/19/2030	500,000		270,348		297,326		1.27	%
Octagon Investment Partners XXI, Ltd.	Structured Finance	1/13/2016	16.05	%	N/A	2/14/2031	387,538		223,038		206,601		0.88	%
Octagon Investment Partners 30, Ltd.	Structured Finance	11/21/2017	16.18	%	N/A	3/17/2030	475,000		456,377		405,248		1.73	%
OZLM XII, Ltd.	Structured Finance	1/20/2017	10.59	%	N/A	4/30/2027	275,000		219,453		171,524		0.73	%
Sound Point CLO II, Ltd.	Structured Finance	5/16/2019	20.73	%	N/A	1/26/2031	1,500,000		902,022		881,608		3.77	%
Sound Point CLO XVIII, Ltd.	Structured Finance	5/16/2019	19.05	%	N/A	1/21/2031	250,000		245,476		246,338		1.05	%
Voya IM CLO 2013-1, Ltd.	Structured Finance	6/14/2016	14.81	%	N/A	10/15/2030	278,312		188,161		159,683		0.68	%
Voya CLO 2016-1, Ltd.	Structured Finance	2/25/2016	20.38	%	N/A	1/21/2031	250,000		217,902		221,741		0.95	%
THL Credit Wind River 2013-1 CLO, Ltd.	Structured Finance	11/3/2017	12.4	%	N/A	7/30/2030	325,000		245,179		192,750		0.82	%
Total Structured subordinated notes^(e)(f)									$	5,070,436	$	4,715,487	20.14	%

Equity/Other^(a)(k)
ACON IWP Investors I, L.L.C. ^(h)(i)	Healthcare & Pharmaceuticals	4/30/2015	N/A		N/A	N/A	$	472,357	$	472,357	$	570,816	2.44	%
FullBeauty Brands Holding, Common Stock⁽ⁱ⁾	Retail	2/7/2019	N/A		N/A	N/A	72		208,754		—		—	%
Total Equity/Other									$	681,111	$	570,816	2.44	%

Total Portfolio Investments									$	24,898,370	$	24,019,563	102.6	%

(a)

Indicates assets that the Company believes do not represent “qualifying assets” under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. Of the Company’s total investments as of June 30, 2019, 17% are non-qualifying assets as a percentage of assets.

(b)

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or ~~Prime Rate (“Prime” or “P”)~~ which reset ~~daily,~~ monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at ~~December 31, 2017.~~June 30, 2019. Certain investments are subject to a LIBOR or Prime interest rate floor. As of ~~December 31, 2017,~~June 30, 2019, the one-month ("1ML"), two-month ("2ML"), three-month ~~London Interbank Offered Rate, or~~("3ML"), and six-month ("6ML") LIBOR ~~was 1.69465%.~~rates were 2.40%, 2.33%, 2.32%, and 2.20%, respectively.


(c)	Fair value and market value are determined by the Company’s board of directors (see Note ~~7.)~~2).

~~(d)~~

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

~~(e)~~

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

~~(f)~~(d)

See Note 56 for a discussion of the tax cost of the portfolio.

TP FLEXIBLE INCOME FUND, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2019

See notes to consolidated financial statements

(e) The structured subordinated notes and preference/preferred shares are considered equity positions in the Collateralized Loan Obligations (“CLOs”). The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield is based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.


(f)	All structured subordinated notes are co-investments with other entities managed by an affiliate of the Adviser (see Note 4).


(g)	The senior structured loan is held as collateral at the SPV, TP Flexible Funding, LLC as of June 30, 2019.

(h)

Affiliated investment as defined by the 1940 Act, whereby the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. Affiliated funds that are managed by an affiliate of Triton Pacific Adviser, LLC also hold investments in this security. The aggregate fair value of non-controlled, affiliated investments at June 30, 2019 represented 2.44% of the Company’s net assets. Fair value as of June 30, 2019 along with transactions during the period ended June 30, 2019 in affiliated investments were as follows:

Non-controlled, Affiliated Investments
Number
of
Shares
Fair Value
at
March 31,
2019
Gross
Additions
(Cost)*
Gross
Reductions
(Cost)**
Unrealized
Change in
FMV
Net Realized
Gain (Loss)
Fair Value
at
June 30,
2019
Interest &
Dividends
Credited to
Income
ACON IWP Investors I,
L.L.C.
472,357

$ 507,988

$ —

$ —

$ 62,828

—

$ 570,816

$ —

Total

$ 507,988

$ —

$ —

$ 62,828

$ —

$ 570,816

$ —

(i) Represents non-income producing security that has not paid a dividend in the year preceding the reporting date.


(j)	All investments in this category are categorized as Level 2 investments in accordance with ASC 820. See Note 2 within the accompanying notes to the consolidated financial statements.

(k) All investments in this category are valued using significant unobservable inputs and are categorized as Level 3 investments in accordance with ASC 820. See Notes 2 and 7 within the accompanying notes ~~are an integral part of these~~to the consolidated financial statements.

(l) This investment has contractual payment-in-kind (“PIK”) interest. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date.

See notes to consolidated financial statements.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1 - NATURE OF OPERATIONS

TP Flexible Income Fund, Inc. (f/k/a Triton Pacific Investment Corporation, Inc.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 1 – DESCRIPTION OF BUSINESS~~

~~Triton Pacific Investment Corporation, Inc.~~) (the “Company”, “our”, “us”, “we”), incorporated in Maryland on April 29, 2011, is ~~a publicly registered, non-traded fund focused on private equity, structured~~an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to generate current income and, as a secondary objective, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. We intend to meet our investment objective by primarily lending to and investing in the debt of privately-owned U.S. middle market companies, which we define as companies with annual revenue between $50 million and $2.5 billion. We expect that at least 70% of our portfolio of investments will consist primarily ~~makes structured~~of syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt, and that up to 30% of our portfolio of investments will consist of other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt ~~investments in small~~tranches of a type of pools of broadly syndicated loans known as collateralized loan obligations ("CLOs"), which we also refer to ~~mid-sized private U.S. companies. Structured equity refers to derivative investment products, including convertible~~as subordinated structured notes ~~and warrants, designed to facilitate highly customized risk-return objectives.~~("SSNs"). Pursuant to ~~the~~our Articles of Incorporation, as amended, restated and supplemented, the Company is authorized to issue 75,000,000 shares of common stock with a par value of $0.001 per share. Additionally, the Company is authorized to issue 25,000,000 shares of preferred stock with a par value of $0.001 per share. The Company is currently offering for sale a maximum of $300,000,000 of shares of common stock on a “best efforts” basis pursuant to a registration statement on Form N-2 filed with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended, which was declared effective on September 26, 2019 (the “Offering”). On June 25, 2014, the Company met its minimum offering requirement of $2,500,000 and released all shares held in escrow.

On August 10, 2018, we (in our capacity as Triton Pacific Investment Corporation, Inc., which we refer to as "TPIC") entered into an agreement and plan of merger with Pathway Capital Opportunity Fund, Inc. (“PWAY”) pursuant to which PWAY agreed to merge with and into TPIC (the “Merger”), and, as the combined legal surviving company, we were renamed as TP Flexible Income Fund, Inc. (we were formerly known as Triton Pacific Investment Corporation, Inc.). The ~~Company invests either alone or together~~agreement and plan of merger was amended and restated effective February 12, 2019. On March 15, 2019 the Merger was approved by the stockholders of TPIC and PWAY and was consummated effective as of March 31, 2019 at 11:59 p.m. eastern time (the “Effective Time”). As part of the Merger, each outstanding Class A and Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock as consideration for the Merger. From and after the Effective Time, shares of PWAY common stock are no longer outstanding and cease to exist.

Although PWAY merged into TPIC in connection with ~~other private equity sponsors. The Company~~the Merger, PWAY is ~~an externally managed, non-diversified closed-end investment company that has elected to be treated as a business development company, or BDC, under~~considered the ~~Investment Company Act~~accounting survivor of ~~1940, or~~the Merger and its historical financial statements are included and discussed in this report, and the Company ~~Act. As a BDC,~~adopted PWAY’s fiscal year end of June 30. We refer to the ~~Company is required to comply with certain regulatory requirements. The Company has elected to be treated for U.S. federal income tax purposes, and intends to annually qualify~~surviving merged accounting entity as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue code of 1986, as amended, or the Code. The Company has one wholly-owned subsidiary through which it holds interest in a non-controlled, affiliated portfolio company. The"FLEX" within these notes that accompany our consolidated financial statements include both the Company’s accounts and the accounts of its wholly-owned subsidiary. All significant intercompany transactions have been eliminated in consolidation. The Company’s consolidated subsidiary is subject to U.S. federal and state income taxes. No taxes were accrued or paid by the wholly-owned subsidiary for the three and nine months ended September 30, 2018 and 2017.

~~Triton Pacific Adviser,~~statements.

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

~~The Adviser~~adviser (the "Adviser"), was formed in Delaware as a private investment management firm and is registered as an investment adviser with the ~~Securities and Exchange Commission (“SEC”)~~SEC under the Investment Advisers Act of 1940, as amended, or the Advisers Act. The Adviser oversees the management of ~~the Company’s~~our activities and is responsible for making the investment decisions with respect to our investment portfolio, subject to the oversight of our Board of Directors. Prospect Administration LLC, an affiliate of the Adviser, serves as our administrator.

As a result of the Merger several significant changes occurred:

New Investment Adviser. Prospect Flexible Income Management, LLC now serves as our investment adviser. The Adviser is an affiliate of PWAY and the investment professionals of PWAY’s investment adviser have investment discretion at the Adviser.

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

Special Repurchase Offer. As a condition to being able to increase our leverage, we have offered and will in the future offer to repurchase certain of our outstanding shares pursuant to four quarterly tender offers (the "Special Repurchase Offer"). In connection with the Special Repurchase Offer, stockholders should be aware that:


◦	Only former stockholders of TPIC as of March 15, 2019 (the “Eligible Stockholders”), the date of TPIC’s 2019 annual stockholder meeting (the "2019 Annual Meeting"), were and will be allowed to participate in the Special Repurchase Offer, and they may have up to 100% of their shares repurchased. Former stockholders of PWAY

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

and stockholders who purchased shares in our continuous public offering will not and may not participate in the Special Repurchase Offer.


◦	If a substantial number of the Eligible Stockholders take advantage of this opportunity, it could minimize or eliminate the expected benefits of the Merger and it could:


▪	significantly decrease our asset size;


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


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

◦

The first of our four quarterly Special Repurchase Offers expired on June 24, 2019, and in that offer we repurchased 49,900 shares of our Class A common stock for gross proceeds of $495,506. Our second Special Repurchase Offer expired on October 4, 2019 and in that offer we repurchased 34,489 shares of our Class A common stock for gross proceeds of $326,262. Our third Special Repurchase Offer expired on December 20, 2019 and in that offer we repurchased 51,715 shares of our Class A common stock for gross proceeds of $460,786. See "Note 3 - Share Transactions" for additional information.

New Board of Directors. As a result of the Merger, the composition of our board of directors changed and now consists of Craig J. Faggen, TPIC’s former President and Chief Executive Officer, M. Grier Eliasek, PWAY’s former President and Chief Executive Officer, Andrew Cooper, William Gremp and Eugene Stark. Messrs. Cooper, Gremp and Stark are all former independent directors of PWAY.

On May 16, 2019, we formed a wholly-owned subsidiary TP Flexible Funding, LLC (the “SPV”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the ~~portfolio.~~

revolving credit facility at the SPV. This subsidiary has been consolidated since operations commenced.

NOTE 2 ~~– SUMMARY OF~~- SIGNIFICANT ACCOUNTING POLICIES

Basis of ~~Presentation.~~~~These~~Presentation and Consolidation. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ~~generally accepted in the United States of America~~ (“GAAP”) pursuant to the requirements for ~~interim financial information, including accounting for investment companies under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)~~reporting on Form 10-Q, ASC 946, Financial Services –- Investment Companies (“ASC 946”), and Articles 6, 10 and 12 of Regulation S-X.Under the 1940 Act, ASC 946, and the ~~rules and~~ regulations pursuant to Article 6 of ~~the Securities and Exchange Commission for interim financial statements. These~~Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Our consolidated financial statements ~~reflect all adjustments~~include the accounts of FLEX and ~~accruals of a normal recurring nature that,~~the SPV. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications. Certain reclassifications have been made in the ~~opinion~~presentation of ~~management, are necessarily indicative of results expected for any future period. These interim, unaudited~~prior consolidated financial statements and ~~related~~accompanying notes ~~should be read in conjunction with~~to conform to the ~~financial statements~~presentation as of and ~~related notes included in the Company’s annual report on Form 10-K~~ for the ~~year~~six months ended December 31, ~~2017.~~2019.

Management Estimates and Assumptions.The preparation of ~~unaudited,~~the consolidated financial statements in ~~conformity~~accordance with GAAP requires ~~management~~us 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 consolidated financial statements and the reported amounts of ~~revenues~~income, expenses, and ~~expenses~~gains and losses during the ~~reporting~~reported period. ~~Actual~~Changes in the economic environment, financial markets, creditworthiness of the issuers of our investment portfolio and any other parameters used in determining these estimates could cause actual results to differ, and these differences could ~~differ from those estimates.~~

be material.

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

Valuation of Portfolio Investments.The Company determines the ~~net asset~~fair value of its investment portfolio each quarter. Securities that are publicly-traded are valued at the reported closing price on the valuation date. Securities that are not publicly-traded are valued at fair value as determined in good faith by the Company’s board of directors. In connection with that determination, the Adviser provides the Company’s board of directors with portfolio company valuations which are based on relevant inputs which may include indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and also may include valuations prepared by third-party valuation services.

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

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

●

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

●

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

●

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

●

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

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

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, the Company may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that the Company’s board of directors may consider include the borrower’s ability to adequately service its debt, the fair

market value of the portfolio company in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The determination of fair market value for the equity positions were determined by considering, among other factors, various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues, waterfall and liquidation priority and market comparables, book value multiples, economic profits and portfolio multiples.

The fair values of the Company’s investments are determined in good faith by the Company’s board of directors. The Company’s board of directors is solely responsible for the valuation of the Company’s portfolio investments at fair value as determined in good faith pursuant to the Company’s valuation policy and consistently applied valuation process.

~~Revenue Recognition.~~~~Security transactions~~

In connection with that determination, the Adviser provides the Company’s board of directors with portfolio company valuations which are ~~accounted~~based on relevant inputs which may include indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

We follow guidance under U.S. GAAP, which classifies the inputs used to measure fair values into the following hierarchy:

Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2. Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities on an inactive market, or other observable inputs other than quoted prices.

Level 3. Unobservable inputs for the asset or liability.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.

Securities traded on a national securities exchange are valued at the last sale price on such exchange on the date of valuation or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price. Securities traded on the Nasdaq market are valued at the Nasdaq official closing price (“NOCP”) on the day of valuation or, if there was no NOCP issued, at the last sale price on such day. Securities traded on the Nasdaq market for which there is no NOCP and no last sale price on the day of valuation are valued at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price.

Securities traded in the over-the-counter market are valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We value over-the-counter securities by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent pricing agent and screened for validity by such service.

For some of our investments, market quotations are not readily available. With respect to such investments, or when such market quotations are deemed not to represent fair value, our board of directors has approved a multi-step valuation process for each quarter, as described below, and such investments are classified in Level 3 of the fair value hierarchy:


1.	Each portfolio company or investment is reviewed by investment professionals of the Adviser with the independent valuation firms engaged by our board of directors.


2.	The independent valuation firms prepare independent valuations based on their own independent assessments and issue their reports.


3.	The audit committee of our board of directors (the “Audit Committee”) reviews and discusses with the independent valuation firms the valuation reports, and then makes a recommendation to our board of directors of the value for each investment.


4.	Our board of directors discusses valuations and determines the fair value of such investments in our portfolio in good faith based on the input of the Adviser, the respective independent valuation firms and the Audit Committee.

Our non-CLO investments are valued utilizing a broker quote, yield technique, enterprise value (“EV”) technique, net asset value technique, liquidation technique, discounted cash flow technique, or a combination of techniques, as appropriate. The yield technique uses loan spreads for loans and other relevant information implied by market data involving identical or comparable assets or liabilities. Under the EV technique, the EV of a portfolio company is first determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i.e., “waterfall” allocation). To determine the EV, we typically use a market (multiples) valuation approach that considers relevant and applicable market trading data of guideline public companies, transaction metrics from precedent merger and acquisitions transactions, and/or a discounted cash flow technique. The net asset value technique, an income approach, is used to derive a value of an underlying investment by dividing a relevant earnings stream by an appropriate capitalization rate. The liquidation technique is intended to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio company’s assets. The discounted cash flow technique converts future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate discount rate. The fair value measurement is based on the net present value indicated by current market expectations about those future amounts.

Generally, our investments in loans are classified as Level 3 fair value measured securities under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

The types of factors that are taken into account in fair value determination include, as relevant, market changes in expected returns for similar investments, performance improvement or deterioration, security covenants, call protection provisions, and information rights, the nature and realizable value of any collateral, the issuer’s ability to make payments and its earnings and cash flows, the principal markets in which the issuer does business, comparisons to traded securities, and other relevant factors.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Our investments in CLOs are classified as Level 3 fair value measured securities under ASC 820 and are valued using a discounted multi-path cash flow model. The CLO structures are analyzed to identify the risk exposures and to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows from the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market as well as certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the multi-path cash flows. We are not responsible for and have no influence over the asset management of the portfolios underlying the CLO investments we hold, as those portfolios are managed by non-affiliated third-party CLO collateral managers. The main risk factors are default risk, prepayment risk, interest rate risk, downgrade risk, and credit spread risk.

Valuation of Other Financial Assets and Financial Liabilities. ASC 825, Financial Instruments, specifically ASC 825-10-25, permits an entity to choose, at specified election dates, to measure eligible items at fair value (the "Fair Value Option"). We have not elected the Fair Value Option to report selected financial assets and financial liabilities.

Investment Risks

Our investments are subject to a variety of risks. Those risks include the following:

Market Risk

Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.

Credit Risk

Credit risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.

Liquidity Risk

Liquidity risk represents the possibility that we may not be able to rapidly adjust the size of our investment positions in times of high volatility and financial stress at a reasonable price.

Interest Rate Risk

Interest rate risk represents a change in interest rates, which could result in an adverse change in the fair value of an interest-bearing financial instrument.

Prepayment Risk

Many of our debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the security and making us less likely to fully earn all of the expected income of that security and reinvesting in a lower yielding instrument.

Structured Credit Related Risk

CLO investments may be riskier and less transparent to us than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans.

Investment Classification. We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of more than 25% of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through the possession outright or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of December 31, 2019 and June 30, 2019, our qualifying assets as a percentage of total assets, stood at 83.59% and 82.79%, respectively.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Investment Transactions. Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade ~~date.~~date basis. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Amounts for investments traded but not yet settled are reported in Payable for investments purchased and Receivable for investments sold in the Consolidated Statements of Assets and Liabilities.

Revenue Recognition. The Company records interest income on an accrual basis to the extent it expects to collect such amounts. The Company records dividend income on the ex-dividend date. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. Loan origination fees, original issue discount and market discount are capitalized and the Company ~~amortizes~~accretes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. Upfront structuring fees are recorded as fee income when earned. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Accretion of such purchase discounts or amortization of such premiums is calculated using the effective interest method as of the settlement date and adjusted only for material amendments or prepayments. Upon the prepayment of a bond, any unamortized discount or premium is recorded as interest income.

Interest income from investments in the “equity” positions of CLOs (typically income notes or subordinated notes) is recorded based on an estimation of an effective yield to expected maturity utilizing assumed future cash flows in accordance with ASC 325-40, Beneficial Interest in the Securitized Financial Assets. The Company monitors the expected cash inflows from CLO equity investments, including the expected residual payments, and the estimated effective yield is determined and updated periodically. In accordance with ASC 325-40, Beneficial Interest in Securitized Financial Assets, investments in CLOs are periodically assessed for other-than-temporary impairment (“OTTI”). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down to its fair value as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.

Due to and from Adviser. Amounts due from the Adviser are for amounts waived under the ELA (as such term is defined in Note 4) and amounts due to the Adviser are for base management fees, incentive fees, operating expenses paid on our behalf and offering and organization expenses paid on our behalf. The due to and due from Adviser balances are presented net on the Consolidated Statements of Assets and Liabilities as of December 31, 2019and are presented gross on the Consolidated Statements of Assets and Liabilities as of June 30, 2019. All balances due to and from the Adviser are settled quarterly.

Paid-In-Kind Interest.The ~~company~~Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. For the three months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017,~~PIK interest included in interest income ~~included -0-~~totaled $29 and ~~-0- of PIK interest,~~$0, respectively. For the ~~nine~~six months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017,~~PIK interest included in interest income ~~included -0-~~totaled $58 and ~~$19,488 of PIK interest,~~$0, respectively. The Company stops accruing PIK interest when it is determined that PIK interest is no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to the stockholders in the form of distributions, even though the Company has not yet collected the cash.

Offering Costs and Expenses. The Company will incur certain costs and expenses in connection with registering to sell shares of its common stock. These costs and expenses principally relate to certain costs and expenses for advertising and sales, printing and marketing costs, professional and filing fees. Offering costs incurred by the Company are capitalized to deferred offering costs on the Consolidated Statements of Assets and Liabilities and amortized to expense over the 12 month period following such capitalization on a straight line basis. Prior to the Merger, there were offering and organizational costs due to the PWAY's investment adviser (as such term is defined in Note 4).

Dividends and Distributions. Dividends and distributions to common stockholders are recorded on the record date. The amount, if any, to be paid as a monthly dividend or distribution is approved by our Board of Directors quarterly and is generally based upon our management's estimate of our future taxable earnings. Net realized capital gains, if any, are distributed at least annually.

Financing Costs. We record origination expenses related to our Revolving Credit Facility as deferred financing costs. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation of our Revolving Credit Facility. (See Note 11 for further discussion).

Per Share Information. Net increase or decrease in net assets resulting from operations per share is calculated using the weighted average number of common shares outstanding for the period presented. In accordance with ASC 946, convertible securities are not considered in the calculation of net asset value per share. As of December 31, 2019, there were no issued convertible securities.

Net Realized ~~Gains or Losses,~~ and Net Change in Unrealized ~~Appreciation~~Gains or ~~Depreciation.~~Losses. Gains or losses on the sale of investments are calculated by using the specific identification method. The Company measures realized gains or losses by the difference between the net proceeds

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

~~Capital Gains Incentive Fees.~~ The Company has entered into an investment advisory agreement with the Adviser dated as of July 27, 2012. Pursuant to the terms of the investment advisory agreement, the Incentive Fee shall be determinedFederal and payable in arrears as of the end of each quarter, upon liquidation of the Company or upon termination of this Agreement, as of the termination date, and shall equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each quarter, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Incentive Fees. The fee for the three months ended September 30, 2018 and 2017 was -0- and -0-, respectively. The fee for the nine months ended September 30, 2018 and 2017 was -0- and ($334), respectively, of which all was for Incentive Fees calculated on unrealized gains.

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

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

~~Offering Costs.~~The Company will incur certain expenses in connection with registering to sell shares of its common stock in connection with the Offering. These costs principally relate to professional and filing fees. Upon recognition or repayment to the Adviser of these costs, they will be capitalized as deferred offering expenses and then subsequently expensed over a 12-month period. The Adviser may reimburse the Company for all or part of these amounts pursuant to the Expense Support and Conditional Reimbursement Agreement (“Expense Reimbursement Agreement”) discussed below. As of September 30, 2018, $3,089,687 of offering costs have been reclassified and included as part of the Expense Reimbursement Agreement and accordingly included in Reimbursement due from the Adviser. Of these expenses, $1,574,616 has exceeded the three-year period for repayment and will not be repayable by the Company. $225,000 of offering costs from contingent expenses recorded in prior periods were deemed to be non-payable and the Reimbursement from the Adviser was adjusted accordingly. For the three and nine months ended September 30, 2018, the Company incurred $73,477 and $292,036, respectively, in offering costs that were not reimbursed by the Sponsor, of which $83,942 and $170,932, respectively, was expensed by the Company for the three and nine months ended September 30, 2018.

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

State Income Taxes.The Company has elected to be treated ~~for federal income tax purposes, and intends to annually qualify thereafter,~~ as a regulated investment company (“RIC”) under Subchapter M of the ~~Code. Generally,~~Internal Revenue Code of 1986, as amended (the “Code”), and intends to continue to comply with the requirements of the Code applicable to RICs. As a RIC, the Company is ~~exempt from federal income taxes if it distributes~~required to distribute at least 90% of “Investment Company Taxable Income,” as defined in the Code, each year. Dividends paid up to 8.5 months after the current tax year can be carried back to the prior tax year for determining the dividends paid in such tax year. The Companyits investment company taxable income and intends to distribute ~~sufficient~~(or retain through a deemed distribution) all of its investment company taxable income and net capital gain to stockholders; therefore, the Company has made no provision for income taxes. The character of income and gains that the Company will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to ~~maintain its RIC status each year. The~~paid-in capital.

If the Company ~~is also subject to nondeductible federal excise taxes if it~~ does not distribute (or is not deemed to have distributed) at least 98% of ~~net~~its annual ordinary income and 98.2% of its net capital ~~gain~~gains in the calendar year earned, it will generally be required to pay an excise tax equal to 4% of the amount by which 98% of its annual ordinary income and 98.2% of its capital gains exceeds the distributions from such taxable income for the year. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, it accrues excise taxes, if any, ~~and~~on estimated excess taxable income. As of December 31, 2019, the Company does not expect to have any ~~recognized and undistributed~~excise tax due for the 2019 calendar year. Thus, the Company has not accrued any excise tax for this period.

If the Company fails to satisfy the annual distribution requirement or otherwise fails to qualify as a RIC in any taxable year, it would be subject to tax on all of its taxable income ~~from prior years for which it paid no federal excise tax.~~at regular corporate income tax rates. The Company ~~will~~would not be able to deduct distributions to stockholders, nor would it be required to make distributions. Distributions would generally ~~endeavor each~~be taxable to the Company’s individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of its current and accumulated earnings and profits, provided certain holding period and other requirements are met. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. To qualify again to be taxed as a RIC in a subsequent year, ~~to avoid any federal excise taxes.~~

~~GAAP requires management to evaluate tax positions taken by~~ the Company would be required to distribute to our shareholders our accumulated earnings and ~~recognize a tax liability~~profits attributable to non-RIC years. In addition, if the Company ~~has taken an~~failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, it would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.

The Company follows ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain ~~position that more likely than not would not be sustained upon examination by the Internal Revenue Service or other tax authorities. Management has analyzed the~~ tax positions ~~taken by~~should be recognized, measured, presented, and disclosed in the ~~Company, and has concluded that as~~consolidated financial statements. ASC 740 requires the evaluation of ~~September 30, 2018 and 2017, there are no uncertain~~tax positions taken or expected to be taken ~~that would require recognition of a liability or disclosure~~ in the ~~financial statements. The~~course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of December 31, 2019, the Company isdid not record any unrecognized tax benefits or liabilities. Management’s determinations regarding ASC 740 may be subject to ~~routine audits~~review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, its major tax jurisdiction is federal. The Company’s federal tax returns for the tax years ended December 31, 2016 and thereafter remain subject to examination by the Internal Revenue ~~Service~~Service.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses(Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic No. 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact, if any, of adopting this ASU on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The standard will modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. ASU No. 2018-13 is effective for annual reporting periods

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted upon issuance of this ASU. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

SEC Disclosure Update and Simplification

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance. We have presented the financial statements for the six months ended December 31, 2019 in accordance with these amendments, and have retrospectively applied the amendments to the presentation of prior financial statement periods.

Prior to adoption and in accordance with previous SEC rules, we presented distributable earnings (loss) on the Consolidated Statements of Assets and Liabilities, as three components: 1) accumulated overdistributed net investment income; 2) accumulated net unrealized gain (loss) on investments; and 3) accumulated net realized gain (loss) on investments. We also presented distributions from earnings on the Consolidated Statements of Changes in Net Assets as distributions from net investment income. In accordance with the SEC Release, distributable earnings and distributions from distributable earnings are shown in total on the Consolidated Statements of Assets and Liabilities and Consolidated Statements of Changes in Net Assets, respectively. The changes in presentation have been retrospectively applied to the prior period statements presented.

The following table provides the reconciliation of the components of distributable earnings (loss) to conform to the current period presentation for the six months ended December 31, 2018:



	Overdistributed net investment income			Realized gains (losses)			Net unrealized loss			Distributable earnings (loss)
Balance as of June 30, 2018	$	(187,902	)	$	37,548		$	(356,386	)	$	(506,740	)
Net Increase in Net Assets Resulting from Operations:
Net investment income	(325,972		)	—			—			(325,972		)
Net realized losses	—			(45,453		)	—			(45,453		)
Net change in net unrealized losses	—			—			(945,059		)	(945,059		)
Distributions to Shareholders:
Distributions from net investment income	—			—			—			—
Tax reclassification	(5,644		)	(452		)				(6,096		)
Balance as of December 31, 2018	$	(519,518	)	$	(8,357	)	$	(1,301,445	)	$	(1,829,320	)

Tax Cuts and Jobs Act

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed the Code, including a reduction in the corporate income tax rate, a new limitation on the deductibility of interest expense, and significant changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Act also authorizes the IRS to issue regulations with respect to the new provisions. We cannot predict how the changes in the Tax Act, or regulations or other ~~tax authorities, generally for three years after~~guidance issued under it, might affect us, our business or the ~~tax returns are filed; however, there are currently no audits for any tax periods~~business of our portfolio companies. However, our portfolio companies may or may not make certain elections under the Tax Act that could materially increase their taxable earnings and profits. Any such increase in ~~progress.~~

the taxable earnings and profits of a portfolio company may result in the characterization of certain distributions sourced from sale proceeds as dividend income, which may increase our distributable taxable income.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 3 –- SHARE TRANSACTIONS

Below is a summary of transactions with respect to shares of ~~the Company’s~~ common stock of FLEX during the ~~nine~~three months and six months ended ~~September 30, 2018 and 2017:~~

December 31, 2019:

Nine months ended September 30,
2018 2017
Shares Amount Shares Amount
Gross proceeds from Offering 141,332.86 $ 1,865,205 362,028.61 $ 5,320,227
Reinvestment of Distributions 21,626.05 256,864 16,105.02 214,336
Commissions and Dealer Manager Fees - (178,471) - (502,640)
Net Proceeds to Company from Share Transactions 162,958.91 $ 1,943,598 378,133.63 $ 5,031,923

~~During the nine months ended September 30, 2018 and 2017, the Company sold 141,322.86 and 362,028.61~~



	Three Months Ended December 31,2019					Six Months Ended December 31,2019
	FLEX Class A Common Shares					FLEX Class A Common Shares
	Shares		Amount			Shares		Amount
Shares issued	—		$	—		2,197		$	25,000
Shares issued from reinvestment of distributions	19,813		211,999			39,745		425,292
Repurchase of common shares	(86,204	)	(787,048		)	(86,204	)	(787,048		)
Net increase (decrease) from capital transactions	(66,391	)	(575,049		)	(44,262	)	$	(336,756	)

Below is a summary of transactions with respect to shares of common stock ~~respectively, for gross proceeds~~ of ~~approximately $1,865,205 and $5,320,227, at an average price per share of $13.20 and $14.70, respectively. The increase in capital in excess of par value~~PWAY during the ~~nine~~three months and six months ended ~~September 30, 2018 and 2017 include reinvested stockholder distributions~~December 31, 2018:



	Class A Shares					Class I Shares			Total
Three Months Ended December 31, 2018	Shares		Amount			Shares	Amount		Shares		Amount
Shares issued	—		$	—		—	$	—	—		$	—
Shares issued from reinvestment of distributions	5,951		66,445			66	741		6,017		67,186
Repurchase of common shares	(19,180	)	(217,695		)	—	—		(19,180	)	(217,695		)
Net increase (decrease) from capital transactions	(13,229	)	$	(151,250	)	66	$	741	(13,163	)	$	(150,509	)



	Class A Shares					Class I Shares					Total
Six Months Ended December 31, 2018	Shares		Amount			Shares		Amount			Shares		Amount
Shares issued	—		$	—		—		$	—		—		$	—
Shares issued from reinvestment of distributions	10,599		124,927			117		1,383			10,716		126,310
Repurchase of common shares	(50,554	)	(615,194		)	(342	)	(4,350		)	(50,896	)	(619,544		)
Net increase (decrease) from capital transactions	(39,955	)	$	(490,267	)	(225	)	$	(2,967	)	(40,180	)	$	(493,234	)

Status of ~~$256,864 and $214,336, respectively, for which the Company issued 21,626.05 and 16,105.02 shares of common stock, respectively.~~

Continuous Public Offering

The proceeds from the issuance of common stock as presented on the accompanying statements of changes in net assets and statements of cash flows are presented net of selling commissions and dealer manager fees ~~of $178,471 and $502,640~~as noted in the tables above for the ~~nine~~three months and six months ended ~~September 30,~~December 31, 2019 and 2018.

The net increase (decrease) from capital transactions during the three months and six months ended December 31, 2019 and 2018 also includes reinvested stockholder distributions as noted in the tables above.

Merger Shares

Upon consummation of the Merger, each outstanding Class A and ~~2017, respectively.~~

Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock. This resulted in 775,193 shares of TPIC common stock being issued to former PWAY investors and all outstanding PWAY shares were retired. For financial reporting purposes, the conversion of PWAY shares to TPIC shares was accounted for as a recapitalization of PWAY (see Note 9).

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Share Repurchase Program

The Company intends to continue to conduct quarterly tender offers pursuant to its share repurchase program. The Company’s board of directors will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase shares of common stock and under what terms:

●

~~the effect of such repurchases on the Company’s qualification as a RIC (including the consequences of any necessary asset sales);~~

●

~~the liquidity of the Company’s assets (including fees and costs associated with disposing of assets);~~

●

~~the Company’s investment plans and working capital requirements;~~

●

~~the relative economies of scale with respect to the Company’s size;~~

●

~~the Company’s history in repurchasing shares of common stock or portions thereof; and~~

●

~~the condition of the securities markets.~~

the effect of such repurchases on the Company’s qualification as a RIC (including the consequences of any necessary asset sales);

the liquidity of the Company’s assets (including fees and costs associated with disposing of assets);

the Company’s investment plans and working capital requirements;

the relative economies of scale with respect to the Company’s size;

the Company’s history in repurchasing shares of common stock or portions thereof; and

the condition of the securities markets.

The Company currently intends to limit the number of shares of common stock to be repurchased during any calendar year to the number of shares of common stock it can repurchase with the proceeds it receives from the issuance of shares of common stock under its distribution reinvestment plan. At the discretion of the Company’s board of directors, the Company may also use cash on hand, cash available from borrowings and cash from the liquidation of securities investments as of the end of the applicable period to repurchase shares of common stock. In addition, the Company will limit the number of shares of common stock to be repurchased in any calendar year to 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter, though the actual number of shares of common stock that the Company offers to repurchase may be less in light of the limitations noted above.

Our board of directors reserves the right, in its sole discretion, to limit the number of shares to be repurchased for each class by applying the limitations on the number of shares to be repurchased, noted above, on a per class basis. We further anticipate that we will offer to repurchase such shares on each date of repurchase at a price equal to 90% of the current offering price on each date of repurchase. If the amount of repurchase requests exceeds the number of shares we seek to repurchase, we will repurchase shares on a pro-rata basis. As a result, we may repurchase less than the full amount of shares that ~~shareholders~~stockholders submit for repurchase. If we do not repurchase the full amount of the shares that ~~shareholders~~stockholders have requested to be repurchased, or we determine not to make repurchases of our shares, ~~shareholders~~stockholders may not be able to dispose of their shares. Any periodic repurchase offers will be subject in part to our available cash and compliance with the ~~Company~~1940 Act.

Special Repurchase Offer

At the 2019 Annual Meeting of TPIC"s Stockholders (the "2019 Annual Meeting"), TPIC’s stockholders approved a proposal allowing us to modify our asset coverage ratio requirement from 200% to 150%. Because our securities are not listed on a national securities exchange, pursuant to the requirements of the SBCA we are required to conduct four Special Repurchase Offers that, taken together, allow all of the Eligible Stockholders (former stockholders of TPIC as of March 15, 2019, the date of the 2019 Annual Meeting) to have those shares that such Eligible Stockholders held as of that date to be repurchased by us. PWAY stockholders who became our stockholders in connection with the Merger are not eligible to participate in these Special Repurchase Offers. In addition, shares of our common stock acquired after the date of the 2019 Annual Meeting are not eligible for repurchase in these Special Repurchase Offers. These Special Repurchase Offer are separate and apart from our share repurchase program discussed above.

The Special Repurchase Offer consists of four quarterly tender offers, the first of which occurred in the second calendar quarter of 2019, the second of which occurred in the third calendar quarter of 2019 and the third of which occurred in the fourth calendar quarter of 2019. The remaining tender offer will occur in the following calendar quarter. Each of the four tender offers that is part of the Special Repurchase Offer allows the Eligible Stockholders to tender for repurchase up to 25% of their shares held as of the date of the 2019 Annual Meeting. The repurchase price for any shares tendered during the Special Repurchase Offer is equal to the net asset value per share of our common stock as of the date of each such repurchase.

In connection with each tender offer that is part of the Special Repurchase Offer, we plan to provide notice to all Eligible Stockholders describing the terms of the Special Repurchase Offer and other information such Eligible Stockholders should consider in deciding whether to tender their shares to us in the Special Repurchase Offer. These documents are made available on our website at www.flexbdc.com. Each Eligible Stockholder has not less than 20 business days from the date of that notice to elect to tender their shares back to us.

The payment for the eligible shares that are tendered in each Special Repurchase Offer is expected to be paid promptly at the end of the applicable Special Repurchase Offer in accordance with the 1940 Act. At the discretion of our board of directors, we may use cash on hand, cash available from borrowings, cash available from the issuance of new shares of our common stock and cash

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

~~The following table provides information concerning~~

from the ~~Company’s~~sale of our investments to fund the aggregate purchase price payable as a result of any Special Repurchase Offer. If substantial numbers of the Eligible Stockholders take advantage of this opportunity, it could significantly decrease our asset size, require us to sell our investments earlier than our Adviser would have otherwise desired, which may result in selling investments at inopportune times or significantly depressed prices and/or at losses, or cause us to incur additional leverage solely to meet repurchase requests.

Below is a summary of transactions with respect to shares of common stock during ~~the nine months ended September 30, 2018 and 2017:~~

For the Nine Months Ended Repurchase Date Shares Repurchased Percentage of Shares Tendered That Were Repurchased Average Price Paid Per Share Aggregate Consideration for Repurchased Shares
Fiscal 2018
March 31, 2018 March 28, 2018 6,388.01 11% $ 12.11 $ 77,359
Fiscal 2017
March 31, 2017 January 20, 2017 8,482.60 27% 13.87 117,654
June 30, 2017 May 12, 2017 1,936.81 6% 13.55 26,244
September 30, 2017 September 25, 2017 5,968.22 9% 12.30 73,409

each tender offer:



Quarterly Offer Date	Repurchase Effective Date	Shares Repurchased	Percentage of Shares Tendered That Were Repurchased		Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares
Three months and Six months ended December 31, 2019
September 30, 2019⁽¹⁾	October 8, 2019	34,489	100	%	$	9.46	$	326,262
December 31, 2019⁽¹⁾⁽²⁾	December 27, 2019	51,715	100	%	$	8.91	460,786
Total for Three months and Six months ended December 31, 2019		86,204					$	787,048

Three months ended December 31, 2018
September 30, 2018⁽³⁾	November 13, 2018	19,180	100	%	Class A:$11.35		$	217,695
Total for Three months ended December 31, 2018		19,180					$	217,695

Six months ended December 31, 2018
June 30, 2018⁽³⁾	August 7, 2018	31,715	100	%	Class A:$12.67 Class I: $12.70		$	401,849
September 30, 2018⁽³⁾	November 13, 2018	19,180	100	%	Class A:$11.35		217,695
Total for Six months ended December 31, 2018		50,895					$	619,544


(1)	Subsequent to the Merger on March 31, 2019, FLEX Class A common shares were tendered in a Special Repurchase Offer.

(2) The ~~Company and its board did not authorize a~~ repurchase for the three months ended ~~September 30, 2018 nor the three months ended June 30, 2018.~~

December 31, 2019, was effective prior to December 31, 2019 but paid after December 31, 2019 and therefore is recorded as a payable as of December 31, 2019.


(3)	As part of the Merger each outstanding Class A and Class I share of PWAY common stock was canceled and retired in exchange for 1.2848 and 1.2884 shares, respectively, of TPIC Class A common stock as consideration for the Merger. From and after the Merger date of March 31, 2019 (Effective Time), shares of PWAY common stock are no longer outstanding and cease to exist.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 4 –- RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

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

~~In connection with the Offering, the Company has incurred registration, organization, operating and offering costs. Such costs have been advanced by the Adviser. As discussed below, the Company has~~

Administration Agreement

On September 2, 2014, PWAY entered into an ~~Expense Reimbursement~~administration agreement with Prospect Administration LLC (the “Administrator”), an affiliate of the Adviser. Pursuant to the agreement and plan of merger as amended and restated, between TPIC and PWAY, Prospect Administration LLC became the administrator for the Company pursuant to an administrative agreement, as amended and restated as of June 17, 2019 (the "Administrative Agreement"). The Administrator performs, oversees and arranges for the performance of administrative services necessary for the operation of the Company. These services include, but are not limited to, accounting, finance and legal services. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s actual and allocable portion of expenses and overhead incurred by the Administrator in performing its obligations under the Administration Agreement, ~~with~~including rent and the Company’s allocable portion of the costs of its ~~Adviser.~~Chief Financial Officer and Chief Compliance Officer and her staff. For the ~~period from inception through September~~three months ended December 31, 2019 and 2018, administrative costs incurred by the Company and PWAY to the Administrator were $173,523 and $17,125, respectively. For the six months ended December 31, 2019 and 2018, administrative costs incurred by the Company and PWAY to the Administrator were $337,316 and $85,875, respectively. As of December 31, 2019 and June 30, ~~2018, certain registration, organization, operating~~2019, $288,156 and ~~offering costs have been accounted~~$341,235, respectively, was payable to the Administrator by the Company.

Investment Advisory Agreement

The Company entered into an Investment Advisory Agreement, dated March 31, 2019, with our Adviser (the “Investment Advisory Agreement”). We pay our Adviser a fee for its services under the ~~Expense Reimbursement~~Investment Advisory Agreement consisting of two components - a base management fee and ~~accordingly included in Reimbursement due from~~an incentive fee. The cost of both the ~~Adviser on the statements of financial position.~~

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

September 30, December 31,
2018 2017
Operating Expenses $ 1,977,504 $ 1,977,504
Offering Costs 3,089,687 3,314,687
Due to related party offset (4,724,476 ) (4,707,407 )
Reimbursements received from Adviser (342,715 ) (342,715 )
Other amounts due to affiliates 886 15,559
Total Reimbursement due from Adviser $ 886 $ 257,628

~~Operating Expenses are the amounts reimbursed by the Adviser for our operating costs and offering costs are the cumulative amount of organizational and offering expenses reimbursed~~base management fee payable to ~~us by~~ the Adviser and ~~subject to future reimbursement per the terms of~~any incentive fees it earns will ultimately be borne by our ~~Expense Reimbursement Agreement.~~

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

stockholders.

Base Management Fee.The ~~Company compensates the Adviser for investment services per an Investment Adviser Agreement (“Agreement”), approved by the Company’s directors, calculated as the sum of (1)~~ base management fee is calculated ~~quarterly~~ at ~~0.5%~~an annual rate of 1.75% (0.4375% quarterly) of our average total assets, which includes any borrowings for investment purposes. Prior to the Merger, PWAY paid a base management fee to its investment adviser of 2% annually. For the first quarter of our operations commencing with the date of the ~~Company’s~~Investment Advisory Agreement, the base management fee was calculated based on the average ~~gross~~value of our total assets as of the date of the Investment Advisory Agreement and at the end of the calendar quarter in which the date of the Investment Advisory Agreement fell, and was appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Subsequently, the base management fee is payable quarterly in arrears, and ~~(2)~~is calculated based on the average value of our total assets at the end of the two most recently completed calendar quarters, and is appropriately adjusted for any share issuances or repurchases during the then current calendar quarter. Base management fees for any partial month or quarter is appropriately pro-rated. At the Adviser’s option, the base management fee for any period may be deferred, without interest thereon, and paid to the Adviser at any time subsequent to any such deferral as the Adviser determines. For the three months and six months ended December 31, 2018, PWAY paid routine non-compensation overhead expenses of its investment adviser in an amount up to 0.0625% per quarter (0.25% annualized) of PWAY's average total assets which totaled $6,342 and $13,552, respectively, which is presented as adviser shared service expense in the Consolidated Statement of Operations. Adviser shares service expense is no longer in effect post Merger.

The total base management fee incurred by the Adviser was $182,205 and $339,614 during the three months and six months ended December 31, 2019, respectively, which was waived by the Adviser. The total base management fee incurred to the favor of PWAY’s investment adviser was $50,735 and $108,414 during the three months and six months ended December 31, 2018. After the waiver, there were $0 in base management fees due to the Adviser as of December 31, 2019 and June 30, 2019.

Incentive Fee- Subordinated Incentive Fee on Income. The first part of the incentive fee, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based upon our “pre-incentive fee net investment income” for the immediately preceding calendar quarter. For this purpose “pre-incentive fee net investment income” means interest income, dividend income and distribution cash flows from equity investments and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive) accrued during the calendar quarter, deducted by the operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement, any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the organization and offering expenses and incentive fees on income). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a preferred return, or “hurdle,” of 1.5% per quarter (6.0% annualized) and a “catch-up” feature measured as of the end of each calendar quarter as discussed below. The subordinated incentive fee on income for each calendar quarter is paid to our Adviser as follows: (1) no incentive fee is payable to our Adviser in any calendar quarter in which our pre-incentive fee net investment income does not exceed the fixed preferred return rate of 1.5%; (2) 100% of our pre-incentive fee net investment

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the fixed preferred return but is less than or equal to 1.875% in any calendar quarter (7.5% annualized); and (3) 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.875% in any calendar quarter (7.5% annualized). This reflects that once the fixed preferred return is reached and the catch-up is achieved, 20.0% of all pre-incentive fee net investment income thereafter is allocated to our Adviser. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

Incentive Fee- Capital Gains Incentive Fee. The second part of the incentive fee, which is referred to as the capital gains incentive fee, is determined and payable in arrears as of the end of each ~~quarter or upon liquidation of the Company or~~calendar year (or upon termination of the Investment Advisory Agreement, ~~at 20%~~as of ~~Company’s~~the termination date), and equals 20.00% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year. In determining the capital gains incentive fee payable to our Adviser, we calculate the aggregate realized capital gains, aggregate realized capital losses and aggregate unrealized capital depreciation, as ~~defined. The Agreement expires~~

applicable, with respect to each investment that has been in our portfolio. For the purpose of this calculation, an “investment” is defined as the total of all rights and claims which may be asserted against a portfolio company arising from our participation in the debt, equity, and other financial instruments issued by that company. Aggregate realized capital gains, if any, equal the sum of the differences between the aggregate net sales price of each investment and the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate realized capital losses equal the sum of the amounts by which the aggregate net sales price of each investment is less than the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate unrealized capital depreciation equals the sum of the differences, if negative, between the aggregate valuation of each investment and the aggregate amortized cost basis of such investment as of the applicable calendar year-end. At the end of the applicable calendar year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee involves netting aggregate realized capital gains against aggregate realized capital losses on a since-inception basis and then reducing this amount by the aggregate unrealized capital depreciation. If this number is positive, then the capital gains incentive fee payable is equal to 20.00% of such amount, less the aggregate amount of any capital gains incentive fees paid since inception. Operating expenses are not taken into account when determining capital gains incentive fees.

~~July~~There were no incentive fees payable as of December 31, 2019 or June 30, 2019. During three months and six months ended December 31, 2019 and ~~may continue automatically for successive annual periods, as approved by~~2018, there were no incentive fees incurred.

Co-Investments

On January 13, 2019, the ~~Company. All management fees earned by~~parent company of the Adviser ~~prior to January 1, 2014 were waived by the Adviser.~~

As a BDC, we will be subject to certain regulatory restrictions in making our investments. For example, we generally will not be permitted to co-invest alongside our Adviser and its affiliates unless we obtainreceived an exemptive order from the SEC (the “Order”),which superseded a prior co-investment exemptive order granted on February 10, 2014, granting the ability to negotiate terms other than price and quantity of co-investment transactions with other funds managed by the Adviser or certain affiliates, including Prospect Capital Corporation (“PSEC”) and Priority Income Fund, Inc. (“PRIS”), where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions included therein.

Under the terms of the order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company’s independent directors must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching of the Company or its stockholders on the part of any person concerned and (2) the transaction is ~~otherwise permitted under existing regulatory guidance,~~consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies. In certain situations where co-investment with one or more funds managed or owned by the Adviser or its affiliates is not covered by the Order, such as ~~syndicated transactions where price~~when there is an opportunity to invest in different securities of the ~~only negotiated term,~~same issuer, the personnel of the Adviser or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on policies and ~~approval from our independent directors.~~procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. Moreover, except in certain circumstances, when relying on the Order, the Company will be unable to invest in any issuer in which one or more funds managed or owned by the Adviser or its affiliates has previously invested.

Allocation of Expenses

The cost of valuation services for CLOs is initially borne by PRIS, which then allocates to the Company its proportional share of such expense. During the three months ended December 31, 2019 and 2018, PRIS incurred $17,862 and $15,033, respectively, in expenses related to valuation services that are attributable to the Company. During the six months ended December 31, 2019 and 2018, PRIS incurred $38,655 and $31,284, respectively, in expenses related to valuation services that are attributable to the Company. The Company reimburses PRIS for these expenses and includes them as part of valuation services on the Statement of Operations. As of ~~September~~December 31, 2019 and June 30, 2019, $56,981 and $32,314, respectively, of expense is due to PRIS, which is presented as part of due to affiliates on the Statement of Assets and Liabilities.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The cost of filing software is initially borne by PSEC, which then allocates to the Company its proportional share of such expense. During the three months ended December 31, 2019 and 2018, PSEC incurred $5,975 and $2,348, respectively in expenses related to the filing services that are attributable to the Company. During the six months ended December 31, 2019 and 2018, PSEC incurred $8,326 and $5,467, respectively in expenses related to the filing services that are attributable to the Company. The Company reimburses PSEC for these expenses and includes them as part of general and administrative expenses on the Statement of Operations. As of December 31, 2019 and June 30, 2019, $8,326 and $2,348 of expense was due to PSEC, respectively, which is presented as part of due to affiliates on the Statement of Assets and Liabilities.

The cost of portfolio management software is initially borne by the Company, which then allocates to PSEC its proportional share of such expense. During the three months ended December 31, 2019 and 2018, the Company ~~has two~~incurred $0 and $6,213, respectively, in expenses related to the portfolio management software that is attributable to PSEC. During the six months ended December 31, 2019 and 2018, the Company incurred $0 and $12,861, respectively, in expenses related to the portfolio management software that is attributable to PSEC. PSEC reimburses the Company for these expenses and included them as part of general and administrative expenses on the Statement of Operations. As of December 31, 2019 and June 30, 2019, $0 of expense is due from PSEC, which is presented as due from affiliate ~~investments in ACON IWP Investors I, L.L.C~~on the Statement of Assets and ~~Javlin Capital, LLC (held by TPJ Holdings, Inc., a wholly-owned subsidiary.)~~

~~The Company compensates TFA for administration services per an Administration Agreement for costs~~Liabilities.

Officers and ~~expenses incurred with the administration~~Directors

Certain officers and ~~operation~~directors of the ~~Company. Such agreement expires July 2019~~Company are also officers and ~~may continue automatically~~directors of the Adviser and its affiliates. There were no fees paid to the independent directors of the Company as the Company did not exceed the minimum net asset value required (i.e., greater than $100 million) to receive a fee for ~~successive annual periods, as approved by~~ the ~~Company. These fees have been reimbursed~~three months and six months ended December 31, 2019. The officers do not receive any direct compensation from the ~~Adviser pursuant to the~~ Company.

Expense Limitation and Expense Reimbursement Agreements

Expense Reimbursement Agreement ~~discussed below.~~

~~The following table describes the fees and expenses accrued under the investment advisory and administration agreement~~with TPIC and the ~~dealer manager agreement during~~Former Adviser

Prior to the ~~three and nine months ended September 30, 2018 and 2017:~~

Three months ended September 30, Nine months ended September 30,
Related Party Source Agreement Description 2018 2017 2018 2017
Triton Pacific Adviser, LLC Investment Adviser Agreement Base Management Fees $ 91,593 $ 83,459 $ 269,189 $ 246,154
Triton Pacific Adviser, LLC Investment Adviser Agreement Capital Gains Incentive Fees⁽¹⁾ $ - $ - $ - $ (334 )
TFA Associates, LLC Administration Agreement Administrative Services Expenses $ 66,558 $ 70,495 $ 215,786 $ 213,473
Triton Pacific Securities, LLC Dealer Manager Agreement Dealer Manager Fees⁽²⁾ $ 11,427 $ 37,201 $ 34,809 $ 97,435

~~(1)~~

During the nine months ended September 30, 2018 and 2017, the Company earned capital gains incentive fees of -0- and ($334), respectively, based on the performance of its portfolio, of which all were based on unrealized losses, respectively. No capital gains incentive fees are actually payable by the Company with respect to unrealized gains unless and until those gains are actually realized. See Note 2 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fees.

~~(2)~~

During the nine months ended September 30, 2018 and 2017, the Company paid the Dealer Manager $178,471 and $502,640, respectively, in sales commissions and dealer fees. $34,809 and $97,435 were retained by TPS, respectively, and the remainder re-allowed to third party participating broker dealers.

~~The following table describes the amounts owed to affiliates~~Merger, Triton Pacific Adviser, LLC served as ~~of September 30, 2018:~~

September 30,
2018
Management fees payable $ 91,593
Dealer manager fees payable 5,610
Other amounts due to affiliates 22,777
Total due to affiliates $ 119,980

~~Expense Reimbursement Agreement~~

our investment adviser (the “Former Adviser”). On March 27, 2014, TPIC and the ~~Company and its~~Former Adviser ~~agreed to~~entered into an ~~Expense Support and Conditional Reimbursement Agreement, or the~~ Expense Reimbursement Agreement. The Expense Reimbursement Agreement was amended and restated effective ~~November 17, 2014.~~April 5, 2018. Under the Expense Reimbursement Agreement, as amended, the Former Adviser, in consultation with ~~the Company, will~~TPIC, could pay up to 100% of both ~~the Company’s~~of TPIC’s organizational and offering expenses and ~~its~~TPIC’s operating expenses, all as determined by ~~the Company~~TPIC and the Former Adviser. As used in the Expense Reimbursement Agreement, operating expenses refer to third party operating costs and expenses incurred by the Company, as determined under GAAP for investment management companies. Organizational and offering expenses include expenses incurred in connection with the organization of the Company and expenses incurred in connection with its offering, which are recorded as a component of equity. The Expense Reimbursement Agreement ~~states~~stated that until the net proceeds to ~~the Company~~TPIC from its offering ~~are~~were at least $25 million, the Former Adviser ~~will~~could pay up to 100% of both ~~the Company’s~~of TPIC’s organizational and offering expenses and ~~its~~TPIC’s operating expenses. After ~~the Company~~

~~receives~~TPIC received at least $25 million in net proceeds from its offering, the Former Adviser ~~may,~~could, with ~~the Company’s~~TPIC’s consent, continue to make expense support payments to ~~the Company~~TPIC in such amounts as ~~are~~was acceptable to ~~the Company~~TPIC and the Former Adviser. ~~Any expense support payments shall be paid by~~The Expense Reimbursement Agreement terminated on December 31, 2018. The Former Adviser had agreed to reimburse a total of $5,292,192 as of December 31, 2018. However, as part of the Merger, the Former Adviser agreed to ~~the Company in~~waive any ~~combination of cash, and/or offsets against~~ amounts ~~otherwise due from the Company~~owed to ~~the Adviser.~~

~~Under~~it under the Expense Reimbursement Agreement.

PWAY’s Expense Support and Expense Limitation Agreement ~~as amended, once~~

PWAY entered into an expense support and conditional reimbursement agreement (the “Expense Support Agreement”) with Pathway Capital Opportunity Fund Management, LLC (the “PWAY Adviser”), whereby the ~~Company has received at least $25 million~~PWAY Adviser agreed to reimburse PWAY for operating expenses in an amount equal to the difference between distributions to its stockholders for which a record date occurred in each quarter less the sum of PWAY's net ~~proceeds~~investment income, the net realized capital gains/losses and dividends and other distributions paid to PWAY from its ~~offering,~~portfolio investments during such period (“Expense Support Reimbursement”). To the extent that there were no dividends or other distributions to PWAY's stockholders for which a record date had occurred in any given quarter, ~~occurring within three years of~~then the ~~date on which~~Expense Payment for such quarter was equal to such amount necessary in order for available operating funds for the ~~Company incurred~~quarter to equal zero. PWAY had a conditional obligation to reimburse the PWAY Adviser for any ~~expenses that are~~amounts funded by the PWAY Adviser under the ~~Company is required~~Expense Support Agreement. Following any calendar quarter in which Available Operating Funds in such calendar quarter exceeded the cumulative distributions to ~~reimburse the Adviser~~stockholders for any expense support payments the Company received from them. However, with respect to any expense support payments attributable to the Company’s operating expenses, (i) the Company will only reimburse the Adviser for expense support payments madewhich a record date occurred in such calendar quarter (“Excess Operating Funds”) on a date mutually agreed upon by the PWAY Adviser and PWAY (each such date, a “Reimbursement Date”), PWAY paid such Excess Operating Funds, or a portion thereof, to the extent that PWAY had cash available for such payment, to the ~~payment~~PWAY Adviser until such time as all Expense Payments made by the PWAY Adviser to PWAY had been reimbursed; provided that (i) the operating expense ratio as of such Reimbursement Date was equal to or less than the operating expense ratio as of the Expense Payment Date attributable to such specified Expense Payment; (ii) the annualized distribution rate, which included all regular cash distributions paid and excluded special distributions or the effect of any stock dividends paid, as of such Reimbursement Date was equal to or greater than the annualized distribution rate as of the Expense Payment Date attributable to such specified Expense Payment; and (iii) such specified Expense Payment Date was not earlier than three years prior to the Reimbursement Date. The Expense Support Agreement including any amendments, terminated on October 31, 2017.

The PWAY Adviser and PWAY entered into an Expense Limitation Agreement on October 31, 2017 under which the PWAY Adviser agreed contractually to waive its fees and to pay or absorb the operating expenses of PWAY, including offering expenses,

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

any shareholder servicing fees, and other expenses described in the Investment Advisory Agreement of PWAY, but not including any portfolio transaction or other investment-related costs (including brokerage commissions, dealer and underwriter spreads, prime broker fees and expenses and dividend expenses related to short sales), interest expenses and other financing costs, distribution fees, extraordinary expenses and acquired fund fees and expenses, to the extent that they exceeded the expense limitation per class on a per annum basis of PWAY’s average weekly net assets, through October 31, 2018 (the “Expense Limitation”). In consideration of the PWAY Adviser’s agreement to limit PWAY’s expenses, PWAY agreed to repay the PWAY Adviser in the amount of any fees waived and PWAY expenses paid or absorbed, subject to the limitations that: (1) the reimbursement ~~(together~~was made only for fees and expenses incurred not more than three years following the end of the fiscal quarter in which they were incurred; and (2) the reimbursement was not made if it would cause the Expense Limitation, or any lower limit had been put in place, to be exceeded. PWAY received Expense Limitation payments from the PWAY adviser of $54,178 and $181,029 for the three months and six months ended December 31, 2018. On October 31, 2018, the Expense Limitation Agreement expired.

On May 11, 2018, the PWAY Adviser agreed to permanently waive its right to any reimbursement (the “Waiver”) to which it was entitled pursuant to the Expense Support Agreement, and any amendments, or the Expense Limitation Agreement, between PWAY and the PWAY Adviser, in the event PWAY (i) consummates a transaction (a “Transaction”) in which PWAY (x) merges with ~~any other reimbursement paid during~~and into another company, or (y) sells all or substantially all of its assets to one or more third parties, or (ii) liquidates its assets and dissolves in accordance with PWAY’s charter and bylaws (a “Dissolution” and together with a Transaction, an “Exit Event”). The Waiver was effective on August 10, 2018 which is when PWAY’s board of directors approved an Exit Event via a merger with TPIC. As such, ~~fiscal year) does not cause “other operating expenses”~~PWAY is no longer obligated to reimburse the PWAY Adviser per the Waiver.

Expense Limitation Agreement with the Adviser

Concurrently with the closing of the Merger, we entered into an Expense Limitation Agreement with our Adviser (the “ELA”). Pursuant to the ELA, our Adviser, in its sole discretion, may waive a portion or all of the investment advisory fees that it is entitled to receive pursuant to the Investment Advisory Agreement in order to limit our Operating Expenses (as defined below) ~~(on~~to an ~~annualized basis and~~annual rate, expressed as a percentage of our average quarterly net assets, equal to 8.00% (the “Annual Limit”). For purposes of ~~any expense reimbursement payments received by~~the ELA, the term “Operating Expenses” with respect to the Company, ~~during such fiscal year)~~is defined to ~~exceed~~include all expenses necessary or appropriate for the ~~percentage~~operation of the ~~Company’s average net assets attributable~~Company, including but not limited to ~~shares~~our Adviser’s base management fee, any and all costs and expenses that qualify as line item “organization and offering” expenses in the financial statements of the Company as the same are filed with the SEC and other expenses described in the Investment Advisory Agreement, but does not include any portfolio transaction or other investment-related costs (including brokerage commissions, dealer and underwriter spreads, prime broker fees and expenses and dividend expenses related to short sales), interest expenses and other financing costs, extraordinary expenses and acquired fund fees and expenses. Upfront shareholder transaction expenses (such as sales commissions, dealer manager fees, and similar expenses) are not Operating Expenses. As part of the ELA, our Adviser waived its ~~common stock represented~~investment advisory fees of $182,205 and $339,614 for the three months and six months ended December 31, 2019, respectively.

Any amount waived pursuant to the ELA is subject to repayment to our Adviser (an “ELA Reimbursement”) by ~~“other operating expenses” during~~us within the ~~fiscal year~~three years following the end of the quarter in which ~~such expense support payment from~~ the ~~Adviser~~waiver was made ~~(provided, however,~~by our Adviser. If the ELA is terminated or expires pursuant to its terms, our Adviser maintains its right to repayment for any waiver it has made under the ELA, subject to the Repayment Limitations (discussed below).

An ELA Reimbursement can be made solely in the event that this clause (i) shall not apply to any reimbursement payment which relates to an expense support payment from the Adviser made during the same fiscal year); and (ii) the Company will not reimburse the Adviser for expense support payments made by the Adviser if the annualized rate of regularwe have sufficient excess cash ~~distributions declared by the Company~~on hand at the time of any proposed ELA Reimbursement and shall be limited to the lesser of (i) the excess of the Annual Limit applicable to such ~~reimbursement payment is less than~~quarter over the Company’s actual Operating Expenses for such quarter and (ii) the amount of ELA Reimbursement which, when added to the Company’s expenses for such quarter, permits the Company to pay the then-current aggregate quarterly distribution to its shareholders, at a minimum annualized rate of ~~regular cash distributions declared by~~at least 6.00% (based on the gross offering prices of Company atshares) (the “Distribution”) from the ~~time the Adviser made the expense support payment to which such reimbursement relates. “Other operating expenses” means~~sum of (x) the Company’s total operating expenses excluding base management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses.

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

~~(1)~~

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

~~(2)~~

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

~~income from investments or pay any distributions to stockholders prior to the end of its fiscal quarter.~~

~~In addition, with respect to any expense support payment attributable to~~net investment income (loss) for such quarter plus (y) the Company’s ~~organizational and offering expenses,~~net realized gains (losses) for such quarter (collectively, the ~~Company will only reimburse~~“Repayment Limitations”). For the Adviser for expense support payments made by the Adviser to the extent that the payment of such reimbursement (together with any other reimbursement for organizational and offering expenses paid during such fiscal year) is limited to 15% of cumulative gross sales proceeds from the Company’s offering including the sales load (or dealer manager fee) paid by the Company.

The Company or the Adviser may terminate the Expense Reimbursement Agreement at any time upon thirty days’ written notice. The Expense Reimbursement Agreement will automatically terminate upon terminationpurposes of the ~~Investment Advisory Agreement or upon our liquidation or dissolution.The Expense~~calculations pursuant to (i) and (ii) of the preceding sentence, any ELA Reimbursement ~~Agreement expires by its terms on December 31, 2018, unless extended with the mutual consent~~will be treated as an expense of the Company ~~and our Adviser.~~ ~~Upon termination~~for such quarter, without regard to the GAAP treatment of such expense. In the event that the Company is unable to make a full payment of any ELA Reimbursements due for any applicable quarter because the Company does not have sufficient excess cash on hand, any such unpaid amount shall become a payable of the ~~Expense Reimbursement Agreement we may~~Company for accounting purposes and shall be ~~required~~paid when the Company has sufficient cash on hand (subject to ~~repay our Adviser all expense support payments~~the Repayment Limitations); provided, that in the case of any ELA Reimbursements, such payment shall be made no later than the date that is three years following the end of the quarter in which the applicable waiver was made by our ~~Adviser within three years of the date of termination, subject to the limitations contained in the agreement.~~

Adviser.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The ~~Expense Reimbursement Agreement is,~~following table provides information regarding liabilities incurred by its terms, effective retroactively to the Company’s inception date of April 29, 2011 for Operating Expenses and from the break of escrow on June 25, 2014 for Offering Expenses. As of September 30, 2018, $5,067,191 has been recorded as Reimbursement due from the Adviser pursuant to the ~~Expense Reimbursement Agreement. Of this, $4,724,476, representing~~ELA:



Period Ended	ELA Reimbursement Payable to the Adviser		ELA Reimbursement Payment to the Adviser		Unreimbursed ELA Reimbursement		Operating Expense Ratio	Annualized Distribution Rate	Eligible to be Repaid Through
June 30, 2019	$	128,852	$	—	$	128,852	5.54%	6.00%	June 30, 2022
September 30, 2019	$	157,409	$	—	$	157,409	2.84%	6.00%	September 30, 2022
December 31, 2019	$	182,205	$	—	$	182,205	3.68%	6.00%	December 31, 2022
Total	$	468,466			$	468,466

Dealer Manager Agreement

The Company and its Adviser have entered into a dealer manager agreement with Triton Pacific Securities, LLC ("TPS") pursuant to which the Company will pay the dealer manager a fee of up to 6% of gross proceeds raised in the Company's offering, some of which will be re-allowed to other participating broker-dealers. TPS is an affiliated entity of the Former Adviser and is partially owned by one of our directors, Craig Faggen.

TPIC over reimbursed TPS for related offering costs and general and administrative expenses prior to the Merger. This resulted in a receivable in an amount ~~due to the Adviser, was netted against the Reimbursement~~of $2,137 which is presented as due from ~~Adviser~~affiliates on the ConsolidatedStatements of Assets and ~~$342,715 was paid to~~Liabilities. As of December 31, 2019 and June 30, 2019, the Company byowes TPS $524 and $20,718, respectively, related to offering costs and general and administrative expenses which is included in Due to Affiliate on the ~~Adviser.~~

~~Beginning the year ended~~ConsolidatedStatements of Assets and Liabilities.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 5 - DISTRIBUTIONS

As of December 31, ~~2016,~~2019 and June 30, 2019, dividend payable is $124,569 and $126,128, respectively, which is presented as dividends payable on the ~~Adviser began to reimburse less than 100%~~Statement of ~~operating expenses,~~Assets and for the year ended December 31, 2017, the Adviser did not reimburse any operating expenses after the first quarter. Additionally, the Adviser did not reimburse any offering expenses for the first nine months of 2018 and fourth quarter of 2017. Of these Operating Expenses in the table above, $2,663,810 has exceeded the three-year period for repayment and will not be repayable by the Company. $2,403,381 remains that could potentially be subject to repayment by the Company.

Liabilities~~NOTE 5 – DISTRIBUTIONS~~.

The following table reflects the cash distributions per share that the Company and PWAY declared and paid on its common stock during the ~~nine~~six months ended ~~September 30, 2018~~December 31, 2019 and ~~2017:~~

2018:



	Distributions
For the Six Months Ended	FLEX Class A Common Shares, per share		FLEX Class A Common Shares, Amount Distributed
December 31, 2019
July 5, 12, 19 and 26, 2019	$	0.0524	$	124,512
August 2, 9, 16, 23 and 30, 2019	$	0.0655	$	156,184
September 6, 13, 20 and 27, 2019	$	0.0524	$	125,345
October 4, 11, 18 and 25, 2019	$	0.0524	$	124,308
November 1, 8, 15, 22 and 29, 2019	$	0.0655	$	155,217
December 6, 13, 20 and 27, 2019	$	0.0524	$	124,568

	Distributions
For the Six Months Ended	PWAY Class A Common Shares, per share⁽¹⁾		PWAY Class A Common Shares, Amount Distributed
December 31, 2018
July 5, 12, 19 and 26, 2018	$	0.06392	$	40,009
August 2, 9, 16, 23 and 30, 2018	$	0.06405	$	38,180
September 6, 13, 20 and 27, 2018	$	0.06076	$	36,312
October 4, 11, 19 and 26, 2018	$	0.05960	$	35,707
November 1, 8, 15, 23 and 29, 2018	$	0.05925	$	34,900
December 6, 14, 21 and 28, 2018	$	0.05460	$	31,826

	Distributions
For the Six Months Ended	PWAY Class I Common Shares, per share⁽¹⁾		PWAY Class I Common Shares, Amount Distributed
December 31, 2018
July 5, 12, 19 and 26, 2018	$	0.06404	$	2,115
August 2, 9, 16, 23 and 30, 2018	$	0.06415	$	2,098
September 6, 13, 20 and 27, 2018	$	0.06092	$	1,994
October 4, 11, 19 and 26, 2018	$	0.05976	$	1,957
November 1, 8, 15, 23 and 29, 2018	$	0.05940	$	1,946
December 6, 14, 21 and 28, 2018	$	0.05476	$	1,794

(1) As part of the Merger each outstanding Class A and Class I share of PWAY common stock was canceled and retired. From and after the Merger date of March 31, 2019 (Effective Time), shares of PWAY common stock are no longer outstanding and cease to exist.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Distribution
For the Nine Months Ended Per Share Amount
Fiscal 2018
January 29, 2018 $ 0.03370 $ 47,908
February 28, 2018 $ 0.03370 $ 49,067
March 28, 2018 $ 0.03370 $ 49,752
April 26, 2018 $ 0.03370 $ 50,700
May 29, 2018 $ 0.03370 $ 51,014
June 27, 2018 $ 0.03370 $ 51,096
July 27, 2018 $ 0.03370 $ 51,473
August 27, 2018 $ 0.03370 $ 52,453
September 25, 2018 $ 0.03370 $ 52,802

Fiscal 2017
January 27, 2017 $ 0.04000 $ 39,407
February 24, 2017 $ 0.04000 $ 41,323
March 23, 2017 $ 0.04000 $ 42,513
April 27, 2017 $ 0.04000 $ 44,526
May 25, 2017 $ 0.04000 $ 46,364
June 23, 2017 $ 0.04000 $ 47,861
July 21, 2017 $ 0.04000 $ 48,678
August 29, 2017 $ 0.03417 $ 44,767
September 28, 2017 $ 0.03417 $ 45,500

~~On October 23, 2018, the Company authorized~~

The following FLEX distributions were previously declared and ~~declared a cash distribution of $0.0337 per share for the month of October 2018,~~have record dates subsequent to the shareholders of record as of October 25, 2018. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.

December 31, 2019:



Record Date	Payment date	FLEX Class A Common Shares, per share
January 3, 10, 17, 24 and 31, 2020	February 7, 2020	$	0.06986
February 7, 14, 21 and 28, 2020	March 6, 2020	$	0.06112

The Company has adopted an “opt in” distribution reinvestment plan for its stockholders. As a result, if the Company makes a cash distribution, its stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a stockholder’s ability to participate in the distribution reinvestment plan.

The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies and expense reimbursements from the Adviser. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

During the three months and six months ended December 31, 2019, the Company's officers and directors did not purchase any shares of our stock.

NOTE 6 - INCOME TAXES

On March 31, 2019, in connection with the Merger, PWAY’s outstanding shares were cancelled and retired in exchange for TPIC common stock. The Merger should qualify as a “tax-free reorganization” within the meaning of Section 368(a) of the Code, and the merger agreement constituted a “plan of reorganization” for such purposes. As such, this transaction was intended to qualify as a nontaxable merger under Section 368 of the Code. Due to this transaction, PWAY dissolved for income tax purposes as of March 31, 2019. As such, PWAY filed a final tax return for the nine-month period ended March 31, 2019. The Company will continue to file its income tax returns using a calendar year end. The Company will reflect all items of income, deduction, gain, and loss generated from the assets obtained from the merger transaction beginning on April 1, 2019. Former PWAY shareholders received a final Form 1099-DIV for the 2019 year reflecting the character of PWAY’s distributions made between January 1, 2019 and March 31, 2019. The Company’s shareholders received a Form 1099-DIV for the 2019 calendar year reflecting TPIC’s distributions made between January 1, 2019 and March 31, 2019 and FLEX’s distributions made between April 1, 2019 and December 31, 2019.

The likely and expected tax character of distributions declared and paid to the Company's shareholders during the tax year ended December 31, 2019 was as follows:



	Unaudited TPIC January 1, 2019 - March 31, 2019		Unaudited FLEX April 1, 2019 - December 31, 2019		Unaudited Twelve Months Ended December 31, 2019
Ordinary income	$	48,359	$	—	$	48,359
Return of capital	113,975		1,221,101		1,335,076
Total	$	162,334	$	1,221,101	$	1,383,435

Based on updated information, we estimate our distributions of ordinary income to be $48,359 and return of capital to be $113,975 for the three months ended March 31, 2019. We have adjusted prior period information presented accordingly. As a result, total distributable earnings as of September 30, 2019 changed from $(7,291,747) to $(7,172,462), and total distributable earnings as of June 30, 2019 changed from $(6,697,650) to $(6,578,365).

The tax character of the distributions declared and paid to the Company’s shareholders during the tax year ended December 31, 2019 are estimates and will not be fully determined until the Company’s tax return is filed.

Following the Merger, the Company's cost basis of investments as of December 31, 2019 for tax purposes was $39,968,371, resulting in an estimated net unrealized loss of $845,856. Following the merger, the gross unrealized gains and losses as of December 31, 2019 were $2,272,241 and $3,118,097, respectively.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Taxable income generally differs from net increase in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The following ~~table reflects~~estimates the ~~sources~~net decrease in net assets resulting from operations to taxable income, which will be included as part of our tax return for the tax year ended December 31, 2019.



	Unaudited TPIC January 1, 2019 - March 31, 2019			Unaudited FLEX April 1, 2019 - December 31, 2019			Unaudited Twelve Months Ended December 31, 2019
Net increase in net assets resulting from operations	$	(775,946	)	$	(1,838,219	)	$	(2,614,165	)
Net realized loss on investments	(1,672		)	1,880,542			1,878,870
Net unrealized (gains) losses on investments	61,423			(522,667		)	(461,244		)
Other temporary book-to-tax differences	—			(151,746		)	(151,746		)
Permanent differences	659,270			372,911			1,032,181
Taxable income before deductions for distributions	$	(56,925	)	$	(259,179	)	$	(316,104	)

In general, we may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which may include differences in the book and tax basis of certain assets and liabilities, amortization of offering costs, expense payments, nondeductible federal excise taxes and net operating losses, among other items. For the tax year ended December 31, 2019, we decreased accumulated net investment loss by $1,348,284 and decreased additional paid in capital by $1,348,284.

PWAY Income Taxes - Pre-Merger

As of March 31, 2019, PWAY’s cost basis of investments for tax purposes was $8,993,783 resulting in an estimated net unrealized loss of $811,740. As of March 31, 2019, the gross unrealized gains and losses were $198,628 and $1,010,368, respectively. As a result of the ~~cash distributions~~tax-free reorganization on aMarch 31, 2019, PWAY’s tax basis ~~that~~in its assets have been carried over to the Company.

For the short tax year ended March 31, 2019, PWAY had no cumulative taxable income in excess of cumulative distributions. For the short tax year ended March 31, 2019, PWAY estimated $100,642 in capital loss carryforwards available for future use. This amount will be available for utilization by the Company beginning with the tax year ended December 31, 2019.

TPIC/FLEX Income Taxes - Pre-Merger

Prior to the merger, the TPIC’s cost basis of investments for tax purposes was $12,106,882 resulting in an estimated net unrealized loss of $675,641. Prior to the merger, the gross unrealized gains and losses were $70,589 and $746,230 respectively.

For the tax year ended December 31, 2018, TPIC had no cumulative taxable income in excess of cumulative distributions.

For the tax year ended December 31, 2018, TPIC had $1,360,148 capital loss carryforwards available for future use. Combined with PWAY’s capital loss carryforward of $100,642, the Company will have a combined capital loss carryforward of $1,460,790 available for future utilization.

The tax character of distributions declared and paid ~~on its common stock~~to PWAY's shareholders during the nine months ended ~~September 30, 2018 and 2017:~~

March 31, 2019 was as follows:

Nine months ended September 30,
2018 2017
Source of Distribution

Distribution
Amount
Percentage
Distribution
Amount
Percentage
Offering proceeds $ - - $ - -
Borrowings - - - -
Net investment income⁽¹⁾ - - - -
Short-term capital gains proceeds from the sale of assets 13,000 3 % 47,998 12 %
Long-term capital gains proceeds from the sale of assets 47,908 11 % - -
Distributions from common equity (return of capital) 395,356 86 % 352,941 88 %
Expense reimbursement from sponsor - - - -
Total $ 456,264 100 % $ 400,939 100 %

~~(1)~~

During the nine months ended September 30, 2018 and 2017, 97.1% and 92.7%, respectively, of the Company’s gross investment income was attributable to cash income earned, and 2.9% and 7.3%, resepctively was attributable to non-cash accretion of discount and paid in-kind interest.

~~The Company’s net investment~~



	Nine Months Ended March 31, 2019⁽¹⁾
Ordinary income	$	23,732
Return of capital	300,907
Total	$	324,639

⁽¹⁾PWAY dissolved for income ~~(loss) on~~tax purposes as of March 31, 2019. As such, PWAY filed a final tax ~~basis~~return for the ~~nine months~~nine-month period ended ~~September~~March 31, 2019.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The character of distributions declared and paid to PWAY's shareholders during the years ended June 30, 2018 and 2017 was ~~($281,572)~~as follows:



	Year Ended June 30, 2018		Year Ended June 30, 2017
Capital gain	161,753		—
Return of capital	403,766		504,515
Total	$	565,519	$	504,515

Taxable income generally differs from net increase in net assets resulting from operations for financial reporting purposes due to temporary and ~~($77,447), respectively. As~~permanent differences in the recognition of ~~September~~income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The following reconciles the net decrease in net assets resulting from operations to taxable income for the tax years ended June 30, 2018, and 2017 ~~the Company had ($1,316,612) and ($356,802), respectively, of undistributed net investment income and realized gains on a tax basis.~~

The primary difference between the Company’s GAAP basis net investment income and its tax basis net investment income is due to the reversal of the required accrual for GAAP purposes of incentive fees on unrealized gains even though no such incentive fees on unrealized gains are payable by the Company foras well as the nine months ended ~~September 30, 2018 and ($334) was reversed for~~March 31, 2019.



	Nine Months Ended March 31, 2019			Year Ended June 30, 2018			Year Ended June 30, 2017
Net increase in net assets resulting from operations	$	163,573		$	(5,126	)	$	765,862
Net realized loss on investments	45,453			(181,007		)	(17,839		)
Net unrealized (gains) losses on investments	769,197			704,925			(357,968		)
Other temporary book-to-tax differences	(83,713		)	(230,457		)	(133,592		)
Permanent differences	(899,819		)	(855,526		)	(653,844		)
Taxable income before deductions for distributions	$	(5,309	)	$	(567,191	)	$	(397,381	)

In general, we may make certain adjustments to the ~~nine months ended September 30, 2017.~~

~~The following table sets forth reconciliation between GAAP basis~~classification of net ~~investment income~~assets as a result of permanent book-to-tax differences, which may include differences in the book and tax basis of certain assets and liabilities, amortization of offering costs, expense payments, nondeductible federal excise taxes and net operating losses, among other items. For the year ended June 30, 2019, we increased accumulated net investment ~~income for the nine months ended September 30, 2018 and 2017:~~

Nine months ended September 30,
2018 2017
GAAP basis net investment income (loss) $ (281,572 ) $ (77,113 )
Reversal of incentive fee accrual on unrealized gains - (334 )
Other book-tax differences - -
Tax-basis net investment income (loss) $ (281,572 ) $ (77,447 )

The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributionsloss by $894,510 increased additional paid ~~for the full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form 1099-DIV.~~

~~As of September 30, 2018 and 2017, the components of accumulated earnings on a tax basis were as follows:~~

Nine months ended September 30,
2018 2017
Undistributed (overdistributed) ordinary income (income and short-term capital gains) $ (1,354,027 ) $ (421,863 )
Distributable realized gains (long-term capital gains) 37,415 65,061
Net unrealized appreciation (depreciation) on investments (1,600,956 ) (1,448,359 )
$ (2,917,568 ) $ (1,805,161 )

The ($1,600,956) of net depreciation as of September 30, 2018 includes gross appreciation over amortized tax cost of $200,456 and gross depreciation under amortized tax cost of $1,801,412. The ($1,448,359) of net depreciation as

in capital by $894,510.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

~~of September 30, 2017 includes gross appreciation over amortized tax cost of $191,929 and gross depreciation under amortized tax cost of $1,640,288.~~

The aggregate cost of the Company’s investments for U.S. federal income tax purposes totaled $15,105,760 and $12,934,038 as of September 30, 2018 and 2017, respectively. The aggregate net unrealized appreciation (depreciation) on investments on a tax basis was ($1,600,956) and ($1,448,359) as of September 30, 2018 and 2017, respectively.

NOTE ~~6 –~~7 - INVESTMENT PORTFOLIO

The following ~~table summarizes~~tables summarize the composition of the Company’s investment portfolio at amortized cost and fair value as of ~~September 30, 2018 and~~ December 31, ~~2017:~~

Nine months ended September 30, 2018
(Unaudited) Year Ended December 31, 2017
Investments at
Amortized
Cost⁽¹⁾ Investments at
Fair Value Fair Value
Percentage of
Total Portfolio Investments at
Amortized
Cost⁽¹⁾ Investments at
Fair Value Fair Value
Percentage of
Total Portfolio
Senior Secured Loans—First Lien $ 8,021,538 $ 7,985,641 59 % $ 7,714,423 $ 7,690,952 64 %
Senior Secured Loans—Second Lien 5,167,833 5,017,421 37 % 3,919,236 3,806,683 32 %
Subordinated Debt 666,389 - 0 % 666,389 - 0 %
Equity/Other 1,250,000 501,742 4 % 1,250,000 537,903 4 %
Total $ 15,105,760 $ 13,504,804 100 % $ 13,550,048 $ 12,035,538 100 %

2019 and June 30, 2019:

~~(1)~~

~~Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.~~



	December 31, 2019
	Investments at Amortized Cost⁽¹⁾		Investments at Fair Value		Fair Value Percentage of Total Portfolio

Senior Secured Loans-First Lien	$	30,282,069	$	29,906,395	76	%
Senior Secured Loans-Second Lien	2,295,837		2,023,418		5	%
Senior Unsecured Bonds	947,066		849,700		2	%
Structured Subordinated notes	6,192,152		5,648,728		15	%
Equity/Other	681,111		694,589		2	%
Total Portfolio Investments	$	40,398,235	$	39,122,830	100	%

	June 30, 2019
	Investments at Amortized Cost⁽¹⁾		Investments at Fair Value		Fair Value Percentage of Total Portfolio

Senior Secured Loans-First Lien	$	15,911,289	$	15,825,870	66	%
Senior Secured Loans-Second Lien	2,790,577		2,505,227		10	%
Senior Unsecured Bonds	444,957		402,163		2	%
Structured Subordinated notes	5,070,436		4,715,487		20	%
Equity/Other	681,111		570,816		2	%
Total Portfolio Investments	$	24,898,370	$	24,019,563	100	%

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

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of ~~September 30, 2018 and~~ December 31, ~~2017:~~

September 30, 2018
(Unaudited) December 31, 2017
Industry Classification
Fair
Value

Percentage of
Portfolio

Fair
Value

Percentage of
Portfolio

Beverage, Food & Tobacco 1,987,287 14.7 % 1,618,327 13.4 %
Business Services 3,700,395 27.5 % 4,325,419 35.8 %
Construction & Building 483,750 3.6 % - 0.0 %
Consumer Services 1,316,527 9.7 % 1,671,168 13.9 %
Energy: Oil & Gas 826,666 6.1 % 337,488 2.8 %
Environmental 490,000 3.6 % - 0.0 %
Healthcare & Pharmaceuticals 1,502,310 11.1 % 734,869 6.1 %
High Tech Industries 768,043 5.7 % 833,178 6.9 %
Hotel, Gaming & Leisure 505,296 3.7 % 352,809 2.9 %
Media: Diversified and Production 306,831 2.3 % 334,586 2.8 %
Metals & Mining 958,018 7.1 % 1,143,870 9.5 %
Telecommunications 469,238 3.5 % 496,322 4.3 %
Wholesale Trade-Nondurable Goods 190,443 1.4 % 187,502 1.6 %
Total $ 13,504,804 100.0 % $ 12,035,538 100.00 %
2019 and June 30, 2019:



	December 31, 2019
Industry	Investments at Fair Value		Percentage of Portfolio
Structured Finance	$	5,648,728	15	%
High Tech Industries	5,178,446		13	%
Healthcare & Pharmaceuticals	4,796,174		12	%
Services: Business	3,667,934		9	%
Telecommunications	3,580,274		9	%
Services: Consumer	3,216,500		8	%
Media: Broadcasting & Subscription	2,146,711		6	%
Media: Diversified and Production	1,860,800		5	%
Construction & Building	1,736,101		4	%
Transportation: Cargo	1,494,615		4	%
Sovereign & Public Finance	994,035		3	%
Wholesale	988,556		3	%
Media: Advertising, Printing & Publishing	925,983		2	%
Retail	869,117		2	%
Financial	849,700		2	%
Beverage, Food & Tobacco	496,163		1	%
Energy: Oil & Gas	377,500		1	%
Hotel, Gaming & Leisure	295,493		1	%
Total	$	39,122,830	100	%

	June 30, 2019
Industry	Investments at Fair Value		Percentage of Portfolio
Structured Finance	$	4,715,487	20	%
High Tech Industries	3,960,671		15	%
Healthcare & Pharmaceuticals	2,975,996		12	%
Services: Business	2,780,788		12	%
Media: Broadcasting & Subscription	1,675,694		7	%
Hotel, Gaming & Leisure	1,138,341		5	%
Services: Consumer	1,100,093		5	%
Media: Advertising, Printing & Publishing	947,142		4	%
Retail	905,020		4	%
Beverage, Food & Tobacco	498,688		2	%
Transportation: Cargo	497,181		2	%
Automotive	496,226		2	%
Consumer	496,134		2	%
Media: Diversified & Production	489,685		2	%
Telecommunications	479,004		2	%
Energy: Oil & Gas	461,250		2	%
Financial	402,163		2	%
Total	$	24,019,563	100	%

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE ~~7 –~~8 - FAIR VALUE OF FINANCIAL INSTRUMENTS

~~Under existing accounting guidance,~~

The following table presents information about the Company’s assets measured at fair value ~~is defined~~ as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market

participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances.

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

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

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

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

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

~~As of September 30, 2018 and~~ December 31, ~~2017, the Company’s investments were categorized as follows in the fair value hierarchy):~~

Valuation Inputs Nine months ended
September 30, 2018
(Unaudited) Year ended
December 31,
2017
Level 1—Price quotations in active markets $ - $ -
Level 2—Significant other observable inputs - -
Level 3—Significant unobservable inputs 13,504,804 12,035,538
Total $ 13,504,804 $ 12,035,538

2019 and June 30, 2019, respectively:



	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
Portfolio Investments
Senior Secured Loans-First Lien	$	—	$	4,166,783	$	25,739,612	$	29,906,395
Senior Secured Loans-Second Lien	—		—		2,023,418		2,023,418
Equity/Other	—		—		694,589		694,589
Senior Unsecured Bonds	—		849,700		—		849,700
Structured subordinated notes	—		—		5,648,728		5,648,728
Total Portfolio Investments	$	—	$	5,016,483	$	34,106,347	$	39,122,830

	As of June 30, 2019
	Level 1		Level 2		Level 3		Total
Portfolio Investments
Senior Secured Loans-First Lien	$	—	$	—	$	15,825,870	$	15,825,870
Senior Secured Loans-Second Lien	—		—		2,505,227		2,505,227
Equity/Other	—		—		570,816		570,816
Senior Unsecured Bonds	—		402,163		—		402,163
Structured subordinated notes	—		—		4,715,487		4,715,487
Total Portfolio Investments	$	—	$	402,163	$	23,617,400	$	24,019,563

The Company’s investments ~~as of September 30, 2018 consisted~~generally consists of debt securities that are traded on a private over-the-counter market for institutional investors, astructured subordinated ~~convertible note~~notes and two equity investments. ~~The~~Generally, the Company valued its debt investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by independent third-party pricing services and screened for validity by such services. The determination of fair market value for the equity positions were determined by considering, among other factors, various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues, ~~waterfall and liquidation priority and~~ market comparables, book value multiples, economic profits and portfolio multiples.

Certain investments are valued utilizing a combination of yield analysis and discounted cash flow technique, as appropriate. The yield analysis uses loan spreads and other relevant information implied by market data involving identical or comparable assets or liabilities. The discounted cash flow technique converts future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate yield, i.e. discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts.

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

The significant unobservable input used to value our investments based on the yield technique and discounted cash flow technique is the market yield (or applicable discount rate) used to discount the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest/dividend payments. Increases or decreases in the market yield (or applicable discount rate) would result in a decrease or increase, respectively, in the fair value measurement. Management and the independent pricing services consider the following factors when selecting market yields or discount rates: risk of default, rating of the investment and comparable company investments, and call provisions.

The significant unobservable inputs used in the market approach of fair value measurement of our investments are the market multiples of EBITDA of comparable companies. The Company selects a population of companies for each investment with similar operations and attributes of the portfolio company. Using these guideline companies’ data, a range of multiples of enterprise value

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

to EBITDA is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months’ EBITDA of the portfolio company. Significant increases or decreases in enterprise value may result in increases or decreases in the fair value estimate of the equity investment.

Changes in market yields, discount rates, or EBITDA multiples, each in isolation, may change the fair value measurement of certain of our investments. Generally, an increase in market yields, discount rates or capitalization rates, or a decrease in EBITDA (or other) multiples may result in a decrease in the fair value measurement of certain of our investments.

In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLOs deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLOs investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.

The significant unobservable input used to value the CLOs is the discount rate applied to the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest payments. Included in the consideration and selection of the discount rate are the following factors: risk of default, comparable investments, and call provisions. An increase or decrease in the discount rate applied to projected cash flows, where all other inputs remain constant, would result in a decrease or increase, respectively, in the fair value measurement.

The Company is not responsible for and has no influence over the management of the portfolios underlying the CLO investments the Company holds as those portfolios are managed by non-affiliated third party CLO collateral managers. CLO investments may be riskier and less transparent to the Company than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLOs are and will be payable solely from the cash flows from such senior secured loans.

The Company’s subordinated (i.e., residual interest) investments in CLOs involve a number of significant risks. CLOs are typically very highly levered (10 - 14 times), and therefore the residual interest tranches that the Company invests in are subject to a higher degree of risk of total loss. In particular, investors in CLO residual interests indirectly bear risks of the underlying loan investments held by such CLOs. The Company generally has the right to receive payments only from the CLOs, and generally does not have direct rights against the underlying borrowers or the entity that sponsored the CLOs. While the CLOs the Company targets generally enable the investor to acquire interests in a pool of senior loans without the expenses associated with directly holding the same investments, the Company’s prices of indices and securities underlying CLOs will rise or fall. These prices (and, therefore, the values of the CLOs) will be influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. The failure of a CLO investment to satisfy financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to the Company. In the event that a CLO fails certain tests, holders of debt senior to the Company may be entitled to additional payments that would, in turn, reduce the payments the Company would receive. Separately, the Company may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting CLO or any other investment the Company may make. If any of these occur, it could materially and adversely affect the Company’s operating results and cash flows.

The interests the Company has acquired in CLOs are generally thinly traded or have only a limited trading market. CLOs are typically privately offered and sold, even in the secondary market. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLOs residual interests carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the fact that the Company’s investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLOs investment or unexpected investment results. The Company’s net asset value may also decline over time if the Company’s principal recovery with respect to CLOs residual interests is less than the price that the Company paid for those investments. The Company’s CLOs and/or the underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on its value.

An increase in LIBOR would materially increase the CLOs financing costs. Since most of the collateral positions within the CLOs have LIBOR floors, there may not be corresponding increases in investment income (if LIBOR increases but stays below the LIBOR floor rate of such investments) resulting in materially smaller distribution payments to the residual interest investors.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021 (the “FCA Announcement”). Furthermore, in the United States, efforts to identify a set of alternative U.S. dollar reference interest rates include proposals by the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Bank of New York. On August 24, 2017, the Federal Reserve Board requested public comment on a proposal by the Federal Reserve Bank of New York, in cooperation with the Office of Financial Research, to produce three new reference rates intended to serve as alternatives to LIBOR. These alternative rates are based on overnight repurchase agreement transactions secured by U.S. Treasury Securities. On December 12, 2017, following consideration of public comments, the Federal Reserve Board concluded that the public would benefit if the Federal Reserve Bank of New York published the three proposed reference rates as alternatives to LIBOR (the “Federal Reserve Board Notice”). Recently, the CLOs we have invested in have included, or have been amended to include, language permitting the CLOs investment manager to implement a market replacement rate (like those proposed by the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Bank of New York) upon the occurrence of certain material disruption events. However, we cannot ensure that all CLOs in which we are invested will have such provisions, nor can we ensure the CLOs investment managers will undertake the suggested amendments when able.

At this time, it is not possible to predict the effect of the FCA Announcement, the Federal Reserve Board Notice, or other regulatory changes or announcements, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted in the United Kingdom, the United States or elsewhere. As such, the potential effect of any such event on our net investment income cannot yet be determined. The CLOs notes in which the Company is invested generally contemplate a scenario where LIBOR is no longer available by requiring the CLOs administrator to calculate a replacement rate primarily through dealer polling on the applicable measurement date. However, there is uncertainty regarding the effectiveness of the dealer polling processes, including the willingness of banks to provide such quotations, which could adversely impact our net investment income. In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLOs would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on the Company’s net investment income and portfolio returns.

If the Company acquires more than 10% of the shares in a foreign corporation that is treated as a CFC (including residual interest tranche investments in a CLO treated as a CFC), for which the Company is treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to its pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains), the Company is required to include such deemed distributions from a CFC in its income and the Company is required to distribute such income to maintain its RIC tax treatment regardless of whether or not the CFC makes an actual distribution during such year.

The Company owns shares in PFICs (including residual interest tranche investments in CLOs that are PFICs), and may be subject to federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend to its stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require the Company to recognize its share of the PFICs income for each year regardless of whether the Company receives any distributions from such PFICs. The Company must nonetheless distribute such income to maintain its tax treatment as a RIC.

If the Company is required to include amounts in income prior to receiving distributions representing such income, the Company may have to sell some of its investments at times and/or at prices management would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If the Company 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.

A portion of the Company’s portfolio is concentrated in CLOs, which is subject to a risk of loss if that sector experiences a market downturn. The Company is subject to credit risk in the normal course of pursuing its investment objectives. The Company’s maximum risk of loss from credit risk for the portfolio of CLO investments is the inability of the CLOs collateral managers to return up to the cost value due to defaults occurring in the underlying loans of the CLOs.

Investments in CLOs residual interests generally offer less liquidity than other investment grade or high-yield corporate debt, and may be subject to certain transfer restrictions. The Company’s ability to sell certain investments quickly in response to changes in economic and other conditions and to receive a fair price when selling such investments may be limited, which could prevent the Company from making sales to mitigate losses on such investments. In addition, CLOs are subject to the possibility of liquidation upon an event of default of certain minimum required coverage ratios, which could result in full loss of value to the CLOs interests and junior debt investors.

The fair value of the Company’s investments may be significantly affected by changes in interest rates. The Company’s investments in senior secured loans through CLOs are sensitive to interest rate levels and volatility. In the event of a significant rising interest rate environment and/or economic downturn, loan defaults may increase and result in credit losses which may adversely affect

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

the Company’s cash flow, fair value of its investments and operating results. In the event of a declining interest rate environment, a faster than anticipated rate of prepayments is likely to result in a lower than anticipated yield.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the currently assigned valuations.

The following is a reconciliation for the ~~nine~~six months ~~ended September 30, 2018 and year~~ ended December 31, ~~2017~~2019 and 2018, of investments for which significant unobservable inputs (Level 3) were used in determining fair value:



	Senior Secured Loans - First Lien			Senior Secured Loans - Second Lien			Equity/Other		Structured Subordinated notes			Total
Fair Value at June 30, 2019	$	15,825,870		$	2,505,227		$	570,816	$	4,715,487		$	23,617,400
Net realized (losses) on investments	(264,029		)	(432,689		)	—		—			(696,718		)
Net change in unrealized gains (losses) on investments	(156,976		)	12,901			123,773		(188,477		)	(208,779		)
Net realized and unrealized gains (losses) on investments	(421,005		)	(419,788		)	123,773		(188,477		)	(905,497		)
Purchases of investments	16,778,375			—			—		1,163,198			17,941,573
Payment-in-kind interest	—			58			—		—			58
Accretion (amortization) of purchase discount and premium, net	66,156			2,921			—		(41,480		)	27,597
Repayments and sales of portfolio investments	(3,200,211		)	(65,000		)	—		—			(3,265,211		)
Transfers within Level 3⁽¹⁾	—			—			—		—			—
Transfers in (out) of Level 3⁽¹⁾	(3,309,573		)	—			—		—			(3,309,573		)
Fair Value at December 31, 2019	$	25,739,612		$	2,023,418		$	694,589	$	5,648,728		$	34,106,347

Net increase in unrealized loss attributable to Level 3 investments still held at the end of the period	$	(191,916	)	$	12,930		$	123,773	$	(188,477	)	$	(243,690	)

(1) Transfer are assumed to have occurred at the beginning of the quarter during which the asset was transferred. Transfers out of Level 3 were due to increased observability of the inputs during the quarter ended December 31, 2019.

For the nine months ended September 30, 2018
Senior Secured
Loans - First Lien Senior Secured
Loans - Second
Lien Subordinated
Convertible
Debt Equity/Other Total
Fair value at beginning of period $ 7,690,952 $ 3,806,683 $ - $ 537,903 $ 12,035,538
Accretion of discount (amortization of premium) 18,119 6,654 - - 24,773
Net realized gain (loss) 23,310 9,650 - - 32,960
Net change in unrealized appreciation (depreciation) (12,425 ) (37,859 ) - (36,161 ) (86,445 )
Purchases 2,943,750 1,482,500 - - 4,426,250
Paid-in-kind interest - - - - -
Sales and redemptions (2,678,064 ) (250,208 ) - - (2,928,272 )
Net transfers in or out of Level 3 - - - - -
Fair value at end of period $ 7,985,642 $ 5,017,420 $ - $ 501,742 $ 13,504,804

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date $ (12,425 ) $ (37,859 ) $ - $ (36,161 ) $ (86,445 )

For the year ended December 31, 2017
Senior Secured
Loans - First Lien Senior Secured
Loans - Second
Lien Subordinated
Convertible
Debt Equity/Other Total
Fair value at beginning of period $ 6,761,313 $ 1,967,658 $ 646,901 $ 1,228,301 $ 10,604,173
Accretion of discount (amortization of premium) 21,761 10,005 - - 31,766
Net realized gain (loss) 50,321 41,115 - - 91,436
Net change in unrealized appreciation (depreciation) (104,169 ) (55,220 ) (666,389 ) (690,398 ) (1,516,176 )
Purchases 4,392,250 2,720,625 - - 7,112,875
Paid-in-kind interest - - 19,488 - 19,488
Sales and redemptions (3,430,524 ) (877,500 ) - - (4,308,024 )
Net transfers in or out of Level 3 - - - - -
Fair value at end of period $ 7,690,952 $ 3,806,683 $ - $ 537,903 $ 12,035,538

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date $ (104,169 ) $ (55,220 ) $ - $ (690,398 ) $ (849,787 )

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)



	Structured Subordinated notes
Fair Value at June 30, 2018	$	3,127,896
Realized loss on investments	(16,627		)
Net change in unrealized gain/loss on investments	(88,129		)
Purchases of investments	—
Distributions received from investments	—
Payment-in-kind interest	—
Accretion (amortization) of purchase discount and premium, net	30,230
Repayments and sales of portfolio investments	(56,437		)
Transfers within Level 3⁽¹⁾	—
Transfers in (out) of Level 3⁽¹⁾	—
Fair Value at December 31, 2018	$	2,996,933

Net increase in unrealized gain attributable to Level 3 investments still held at the end of the period	$	(105,836	)

(1) Transfer are assumed to have occurred at the beginning of the quarter during which the asset was transferred. There were no transfers in or out of Level 3 during the six months ended December 31, 2018.

The ~~valuation techniques and~~following table provides quantitative information regarding significant unobservable inputs used in ~~recurring~~the fair value measurement of Level 3 ~~fair value measurements of assets~~investments as of ~~September 30, 2018 were as follows:~~

Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Range Weighted Average
Senior Secured Loans - First Lien 7,985,642 Market quotes Indicative dealer quotes 71.89 - 102.25 98.55
Senior Secured Loans - Second Lien 5,017,420 Market quotes Indicative dealer quotes 7.10 - 103.00 99.64
Subordinated Debt - Distribution waterfall/ liquidation priorities N/A N/A N/A
Equity/Other - Distribution waterfall/ liquidation priorities N/A N/A N/A
Equity/Other 501,742 Market comparables EBITDA multiples (x) 6.50x - 8.50x 7.50x
Total $ 13,504,804

December 31, 2019:

Asset Category

Fair Value

Primary Valuation
Technique

Unobservable
Inputs

Range

Weighted
Average

Senior Secured First Lien Debt

25,739,612

Market quotes

Indicative dealer quotes

77.50-101.00

97.45

Senior Secured Second Lien
Debt

2,023,418

Market quotes

Indicative dealer quotes

9.50-100.90

88.41

Equity/Other

694,589

Market comparables

EBITDA multiples (x)

0.00x-8.00x

8.00x

Subordinated structured notes

5,648,728

Discounted Cash Flow

Discount Rate

17.51%- 32.95%⁽¹⁾

22.03%⁽¹⁾

Total

34,106,347

(1) Represents the implied discount rate based on our internally generated single-cash flows that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Asset Category

Fair Value

Primary Valuation
Technique

Unobservable
Inputs

Range

Weighted
Average

Senior Secured First Lien Debt

15,825,870

Market quotes

Indicative dealer quotes

85.00-101.00

98.30

Senior Secured Second Lien
Debt

2,505,227

Market quotes

Indicative dealer quotes

61.63-101.52

90.79

Equity/Other

570,816

Market comparables

EBITDA multiples (x)

0.00x-8.00x

8.00x

Subordinated structured notes

4,715,487

Discounted Cash Flow

Discount Rate

17.67%- 23.12%⁽¹⁾

20.57%⁽¹⁾

Total

23,617,400

NOTE 9 - MERGER

Effective March 31, 2019, TPIC and PWAY entered into a tax free business combination. Concurrent with the Merger, TPIC, the legal acquirer, was renamed TP Flexible Income Fund, Inc. As a result of the Merger, the Company issued 775,193 shares of the Company’s common stock to the former shareholders of PWAY and all shares of PWAY were retired.

For financial reporting purposes, the Merger was treated as a recapitalization of PWAY followed by the reverse acquisition of TPIC by PWAY for a purchase price equivalent to the fair value ~~measurements~~ of ~~assets as~~TPIC’s net assets.

Consistent with tax free business combinations of ~~December 31, 2017 were as follows:~~

Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Range Weighted Average
Senior Secured Loans - First Lien 7,690,952 Market quotes Indicative dealer quotes 78.05 - 102.00 98.73
Senior Secured Loans - Second Lien 3,806,683 Market quotes Indicative dealer quotes 26.67 - 103.00 98.55
Subordinated Debt - Distribution waterfall/ liquidation priorities Book value multiples (x) N/A N/A
Equity/Other - Distribution waterfall/ liquidation priorities Book value multiples (x) N/A N/A
Equity/Other 537,903 Market comparables EBITDA multiples (x) 7.15x - 9.15x 8.15x
Total $ 12,035,538

~~On June 30, 2017,~~investment companies, for financial reporting purposes, the ~~Company made~~reverse merger accounting was recorded at fair value; however, the ~~decision~~cost basis of the investments received from TPIC was carried forward to ~~write down~~align ongoing financial reporting of the ~~carrying value~~Company’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Further, the components of its investment value in Javlin Financial. The decision was due to performance issues within Javlin Financial’s core business and a breakdown in restructuring negotiations between the Company, its lenders, and Javlin Financial’s controlling shareholder. It is unknown at this time if there will be any value to the investment.

~~NOTE 8 – FINANCIAL HIGHLIGHTS~~

~~The following is a schedule of financial highlights~~net assets of the Company reflect the combined components of net assets of both PWAY and TPIC.

In accordance with the accounting and presentation for reverse acquisitions, the ~~nine months ended September 30, 2018~~historical financial statements of the Company, prior to the date of the Merger reflect the financial positions and results of operations of PWAY, with the exception of the components of net assets described above, with the results of operations of TPIC being included commencing on April 1, 2019. Effective with the completion of the Merger, TPIC, changed its fiscal year ~~ended December~~end to be the last day of June consistent with PWAY’s fiscal year.

In the Merger, common shareholders of PWAY received newly-issued common shares in the Company having an aggregate net asset value equal to the aggregate net asset value of their holdings of PWAY Class A and/or PWAY Class I common shares, as applicable, as determined at the close of business on March 27, 2019, as permitted by the Merger agreement. The differences in net asset value between March 27, 2019 and March 31, ~~2017:~~

Nine Months Ended
September 30, 2018
(Unaudited) Year Ended
December 31, 2017
Per Share Data:
Net asset value, beginning of period $ 11.89 $ 13.55
Results of operations⁽¹⁾
Net investment income (loss) (0.19 ) (0.16 )
Net realized and unrealized appreciation (depreciation) on investments⁽²⁾ (0.03 ) (1.12 )
Net increase (decrease) in net assets resulting from operations (0.22 ) (1.28 )
Stockholder distributions⁽³⁾
Distributions from net investment income (0.29 ) (0.41 )
Distributions from net realized gain on investments (0.01 ) (0.04 )
Net decrease in net assets resulting from stockholder distributions (0.30 ) (0.45 )
Capital share transactions
Issuance of common stock⁽⁴⁾ 0.02 0.07
Net increase (decrease) in net assets resulting from capital share transactions 0.02 0.07
Net asset value, end of period $ 11.39 $ 11.89
Shares outstanding, end of period 1,573,804 1,417,233
Total return⁽⁵⁾ -1.7 % -8.9 %
Ratio/Supplemental Data:
Net assets, end of period $ 17,924,154 $ 16,849,237
Ratio of net investment income to average net assets -1.6 % -1.3 %
Ratio of total operating expenses to average net assets 6.5 % 7.3 %
Ratio of expenses reimbursed by sponsor to average net assets 0.0 % 0.5 %
Ratio of expense recoupment payable to sponsor to average net assets 0.0 % 0.0 %
Ratio of capital gain incentive fee to average net assets 0.0 % 0.0 %
Ratio of net operating expenses to average net assets 6.5 % 6.7 %
Portfolio turnover⁽⁶⁾ 16.8 % 28.6 %

~~(1)~~	~~The per share data was derived by using the weighted average shares outstanding for the nine months ended September 30, 2018 and the year ended December 31, 2017.~~
~~(2)~~	The amount shown for a share outstanding throughout the year may not agree with the change in the aggregate gains and losses in portfolio securities for the year because of the timing of sales of the Company’s shares in relation to fluctuating market values for the portfolio.
~~(3)~~	~~The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.~~
~~(4)~~	The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock in the Company’s continuous public offering and pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at an offering price, net of sales commissions and dealer manager fees, that is greater or less than the net asset value per share results in an increase or decrease in net asset value per share.
~~(5)~~	The total return for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share which were declared during the applicable calendar year and dividing the total by the net asset value per share at the beginning of the applicable year. The total return does not consider the effect of the sales load from the sale of the Company’s common stock. The total return includes the effect of the issuance of shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. The historical calculation of total return in the table should not be considered a representation of the Company’s future total return, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rate payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s

2019 were not material. Relevant details pertaining to the Merger are as follows:



	NAV/Share ($)		Conversion Ratio
Triton Pacific Investment Corporation, Inc.	$	10.48	N/A
Pathway Capital Opportunity Fund, Inc.: Class A	$	13.46	1.2848
Pathway Capital Opportunity Fund, Inc.: Class I	$	13.50	1.2884

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

	~~investment portfolio during the applicable period and are calculated in accordance with GAAP. These return figures do not represent an actual return to stockholders.~~
~~(6)~~	~~Portfolio turnover for the nine months ended September 30, 2018 is not annualized.~~

Investments

The cost, fair value and net unrealized appreciation (depreciation) of the investments of TPIC as of the date of the merger, was as follows:



	TPIC
Cost of investments	$	12,106,879
Fair value of investments	11,431,241
Net unrealized appreciation (depreciation) on investments	$	(675,638	)

Common Shares

The common shares outstanding, net assets applicable to common shares and NAV per common share outstanding immediately before and after the Merger were as follows:



Accounting Acquirer - Prior to Merger	PWAY Class A		PWAY Class I
Common shares outstanding	570,431		32,834
Net assets applicable to common shares	$	7,679,839	$	443,296
NAV per common share	$	13.46	$	13.50
Legal Acquiring Fund - Prior to Merger	TPIC
Common shares outstanding	1,614,221
Net assets applicable to common shares	$	16,915,592
NAV per common share	$	10.48
Legal Acquiring Fund - Post Merger	FLEX
Common shares outstanding	2,403,349
Net assets applicable to common shares	$	25,086,682
NAV per common share	$	10.44

Cost and Expenses

In connection with the Merger, PWAY incurred certain associated costs and expenses of approximately $731,000, of which $709,000 of these costs and expenses were expensed by PWAY and $22,000 were expensed by the Company. In connection with the Merger, TPIC incurred certain associated costs and expenses of approximately $682,000, of which $636,000 were expensed by TPIC and $46,000 were expensed by the Company.

Purchase Price Allocation

PWAY as the accounting acquiror acquired 32% of the voting interests of TPIC. The below summarized the purchase price allocation from TPIC:



	PWAY as acquirer
Value of Common Stock Issued	$	17,052,546
Assets acquired:
Investments	11,431,241
Cash and cash equivalents	5,055,456
Other assets	607,163
Total assets acquired	17,093,860
Total liabilities assumed	41,314
Net assets acquired	17,052,546
Total purchase price	$	17,052,546

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE ~~9 –~~10 - COMMITMENTS AND CONTINGENCIES

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company has a conditional obligation to reimburse the Adviser for any amounts funded by the Adviser under the Expense Limitation Agreement for any payments made by the Adviser. The Expense Limitation Agreement payments are subject to repayment by the Company within the three years following the end of the quarter in which the payment was made by the Adviser; provided that any such repayments shall be subject to the then-applicable expense limitation, if any, and the limit that was in effect at the time when the Adviser made the payment that is subject to repayment.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of ~~these~~any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.

NOTE 11 - CREDIT FACILITY

PWAY – Pre-Merger

On August 25, 2015, PWAY closed on a credit facility with BNP Paribas Prime Brokerage International, Ltd. (the “Revolving Credit Facility”). The Revolving Credit Facility included an accordion feature which allowed commitments to be increased up to $25,000,000 in the aggregate. Interest on borrowings under the Revolving Credit Facility was three-month LIBOR plus 120 basis points with no minimum LIBOR floor. The Revolving Credit Facility closed prior to the Merger.

During the three months and six months ended December 31, 2018, PWAY recorded $8,434 and $19,595, respectively, of interest expense related to PWAY's Revolving Credit Facility.

FLEX – Post-Merger

On May 16, 2019, the Company established a $50 million senior secured revolving credit facility (the “Credit Facility”) with Royal Bank of Canada, a Canadian chartered bank, acting as administrative agent. In connection with the Credit Facility, the SPV, as borrower, and each of the other parties thereto entered into a Revolving Loan Agreement, dated as of May 16, 2019 (the “Loan Agreement”).

The Credit Facility matures on May 21, 2029 and generally bears interest at a rate of three-month LIBOR plus 1.55%. The Credit Facility is secured by substantially all of the SPV’s properties and assets. Under the Loan Agreement, the SPV has made certain customary representations and warranties and is required to comply with various covenants, including reporting requirements and other customary requirements for similar credit facilities. The Loan Agreement includes usual and customary events of default for credit facilities of this nature.

As of December 31, 2019 and June 30, 2019, we had $21,000,000 and $5,500,000, respectively outstanding on our Credit Facility. As of December 31, 2019, the investments used as collateral for the Credit Facility had an aggregate fair value of $31,745,852, which represents 81% of our total investments. As permitted by ASC 825-10-25, we have not elected to value our Credit Facility which is categorized as Level 2 under ASC 820 as of December 31, 2019.

In connection with the origination of the Credit Facility, we incurred $588,355 fees, all of which are being amortized over the term of the facility in accordance with ASC 470-50. As of December 31, 2019, $551,476 remains to be amortized and is reflected as deferred financing costs on the Consolidated Statements of Assets and Liabilities.

During the three months and six months ended December 31, 2019, we recorded $175,833 and $276,003, respectively, of interest costs and amortization of financing costs on the Credit Facility as interest expense.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 12- FINANCIAL HIGHLIGHTS



	Three months ended December 31,						Six months ended December 31,
	2019			2018^(e)			2019			2018^(e)
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Per Share Data^(a):
Net asset value at beginning of period	$	9.47		$	9.22		$	9.88		$	9.89
Net investment income	0.02			(0.06		)	0.08			(0.4		)
Net realized and unrealized (losses) on investments	(0.15		)	(1.06		)	(0.46		)	(1.21		)
Net increase (decrease) in net assets resulting from operations	(0.13		)	(1.12		)	(0.38		)	(1.61		)
Distributions^(b)
Return of capital distributions	(0.17		)	(0.13		)	(0.34		)	(0.28		)
Dividends from net investment income	—			—			—			—
Total Distributions	(0.17		)	(0.13		)	(0.34		)	(0.28		)
Offering costs	—						—
Other ^(c)	0.02			(0.01		)	0.03			(0.04		)
Net asset value at end of period	$	9.19		$	7.96		$	9.19		$	7.96
Total return based on net asset value ^(d)	(1.34		)%	(11.87		)%	(3.95		)%	(16.2		)%

Supplemental Data:
Net assets at end of period	$	21,371,210		$	6,314,616		$	21,371,210		$	6,314,616
Average net assets	$	22,009,112		$	6,975,814		$	22,476,313		$	7,466,956
Average shares outstanding	2,364,411			801,503			2,370,647			815,359
Ratio to average net assets:
Total annual expenses	17.91		%	22.13		%	15.49		%	29.62		%
Total annual expenses (after expense limitation agreement)	14.60		%	19.02		%	12.47		%	24.77		%
Net investment income (loss)	0.92		%	(2.69		)%	1.79		%	(8.73		)%

Portfolio Turnover	0.18		%	—		%	1.93		%	—		%

(a) Calculated based on weighted average shares outstanding.
(b) The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the year. Distributions per share are rounded to the nearest $0.01.
(c) The amount shown represents the balancing figure derived from the other figures in the schedule, and is primarily attributable to the accretive effects from the sales of the Company’s shares and the effects of share repurchases during the year.
(d) Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the year and assumes that distributions are reinvested in accordance with the Company’s distribution reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since the Company’s shares are not publicly traded. Total return has not been annualized.
(e) Data presented includes the shareholder activity of PWAY Class A and Class I shares prior to the merger and conversion into shares of the Company. The net asset value per share at beginning of year has been adjusted by the exchange ratio used in the merger.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)



	Year Ended			Year Ended			Year Ended
	June 30, 2019^(e)			June 30, 2018			June 30, 2018
				Class A			Class I
Per Share Data^(a):
Net asset value at beginning of period	$	9.89		$	13.53		$	13.53
Net investment income	0.91			0.79			0.81
Net realized and unrealized (losses) on investments	(1.11		)	(0.80		)	(0.79		)
Net increase (decrease) in net assets resulting from operations	(0.20		)	(0.01		)	0.02
Distributions^(b)
Return of capital distributions	(0.54		)	(0.62		)	(0.62		)
Dividends from net investment income	(0.03		)	(0.24		)	(0.24		)
Total Distributions	(0.57		)	(0.86		)	(0.86		)
Offering costs	0.61			—			—
Other ^(c)	0.15			0.05			0.04
Net asset value at end of year	$	9.88		$	12.71		$	12.73
Total return based on net asset value ^(d)	7.52		%	0.18		%	0.33		%

Supplemental Data:
Net assets at end of year	$	23,410,715		$	7,933,028		$	420,136
Average net assets	$	12,536,923		$	8,314,166		$	439,787
Average shares outstanding	1,297,582			622,683			32,914
Ratio to average net assets:
Total annual expenses	23.48		%	22.69		%	22.43		%
Total annual expenses (after expense support agreement/expense limitation agreement)	9.11		%	8.91		%	8.73		%
Net investment income	2.15		%	5.92		%	6.04		%

Portfolio Turnover	93.42		%	37.42		%	37.42		%

(a) Calculated based on weighted average shares outstanding.
(b) The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the year. Distributions per share are rounded to the nearest $0.01.
(c) The amount shown represents the balancing figure derived from the other figures in the schedule, and is primarily attributable to the accretive effects from the sales of the Company’s shares and the effects of share repurchases during the year.
(d) Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the year and assumes that distributions are reinvested in accordance with the Company’s distribution reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since the Company’s shares are not publicly traded.
(e) Data presented includes the shareholder activity of PWAY Class A and Class I shares prior to the merger and conversion into shares of the Company. The net asset value per share at beginning of year has been adjusted by the exchange ratio used in the merger.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)



	Year Ended			Period Ended
	June 30, 2017			June 30, 2016 ^(a)
Per Share Data^(b):
Net asset value, beginning of year or period	$	12.81		$	13.80
Net investment income	0.71			1.21
Net realized and unrealized gains (losses) on investments	0.68			(0.03		)
Net increase in net assets resulting from operations	1.39			1.18
Return of capital distributions^(c)	(0.92		)	(0.75		)
Offering costs	0.03			(0.62		)
Other^(d)	0.22			(0.80		)
Net asset value, end of year or period	$	13.53		$	12.81
Total return, based on NAV^(e)	13.20		%	(1.75		)%

Supplemental Data:
Net assets, end of year or period	$	8,405,744		$	5,976,355
Average net assets	$	7,508,410		$	3,597,990
Average shares outstanding	550,843			341,596
Ratio to average net assets:
Expenses without expense support payment	22.05		%	36.65		%
Expenses after expense support payment	10.52		%	3.41		%
Net investment income	5.19		%	11.50		%

Portfolio turnover	27.54		%	4.27		%

^(a)The net asset value at the beginning of the period is the net offering price as of August 25, 2015, which is the date that the Company satisfied its minimum offering requirement by raising over $2.5 million from selling shares to persons not affiliated with the Company or the Adviser (the “Minimum Offering Requirement”), and as a result, broke escrow and commenced making investments.
^(b)Calculated based on weighted average shares outstanding.
^(c)The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the year or period. Distributions per share are rounded to the nearest $0.01.
^(d)The amount shown represents the balancing figure derived from the other figures in the schedule, and is primarily attributable to the accretive effects from the sales of the Company’s shares and the effects of share repurchases during the year or period.
^(e)Total return is based upon the change in net asset value per share between the opening and ending net asset values per share during the year or period and assumes that distributions are reinvested in accordance with the Company’s dividend reinvestment plan. The computation does not reflect the sales load for any class of shares. Total return based on market value is not presented since the Company’s shares are not publicly traded. For the period less than one year, total return is not annualized.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)



Revolving Credit Facility	Total Amount Outstanding		Asset Coverage per Unit(1)		Involuntary Liquidating Preference per Unit(2)	Average Market Value per Unit(2)
December 31, 2019	$	21,000,000	$	2,018	—	—
September 30, 2019	$	15,500,000	$	2,461	—	—
June 30, 2019	$	5,500,000	$	5,256	—	—

(1) The asset coverage ratio is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by secured senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit.
(2) This column is inapplicable.

NOTE ~~10 –~~13 - SUBSEQUENT EVENTS

Management has evaluated all known subsequent events through the date the accompanying financial statements were available to be issued on ~~November 14, 2018,~~February 12, 2020 and notes the following:

Sales of Common Stock

For the period beginning ~~October~~January 1, ~~2018~~2020 and ending ~~November 14, 2018,~~February 12, 2020, the Company sold ~~4,097.98~~2,021 shares of its common stock for ~~total~~ gross proceeds of ~~$52,700,~~$23,000 and issued ~~amounts~~14,086 shares pursuant to its distribution reinvestment plan in the amount of ~~$29,708.31.~~

~~On March 23, 2018, an amendment to Section 61(a) of~~$150,726.

Investment Activity

During the period beginning January 1, 2020 and ending February 12, 2020, the Company Act was signed into law to permit BDCs to reduce the minimum “asset coverage” ratio from 200% to 150%, so long as certain approval and disclosure requirements are satisfied. As a result, these amendments permit BDCs to potentially increase their debt-to-equity ratio from a maximum of 1 to 1 to a maximum of 2 to 1. In addition, for BDCs like the Company whose securities are not listed on a national securities exchange, the Company is also required tomade three investments totaling $1,838,111.

Tender Offer

On January 21, 2020, under our share repurchase program, we made an offer to ~~repurchase its outstanding shares at the rate of 25% per quarter over four calendar quarters. Under the existing 200% minimum asset coverage ratio, the Company is permitted to borrow~~purchase (the "Tender Offer") up to ~~one dollar for investment purposes for every one dollar of investor equity, and under~~ the ~~150% minimum asset coverage ratio, the Company will be permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity.~~

On April 18, 2018, the Board of Directors of the Company, including a “required majority” (as such term is defined in Section 57(o) of the Company Act), approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the Company Act. As a result, and subject to certain additional disclosure requirements, the minimum asset coverage ratio applicable to the Company will be reduced from 200% to 150%, effective as of April 18, 2019. In addition, in order to provide the Company with the maximum financial flexibility at the earliest possible date, the Board of Directors also authorized the submission of a proposal for stockholders to approve the application of the 150% minimum asset coverage ratio to the Company at the Company’s 2018 annual meeting of stockholders (the “2018 Annual Meeting”). If the Company’s stockholders approve such proposal at the 2018 Annual Meeting, the 150% minimum asset coverage ratio will then apply effective as the first day after the 2018 Annual Meeting and, as a result, the Company will be permitted to incur double the maximum amount of leverage that the Company is able to incur currently approximately ten months earlier than if the Company’s stockholders do not vote to approve such proposal.

and subject to certain conditions described therein, PWAY will merge with and into the Company, with the Company as the surviving legal entity in the merger (the “Merger”). It is expected that PWAY will be the surviving accounting entity. The respective boards of directors of the Company and PWAY, including the directors who are not “interested persons” as defined in Section 2(a)(19) of the Company Act, determined that the Merger would be in the best interests of each of the Company and PWAY, and further approved the Merger upon the terms and subject to the conditions and limitations set forth in the Merger Agreement. If the proposed Merger is consummated, the holdersnumber of shares of ~~PWAY’s~~our issued and outstanding Class A common stock ~~par value $0.01~~we can repurchase with the proceeds we receive from the issuance of shares under our distribution reinvestment plan prior to the expiration of the Tender Offer. The Tender Offer is for cash at a price equal to the net offering price per share determined as of February 21, 2020 (“~~PWAY Class A Shares”~~Purchase Price”)~~, will have a right to receive a~~. The total estimated cost of purchasing the estimated maximum number of shares pursuant to the Tender Offer, assuming a Purchase Price of $10.70 per share (based upon the most recent net offering price as of January 21, 2020), would be approximately $211,246.19. The Tender Offer will expire at 4:00 P.M., Eastern Time, on February 19, 2020 unless extended.

Distributions

On November 15, 2019, the Company’s board of directors declared distributions for the months of December 2019, January 2020 and February 2020, which reflected an annualized distribution rate of 6.0%. The distributions have weekly record dates as of the ~~Company’s Class A common stock, par value $0.001~~close of business of each week in December 2019, January 2020 and February 2020 and equal a weekly amount of $0.01310 per share ~~(“TPIC Common Stock”), equal~~of common stock.

On January 27, 2020, the Company’s board of directors announced an increase in the annualized rate distribution rate from 6.0% to 7.0% based on the ~~result of (A)~~current offering price. The 100 basis point annualized increase in the PWAY Class A per-share net asset value (“NAV”) divided by (B) the Company per-share NAV, in each case determined in accordance with the Merger Agreement, and the holders of shares of PWAY’s Class I common stock, par value $0.01 per share (“PWAY Class I Shares” and, together with the PWAY Class A Shares, the “PWAY Common Stock”), will have a right to receive a number of shares of TPIC Common Stock equal to the result of (A) the PWAY Class I per-share NAV divided by (B) the Company per-share NAV, in each case determined in accordance with the Merger Agreement. The closingdistribution rate is effective as of the ~~Merger is subject~~January 24, 2020 record date. The distributions have weekly record dates and are payable monthly to ~~a number of closing conditions, including the approval of~~ the stockholders of ~~both~~record as of the ~~Company~~close of business of each week in January 2020 and ~~PWAY.~~

February 2020. The increased declared distributions equal a weekly amount of $0.01528 per share of common stock, a $0.00218 increase compared to the previously declared distribution weekly amount of $0.01310 per share of common stock. The distributions will be payable monthly to stockholders of record as of the weekly record dates set forth below.

TP FLEXIBLE INCOME FUND, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)



Record Date	Payment Date	Distribution Amount
1/3/2020	2/7/2020	$	0.01310
1/10/2020	2/7/2020	$	0.01310
1/17/2020	2/7/2020	$	0.01310
1/24/2020	2/7/2020	$	0.01528
1/31/2020	2/7/2020	$	0.01528
2/7/2020	3/6/2020	$	0.01528
2/14/2020	3/6/2020	$	0.01528
2/21/2020	3/6/2020	$	0.01528
2/28/2020	3/6/2020	$	0.01528

On February 7, 2020, the Company’s board of directors declared distributions for the months of March 2020, April 2020 and May 2020. The distributions will be payable monthly to stockholders of record as of the weekly record dates set forth below.



Record Date	Payment Date	Distribution Amount
3/6/2020	4/3/2020	$	0.01528
3/13/2020	4/3/2020	$	0.01528
3/20/2020	4/3/2020	$	0.01528
3/27/2020	4/3/2020	$	0.01528
4/3/2020	5/1/2020	$	0.01528
4/10/2020	5/1/2020	$	0.01528
4/17/2020	5/1/2020	$	0.01528
4/24/2020	5/1/2020	$	0.01528
5/1/2020	6/5/2020	$	0.01528
5/8/2020	6/5/2020	$	0.01528
5/15/2020	6/5/2020	$	0.01528
5/22/2020	6/5/2020	$	0.01528
5/29/2020	6/5/2020	$	0.01528

~~Item 2:~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

~~Except as otherwise specified, references~~Quarterly Report. In addition to ~~“we,” “us,” “our,” or~~historical information, the ~~“Company,” refer to Triton Pacific Investment Corporation, Inc.~~

~~Forward-Looking Statements~~

~~Some~~following discussion and other parts of ~~the statements in~~ this ~~quarterly report on Form 10-Q constitute~~Quarterly Report contain forward-looking statements, which relate to future events or our performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including, but not limited to, statements as to:

●

~~our future operating results;~~

●

~~our business prospects and the prospects of our portfolio companies;~~

●

~~changes in the economy;~~

●

~~risk associated with possible disruptions in our operations or the economy generally;~~

●

~~the effect of investments that we expect to make;~~

●

~~our contractual arrangements and relationships with third parties;~~

●

~~actual and potential conflicts of interest with Triton Pacific Adviser, LLC and its affiliates;~~

●

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

●

~~the ability of our portfolio companies to achieve their objectives;~~

●

~~the use of borrowed money to finance a portion of our investments;~~

●

~~the adequacy of our financing sources and working capital;~~

●

~~the timing of cash flows, if any, from the operations of our portfolio companies;~~

●

~~the ability of Triton Pacific Adviser, LLC and its Sub-Adviser to locate suitable investments for us and to monitor and administer our investments;~~

●

~~the ability of Triton Pacific Adviser, LLC, its Sub-Adviser and its affiliates to attract and retain highly talented professionals;~~

●

~~our ability to qualify and maintain our qualification as a RIC and as a BDC; and~~

●

~~the effect of changes in laws or regulations affecting our operations or to tax legislation and our tax position.~~

~~Such forward-looking statements may include statements preceded by, followed by or~~information that otherwise include the words “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The forward looking statements contained in this annual report involveinvolves risks and uncertainties. Our actual results ~~could~~may differ ~~materially~~significantly from ~~those~~any results expressed or implied ~~or expressed in the~~by these forward-looking statements ~~for any reason, including~~due to the factors ~~set forth as “Risk~~discussed in Part II, “Item 1A. Risk Factors” ~~in this report~~ and ~~in our last effective registration statement filed with the SEC on June 22, 2018 and declared effective on June 25, 2018.~~

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, shareholders are advised to consult any additional disclosures that we may make directly to them or through reports that we have filed or in the future may file with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K.

“Forward-Looking Statements” appearing elsewhere herein.

~~Overview~~

~~We are a publicly registered, non-traded fund focused on private equity, structured as a business development company that primarily makes equity, structured equity,~~

The terms “FLEX,” “the Company,” “we,” “us” and debt investments in small to mid-sized private U.S. companies. Structured equity refers to derivative investment products, including convertible notes and warrants, designed to facilitate highly customized risk-return objectives. Our private equity investments will generally take“our” mean TP Flexible Income Fund, Inc. unless the ~~form of direct investments in common and preferred equity, as well as structured equity investments such as convertible notes and warrants.~~ context specifically requires otherwise.

Overview

We are an externally managed, non-diversified, closed-end ~~non-diversified~~ management investment company that has elected to be ~~treated~~regulated as a business development company ~~under the Company Act. Triton Pacific Adviser, LLC~~ (“~~Triton Pacific Adviser”~~BDC”)~~, which is a registered investment adviser~~ under the Investment ~~Advisers~~Company Act of 1940, as amended (the ~~“Advisers~~“1940 Act”) serves as our investment adviser and TFA Associates, LLC serves as our administrator. Each of these companies is affiliated with Triton Pacific Group, Inc., a private equity investment management firm, and its subsidiary, Triton Pacific Capital Partners, LLC (“TPCP”), a private equity investment fund management company, each focused on debt and equity investments in small to mid-sized private companies.

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

~~Triton Pacific Adviser is responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing~~appreciation by targeting investment opportunities ~~structuring investments~~with favorable risk-adjusted returns. We intend to meet our investment objective by primarily lending to and ~~monitoring our portfolio on an ongoing basis. In addition,~~investing in the debt of privately-owned U.S. middle market companies, which we define as companies with annual revenue between $50 million and $2.5 billion. We have elected and intend to continue to qualify annually ~~qualify~~ to be ~~treated,~~taxed for U.S. federal income tax purposes as a regulated investment company ~~(“RIC”~~("RIC"), under ~~subchapter M of~~ the Internal Revenue Code of 1986, as amended (the ~~“Code”~~"Code").

~~Our investment objectives are~~

On August 10, 2018, we (in our capacity as Triton Pacific Investment Corporation, Inc., which we refer to ~~maximize~~as "TPIC") entered into an agreement and plan of merger with Pathway Capital Opportunity Fund, Inc. (“PWAY”) (which was amended and restated effective February 12, 2019) (the "Merger Agreement") pursuant to which PWAY merged with and into TPIC (the "Merger") and, as the combined surviving company, we were renamed as TP Flexible Income Fund, Inc. (we were formerly known as Triton Pacific Investment Corporation, Inc.). TPIC’s board of directors and PWAY’s board of directors each approved the transaction. Completion of the Merger was subject to a number of conditions, including, among other things, the approval by TPIC’s stockholders and PWAY’s stockholders of the Merger and the Merger Agreement. The Merger was approved by TPIC’s stockholders at their annual meeting of stockholders held on March 15, 2019 (the "2019 Annual Meeting") and by PWAY’s stockholders at a special meeting of stockholders held on March 15, 2019. The Merger was completed on March 31, 2019. We refer to the surviving merged accounting entity as "FLEX" throughout Management's Discussion and Analysis herein and in the accompanying consolidated financial statements.

As a result of the Merger several significant changes occurred:

New Investment Adviser. Prospect Flexible Income Management, LLC (the "Adviser") now serves as our investment ~~portfolio’s total return~~adviser. The Adviser is an affiliate of PWAY and the investment professionals of PWAY’s investment adviser have investment discretion at the Adviser.

◦

Only former stockholders of TPIC as of March 15, 2019 (the “Eligible Stockholders”), the date of TPIC’s 2019 annual stockholder meeting, were and will be allowed to participate in the Special Repurchase Offer, and they may have up to 100% of their shares repurchased. Former stockholders of PWAY and stockholders who purchased shares in our continuous public offering will not and may not participate in the Special Repurchase Offer.


◦	If a substantial number of the Eligible Stockholders take advantage of this opportunity, it could minimize or eliminate the expected benefits of the Merger and it could:


▪	significantly decrease our asset size;


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


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

◦

New Board of Directors. Following the Merger, the composition of our board of directors changed and now consists of Craig J. Faggen, TPIC’s former President and Chief Executive Officer, M. Grier Eliasek, PWAY’s Former President and Chief Executive Officer, Andrew Cooper, William Gremp and Eugene Stark. Messrs. Cooper, Gremp and Stark are our independent directors and were formally independent directors of PWAY.

Prospect Flexible Income Management, LLC serves as our investment adviser. The engagement of the Adviser was approved by ~~generating long-term capital appreciation from~~TPIC’s stockholders at the 2019 Annual Meeting, concurrently with the approval of the Merger and the Merger Agreement. Prospect Administration LLC (the "Administrator"), an affiliate of our ~~private equity investments and current income from~~Adviser, serves as our ~~debt investments.~~administrator. We ~~intend~~have engaged Triton Pacific Securities, LLC (the "Dealer Manager") to ~~make both~~serve as the dealer manager of our ~~debt and private equity investments in small~~offering. The dealer manager is not required to ~~mid-sized private U.S. companies either alone~~sell any specific number or ~~together with other private equity sponsors.~~

dollar amount of shares but will use its best efforts to sell the shares offered.

We are offering for sale a maximum amount of $300,000,000 our shares of common stock on a "best efforts" basis. We are currently offering to sell our ~~common stock.We commenced our initial continuous public~~Class A Shares up to the maximum offering amount, at an offering price of shares through our initial registration statement (File No. 333-174873) that was declared effective by the SEC on September 4, 2012. Rule 415 promulgated under the Securities Act requires that a registration statement not be used for more than three years from its effective date, subject to a 180-day grace period. On September 2, 2015, we filed a registration statement with the SEC (File No. 333-206730) in order to continue our continuous public offering of shares for an additional three years or until all of the shares registered herein are sold. The registration statement for our follow-on offering was declared effective by the SEC on March 17, 2016 and our most-recent post-effective amendment to our registration was declared effective by the SEC on June 25, 2018.$11.38 per Class A Share. As of ~~November 14, 2018,~~February 12, 2020, we have sold a total of ~~1,580,469.90~~2,341,856 shares of common stock, ~~for gross proceeds of approximately $23,022,029.93~~ including 142,094 shares issued pursuant to our distribution reinvestment plan, ~~in the amount~~for gross proceeds of ~~$890,616.79,~~approximately $31,123,333, including the reduction due to ~~$604,017.28~~($1,886,571) in shares repurchased pursuant to the Company’s ~~Repurchase Program,~~share repurchase program and 14,815 shares of common stock sold to ~~Triton Pacific~~our Former Adviser in exchange for gross proceeds of $200,003.

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

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

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

Company issued 775,193 shares.

~~-Employing disciplined underwriting policies and rigorous portfolio management;~~

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

~~-Maintaining a well-balanced portfolio.~~

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

~~-Investment opportunities~~

~~-Market conditions~~

~~-Perceived Risk~~

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

Our Adviser ~~has engaged ZAIS to act as our investment sub-adviser. ZAIS assists our~~

Our Adviser ~~with identifying, evaluating, negotiating and structuring syndicated debt investments and makes investment recommendations for approval by our Adviser. ZAIS~~ is a Delaware limited liability company and is a registered as an investment adviser under the Advisers ~~Act~~Act. Our Adviser is controlled by Prospect Capital Management, who owns a majority of its voting units. Mr. Eliasek is the principal officer of the Adviser.

Second Quarter Highlights

Investment Transactions

We seek to be a long-term investor with our portfolio companies. During the three months and ~~had approximately $5.221 billion~~six months ended December 31, 2019, we purchased investment securities (excluding short-term securities) of $8,990,588 and $19,425,198, respectively. During the same three month and six month period, sales and redemptions of investment securities (excluding short-term securities) were $1,652,836 and $3,275,274, respectively, resulting in ~~assets under management~~a total net portfolio growth of $7,337,752 for the three months ended December 31, 2019 and $16,149,924 for the six months ended December 31, 2019.

Debt Issuances and Redemptions

During the three months and six months ended December 31, 2019, we drew an additional $5,500,000 and $10,000,000, respectively, on our Credit Facility (as defined herein) for a total of $21,000,000 outstanding on our credit facility as of ~~June 30, 2018. ZAIS~~December 31, 2019. See "Credit Facility".

On November 21, 2019, we made an offer to the Eligible Stockholders as part of the Special Repurchase Offer to purchase up to 402,918 shares of the Company’s issued and outstanding Class A common stock, at a price equal to the net asset value per share determined as of December 24, 2019. The offer expired at 4:00 P.M., Eastern Time, on December 20, 2019 and a total of 51,715 shares were validly tendered and not withdrawn pursuant to the offer. In accordance with the terms of the offer, the Company purchased all of the shares validly tendered and not withdrawn at a price equal to $8.91 per share for an aggregate purchase price of approximately $460,786. The repurchase for the three months ended December 31, 2019, was effective prior to December 31, 2019 but paid after December 31, 2019 and therefore is ~~not an affiliate~~recorded as a payable as of ~~us or our Adviser~~December 31, 2019.

Equity Issuances

As part of the dividend reinvestment plan, we issued 6,125, 6,102 and ~~does not own any~~7,587 shares of our ~~shares.~~

~~We will generally source our private equity investments through third party intermediaries~~common stock on October 4, 2019, October 28, 2019 and ~~our debt investments primarily through our Adviser and Sub-Adviser. We will invest only after~~December 2, 2019, respectively. On January 3, 2020 we conduct a thorough evaluation of the risks and strategic opportunities of an investment and a price (or interest rate in the case of debt investments) has been established that reflects the intrinsic value of the investment opportunity. We will endeavor to identify the best exit strategy for each private equity investment, including methodology (for example, a sale, company redemption, or public offering) and an appropriate time horizon. We will then attempt to influence the growth and development of each portfolio company accordingly to maximize our potential return on investment using such exit strategy or another strategy that may become preferable due to changing market conditions. We anticipate that the holding period for mostissued 6,054 shares of our ~~private equity investments will range from four to six years, but we will be flexible~~common stock in ~~order to take advantage of market opportunities or to overcome unfavorable market conditions.~~

connections with the dividend reinvestment plan for December distributions.

Investments

We intend to ~~generate~~primarily lend to and invest in the ~~majority~~debt of ~~our current income by investing~~privately-owned U.S. middle market companies. We may on occasion invest in smaller or larger companies if an attractive opportunity presents itself, especially when there are dislocations in the capital

markets. We expect to focus primarily on making investments in syndicated senior secured first lien loans, syndicated senior secured second lien ~~secured~~ loans, and to a lesser extent, subordinated debt, of middle market companies in a broad range of industries. Syndicated secured loans refer to commercial loans provided by a group of ~~small~~lenders that are structured, arranged, and administered by one or several commercial or investment banks, known as arrangers. These loans are then sold (or syndicated) to ~~mid-sized private U.S. companies.~~other banks or institutional investors. Syndicated secured loans may have a first priority lien on a borrower’s assets (i.e., senior secured first lien loans), a second priority lien on a borrower’s assets (i.e., senior secured second lien loans), or a lower lien or unsecured position on the borrower’s assets (i.e., subordinated debt). We ~~may purchase interests in loans through secondary market transactions in the “over-the-counter” market for institutional loans or directly from~~expect our target ~~companies as primary market investments. In connection~~credit investments will typically have initial maturities between three and ten years and generally range in size between $1 million and $100 million, although the investment size will vary with the size of our capital base. We expect that the majority of our debt investments wewill bear interest at floating interest rates, but our portfolio may also include fixed-rate investments. We also expect to make our investments directly through the primary issuance by the borrower or in the secondary market.

We will generally source our investments primarily through our Adviser. We believe the investment management team of our Adviser has a significant amount of experience in the credit business, including originating, underwriting, principal investing and loan structuring. Our Adviser, through Prospect Capital Management, has access to over 106 professionals, including over 51 investments, origination and credit management professionals, and over 55 operations, marketing and distribution professionals, each with extensive experience in their respective disciplines.

We expect to dynamically allocate our assets in varying types of investments based on ~~occasion receive equity interests such~~our analysis of the credit markets, which may result in our portfolio becoming more concentrated in particular types of credit instruments (such as ~~warrants or options as additional consideration. The~~ senior secured loans) and ~~second lien secured loans~~less invested in ~~which we invest generally will have stated terms~~other types of three to seven years and any subordinated investments that we make generally will have stated terms of up to ten years. However, there is no limit on the maturity or duration of any security we may hold in our portfolio.credit instruments. The loans in which we intend to invest are often rated by a nationally recognized ratings organization, and generally carry a rating below investment grade (rated lower than “Baa3” by Moody’s Investors Service or lower than “BBB-” by Standard & Poor’s Corporation –- also known as “high yield” or “junk bonds”). However, we may also invest in non-rated debt securities.

To seek to enhance our returns, we may employ leverage as market conditions permit and at the discretion of our Adviser, but in no event will leverage employed exceed the maximum amount permitted by the 1940 Act.

As part of our investment objective to generate current income, we expect that at least 70% of our investments will consist primarily of syndicated senior secured first lien loans, syndicated senior secured second lien loans, and to a lesser extent, subordinated debt. We expect that up to 30% of our investments will consist of other securities, including private equity (both common and preferred), dividend-paying equity, royalties, and the equity and junior debt tranches of collateralized loan obligations ("CLOs"), which we also refer to as subordinated structured notes ("SSNs"). The senior secured loans underlying our CLO investments are expected typically to be BB or B rated (non-investment grade, which are often referred to as “high yield” or “junk”) and in limited circumstances, unrated, senior secured loans.

As a BDC, we are subject to certain regulatory restrictions in making our investments. For example, we ~~generally will not be permitted~~have in the past and expect in the future to co-invest ~~alongside~~on a concurrent basis with certain affiliates, consistent with applicable regulations and our allocation procedures. On January 13, 2019, the parent company of the Adviser ~~including TPCP and certain of its affiliates, unless we obtain~~received an exemptive order from the SEC granting the ability to negotiate terms, other than price and quantity, of co-investment transactions with other funds managed by our Adviser or certain affiliates, including us, Prospect Capital Corporation and Priority Income Fund, Inc., subject to certain conditions included therein. Under the terms of the Order permitting us to co-invest with other funds managed by our Adviser or its affiliates, a majority of our independent directors who have no financial interest in the transaction must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned and (2) the transaction is ~~otherwise permitted under~~consistent with the interests of our stockholders and is consistent with our investment objective and strategies. The Order also imposes reporting and record keeping requirements and limitations on transactional fees. We may only co-invest with certain entities affiliated with our Adviser in negotiated transactions originated by our Adviser or its affiliates in accordance with such Order and existing regulatory ~~guidance, such as syndicated~~guidance. See Note 4 of the Consolidated Financial Statements. These co-investment transactions where price is the only negotiated term, and approval from our independent directors. We have applied for an exemptive relief order for co-investments, though there is no assurance that such exemptions will be granted, and in either instance, conflicts of interests with affiliates of our Adviser might exist. Should suchmay give rise to conflicts of interest ~~arise, we~~or perceived conflicts of interest among us and the other participating accounts. To mitigate these conflicts, our Adviser ~~have developed policies~~ and ~~procedures for dealing with such conflicts which require the Adviser~~its affiliates will seek to ~~(i) execute such~~allocate portfolio transactions for all of the participating investment accounts, including ~~ours,~~us, on a fair and equitable basis, taking into account such factors as the relative amounts of capital available for new investments, the ~~then-current~~applicable investment ~~objectives~~programs and portfolio positions, ~~of each party,~~the clients for which participation is appropriate and any other factors deemed appropriate and (ii) endeavor to obtain the advice of Adviser personnel not directly involved with the investment giving rise to the conflict as to such appropriateness and other factors as well as the fairness to all parties of the investment and its terms.appropriate. We intend to make all of our investments in compliance with the ~~Company~~1940 Act and in a manner that will not jeopardize our status as a BDC or RIC.

As a BDC, we are permitted under the ~~Company~~1940 Act to borrow funds to finance portfolio investments. To enhance our opportunity for gain, we intend to employ leverage as market conditions permit. ~~The Company Act generally prohibits~~At the 2019 Annual Meeting, TPIC’s stockholders approved a proposal allowing us ~~from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of~~to modify our ~~assets). However, recent legislation has modified the Company Act by allowing a BDC to increase the maximum amount of leverage it may incur from an~~ asset coverage ratio ofrequirement from 200% to ~~an asset coverage ratio of~~ 150%~~, if certain requirements are met. Under the legislation,~~. As a result, we are allowed to increase our leverage ~~capacity~~capacity. The use of leverage, although it may increase returns, may also increase the risk of loss to our investors, particularly if ~~stockholders representing at least a majority~~the level of ~~the votes cast, when quorum is met, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase~~ our leverage ~~capacity on the first day after such approval. Alternatively, the legislation allows the majority of our independent directors to approve an increase in our leverage capacity,~~is high and such approval would become effective after one year. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As a non-traded BDC, we would also be required to offer to repurchase our outstanding shares at the rate of 25% per quarter over four calendar quarters.

At a meeting held on April 18, 2018, our Board of Directors, including a “required majority” (as defined in Section 57(o) of the Company Act) approved the application of the modified asset coverage requirements from 200% asset coverage to 150% asset coverage. As a result, and subject to certain additional disclosure requirements as well as the repurchase obligations, both as described above, the 150% minimum asset coverage ratio will apply to the Company effective as of April 18, 2019. We intend to seek stockholder approval to accelerate the decrease of the required asset coverage ratio from 200% to 150%, which would give us the ability to increase the amount of leverage we could incur effective the day after stockholder approval is received.

~~Proposed Merger with Pathway Capital Opportunity Fund~~

On August 10, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Pathway Capital Opportunity Fund, Inc. (“PWAY”), a registered closed-end investment company that operates as an interval fund pursuant to Rule 23c-3 under the Company Act. Pursuant to the Merger Agreement, and subject to certain conditions described therein, PWAY will merge with and into the Company, with the Company as the surviving entity in the merger (the “Merger”). The respective boards of directors of the Company and PWAY, including the directors who are not “interested persons” as defined in Section 2(a)(19) of the Company Act, determined that the Merger would be in the best interests of each of the Company and PWAY, and further approved the Merger upon the terms and subject to the conditions and limitations set forth in the Merger Agreement. The closing of the Merger (the “Closing”) is subject to the satisfaction or waiver of certain closing conditions, as described below. It is expected that the Merger will qualify as a “reorganization” under the provisions of Section 368(a) of Internal Revenue Code of 1986, as amended (the “Code”) and shareholders of PWAY generally will not recognize gain or loss in connection with the exchange of their shares of PWAY common stock for shares of the Company’s common stock pursuant to the Merger Agreement.

If the proposed Merger is consummated, the holders of shares of PWAY’s Class A common stock, par value $0.01 per share (“PWAY Class A Shares”), will have a right to receive a number of shares of the Company’s Class A common stock, par value $0.001 per share (“TPIC Common Stock”), equal to the result of (A) the PWAY Class A per-share net asset value (“NAV”) divided by (B) the Company per-share NAV, in each case determined in accordance with the Merger Agreement, and the holders of shares of PWAY’s Class I common stock, par value $0.01 per share (“PWAY Class I Shares” and, together with the PWAY Class A Shares, the “PWAY Common Stock”), will have a right to receive a number of shares of TPIC Common Stock equal to the result of (A) the PWAY Class I per-share NAV divided by (B) the Company per-share NAV, in each case determined in accordance with the Merger Agreement. Until the Merger is completed, the value of ~~the shares of TPIC Common Stock to be issued in the Merger and the number of shares of the Company Common Stock to be issued to PWAY stockholders may fluctuate or change.~~

Triton Pacific Adviser and ZAIS Group, LLC currently serve as the investment adviser and investment sub-adviser, respectively, to the Company. These entities are expected to no longer serve in such capacities following completion of the Merger, and Prospect Flexible Income Management, LLC (the “New Investment Adviser”), subject to the approval of the Company’s stockholders, is expected to serve as the investment adviser to the combined company following completion of the Merger. In addition, TFA Associates, LLC, which currently serves as the administrator to the Company is also expected to cease to serve in such capacity, and Prospect Administration LLC (“Prospect Administration”) is expected to serve as the administrator and TFA Associates, LLC is expected to serve as the sub-administrator to the combined surviving company following completion of the Merger. Finally, in accordance with the provisions of the Maryland General Corporation Law, the Company’s board of directors has approved the change in the Company’s name to TP Flexible Income Fund, Inc. (“FLEX”), subject to and effective upon consummation of the Merger.

At the effective time of the Merger, the Company’s board of directors will continue to consist of five directors, with each of Prospect Capital Management L.P. (“Prospect Capital Management”) and Triton Pacific Adviser having the right to nominate one individual for election to the board of directors of the combined surviving company so long as (i) the New Investment Adviser is the investment adviser to the combined surviving company and (ii) such nomination is (A) in accordance with the combined surviving company’s charter, bylaws and applicable law, and (B) consistent with the duties of the board of directors of the combined surviving company. Prospect Capital Management has nominated M. Grier Eliasek, PWAY’s existing Chief Executive and Officer and President, to the combined surviving company’s board of directors, and Triton Pacific Adviser has nominated Craig J. Faggen, TPIC’s existing Chief Executive Officer and member of its board of directors, to the combined surviving company’s board of directors. In addition, the Company has nominated three new independent directors to the combined surviving company’s board of directors, each of whom is currently an independent director on PWAY’s board of directors. The terms of each of these nominated directors is effective upon consummation of the Merger.

The Merger Agreement contains (a) customary representations and warranties made by each party to the other party, and (b) customary covenants and agreements, including: (i) a covenant by each party to cooperate in the preparation of the proxy materials to be filed in connection with the Merger; and (ii) a covenant by each party to take actions reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by the Merger Agreement.

As more fully described in the Merger Agreement, the obligations of PWAY and the Company to complete the Merger are subject to the satisfaction or, where permissible, waiver of, certain conditions including the following: (i) the approvals of PWAY and the Company stockholders are obtained at their respective stockholder meetings; (ii) a joint proxy statement and prospectus filed by the Company on Form N-14 (the “Registration Statement”) has become effective and no stop order suspending its effectiveness has been issued and no proceedings for that purpose have been initiated or threatened by the SEC; (iii) all necessary regulatory and statutory approvals (if any) are obtained by each of PWAY and the Company and remain in full force and effect and all statutory waiver periods in respect thereof have expired or been terminated; (iv) any applicable waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired or been terminated; (v) no order, injunction or decree or law preventing or making illegal the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement is in effect, and no such suit or proceeding is pending; (vi) the New Investment Adviser is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended; (vii) a new investment advisory

our investments declines.

agreement is duly executed and delivered by FLEX and the New Investment Adviser; (viii) a new administration agreement is duly executed and delivered by FLEX and Prospect Administration; (ix) an expense limitation agreement by and between FLEX and the New Investment Adviser (as described in the Registration Statement), is duly executed and delivered by such parties; (x) the Triton Termination and Waiver Agreement (as defined and described in the Registration Statement) is duly executed and delivered by the relevant parties; (xi) a distribution agreement, by and between FLEX and Triton Pacific Securities, LLC, is duly executed and delivered by such parties; and (xii) the truth and accurateness of the representations and warranties and compliance with covenants of each other party in the Merger Agreement, subject to the materiality standards provided in the Merger Agreement.

As more fully described in the Merger Agreement, the Merger Agreement contains certain termination rights for PWAY or the Company, as applicable, including if: (i) the parties mutually agree to terminate; (ii) the Merger has not been completed by December 31, 2018, unless extended in writing with the mutual consent of the Company and PWAY; (iii) any regulatory or statutory approvals required to be obtained by either PWAY or the Company with respect to the Merger or any of the other transactions contemplated by the Merger Agreement have been denied and such denials have become final and nonappealable; (iv) a governmental entity has issued a final and non-appealable order or promulgated a law prohibiting or making illegal the Merger or any of the other transactions contemplated by the Merger Agreement; (v) the stockholders of PWAY fail to approve the Merger and the transactions contemplated thereby (collectively, the “PWAY Stockholder Proposals”); (vi) the PWAY board of directors has changed its recommendation in favor of the PWAY Stockholder Proposals; (vii) the stockholders of the Company fail to approve the Merger and the transactions contemplated thereby (collectively, the “the Company Stockholder Proposals”); (viii) the Company board of directors has changed its recommendation in favor of the Company Stockholder Proposals; (ix) either the Company or PWAY receives a Superior Proposal (as defined in the Merger Agreement) by a third party and the board of directors of the Company or PWAY, as the case may be, approves such entity to enter into definitive documentation with respect to such Superior Proposal and such entity pays the other entity the reasonable, documented out-of-pocket expenses incurred in connection transactions contemplated by the Merger Agreement; or (x) either party breaches its representations, warranties or covenants in the Merger Agreement such that the closing conditions cannot be satisfied. The Merger Agreement provides that, in connection with the termination of the Merger Agreement under specified circumstances, the Company or PWAY, as the terminating party, will be required to pay the other party, as the non-terminating party, in cash, an amount equal to such non-terminating party’s reasonable, documented out-of-pocket expenses incurred in connection with the transactions contemplated by the Merger Agreement.

In connection with the proposed Merger, the Company has filed with the SEC a Registration Statement on Form N-14 that includes proxy statements of the Company and PWAY and that also constitutes a prospectus of the Company regarding the TPIC Common Stock to be issued to the stockholders of PWAY in connection with the Merger. The Registration Statement will be mailed to the stockholders of TPIC and PWAY if and when it is declared effective by the SEC.

The description of the Merger Agreement set forth above is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached as an exhibit to the Registration Statement on Form N-14 filed by the Company with the SEC on August 13, 2018.

Revenues

We generate revenue in the form of dividends, interest and capital gains on the debt securities, ~~and~~ equity interests and CLOs that we hold. In addition, we may generate revenue from our portfolio companies in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees will be recognized as earned.

Expenses

Our primary operating expenses ~~are~~will be the payment of advisory fees and other expenses under ~~our investment adviser agreement.~~the Investment Advisory Agreement with the Adviser (the "Investment Advisory Agreement"). The advisory fees will compensate our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

We ~~also~~will bear all other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:

●

~~corporate and organizational expenses relating to offerings of our common stock, subject to limitations included in the investment advisory and management services agreement;~~

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~~the cost of calculating our net asset value, including the cost of any third-party valuation services;~~

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~~the cost of effecting sales and repurchase of shares of our common stock and other securities;~~

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~~investment advisory fees;~~

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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;

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~~transfer agent and custodial fees;~~

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~~fees and expenses associated with marketing efforts;~~

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~~federal and state registration fees;~~

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~~federal, state and local taxes;~~

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~~independent directors’ fees and expenses;~~

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~~costs of proxy statements, stockholders’ reports and notices;~~

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~~fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums;~~

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~~direct costs such as printing, mailing, long distance telephone, and staff;~~

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~~fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act;~~

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~~costs associated with our reporting and compliance obligations under the Company Act and applicable federal and state securities laws;~~

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~~brokerage commissions for our investments;~~

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~~legal, accounting and other costs associated with structuring, negotiating, documenting and completing our investment transactions;~~

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~~all other expenses incurred by our Adviser, in performing its obligations, subject to the limitations included in the investment adviser agreement; and~~

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corporate and organizational expenses relating to offerings of our common stock, subject to limitations included in the investment advisory and management services agreement;

the cost of calculating our net asset value, including the cost of any third-party valuation services;

the cost of effecting sales and repurchase of shares of our common stock and other securities;

investment advisory fees;

transfer agent and custodial fees;

fees and expenses associated with marketing efforts;

federal and state registration fees;

federal, state and local taxes;

independent directors’ fees and expenses;

costs of proxy statements, stockholders’ reports and notices;

fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums;

direct costs such as printing, mailing, long distance telephone, and staff;

fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act;

costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws;

brokerage commissions for our investments;

legal, accounting and other costs associated with structuring, negotiating, documenting and completing our investment transactions;

all other expenses incurred by our Adviser, in performing its obligations, subject to the limitations included in the Investment Advisory Agreement; and

all other expenses incurred by either our Administrator or us in connection with administering our business, including payments to our Administrator under the Administration Agreement (as defined herein) that will be based upon our allocable portion of its overhead and other expenses incurred in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our chief executive officer, chief compliance officer and chief financial officer and their respective staffs.

Reimbursement of our Administrator or us in connection with administering our business, including payments to our Administrator under the administration agreement that will be based upon our allocable portion of its overhead and other expenses incurred in performing its obligations under the administration agreement, including rent and our allocable portion of the costs of compensation and related expenses of our chief executive officer, chief compliance officer and chief financial officer and their respective staffs.

~~Reimbursement of TFA Associates, LLC~~ for Administrative Services

We will reimburse ~~TFA Associates~~our Administrator for the administrative expenses necessary for its performance of services to us. Such costs will be reasonably allocated to us on the basis of assets, revenues, time records or other reasonable methods. However, such reimbursement is made in an amount equal to the lower of the Administrator’s actual costs or the amount that we would be required to pay for comparable administrative services in the same geographic location. We will not reimburse our Administrator for any services for which it receives a separate fee or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a controlling person of ~~TFA Associates.~~

our Administrator.

Merger

Effective March 31, 2019, TPIC and PWAY entered into a tax free business combination. Concurrent with the Merger, TPIC, the legal acquirer, was renamed TP Flexible Income Fund, Inc. As a result of the Merger the Company issued 775,193 shares of the Company’s common stock to the former shareholders of PWAY and all shares of PWAY were retired.

After a review of available strategic alternatives, PWAY and TPIC’s board of directors believed the Merger to be in the best interests of the respective companies and their respective stockholders because of FLEX’s expected economies of scale, investment objectives and strategy, investment portfolio, capital structure and increased market capitalization, and the experience and expertise of the FLEX’s new investment adviser.

Consistent with tax free business combinations of investment companies, for financial reporting purposes, the reverse merger accounting was recorded at fair value; however, the cost basis of the investments received from TPIC was carried forward to align ongoing financial reporting of the Company’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Further, the components of net assets of the Company reflect the combined components of net assets of both PWAY and TPIC.

In accordance with the accounting and presentation for reverse acquisitions, the historical financial statements of the Company, prior to the date of the Merger reflect the financial positions and results of operations of PWAY, with the results of operations of TPIC being included commencing on April 1, 2019. Effective with the completion of the Merger, TPIC, changed its fiscal year end to be the last day of June consistent with PWAY’s fiscal year.

In the Merger, common shareholders of PWAY received newly-issued common shares in the Company having an aggregate net asset value equal to the aggregate net asset value of their holdings of PWAY Class A and/or PWAY Class I common shares, as applicable, as determined at the close of business on March 27, 2019, as permitted by the Merger Agreement. The differences in net asset value between March 27, 2019 and March 31, 2019 were not material. Relevant details pertaining to the Merger are as follows:



	NAV/Share ($)		Conversion Ratio
Triton Pacific Investment Corporation, Inc.	$	10.48	N/A
Pathway Capital Opportunity Fund, Inc.: Class A	$	13.46	1.2848
Pathway Capital Opportunity Fund, Inc.: Class I	$	13.50	1.2884

Investments

The cost, fair value and net unrealized appreciation (depreciation) of the investments of TPIC as of the date of the Merger, was as follows:



	TPIC
Cost of investments	$	12,106,879
Fair value of investments	11,431,241
Net unrealized appreciation (depreciation) on investments	$	(675,638	)

Common Shares

The common shares outstanding, net assets applicable to common shares and NAV per common share outstanding immediately before and after the Merger were as follows:



Accounting Acquirer - Prior to Merger	PWAY Class A		PWAY Class I
Common shares outstanding	570,431		32,834
Net assets applicable to common shares	$	7,679,839	$	443,296
NAV per common share	$	13.46	$	13.50
Legal Acquiring Fund - Prior to Merger	TPIC
Common shares outstanding	1,614,221
Net assets applicable to common shares	$	16,915,592
NAV per common share	$	10.48
Legal Acquiring Fund - Post Merger	FLEX
Common shares outstanding	2,403,349
Net assets applicable to common shares	$	25,086,682
NAV per common share	$	10.44

Cost and Expenses

Purchase Price Allocation

PWAY as the accounting acquirer acquired 32% of the voting interests of TPIC. The below table summarizes the purchase price allocation from TPIC:



	PWAY as acquirer
Value of Common Stock Issued	$	17,052,546
Assets acquired:
Investments	11,431,241
Cash and cash equivalents	5,055,456
Other assets	607,163
Total assets acquired	17,093,860
Total liabilities assumed	41,314
Net assets acquired	17,052,546
Total purchase price	$	17,052,546

Portfolio and Investment Activity

During the ~~nine~~three months and six months ended ~~September 30,~~December 31, 2019, purchases of investment securities (excluding short-term securities) were $8,990,588 and $19,425,198, respectively. During the same three month and six month period, sales and redemptions of investment securities (excluding short-term securities) were $1,652,836 and $3,275,274, respectively, resulting in a total net portfolio growth of $7,337,752 for the three months ended December 31, 2019 and $16,149,924 for the six months ended December 31, 2019. As of December 31, 2019, our investment portfolio, with a total fair value of $39,122,830, consisted of interests in 59 investments (82% in senior secured loans, 2% in senior unsecured bonds, 2% in equity/other and 14% in CLO - subordinated notes).

During the three months and six months ended December 31, 2018, ~~we made investments in portfolio companies totaling $4,426,250.~~there were no purchases of investment securities (excluding short-term securities). During the same period, sales and redemptions of investment securities (excluding short-term securities)

were $1,773,964 and $2,068,610, respectively. During the six months ended December 31, 2018, one of our Subordinated Structured Notes were deemed to have an other-than-temporary loss. In accordance with ASC 325-40, Beneficial Interest in Securitized Financial Assets, we ~~sold investments and received principal repayments~~recorded a total loss of ~~$2,928,272.~~$20,261 related to this investment for the amount our amortized cost exceeded fair value as of the respective determination dates. As of ~~September 30,~~December 31, 2018, our investment portfolio, with a total fair value of ~~$13,504,804,~~$7,943,823, consisted of interests in 23 investments (57% in senior unsecured bonds, 5% in senior secured bonds, and 38% in CLO - subordinated notes).

Portfolio Holdings

As of December 31, 2019, our investment portfolio, with a total fair value of $39,122,830, consisted of interests in 33 portfolio companies ~~(59.1% in first lien senior secured loans, 37.2% in second lien senior secured loans, 0% in~~and 23 structured subordinated convertible debt and 3.7% in equity). The portfolio companies that comprised our portfolio as of such date had an average annual EBITDA of approximately $167.3 million. As of September 30, 2018, the investments in our debt portfolio were purchased at a weighted average price of 98.4% of par or stated value, and the weighted average credit rating of the investments in our portfolio that were rated (constituting 96.3% of our portfolio based on the fair value of our investments) was B2 based upon the Moody’s scale. Our estimated gross annual portfolio yield was 7.8% based upon the amortized cost of our investments and was 8.5% on the debt portfolio alone. Our gross annual portfolio yield represents the expected yield to be generated by us on our investment portfolio based on the composition of our portfolio as of September 30, 2018. The portfolio yield does not represent an actual investment return to stockholders.

~~Total Portfolio Activity~~

September 30, 2018 December 31, 2017
Number of Portfolio Companies 33 32
% Variable Rate (based on fair value) 96.3% 95.5%
% Fixed Rate (based on fair value) 0.0% 0.0%
% Non-Income Producing Equity or Other Investments (based on fair value) 3.7% 4.5%
Average Annual EBITDA of Portfolio Companies 167.3MM 162.3MM
Weighted Average Credit Rating of Investments that were Rated B2 B2
% of Investments on Non-Accrual (based on amortized cost) — —
Gross Portfolio Yield Prior to Leverage (based on amortized cost) 7.8% 6.7%

notes. The following ~~tables present~~table presents certain selected information regarding our portfolio ~~investment activity for the nine months ended September 30, 2018~~composition and ~~year ended~~weighted average yields as of December 31, ~~2017:~~

Net Investment Activity Nine months ended
September 30, 2018 Year ended
December 31, 2017
Purchases $ 4,426,250 $ 7,112,875
Sales and Redemptions (2,928,272 ) (4,308,024 )
Net Portfolio Activity $ 1,497,978 $ 2,804,851

~~The following table presents the composition of the total purchases for the nine months ended September~~2019 and June 30, ~~2018:~~

2019:



	As of December 31, 2019					As of June 30, 2019
	Fair Value			As Percent of Total Fair Value		Fair Value			As Percent of Total Fair Value
Senior Secured Loans-First Lien	$	29,906,395		76	%	$	15,825,870		66	%
Senior Secured Loans-Second Lien	2,023,418			5	%	2,505,227			10	%
Equity/Other	694,589			2	%	570,816			2	%
Senior Unsecured Bonds	849,700			2	%	402,163			2	%
Structured subordinated notes	5,648,728			15	%	4,715,487			20	%
Total	$	39,122,830		100	%	$	24,019,563		100	%

Number of portfolio companies	33					36
Number of Structured subordinated notes	23					17

% Variable Rate (based on fair value)⁽¹⁾	97		%			98		%
% Fixed Rate (based on fair value)⁽¹⁾	3		%			2		%
% Weighted Average Yield Variable Rate (based on fair value)⁽¹⁾	12		%			8		%
% Weighted Average Yield Fixed Rate (based on fair value)⁽¹⁾	12		%			12		%


(1) The interest rate by type information is calculated using the Company’s debt portfolio and excludes equity and structured subordinated notes.

Nine months ended September 30, 2018
(unaudited) Year ended December 31, 2017
Purchases Percentage of Portfolio Purchases Percentage of Portfolio
Senior Secured Loans—First Lien $ 2,943,750 67% $ 4,392,250 62%
Senior Secured Loans—Second Lien 1,482,500 33% 2,720,625 38%
Subordinated Debt - 0% - 0%
Equity/Other - 0% - 0%
Total $ 4,426,250 100% $ 7,112,875 100%

September 30, 2018
(Unaudited) December 31, 2017
Industry Classification Fair
Value Percentage of
Portfolio Fair
Value Percentage of
Portfolio
Beverage, Food & Tobacco 1,987,287 14.7 % 1,618,327 13.4 %
Business Services 3,700,395 27.5 % 4,325,419 35.8 %
Construction & Building 483,750 3.6 % - 0.0 %
Consumer Services 1,316,527 9.7 % 1,671,168 13.9 %
Energy: Oil & Gas 826,666 6.1 % 337,488 2.8 %
Environmental 490,000 3.6 % - 0.0 %
Healthcare & Pharmaceuticals 1,502,310 11.1 % 734,869 6.1 %
High Tech Industries 768,043 5.7 % 833,178 6.9 %
Hotel, Gaming & Leisure 505,296 3.7 % 352,809 2.9 %
Media: Diversified and Production 306,831 2.3 % 334,586 2.8 %
Metals & Mining 958,018 7.1 % 1,143,870 9.5 %
Telecommunications 469,238 3.5 % 496,322 4.3 %
Wholesale Trade-Nondurable Goods 190,443 1.4 % 187,502 1.6 %
Total $ 13,504,804 100.0 % $ 12,035,538 100.00 %

2019 and June 30, 2019:



	December 31, 2019
Industry	Investments at Fair Value		Percentage of Portfolio
Structured Finance	$	5,648,728	15	%
High Tech Industries	5,178,446		13	%
Healthcare & Pharmaceuticals	4,796,174		12	%
Services: Business	3,667,934		9	%
Telecommunications	3,580,274		9	%
Services: Consumer	3,216,500		8	%
Media: Broadcasting & Subscription	2,146,711		6	%
Media: Diversified and Production	1,860,800		5	%
Construction & Building	1,736,101		4	%
Transportation: Cargo	1,494,615		4	%
Sovereign & Public Finance	994,035		3	%
Wholesale	988,556		3	%
Media: Advertising, Printing & Publishing	925,983		2	%
Retail	869,117		2	%
Financial	849,700		2	%
Beverage, Food & Tobacco	496,163		1	%
Energy: Oil & Gas	377,500		1	%
Hotel, Gaming & Leisure	295,493		1	%
Total	$	39,122,830	100	%

	June 30, 2019
Industry	Investments at Fair Value		Percentage of Portfolio
Structured Finance	$	4,715,487	20	%
High Tech Industries	3,960,671		15	%
Healthcare & Pharmaceuticals	2,975,996		12	%
Services: Business	2,780,788		12	%
Media: Broadcasting & Subscription	1,675,694		7	%
Hotel, Gaming & Leisure	1,138,341		5	%
Services: Consumer	1,100,093		5	%
Media: Advertising, Printing & Publishing	947,142		4	%
Retail	905,020		4	%
Beverage, Food & Tobacco	498,688		2	%
Transportation: Cargo	497,181		2	%
Automotive	496,226		2	%
Consumer	496,134		2	%
Media: Diversified & Production	489,685		2	%
Telecommunications	479,004		2	%
Energy: Oil & Gas	461,250		2	%
Financial	402,163		2	%
Total	$	24,019,563	100	%

We do not “control” any of our portfolio companies, each as defined in the ~~Company~~1940 Act. We are an affiliate of ~~two portfolio companies, Javlin Capital, LLC (held through TPJ Holdings, Inc. and a convertible note) and~~ Injured Workers Pharmacy, LLC (held through ACON IWP Investors I, L.L.C.). In general, under the ~~Company~~1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.

~~Portfolio Asset Quality~~

In addition to various risk management and monitoring tools, our Subadviser uses an investment rating system to characterize and monitor the expected level of returns on each investment in our debt portfolio. All of the investments included in our Subadviser’s rating systems refer to non-rated debt securities or rated debt securities that carry a rating below investment grade (rated lower than “Baa3” by Moody’s Investors Service or lower than “BBB-” by Standard & Poor’s Corporation also known as “junk bonds”). These ratings are on a scale of 1 to 8 as follows:

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

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

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

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

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

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

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

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

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

The following table shows the ~~distribution~~composition of our ~~senior secured loan investments on the 1 to 8 scale at fair value~~investment portfolio by level of control as of ~~September~~December 31, 2019 and June 30, ~~2018~~2019:



	December 31, 2019								June 30, 2019
Level of Control	Cost		% of Portfolio		Fair Value		% of Portfolio		Cost		% of Portfolio		Fair Value		% of Portfolio
Affiliate	$	472,357	1	%	$	694,589	2	%	$	472,357	2	%	$	570,816	2	%
Non-Control/Non-Affiliate	39,925,878		99	%	38,428,241		98	%	24,426,013		98	%	23,448,747		98	%
Total Investments	$	40,398,235	100	%	$	39,122,830	100	%	$	24,898,370	100	%	$	24,019,563	100	%

Results of Operations - Comparison of the three months and six months ended December 31, 2019 and December 31, ~~2017:~~

September 30, 2018 December 31, 2017
Investment Rating Fair Value Percentage Fair Value Percentage
1 $ 188,447 1.4 % $ - 0.0 %
2 695,361 5.3 % 486,150 4.2 %
3 2,005,301 15.4 % 4,067,859 35.4 %
4 3,309,314 25.5 % 2,975,871 25.9 %
5 5,923,983 45.6 % 3,508,571 30.5 %
6 858,656 6.6 % 459,184 4.0 %
7 22,000 0.2 % - 0.0 %
8 - 0.0 % - 0.0 %
$ 13,003,062 100.0 % $ 11,497,635 100.0 %

~~Results of Operations~~2018

Investment Income

For the three months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017,~~ we generated ~~$302,542~~$853,848 and ~~$227,488,~~$284,830, respectively, in investment income in the form of interest and fees earned on our debt portfolio. For the six months ended December 31, 2019 and 2018, we generated $1,602,492 and $598,971, respectively, in investment income in the form of interest and fees earned on our debt portfolio. Such revenues ~~represent $293,723 of~~were primarily cash income and ~~$8,819 in~~ non-cash portions related to the accretion of ~~discounts~~discounts. For the three months and ~~paid-in-kind~~six months ended December 31, 2019, PIK interest included in interest income totaled $29 and $58, respectively. There was no PIK interest for the three months ~~ended September 30, 2018. We expect the dollar amount of interest that we earn to continue to increase as the size of our investment portfolio increases.~~

~~For the nine~~and six months ended September 30, 2018 and 2017, we generated $857,038 and $596,666, respectively, in investment income in the form of interest and fees earned on our debt portfolio. Such revenues represent $832,265 of cash income and $24,773 in non-cash portions related to the accretion of discounts and paid-in-kind interest for the nine months ended September 30,December 31, 2018.

Operating Expenses

Total operating expenses before ~~reimbursement from the sponsor~~expense limitation support and ~~management fee~~ waiver of offering costs totaled ~~$421,402~~$985,469 and ~~$283,890~~$385,865 for the three months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017,~~ respectively, and $1,740,798 and $1,105,972 for the six months ended December 31, 2019 and 2018, respectively. These operating expenses consisted primarily of

amortization of offering costs, base management fees, administrator costs, legal expense, audit and tax expense, and adviser ~~and administrator reimbursements, professional fees, insurance expense, directors’ fees and other general and administrative fees.~~shared service expense. The base management fees for the quarters were $91,593 and $83,459, respectively, and the incentive fees for the quarters were -0- and -0-, respectively. Pursuant to the Expense Reimbursement Agreement (discussed below), the sponsor did not reimburse the Company for the three months ended ~~September 30,~~December 31, 2019 and 2018, respectively, were $182,205 and ~~2017.~~

Total operating expenses before reimbursement from the sponsor and management fee waiver totaled $1,138,610 and $754,626 for the nine months ended September 30, 2018 and 2017, respectively, and consisted of base management fees, adviser and administrator reimbursements, professional fees, insurance expense, directors’ fees and other general and administrative fees.$50,735. The base management fees for the ~~periods~~six months ended December 31, 2019 and 2018, respectively, were ~~$269,189~~$339,614 and ~~$246,154, respectively, and the incentive fees~~$108,414. The amortization of offering costs for the ~~quarters~~three months ended December 31, 2019 and 2018, respectively, were ~~-0-~~$151,288 and ~~($334), respectively.~~$34,054. The amortization of offering costs for the six months ended December 31, 2019 and 2018, respectively, were $271,894 and $64,500. The adviser shared service expense for the three months ended December 31, 2019 and 2018, respectively, were $0 and $6,342. The adviser shared service expense for the six months ended December 31, 2019 and 2018, respectively, were $0 and $13,552. The legal expenses for the three months ended December 31, 2019 and 2018, respectively, were $86,263 and $141,674. The legal expenses for the six months ended December 31, 2019 and 2018, respectively, were $111,621 and $580,843. Pursuant to the ~~Expense Reimbursement Agreement~~expense limitation support payment (discussed below), the sponsor reimbursed the Company ~~-0-~~$(182,205) and ~~$80,847 for the nine months ended September 30, 2018 and 2017.~~

~~Our other general and administrative expenses totaled $27,339 and $13,095~~$(54,178) for the three months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017,~~ respectively, and ~~$56,487~~$(339,614) and ~~$23,168~~$(181,029) for the ~~nine~~six months ended ~~September 30,~~December 31, 2019 and 2018, ~~and 2017, respectively, and consisted of the following:~~

Three months ended
September 30, 2018 Three months ended
September 30, 2017 Nine months ended
September 30, 2018 Nine months ended
September 30, 2017
Licenses and permits $ - $ - $ 623 $ 413
Outside Services 1,763 9,753 1,859 9,753
Printing fees 9,841 2,408 20,356 8,560
Travel expenses 14,685 - 25,774 1,056
Other 1,050 934 7,875 3,386
Total $ 27,339 $ 13,095 $ 56,487 $ 23,168

respectively.

Net Investment Income

Our net investment income (loss) totaled ~~($118,860) (($0.08) per share based on weighted average shares outstanding)~~$50,584 and $(46,857) for the three months ended ~~September 30,~~December 31, 2019 and 2018, respectively, and ~~($56,402) (($0.04) per share based on weighted average shares outstanding)~~$201,308 and $(325,972) for the ~~three~~six months ended ~~September 30, 2017.~~

~~Our net investment income totaled ($281,572) (($0.19) per share based on weighted average shares outstanding) for the nine months ended September 30,~~December 31, 2019 and 2018, ~~and ($77,113) (($0.07) per share based on weighted average shares outstanding) for the nine months ended September 30, 2017.~~

respectively.

Net Realized Gains/Losses from Investments

We measure realized gains or losses by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized.

For the three ~~and nine~~ months ended ~~September 30,~~December 31, 2019 and 2018, respectively, we ~~sold~~received proceeds from sales and repayments on unaffiliated investments of $1,652,836 and ~~received principal payments of $1,069,852 and $2,928,272,~~$1,773,964, from which we realized a net ~~gain~~losses of ~~$3,740~~$(431,439) and ~~$32,960, respectively.~~$(40,098). For the ~~three and nine~~

six months ended ~~September 30, 2017,~~December 31, 2019 and 2018, respectively, we ~~sold~~received proceeds from sales and repayments on unaffiliated investments of $3,275,274 and ~~received principal payments of $1,313,279 and $3,926,031,~~$2,068,610, from which we realized a net ~~gain~~losses of ~~$31,093~~$(695,468) and ~~$95,657, respectively.~~

$(45,453).

Net Unrealized ~~Appreciation/Depreciation~~Gains/Losses on Investments

Net change in unrealized ~~appreciation~~gains (losses) on investments reflects the net change in the fair value of our investment portfolio. For the three ~~and nine~~ months ended ~~September 30,~~December 31, 2019 and 2018, respectively, net ~~changes in~~ unrealized ~~appreciation were ($14,389)~~losses totaled $84,194 and ~~($86,445)~~$(807,829), respectively. For the ~~three and nine~~six months ended ~~September 30, 2017,~~December 31, 2019 and 2018, respectively, net ~~changes in~~ unrealized ~~appreciation were ($131,397)~~losses totaled $(396,598) and ~~($1,450,025)~~$(945,059), respectively.

On June 30, 2017, we made the decision to fully mark down its remaining investment value in Javlin Financial as an unrealized loss. The decision was due to performance issues within Javlin Financial’s core business and a breakdown in restructuring negotiations between the Company, its lenders, and Javlin Financial’s controlling shareholder. It is unknown at this time if there will be any value to the investment.

~~Changes in Net Assets from Operations~~

For the three and nine months ended September 30, 2018, we recorded a net income of ($129,509) and ($335,058), respectively versus net income of ($161,230) and ($1,436,004), respectively, for the three and nine months ended September 30, 2017.

Based on 1,544,718 and 1,500,612 weighted average common shares outstanding for the three and nine months ended September 30, 2018, basic and diluted, our per share net increase in net assets resulting from operations was ($0.08) and ($0.22).

Based on 1,266,225 and 1,143,880 weighted average common shares outstanding for the three and nine months ended September 30, 2017, basic and diluted, our per share net increase in net assets resulting from operations was ($0.13) and ($1.26).

Financial Condition, Liquidity and Capital Resources

Our distributions previously were paid quarterly in arrears. On January 15, 2015, our Board declared a quarterly cash distribution for the fourth quarter of 2014 of $0.07545 per share payable on January 30, 2015, to shareholders of record as of January 20, 2015. In addition, on April 2, 2015, our Board declared a cash distribution for the first quarter of 2015 of $0.116 per share payable on April 13, 2015, to shareholders of record as of April 6, 2015. Commencing in April 2015, and subject to our board of directors’ discretion and applicable legal restrictions, our board of directors began to authorize and declare a monthly distribution amount per share of our common stock, payable in advance. We then calculate each stockholder’s specific distribution amount for the month using record and declaration dates, and distributions will begin to accrue on the date we accept subscriptions for shares of our common stock. No distributions were declared for the years before 2015.

~~reimbursements from the Adviser. The Company has not established limits on the amount of funds it may use from available sources to make distributions.~~

~~The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common stock during the nine months ended September 30, 2018 and September 30, 2017:~~

transactions. If the Company’s stockholders approve such proposal, the 150% minimum asset coverage ratio will then apply effective as of the first day after stockholder approval. As a result, the Company will be permitted to incur double the maximum amount of leverage that the Company is able to incur significantly earlier than if the Company’s stockholders do not vote to approve such proposal.

We have adopted ASC Topic 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

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

Level ~~1: Quoted~~1. Unadjusted quoted prices in active markets for identical assets or liabilities ~~accessible by~~that we have the ~~company~~ability to access at the measurement date.

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

We have incurred certain expenses in connection with the registration of shares of our common stock for sale as discussed in Note 2 of our financial statements– Description of Business and Summary of Significant Accounting Policies. These costs principally relate to professional fees, fees paid to the SEC and fees paid to the Financial Industry Regulatory Authority. These costs were included in deferred offering costs in the accompanying balance sheets. Simultaneous with the sale of common shares, the deferred offering costs will be reclassified to stockholders’ equity upon the issuance of shares.

	September 30,
	2018			December 31,
	(unaudited)			2017
ASSETS

Affiliate Investments, at fair value (amortized cost - $1,916,389 and $1,916,389, respectively)	$	501,742		$	537,903
Non-affiliate Investments, at fair value (amortized cost - $13,189,371 and $11,633,659, respectively)		13,003,062			11,497,635
Cash		4,921,673			5,648,505
Principal and interest receivable		25,410			41,027
Prepaid expenses		10,697			48,091
Reimbursement due from Adviser (see Note 4)		-			257,628
Due from affiliates		886			-
Deferred offering costs		205,174			84,070

TOTAL ASSETS	$	18,668,644		$	18,114,859

LIABILITIES AND NET ASSETS

LIABILITIES
Payable for investments purchased	$	495,000		$	990,000
Accounts payable and accrued liabilities		129,510			249,910
Due to related parties (see Note 4)		119,980			25,712
TOTAL LIABILITIES		744,490			1,265,622

COMMITMENTS AND CONTINGENCIES (see Note 9)

NET ASSETS
Common stock, $0.001 par value, 75,000,000 shares authorized, 1,573,804.22 and 1,417,233.32 shares issued and outstanding respectively		1,571			1,417
Capital in excess of par value		20,899,977			19,033,890
Accumulated undistributed net realized gains		37,415			65,363
Accumulated overdistributed net investment income		(1,413,853	)		(736,923	)
Accumulated unrealized depreciation on investments		(1,600,956	)		(1,514,510	)
TOTAL NET ASSETS		17,924,154			16,849,237

TOTAL LIABILITIES AND NET ASSETS	$	18,668,644		$	18,114,859

Net asset value per share of common stock at period end	$	11.39		$	11.89


	Three months ended						Nine months ended
	September 30,						September 30,
	2018			2017			2018			2017
INVESTMENT INCOME
Interest from affiliate investments	$	-		$	-		$	-		$	19,488
Interest from non-control/ non-affiliate investments		302,265			198,075			849,536			536,481
Fee income from non-control/ non-affiliate investments		277			29,413			7,502			40,697

Total investment income		302,542			227,488			857,038			596,666

OPERATING EXPENSES
Management fees		91,593			83,459			269,189			246,154
Capital gains incentive fees (see Notes 2 and 4)		-			-			-			(334	)
Administrator expense		66,558			70,495			215,786			213,473
Professional fees		134,179			99,062			368,899			214,914
Insurance expense		17,791			17,779			57,317			57,251
Offering expense		83,942			-			170,932			-
Other operating expenses		27,339			13,095			56,487			23,168

Total operating expenses		421,402			283,890			1,138,610			754,626

Expense reimbursement from Sponsor		-			-			-			(80,847	)

Net operating expenses		421,402			283,890			1,138,610			673,779

Net investment income/ (loss)		(118,860	)		(56,402	)		(281,572	)		(77,113	)

REALIZED AND UNREALIZED GAIN/(LOSS)
Net realized gain on non-affiliated investments		3,740			26,569			32,960			91,134
Net decrease in unrealized appreciation on affiliate investments		(782	)		(88,923	)		(36,161	)		(1,350,763	)
Net decrease in unrealized appreciation on non-control/ non-affiliate investments		(13,607	)		(42,474	)		(50,285	)		(99,262	)

Total net realized and unrealized loss on investments		(10,649	)		(104,828	)		(53,486	)		(1,358,891	)

NET DECREASE IN NET ASSETS FROM OPERATIONS	$	(129,509	)	$	(161,230	)	$	(335,058	)	$	(1,436,004	)

PER SHARE INFORMATION - Basic and Diluted
Net decrease in net assets from operations per share	$	(0.08	)	$	(0.13	)	$	(0.22	)	$	(1.26	)

Weighted average common shares outstanding - basic and diluted		1,544,718			1,266,225			1,500,612			1,143,880



	Common Stock
Three Months Ended December 31, 2019	Shares		Par			Paid-in Capital in Excess of Par⁽¹⁾			Distributable Earnings (Loss)⁽¹⁾			Total Net Assets
Balance as of September 30, 2019	2,392,140		$	2,392		$	29,817,083		$	(7,172,462	)	$	22,647,013
Net decrease in net assets resulting from operations
Net investment income	—		—			—			50,584			50,584
Net realized (losses) on investments	—		—			—			(431,439		)	(431,439		)
Net change in unrealized gains (losses) on investments	—		—			—			84,194			84,194
Distributions to Shareholders (Note 5)
Return of capital distributions -FLEX Class A common shares	—		—			(404,093		)	—			(404,093		)
Capital Transactions
Shares issued through reinvestment of dividends	19,813		20			211,979			—			211,999
Repurchase of common shares	(86,204	)	(86		)	(786,962		)	—			(787,048		)
Tax Reclassification of Net Assets (Note 6)						(1,348,284		)	1,348,284			—
Total Increase (Decrease) for the three months ended December 31, 2019	(66,391	)	(66		)	(2,327,360		)	1,051,623			(1,275,803		)
Balance as of December 31, 2019	2,325,749		$	2,326		$	27,489,723		$	(6,120,839	)	$	21,371,210

(1) See Note 6 - Income Taxes.

Portfolio Company	Footnotes	Industry	Rate (b)	Floor		Maturity	Principal Amount/ Number of Shares		Amortized Cost^(f)		Fair Value^(c)
Senior Secured Loans—First Lien—44.55%
LSF9 Atlantis Holdings, LLC		Telecommunications	L+6.00% (8.12%)	2.12	%	5/1/2023	$	484,375	$	480,491	$	469,238
California Pizza Kitchen, Inc.		Beverage, Food & Tobacco	L+6.00% (8.39%)	2.39	%	8/19/2022		343,000		340,751		334,425
CareerBuilder		Business Services	L+6.75% (9.14%)	2.39	%	7/27/2023		369,112		357,002		369,804
Coronado Curragh LLC - Term Loan B		Metals & Mining	L+6.50% (8.89%)	2.39	%	3/29/2025		345,543		334,639		349,862
Coronado Curragh LLC - Term Loan C		Metals & Mining	L+6.50% (8.89%)	2.39	%	3/21/2025		94,475		92,018		95,656
Deluxe Entertainment Services Group, Inc.		Media: Diversified and Production	L+5.50% (7.84%)	2.34	%	2/28/2020		333,512		329,039		306,831
Flavors Holdings, Inc. Tranche B		Beverage, Food & Tobacco	L+5.75% (8.14%)	2.39	%	4/3/2020		98,839		97,511		92,415
GK Holdings, Inc.		Business Services	L+6.00% (8.39%)	2.39	%	1/20/2021		120,313		119,976		112,191
GoWireless Holdings, Inc.		Consumer Services	L+6.50% (8.74%)	2.24	%	12/20/2024		481,250		476,768		471,625
InfoGroup Inc.		Business Services	L+5.00% (7.39%)	2.39	%	3/28/2023		492,500		488,744		492,091
Isagenix International LLC		Healthcare & Pharmaceuticals	L+5.75% (8.14%)	2.39	%	4/25/2025		493,750		489,056		494,984
McAfee LLC		Business Services	L+4.50% (6.74%)	2.24	%	9/27/2024		247,500		245,353		249,843
Moran Foods, LLC		Beverage, Food & Tobacco	L+6.00% (8.24%)	2.24	%	12/5/2023		343,875		336,121		250,169
Prospect Medical Holdings, Inc.		Healthcare & Pharmaceuticals	L+5.50% (7.63%)	2.13	%	2/22/2024		497,500		488,527		505,584
Quidditch Acquisition, Inc.		Beverage, Food & Tobacco	L+7.00% (9.17%)	2.17	%	3/14/2025		497,500		488,237		506,206
Raley’s		Beverage, Food & Tobacco	L+5.25% (7.49%)	2.24	%	5/18/2022		187,277		187,277		188,447
Sahara Parent Inc		Business Services	L+5.00% (7.26%)	2.26	%	8/16/2024		346,500		343,533		347,713
Strike, LLC		Energy: Oil & Gas	L+8.00% (10.59%)	2.59	%	11/30/2022		319,375		312,126		324,166
Travel Leaders Group, LLC		Hotel, Gaming & Leisure	L+4.00% (6.16%)	2.16	%	1/25/2024		498,750		497,795		505,296
TruGreen Limited Partnership		Consumer Services	L+4.00% (6.13%)	2.13	%	4/13/2023		343,035		339,583		347,109
Verdesian Life Sciences LLC		Wholesale Trade-Nondurable Goods	L+5.00% (7.34%)	2.34	%	7/1/2020		199,417		198,695		190,443
Wirepath LLC		Consumer Services	L+4.50% (6.74%)	2.24	%	8/5/2024		495,009		492,873		497,793
Yak Access LLC		Construction & Building	L+5.00% (7.14%)	2.14	%	6/29/2025		500,000		485,424		483,750
Total Senior Secured Loans—First Lien							$	8,132,407	$	8,021,538	$	7,985,641

Senior Secured Loans—Second Lien—27.99%
DG Investment Intermediate Holdings 2 Inc.		Business Services	L+6.75% (8.99%)	2.24	%	2/1/2026		500,000		497,706		504,375
Encino Acquisition Partners Holdings, LLC		Energy: Oil & Gas	L+6.75% (7.75%)	1.00	%	9/26/2025		500,000		495,000		502,500
Flavors Holdings, Inc.		Beverage, Food & Tobacco	L+10.00% (12.39%)	2.39	%	10/7/2021		125,000		122,885		109,375
FullBeauty Brands Holding		High Tech Industries	L+9.00% (11.34%)	2.34	%	10/13/2023		250,000		219,377		22,000
GK Holdings, Inc.		Business Services	L+10.25% (12.64%)	2.39	%	1/21/2022		125,000		123,830		104,063
Inmar		Business Services	L+8.00% (10.24%)	2.24	%	5/1/2025		500,000		493,807		502,500
McAfee LLC		Business Services	L+8.50% (10.74%)	2.24	%	9/26/2025		500,000		497,338		511,250
Neustar, Inc.		High Tech Industries	L+8.00% (10.24%)	2.24	%	2/28/2025		749,792		740,292		746,043
NPC International, Inc.		Beverage, Food & Tobacco	L+7.50% (9.58%)	2.08	%	3/28/2025		500,000		498,846		506,250
Oxbow Carbon LLC		Metals & Mining	L+7.50% (9.74%)	2.24	%	1/4/2024		500,000		495,575		512,500
Patriot Container Corp.		Environmental	L+7.75% (9.96%)	2.21	%	3/16/2026		500,000		490,680		490,000
Rocket Software, Inc.		Business Services	L+9.50% (11.89%)	2.39	%	10/14/2024		500,000		492,497		506,565
Total Senior Secured Loans—Second Lien							$	5,249,792	$	5,167,833	$	5,017,421

					Nine months ended September 30, 2018
Non-controlled, Affiliated Investments	Number of Shares		Fair Value at December 31, 2017		Gross Additions (Cost)*		Gross Reductions (Cost)**		Unrealized Change in FMV			Fair Value at September 30, 2018		Net Realized Gain (Loss)		Interest & Dividends Credited to Income
ACON IWP Investors I, L.L.C.		500,000	$	537,903	$	-	$	-	$	(36,161	)	$	501,742	$	-	$	-
Javlin Capital, LLC, Convertible Note		666,389		-		-		-		-			-		-		-
Javlin Capital, LLC, C-2 Preferred Units		214,286		-		-		-		-			-		-		-
Total			$	537,903	$	-	$	-	$	(36,161	)	$	501,742	$	-	$	-

			Year Ended December 31, 2017
Non-controlled, Affiliated Investments	Fair Value at December 31, 2016		Gross Additions (Cost)*		Gross Reductions (Cost)**		Fair Value at December 31, 2017		Net Realized Gain (Loss)		Interest & Dividends Credited to Income
ACON IWP Investors I, L.L.C.	$	691,072	$	-	$	-	$	537,903	$	-	$	-
Javlin Capital, LLC, Convertible Note		646,901		19,488		-		-		-		19,488
Javlin Capital, LLC, C-2 Preferred Units		537,229		-		-		-		-		-
Total	$	1,875,202	$	19,488	$	-	$	537,903	$	-	$	19,488



Non-controlled, Affiliated Investments	Number of Shares	Fair Value at March 31, 2019		Gross Additions (Cost)*		Gross Reductions (Cost)**		Unrealized Change in FMV		Net Realized Gain (Loss)		Fair Value at June 30, 2019		Interest & Dividends Credited to Income
ACON IWP Investors I, L.L.C.	472,357	$	507,988	$	—	$	—	$	62,828	—		$	570,816	$	—
Total		$	507,988	$	—	$	—	$	62,828	$	—	$	570,816	$	—

	Nine months ended September 30,
	2018			2017
	Shares	Amount		Shares	Amount
Gross proceeds from Offering	141,332.86	$	1,865,205	362,028.61	$	5,320,227
Reinvestment of Distributions	21,626.05		256,864	16,105.02		214,336
Commissions and Dealer Manager Fees	-		(178,471)	-		(502,640)
Net Proceeds to Company from Share Transactions	162,958.91	$	1,943,598	378,133.63	$	5,031,923

For the Nine Months Ended		Repurchase Date	Shares Repurchased	Percentage of Shares Tendered That Were Repurchased	Average Price Paid Per Share		Aggregate Consideration for Repurchased Shares
Fiscal 2018
	March 31, 2018	March 28, 2018	6,388.01	11%	$	12.11	$	77,359
Fiscal 2017
	March 31, 2017	January 20, 2017	8,482.60	27%		13.87		117,654
	June 30, 2017	May 12, 2017	1,936.81	6%		13.55		26,244
	September 30, 2017	September 25, 2017	5,968.22	9%		12.30		73,409

			Three months ended September 30,				Nine months ended September 30,
Related Party	Source Agreement	Description	2018		2017		2018		2017
Triton Pacific Adviser, LLC	Investment Adviser Agreement	Base Management Fees	$	91,593	$	83,459	$	269,189	$	246,154
Triton Pacific Adviser, LLC	Investment Adviser Agreement	Capital Gains Incentive Fees⁽¹⁾	$	-	$	-	$	-	$	(334	)
TFA Associates, LLC	Administration Agreement	Administrative Services Expenses	$	66,558	$	70,495	$	215,786	$	213,473
Triton Pacific Securities, LLC	Dealer Manager Agreement	Dealer Manager Fees⁽²⁾	$	11,427	$	37,201	$	34,809	$	97,435

	September 30,
	2018
Management fees payable	$	91,593
Dealer manager fees payable		5,610
Other amounts due to affiliates		22,777
Total due to affiliates	$	119,980

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

	Distribution
For the Nine Months Ended	Per Share		Amount
Fiscal 2018
January 29, 2018	$	0.03370	$	47,908
February 28, 2018	$	0.03370	$	49,067
March 28, 2018	$	0.03370	$	49,752
April 26, 2018	$	0.03370	$	50,700
May 29, 2018	$	0.03370	$	51,014
June 27, 2018	$	0.03370	$	51,096
July 27, 2018	$	0.03370	$	51,473
August 27, 2018	$	0.03370	$	52,453
September 25, 2018	$	0.03370	$	52,802

Fiscal 2017
January 27, 2017	$	0.04000	$	39,407
February 24, 2017	$	0.04000	$	41,323
March 23, 2017	$	0.04000	$	42,513
April 27, 2017	$	0.04000	$	44,526
May 25, 2017	$	0.04000	$	46,364
June 23, 2017	$	0.04000	$	47,861
July 21, 2017	$	0.04000	$	48,678
August 29, 2017	$	0.03417	$	44,767
September 28, 2017	$	0.03417	$	45,500

	September 30, 2018 (Unaudited)					December 31, 2017
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Beverage, Food & Tobacco		1,987,287		14.7	%		1,618,327		13.4	%
Business Services		3,700,395		27.5	%		4,325,419		35.8	%
Construction & Building		483,750		3.6	%		-		0.0	%
Consumer Services		1,316,527		9.7	%		1,671,168		13.9	%
Energy: Oil & Gas		826,666		6.1	%		337,488		2.8	%
Environmental		490,000		3.6	%		-		0.0	%
Healthcare & Pharmaceuticals		1,502,310		11.1	%		734,869		6.1	%
High Tech Industries		768,043		5.7	%		833,178		6.9	%
Hotel, Gaming & Leisure		505,296		3.7	%		352,809		2.9	%
Media: Diversified and Production		306,831		2.3	%		334,586		2.8	%
Metals & Mining		958,018		7.1	%		1,143,870		9.5	%
Telecommunications		469,238		3.5	%		496,322		4.3	%
Wholesale Trade-Nondurable Goods		190,443		1.4	%		187,502		1.6	%
Total	$	13,504,804		100.0	%	$	12,035,538		100.00	%

Valuation Inputs	Nine months ended September 30, 2018 (Unaudited)		Year ended December 31, 2017
Level 1—Price quotations in active markets	$	-	$	-
Level 2—Significant other observable inputs		-		-
Level 3—Significant unobservable inputs		13,504,804		12,035,538
Total	$	13,504,804	$	12,035,538

	For the nine months ended September 30, 2018
	Senior Secured Loans - First Lien			Senior Secured Loans - Second Lien			Subordinated Convertible Debt		Equity/Other			Total
Fair value at beginning of period	$	7,690,952		$	3,806,683		$	-	$	537,903		$	12,035,538
Accretion of discount (amortization of premium)		18,119			6,654			-		-			24,773
Net realized gain (loss)		23,310			9,650			-		-			32,960
Net change in unrealized appreciation (depreciation)		(12,425	)		(37,859	)		-		(36,161	)		(86,445	)
Purchases		2,943,750			1,482,500			-		-			4,426,250
Paid-in-kind interest		-			-			-		-			-
Sales and redemptions		(2,678,064	)		(250,208	)		-		-			(2,928,272	)
Net transfers in or out of Level 3		-			-			-		-			-
Fair value at end of period	$	7,985,642		$	5,017,420		$	-	$	501,742		$	13,504,804

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(12,425	)	$	(37,859	)	$	-	$	(36,161	)	$	(86,445	)

	For the year ended December 31, 2017
	Senior Secured Loans - First Lien			Senior Secured Loans - Second Lien			Subordinated Convertible Debt			Equity/Other			Total
Fair value at beginning of period	$	6,761,313		$	1,967,658		$	646,901		$	1,228,301		$	10,604,173
Accretion of discount (amortization of premium)		21,761			10,005			-			-			31,766
Net realized gain (loss)		50,321			41,115			-			-			91,436
Net change in unrealized appreciation (depreciation)		(104,169	)		(55,220	)		(666,389	)		(690,398	)		(1,516,176	)
Purchases		4,392,250			2,720,625			-			-			7,112,875
Paid-in-kind interest		-			-			19,488			-			19,488
Sales and redemptions		(3,430,524	)		(877,500	)		-			-			(4,308,024	)
Net transfers in or out of Level 3		-			-			-			-			-
Fair value at end of period	$	7,690,952		$	3,806,683		$	-		$	537,903		$	12,035,538

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(104,169	)	$	(55,220	)	$	-		$	(690,398	)	$	(849,787	)

Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Range	Weighted Average
Senior Secured Loans - First Lien		7,985,642	Market quotes	Indicative dealer quotes	71.89 - 102.25	98.55
Senior Secured Loans - Second Lien	5,017,420		Market quotes	Indicative dealer quotes	7.10 - 103.00	99.64
Subordinated Debt		-	Distribution waterfall/ liquidation priorities	N/A	N/A	N/A
Equity/Other		-	Distribution waterfall/ liquidation priorities	N/A	N/A	N/A
Equity/Other		501,742	Market comparables	EBITDA multiples (x)	6.50x - 8.50x	7.50x
Total	$	13,504,804

	Nine Months Ended September 30, 2018 (Unaudited)			Year Ended December 31, 2017
Per Share Data:
Net asset value, beginning of period	$	11.89		$	13.55
Results of operations⁽¹⁾
Net investment income (loss)		(0.19	)		(0.16	)
Net realized and unrealized appreciation (depreciation) on investments⁽²⁾		(0.03	)		(1.12	)
Net increase (decrease) in net assets resulting from operations		(0.22	)		(1.28	)
Stockholder distributions⁽³⁾
Distributions from net investment income		(0.29	)		(0.41	)
Distributions from net realized gain on investments		(0.01	)		(0.04	)
Net decrease in net assets resulting from stockholder distributions		(0.30	)		(0.45	)
Capital share transactions
Issuance of common stock⁽⁴⁾		0.02			0.07
Net increase (decrease) in net assets resulting from capital share transactions		0.02			0.07
Net asset value, end of period	$	11.39		$	11.89
Shares outstanding, end of period		1,573,804			1,417,233
Total return⁽⁵⁾		-1.7	%		-8.9	%
Ratio/Supplemental Data:
Net assets, end of period	$	17,924,154		$	16,849,237
Ratio of net investment income to average net assets		-1.6	%		-1.3	%
Ratio of total operating expenses to average net assets		6.5	%		7.3	%
Ratio of expenses reimbursed by sponsor to average net assets		0.0	%		0.5	%
Ratio of expense recoupment payable to sponsor to average net assets		0.0	%		0.0	%
Ratio of capital gain incentive fee to average net assets		0.0	%		0.0	%
Ratio of net operating expenses to average net assets		6.5	%		6.7	%
Portfolio turnover⁽⁶⁾		16.8	%		28.6	%

Net Investment Activity	Nine months ended September 30, 2018			Year ended December 31, 2017
Purchases	$	4,426,250		$	7,112,875
Sales and Redemptions		(2,928,272	)		(4,308,024	)
Net Portfolio Activity	$	1,497,978		$	2,804,851

	September 30, 2018					December 31, 2017
Investment Rating	Fair Value		Percentage			Fair Value		Percentage
1	$	188,447		1.4	%	$	-		0.0	%
2		695,361		5.3	%		486,150		4.2	%
3		2,005,301		15.4	%		4,067,859		35.4	%
4		3,309,314		25.5	%		2,975,871		25.9	%
5		5,923,983		45.6	%		3,508,571		30.5	%
6		858,656		6.6	%		459,184		4.0	%
7		22,000		0.2	%		-		0.0	%
8		-		0.0	%		-		0.0	%
	$	13,003,062		100.0	%	$	11,497,635		100.0	%

	Three months ended September 30, 2018		Three months ended September 30, 2017		Nine months ended September 30, 2018		Nine months ended September 30, 2017
Licenses and permits	$	-	$	-	$	623	$	413
Outside Services		1,763		9,753		1,859		9,753
Printing fees		9,841		2,408		20,356		8,560
Travel expenses		14,685		-		25,774		1,056
Other		1,050		934		7,875		3,386
Total	$	27,339	$	13,095	$	56,487	$	23,168

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

~~LIBOR Basis Point Change~~	~~Percentage~~ ~~Change in Net~~ ~~Interest Income~~
~~Down 25 basis points~~		~~-2.86~~	%
~~Current LIBOR~~		~~0.00~~	%
~~Up 100 basis points~~		~~27.36~~	%
~~Up 200 basis points~~		~~38.78~~	%
~~Up 300 basis points~~		~~50.20~~	%



LIBOR Basis Point Change	Interest Income			Interest Expense			Net Investment Income
Up 300 basis points	$	997,032		$	630,000		$	367,032
Up 200 basis points	$	664,688		$	420,000		$	244,688
Up 100 basis points	$	332,344		$	210,000		$	122,344
Down 100 basis points	$	(295,608	)	$	(210,000	)	$	(85,608	)
Down 200 basis points	$	(391,159	)	$	—		$	(391,159	)
Down 300 basis points	$	(393,398	)	$	—		$	(393,398	)

~~Number~~		~~Description~~
31.1
~~2.1~~		Agreement and Plan of Merger, dated August 10, 2018, between the Registrant and Pathway Capital Opportunity Fund, Inc. (Filed as Annex A to the Registrant’s Registration Statement on Form N-14 (SEC File No. 333-226861) filed with the SEC on August 13, 2018)
~~31.1~~		Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *


31.2		Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *


32.1		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 *


32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *


(1)	Incorporated by reference to Exhibit 2(a) to the Post-Effective Amendment No. 7 to the Registrant’s Registration Statement on Form N-2 (SEC File No. 333-174873) filed with the SEC on November 1, 2013.

Title of each class

Trading Symbol(s)

Name of each exchange on which registered