Current Status of our investments. Immediately after we satisfyInvestments

 Orchestra BioMed Inc. (“Orchestra”)

On May 10, 2018, the Minimum Offering Requirement, gross subscription funds will totalCompany purchased its initial investment of 220,000 shares of preferred stock series B of Orchestra at $5.00 per share price. The shares are convertible into common stock at any time on a 1-for-1 exchange, are eligible for a future 2-for -1 exchange pending 100% participation in a follow-on offering, automatically convert into common stock upon a firm commitment underwritten public offering of at least $1,100,000. Subsequent$16,000,000, can vote alongside common holders on an as-converted basis, have registration rights, no redemption right, has piggyback registration right, and do not pay a dividend. Upon any liquidation, dissolution or winding up of the Company, the holders of Series B Preferred shall be entitled to satisfyingreceive, in preference to the Minimum Offering Requirement,shares of common stock or other junior securities of the Company, the stated value of $5.00 per share of Series B Preferred, and thereafter shall participate on an as converted basis prorate with the holders of common stock in any further distributions. In March 2019, Orchestra announced 1-for-2 reverse split, as a result, 220,000 shares of the preferred stock we will sell ourcurrently hold is convertible into 110,000 shares of common stock.

On April 3, 2019, the Company purchased 60,000 Series B-1 Preferred shares of Orchestra Biomed (OBIO) at $15.00 per share. The shares are convertible into common stock at any time on a continuous1-for-1 exchange, are eligible for a future 2-for-1 exchange pending 100% participation in a follow-on offering, automatically convert into common stock upon a firm-commitment underwritten public offering of at least $16,000,000, can vote alongside common holders on an as-converted basis, no redemption right, has piggyback registration rights and do not pay a dividend. Upon any liquidation, dissolution or winding-up of the Company, the holders of Series B-1 Preferred shall be entitled to receive, in preference to the shares of common stock or other junior securities of the Company, the stated value of $15.00 per share of Series B-1 Preferred, and thereafter shall participate on an as- converted basis pro-rata with the holders of Common Stock in any further distributions.

On April 3, 2019, the Company revalued the shares of preferred stock series B it holds at an initial offeringequivalence of 110,000 shares of common stock of $15.00 per as-converted basis, and recorded a $550,000 increase in value as gain on asset valuation.

The Company determined that no value changes since April 3, 2019 till September 30, 2020.

AzurRx BioPharma Inc.

In July 2019, the Company purchased 1,000,000 shares of common stock of AZURRX Biopharma, Inc. (NASDAQ: AZRX). During the nine months ended September 30, 2020, the Company sold all common shares for $607,161, recorded an unrealized loss of $40,000, and realized a loss of $392,839.

On January 9, 2020 the Company purchased from AZRX a convertible note in the amount of $500,000 which is convertible into 515,464 shares of AZRX common stock. The convertible notes mature on September 20, 2020 and accrue interest at a rate of 9% per annum. The $500,000 notional amount of convertible note come with warrants to purchase an additional 257,732 shares of AZRX common stock, equal to 50% of the shares underlying the convertible note. The warrant expiry is December 20, 2024. Each note is convertible, at the option of the holder, into shares of the Company’s common stock at a price of $10.00$0.97 per share, and thereafter will accept subscriptionsthe warrants have an exercise price of $1.07 per share.

The convertible note is classified available for sale according to ASC 320 Investments—Debt and Equity Securities. At the time of purchase, the fair value of the convertible note was determined to be $330,714 using allocation of proceeds and the beneficial conversion feature were determined to be $231,959, and prior to the exchange, the fair value of the convertible note was determined to be $500,000 including beneficial conversion of $0. The fair value of warrants was determined to be $169,286 using Black-Scholes method on the date of purchase. On September 30, 2020, the fair value of the note and warrants was $0 and $97,195, respectively. During the nine months ended September 30, 2020, the unrealized loss on these securities was $72,091 and the realized gain was $169,286.

On July 16, 2020, the Company entered into a continuous basisprivate placement offering with AZRX whereby the Company exchanged the convertible note with a principal balance of $500,000 and issueaccrued interest of $23,178, into 67.945205 shares of Series B Convertible Preferred Stock, together with a Series B Warrants to purchase 339,726 shares of Common Stock at monthly closingsan exercise price of $0.85 per share with the exercise term of 5 years from issuance date. The Series B Convertible Preferred Stock had a par value $0.0001 per share, and is convertible into 679,452 shares of the Company’s common stock at prices that, after deducting selling commissions and dealer manager fees, must be above our net asset valueper share at $0.77 per share. In connection with each monthly closingthe Private Placement, the company also received Exchange Warrant to purchase 128,886 shares of Common Stock at an exercise price of $0.85 per share with the exercise term of 5 years from issuance date.

On the date of exchange the fair value of the 67.945205 shares of Series B Convertible Preferred Stock and Series B Warrants was determined to be $523,178 using fair market value, and the fair value on these as of September 30, 2020 was $523,178. During the nine months ended September 30, 2020, There was no realized gain or loss recorded associated with the exchanged convertible note, and no unrealized gain or loss recorded on these Series B Convertible Preferred Stock and Series B Warrants.

Also, on the sale of shares in our Offering, our board of directors or a committee thereof is required, within 48 hoursdate of the timeexchange the Exchange Warrant was valued at $70,972 using the Black-Scholes method and has been recorded as a realized gain during the quarter ended September 30, 2020, and the fair value was $55,598 as of September 30, 2020. During the nine months ended September 30, 2020, the unrealized loss on these was $15,374.

During the nine months ended September 30, 2020, the Company recorded an aggregate realized gain of $240,258 associated with the note and Exchange Warrants, and recorded a total unrealized loss from these securities in the amount of $87,465. During the nine months ended September 30, 2020, interest income was $23,178.

Naha Health LLC

In May 2020, the Company purchased from Naha Health LLC a convertible promissory note in the amount of $200,000 at a conversion price of $41.67 per Common Membership Interest. The fair value of the conversion feature was not determinable, since Naha Health LLC is a private company. The convertible note matures on the fourth anniversary and accrues interest at a rate of 6% per annum. The note is recorded at cost of $200,000 at purchase date. The Company determined that each closingthe fair value of the note did not change from purchase date to September 30, 2020. During the nine months ended September 30, 2020, interest income was $4,932 under this note.

During the nine months ended September 30, 2020, the Company entered into two amendments with Naha Health LLC, in which the Company is planning to fund an additional $200,000 by November 30, 2020.

Other Trading Securities

Investments in other trading securities at fair value consisted of the following at September 30, 2020 and sale is made,the unrealized gain and loss during the nine months ended September 30, 2020:

The Company realized a net gain of $69,922 from other trading securities sold during the nine months ended September 30, 2020, which was recorded in net realized gain or loss under other comprehensive income.

Note 8. Subsequent Events

Conversion of AzurRx BioPharma Inc. Series B Convertible Preferred Stock

Subsequent to make the determination that we are not sellingperiod ended September 30, 2020 the Company elected to convert 67.945205 shares of ourAZRX Series B Convertible Preferred Stock into 679,452 shares of AZRX common stock, at a price per share which, after deducting selling commissionsalong with additional common shares related to accrued and dealer manager fees, is below our then-current net asset value per share.

Priorunpaid dividends earned to investing in securitiesand including the date of portfolio companies, we will invest the net proceeds from our Offering and from any sales and paydowns of investments primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our intention to be taxed as a RIC.conversion.

We intend to borrow funds to make investments, including before we have fully invested the proceeds from our Offering, to the extent we determine that additional capital would allow us to take advantageItem 2. Management’s Discussion and Analysis of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our boardFinancial Condition and Results of directors determines that leveraging our portfolio would be in our best interests and the best interests of our stockholders. However, we have not currently decided whether, and to what extent, we will finance portfolio investments using debt. We do not currently anticipate issuing any preferred stock.Operations

RIC StatusThe following discussion and Distributions

We intend to elect to be treated for federal income tax purposes, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. In order to qualify as a RIC, we must, among other things, distribute at least 90% of our “investment company taxable income,” as defined by the Code, each year. As long as the distributions are declared by the later of the fifteenth day of the ninth month following the close of the taxable year or the due date of the tax return, including extensions, distributions paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC status each year. We are also subject to nondeductible federal excise taxes if we do not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed income from prior years on which we paid no federal income taxes.

Subject to our board of directors’ discretion and applicable legal restrictions, we intend to authorize and declare ordinary cash distributions on a monthly or quarterly basis and pay such distributions on a monthly or quarterly basis beginning no later than the first calendar quarter after the month in which the Minimum Offering Requirement is met. We will then calculate each stockholder’s specific distribution amount for the period using record and declaration dates and each stockholder’s distributions will begin to accrue on the date we accept each stockholder’s subscription for shares of our common stock. From time to time, we may also pay special interim distributions in the form of cash or common stock at the discretion of our board of directors. During certain periods, our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our Offering. As a result, it is possible that a portion of the distributions we make will represent a return of capital for tax purposes. A return of capital generally is a return of an investor’s investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with our Offering, including any fees payable to Freedom Capital Investment Advisors. Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our stockholders.

We intend to make our ordinary distributions in the form of cash out of assets legally available for distribution, unless stockholders elect to receive their distributions in additional shares of our common stock under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. stockholder.

We have adopted an “opt in” distribution reinvestment plan for our stockholders. As a result, if we make a cash distribution, our stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of our common stock. 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 our distribution reinvestment plan.

We may fund our cash distributions to stockholders from any sources of funds legally available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and expense reimbursements from Freedom Capital Investment Advisors. We have not established limits on the amount of funds we may use from available sources to make distributions.

Pursuant to the Amended and Restated Expense Support and Conditional Reimbursement Agreement (the “Expense Reimbursement Agreement”), Freedom Capital Investment Advisors has agreed to reimburse us for expenses in an amount that is sufficient to ensure that (i) no portion of our distributions to stockholders will be paid from our offering proceeds or borrowings and/or (ii) to reduce our operating expenses until we have achieved economies of scale sufficient to ensure that we bear a reasonable level of expenses in relation to our investment income. However, because certain investments we make, including preferred and common equity investments, may generate distributions to us that are treated for tax purposes as a return of capital, a portion of these distributions to stockholders may exceed our earnings and also be deemed to constitute a return of capital for tax purposes. Under those circumstances, Freedom Capital Investment Advisors will not reimburse us for the portion of such distributions to stockholders that represent a return of capital for tax purposes, as the purpose of the Expense Reimbursement Agreement is not to prevent tax-advantaged distributions to stockholders.

We expect that for a period of time following commencement of the Offering, which time period may be significant, substantial portions of our distributions may be funded through the reimbursement of certain expenses by Freedom Capital Investment Advisors and its affiliates, including through the waiver of certain investment advisory fees by Freedom Capital Investment Advisors, that may be subject to repayment by us within three years. One of the purposes of the Expense Reimbursement Agreement is to ensure that no portion of our distributions to stockholders will be paid from offering proceeds or borrowings. Any such distributions funded through expense reimbursements or waivers of advisory fees will not be based on our investment performance, and can only be sustained if we achieve positive investment performance in future periods and/or Freedom Capital Investment Advisors continues to make such reimbursements or waivers of such fees. Our future repayments of amounts reimbursed or waived by Freedom Capital Investment Advisors or its affiliates will reduce the distributions that you would otherwise receive in the future. There can be no assurance that we will achieve the performance necessary to be able to pay distributions at a specific rate or at all. Freedom Capital Investment Advisors and its affiliates have no obligation to waive advisory fees or otherwise reimburse expenses in future periods.

The determination of the tax attributes of our distributions will be made annually as of the end of each fiscal year based upon our taxable income for the full year and distributions paid for the full year. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.

Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management will make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management also will utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparabilityanalysis of our results of operations to those of companiesand financial condition for the quarters ended September 30,2020 and 2019 should be read in similar businesses. As we executeconjunction with our expected operating plans, we will describe additional critical accounting policies infinancial statements and the notes to our futurethose financial statements that are included elsewhere in addition tothis Quarterly Report. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those discussed below.we currently anticipate as a result of many factors, including those we describe under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the period ended December 31, 2019, as filed with the SEC on March 30, 2020. See “Special Note Regarding Forward Looking Statements.”

ValuationResults of Portfolio InvestmentsOperations

We intendThree months Ended September 30, 2020 Compared to determineThree months Ended September 30, 2019

Interest Income

Our interest income for the three months ended September 30, 2020 was $4,977, compared to $3,216 for the three months ended September 30, 2019.

General and Administrative

Our general and administrative expenses for the three months ended September 30, 2020 were $59,929, a decrease of $11,542 or 16% as compared to $71,471 for the three months ended September 30, 2019. The decrease in general and administrative expenses was primarily due to decrease in marketing expense. During the three months ended September 30, 2020, $25,822 was paid to a related party for administrative costs, compared to $31,925 for the three months ended September 30, 2019 (see note 5).

Management fee – related party

Our related party management fees for the three months ended September 30, 2020 were $21,376, compared to $16,750 for the three months ended September 30, 2019 (see Note 4).

Professional Fees

Our professional fees for the three months ended September 30, 2020 were $254,848, a decrease of $7,519 or 3% as compared to $262,367 for the three months ended September 30, 2019. The decrease in professional fees was primarily due to decrease in audit, investor relations and board member fees.

Net realized and unrealized gain (loss) on investments

Our net asset valuerealized gain on investment for the three months ended September 30, 2020 was $271,722, compared to $0 for the three months ended September 30, 2019. Please refer to Note 7. Investments, for further detail.

Our net unrealized loss on investment for the three months ended September 30, 2020 was $254,599, compared to loss of $399,618 for the three months ended September 30, 2019. Please refer to Note 7. Investments, for further detail.

Net Decrease in Net Assets Resulting from Operations

As a result of the foregoing, for the three months ended September 30, 2020, we recorded a net decrease in net assets resulting from operations of $314,053 compared to a net decrease in net assets resulting from operations of $746,990 for the three months ended September 30, 2019.

Nine months Ended September 30, 2020 Compared to Nine months Ended September 30, 2019

Interest Income

Our interest income for the nine months ended September 30, 2020 was $34,964, compared to $24,879 for the nine months ended September 30, 2019.

General and Administrative

Our general and administrative expenses for the nine months ended September 30, 2020 were $200,408, an increase of $89,249 or 80% as compared to $111,159 for the nine months ended September 30, 2019. An increase in general and administrative expenses was primarily due to increase in rent expense. During the nine months ended September 30, 2020, $68,798 was paid to a related party for outside service fees, compared to $31,925 for the nine months ended September 30, 2019 (see Note 5).

Management fee – related party

Our related party management fees for the nine months ended September 30, 2020 were $59,320, compared to $37,000 for the nine months ended September 30, 2019 (see Note 4).

Professional Fees

Our professional fees for the nine months ended September 30, 2020 were $678,382, an increase of $212,490 or 46% as compared to $465,892 for the nine months ended September 30, 2019. An increase in professional fees was primarily due to increase in legal, accounting and outside services fees.

Net realized and unrealized gain (loss) on investments

Our net realized loss on investment for the nine months ended September 30, 2020 was $82,659, compared to $0 for the nine months ended September 30, 2019 (see note 7).

Our net unrealized loss on investment for the nine months ended September 30, 2020 was $193,432, compared to gain of $262,565 for the nine months ended September 30, 2019 (see note 7).

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Net Decrease in Net Assets Resulting from Operations

As a result of the foregoing, for the nine months ended September 30, 2020, we recorded a net decrease in net assets resulting from operations of $1,179,237 compared to a net decrease in net assets resulting from operations of $326,607 for the nine months ended September 30, 2019.

Liquidity and Capital Resources

Operating Activities

During the nine months ended September 30, 2020, we used $1,679,484 of cash in operating activities primarily as a result of our investment portfolio each quarter. Securities that are publicly-traded will be valued at the reported closing pricenet decrease in net assets resulting from operations of $1,179,237, loss on the valuation date. Securities that are not publicly-traded will be valued at fair value as determinedinvestments of $276,091, depreciation of $10,278 and net changes in good faith by our board of directors. In connection with that determination, we expect that Freedom Capital Investment Advisors will provide our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services.

Accounting Standards Codification Topic 820,Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the Financial Accounting Standards Board, or the FASB, clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measureoperating assets and liabilities in interimof $(786,616), including $3,918,535 paid for investments and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be receivedproceeds 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.investment of $3,175,154.

With respect toDuring the nine months ended September 30, 2019, we used $2,431,642 of cash in operating activities primarily as a result of our net decrease in net assets resulting from operations of $326,607, gain on investments of $262,183 and net changes in operating assets and liabilities of $(1,844,202), including $1,900,000 paid for which market quotations are not readily available, we intend to undertake a multi-step valuation process each quarter, as described below:

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

ValuationInvesting Activities

During the nine months ended September 30, 2020, the Company used $3,779 in investing activities for purchase of fixed income investments, such as loans and debt securities, depends upon a numberassets.

During the nine months ended September 30, 2020, the Company used $38,594 in investing activities for purchase of factors, including prevailing interest rates for like securities, expected volatilityfixed assets.

Financing Activities

During the nine months ended September 30, 2020, financing activities provided $45,000 in future interest rates, call features, put features and other relevant termsproceeds from issuance of common stock.

During the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that our boardnine months ended September 30, 2019, financing activities provided $5,070,730 in proceeds from issuance 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 our debt investments.common stock.

Going Concern

For convertible debt securities, fair valuethe nine months ended September 30, 2020, the Company incurred a net decrease in net assets resulting from operations of $1,179,237 and have an accumulated deficit of $8,345,562. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. Currently, the Company has launched a capital raising program led by a Broker Dealer acting as the Dealer Manager and arranging a syndicate of several additional Broker Dealers who will generally approximatealso sell our securities. During the fair valuenine months ended September 30, 2020, the Company issued 20,000 shares of the debt plus the fair valueits common stock and received gross proceeds of an option to purchase the underlying security (the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

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

Our board of directors may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. Our board of directors may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors it deems relevant in assessing the value. Generally, the value of our equity interests in public companies for which market quotations are readily available will be based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale will typically be valued$50,000, at a discount fromprice of $2.50 per share. There were 10% commission cost and therefore net proceeds in cash were $45,000. The accompanying financial statements do not include any adjustments that might be necessary if the public market value of the security.

If we receive warrants or other equity-linked securities at nominal or no additional cost in connection with an investment in a debt security, our board of directors will allocate the cost basis in the investment between the debt securities and any such warrants or other equity-linked securities received at the time of origination. Our board of directors will subsequently value these warrants or other equity-linked securities received at fair value.

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

We will periodically benchmark the bid and ask prices we receive from the third-party pricing services and/ or dealers, as applicable, and valuations received from the third-party valuation service against the actual prices at which we purchase and sell our investments. We believe that these prices will be reliable indicators of fair value. Our valuation committee and board of directors will review and approve the valuation determinations made with respect to these investments in a manner consistent with our valuation process.Off-Balance Sheet Transactions

Revenue RecognitionAt September 30, 2020, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

Security transactions will be accounted for on the trade date. We will record interest income on an accrual basis to the extent that we expect to collect such amounts. We will record dividend income on the ex-dividend date. We will not accrue as a receivable interest or dividends on loansItem 3. Quantitative and securities if we have reason to doubt our ability to collect such income. Loan origination fees, original issue discount and market discount will be capitalized, and we will amortize 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 will be recorded as fee income. Upfront structuring fees will be recorded as income when earned. We will record prepayment premiums on loans and securities as fee income when we receive such amounts.Qualitative Disclosure About Market Risk

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign CurrencyAs a smaller reporting company, we are not required to provide the information required by this Item 3.

Gains or losses on the sale of investments will be calculated by using the specific identification method. We will measure realized gains or losses by the difference between the net proceeds from the repayment or saleItem 4. Controls 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 will reflect 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. Net change in unrealized gains or losses on foreign currency will reflect the change in the value of receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

Organization CostsProcedures

Organization costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertaining to our organization. As of September 30, 2016, we had incurred organization costs of $46,064, which were paid on our behalf by Freedom Capital Investment Management LLC (“FCIM”). These costs are expensed as incurred but, together with offering costs, are limited to 1.5% of total proceeds raised. To the extent we are unable to raise sufficient capital such that the expenses paid by Freedom Capital Investment Advisors or its affiliates on our behalf are more than 1.5% of total proceeds at the end of the offering, Freedom Capital Investment Advisors will forfeit the right to reimbursement of these costs. To date, $1,500 of these costs have been expensed.

Offering Costs

Our offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Registration Statement relating to the Offering. Once we achieve the Minimum Offering Requirement these costs will be capitalized and amortized as an expense on a straight-line basis over a twelve month period. During the period from June 19, 2014 (Inception) to September 30, 2016, we had incurred offering costs of $1,695,109, which were paid on our behalf by FCIM. Offering costs, together with organization costs, are limited to 1.5% of total proceeds raised. To the extent we are unable to raise sufficient capital such that the expenses paid by Freedom Capital Investment Advisors or its affiliates on our behalf are more than 1.5% of total proceeds at the end of the Offering, Freedom Capital Investment Advisors will forfeit the right to reimbursement of these costs. To date, we have recorded no deferred charge on our balance sheet since the aggregate amount of organization and offering costs exceeds the limitation.

Income Taxes

We intend to elect to be treated for federal income tax purposes, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. To qualify for and maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. As a RIC, we will not have to pay corporate-level federal income taxes on any income that we distribute to our stockholders. We intend to make distributions in an amount sufficient to maintain our RIC status each year and to avoid any federal income taxes on income. We will also be subject to nondeductible federal excise taxes if we do not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed income from prior years for which we paid no federal income taxes.

Uncertainty in Income Taxes

We will evaluate our tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in our financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. We will recognize interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in our statement of operations.

Distributions

Distributions to our stockholders will be recorded as of the record date. Subject to our board of directors’ discretion and applicable legal restrictions, we intend to authorize and declare ordinary cash distributions on a monthly or quarterly basis and pay such distributions on a monthly or quarterly basis. Net realized capital gains, if any, will be distributed or deemed distributed at least annually.

Capital Gains Incentive Fee

Pursuant to the terms of the investment advisory and administrative services agreement we entered into with Freedom Capital Investment Advisors, the incentive fee on capital gains will be determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory and administrative services agreement). Such fee will equal 20.0% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, we will accrue for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

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

Contractual Obligations

We have entered into an agreement with Freedom Capital Investment Advisors to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory and administrative services agreement will be equal to (a) an annual base management fee of 2.0% of our average monthly gross assets and (b) an incentive fee based on our performance. Freedom Capital Investment Advisors will be reimbursed for administrative expenses incurred on our behalf.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Related Party Transactions

Compensation of the Investment Adviser and its Affiliates

Pursuant to the investment advisory and administrative services agreement, after we meet the Minimum Offering Requirement, Freedom Capital Investment Advisors will become entitled to receive an annual base management fee of 2.0% of our average monthly gross assets and an incentive fee based on our performance. We will commence accruing fees under the investment advisory and administrative services agreement upon commencement of our operations after we meet the Minimum Offering Requirement. Management fees will be paid on a quarterly basis in arrears.

The incentive fee will consist of two parts. The first part, which is referred to as the subordinated incentive fee on income, will be calculated and payable quarterly in arrears, will equal 20.0% of “pre-incentive fee net investment income” for the immediately preceding quarter and will be subject to a hurdle rate, expressed as a rate of return on adjusted capital, as defined in the investment advisory and administrative services agreement, equal to 1.375% per quarter, or an annualized hurdle rate of 5.5%. The second part of the incentive fee, which is referred to as the incentive fee on capital gains, will be accrued for on a quarterly basis and, if earned, will be paid annually. We will accrue this incentive fee based on net realized and unrealized gains; however, under the terms of the investment advisory and administrative services agreement, the fee payable to Freedom Capital Investment Advisors will be based on realized gains and no such fee will be payable with respect to unrealized gains unless and until such gains are actually realized. See “— Critical Accounting Policies — Capital Gains Incentive Fee.”

Pursuant to the investment advisory and administrative services agreement, Freedom Capital Investment Advisors oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations and other administrative services. Freedom Capital Investment Advisors also performs or oversees the performance of our corporate operations and required administrative services, which includes being responsible for the financial records which we are required to maintain and preparing reports for our stockholders and reports filed with the SEC. In addition, Freedom Capital Investment Advisors assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. We will reimburse Freedom Capital Investment Advisors for expenses necessary to perform services related to our administration and operations. The amount of this reimbursement will be the lesser of (1) Freedom Capital Investment Advisors’ actual costs incurred in providing such services and (2) the amount that we estimate we would be required to pay alternative service providers for comparable services in the same geographic location. Freedom Capital Investment Advisors will be required to allocate the cost of such services to us based on objective factors such as assets, revenues, time allocations and/or other reasonable metrics. Our board of directors will assess the reasonableness of such reimbursements based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of directors will consider whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of directors will compare the total amount paid to Freedom Capital Investment Advisors for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs.

FCIM, an affiliate of Freedom Capital Investment Advisors, funded offering costs and organization costs in the amount of $1,741,173. Under the terms of the investment advisory and administrative services agreement, there is no liability on our part for the offering or organization costs funded by Freedom Capital Investment Advisors or its affiliates until we have met the Minimum Offering Requirement. At such time, Freedom Capital Investment Advisors will be entitled to receive 1.5% of gross proceeds raised in the Offering until all offering costs and organization costs funded by Freedom Capital Investment Advisors or its affiliates have been recovered. The minimum reimbursement to Freedom Capital Investment Advisors for such fees is $15,000 assuming we are able to raise $1,000,000 in gross proceeds. The investment advisory and administrative services agreement will not be effective until we meet the Minimum Offering Requirement. The dealer manager for our continuous public offering is Democracy Funding LLC, which is one of our affiliates. Under the dealer manager agreement among us, Freedom Capital Investment Advisors and Democracy Funding LLC, Democracy Funding LLC will be entitled to receive selling commissions and dealer manager fees in connection with the sale of shares of common stock in the Offering, all or a portion of which may be re-allowed to selected broker-dealers.

Capital Contribution by FCIM

In December 2014, pursuant to a private placement, FCIM contributed an aggregate of $100,000, which was used in its entirety to purchase approximately 11,111.110 shares of common stock at $9.00 per share, which represents the initial public offering price of $10.00 per share, net of selling commissions and dealer manager fees. FCIM has agreed not to tender these shares for repurchase as long as it remains an affiliate of Freedom Capital Investment Advisors.

Potential Conflicts of Interest

Freedom Capital Investment Advisors’ senior management team may in the future be involved in advising future investment funds. It is possible that some investment opportunities will be provided to such potential future investment funds rather than to us.

Expense Reimbursement Agreement

Pursuant to the Expense Reimbursement Agreement, Freedom Capital Investment Advisors has agreed to reimburse us for expenses in an amount that (i) no portion of our distributions to stockholders will be paid from our offering proceeds or borrowings and/or (ii) to reduce our operating expenses until we have achieved economies of scale sufficient to ensure that we bear a reasonable level of expenses in relation to our investment income.

We will be subject to financial market risks. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates could make it easier for us to meet or exceed our incentive fee hurdle rate, as described in the investment advisory and administrative services agreement, and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to Freedom Capital Investment Advisors with respect to our increased pre-incentive fee net investment income.

In addition, in the future we may seek to borrow funds in order to make additional investments. Our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we would be subject to risks relating to changes in market interest rates. In periods of rising interest rates, when we have debt outstanding, our cost of funds would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.

We expect that our long-term investments will be financed primarily with equity and long-term debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

Evaluation of Disclosure Controls and Procedures

As requiredof the end of the period covered by Rule 13a-15(b) promulgated under the Exchange Act, we carried out an evaluation, under the supervision andthis report, management performed, with the participation of our management, including our chiefprincipal executive officer and chiefprincipal financial officer,officers, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive and principal financial officers concluded that, as of September 30, 2016.

Based on the foregoing, our chief executive officer and chief financial officer concluded that2020, our disclosure controls and procedures were not effective due to provide reasonable assurance that we would meet our disclosure obligations.a material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our 10-Q or interim financial statements will not be prevented or detected on a timely basis. We identified the following material weakness as of September 30, 2020: insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting.

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

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

Changes in Internal Control Overover Financial Reporting

There waswere no change inchanges to our internal control over financial reporting (as definedor in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act)other factors that occurredcould affect these controls during the quarternine months ended September 30, 20162020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, our management is currently seeking to improve our controls and procedures in an effort to remediate the deficiency described above. 

PART II—II – OTHER INFORMATION

Item 1.  Legal Proceedings

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise, neither we nor Freedom Capital Investment Advisors isWe are not currently a party to any pending material legal proceedings nor,that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to our knowledge, is any materialvarious claims and legal proceeding threatened against us or against Freedom Capital Investment Advisors.actions arising in the ordinary course of business from time to time.

There have been no material changes fromIn addition to the riskother information set forth in this report, you should carefully consider the factors set forthdiscussed under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2019, as filed with the SECSecurities and Exchange Commission on March 18, 2016, except for30, 2020. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the following,

We did not satisfy the original terms of the Minimum Offering Requirement, which required that we raise at least $1,000,000 in gross proceeds from the sale of sharesresults contemplated by any forward-looking statements contained in this offering in order to break escrow and commence operations by September 14, 2016. Our board of directors unanimously approved extending the time period by which we must satisfy the Minimum Offering Requirement in order to break escrow and commence operations to June 30, 2017.There can be no assurance that we will be able to raise the necessary capital to satisfy the Minimum Offering Requirement within such timeframe. Even if we satisfy the Minimum Offering Requirement within this timeframe, we will incur additional expenses that could materially impact our financial position and results of operations.report.

We did not satisfy the original termsItem 2. Recent Sales of the Minimum Offering Requirement, which required that we raise at least $1,000,000 in gross proceedsUnregistered Securities; Use of Proceeds from the sale of shares in this offering in order to break escrow and commence operations by September 14, 2016.  As of the date hereof, we have not accepted any subscriptions from investors or placed any investor funds into the escrow account we have with our escrow agent. Our sponsor is currently negotiating a term sheet with a third party that, if consummated, is expected to provide significant capital to our sponsor and our dealer manager, in exchange for ownership interests in our sponsor and dealer manager.  While the specific terms of this transaction have not been finalized, we expect that the transaction will result in additional personnel at our dealer manager as well as one or more selling agreements with selected broker-dealers to sell our shares.  There can be no assurance that the proposed transaction will be completed on terms favorable to us or at all.Registered Securities

In order to provide our sponsor with the necessary time to continue negotiations with the third party, we received unanimous approval from our board of directors to extend the time period by which we must satisfy the Minimum Offering Requirement in order to break escrow and commence operations. On September 14, 2016, our board of directors approved extending the Minimum Offering Requirement to June 30, 2017.  The other terms of the Minimum Offering Requirement have not changed.  If we do not raise at least $1,000,000 in gross proceeds from the sale of shares in this offering by June 30, 2017, we will promptly return all funds in the escrow account (including interest), and we will stop offering shares.Not applicable.

There can be no assurance that we will satisfy the Minimum Offering Requirement prior to June 30, 2017 even if the proposed transaction takes place. Even if we satisfy the Minimum Offering Requirement within this timeframe, we will incur additional expenses that could materially impact our financial position and results of operations.Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None. 

Item 6. Exhibits

None.

None.

None.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 14, 2016.authorized.

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