UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,
Washington, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED September 30, 2016

OR

☐

FOR THE TRANSITION PERIOD FROM                      TO

COMMISSION FILE NUMBER: 814-01137

Freedom Capital Corporation

STHEALTH CAPITAL INVESTMENT CORP.
(Exact name of registrant as specified in its charter)

(703) 259-8204

(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x☐    No ¨☑

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨☑     No ¨☐

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨☐ No x☑

IndicateAs of November 15, 2021, the numberCompany had 4,304,191 shares of shares outstanding of each of the issuer’s classes ofits common stock, as of the latest practicable date.

There were 11,111 shares of the registrant’s common stock outstanding as of November 14, 2016.$0.001 par value per share, outstanding. 

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

StHealth Capital Investment Corp

Three Months Ended March 31, 2021 and 2020

Index to the Condensed Financial Statements

PART I—FINANCIAL INFORMATION

FreedomStHealth Capital Corporation

Investment Corp.
Condensed Balance Sheets

SeeThe accompanying notes toare an integral part of these unaudited financial statements

statements. 

FreedomStHealth Capital Corporation

Investment Corp.
Unaudited Condensed Statements of Operations
For the Three Months Ended March 31,

SeeThe accompanying notes toare an integral part of these unaudited financial statementsstatements.

StHealth Capital Investment Corp.
Unaudited Condensed Statements of Changes in Stockholders’ Equity
For the Three Months Ended March 31, 2021 and 2020

The accompanying notes are an integral part of these unaudited financial statements.

FreedomStHealth Capital Corporation

Investment Corp.
Unaudited Condensed Statements of Changes in Net Assets
For the Three Months Ended March 31,

SeeThe accompanying notes toare an integral part of these unaudited financial statementsstatements.

StHealth Capital Investment Corp.
Unaudited Condensed Statements of Cash Flows
For the Three Months Ended March 31,

The accompanying notes are an integral part of these unaudited financial statements.

FreedomStHealth Capital CorporationInvestment Corp.
Schedules of Investments

The accompanying notes are an integral part of these unaudited financial statements.

StHealth Capital Investment Corp.
Notes to Unaudited Condensed Financial Statements (Unaudited)
For the Three Months ended March 31, 2021 and 2020

Note 1. Principal1 - Nature of the Business and OrganizationSummary of Significant Accounting Policies

FreedomStHealth Capital CorporationInvestment Corp. (the “Company”), was incorporated under the general corporation laws of the State of Maryland on June 19, 2014 and will commence operations upon raising $1.0 million (the “Minimum Offering Requirement”), pursuant to an offering to sell up to $500,000,000 in shares of common stock at an initial offering price of $10.00 per share by June 30, 2017. The U.S. Securities and Exchange Commission (the “SEC”) declared the Company’s registration statement on Form N-2 (SEC File No. 333-202461) (the “Registration Statement”) for this offering effective on September 9, 2015. On September 14, 2016, the Company extended the time by which it could achieve the Minimum Offering Requirement from September 14, 2016 to June 30, 2017. As of September 14, 2016, the Company had not accepted any subscriptions from investors or placed any investor funds into the escrow account maintained by UMB Bank, N.A. (the “Escrow Agent”). As of September 30, 2016, the Minimum Offering Requirement had not been achieved. The investment adviser of the Company is Freedom Capital Investment Advisors LLC (“Freedom Capital Investment Advisors”). Freedom Capital Investment Advisors is an unregistered private investment advisory firm that intends to register as an investment adviser with the SEC at such time as it has at least $25 million in assets under management. Freedom Capital Investment Advisors is an affiliate of the Company.

2014. The Company is offering for sale a maximum of $500,000,000 in shares of common stock, $0.001 par value per share, at an initial public offering price of $10.00 per share (including the maximum allowed to be charged for commissions and fees), on a “best efforts” basis, pursuant to the Registration Statement (the “Offering”) filed with the SEC under the Securities Act of 1933, as amended (the “Securities Act”).

The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and that intends to elect to be treated for federal income tax purposes, and intends to qualify annually thereafter, as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”)., for which it believes it qualified for as of January 2021 however has not yet filed documents with the IRS.

The Company was not operational as of and for the period ended September 30, 2016. Therefore, no trading activity had taken place.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The Company is an investment company, as defined under U.S. GAAP, forand applies accounting and reporting guidance in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 946, Financial Services - Investment Companies.

Unaudited Interim Financial Information: These unaudited interim condensed financial information andstatements have been prepared in accordance with generally accepted accounting principles in the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do notUnited States ("GAAP"). In our opinion, the unaudited interim condensed financial statements include all adjustments of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting ofa normal and recurring adjustments, considerednature necessary for athe fair presentation have been included. Operatingof our financial position as of March 31, 2021, our results of operations for the three and nine months ended September 30, 2016March 31, 2021 and 2020, and our cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that mayto be expected for the year ending December 31, 2016.

The balance sheet at December 31, 2015 has been derived from the audited2021. These unaudited interim condensed financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements as of and for the year ended December 31, 2015 and related notes thereto set forthincluded in the Company’sour Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 18, 2016.

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

UseNet Increase in Net Assets Resulting from Operations per Share: The net increase in net assets resulting from operations per share is calculated based upon the weighted average number of Estimates: The preparationshares of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expensescommon stock outstanding during the reporting period. Actual results could differ from those estimates.

Statement of Cash Flows:The Company has elected not to provide statements of cash flows as permitted by FASB ASC 230,Statement of Cash Flows. As of and for the period ended September 30, 2016, the Company held no investments, the Company carried no debt and the Company’s financial statements include a statement of changes in net assets.

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

Valuation of Portfolio Investments: The Company intends to determine the net asset value of its investment portfolio each quarter. The Company’s Board of Directors also reviews and approves the valuation for each period end. Securities that are publicly-tradedpublicly traded will be valued at the reported closing price on the valuation date. Securities that are not publicly-traded will be valued at fair value as determined in good faith by the Company’s boardBoard of directors. In connectionDirectors - in accordance with ASC 820 – Fair Value Measurements and Disclosures (“ASC 820”).  Under ASC 820, fair value is defined as the price that determination, the Company expects that Freedom Capital Investment Advisors will provide the Company’s board of directors with portfolio company valuations which are based on relevant inputs, including, but not limitedwould be received to indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services.

Organization Costs: Organization costs include, among other things, the cost of incorporating, including the cost of legal services and other fees pertainingsell an asset or paid to the Company’s organization. These costs are expensed as incurred. For the period from June 19, 2014 (Inception) to September 30, 2016, the Company incurred organization costs of $46,064, which were funded on behalf of the Company by Freedom Capital Investment Management LLC (“FCIM”),transfer a liability in an affiliate of Freedom Capital Investment Advisors. Organization costs, together with offering costs, are limited to 1.5% of total proceeds raised (the “Limit”) and are not due and payable to Freedom Capital Investment Advisors to the extent they exceed that amount. The Company recorded the maximum amount payable under the Limit of $1,500 at December 31, 2014 and accordingly, the Company has recorded $0 of organizational costs on the accompanying statement of operations in 2016 and 2015. To the extent the Company is unable to raise sufficient capital such that the expenses paid by Freedom Capital Investment Advisors or its affiliates on behalf of the Company are more than 1.5% of total proceedsorderly transaction between market participants at the endmeasurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the Offering, Freedom Capital Investment Advisors will forfeitrelated disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and ASC 820-10-50 details the right to reimbursement of those costs (see Note 3).

Offering Costs: The Company’s offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company’s Registration Statement relating to the Offering. Once the Company achieves 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, the Company had incurred offering costs of $1,695,109, which were funded on behalf of the Company by FCIM. Offering costs, together with organization costs,disclosures that are limited to 1.5% of total proceeds raised and are not due and payable to Freedom Capital Investment Advisors to the extent they exceed that amount. No offering costs have been recorded on the accompanying balance sheet as of September 30, 2016 since the aggregate amount of organization and offering costs exceeds the Limit (see Note 3).

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

Uncertainty in Income Taxes: The Company evaluates its 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 the 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. As of September 30, 2016, the Company had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the statement of operations. During the period from January 1, 2016 to September 30, 2016, the Company did not incur any interest or penalties.

Distributions: Distributions to the Company’s stockholders will be 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 or quarterly basis and pay such distributions on either a monthly or quarterly basis. Net realized capital gains, if any, will be distributed or deemed distributed at least annually.

Note 3. Related Party Transactions

Compensation of Freedom Capital Investment Advisorsfair value.

The Company may have various financial instruments that must be measured under the new fair value standard including cash, promissory notes payable. The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Cash, security deposit, prepaid expenses, accrued expenses and note payable reported on the balance sheet are estimated by management to approximate fair market value due to their short-term nature.

Revenue Recognition for Interest Income:  Revenue from investment securities such as interest income is recognized as earned on an accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes past due, or if the Company’s qualitative assessment indicates that the debtor is unable to service its debt or other obligations, the Company will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, the Company will remain contractually entitled to this interest. If interest payments are later received on non-accrual loans, then they are restored to accrual status when past due principal and interest are paid assuming in management’s judgment they are likely to remain current. Realized gains or losses on investments are determined by calculating the difference between the net proceeds from the disposition and the amortized cost basis of the investments, without regard to unrealized gains or losses previously recognized. Realized gains or losses on the sale of investments are calculated using the specific identification method. The Company reports changes in fair value of investments as a component of the net unrealized gain (loss) on investments in the Statements of Operations.

Going Concern, Removal of Qualification: The Company’s condensed financial statements have been prepared assuming that it will continue as a going concern. As of March 31, 2021 and as of November 18, 2021, the date that our condensed financial statements as of and for the three months March 31, 2021 were published, management reviewed its available cash and projected annual spend for normal operations of the Company. Upon managements’ review it was determined that the available cash for normal operations was in excess of 12 months of anticipated spending for that same period from the date of the filing of this Report. Management believes that its cash and marketable securities available for operations of nearly $1,628,000 and $1,405,000 as of March 31, 2021, and the limited need for operating capital, there is limited risk of it being unable to operate for 12 months from the date this form 10-Q was published. Notwithstanding current book losses management is confident of its portfolio and its future prospects.

New Accounting Pronouncements: The Company’s management reviewed all recently issued accounting standard updates (“ASU’s”) not yet adopted by the Company, and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s financial condition or the results of its operations.

Note 2. Compensation of the Advisor

The Company pays StHealth Capital Advisors (“Advisor”) a fee for its services under the investment advisory and administrative services agreement with Freedom Capital Investment Advisors that will become effective upon achieving the Minimum Offering Requirement. Payments for investment advisory services under such investment advisory and administrative services agreement in future periods will be equal to (a) an annual(“New Advisory Agreement”) consisting of two components — a base management fee of 2.0% of the Company’s average monthly gross assets and (b) an incentive fee based on the Company’s performance. The cost of both the base management fee payable to the Advisor and any incentive fees it earns will ultimately be borne by the Shareholders.

Base Management Fee. The base management fee will be payable quarterly in arrears and will be calculated at an annual rate of 2.0% of the Company’s gross investments during such period. The base management fee may or may not be taken in whole or in part at the discretion of the Advisor. The base management fee for any partial month or quarter will be appropriately prorated.

During the three months ended March 31, 2021 and 2020, the base management fee was accrued for the Advisor in the amounts of $7,000 and $20,000, respectively.  During the three months ended March 31, 2021 and 2020, base management fee is included in management fee – related party on the face of statements of operations.

Incentive Fee. Under the New Advisory Agreement, the incentive fee consists of two parts. The first part, referredwhich the Company refers to as the subordinated incentive fee on interest or dividend income, will be calculated and payable quarterly in arrears will equal 20.0% ofbased upon the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter andquarter. The subordinated incentive fee on interest or dividend income will be subject to a quarterly hurdle rate, or the rate of return that must be met before incentive fees are payable to the Advisor, expressed as a rate of return on adjusted capital for the most recently completed calendar quarter, of 0.496% (2.0% annualized), subject to a “catch up” feature. For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as defined incommitment, origination, structuring, diligence and consulting fees or other fees that the investment advisory and administrative services agreement, equal to 1.375% perCompany receives from portfolio companies) accrued during the calendar quarter, or an annualized hurdle rate of 5.5%. As a result, Freedom Capital Investment Advisors will not earn this incentive fee for any quarter untilminus the Company’s pre-incentiveoperating expenses for the quarter (including the base management fee, expenses reimbursed to the Advisor under the New Advisory Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income for such quarter exceedsincludes, in the hurdle ratecase of 1.375%. Onceinvestments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero-coupon securities), accrued income that the Company’s pre-incentiveCompany has not yet received in cash. Pre-incentive fee net investment income indoes not include any quarter exceeds the hurdle rate, Freedom Capital Investment Advisors will be entitled to a “catch-up” fee equal to the amountrealized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The calculation of the pre-incentivesubordinated incentive fee net investment income in excess of the hurdle rate, until the Company’s pre-incentive fee net investmenton interest or dividend income for sucheach quarter equals 1.71875% of adjusted capital, or 6.875% annually. This “catch-up” feature allows Freedom Capital Investment Advisors to recoup the fees foregoneis as a result of the existence of the hurdle rate. Thereafter, Freedom Capital Investment Advisors will receive 20.0% of pre-incentive fee net investment income.follows:

The second part of the incentive fee, referredwhich the Company refers to as the incentive fee on capital gains, will be determined and payable in arrears as of the end of each calendar yearquarter (or upon termination of the investment advisory and administrative services agreement)New Advisory Agreement). This fee will equal 20.0% of the Company’s incentive fee capital gains, which will equal the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. The Company will accrue for the capital gains incentive fee, which, if earned, will beIncentive fees not paid annually. The Company will accrue the capital gains incentive fee based on net realized and unrealized gains; however, under the terms of the investment advisory and administrative services agreement entered into with Freedom Capital Investment Advisors, 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.

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, or AICPA, Technical Practice Aid for investment companies, the Company 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 the Company’s entire portfolio was liquidated at its fair value as of each balance sheet date even though Freedom Capital Investment Advisors will not be entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

The Company will reimburse Freedom Capital Investment Advisors for expenses necessary for its performance of services related to the Company’s administration and operations. The amount of the reimbursement will be the lesser of (1) Freedom Capital Investment Advisors’ actual costs incurred in providing such services and (2) the amount that the Company estimates it 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 the Company based on objective factors such as assets, revenues, time allocations and/or other reasonable metrics. The Company’s board of directors will then assess the reasonableness of such reimbursements based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available. In addition, the Company’s 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.

FCIM has funded the Company’s offering costs and organization costs in the amount of $1,741,173 for the period from June 19, 2014 (Inception) to September 30, 2016. Currently, the cumulative aggregate amount of $1,741,173 of organization and offering costs exceeds 1.5% of total proceeds raised. Accordingly, the Company recorded $1,500 of organizational costs payable on the accompanying balance sheets, which is payable to Freedom Capital Investment Advisors. To the extent the Company is unable to raise sufficient capital such that the expenses paid by Freedom Capital Investment Advisors or its affiliates on behalf of the Company 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 the remaining $1,739,673 of these costs.

Under the investment advisory and administrative services agreement between the Company and Freedom Capital Investment Advisors, there will be no liability on the Company’s part for the offering or organization costs funded by Freedom Capital Investment Advisors or its affiliates until the Company has 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 listed above and any future offering or organization costs incurred have been recovered. The minimum reimbursement to Freedom Capital Investment Advisors for such fees is expected to be $15,000 assuming the Minimum Offering Requirement is satisfied.

Capital Contribution by FCIM

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

Expense Reimbursement

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

Pursuant to the Expense Reimbursement Agreement, the Company will have a conditional obligation to reimburse Freedom Capital Investment Advisors for any amounts funded by Freedom Capital Investment Advisors under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which Freedom Capital Investment Advisors funded such amount, the sum of the Company’s net investment company taxable income, net capital gains and the amount of any dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent not included in net investment company taxable income or net capital gains) exceeds the distributions paid by the Company to stockholders; provided, however, that (i) the Company will only reimburse Freedom Capital Investment Advisors for expense support payments made by Freedom Capital Investment Advisors to the extent that the payment of such reimbursement (together with any other reimbursement paid during such fiscal year) does not cause “other operating expenses” (as defined below) (on an annualized basis and net of any expense reimbursement payments received by the Company during such fiscal year) to exceed the lesser of (A) 1.75% of the Company’s average net assets attributable to shares of the Company’s common stock for the fiscal year-to-date period after taking such payments into account and (B) the percentage of the Company’s average net assets attributable to shares of the Company’s common stock represented by “other operating expenses” during the fiscalcalendar year in which they were earned will accrue until such expense support payment from Freedom Capital Investment Advisors was made (provided, however, that this clause (B) shall not applytime when the management chooses to any reimbursement payment which relates to an expense support payment from Freedom Capital Investment Advisors made during the same fiscal year) and (ii) the Company will not reimburse Freedom Capital Investment Advisors for expense support payments made by Freedom Capital Investment Advisors if the annualized rate of regular cash distributions declared by the Company at the time of such reimbursement payment is less than the annualized rate of regular cash distributions declared by the Company at the time Freedom Capital Investment Advisors made the expense support payment to which such reimbursement relates. “Other operating expenses” means the Company’s total “operating expenses” (as defined below), excluding base management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses. “Operating expenses” means all operating costs and expenses incurred, as determined in accordance with GAAP, for investment companies.pay them.

The Company or Freedom Capital Investment Advisors may terminateIncentive fee was accrued for the Expense Reimbursement Agreement at any time. Freedom Capital Investment Advisors has indicated that it expectsthree months ended March 31, 2021 and 2020 amounted to continue such reimbursements until it deems that$4,000 and nil, respectively. During the Company has achieved economiesthree months ended March 31, 2021 and 2020, incentive fee is included in management fee – related party on the face of scale sufficient to ensure that the Company bears a reasonable levelstatements of expenses in relation to the Company’s income.operations.

The specific amountAs of March 31, 2021 and December 31, 2020, the Advisor was owed $179,000 and $168,000, respectively. This is recorded under Accrued expenses reimbursed by Freedom Capital Investment Advisors, if any, will be determined at– related party in the end of each quarter. Upon termination of the Expense Reimbursement Agreement by Freedom Capital Investment Advisors, Freedom Capital Investment Advisors will be required to fund any amounts accrued thereunder as of the date of termination and will not be eligible for reimbursement of such amounts. Similarly, the Company’s conditional obligation to reimburse Freedom Capital Investment Advisors pursuant to the terms of the Expense Reimbursement Agreement shall survive the termination of such agreement by either party.balance sheets.

Freedom Capital Investment Advisors is controlled by the Company’s chairman, president and chief executive officer, Jeffrey McClure. There can be no assurance that the Expense Reimbursement Agreement will remain in effect or that Freedom Capital Investment Advisors will reimburse any portion of the Company’s expenses in future quarters.

Note 4. Share Repurchase Program

Beginning with the first full calendar quarter following the one year anniversary of the date that the Company achieves the Minimum Offering Requirement, and on a quarterly basis thereafter, the Company intends to offer to repurchase shares on such terms as may be determined by the Company’s board of directors in its complete and absolute discretion unless, in the judgment of the independent directors of the Company’s board of directors, such repurchases would not be in the best interests of the Company’s stockholders or would violate applicable law. The Company will conduct such repurchase offers in accordance with the requirements of Rule 13e-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the 1940 Act. In months in which the Company repurchases shares, it will generally conduct repurchases on the same date that it holds its first monthly closing for the sale of shares in the Offering. Any offer to repurchase shares will be conducted solely through tender offer materials mailed to each stockholder.3. Expense Reimbursement

The Company’s board of directors will also consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:

The Company currently intends to limit the number of shares to be repurchased during any calendar year to the number of shares it can repurchase with the proceeds it receives from the sale of shares 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 liquidation of securities investments as of the end of the applicable period to repurchase shares. In addition, the Company will limit the number of shares to be repurchased in any calendar year to 10.0% of the number of shares outstanding in the prior calendar year, or 2.5% at the end of the prior quarter, though the actual number of shares that the Company offers to repurchase may be less in light of the limitations noted above. The Company intends to offer to repurchase such shares at a price equal to 90% of the offering price in effect on each date of repurchase. In months in which the Company repurchases shares pursuant to its share repurchase program, it expects to conduct repurchases on the same date that it holds its first monthly closing for the sale of shares in the Offering. The Company’s board of directors may amend, suspend or terminate the share repurchase program, upon 30 days’ notice.

Note 5. Economic Dependency

Under various agreements, the Company has engaged or will engage Freedom Capital Investment Advisors and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company available for issue, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company is dependent upon Freedom Capital Investment Advisors and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

Note 6. Subsequent Events

The Company has evaluated subsequent events from September 30, 2016 through the date the financial statements were available to be issued, November 14, 2016, and has determined that there are no items to disclose, except for the following.

On October 12, 2016, FCIM entered into a letter agreement (the “Letter Agreement”) with First Capital Real Estate Investments, LLC (“First Capital”), whereby First Capital agreed to cover specified obligations of FCIM and Democracy Funding LLC (“Democracy Funding”), the Company’s affiliated dealer manager in the Offering, including expenses incurred in connection with the Offering, in exchange for a non-controlling ownership interest in FCIM and Democracy Funding. The Letter Agreement also states that First Capital will provide broker-dealer personnel to Democracy Funding, subject to such personnel passing customary and appropriate background and due diligence checks conducted by Democracy Funding, to assist the Company in raising capital in the Offering. Pursuant to the Letter Agreement, First Capital was granted the option to acquire a controlling interest in FCIM and Democracy Funding upon the occurrence of certain specified events, including, but not limited to, continuing compliance with the terms of the Letter Agreement for six (6) months following the date the Letter Agreement was executed. First Capital is not otherwise affiliated with the Company, FCIM or Democracy Funding.

On November 9, 2016, the Company executed the Amended and Restated Expense Support and Conditional Reimbursement Agreement. See Note 3, “Related Party Transactions—Expense Reimbursement” for a description of the Amended and Restated Expense Support and Conditional Reimbursement Agreement.

The information contained in this section should be read in conjunction with our interim and unaudited financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In this report, “we,” “us,” and “our” refer to Freedom Capital 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 future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as to:

In addition, words such as “anticipate” “believe” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words.

The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Other factors that could cause actual results to differ materially include:

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, 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 may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and projections contained in this quarterly report on Form 10-Q or in other periodic reports we file under the Exchange Act are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Exchange Act.

Overview

We were incorporated under the general corporation laws of the State of Maryland on June 19, 2014 and will commence operations upon raising $1.0 million (the “Minimum Offering Requirement”), pursuant to an offering to sell up to $500,000,000 in shares of common stock at an initial offering price of $10.00 per share by June 30, 2017. The U.S. Securities and Exchange Commission (the “SEC”) declared our registration statement on Form N-2 (SEC File No. 333-202461) (the “Registration Statement”) for this offering effective on September 9, 2015. On September 14, 2016, we extended the time by which we can achieve the Minimum Offering Requirement from September 14, 2016 to June 30, 2017. As of September 14, 2016, we had not accepted any subscriptions from investors or placed any investor funds into the escrow account maintained by UMB Bank, N.A. (the “Escrow Agent”). As of September 30, 2016, the Minimum Offering Requirement had not been achieved. Our investment adviser is Freedom Capital Investment Advisors LLC (“Freedom Capital Investment Advisors”). Freedom Capital Investment Advisors is an unregistered private investment advisory firm that intends to register as an investment adviser with the SEC at such time as it has at least $25 million in assets under management. Freedom Capital Investment Advisors is an affiliate of the Company.

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

Our investment activities will be managed by Freedom Capital Investment Advisors and supervised by our board of directors, a majority of whom are independent. Under our investment advisory and administrative services agreement, we have agreed to pay Freedom Capital Investment Advisors an annual base management fee based on our average monthly gross assets as well as incentive fees based on our performance.

We intend to initially screen potential investments based upon the Patriotic Responsible Investing principles outlined in the following paragraph. Using subjective analysis, we will determine if a potential investment sufficiently meets the threshold to be an investment according to Patriotic Responsible Investing principles. Once this threshold is met, we will make investments based upon a fundamental financial analysis of each particular investment opportunity.

Patriotic Responsible Investing seeks to direct capital investment towards entities that through their commercial endeavors provide for and enhance the sovereign and economic security and freedom of the United States and its allies. Entities that fit within the Patriotic Responsible Investing framework typically provide the United States and its allies one or more of the following benefits: (i) independence from foreign political and economic coercion, (ii) freedom to pursue constitutionally protected activities, (iii) protection from foreign state sponsored and private acts of terror, (iv) ability to obtain data and intelligence to defeat acts of war, terror or aggression, (v) defense against acts of war and aggression, and (vi) facilitation of a democratic economy where capital is allocated without undue social or bureaucratic intervention.

Our investment objectives are to generate current income and long-term capital appreciation.

In accordance with the Patriotic Responsible Investing principles, we have identified and intend to focus on the following six investment categories, which we believe will allow us to generate an attractive total return with an acceptable level of risk.

Originated/Proprietary Transactions: We define proprietary investments as any investment originated or structured specifically for us or made by us that was not generally available to the broader market. Proprietary investments may include both debt and equity components. We believe proprietary transactions may offer attractive investment opportunities as they typically offer higher returns than broadly syndicated transactions.

Anchor Orders: In addition to proprietary transactions, we intend to invest in certain opportunities that are originated and then syndicated by a commercial or investment bank but where we provide a capital commitment significantly above the average syndicate participant. Our decision to provide an anchor order to a syndicated transaction will be predicated on a rigorous credit analysis, our familiarity with a particular company, industry or financial sponsor, and the broader investment experiences of Freedom Capital Investment Advisors and any sub-adviser. In these types of investments, we may receive fees, preferential pricing or other benefits not available to other lenders in return for our significant capital commitment.

Event Driven: We intend to take advantage of dislocations that arise in the markets due to an impending event and where the market’s apparent expectation of value differs substantially from our fundamental analysis. Such events may include a looming debt maturity or default, a merger, spin-off or other corporate reorganization, an adverse regulatory or legal ruling, or a material contract expiration, any of which may significantly improve or impair a company’s financial position. Compared to other investment strategies, event driven investing depends more heavily on our ability to successful predict the outcome of an individual event than on underlying macroeconomic fundamentals. As a result, successful event driven strategies may offer both substantial diversification benefits and the ability to generate performance in uncertain market environments.

Opportunistic: We intend to seek to capitalize on market price inefficiencies by investing in loans, bonds and other securities where the market price of such investment reflects a lower value than deemed warranted by our fundamental analysis. We believe that market price inefficiencies may occur due to, among other things, general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor with the broader investment community. We will seek to allocate capital to these securities that have been misunderstood or mispriced by the market and where we believe there is an opportunity to earn an attractive return on our investment.

Collateralized Securities: CLOs are a form of securitization where the cash flow from a pooled basket of syndicated loans is used to support distribution payments made to different tranches of securities. While collectively CLOs represent nearly fifty percent of the broadly syndicated loan universe, investing in individual CLO tranches requires a high degree of investor sophistication due to their structural complexity and the illiquid nature of their securities.

Broadly Syndicated/Other: Although our primary focus will be to invest in proprietary transactions, in certain circumstances we will also invest in the broadly syndicated loan and high yield markets. Broadly syndicated loans and bonds are generally more liquid than our proprietary investments and provide a complement to our more illiquid proprietary strategies. In addition, and because we typically receive more attractive financing terms on these positions than we do on our less liquid assets, we are able to leverage the broadly syndicated portion of our portfolio in such a way that maximizes the levered return potential of our portfolio.

We anticipate that our portfolio will be comprised of investments at all levels of private company capital structure, including senior secured loans, second lien secured loans, subordinated loans and common and preferred equity of private U.S. small and middle-market companies. We may purchase interests through secondary market transactions in the “over-the-counter” market for institutional loans or directly from our target companies as primary market investments. We may also purchase minority interests in the form of common or preferred equity in our target companies, either directly or through a co-investment with a financial sponsor, such as an institutional investor or private equity firm. In addition, a portion of our portfolio may be comprised of corporate bonds, unsecured loans, CLOs and other debt securities. However, such investments are not expected to comprise a significant portion of our portfolio. Once we raise a significant amount of proceeds from our offering, we expect that our investments will generally range between $2 million and $15 million each, although investments may vary proportionately with the size of our capital base and will ultimately be made at the discretion of Freedom Capital Investment Advisors, subject to oversight by our board of directors. Prior to raising significant amounts of capital, we may make smaller investments due to liquidity constraints.

Revenues

We plan to generate revenues in the form of interest income on the debt investments we hold. We may also generate revenues in the form of dividends and other distributions on the equity or other securities we may hold. In addition, we may generate revenues in the form of commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. Any such fees generated in connection with our investments will be recognized as earned.

Expenses

Our primary operating expenses will be the payment of advisory fees and other expenses under the investment advisory and administrative services agreement,New Advisory Agreement, interest expense from financing facilities if any, and other expenses necessary for ourits operations. OurThe investment advisory fee will compensate Freedom Capital Investment Advisorsthe Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing ourthe Company’s investments.

We will reimburse Freedom Capital Investment Advisors for expenses necessary to perform services related to our administration and operations. Such services will include 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. 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. We will not reimburse Freedom Capital Investment Advisors 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 Freedom Capital Investment Advisors.

WeCompany will bear all other expenses of ourits operations and transactions, including (without limitation) fees and expenses relating to:

Subject to the limitations on reimbursement of the Advisor, the Corporation, either directly or through reimbursement to the Advisor, shall bear all other costs and expenses of its operations and transactions, including expenses deemed to be “organization and offering expenses” of the Corporation for purposes of Conduct Rule 2310(a)(12) of the Financial Condition, LiquidityIndustry Regulatory Authority, such expenses, exclusive of commissions, the dealer manager fee and Capital Resourcesany discounts, are hereinafter referred to as “Organization and Offering Expenses”; corporate and organizational expenses relating to offerings of shares of Common Stock, subject to limitations included in the Investment Advisor Agreement.

We intendDuring the three months ended March 31, 2021 and 2020, $70,000 and $10,000 was paid to generate cash primarily from the netAdvisor for expense reimbursement, respectively. During the three months ended March 31, 2021, expense reimbursements are included in professional fees on the face of statements of operations. During the three months ended March 31, 2020, expense reimbursements are included in general and administrative expenses on the face of statements of operations.

Note 4 - Capital Raising

There were no shares issued during the three months ended March 31, 2021.

During the three months ended March 31, 2020, the Company issued 20,000 shares of its common stock and received gross proceeds of our Offering and from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. Immediately after we satisfy the Minimum Offering Requirement, gross subscription funds will total at least $1,100,000. Subsequent to satisfying the Minimum Offering Requirement, we will sell our shares on a continuous basis at an initial offering price of $10.00 and thereafter will accept subscriptions on a continuous basis and issue shares at monthly closings at prices that, after deducting selling commissions and dealer manager fees, must be above our net asset value per share. In connection with each monthly closing on the sale of shares in our Offering, our board of directors or a committee thereof is required, within 48 hours of the time that each closing and sale is made, to make the determination that we are not selling shares of our common stock$50,000, at a price of $2.50 per shareshare. There were 10% commission cost and therefore net cash proceeds to the Company were $45,000.

Note 5 - Investments

Description of Investments

During the three months ended March 31, 2021, the Company deployed approximately $1,477,000 in several investments in portfolio companies which after deducting selling commissionsare described below:

Current Status of Investments

Orchestra BioMed Inc. (“Orchestra”)

On December 31, 2020, a non-affiliated specialist revalued the shares of Series B Preferred at $473,000, a reduced value of $4.30 per share. The Company has determined that there is no change in the fair value of the shares of Series B Preferred as of March 31, 2021.

On December 31, 2020, based on a third-party specialist’s valuation report the Company revalued the shares of Series B-1 Preferred at a fair value of $305,000. Upon inquiry with Orchestra’s management, the Company has determined that there is no change in the fair value of the shares of Series B-1 Preferred as of March 31, 2021.

First Wave BioPharma Inc. (“First Wave”, formerly AzurRx BioPharma Inc.)

AzurRx BioPharma, Inc. changed its corporate name to First Wave BioPharma, Inc. and dealer manager fees,changed its ticker symbol to “FWBI” effective September 22, 2021.

In January 2021, an aggregate of 697,210 shares of First Wave with fair value of $676,000 as of December 31, 2020 were sold for an aggregate amount of $672,000. Realized loss of $4,000 is recognized in the unaudited statements of operations.

In February 2021, First Wave Warrants B and Warrants Exchange aggregating to 468,592 common stock warrants with fair value of $571,000 were exercised for 468,592 shares of common stock with $398,000 payment in cash. The common stock was later sold for an aggregate amount of $999,000. Realized gain of $30,000 and unrealized gain of $272,000 is recognized in the unaudited statements of operations.

In February 2021, 257,732 First Wave warrants with fair value of $334,000 were exercised for 257,732 shares of common stock with $469,000 payment in cash. Realized loss of $141,000 and unrealized gain of $191,000 is recognized in the unaudited statements of operations.

As of March 31, 2021, the common shares’ fair value amounted to $346,000. For the three months ended March 31, 2021, the Company recognized an unrealized loss amounting to $124,000 from the change in market value of First Wave common shares.

Other Trading Securities

Investments in other trading securities at fair value consisted of the following at March 31, 2021 and the unrealized gain and loss during the three months ended March 31, 2021:

The Company realized a net gain of $136,000 and nil from other trading securities sold during the three months ended March 31, 2021 and 2020, respectively, which was recorded in net realized gain or loss in the unaudited statements of operations.

The table below our then-current net asset valuesummarizes the transactions for the three months ended March 31, 2021 and year ended December 31, 2020:

Additions for December 31, 2020 includes $24,000 accrued interest that were converted into investment.

Note 6 - Subsequent events

Subsequent to the period ended March 31, 2021, the Company entered into a Third Amended Convertible Promissory Note with Naha whereby the Company committed an additional $13,000 in new funds to Naha, in return Naha agreed to repay the Company a total of $700,000.

Subsequent to the period ended March 31, 2021, the Company purchased 1,200 shares of Dash Therapeutics, Inc. Preferred stock for $50,000 at $41.67 per share.

PriorSubsequent to investingperiod ended March 31, 2021, the Company sold the remaining 257,732 common shares held in securitiesFirst Wave for $240,000 at $0.93 per share

Subsequent to period ended March 31, 2021, the Company entered into a settlement agreement with a third party for $50,000 to resolve a legal matter.

Subsequent to period ended March 31, 2021, the Company is authorized to commence a private placement with targeted offering amount of $5,000,000. As of November 15, 2021, 410,000 shares of common stock at $2.50 per share were subscribed for a total amount of $1,025,000.

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 financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to StHealth Capital Investment Corp.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will investbe achieved. These risks and uncertainties include those described or identified elsewhere in this quarterly report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the netdate of this quarterly report on Form 10-Q. Moreover, we assume no duty and do not undertake to update the forward-looking statements.

Liquidity and Capital Resources

Operating Activities

During the three months ended March 31, 2021, our cash provided by operations was $732,000 compared to cash used in operation of $1,314,000 for the three months ended March 31, 2020. The cash provided from operations during the three months ended March 31, 2021 was due primarily to our cash received from sale of investments being greater than the cash used for the purchase of investments.

Investing Activities

There are no investing-related activities during the three months ended March 31, 2021. During the three months ended March 31, 2020, the Company used $3,000 for purchase of fixed assets.

Financing Activities

There are no financing-related activities during the three months ended March 31, 2021. During the three months ended March 31, 2020, financing activities provided $45,000 in proceeds from our Offering and from any sales and paydownsissuance 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.

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 advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our board of directors determines that leveraging our portfolio would be in our best interests and the best interests of our stockholders. 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 preferredcommon stock.

RIC Status and DistributionsResults of Operations

We intendThree months Ended March 31, 2021 Compared to electThree months Ended March 31, 2020

Interest Income

Our interest income for the three months ended March 31, 2021 was nil, compared to be treated$16,000 for federalthe three months ended March 31, 2020. During the three months ended March 31, 2021, the Company had no interest income tax purposes, and intendproducing investments.

Professional Fees

Our professional fee for the three months ended March 31, 2021 was $257,000, an increase of $81,000 or 46% as compared to qualify annually thereafter, as a RIC under Subchapter M$176,000 for the three months ended March 31, 2020. The increase in professional fees was primarily due to the increase in due diligence requirements needed for the Company’s compliance obligations to evaluate an increased number of investment opportunities.

Management fee – related party

Our related party management fee for the three months ended March 31, 2021 was $11,000, compared to $20,000 for the three months ended March 31, 2020. Management fee is calculated at an annual rate of 2% of the Code. In order to qualify as a RIC, we must, among other things, distribute at least 90%Company’s total investment plus an annual rate of our “investment company taxable income,” as defined by the Code, each year. As long as the distributions are declared by the later20% of the fifteenth dayrealized gains as of the ninth month followingreporting period. During the closequarter ended March 31, 2021, the Company sold of investments which resulted to the taxable yeardecrease in the total investment on which management fees are calculated.

General and Administrative

Our general and administrative expense for the three months ended March 31, 2021 was $78,000, an increase of $12,000 or 18% as compared to $66,000 for the due date ofthree months ended March 31, 2020. During the tax return, including extensions, distributions paidperiod ended March 31, 2021, the Company incurred expenses to set up to one year afteran audio-visual conference system and improve 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 forIT system integration, email management 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.data room set up.

Subject to our board of directors’ discretion and applicable legal restrictions, we intend to authorize and declare ordinary cash distributionsNet realized gain (loss) 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.investments

We intend to make our ordinary distributions inDuring 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, ifthree months ended March 31, 2021, 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 proceedsrealized $21,000 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 onvarious portfolios. There were no sales transaction during 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.three months ended March 31, 2020.

We expect thatNet unrealized gain (loss) on investments

Our net unrealized gain on investment for a periodthe three months ended March 31, 2021 was $318,000, compared to loss of time following commencement$646,000 for the three months ended March 31, 2020. The overall increase in the investment valuation is due to the appreciation in the fair market value of the Offering, which time period may be significant, substantial portionssecurities.

Net Decrease in Net Assets Resulting from Operations

As a result of the foregoing, for the three months ended March 31, 2021, we recorded a net decrease in net assets resulting from operations of $7,000 compared to a net decrease in net assets resulting from operations of $892,000 for the three months ended March 31, 2020.

Critical Accounting Policies

Our discussion and analysis of our distributions may be funded through the reimbursementfinancial condition and results 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 yearoperations are 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, arewhich have been prepared in conformityaccordance with GAAP, whichaccounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires usmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, gains and liabilitieslosses. Changes in the economic environment, financial markets, credit worthiness of portfolio companies and disclosures of contingent assets and liabilities as ofany other parameters used in determining such estimates could cause actual results to differ materially. In addition to the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Criticaldiscussion below, our 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 comparability of our results of operations to those of companies in similar businesses. As we execute our expected operating plans, we will describe additional critical accounting policiesfurther described in the notes to our futurethe financial statements.

Fair Value Measurements

The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.

ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements in addition to those discussed below.may differ materially from the values that would be received upon an actual disposition of such investments.

ValuationAs of Portfolio InvestmentsMarch 31, 2021, $627,000 or 45% of the Company’s investments were classified as Level 1, and $778,000 or 55% of the Company’s investments were classified as Level 3.

We intend to determineInvestment Valuation Process

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

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

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 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, we intendthe Company intends 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 ourthe Company’s financial statements will refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on ourthe Company’s financial statements. Below is a description of factors that our boardthe Board of directorsDirectors may consider when valuing ourthe 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, wethe Company may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that our boardthe Board of directorsDirectors 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 ourthe Company’s debt investments.

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

OurThe equity interests in portfolio companies for which there is no liquid public market will be valued at fair value. Our boardThe Board of directors,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 boardThe Board of directorsDirectors 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 boardThe Board of directorsDirectors 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 ourthe equity interests in public companies for which market quotations are readily available will be based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale will typically be valued at a discount from the public market value of the security.

If we receivethe Company receives warrants or other equity-linked securities at nominal or no additional cost in connection with an investment in a debt security, our boardthe Board of directorsDirectors 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 boardThe Board of directorsDirectors will subsequently value these warrants or other equity-linked securities received at fair value.

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

We

The Company will periodically benchmark the bid and ask prices weit 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 purchasethe Company purchases and sell ourthe investments. We believeThe Company believes that these prices will be reliable indicators of fair value. OurThe Company’s valuation committee and boardBoard of directorsDirectors will review and approve the valuation determinations made with respect to these investments in a manner consistent with ourthe Company’s valuation process.

Revenue RecognitionOff-Balance Sheet Arrangements

Security transactions will be accounted for onOther than contractual commitments and other legal contingencies incurred in the trade date. normal course of our business, we do not have any off-balance sheet financings or liabilities.

Item 3.                Quantitative and Qualitative Disclosure About Market Risk

We will recordare subject to financial market risks, including changes in interest income on an accrual basisrates and the valuations of our investment portfolio. Uncertainty with respect to the extenteconomic effects of the COVID-19 pandemic has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks, including those listed below.

Investment valuation risk

Because there is not a readily available market value for some of the investments in our portfolio, we value those portfolio investments at fair value as determined in good faith by our board of directors based on, among other things, the input of our management and audit committee and independent valuation firms that have been engaged at the direction of the management of our invested companies to assist in the valuation a portfolio investment without a readily available market quotation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we expectmay ultimately realize. Further, such investments are generally subject to collect such amounts. We will record dividend incomelegal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the ex-dividend date. We will not accrue as a receivable interest or dividends on loans and securities ifvalue at which we have reason to doubt our ability to collect such income. Loan origination fees, original issue discountrecorded it. In addition, changes in the market environment and market discount will be capitalized, and we will amortize such amounts as interest incomeother events that may occur over the respective termlife of the loan or security. Uponinvestments may cause 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.

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency

Gains or losses on the sale of investments will be calculated by using the specific identification method. We will measure realized gains or losses byultimately realized on these investments to be different than the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. Net change in unrealized appreciation or depreciation 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 changereflected in unrealized gains or losses on foreign currency will reflectthe valuations currently assigned.

Interest Rate Risk

Interest rate sensitivity refers to the change in our earnings that may result from changes in the valuelevel of receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

Organization Costs

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 ifinterest rates. Because we do not distribute at least 98% of net ordinary income, 98.2% offund 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 inwith borrowings, 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, uponis not affected by the difference between the rate at which we borrow fundsinvest and the rate at which we invest those funds. As a result,borrow. If we would be subjectdo borrow money to risks relatingsupport our investments, we intend 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 minimizeregularly measure our exposure to interest rate fluctuations. These techniques may include various interest raterisk, and would determine whether or not any hedging activitiestransactions are necessary to the extent permitted by the 1940 Act. Adverse developments resulting frommitigate exposure to changes in interest rates or hedging transactions could have a material adverse effect on our business, financial conditionrates.

Item 4.                Controls and results of operations.Procedures

Evaluation of Disclosure Controls and Procedures

As required byWe maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(b) promulgated13a-15(e) under the Securities Exchange Act we carried out an evaluation, under the supervisionof 1934. In designing and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation ofevaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of September 30, 2016.

Based on the foregoing,end of the period covered by this report, our chief executive officerChief Executive Officer and chief financial officerour Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to provide reasonable assuranceensure that we would meetthe information relating to our Company, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure obligations.as a result of continuing material weaknesses in our internal control over financial reporting identified in our Annual Report on Form 10-K for the year ended December 31, 2020.

We continue to work toward full remediation of these material weaknesses. We expect that the remediation of these material weaknesses in our internal control over financial reporting will remediate the weakness in our disclosure controls and procedures.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act) that occurred during the quarterthree-month period ended September 30, 2016March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Although we may, from timeWe are not currently subject 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 is currently a party to any pending material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against usus. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material adverse effect upon our financial condition or against Freedom Capital Investment Advisors.results of operations.

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on March 18, 2016, except for 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 shares 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.

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 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.

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.

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.year ended December 31, 2020.

Not applicable. There has been no sale of unregistered equity securities during the three months ended March 31, 2021.

Not applicable.

Not applicable.

None.

None.

None.

None.

SIGNATURES

Pursuant to the requirements 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, 2016.19, 2021.