1141299--3/3/2006--MCG_CAPITAL

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{loan, real, estate}

{investment, property, distribution}

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{acquisition, growth, future}

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{cost, contract, operation}

Risks Related to Our Business and Financial Results Because there is generally no established market for which to value our investments, our board of directors determination of the value of our investments may differ materially from the values that a ready market or third party would attribute to these investments. We make loans to and invest in primarily privately owned middle market companies, which may default on their loans, thereby reducing or eliminating the return on our investments. If the industries in which we invest experience adverse economic or business conditions, our operating results may be negatively impacted. Our financial results could be negatively affected if Broadview Networks Holdings, Inc. fails to perform as expected. Economic downturns or recessions could impair our customers ability to repay our loans, harm our operating results and reduce our volume of new loans. If we fail to qualify as a regulated investment company, we will have to pay corporate-level taxes on our income and our income available for distribution would be reduced. Because we will distribute substantially all of our income to our stockholders, we will continue to need additional capital to finance our growth. If additional capital is unavailable or not available on favorable terms, our ability to grow will be impaired. We have substantial indebtedness and servicing our indebtedness could reduce funds available to grow our business or make new investments. If we are not able to refinance our debt or able to do so on favorable terms, we would not be able to operate our business in the ordinary course. You may not receive distributions. We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income. If we fail to manage our growth, our financial results could be adversely affected. If we need to sell any of our investments, we may not be able to do so at a favorable price and, as a result, we may suffer losses. Our business depends on our key personnel. Fluctuations in interest rates could adversely affect our income. Regulations governing our operation as a business development company will affect our ability to, and the way in which we, raise additional capital. Any change in regulation of our business could negatively affect the profitability of our operations. Our ability to invest in private companies may be limited in certain circumstances.

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1141299--3/3/2006--MCG_CAPITAL_CORP