Priority Income Fund, Inc. — Regulatory Filings 2021

Mar 19, 2021

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Filed Pursuant to Rule 424(b)(3)

File No. 333-235356

Maximum Offering of 69,851,914 Shares

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Supplement No. 8 dated March 19, 2021

to the

Prospectus dated October 9, 2020

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This supplement contains information which amends, supplements or modifies certain information contained in the prospectus of Priority Income Fund, Inc. (the “Company”) dated October 9, 2020, as amended or supplemented (the “Common Stock Prospectus”). Capitalized terms used but not defined herein shall have the meanings given to them in the Common Stock Prospectus.

You should carefully consider the “Risk Factors” beginning on page 34 of the Common Stock Prospectus before you decide to invest in our common stock.

CAPITALIZATION

On March 17, 2021, the Company filed a final prospectus under Rule 424(b)(1) (the “Series G Prospectus”) relating to the offering (the “Series G Offering”) of $32,000,000 of the Company’s 6.250% Series G Term Preferred Stock Due 2026, Par Value $0.01 Per Share, which contains updated information regarding the capitalization of the Company. Accordingly, the information contained under the header “Capitalization” in the Common Stock Prospectus is hereby deleted and replaced with the following two paragraphs and table from the Series G Prospectus:

The following table sets forth our capitalization (i) as of December 31, 2020 and (ii) as of December 31, 2020, as adjusted to give effect to the sale of $32 million of our Series G Term Preferred Stock in the Series G Offering, but without giving effect to the use of cash proceeds from such sales as described in “Use of Proceeds” in the Series G Prospectus or the exercise of the underwriters’ option to purchase shares to cover overallotments.

This table should be read in conjunction with “Use of Proceeds” in the Series G Prospectus and our financial statements and notes thereto included in the Series G Prospectus. The adjusted information is illustrative only.

	As of December 31, 2020 (unaudited) — Actual	As adjusted for the issuance of the Series G Term Preferred Stock
Long-term debt, including current maturities:
Term Preferred Stock, par value $0.01 per share; 9,360,000 shares authorized, 1,481,435 shares of Series A Term Preferred Stock issued and outstanding	$ 35,915,317	$ 35,915,317
Term Preferred Stock, par value $0.01 per share; 9,035,000 shares authorized, 984,918 shares of Series B Term Preferred Stock issued and outstanding	$ 23,917,178	$ 23,917,178
Term Preferred Stock, par value $0.01 per share; 9,610,000 shares authorized, 1,557,099 shares of Series C Term Preferred Stock issued and outstanding	$ 37,852,530	$ 37,852,530
Term Preferred Stock, par value $0.01 per share; 8,000,000 shares authorized, 1,096,007 shares of Series D Term Preferred Stock issued and outstanding	$ 26,288,094	$ 26,288,094
Term Preferred Stock, par value $0.01 per share; 1,150,000 shares authorized, 1,039,316 shares of Series E Term Preferred Stock issued and outstanding	$ 25,122,654	$ 25,122,654
Term Preferred Stock, par value $0.01 per share; 1,380,000 shares authorized, 1,235,348 shares of Series F Term Preferred Stock issued and outstanding	$ 29,846,546	29,846,546
Facility (1)	$ 2,000,000	$ 2,000,000
2035 Notes	$ 14,360,768	$ 14,360,768
Term Preferred Stock, par value $0.01 per share; 1,472,000 shares authorized, 1,280,000 (3) shares of Series G Term Preferred Stock issued and outstanding, as further adjusted	$ —	$ 32,000,000 (2)
Total long-term debt	$ 195,303,087	$ 227,303,087
Stockholder’s equity:
Common stock, $0.01 par value per share; 160,000,000 shares authorized; 34,688,484 shares issued and outstanding	$ 346,885	346,885
Paid‑in capital in excess of par	421,954,815	421,954,815
Total Distributable Earnings	(19,918,211)	(19,918,211)
Total stockholders’ equity	402,383,489	402,383,489
Total capitalization	$ 597,686,576	$ 629,686,576

(1) On December 16, 2019, we entered into the Facility. The aggregate commitment of the Facility is $25 million and is collateralized by our CLO investments. As of March 10, 2021, the drawn balance on the Facility was $8.5 million.

(2) This amount does not include a deduction for underwriting discounts and commissions and estimated offering expenses.

(3) The number of issued and outstanding shares of Series G Term Preferred Stock is as adjusted to give effect to the sale of 1,280,000 shares of Series G Term Preferred Stock in this offering and assumes no exercise of the underwriters’ option to purchase shares to cover overallotments.

FEES AND EXPENSES

The offering of the Company’s Series G Term Preferred Stock as described in the Series G Prospectus impacts the costs and expenses that an investor in Class R common shares sold in the offering conducted pursuant to the Common Stock Prospectus will bear, directly or indirectly. Accordingly, the information set forth under the heading “Fees and Expenses” in the Common Stock Prospectus is hereby deleted and replaced with the following:

The following table is intended to assist you in understanding the costs and expenses that an investor in Class R shares sold in this offering will bear directly or indirectly. You will pay (i) selling commissions and dealer manager fees for the purchase of our Class R shares, (ii) dealer manager fees, but no selling commissions, for the purchase of our Class RIA shares and (iii) no selling commissions or dealer manager fees for the purchase of our Class I shares. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you,” “us” or “Priority Income Fund, Inc.,” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.

Stockholder Transaction Expenses (as a percentage of offering price) (1)

Sales load to Dealer Manager (2)	6.75
Offering expenses (3)	1.96 %
Distribution reinvestment plan fees (4)	—
Total stockholder transaction expenses	8.71 %

Annual expenses (as a percentage of average net assets attributable to shares) (1)

Management fee (5)	3.11
Incentive fees payable under our Investment Advisory Agreement (up to 20% on net investment income, subject to a hurdle rate of 6% annualized) (6)	3.43 %
Interest payments on borrowed funds (7)	4.66 %
Other expenses (8)	1.96 %
Expense Support Repayment (9)	0.15 %
Total annual expenses (10)	13.31 %

Example

The following example demonstrates the projected dollar amount of total expenses that would be incurred over various periods with respect to a hypothetical investment in our shares. In calculating the following expense amounts, we have assumed our annual operating expenses would remain at the percentage levels set forth in the table above and that stockholders would pay a sales load of 6.75%, comprised of a selling commission of 6.0% and a Dealer Manager fee of 0.75%, with respect to shares sold by us in this offering.

	1 Year	3 Years	5 Years	10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return (1)(6)	175	338	486	797
You would pay the following expenses on a $1,000 investment, assuming the fixed preferred return is achieved (1)(6)	204	413	593	939

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(1) Amount assumes that we sell $26.3 million worth of our shares during the 12 months following the date of this prospectus, which represents the average monthly rate of capital raising during the 3 months from April 1, 2020 to June 30, 2020 over 12 months. As of June 30, 2020, we had net assets of approximately $347.8 million. Assuming we raise an additional $26.3 million over the 12 months following the date of this prospectus, we would receive net offering proceeds from such sales of $24.5 million, resulting in estimated net assets of $372.3 million and average net assets of $361.1 million, based on our net assets of $347.8 million as of June 30, 2020. Actual expenses will depend on the number of shares we sell in this offering and the amount of leverage we employ. For example, if we were to raise proceeds significantly less than this amount over the next twelve months, our expenses as a percentage

of our average net assets would be significantly higher. There can be no assurance that we will sell $26.3 million of our shares during the twelve months following the date of this prospectus.

(2) “Sales load” includes selling commissions of 6.0% and dealer manager fees of 0.75% payable upon a purchase of Class R shares.

(3) Amount reflects an estimate of the maximum amount of offering expenses we may incur of 1.96% of gross offering proceeds based on estimated amounts over the next twelve months. This amount includes certain costs and expenses for which we may reimburse our Dealer Manager.

(4) The expenses of the distribution reinvestment plan are included in Other Expenses. See “Distribution Reinvestment Plan.”

(5) Our base management fee under the Investment Advisory Agreement will be payable quarterly in arrears, and will be calculated at an annual rate of 2.0% of the value of our average total assets, and based on the average value of our total assets as of the end of the two most recently completed calendar quarters). Our base management fee has been calculated on the basis of our average total assets over the following twelve months and includes routine non-compensation overhead expenses of our Adviser under the Investment Advisory Agreement (up to a maximum of 0.0625% of our total assets per quarter, or 0.25% per year). Routine non-compensation overhead expenses consist primarily of expenses related to office space, furnishings, supplies, equipment, communications equipment and services, and insurance. The percentage reflected in the table is higher than 2.0% because it is calculated on our average net assets (rather than our average total assets). See “Investment Advisory Agreement—Overview of Our Adviser—Advisory Fees.”

(6) Based on the subordinated incentive fee expected to be paid for the year ended June 30, 2021. However, the subordinated incentive fee payable to our Adviser is based on our performance and will not be paid unless we achieve certain performance targets. For example, the subordinated incentive fee, which we refer to as the subordinated incentive fee on income, will be calculated and payable quarterly in arrears based upon our “pre-incentive fee net investment income” for the immediately preceding quarter and will be subordinated to a fixed preferred return on the value of our net assets at the end of the immediately preceding calendar quarter equal to 1.5% per quarter, or an annualized rate of 6.0%. See “Investment Advisory Agreement—Overview of Our Adviser—Advisory Fees” for a full explanation of how this incentive fee is calculated.

(7) “Interest payments on borrowed funds” represents our annualized effective interest expense and includes dividends payable on shares of our Series A Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.375% per annum, dividends payable on shares of our Series B Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.25% per annum, dividends payable on shares of our Series C Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.625% per annum, dividends payable on shares of our Series D Term Preferred Stock, which accrue dividends at a fixed annual rate of 7.00% per annum, dividends payable on shares of our Series E Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.375% per annum, dividends payable on shares of our Series F Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.625% and dividends payable on shares of our Series G Term Preferred Stock, which accrue dividends at a fixed annual rate of 6.250%. It also includes estimated payments under the Facility. We anticipate having an average drawn balance on the Facility of $10 million that will incur interest at at the current Prime Rate subject to a 3% floor plus 0.75%. Also included is a 1% undrawn fee based on the assumed $15 million of the unused commitment on the Facility. Additional projected amounts considered in calculating the above include interest expense, amortization of deferred financing costs, and amortization of discount on the $15 million balance of the 2035 Notes that accrue interest at a rate of 6.50% per annum. The percentage disclosed assumes 1,468,265 shares of Series A Preferred Stock outstanding, 984,918 shares of Series B Preferred Stock outstanding, 1,553,389 shares of Series C Preferred Stock outstanding, 1,094,065 shares of Series D Preferred Stock outstanding, 1,021,674 shares of Series E Preferred Stock outstanding, 1,233,428 shares of Series F Preferred Stock outstanding, and 1,280,000 shares of Series G Preferred Stock outstanding. We may issue additional shares and/or series of preferred stock or debt securities in the 12 months following the date of this prospectus. In the event we were to issue additional shares of preferred stock or debt securities, our borrowing costs, and correspondingly our total annual expenses, including, in the case of such preferred stock, our base management fee as a percentage of our net assets attributable to common stock, would increase.

(8) Other expenses include accounting, legal and auditing fees as well as the reimbursement of the compensation of our chief financial officer, chief compliance officer, treasurer and secretary and other administrative personnel of our Administrator and fees payable to our independent directors. The amount presented in the table is based on estimated amounts that may be incurred during the year ended June 30, 2021. The estimate of our administrative

costs is based on our projected allocable portion of overhead and other expenses incurred by Prospect Administration in performing its obligations under the Administration Agreement, as well as reimbursement of routine non-compensation overhead expenses of our Adviser under the Investment Advisory Agreement. “Other expenses” does not include non-recurring expenses. See “Administration Agreement” and “Investment Advisory Agreement.”

(9) We have a conditional obligation to repay our Adviser for any amounts previously funded by our Adviser under an expense support and conditional reimbursement agreement. The percentage disclosed assumes the maximum amount of expense support reimbursements that could be paid by us during the next 12 months. As of June 30, 2020, the current unreimbursed expense support is $531,630. If we were required to make the potential maximum repayment, such payment as a percentage of average net assets attributable to common shares would be 0.15%. On May 24, 2018, our Board of Directors voted in favor of terminating the expense support agreement. As a result, we will no longer receive expense support payments, but will continue to be obligated to reimburse any payments made by our Adviser to us within the last three years that have not yet been reimbursed, subject to the expiration of each repayment obligation. The last of the Company’s repayment obligations expires on March 31, 2021. See “Conditional Obligation to Reimburse the Adviser Pursuant to Terminated Expense Support Agreement” on page 64.

(10) The indirect expenses associated with the Company’s CLO equity investments are not included in the fee table presentation, but if such expenses were included in the fee table presentation then the Company’s total annual expenses would have been 18.10%.

The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all distributions at net asset value, we generally intend that participants in our distribution reinvestment plan during this offering will receive a number of our shares determined by dividing the total dollar amount of the distribution payable to a participant by a price equal to 95% of the price that shares are sold in the offering at the closing immediately following the distribution payment date. See “Distribution Reinvestment Plan” for additional information regarding our distribution reinvestment plan. See “Plan of Distribution” for additional information regarding stockholder transaction expenses.