Investment Portfolio - As of June 30, 2024, the company had investments in 106 portfolio companies with an aggregate fair value of approximately $1,847 million and unfunded commitments of $179 million[219] - The portfolio consisted of 97.8% first lien senior secured loans, 1.2% subordinated debt, and 1.0% equity investments[219] - The average position size based on commitment was $19.3 million as of June 30, 2024[222] - The company had two debt investments on non-accrual status, representing 1.0% and 1.2% of total debt investments at fair value and cost, respectively[224] - The company had $178.5 million in unfunded commitments to provide debt financing to portfolio companies as of June 30, 2024[258] Financial Performance - Total investment income for the three months ended June 30, 2024, was $52.4 million, up from $40.7 million in the same period of 2023, representing a 28.0% increase[236] - Net investment income for the six months ended June 30, 2024, was $58.1 million, compared to $41.0 million for the same period in 2023, reflecting a 41.5% increase[236] - Operating expenses for the three months ended June 30, 2024, totaled $22.6 million, an increase from $19.0 million in the same period of 2023, marking a 18.9% rise[238] - Interest and debt financing expenses for the six months ended June 30, 2024, were $28.9 million, up from $24.5 million in the same period of 2023, indicating a 17.9% increase[238] - The company recorded net unrealized gains of $9.9 million for the six months ended June 30, 2024, compared to $6.6 million for the same period in 2023, a 50.0% increase[240] IPO and Capital Structure - The company closed its initial public offering on May 24, 2024, issuing 6,000,000 shares at a public offering price of $16.63 per share, resulting in net cash proceeds of $93.8 million[214] - A regular dividend of $0.40 per share was paid on July 15, 2024, totaling $28.4 million, with $4.4 million reinvested into the company[216] - The company has an asset coverage ratio of 289% as of June 30, 2024, significantly above the required minimum of 150%[247] - The company has $603 million of undrawn commitments available on its credit facilities as of June 30, 2024[249] - The company increased its revolving funding facility commitment from $455 million to $600 million on April 3, 2024[254] Debt and Financing - As of June 30, 2024, the company had $75 million in senior unsecured notes outstanding and $640 million borrowed under credit facilities, with cash and cash equivalents of $15.1 million[249] - Total contractual obligations related to outstanding indebtedness as of June 30, 2024, amount to $622 million[257] - The interest rate on the corporate credit facility is based on Term SOFR plus an applicable spread of 2.35% per annum[252] - The company does not have any off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[258] Management and Administration - The base management fee is calculated at an annual rate of 1.00% following the IPO, with an incentive fee on income subject to a twelve-quarter lookback hurdle rate of 1.50%[271] - The Company will reimburse the Administrator for costs incurred under the Administration Agreement, which may include office facilities and compensation for officers[273] - The Administrator has engaged Ultimus Fund Solutions, LLC for fund administration and accounting services, with fees constituting reimbursable expenses[274] - The Administration Agreement has been extended through March 15, 2025, allowing for continued administrative support[272] Interest Rate Sensitivity - Interest rate sensitivity indicates that a 200 basis point decrease in interest rates could lead to a net decrease in investment income of $25.4 million[278] - A 100 basis point increase in interest rates could result in a net increase in investment income of $12.6 million[278] - The Company may hedge against interest rate fluctuations using standard hedging instruments, which could limit benefits from lower interest rates[279] - The Company does not include investments on non-accrual status in its interest rate sensitivity calculations[277] Incentive Fees and Waivers - The Advisor implemented waivers of the income incentive fee for three quarters and a portion of the base management fee for one year post-IPO[271] - The Advisor's income incentive fee may be reduced if the portfolio experiences aggregate write-downs or net capital losses during the trailing twelve quarters[271]

Regulatory and Legal Risks - Changes in laws and regulations, particularly those stemming from Dodd-Frank, could materially adversely affect the company's operations and financial condition [262]. - The U.S. Risk Retention Rules, effective December 24, 2016, may increase financing costs and impact the company's ability to complete future securitization transactions [266]. - The Economic Growth, Regulatory Relief, and Consumer Protection Act significantly recalibrated regulatory thresholds, which could negatively impact the company's operations and cash flows [267]. - Increased regulatory attention on non-bank credit extension may impose additional costs and adversely affect the company's financial condition [268]. - The Inflation Reduction Act of 2022 introduced a 15% book minimum tax on larger corporations, which may have uncertain impacts on the company and its stockholders [364]. Cybersecurity and Operational Risks - Cybersecurity risks pose a significant threat to the company's operations and could lead to operational disruptions and negatively affect financial performance [280]. - The company is highly dependent on information systems, and any cyber incidents could materially affect the value of its securities and ability to pay distributions [279]. Financial and Market Risks - The Federal Open Market Committee raised the target range for the federal funds rate eleven times since March 2022, currently at 5.25% to 5.50% [288]. - Rising interest rates could increase the cost of borrowings and reduce returns to stockholders, potentially leading to lower dividend payments [287]. - The company is dependent on bank relationships, and recent strains in the banking system may adversely impact its financial condition and results of operations [289]. - Borrowings under credit facilities and senior unsecured notes increase investment volatility and risk, potentially affecting cash available for debt servicing and stockholder distributions [345][346]. - The company is subject to risks associated with liquid credit investments, including liquidity, price volatility, and interest rate risk, which may impact net asset value (NAV) [348]. - The company has not taken actions to alter its existing interest rate sensitivity, which could expose it to significant changes in market interest rates [464]. - Interest rate sensitivity indicates that a 200 basis point decrease in interest rates could lead to a net decrease of $14.5 million in net investment income [466]. Investment Risks - The majority of the company's portfolio investments are classified as Level 3 under ASC Topic 820, indicating that valuations are based on unobservable inputs and significant management judgment [258]. - The company intends to use an independent valuation firm to review the fair value of certain instruments at least annually, which may lead to fluctuations in valuations over short periods [259]. - Investments are typically in highly leveraged companies, which may have limited financial resources and could lead to partial or total loss of investments [294]. - The company may invest in companies not subject to public reporting requirements, complicating the assessment of prior performance and increasing investment risk [292]. - The company may face significant net unrealized depreciation in its portfolio due to declines in prices and liquidity in the corporate debt markets [310]. - Prepayment of loans in the investment portfolio may reduce achievable yields if returned capital cannot be reinvested in transactions with equal or greater expected yields [312]. - The debt investments are typically below investment grade, indicating predominantly speculative characteristics and resulting in above-average risk and volatility [296]. - Defaults by portfolio companies could harm operating results and lead to potential termination of loans and foreclosure on assets [297]. - A failure of portfolio companies to meet debt obligations could materially adversely affect the company's business, financial condition, and cash flows [315]. - The company may incur contingent liabilities related to representations about portfolio companies, which could adversely affect its financial condition [311]. - The company may make follow-on investments to maintain or increase its position in portfolio companies, but failure to do so could impair portfolio value [322]. - The company may invest in subordinated loans, which carry a higher risk of default due to potential adverse changes in the financial condition of portfolio companies [328]. - Unsecured loans made by the company may not benefit from collateral, increasing the risk of loss if portfolio companies face liquidation [331]. - The company may face contingent liabilities related to private securities investments, which could result in funding obligations if representations made during sales turn out to be inaccurate [334]. - The company may not realize gains from equity investments, and any gains may not offset other losses experienced [343]. Environmental and Geopolitical Risks - Investments may expose the company to environmental risks, potentially leading to liabilities for removal or remediation costs [316]. - Global economic and political conditions, including the conflict in Ukraine, may adversely affect the company's business and financial condition [371]. - The company does not currently have portfolio investments with direct exposure to the Middle East, China, Taiwan, Russia, or Ukraine, mitigating potential geopolitical risks [373]. - Political, social, and economic uncertainties, including those related to the COVID-19 pandemic, create risks that could adversely impact the company's investments and operations [374]. - The interconnectedness of global economies means that events in one region can increasingly impact issuers in other markets, including established markets like the U.S. [374]. Dividend and Shareholder Risks - The company may declare a large portion of dividends in shares instead of cash, affecting stockholders' tax liabilities [365]. - The company may issue additional shares, leading to potential dilution of existing stockholders' interests [359]. - There is no public market for the company's common stock, which may limit liquidity for stockholders [349]. Economic Impact Risks - The COVID-19 pandemic has caused significant disruptions in the U.S. credit markets, leading to increased defaults and volatility, which could adversely impact the company's loan origination and investment returns [376]. - Loan delinquencies and non-accruals may increase if public health uncertainties and market disruptions persist, potentially leading to higher costs and reduced income [378]. - Increased public scrutiny related to environmental, social, and governance (ESG) activities poses risks to the company's brand and operational costs [380].

Investment Portfolio - As of September 30, 2023, the company had investments in 72 portfolio companies with an aggregate fair value of approximately $1,278 million and unfunded commitments of $109 million[179]. - The portfolio consisted of 97.7% first lien senior secured loans, 1.7% junior debt, and 0.6% equity investments[179]. - The largest industries in the portfolio were Trading Companies & Distributors (13.8%), Food Products (10.9%), and Commercial Services & Supplies (10.5%) based on fair value[181]. - The average position size based on commitment was $19.5 million, with a weighted average and median last twelve months (LTM) EBITDA of $55.8 million and $43.4 million, respectively[182]. - The weighted average loan-to-value (LTV) of debt investments at the time of initial investment was 44.5%[183]. - As of September 30, 2023, the company had one investment on non-accrual status, comprising 1.9% of total debt investments at cost[184]. Investment Income and Expenses - Total investment income for the three months ended September 30, 2023, was $41.2 million, a 100% increase from $20.5 million in the same period of 2022[199]. - Net investment income for the three months ended September 30, 2023, was $21.4 million, compared to $11.3 million for the same period in 2022, reflecting an increase of 89%[199]. - Total expenses for the three months ended September 30, 2023, were $19.8 million, significantly higher than $9.2 million in the same period of 2022, marking a 115% increase[201]. - Interest and debt financing expenses for the three months ended September 30, 2023, were $13.9 million, up from $5.5 million in the same period of 2022, reflecting a 153% increase[201]. - Investment income for the nine months ended September 30, 2023, totaled $118.3 million, up from $45.4 million in the same period of 2022, representing a 160% increase[200]. - Net investment income for the nine months ended September 30, 2023, was $62.4 million, compared to $24.6 million for the same period in 2022, indicating a 154% increase[199]. Unrealized Gains and Losses - Net unrealized losses on investments for the three months ended September 30, 2023, were $(7.5) million, compared to unrealized gains of $3.3 million in the same period of 2022[204]. - The total unrealized appreciation (depreciation) for the three months ended September 30, 2023, was $(7.5) million, compared to $7.3 million in unrealized gains for the same period in 2022[204]. - The top contributor to unrealized gains for the three months ended September 30, 2023, was Genuine Cable Group, LLC, with $0.7 million[205]. - Total unrealized appreciation (depreciation), net for the nine months ended September 30, 2023, was $(8.1) million, reflecting a challenging investment environment[208]. Financial Position and Commitments - As of September 30, 2023, the company had $75 million in senior unsecured notes outstanding and $523 million borrowed under credit facilities, with cash and cash equivalents of $29 million[212]. - The asset coverage ratio was 214% as of September 30, 2023, compared to 203% as of December 31, 2022, indicating strong leverage management[210]. - The company has aggregate capital commitments of $988.2 million, with $329.9 million undrawn from investors, representing 66.6% funding[213]. - The Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain conditions[214]. - The Revolving Funding Facility has a total commitment of $455 million, with a maturity date of February 18, 2027[216]. - The company expects cash and cash equivalents, along with undrawn capital commitments, to be sufficient for anticipated investment activities over the next twelve months[211]. - The company has $598 million in total contractual obligations related to outstanding indebtedness as of September 30, 2023[218]. - The company anticipates that its cash and liquidity needs will continue to be met by cash generated from ongoing operations and financing activities beyond twelve months[211]. Management and Fees - The Investment Advisory Agreement was renewed for one year through March 15, 2024, with payments consisting of a base management fee and an incentive fee based on performance[230]. - The base management fee is calculated as a percentage of the fair market value of investments, excluding cash and certain securities[231]. - The Administration Agreement was also renewed for one year through March 15, 2024, with the Administrator reimbursed for administrative expenses incurred[233]. - The Administrator has engaged U.S. Bank Global Fund Services and Ultimus Fund Solutions, LLC for sub-administration services effective in 2023[233]. - Incentive fees earned by the Advisor will only be payable upon an Exchange Listing or sale of the company[232]. Interest Rate Sensitivity - Interest rate sensitivity indicates that net investment income may be adversely affected by changes in interest rates due to the use of borrowings for investments[235]. - A hypothetical decrease of 200 basis points in interest rates would result in a decrease of $14.7 million in net investment income[237]. - Conversely, a hypothetical increase of 200 basis points in interest rates would lead to an increase of $14.7 million in net investment income[237]. - The company may use hedging instruments to mitigate interest rate fluctuations, but this could limit benefits from lower interest rates[238]. - The company does not include non-accrual and non-income producing investments in its interest rate sensitivity calculations[236].

Investment Performance - Total investment income for the three months ended June 30, 2023, was $40.7 million, compared to $13.0 million for the same period in 2022, representing a 213% increase[199] - Net investment income for the three months ended June 30, 2023, was $21.7 million, up from $7.1 million in the same period of 2022, reflecting a 205% increase[199] - The weighted average total yield to maturity of debt and income-producing securities at fair value was 12.3% as of June 30, 2023[188] - The net unrealized gains on investments for the three months ended June 30, 2023, were $4.4 million, compared to $2.0 million for the same period in 2022, reflecting a 120% increase[204] - The total unrealized appreciation for the six months ended June 30, 2023, was $6.6 million, up from $2.8 million in the same period of 2022, indicating a 136% increase[210] Investment Commitments - The company made gross new investment commitments of $57.2 million for the three months ended June 30, 2023, compared to $118.3 million for the same period in 2022[191] - The average new investment commitment amount for the three months ended June 30, 2023, was $5.7 million, compared to $4.7 million in the same period of 2022[191] - As of June 30, 2023, the company had subscription agreements with investors for an aggregate capital commitment of $887.0 million, of which $228.7 million is undrawn[185] - Unfunded commitments to provide debt financing to portfolio companies were $116.1 million as of June 30, 2023[227] Financial Position - As of June 30, 2023, the company had 157 debt investments and 13 equity investments in 73 portfolio companies, with an aggregate fair value of approximately $1,284 million[187] - Cash and cash equivalents as of June 30, 2023, totaled $28.0 million, down from $14.9 million as of August 10, 2023[220] - The company had $75 million in senior unsecured notes outstanding as of June 30, 2023, with $25 million due in June 2027 and $50 million due in June 2028[221] - Total contractual obligations amount to $641 million, with $632 million due after one year[226] Operating Expenses - Operating expenses for the three months ended June 30, 2023, were $19.0 million, significantly up from $5.9 million in the same period of 2022, representing a 221% increase[201] Leadership Changes - The company accepted the resignation of its CEO and appointed two Co-CEOs effective August 16, 2023[186] Interest Rate Sensitivity - The company is subject to interest rate sensitivity, with a potential decrease in net investment income of $14.4 million if interest rates rise by 200 basis points[243][245] - The company may hedge against interest rate fluctuations using standard hedging instruments, which could limit benefits from lower interest rates[246] Credit Facilities - As of June 30, 2023, the Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain circumstances[222] - The Revolving Funding Facility has a total commitment of $455 million, with an interest rate of daily SOFR plus 2.75% per annum[224] - The Subscription Credit Agreement allows borrowing up to $125 million, with an interest rate of Term SOFR plus 1.975%[225] - The company has a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility[222] - The interest rate on the Subscription Credit Agreement is subject to a 0.275% floor[225] Accounting Estimates - The company’s critical accounting estimates affect the reported amounts of assets, liabilities, revenues, and expenses, which could lead to actual results differing from estimates[228] Shareholder Distributions - The company declared a distribution of $0.53 per share to common stockholders, totaling $20.7 million, with $1.4 million reinvested into the company[184]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 83-0531326 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Title of each class Trading Symbol(s) Name of each exchange on which registered None None None FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ...

Valuation and Investment Strategy - The majority of the company's portfolio investments are classified as Level 3 under ASC Topic 820, indicating that valuations are based on unobservable inputs and significant management judgment [246]. - The company intends to use an independent valuation firm to review the fair value of certain instruments at least once annually, which may lead to fluctuations in valuations over short periods [247]. - Changes in fair value are recorded in the consolidated statement of operations as net change in unrealized appreciation or depreciation, reflecting quarterly adjustments [248]. - The SEC's new Rule 2a-5, effective September 1, 2022, designates the Advisor as the "valuation designee" for fair value determinations, with oversight from the Board of Directors [249]. - The Board of Directors has the authority to change investment objectives and strategies without prior notice, which could adversely affect business and stockholder value [257]. - The company may need to alter its investment strategy due to changes in laws and regulations, which could materially impact results and investment focus [251]. Regulatory and Compliance Risks - New or modified laws and regulations, including those from Dodd-Frank, may adversely affect the company's business operations and financial condition [250]. - The company anticipates incurring significant costs related to compliance with the Sarbanes-Oxley Act and other regulatory requirements, which may negatively impact financial performance [268]. - The company is classified as an "emerging growth company" until total annual gross revenues exceed $1.07 billion or other specified conditions are met [264]. - The SEC is working on proposals for mandatory disclosure of ESG-related matters, which could increase regulatory burdens and affect profitability [359]. Economic and Market Risks - Political uncertainty, including risks from global events, could lead to increased volatility and negatively impact the company's investments [256]. - Economic recessions could impair portfolio companies, leading to declines in revenue and cash flows, potentially increasing non-performing investments [274]. - The Federal Reserve raised the federal funds rate seven times in 2022 to a range of 4.25% to 4.50%, with further increases likely in 2023, which could adversely affect income-oriented investments [277]. - Rising interest rates may increase the difficulty for portfolio companies to service their debt obligations, potentially leading to defaults [303]. - The company is subject to financial market risks, including interest rate sensitivity, which can materially affect net investment income [431]. - A hypothetical 200 basis points decrease in interest rates could lead to a net decrease of $11.7 million in net investment income [433]. Investment Risks - The company may invest in highly leveraged companies, which could lead to significant risks and potential loss of investments [283]. - Investments in private middle-market companies are risky due to limited public information and potential difficulties in accessing capital markets [287]. - Defaults by portfolio companies could harm operating results and may lead to additional expenses for recovery efforts [282]. - The company may invest in "covenant-lite" loans, which provide fewer rights against borrowers and may increase the risk of loss [282]. - The company may invest in portfolio companies with second priority debt secured by the same collateral as senior debt, which may limit recovery in liquidation scenarios [289]. - Unsecured debt investments may not benefit from collateral, increasing the risk of insufficient proceeds to satisfy obligations [290]. - The company faces risks related to illiquidity in investments, which may hinder timely realization of investments and affect overall business performance [292]. - The company may lack control over portfolio companies, limiting its ability to influence management decisions that could affect investment value [311]. - There is no assurance that portfolio company management will operate in accordance with the company's expectations, which could adversely affect performance [314]. - The company may invest in second lien and subordinated loans, which carry a higher risk of default due to potential adverse changes in financial conditions [317]. - The company may make unsecured loans to portfolio companies, which do not benefit from any collateral, increasing the risk of loss [319]. - The company may engage in hedging transactions to mitigate risks, but these transactions could also introduce additional risks and may not fully protect against losses [325]. - The use of leverage increases the volatility of investments, magnifying potential gains or losses, and could negatively affect the ability to service debt or make distributions [330]. - If the ratio of total assets to total borrowings falls below 150%, the company may be required to sell investments to repay debt, potentially at a disadvantageous time [332]. Shareholder and Distribution Risks - There is no public market for the company's shares, which may limit liquidity and the ability to liquidate investments [333]. - The company intends to make periodic distributions to stockholders, but these may be affected by various risk factors and asset coverage tests [339]. - Distributions may include a return of capital, which could increase tax liabilities for stockholders upon future sales of shares [340]. - Stockholders may experience dilution in ownership percentage if additional equity interests are issued [342]. - The company is prohibited from issuing shares below NAV per share unless approved by the Board of Directors and stockholders, which may lead to dilution for existing stockholders [343]. - Subsequent closings after the Initial Closing will result in existing stockholders experiencing dilution due to Catch-up Purchases by new investors [344]. - Distributions declared in cash for stockholders participating in the DRIP will be automatically reinvested, potentially causing dilution for non-participants over time [345]. - The company may declare a large portion of dividends in shares instead of cash, with a minimum cash portion of 20%, impacting stockholders' tax obligations [346]. - The company does not currently anticipate issuing preferred stock, which could adversely affect the value of common stock [347]. Operational Risks - The Advisor and Administrator can resign with 60 days' notice, potentially disrupting operations and adversely affecting financial condition if suitable replacements are not found [260][263]. - The company may face increased operational risks due to remote working policies, which could strain technology resources and heighten cybersecurity risks [271]. - The company is highly dependent on information systems, and failures could significantly disrupt business operations and affect share value [269]. - The portfolio may be concentrated in a limited number of companies and industries, increasing exposure to significant losses if any of these companies default [308]. - Follow-on investments are at the company's discretion and failure to make them may jeopardize the value of initial investments [310]. Environmental, Social, and Governance (ESG) Risks - Environmental risks associated with portfolio companies could lead to significant liabilities and adversely impact investment performance [300]. - The company faces increasing scrutiny related to ESG activities, which could impact brand value and operational costs [357].

Investment Performance - Total investment income for the three months ended September 30, 2022, was $20.5 million, compared to $5.0 million for the same period in 2021, representing a 310% increase [200]. - Net investment income for the three months ended September 30, 2022, was $11.3 million, up from $3.0 million in the same period of 2021, reflecting a 277% increase [200]. - Net unrealized gains on investments for the three months ended September 30, 2022, were $7.3 million, compared to $1.7 million for the same period in 2021, representing a significant increase of 329% [202]. - For the nine months ended September 30, 2022, net unrealized gains totaled $9.4 million, up from $5.0 million in 2021, indicating an increase of 88% [206]. Investment Commitments - Gross new investment commitments for the three months ended September 30, 2022, were $331.8 million, significantly higher than $105.6 million in the same period of 2021 [194]. - The weighted average interest rate of new investment commitments for the three months ended September 30, 2022, was 9.7%, compared to 7.3% in the same period of 2021 [194]. - The company had subscription agreements with investors for an aggregate capital commitment of $808.2 million, of which $290.5 million was undrawn [190]. - The company has unfunded commitments of $125.2 million as of September 30, 2022, compared to $97.8 million as of December 31, 2021 [220]. Financial Position - As of September 30, 2022, the company had $464 million borrowed under credit facilities and cash and cash equivalents of $20.0 million [212]. - The asset coverage ratio as of September 30, 2022, was 213%, down from 217% as of December 31, 2021, indicating a stable financial condition [210]. - As of November 9, 2022, the company had $508 million borrowed under credit facilities and cash and cash equivalents of $7.2 million [212]. - As of September 30, 2022, total contractual obligations amount to $464 million, with $62 million due in less than one year and $402 million due after five years [219]. Distribution and Share Issuance - The company paid a distribution of $0.35 per share on October 25, 2022, totaling $11.0 million, with $2.1 million reinvested into the company [189]. - The company issued and sold 11,858,122 shares of common stock during the nine months ended September 30, 2022, raising an aggregate of $193.6 million [213]. Credit Facilities - The company increased its Corporate Credit Facility commitment from $350 million to $400 million on November 10, 2022 [191]. - The Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain conditions [215]. - The Revolving Funding Facility has a total commitment of $250 million, with a maturity date of February 18, 2027 [217]. Interest Rate Sensitivity - The company is subject to interest rate sensitivity, with potential impacts on net investment income based on hypothetical interest rate changes [232]. - A 100 basis point increase in interest rates could lead to a $9.6 million increase in interest income and a $4.6 million increase in interest expense, resulting in a net investment income increase of $5 million [234]. - The company may hedge against interest rate fluctuations using standard hedging instruments, which could limit benefits from lower interest rates [235]. Valuation and Management Fees - The Advisor is responsible for the valuation of investments, with quarterly reviews by a third-party valuation firm for Level 3 investments [226]. - The base management fee under the Investment Advisory Agreement is based on a percentage of the fair market value of investments, excluding certain assets [228]. - The Audit Committee oversees the Advisor's fair valuation processes, meeting quarterly to review determinations and reports [226]. Portfolio Diversification - As of September 30, 2022, the company had 140 debt investments and 9 equity investments with an aggregate fair value of approximately $964.0 million [192]. - As of September 30, 2022, the portfolio was diversified across various industries, with the largest being commercial services & supplies at 13.7% [197]. Other Financial Information - Interest income is recorded on an accrual basis, with specific policies for PIK interest and OIDs, impacting revenue recognition [227]. - The company does not have any off-balance sheet financings or liabilities beyond contractual commitments and legal contingencies [220].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 814-01363 Kayne Anderson BDC, Inc. | Delaware | 83-0531326 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification ...

Investment Income - Total investment income for the three months ended March 31, 2022, was $11.9 million, a significant increase from $1.7 million in the same period of 2021[178]. - Net investment income for the three months ended March 31, 2022, was $6.2 million, compared to $0.6 million for the same period in 2021[177]. Portfolio Composition - The company had 104 debt investments and 4 equity investments in 50 portfolio companies with an aggregate fair value of approximately $617.1 million as of March 31, 2022[170]. - The portfolio's industry composition as of March 31, 2022, included 18.0% in commercial services & supplies and 14.3% in trading companies & distributors[174]. - The company anticipates that at least 90% of its portfolio will be invested in secured middle market loans, primarily in core middle market companies[165]. Investment Activity - New investments for the three months ended March 31, 2022, totaled $11.5 million, a decrease from $159.8 million in the same period of 2021[172]. - The principal amount of investments funded for private credit investments was $66.9 million for the three months ended March 31, 2022[172]. - As of March 31, 2022, the company had $81.8 million in unfunded commitments to provide debt financing to portfolio companies, indicating ongoing investment potential[193]. Financial Health - As of March 31, 2022, the asset coverage ratio was 260%, significantly above the required minimum of 150%, indicating strong financial health[183]. - The company expects cash and cash equivalents, along with undrawn capital commitments, to be sufficient for its investing activities over the next twelve months[184]. - The company plans to target an asset coverage ratio of 200% to 180%, equating to a debt-to-equity ratio of 1.0x to 1.25x, subject to market conditions[183]. Expenses and Fees - Total expenses for the three months ended March 31, 2022, were $5.7 million, compared to $1.1 million in the same period of 2021[179]. - The company will pay a base management fee to its Advisor based on the fair market value of investments, excluding cash and certain short-term instruments[202]. - The company has an Administration Agreement with its Advisor for necessary administrative services, with reimbursement for expenses incurred on behalf of the company[205]. Borrowings and Liquidity - As of March 31, 2022, the company had $242.0 million borrowed under credit facilities and cash and cash equivalents of $8.8 million, showing a decrease in liquidity compared to $296 million borrowed and $3.8 million in cash as of May 11, 2022[185]. - The Corporate Credit Facility has a total commitment of $275 million, with a potential increase to $550 million under certain circumstances, and an interest rate of Term SOFR plus 2.35% per annum[188]. - The Revolving Funding Facility has a total commitment of $250 million, with an interest rate of daily SOFR plus 2.35% per annum, maturing on February 18, 2027[190]. Unrealized Appreciation - For the three months ended March 31, 2022, the total unrealized appreciation was $1.1 million, down from $2.8 million in the same period of 2021, reflecting a decrease of approximately 60.7%[181][183]. Interest Rate Sensitivity - The company is subject to financial market risks, particularly interest rate sensitivity, which can affect net investment income due to borrowings[206]. - A hypothetical 25 basis points decrease in interest rates would result in a net investment income increase of $0.6 million, while a 300 basis points increase would yield an increase of $11.0 million[208]. - The company may use hedging instruments such as futures, options, and forward contracts to mitigate interest rate fluctuations, although this may limit benefits from lower interest rates[209].

Valuation and Regulatory Environment - The majority of the company's portfolio investments are classified as Level 3 under ASC Topic 820, indicating that valuations are based on unobservable inputs and significant management judgment [207]. - The company intends to use an independent valuation firm to review the fair value of certain instruments at least once annually, which may lead to fluctuations in valuations over short periods [208]. - The SEC's new Rule 2a-5, effective in Q3 2022, may impact the company's valuation practices and reliance on historical valuation methods [210]. - Changes in laws and regulations, including those from Dodd-Frank, could materially affect the company's operations, cash flows, and financial condition [211]. - The company may alter its investment strategy due to new regulations, which could shift focus away from areas of expertise and adversely affect results [212]. - The U.S. Risk Retention Rules, effective December 24, 2016, may increase financing costs and impact future securitization transactions [213]. - The company is classified as an "emerging growth company" under the JOBS Act, which may affect the attractiveness of its shares to investors [223]. - The company may take advantage of reduced regulatory requirements under the JOBS Act, potentially making its shares less attractive to some investors [224]. - The company will incur significant costs due to compliance with the Sarbanes-Oxley Act and related SEC regulations, which may negatively impact financial performance and distributions [226]. Economic and Market Risks - Economic recessions could impair portfolio companies, leading to declines in revenue and cash flows, which may increase non-performing investments [229]. - Higher inflation levels can reduce returns and the value of investments, as rising interest rates increase borrowing costs and lower dividend payments [231]. - The company may invest in highly leveraged companies, which could result in significant risks and potential loss of investments [238]. - Defaults by portfolio companies could harm operating results, potentially leading to loan terminations and foreclosure on assets [237]. - The company may face challenges in conducting due diligence on portfolio companies, which could expose it to investment risks [232]. - Cybersecurity risks are heightened due to increased reliance on information systems, which could disrupt operations and negatively affect financial data [227]. - The company is currently impacted by COVID-19 measures, which may strain technology resources and introduce operational risks [228]. - Investments in private middle-market companies are risky due to limited public information and unpredictable operating results [241]. - The company may make unsecured debt investments, which will not benefit from any collateral, increasing the risk of loss [243]. - The company may face limitations on rights related to collateral securing junior priority loans due to intercreditor agreements with senior debt holders [244]. - Investments in companies experiencing financial difficulties may be illiquid, making timely realization of investments uncertain [245]. - Price declines and illiquidity in corporate debt markets could lead to significant net unrealized depreciation, adversely affecting the company's NAV [249]. - The company may be unable to liquidate investments quickly, potentially realizing less than previously recorded values [246]. - Rising interest rates may hinder portfolio companies' ability to service debt obligations, increasing the risk of defaults [254]. - The company has not yet identified all potential investments for its portfolio, which may affect anticipated investment pace [255]. - The portfolio may be concentrated in a limited number of companies and industries, increasing the risk of significant loss from defaults [257]. - The company may make unsecured loans to portfolio companies, which do not benefit from collateral, increasing risk in case of defaults [263]. - Follow-on investments in portfolio companies are at the company's discretion, and failure to make such investments could impair portfolio value [258]. - The company is classified as a non-diversified investment company, which may lead to greater NAV fluctuations due to concentration in few issuers [256]. - The company may face contingent liabilities related to the disposition of private securities, which could require indemnification of purchasers if representations about the business turn out to be inaccurate [266]. Financial Performance and Distributions - The company’s ability to pay distributions may be adversely affected by the COVID-19 pandemic, with potential limitations on cash distributions due to asset coverage tests under the 1940 Act [280]. - The company’s total assets to total borrowings ratio must remain above 150% to incur additional debt, which could impact operations if this threshold is not met [275]. - The use of leverage increases investment volatility, magnifying potential gains or losses, and could negatively affect the ability to service debt or make distributions [273]. - The company may issue preferred stock in the future, which could adversely affect the value of common stock due to cumulative dividend requirements and liquidation preferences [288]. - There is no public market for the company’s shares, which may limit liquidity and the ability to liquidate investments [276]. - Stockholders may experience dilution in ownership percentage if additional equity interests are issued at or below NAV [283]. - The company may not realize gains from equity investments, as the value of such investments may decline [271]. - The company’s investments involve higher levels of risk, making them potentially unsuitable for investors with lower risk tolerance [282]. COVID-19 Impact and Market Conditions - The COVID-19 pandemic has caused significant disruptions in local, regional, national, and global markets, affecting middle-market loan borrowers and leading to increased draws on revolving lines of credit [293]. - Increased loan delinquencies, non-accruals, and bankruptcies may occur if public health uncertainties and market disruptions persist, potentially leading to a material adverse effect on the company's financial condition [295]. - Interest rate sensitivity indicates that changes in interest rates can materially affect net investment income, with a hypothetical 200 basis points increase resulting in a net investment income increase of $3.5 million [369]. - The company may hedge against interest rate fluctuations using standard hedging instruments, which could limit participation in benefits from lower interest rates [370]. - The company faces risks related to environmental, social, and governance (ESG) activities, which could adversely impact brand value and operational costs [297]. - Political, social, and economic uncertainties, including those stemming from the COVID-19 pandemic, create significant risks for the company and its investments [291]. - The company may experience fluctuations in quarterly operating results due to various factors, including interest rates and default rates on securities [300]. - Increased governmental involvement in the economy and changes in regulations could adversely affect the company's operations and market conditions [292]. - The company is subject to potential litigation, which could result in substantial costs and divert management's attention [299]. - The company may face challenges in valuing assets and increased volatility in financial markets due to ongoing uncertainties [292].