☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-56126 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 March 31, 2022 Palmer Square Capital BDC Inc. (Exact name of registrant as specified in its charter) | Maryland | 84-3665200 | | --- | --- | | (State or other jurisdiction of | (I.R.S. ...

Investment Portfolio - As of December 31, 2021, the company had 240 debt and equity investments in 212 portfolio companies with an aggregate fair value of approximately $1.1 billion[303]. - The size of the investment portfolio at fair value increased from $600.1 million as of December 31, 2020 to $1.1 billion as of December 31, 2021, marking an 83.6% growth[314]. - Total investments amounted to $1.19 billion, up from $640.1 million as of December 31, 2020[309]. - The total principal amount of investments funded in first-lien senior secured debt investments was $829.59 million for the year ended December 31, 2021[305]. - The company has unfunded commitments totaling $11.3 million as of December 31, 2021, compared to $1.3 million in the previous year[359]. Investment Performance - For the year ended December 31, 2021, the company made gross investments of $926.35 million, with total new investments amounting to $524.59 million after accounting for sold investments[305]. - The weighted average total yield to maturity of debt and income-producing securities at fair value was 5.77% as of December 31, 2021, compared to 4.96% as of December 31, 2020[302][303]. - The company reported a weighted average interest rate of new investment commitments at 4.80% for the year ended December 31, 2021[309]. - Total investment income for the year ended December 31, 2021 was $39.7 million, up from $25.5 million in 2020, representing a 55.8% increase[312]. - Net investment income for the year ended December 31, 2021 was $22.8 million, compared to $14.7 million in 2020, reflecting a 55.5% increase[312]. - Weighted average total yield of debt and income-producing securities rose to 5.77% in 2021 from 4.96% in 2020[311]. Financial Position - Net expenses for the year ended December 31, 2021 were $16.9 million, up from $10.8 million in 2020, indicating a 56.5% increase[315]. - Average debt outstanding increased from $247.5 million in 2020 to $447.0 million in 2021, a 80.6% rise[316]. - Total net assets increased from $253.1 million as of December 31, 2020 to $452.8 million as of December 31, 2021, a 78.8% increase[316]. - Cash and cash equivalents as of December 31, 2021 were $1.1 million, up from $683 thousand in 2020[322]. - The company experienced net cash used in operating activities of $438 million during the year ended December 31, 2021[321]. Debt and Financing - Under the Bank of America Credit Facility, the commitment amount increased to $725 million as of September 29, 2021, with approximately $552 million principal outstanding as of December 31, 2021[328][331]. - The Wells Fargo Credit Facility had a facility amount of $150 million, with approximately $100 million outstanding as of December 31, 2021[333][337]. - The company reported a total outstanding indebtedness of $550.26 million under the BoA Credit Facility as of December 31, 2021[356]. - The asset coverage ratio was 170% as of December 31, 2021, exceeding the required minimum of 150%[325]. Dividends and Distributions - The company intends to distribute dividends quarterly, subject to available income, and must distribute at least 90% of its net ordinary income to maintain RIC tax treatment[338][339]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares of common stock unless they opt out[342]. - The company plans to distribute net capital gains at least annually, but may retain such gains for investment purposes[341]. Management and Compliance - The company is externally managed by an Investment Advisor, which is a majority-owned subsidiary of Palmer Square, specializing in global alternative investments[297]. - The company is required to comply with various covenants and reporting requirements under its credit facilities, ensuring adherence to leverage restrictions[330][336]. - As of December 31, 2021, PS BDC Funding was in compliance with the applicable covenants in both the Bank of America and Wells Fargo Credit Facilities[331][337]. Risk Management - The company is subject to interest rate sensitivity, with potential impacts on net investment income due to changes in interest rates[361]. - A hypothetical increase of 200 basis points in interest rates could result in a net investment income increase of $4.28 million[363]. - The company measures exposure to currency exchange rate fluctuations and may use hedging instruments to mitigate risks[365]. Valuation and Accounting - The company values investments without readily available market quotations using a multi-step valuation process, including independent reviews[357]. - The company’s financial statements are prepared in accordance with generally accepted accounting principles, requiring estimates and assumptions that may affect reported amounts[348]. - The company’s net realized gains or losses are measured by the difference between net proceeds from sales and the amortized cost basis of investments[353].

Financial Performance - The total investment income for the three months ended September 30, 2021, was $8.9 million, up from $7.9 million in the same period of 2020, indicating a growth of approximately 12.0%[170]. - The net investment income for the three months ended September 30, 2021, was $4.9 million, compared to $4.4 million in the same period of 2020, reflecting an increase of about 10.9%[170]. - The fair value of total investments as of September 30, 2021, was $877.1 million, up from $653.2 million as of December 31, 2020, marking an increase of approximately 34.5%[171]. - The net realized gains on investments for the nine months ended September 30, 2021, were $4.3 million, compared to a loss of $1.1 million in the same period of 2020[170]. - The average new investment commitment amount for the three months ended September 30, 2021, was $3.9 million, compared to $2.8 million in the same period of 2020, indicating a growth of approximately 42.0%[166]. Investment Activity - Total new investments for the three months ended September 30, 2021, were $159.8 million, compared to $26.1 million for the same period in 2020, representing a significant increase[166]. - The investment activity for the three and nine months ended September 30, 2021, reflects ongoing portfolio management and adjustments[164]. - The number of new investment commitments for the three months ended September 30, 2021, was 41, compared to 40 in the same period of 2020[166]. - The weighted average interest rate of new investment commitments was 4.80% for the three months ended September 30, 2021, compared to 5.18% for the same period in 2020[166]. - The percentage of new debt investment commitments at floating rates was 100.00% for the three months ended September 30, 2021, compared to 98.31% in the same period of 2020[166]. Debt and Financing - As of September 30, 2021, the company had $427.5 million principal outstanding under the Credit Facility, an increase from approximately $375.0 million a year earlier[182]. - The Credit Facility was increased to $725 million on September 29, 2021, providing additional liquidity for the company[188]. - The company issued 2,551,012 shares at an aggregate purchase price of $52.5 million during the nine months ended September 30, 2021[185]. - Average debt outstanding increased from $198.6 million to $411.7 million from January 23, 2020, through September 30, 2021, contributing to higher interest expenses[174]. - The asset coverage ratio was 173% as of September 30, 2021, exceeding the required minimum of 150%[184]. Risk Management - The company acknowledges various risks and uncertainties that could impact future performance, including economic conditions and the ability to manage investments effectively[156]. - Interest rate sensitivity indicates that a 100 basis point increase in interest rates could lead to an increase in net investment income by $8,127,349[223]. - A 200 basis point increase in interest rates could result in a net investment income increase of $16,254,697[223]. - The company measures exposure to interest rate and currency exchange rate fluctuations and may use hedging instruments to mitigate risks[225]. - Changes in foreign currency exchange rates may significantly impact investments denominated in foreign currencies[224]. Liquidity and Cash Flow - Cash and cash equivalents increased to $11.0 million as of September 30, 2021, up from $1.2 million a year earlier[182]. - During the nine months ended September 30, 2021, net cash used in operating activities was $61.3 million, primarily due to portfolio investments totaling $521.9 million[180]. - The company maintains sufficient liquidity to fund unfunded commitments, including cash and borrowing capacity[218]. - There are no off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[219]. Company Structure and Regulation - The company is structured as an externally managed, non-diversified closed-end management investment company and has elected to be regulated as a BDC under the Investment Company Act of 1940[157]. - The investment objective is to maximize total return through current income and capital appreciation, focusing on corporate debt securities and CLO structured credit[159]. - The company expects to qualify as a regulated investment company (RIC) annually following its election in 2020[157]. - The company expects to qualify as a RIC annually, requiring distributions of at least 98% of net ordinary income and capital gains to avoid excise taxes[200]. - The valuation of portfolio investments is subject to oversight by the Board, with independent valuation providers engaged for material investments lacking readily available market quotations[209]. Dividends and Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, contingent on available income, with a distribution policy requiring at least 90% of net ordinary income and net short-term capital gains to be distributed[200]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[202]. Expenses - The primary operating expenses include fees to the Investment Advisor and other out-of-pocket costs related to operations and transactions[161]. - Net expenses for the three months ended September 30, 2021 were $4.0 million, an increase from $3.5 million in the same period of 2020, with significant components being $1.9 million in interest and debt financing and $1.5 million in management fees[173].

Investment Performance - As of June 30, 2021, the weighted average total yield to maturity of debt and income-producing securities at fair value was 5.02%[167] - The weighted average total yield to maturity of debt and income-producing securities at amortized cost was 5.35% as of June 30, 2021[167] - The fair value of total investments increased from $640,100,635 as of December 31, 2020, to $721,635,479 as of June 30, 2021, representing a growth of 12.7%[175] - The weighted average total yield of debt and income-producing securities was 5.02% as of June 30, 2021, compared to 4.96% as of December 31, 2020[173] - Total investment income for the three months ended June 30, 2021, was $7,869,228, compared to $6,409,072 for the same period in 2020, reflecting an increase of 22.7%[174] - Net investment income for the six months ended June 30, 2021, was $10,233,952, up from $3,872,987 in the same period of 2020[174] Investment Portfolio - The aggregate fair value of the company's investments as of June 30, 2021, was approximately $653.6 million, consisting of 197 debt and equity investments in 178 portfolio companies[168] - As of December 31, 2020, the aggregate fair value of investments was approximately $600.1 million, with 202 debt and private investments in 181 portfolio companies[169] - The company had no loans on non-accrual status as of June 30, 2021, indicating a stable investment portfolio[176] - The net change in unrealized gains (losses) on investments for the three months ended June 30, 2021, was $(1,871,880), compared to $27,924,433 in the same period of 2020[174] - The net change in unrealized gains (losses) on investments for the three months ended June 30, 2021 was a loss of $1.9 million, compared to a gain of $27.9 million for the same period in 2020[179] Financial Position - As of June 30, 2021, the company had cash and cash equivalents of $1.0 million, up from $0.7 million as of June 30, 2020[184] - The company experienced a net increase in cash and cash equivalents of $336 thousand during the six months ended June 30, 2021[182] - The company had aggregate capital commitments of $9.4 million as of June 30, 2021, with 89% unfunded commitments[185] - The company had $45.6 million in net purchases that had not yet settled as of June 30, 2021, which will affect future interest expenses[225] - The company has total contractual obligations of $413.9 million due within 1-3 years related to its credit facility[219] Debt and Financing - The company bears all out-of-pocket costs and expenses of operations, including interest expense and costs associated with making investments[166] - The company had $415 million principal outstanding under the Credit Facility, compared to approximately $335 million as of June 30, 2020[184] - The Credit Facility has a commitment amount that increased to $475 million as of October 12, 2020, with a maturity date of February 18, 2023[190] - The Wells Fargo Credit Facility has a total Facility Amount of $150 million, maturing on December 18, 2025, with the ability to draw terminating on December 18, 2023[196] - Interest rates for Broadly Syndicated Loans are set at LIBOR or base rate plus 1.85%, while Middle Market Loans are at LIBOR or base rate plus 2.35%[197] Investment Strategy and Management - The company generates revenue primarily from interest and fee income on debt investments, with interest generally payable quarterly or semi-annually[165] - The company has elected to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940 and expects to qualify as a Regulated Investment Company (RIC) annually[161] - The company is externally managed by an investment advisor registered with the SEC, which provides investment advisory and management services[162] - The company may enter into derivatives transactions to hedge against fluctuations in currency exchange rates and market interest rates[163] - The company may hedge against interest rate and currency exchange rate fluctuations using standard hedging instruments[227] Dividends and Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, with a requirement to distribute at least 90% of net ordinary income and net short-term capital gains to maintain RIC tax treatment[202] - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[204] Risk Management - The company is exposed to financial market risks, including changes in interest rates, which may materially affect net investment income[222] - The company is subject to risks associated with foreign currency investments, including significant fluctuations in currency exchange rates[226] - The company does not have any off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[221] - The company maintains sufficient liquidity to fund unfunded commitments through cash, receivables, and borrowing capacity[220] Investment Commitments - Total new investments for the three months ended June 30, 2021, were $15,609,129, a significant decrease from $236,499,578 in the same period of 2020[171] - The percentage of new debt investment commitments at floating rates was 98.77% for the three months ended June 30, 2021[171] - The average new investment commitment amount increased to $3,005,848 for the three months ended June 30, 2021, from $2,095,848 in the same period of 2020[171] - The number of new investment commitments decreased to 27 for the three months ended June 30, 2021, down from 87 in the same period of 2020[171] - The company has eight unfunded commitments totaling $5.3 million as of June 30, 2021, compared to three unfunded commitments totaling $1.3 million as of December 31, 2020[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 March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-56126 Palmer Square Capital BDC Inc. (Exact name of registrant as specified in its charter) | Maryland | 84-3665200 | | --- | --- | | (State or other jurisdiction of | (I.R.S. ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) The company operates as a BDC, maximizing total return by investing in private U.S. corporate debt and CLO structured credit - Palmer Square Capital BDC Inc. was organized on August 26, 2019, and commenced operations on January 23, 2020, electing to be regulated as a **BDC** and treated as a **RIC**[11](index=11&type=chunk)[392](index=392&type=chunk) - The company's investment objective is to **maximize total return**, comprising current income and capital appreciation, primarily by investing in corporate debt securities of privately held U.S. companies and CLO structured credit[13](index=13&type=chunk)[298](index=298&type=chunk)[393](index=393&type=chunk) - The Investment Advisor, Palmer Square BDC Advisor LLC, is a majority-owned subsidiary of Palmer Square, which had approximately **$13.9 billion in assets under management** as of December 31, 2020[12](index=12&type=chunk)[20](index=20&type=chunk) - The company has implemented **ESG guidelines** effective March 1, 2021, prohibiting direct purchase of 'Prohibited ESG Securities' related to speculative energy extraction, controversial weapons, and other specific sectors[84](index=84&type=chunk)[85](index=85&type=chunk) Portfolio Overview as of December 31, 2020 | Metric | Value | | :--- | :--- | | Number of Debt & Private Fund Investments | 202 | | Number of Portfolio Companies | 181 | | Aggregate Fair Value of Investments | ~$600.1 million | | Top Industry (Software) as % of Total Assets | 12.9% | | Top Portfolio Company (Playtika Holding Corp.) as % of Total Assets | 1.3% | [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from its limited operating history, advisor dependence, conflicts of interest, leverage, and regulatory constraints - The company has a **limited operating history**, having commenced operations on January 23, 2020, and neither Palmer Square nor the Investment Advisor has previously managed a BDC[172](index=172&type=chunk)[173](index=173&type=chunk) - Success is **highly dependent on the financial and managerial expertise** of the Investment Advisor and Palmer Square, with no assurance that key personnel will remain employed[174](index=174&type=chunk)[175](index=175&type=chunk) - The **incentive fee structure** may create a conflict of interest by encouraging investments in deferred interest securities that increase assets under management and fees[184](index=184&type=chunk)[190](index=190&type=chunk) - The use of **leverage magnifies potential gains or losses**, and the company must maintain an asset coverage ratio of at least **150%**[191](index=191&type=chunk)[193](index=193&type=chunk) - A significant portion of potential investments may be **'Covenant-Lite Loans,'** which offer fewer protections to lenders and increase the risk of loss[62](index=62&type=chunk)[212](index=212&type=chunk)[222](index=222&type=chunk) - The expected **discontinuation of LIBOR** by mid-2023 poses material risks due to operational challenges and uncertainty of successor rates[197](index=197&type=chunk)[198](index=198&type=chunk) - The company's ability to make distributions may be limited by the **150% asset coverage test** and covenants in credit facilities[264](index=264&type=chunk)[265](index=265&type=chunk) [Item 1B. Unresolved Staff Comments](index=58&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the SEC staff - There are **no unresolved staff comments**[269](index=269&type=chunk) [Item 2. Properties](index=58&type=section&id=Item%202.%20Properties) The company's office facilities in Mission Woods, Kansas are considered adequate for its business operations - The company's headquarters are located at 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205[270](index=270&type=chunk) - The office facilities are considered **suitable and adequate** for the business[270](index=270&type=chunk) [Item 3. Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings - The company is **not currently subject to any material legal proceedings**[271](index=271&type=chunk) - No material legal proceeding is threatened against the company[271](index=271&type=chunk) - The company may be a party to certain legal proceedings in the ordinary course of business from time to time[271](index=271&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as there are no mine safety disclosures - There are **no mine safety disclosures**[272](index=272&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock has no public market, with details provided on holders, distributions, and recent unregistered sales - There is currently **no public market** for the company's common stock, and no outstanding options, warrants, or convertible equity[275](index=275&type=chunk) - As of March 12, 2021, the company had **131 record holders** of its common stock[5](index=5&type=chunk)[276](index=276&type=chunk) - The company issued and sold **12,562,805 shares** of common stock for an aggregate purchase price of approximately **$238.6 million** during the year ended December 31, 2020, exempt from registration requirements[287](index=287&type=chunk)[450](index=450&type=chunk) Distributions Declared for Fiscal Year Ended December 31, 2020 | Declaration Date | Record Date | Per Share | Payment Date | Total Distributions Declared | | :--- | :--- | :--- | :--- | :--- | | 5/12/2020 | 5/12/2020 | $0.040 | 5/14/2020 | $488,608 | | 8/17/2020 | 8/17/2020 | $0.270 | 8/18/2020 | $3,325,960 | | 11/16/2020 | 11/16/2020 | $0.360 | 11/17/2020 | $4,472,622 | | 12/29/2020 | 12/31/2020 | $0.310 | 1/19/2021 | $3,894,469 | | **Total** | | | | **$12,181,659** | [Item 6. Selected Financial Data](index=62&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents key financial data for the initial operating period ending December 31, 2020 Selected Consolidated Financial Data (Jan 23, 2020 - Dec 31, 2020) | Metric | Amount | | :--- | :--- | | Total investment income | $25,468,576 | | Net expenses | $10,771,790 | | Net investment income | $14,696,786 | | Net realized gains (losses) on investments | $(1,018,741) | | Net unrealized gains (losses) on investments| $13,055,565 | | Net increase in net assets from operations | $26,733,610 | | Net investment income per share | $1.32 | | Net increase in net assets per share | $1.13 | | Total assets | $667,490,101 | | Net assets | $253,144,971 | | Total return based on net asset value | 4.29% | | Number of portfolio company investments | 181 | | Total portfolio investments | 202 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's 2020 financial results, portfolio activity, liquidity, and critical accounting policies - The company generates revenue primarily from **interest and fee income** on debt investments and capital gains, with debt investments generally bearing floating interest rates[299](index=299&type=chunk) - As of December 31, 2020, the company had 202 debt and private investments in 181 portfolio companies with an aggregate fair value of approximately **$600.1 million**[300](index=300&type=chunk)[301](index=301&type=chunk)[305](index=305&type=chunk) - The weighted average total yield to maturity of debt and income producing securities at fair value was **4.96%**[300](index=300&type=chunk)[301](index=301&type=chunk)[305](index=305&type=chunk) - The company's asset coverage ratio was **164%** as of December 31, 2020, exceeding the 150% requirement for BDCs[315](index=315&type=chunk) Operating Results (Jan 23, 2020 - Dec 31, 2020) | Metric | Amount | | :--- | :--- | | Total investment income | $25,468,576 | | Less: Net expenses | $10,771,790 | | Net investment income | $14,696,786 | | Net realized gains (losses) on investments | $(1,018,741) | | Net change in unrealized gains (losses) on investments| $13,055,565 | | Net increase in net assets from operations | $26,733,610 | Investment Income Breakdown (Jan 23, 2020 - Dec 31, 2020) | Source | Amount | | :--- | :--- | | Interest from investments | $24,956,907 | | Dividend income | $228,092 | | Other income | $283,577 | | **Total investment income** | **$25,468,576**| Operating Expenses Breakdown (Jan 23, 2020 - Dec 31, 2020) | Expense Category | Amount | | :--- | :--- | | Interest expenses | $4,739,682 | | Management fees | $3,947,575 | | Professional fees | $992,352 | | Directors fees | $80,000 | | Offering costs | $503,292 | | Initial organization | $122,199 | | Other general and administrative expenses | $880,137 | | Less: Management fee waiver | $(493,447) | | **Net expenses** | **$10,771,790**| Financing Arrangements as of December 31, 2020 | Facility | Aggregate Principal Committed | Outstanding Principal | Amount Available | | :--- | :--- | :--- | :--- | | Bank of America Credit Facility | $475,000,000 | $395,000,000 | $80,000,000 | | Wells Fargo Credit Facility | $150,000,000 | $0 | $150,000,000 | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate changes, with additional risk from foreign currency fluctuations - The company's net investment income is affected by the difference between investment rates and borrowing rates, making it **sensitive to interest rate changes**[351](index=351&type=chunk) - Investments denominated in foreign currencies are subject to risks from changes in currency exchange rates, which the company may hedge using standard instruments[354](index=354&type=chunk)[355](index=355&type=chunk) Annualized Impact of Hypothetical Base Rate Changes on Net Investment Income (as of Dec 31, 2020) | Change in Interest Rates | Increase (Decrease) in Interest Income | Increase (Decrease) in Interest Expense | Net Increase (Decrease) in Net Investment Income | | :--- | :--- | :--- | :--- | | Down 25 basis points | $(1,507,147) | $(987,500) | $(519,647) | | Up 100 basis points | $6,028,588 | $3,950,000 | $2,078,588 | | Up 200 basis points | $12,057,176 | $7,900,000 | $4,157,176 | | Up 300 basis points | $18,085,764 | $11,850,000 | $6,235,764 | [Item 8. Consolidated Financial Statements and Supplementary Data](index=79&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the period ending December 31, 2020 - The consolidated financial statements for the period from January 23, 2020 through December 31, 2020 have been **audited by PricewaterhouseCoopers LLP**[359](index=359&type=chunk)[360](index=360&type=chunk) Consolidated Statement of Assets and Liabilities (as of Dec 31, 2020) | Asset/Liability Category | Amount (Dec 31, 2020) | | :--- | :--- | | Non-controlled, non-affiliated investments, at fair value | $653,156,200 | | Cash and cash equivalents | $682,579 | | Total Assets | $667,490,101 | | Credit facility, net | $393,152,103 | | Total Liabilities | $414,345,130 | | Total Net Assets | $253,144,971 | | Net Asset Value Per Common Share | $20.15 | Consolidated Statement of Operations (Jan 23, 2020 - Dec 31, 2020) | Income/Expense Category | Amount | | :--- | :--- | | Total Investment Income | $25,468,576 | | Total Expenses | $11,265,237 | | Less: Management fee waiver | $(493,447) | | Net expenses | $10,771,790 | | Net Investment Income (Loss) | $14,696,786 | | Total realized and unrealized gains (losses)| $12,036,824 | | Net Increase in Net Assets from Operations | $26,733,610 | | Basic and diluted net investment income per common share | $1.32 | | Basic and diluted net increase in net assets from operations | $2.40 | Consolidated Statement of Cash Flows (Jan 23, 2020 - Dec 31, 2020) | Cash Flow Category | Amount | | :--- | :--- | | Net cash used in operating activities | $(623,170,895) | | Net cash provided by financing activities | $623,851,974 | | Net increase in cash and cash equivalents | $681,079 | | Cash and cash equivalents, end of period | $682,579 | Investment Portfolio Composition (Fair Value as of Dec 31, 2020) | Investment Type | Fair Value | Percentage of Net Assets | | :--- | :--- | :--- | | First-lien senior secured debt | $566,459,850 | 223.8% | | Second-lien senior secured debt | $19,975,980 | 7.8% | | Collateralized securities and structured products - debt | $13,615,501 | 5.4% | | Short-term investments | $53,104,869 | 21.0% | | **Total Investments** | **$653,156,200** | **258.0%** | Industry Composition of Investments (Fair Value as of Dec 31, 2020) | Industry | Percentage of Total Investments | | :--- | :--- | | Software | 13.3% | | Healthcare Providers and Services | 12.0% | | Short-Term Investments | 8.1% | | Insurance | 7.7% | | Professional Services | 4.4% | | Media | 4.4% | | Diversified Financial Services | 3.7% | | Hotels, Restaurants and Leisure | 3.6% | | Independent Power and Renewable Electricity Producers | 3.2% | | Diversified Consumer Services | 3.2% | | IT Services | 3.1% | | Commercial Services and Supplies | 2.8% | | Specialty Retail | 2.4% | | Containers and Packaging | 2.4% | | Health Care Technology | 2.3% | | Diversified Telecommunication Services | 2.2% | | Construction and Engineering | 2.2% | | Structured Note | 2.1% | | Chemicals | 1.8% | | Oil, Gas and Consumable Fuels | 1.7% | | Interactive Media and Services | 1.5% | | Metals and Mining | 1.3% | | Food Products | 1.2% | | Healthcare Equipment and Supplies | 1.1% | | Building Products | 1.1% | | Pharmaceuticals | 1.0% | | Wireless Telecommunication Services | 0.9% | | Leisure Products | 0.8% | | Electric Utilities | 0.8% | | Aerospace and Defense | 0.7% | | Construction Materials | 0.6% | | Internet and Direct Marketing Retail | 0.5% | | Technology Hardware, Storage and Peripherals| 0.5% | | Capital Markets | 0.4% | | Energy Equipment and Services | 0.3% | | Real Estate Investment Trusts (REITs) | 0.3% | | Textiles, Apparel and Luxury Goods | 0.3% | | Transportation Infrastructure | 0.1% | | **Total** | **100.0%** | Financial Highlights (Jan 23, 2020 - Dec 31, 2020) | Metric | Value | | :--- | :--- | | Net Asset Value, Beginning of Period | $20.00 | | Net Investment Income | $1.32 | | Net Realized and Unrealized Gain (Loss) on Investments | $(0.19) | | Net Increase in Net Assets from Operations | $1.13 | | Distributions to Common Stockholders | $(0.98) | | Net Asset Value, End of Period | $20.15 | | Shares Outstanding, End of Period | 12,562,805 | | Total Return | 4.29% | | Ratio of operating expenses to average net assets with waiver | 5.44% | | Ratio of net investment income to average net assets with waiver | 7.43% | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - There are **no changes in and disagreements with accountants** on accounting and financial disclosure[481](index=481&type=chunk) [Item 9A. Controls and Procedures](index=110&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the end of the fiscal year - Disclosure controls and procedures were evaluated as **effective** at a reasonable assurance level as of December 31, 2020[482](index=482&type=chunk) - The company did not include a report on management's assessment of internal control over financial reporting, as **permitted for newly public companies**[483](index=483&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fiscal quarter ended December 31, 2020[484](index=484&type=chunk) [Item 9B. Other Information](index=110&type=section&id=Item%209B.%20Other%20Information) This section details the terms of the $150 million Wells Fargo Credit Facility established in December 2020 - On December 18, 2020, the company entered into a Loan and Security Agreement for a **Wells Fargo Credit Facility** through its wholly-owned subsidiary[485](index=485&type=chunk) - The WF Credit Facility has a facility amount of **$150.0 million**, matures on December 18, 2025, and the ability to draw terminates on December 18, 2023[486](index=486&type=chunk) - Loans under the WF Credit Facility bear interest at LIBOR or base rate plus **1.85%** for Broadly Syndicated Loans and **2.35%** for Middle Market Loans[487](index=487&type=chunk) - As of December 31, 2020, there was **no principal outstanding** and **$150 million** of available commitments under the WF Credit Facility[489](index=489&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=112&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's board of directors, executive officers, and key corporate governance policies - The Board of Directors includes both **independent and interested directors**, with Christopher D. Long and Jeffrey D. Fox identified as interested directors[492](index=492&type=chunk)[493](index=493&type=chunk) - Key executive officers not serving as directors include Angie K. Long (Chief Investment Officer) and Scott A. Betz (Chief Compliance Officer)[495](index=495&type=chunk) - The company's **Code of Ethics** applies to all directors and officers, restricting personal investments in securities that may be purchased or held by the company[504](index=504&type=chunk)[505](index=505&type=chunk) - The Audit Committee consists entirely of independent directors, with Ms. Webber recognized as an **'audit committee financial expert'**[507](index=507&type=chunk) [Item 11. Executive Compensation](index=118&type=section&id=Item%2011.%20Executive%20Compensation) Executive officers receive no direct compensation, while independent directors receive an annual fee - Executive officers receive **no direct compensation** from the company; however, some have indirect pecuniary interests in the advisory fees paid to the Investment Advisor[509](index=509&type=chunk) - Independent Directors receive an **annual fee of $25,000** and reimbursement for reasonable out-of-pocket expenses incurred for attending meetings[510](index=510&type=chunk) - The company does not have a compensation committee; the Board as a whole is responsible for reviewing Administrator reimbursements and director compensation[514](index=514&type=chunk) Director Compensation for Year Ended December 31, 2020 | Name | Aggregate Compensation from Palmer Square Capital BDC Inc. | | :--- | :--- | | Megan L. Webber | $25,000 | | James W. Neville Jr. | $25,000 | | Christopher C. Nelson | $25,000 | | Christopher D. Long | $— | | Jeffrey D. Fox | $— | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=118&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section discloses beneficial stock ownership by major shareholders, directors, and executive officers - As of March 12, 2021, there were **12,776,672 shares** of common stock issued and outstanding[5](index=5&type=chunk)[516](index=516&type=chunk) Beneficial Ownership of Common Stock (as of March 12, 2021) | Name | Shares Owned | Percentage of Common Stock Outstanding | | :--- | :--- | :--- | | Christopher D. Long | 26,131 | * (less than 1.0%) | | Jeffrey D. Fox | 7,839 | * (less than 1.0%) | | Angie K. Long | 26,131 | * (less than 1.0%) | | Scott A. Betz | 3,920 | * (less than 1.0%) | | All directors and executive officers as a group (7 persons) | 37,890 | * (less than 1.0%) | | Excelsior Holdings D2 LLC | 2,613,051 | 20.5% | | Alaris Master Fund, LP | 1,478,675 | 11.6% | | Caravel Holdings LLC | 1,567,831 | 12.3% | | BFFV19, LLC | 783,915 | 6.1% | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company details its related party agreements and procedures for managing conflicts of interest - The company has an **Advisory Agreement** and **Administration Agreement** with its Investment Advisor, and a Resource Sharing Agreement and License Agreement with Palmer Square[521](index=521&type=chunk)[522](index=522&type=chunk)[523](index=523&type=chunk)[524](index=524&type=chunk) - Policies and procedures are in place to **manage conflicts of interest**, including screening transactions and seeking Board approval or SEC exemptive relief[525](index=525&type=chunk) - The company has obtained **exemptive relief from the SEC** to permit greater flexibility in co-investing with investment funds managed by Palmer Square[208](index=208&type=chunk)[528](index=528&type=chunk) - A **majority of the company's directors are independent**, as defined by the 1940 Act, and the Audit Committee is exclusively composed of independent directors[531](index=531&type=chunk) [Item 14. Principal Accounting Fees and Services](index=122&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section outlines fees paid to the independent accounting firm and the Audit Committee's pre-approval policy - The Audit Committee has a **pre-approval policy** for audit, audit-related, tax, and other services provided by the independent auditor to ensure independence[538](index=538&type=chunk)[539](index=539&type=chunk) Principal Accountant Fees and Services | Fee Type | Fiscal Year Ended Dec 31, 2020 | Fiscal Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Audit Fees | $240,000 | $20,000 | | Audit-Related Fees | - | — | | Tax Fees | $33,000 | — | | All Other Fees | - | — | | **Total** | **$273,000** | **$20,000** | PART IV [Item 15. Exhibits, Consolidated Financial Statements, and Schedules](index=124&type=section&id=Item%2015.%20Exhibits%2C%20Consolidated%20Financial%20Statements%2C%20and%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the annual report - The report includes **consolidated financial statements and supplementary data**, such as the Report of Independent Registered Public Accounting Firm and various financial statements[542](index=542&type=chunk)[543](index=543&type=chunk) - A list of exhibits is provided, including organizational documents, investment advisory and administration agreements, credit agreements, and certifications[544](index=544&type=chunk)[545](index=545&type=chunk)[547](index=547&type=chunk) [Item 16. Form 10-K Summary](index=125&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a summary for its Form 10-K filing - The registrant has **elected not to provide summary information**[546](index=546&type=chunk) [SIGNATURES](index=126&type=section&id=SIGNATURES) The report is duly signed by the company's principal executive officer, financial officer, and directors - The report is signed by **Christopher D. Long**, Chief Executive Officer and President (Principal Executive Officer), **Jeffrey D. Fox**, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer), and other directors[551](index=551&type=chunk)[552](index=552&type=chunk) - The signing date for the report is **March 12, 2021**[551](index=551&type=chunk)[552](index=552&type=chunk)