☒

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Delaware

85-3439073

(State or Other Jurisdiction of Incorporation)

(IRS Employer Identification No.)

2951 28^th Street, Suite 1000

Santa Monica, California

90405

(Address of Principal Executive Offices)

(Zip Code)

None

Not applicable

Not applicable

(Title of each class)

(Trading Symbol(s) )

(Name of each exchange where registered)

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting company

☐

Emerging growth company

☒

Part I.

Financial Information

Item 1.

Financial Statements

Statements of Assets and Liabilities as of June 30, 2022 (Unaudited) and December 31, 2021

3

Statements of Operations for the three and six months ended June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

4

Statements of Changes in Net Assets for the three and six months ended June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

5

Statements of Cash Flows for the six months ended June 30, 2022 (Unaudited) and June 30, 2021 (Unaudited)

6

Schedules of Investments as of June 30, 2022 (Unaudited) and December 31, 2021

7

Notes to Financial Statements (Unaudited)

17

Schedule of Restricted Securities of Unaffiliated Issuers as of June 30, 2022 (Unaudited) and December 31, 2021

30

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

43

Item 4.

Controls and Procedures

44

Part II.

Other Information

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

46

June 30, 2022

December 31, 2021

Assets

(unaudited)

Investments, at fair value:

Non-controlled, non-affiliated investments (cost of $157,749,704 and $114,888,752, respectively)

$

156,380,609

$

116,529,036

Total investments (cost of $157,749,704 and $114,888,752, respectively)

156,380,609

116,529,036

Cash and cash equivalents

5,131,881

1,957,486

Interest receivable

849,770

809,137

Deferred debt issuance costs

297,863

451,461

Deferred offering costs

160,573

196,256

Prepaid expenses and other assets

229,219

98,285

Total assets

163,049,915

120,041,661

Liabilities

Debt (net of deferred issuance costs of $15,440 and $15,709, respectively)

41,094,560

22,094,291

Payable for investments purchased

179,819

10,366,640

Interest and debt related payables

106,576

73,441

Reimbursements due to the Advisor

83,224

142,784

Incentive fees payable (Note 3)

—

304,622

Accrued capital gains incentive fees (Note 3)

—

165,778

Accrued expenses and other liabilities

407,322

291,747

Total liabilities

41,871,501

33,439,303

Commitments and contingencies (Note 5)

Net assets

$

121,178,414

$

86,602,358

Composition of net assets applicable to common stockholders

Common stock, $0.001 par value; 300,000,000 shares authorized, 11,706,673 and 8,371,979 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

$

11,707

$

8,372

Paid-in capital in excess of par

120,161,313

85,083,664

Distributable earnings

1,005,394

1,510,322

Total net assets

121,178,414

86,602,358

Total liabilities and net assets

$

163,049,915

$

120,041,661

Net assets per share

$

10.35

$

10.34

Three Months Ended June 30,

Six Months Ended June 30,

Investment income

2022

2021

2022

2021

Interest income (excluding PIK):

Non-controlled, non-affiliated investments

$

3,195,993

$

724,664

$

5,614,583

$

965,254

PIK income:

Non-controlled, non-affiliated investments

79,338

—

148,344

—

Other income:

Non-controlled, non-affiliated investments

26,218

—

45,089

30,000

Total investment income

3,301,549

724,664

5,808,016

995,254

Operating expenses

Interest and other debt expenses

365,120

17,516

672,045

20,904

Management fees

315,578

45,298

577,628

50,142

Administrative expenses

100,155

194,206

201,385

194,206

Professional fees

85,002

95,121

198,358

198,878

Director fees

37,500

46,000

81,000

87,500

Custody and transfer agent fees

10,592

11,086

23,519

21,140

Insurance expense

6,822

5,999

13,568

12,271

Incentive fees earned

—

—

201,710

—

Incentive fees on capital gains ⁽¹⁾

(170,434

)

—

(165,778

)

—

Other operating expenses

52,804

11,612

102,882

13,989

Total operating expenses

803,139

426,838

1,906,317

599,030

Net investment income

2,498,410

297,826

3,901,699

396,224

Realized and unrealized gain (loss)

    Net realized gain (loss):

Non-controlled, non-affiliated investments

15

—

4,041

—

Change in net unrealized appreciation (depreciation)

Non-controlled, non-affiliated investments

(2,730,124

)

369,001

(3,009,379

)

557,446

Net realized and unrealized gain (loss)

(2,730,109

)

369,001

(3,005,338

)

557,446

Net increase (decrease) in net assets from operations

$

(231,699

)

$

666,827

$

896,361

$

953,670

Earnings per share ⁽²⁾

$

(0.01

)

$

0.13

$

0.13

$

0.23

Basic and diluted weighted average shares outstanding

11,083,708

5,000,499

9,735,334

$

4,060,501

(1)

Net investment income and per share amounts displayed above are net of the accrual for incentive fees on capital gains which is reflected on a hypothetical liquidation basis in accordance with Generally Accepted Accounting Principles (“GAAP”) for the three and six months ended June 30, 2022 (see Note 3).

(2)

Computed based on the actual number of shares outstanding and capital activity during the time periods such earnings occurred.

Common Stock

Paid in Capital in

Distributable

Total

Shares

Par Amount

Excess of Par

Earnings (Loss)

Net Assets

Balance at December 31, 2020

3,010,000

$

3,010

$

29,954,394

$

(95,482

)

$

29,861,922

Issuance of common stock

1,500,858

1,501

15,048,499

—

15,050,000

Offering costs charged to paid-in capital

—

—

(11,399

)

—

(11,399

)

Net investment income

—

—

—

98,398

98,398

Net realized and unrealized gain (loss)

—

—

—

188,445

188,445

Balance at March 31, 2021

4,510,858

$

4,511

$

44,991,494

$

191,361

$

45,187,366

Issuance of common stock

1,485,244

1,485

15,048,515

—

15,050,000

Offering costs charged to

paid-in capital

—

—

(19,327

)

—

(19,327

)

Net investment income

—

—

—

297,826

297,826

Net realized and unrealized gain (loss)

—

—

—

369,001

369,001

Balance at June 30, 2021

5,996,102

$

5,996

$

60,020,682

$

858,188

$

60,884,866

Common Stock

Paid in Capital in

Distributable

Total

Shares

Par Amount

Excess of Par

Earnings (Loss)

Net Assets

Balance at December 31, 2021

8,371,979

$

8,372

$

85,083,664

$

1,510,322

$

86,602,358

Net investment income

—

—

—

1,403,289

1,403,289

Net realized and unrealized gain (loss)

—

—

—

(275,229

)

(275,229

)

Balance at March 31, 2022

8,371,979

$

8,372

$

85,083,664

$

2,638,382

$

87,730,418

Issuance of common stock

3,334,694

3,335

35,113,332

—

35,116,667

Offering costs charged to

paid-in capital

—

—

(35,683

)

—

(35,683

)

Net investment income

—

—

—

2,498,410

2,498,410

Net realized and unrealized gain (loss)

—

—

—

(2,730,109

)

(2,730,109

)

Dividends paid to common shareholders

—

—

—

(1,401,289

)

(1,401,289

)

Balance at June 30, 2022

11,706,673

$

11,707

$

120,161,313

$

1,005,394

$

121,178,414

Six Months Ended June 30,

2022

2021

Operating activities

Net increase (decrease) in net assets resulting from operations

$

896,361

$

953,670

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to

   net cash provided by (used in) operating activities:

      Net realized (gain) loss

(4,041

)

—

Change in net unrealized (appreciation)/depreciation of investments

3,009,379

(557,446

)

Net amortization of investment discounts and premiums

(306,237

)

(50,427

)

Amortization of deferred debt issuance costs

153,867

8,210

Interest and dividend income paid in kind

(148,344

)

—

Changes in assets and liabilities:

Purchases of investments

(46,935,803

)

(52,212,709

)

Proceeds from disposition of investments

4,533,473

941,722

Decrease (increase) in interest receivable

(40,633

)

(257,073

)

Decrease (increase) in prepaid expenses and other assets

(130,934

)

(7,039

)

Increase (decrease) in incentive fees payable

(304,622

)

—

Increase (decrease) in accrued capital gains incentive fees

(165,778

)

—

Increase (decrease) in reimbursements due to the Advisor

(59,560

)

(52,725

)

Increase (decrease) in interest and debt related payables

33,135

6,094

Increase (decrease) in payable for investments purchased

(10,186,821

)

8,430,387

Increase (decrease) in management fees payable

—

45,298

Increase (decrease) in accrued expenses and other liabilities

115,575

251,442

Net cash provided by (used in) operating activities

(49,540,983

)

(42,500,596

)

Financing activities

Draws on credit facilities

19,000,000

—

Proceeds from shares of common stock sold

35,116,667

30,100,000

Payments of debt issuance costs

—

(445,379

)

Payments of equity offering costs

—

(267,620

)

Dividends paid to shareholders

(1,401,289

)

—

Net cash provided by (used in) financing activities

52,715,378

29,387,001

Net increase (decrease) in cash and cash equivalents (including restricted cash)

3,174,395

(13,113,595

)

Cash and cash equivalents (including restricted cash) at beginning of period

1,957,486

30,193,016

Cash and cash equivalents (including restricted cash) at end of period

$

5,131,881

$

17,079,421

Supplemental cash flow information

Interest payments

$

485,043

$

6,600

Issuer

Instrument

Ref

Floor

Spread

Total

Coupon

Maturity

Principal

Cost

Fair

Value

% of Total

Cash and

Investments

Notes

Debt Investments (A)

Automobiles

ALCV Purchaser, Inc. (AutoLenders)

First Lien Term Loan

LIBOR(M)

1.00

%

6.75

%

8.38

%

4/15/2026

$

952,821

$

941,710

$

952,821

0.59

%

F

ALCV Purchaser, Inc. (AutoLenders)

First Lien Revolver

LIBOR(M)

1.00

%

6.75

%

8.38

%

4/15/2026

$

71,792

70,742

71,792

0.04

%

F

1,012,452

1,024,613

0.63

%

Beverages

JP Intermediate B, LLC (Juice Plus)

First Lien Term Loan

LIBOR(Q)

1.00

%

5.50

%

6.74

%

11/20/2025

$

1,955,802

1,817,310

1,599,220

0.99

%

Building Products

Porcelain Acquisition Corporation (Paramount)

First Lien Term Loan

LIBOR(Q)

1.00

%

5.75

%

8.00

%

4/30/2027

$

867,282

852,614

866,414

0.54

%

F

Porcelain Acquisition Corporation (Paramount)

First Lien Delayed Draw Term Loan

LIBOR(Q)

1.00

%

5.75

%

8.00

%

4/30/2027

$

135,161

132,950

135,026

0.08

%

F

985,564

1,001,440

0.62

%

Commercial Services & Supplies

Thermostat Purchaser III, Inc. (Reedy Industries)

Second Lien Term Loan

LIBOR(Q)

0.75

%

7.25

%

8.82

%

8/31/2029

$

1,076,305

1,061,405

1,033,253

0.64

%

F

Thermostat Purchaser III, Inc. (Reedy Industries)

Second Lien Delayed Draw Term Loan

LIBOR(Q)

0.75

%

7.25

%

8.82

%

8/31/2029

$

-

(1,237

)

(7,367

)

0.00

%

E/F

1,060,168

1,025,886

0.64

%

Construction & Engineering

CSG Buyer, Inc. (Core States)

First Lien Term Loan

SOFR(Q)

1.00

%

6.00

%

7.00

%

3/31/2028

$

1,306,874

1,280,736

1,274,202

0.79

%

F

CSG Buyer, Inc. (Core States)

First Lien Delayed Draw Term Loan

SOFR(Q)

1.00

%

6.00

%

7.00

%

3/31/2028

$

-

(8,521

)

(10,652

)

(0.01

)%

E/F

CSG Buyer, Inc. (Core States)

Sr Secured Revolver

SOFR(Q)

1.00

%

6.00

%

7.03

%

3/31/2028

$

85,213

80,952

79,887

0.05

%

F

Homerenew Buyer, Inc. (Project Dream)

First Lien Term Loan

SOFR(Q)

1.00

%

6.50

%

8.70

%

8/10/2027

$

1,420,690

1,388,670

1,368,125

0.85

%

F

Homerenew Buyer, Inc. (Project Dream)

First Lien Delayed Draw Term Loan

SOFR(Q)

1.00

%

6.50

%

8.69

%

8/10/2027

$

1,325,560

1,272,041

1,228,801

0.76

%

F

Homerenew Buyer, Inc. (Project Dream)

Sr Secured Revolver

SOFR(Q)

1.00

%

6.50

%

8.70

%

11/23/2027

$

-

(10,308

)

(17,674

)

(0.01

)%

E/F

PHRG Intermediate, LLC (Power Home)

First Lien Term Loan

LIBOR(M)

0.75

%

6.00

%

7.60

%

12/16/2026

$

4,488,421

4,384,596

4,353,768

2.70

%

F

Sunland Asphalt & Construction, LLC

First Lien Term Loan

LIBOR(S)

1.00

%

6.00

%

8.88

%

1/13/2026

$

998,254

983,750

974,296

0.60

%

F

Sunland Asphalt & Construction, LLC

First Lien Delayed Draw Term Loan

LIBOR(S)

1.00

%

6.00

%

8.88

%

1/13/2026

$

335,663

330,726

327,607

0.20

%

F

9,702,642

9,578,360

5.93

%

Construction & Material

AHF Parent Holding, Inc.

First Lien Term Loan

LIBOR(Q)

0.75

%

6.51

%

7.16

%

2/1/2028

$

2,445,383

2,398,387

2,340,427

1.45

%

D

Containers & Packaging

BW Holding, Inc. (Brook & Whittle)

Second Lien Term Loan

SOFR(Q)

0.75

%

7.50

%

8.68

%

12/14/2029

$

883,647

864,827

839,466

0.52

%

F

BW Holding, Inc. (Brook & Whittle)

Second Lien Term Loan

SOFR(Q)

0.75

%

7.50

%

9.05

%

12/14/2029

$

770,241

753,078

731,730

0.45

%

F

BW Holding, Inc. (Brook & Whittle)

Second Lien Delayed Draw Term Loan

SOFR(Q)

0.75

%

7.50

%

9.05

%

12/14/2029

$

153,411

150,136

145,740

0.09

%

F

1,768,041

1,716,936

1.06

%

Distributors

Colony Display, LLC

First Lien Term Loan

LIBOR(Q)

1.00

%

6.50

%

8.75

%

6/30/2026

$

970,714

954,979

920,237

0.57

%

F

Diversified Consumer Services

Elevate Brands OpCo, LLC

First Lien Delayed Draw Term Loan

SOFR(Q)

1.00

%

8.50

%

10.70

%

3/15/2027

$

3,131,544

3,073,523

3,047,234

1.89

%

F

Razor Group GmbH (Germany)

First Lien Delayed Draw Term Loan

LIBOR(M)

1.00

%

9.00

%

11.07

%

9/30/2025

$

4,000,000

4,031,758

4,000,000

2.48

%

B/F

Razor Group GmbH (Germany)

First Lien Sr Secured Convertible Term Loan

Fixed

0.00

%

3.50% Cash + 3.50% PIK

7.00

%

10/2/2023

$

547,373

547,373

927,250

0.57

%

B/F

SellerX Germany Gmbh & Co. Kg (Germany)

First Lien Delayed Draw Term Loan

LIBOR(Q)

1.00

%

8.00

%

10.15

%

11/23/2025

$

1,038,843

1,017,387

993,843

0.62

%

B/F

Whele, LLC (Perch)

First Lien Incremental Term Loan

LIBOR(S)

1.00

%

8.50

%

10.61

%

10/15/2025

$

2,815,986

2,835,173

2,708,979

1.68

%

F

11,505,214

11,677,306

7.24

%

Issuer

Instrument

Ref

Floor

Spread

Total

Coupon

Maturity

Principal

Cost

Fair

Value

% of Total

Cash and

Investments

Notes

Debt Investments (Continued)

Diversified Financial Services