ThZeal - The Zeal

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 September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 814-01393

Kayne DL 2021, Inc.

Delaware		86-2440860
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

811 Main Street, 14^th Floor, Houston, TX		77002
(Address of principal executive offices)		(Zip Code)

(713) 493-2020

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 9, 2023, the registrant had 32,478 shares of common stock, $0.001 par value per share, issued and outstanding and there was no public market for the registrant’s shares.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Consolidated Financial Statements	1
	Consolidated Statements of Assets and Liabilities as of September 30, 2023 (Unaudited) and December 31, 2022	1
	Consolidated Statement of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited)	2
	Consolidated Statement of Changes in Net Assets for the three and nine months ended September 30, 2023 and 2022 (Unaudited)	3
	Consolidated Statement of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)	4
	Consolidated Schedule of Investments as of September 30, 2023 (Unaudited) and December 31, 2022	5
	Notes to Financial Statements (Unaudited)	15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

PART II.	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

Signatures		46

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the company, current and prospective portfolio investments, the industry, beliefs and assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond control of Kayne DL 2021, Inc. (“the Company”) and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:

●

future operating results;

	●	business prospects and the prospects of portfolio companies in which we invest;

	●	the ability of our portfolio companies to achieve their objectives;

●

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets;

●

the ability of KA Credit Advisors II, LLC (our “Advisor”) to locate suitable investments and to monitor and administer investments;

●

the ability of the Advisor and its affiliates to attract and retain highly talented professionals;

	●	risk associated with possible disruptions in operations or the economy generally;

	●	the adequacy of our cash resources, financing sources and working capital;

●

the timing of cash flows, distributions and dividends, if any, from the operations of the companies in which the Company invests;

●

the dependence of the future success on the general economy and its effect on the industries in which the Company invests;

●

the ability to maintain qualification as a business development company (“BDC”) and as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”);

●

the use of borrowed money to finance a portion of the Company’s investments;

●

the adequacy, availability and pricing of financing sources and working capital for the Company;

●

actual or potential conflicts of interest with the Advisor and its affiliates;

●

contractual arrangements and relationships with third parties;

●

the risk associated with an economic downturn, increased inflation, political instability, interest rate volatility, loss of key personnel, and the illiquid nature of investments of the Company; and

●

the risks, uncertainties and other factors the Company identifies under “Item 1A. Risk Factors” and elsewhere in this quarterly report on Form 10-Q, as well as in the Company’s annual report on Form 10-K for the year ended December 31, 2022.

We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United States Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, registration statements on Form 10, quarterly reports on Form 10-Q and current reports on Form 8-K.

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Kayne DL 2021, Inc.

Consolidated Statements of Assets and Liabilities

(amounts in 000’s, except share and per share amounts)

	September 30, 2023 (Unaudited)			December 31, 2022
Assets:
Investments, at fair value:
Long-term investments (amortized cost of $142,972 and $105,083)	$	145,692		$	107,312
Short-term investments (amortized cost of $20,409 and $0)		20,409			-
Cash and cash equivalents		2,010			715
Receivable for principal payments on investments		12			22
Interest receivable		1,385			972
Prepaid expenses and other assets		11			101
Total Assets	$	169,519		$	109,122

Liabilities:
Subscription Credit Facility (Note 6)	$	-		$	750
Unamortized Subscription Credit Facility issuance costs		(22	)		(35	)
Payable for investments purchased		-			137
Distributions payable		4,151			1,768
Management fee payable		271			156
Accrued expenses and other liabilities		441			438
Total Liabilities	$	4,841		$	3,214

Commitments and contingencies (Note 8)

Net Assets:
Common Shares, $0.001 par value; 100,000 shares authorized; 31,687 and 20,554 as of September 30, 2023 and December 31, 2022, respectively, issued and outstanding	$	-		$	-
Additional paid-in capital		162,017			103,811
Total distributable earnings (deficit)		2,661			2,097
Total Net Assets	$	164,678		$	105,908
Total Liabilities and Net Assets	$	169,519		$	109,122
Net Asset Value Per Common Share	$	5,197		$	5,153

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Statements of Operations

(amounts in 000’s, except share and per share amounts)

(Unaudited)

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Income:
Investment income from investments:
Interest income	$	4,530	$	1,122	$	12,123	$	2,085
Dividend income		179		-		204		-
Total Investment Income		4,709		1,122		12,327		2,085

Expenses:
Interest expense		36		42		180		101
Management fees		270		90		745		181
Professional fees		102		97		266		311
Directors fees		37		26		110		80
Offering costs		-		36		-		107
Other general and administrative expenses		101		97		283		264
Total Expenses		546		388		1,584		1,044
Net Investment Income (Loss)		4,163		734		10,743		1,041

Realized and unrealized gains (losses) on investments
Net realized gains (losses):
Investments		-		1		-		1
Total net realized gains (losses)		-		1		-		1
Net change in unrealized gains (losses):
Investments		120		465		491		912
Total net change in unrealized gains (losses)		120		465		491		912
Total realized and unrealized gains (losses)		120		466		491		913

Net Increase (Decrease) in Net Assets Resulting from Operations	$	4,283	$	1,200	$	11,234	$	1,954

Per Common Share Data:
Basic and diluted net investment income per common share	$	141	$	69	$	412	$	112
Basic and diluted net increase in net assets resulting from operations	$	145	$	113	$	430	$	210
Weighted Average Common Shares Outstanding - Basic and Diluted		29,515		10,647		26,096		9,305

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Statements of Changes in Net Assets

(amounts in 000’s)

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
Increase (Decrease) in Net Assets Resulting from Operations:
Net investment income (loss)	$	4,163		$	734		$	10,743		$	1,041
Net realized gains (losses) on investments		-			1			-			1
Net change in unrealized gains (losses) on investments		120			465			491			912
Net Increase (Decrease) in Net Assets Resulting from Operations		4,283			1,200			11,234			1,954

Decrease in Net Assets Resulting from Stockholder Distributions
Dividends and distributions to stockholders		(4,151	)		(308	)		(10,670	)		(366	)
Net Decrease in Net Assets Resulting from Stockholder Distributions		(4,151	)		(308	)		(10,670	)		(366	)

Increase in Net Assets Resulting from Capital Share Transactions
Issuance of common shares		25,000			-			50,000			10,000
Reinvestment of distributions		3,533			362			8,206			362
Net Increase in Net Assets Resulting from Capital Share Transactions		28,533			362			58,206			10,362
Total Increase (Decrease) in Net Assets		28,665			1,254			58,770			11,950
Net Assets, Beginning of Period		136,013			53,575			105,908			42,879
Net Assets, End of Period	$	164,678		$	54,829		$	164,678		$	54,829

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Statements of Cash Flows

(amounts in 000’s)

(Unaudited)

	For the nine months ended September 30,
	2023			2022

Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	11,234		$	1,954
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Net realized (gains)/losses on investments		-			(1	)
Net change in unrealized (gains)/losses on investments		(491	)		(912	)
Net accretion of discount on investments		(648	)		(114	)
Sales (purchases) of short-term investments, net		(20,409	)		27,387
Purchases of portfolio investments		(44,326	)		(47,057	)
Proceeds from sales of investments and principal repayments		7,085			1,683
Amortization of deferred financing cost		68			57
Increase/(decrease) in operating assets and liabilities:
(Increase)/decrease in interest and dividends receivable		(413	)		(351	)
(Increase)/decrease in deferred offering costs		-			107
(Increase)/decrease in receivable for principal payments on investments		10			(54	)
(Increase)/decrease in prepaid expenses and other assets		90			100
Increase/(decrease) in payable for investments purchased		(137	)		-
Increase/(decrease) in management fees payable		115			88
Increase/(decrease) in accrued organizational and offering costs, net		-			(471	)
Increase/(decrease) in accrued other general and administrative expenses		3			222
Net cash provided by (used in) operating activities		(47,819	)		(17,362	)
Cash Flows from Financing Activities:
Borrowings/(payments) on subscription credit facility, net		(750	)		10,000
Payments of debt issuance costs		(55	)		(95	)
Distributions paid in cash		(81	)		(4	)
Proceeds from issuance of common shares		50,000			10,000
Net cash provided by financing activities		49,114			19,901
Net increase in cash and cash equivalents		1,295			2,539
Cash and cash equivalents, beginning of period		715			266
Cash and cash equivalents, end of period	$	2,010		$	2,805

Supplemental and Non-Cash Information:
Interest paid during the period	$	111		$	26
Non-cash financing activities not included herein consisted of reinvestment of dividends	$	8,206		$	362

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of September 30, 2023

(amounts in 000’s)

(Unaudited)

			Maturity	Principal /		Amortized		Fair		Percentage
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		of Net Assets
Debt Investments
Private Credit Investments⁽⁴⁾
Aerospace & defense
Basel U.S. Acquisition Co., Inc. (IAC) (5)	First lien senior secured revolving loan	11.55% (S + 6.00%)	12/5/2028	$	-	$	-	$	-		0.0	%
	First lien senior secured loan	11.55% (S + 6.00%)	12/5/2028		4,566		4,456		4,589		2.8	%
Precinmac (US) Holdings, Inc.	First lien senior secured loan	11.42% (S + 6.00%)	8/31/2027		282		277		275		0.2	%
					4,848		4,733		4,864		3.0	%
Automobile components
Speedstar Holding LLC	First lien senior secured delayed draw loan	12.81% (S + 7.25%)	1/22/2027		186		181		188		0.1	%
	First lien senior secured loan	12.76% (S + 7.25%)	1/22/2027		792		772		798		0.5	%
Vehicle Accessories, Inc.	First lien senior secured loan	10.90% (S + 5.25%)	11/30/2026		1,701		1,681		1,701		1.0	%
					2,679		2,634		2,687		1.6	%
Biotechnology
Alcami Corporation (Alcami)	First lien senior secured delayed draw loan	12.42% (S + 7.00%)	6/30/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	12.42% (S + 7.00%)	12/21/2028		-		-		-		0.0	%
	First lien senior secured loan	12.42% (S + 7.00%)	12/21/2028		4,079		3,924		4,160		2.5	%
					4,079		3,924		4,160		2.5	%

Capital Markets
Atria Wealth Solutions, Inc.	First lien senior secured delayed draw loan	12.18% (S + 6.50%)	2/29/2024		2,998		2,987		2,998		1.8	%
					2,998		2,987		2,998		1.8	%
Chemicals
Shrieve Chemical Company, LLC	First lien senior secured loan	11.80% (S + 6.38%)	12/2/2024		3,101		3,080		3,101		1.9	%
					3,101		3,080		3,101		1.9	%
Commercial services & supplies
Allentown, LLC	First lien senior secured loan	11.42% (S + 6.00%)	4/22/2027		2,259		2,243		2,248		1.4	%
	First lien senior secured delayed draw loan	11.42% (S + 6.00%)	4/22/2027		408		406		406		0.3	%
	First lien senior secured revolving loan	13.50% (P + 5.00%)	4/22/2027		167		165		166		0.1	%
American Equipment Holdings LLC	First lien senior secured delayed draw loan	11.93% (S + 6.00%)	11/5/2026		4,982		4,889		4,982		3.0	%
BLP Buyer, Inc. (Bishop Lifting Products)	First lien senior secured loan	12.02% (S + 6.50%)	2/1/2027		2,709		2,672		2,682		1.6	%
	First lien senior secured loan	12.27% (S + 6.75%)	2/1/2027		1,985		1,946		1,985		1.2	%
	First lien senior secured loan	12.27% (S + 6.75%)	2/1/2027		2,000		1,946		2,000		1.2	%
	First lien senior secured revolving loan	11.92% (S + 6.50%)	2/1/2027		191		188		189		0.1	%
					14,701		14,455		14,658		8.9	%
Containers & packaging
Drew Foam Companies, Inc.	First lien senior secured loan	12.75% (S + 7.25%)	11/5/2025		2,970		2,938		2,948		1.8	%
FCA, LLC (FCA Packaging)	First lien senior secured loan	11.81% (S + 6.50%)	7/18/2028		2,012		1,984		2,033		1.2	%
	First lien senior secured revolving loan	11.81% (S + 6.50%)	7/18/2028		-		-		-		0.0	%
					4,982		4,922		4,981		3.0	%
Diversified telecommunication services
Pavion Corp., f/k/a Corbett Technology Solutions, Inc.	First lien senior secured loan	11.30% (S + 5.75%)	10/29/2027		833		821		833		0.5	%
	First lien senior secured loan	11.29% (S + 5.75%)	10/29/2027		925		912		925		0.6	%
					1,758		1,733		1,758		1.1	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of September 30, 2023

(amounts in 000’s)

(Unaudited)

			Maturity	Principal /		Amortized		Fair		Percentage
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		of Net Assets
Food products
BR PJK Produce, LLC (Keany)	First lien senior secured loan	11.54% (S + 6.00%)	11/14/2027		4,736		4,632		4,807		2.9	%
	First lien senior secured delayed draw loan	11.54% (S + 6.00%)	5/14/2024		-		-		-		0.0	%
Gulf Pacific Holdings, LLC	First lien senior secured loan	11.29% (S + 5.75%)	9/30/2028		1,734		1,705		1,725		1.0	%
	First lien senior secured delayed draw loan	11.38% (S + 5.75%)	9/30/2028		146		129		145		0.1	%
	First lien senior secured revolving loan	11.29% (S + 5.75%)	9/30/2028		-		-		-		0.0	%
City Line Distributors, LLC	First lien senior secured loan	11.65% (S + 6.00%)	8/31/2028		1,879		1,814		1,879		1.2	%
	First lien senior secured delayed draw loan	11.65% (S + 6.00%)	3/3/2025		-		-		-		0.0	%
	First lien senior secured revolving loan	11.65% (S + 6.00%)	8/31/2028		18		9		18		0.0	%
IF&P Foods, LLC (FreshEdge) (6)	First lien senior secured loan	11.07% (S + 5.63%)	10/3/2028		3,902		3,818		3,824		2.3	%
	First lien senior secured delayed draw loan	11.07% (S + 5.63%)	10/3/2028		580		568		568		0.3	%
	First lien senior secured revolving loan	11.07% (S + 5.63%)	10/3/2028		254		243		249		0.2	%
Siegel Egg Co., LLC	First lien senior secured loan	11.84% (S + 6.50%)	12/29/2026		2,465		2,434		2,329		1.4	%
	First lien senior secured revolving loan	11.84% (S + 6.50%)	12/29/2026		413		407		390		0.2	%
Worldwide Produce Acquisition, LLC	First lien senior secured delayed draw loan	11.64% (S + 6.25%)	1/18/2029		632		587		632		0.4	%
	First lien senior secured delayed draw loan	11.64% (S + 6.25%)	4/18/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	11.64% (S + 6.25%)	1/18/2029		127		116		127		0.1	%
	First lien senior secured loan	11.64% (S + 6.25%)	1/18/2029		2,867		2,789		2,867		1.8	%
					19,753		19,251		19,560		11.9	%
Health care providers & services
Brightview, LLC	First lien senior secured loan	11.43% (S + 6.00%)	12/14/2026		2,173		2,168		2,135		1.3	%
	First lien senior secured delayed draw loan	11.43% (S + 6.00%)	12/14/2026		290		289		285		0.2	%
	First lien senior secured revolving loan	11.43% (S + 6.00%)	12/14/2026		39		39		38		0.0	%
Guardian Dentistry Partners	First lien senior secured loan	12.15% (S + 6.50%)	8/20/2026		1,005		989		1,005		0.6	%
	First lien senior secured delayed draw loan	12.15% (S + 6.50%)	8/20/2026		1,956		1,933		1,956		1.2	%
Light Wave Dental Management LLC	First lien senior secured revolving loan	12.39% (S + 7.00%)	6/30/2029		433		408		433		0.3	%
	First lien senior secured loan	12.39% (S + 7.00%)	6/30/2029		6,160		5,991		6,160		3.7	%
OMH-HealthEdge Holdings, LLC	First lien senior secured loan	12.75% (S + 4.25%)	10/24/2025		2,955		2,916		2,955		1.8	%
SGA Dental Partners Holdings, LLC	First lien senior secured loan	11.54% (S + 6.00%)	12/30/2026		1,423		1,404		1,423		0.9	%
	First lien senior secured delayed draw loan	11.67% (S + 6.00%)	12/30/2026		1,326		1,308		1,326		0.8	%
	First lien senior secured revolving loan	11.53% (S + 6.00%)	12/30/2026		41		39		41		0.0	%
					17,801		17,484		17,757		10.8	%
Health care equipment & supplies
LSL Industries, LLC (LSL Healthcare)	First lien senior secured loan	12.13% (S + 6.50%)	11/3/2027		1,678		1,628		1,661		1.0	%
	First lien senior secured delayed draw loan	12.13% (S + 6.50%)	11/3/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	12.13% (S + 6.50%)	11/3/2027		-		-		-		0.0	%
					1,678		1,628		1,661		1.0	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of September 30, 2023

(amounts in 000’s)

(Unaudited)

			Maturity	Principal /		Amortized		Fair		Percentage
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		of Net Assets
Insurance
Allcat Claims Service, LLC	First lien senior secured loan	11.51% (S + 6.00%)	7/7/2027		663		652		663		0.4	%
	First lien senior secured delayed draw loan	11.52% (S + 6.00%)	7/7/2027		1,857		1,822		1,857		1.1	%
	First lien senior secured revolving loan	11.52% (S + 6.00%)	7/7/2027		-		-		-		0.0	%
					2,520		2,474		2,520		1.5	%
IT services
Domain Information Services Inc. (Integris)	First lien senior secured loan	11.40% (S + 6.00%)	9/30/2025		4,967		4,880		4,967		3.0	%
Improving Acquisition LLC	First lien senior secured loan	12.15% (S + 6.50%)	7/26/2027		4,600		4,518		4,577		2.8	%
	First lien senior secured revolving loan	12.15% (S + 6.50%)	7/26/2027		-		-		-		0.0	%
					9,567		9,398		9,544		5.8	%
Leisure products
BCI Burke Holding Corp.	First lien senior secured loan	11.15% (S + 5.50%)	12/14/2027		2,069		2,047		2,100		1.3	%
	First lien senior secured delayed draw loan	11.15% (S + 5.50%)	12/14/2027		78		74		79		0.0	%
	First lien senior secured revolving loan	11.15% (S + 5.50%)	6/14/2027		-		-		-		0.0	%
VENUplus, Inc. (f/k/a CTM Group, Inc.)	First lien senior secured loan	12.32% (S + 6.75%)	11/30/2026		3,031		2,962		3,031		1.8	%
MacNeill Pride Group	First lien senior secured delayed draw loan	11.90% (S + 6.25%)	4/22/2026		984		963		971		0.6	%
	First lien senior secured revolving loan	11.90% (S + 6.25%)	4/22/2026		-		-		-		0.0	%
					6,162		6,046		6,181		3.7	%
Machinery
Pennsylvania Machine Works, LLC	First lien senior secured loan	11.65% (S + 6.00%)	3/6/2027		922		915		922		0.6	%
PVI Holdings, Inc	First lien senior secured loan	12.08% (S + 6.67%)	1/18/2028		2,053		2,027		2,053		1.2	%
					2,975		2,942		2,975		1.8	%
Professional services
DISA Holdings Corp. (DISA)	First lien senior secured delayed draw loan	10.83% (S + 5.50%)	9/9/2028		426		402		426		0.3	%
	First lien senior secured revolving loan	10.83% (S + 5.50%)	9/9/2028		43		35		43		0.0	%
	First lien senior secured loan	10.83% (S + 5.50%)	9/9/2028		3,403		3,315		3,403		2.1	%
Universal Marine Medical Supply International, LLC (Unimed)	First lien senior secured loan	12.55% (S + 7.00%)	12/5/2027		3,998		3,913		3,998		2.4	%
	First lien senior secured revolving loan	12.56% (S + 7.00%)	12/5/2027		735		720		735		0.4	%
					8,605		8,385		8,605		5.2	%
Software
AIDC Intermediate Co 2, LLC (Peak Technologies)	First lien senior secured loan	11.75% (S + 6.25%)	7/22/2027		2,975		2,873		2,960		1.8	%
					2,975		2,873		2,960		1.8	%
Textiles, apparel & luxury goods
American Soccer Company, Incorporated (SCORE)	First lien senior secured loan	12.04% (S + 6.50%)	7/20/2027		2,562		2,517		2,562		1.6	%
	First lien senior secured revolving loan	12.04% (S + 6.50%)	7/20/2027		172		167		172		0.1	%
					2,734		2,684		2,734		1.7	%
Trading companies & distributors
BCDI Meteor Acquisition, LLC (Meteor)	First lien senior secured loan	12.49% (S + 7.00%)	6/29/2028		4,975		4,865		4,975		3.0	%
CGI Automated Manufacturing, LLC	First lien senior secured loan	12.65% (S + 7.00%)	12/17/2026		1,489		1,450		1,474		0.9	%
	First lien senior secured delayed draw loan	12.65% (S + 7.00%)	12/17/2026		1,243		1,211		1,231		0.8	%
	First lien senior secured revolving loan	12.65% (S + 7.00%)	12/17/2026		64		60		64		0.0	%
Engineered Fastener Company, LLC (EFC International)	First lien senior secured loan	12.04% (S + 6.50%)	11/1/2027		6,965		6,813		6,965		4.2	%
Genuine Cable Group, LLC	First lien senior secured loan	10.92% (S + 5.50%)	11/1/2026		6,945		6,759		6,928		4.2	%
I.D. Images Acquisition, LLC	First lien senior secured loan	11.79% (S + 6.25%)	7/30/2026		666		658		666		0.4	%
	First lien senior secured loan	11.67% (S + 6.25%)	7/30/2026		2,949		2,905		2,949		1.8	%
Krayden Holdings, Inc.	First lien senior secured delayed draw loan	11.24% (S + 5.75%)	3/1/2025		-		-		-		0.0	%
	First lien senior secured delayed draw loan	11.24% (S + 5.75%)	3/1/2025		-		-		-		0.0	%
	First lien senior secured revolving loan	11.24% (S + 5.75%)	3/1/2029		-		-		-		0.0	%
	First lien senior secured loan	11.24% (S + 5.75%)	3/1/2029		3,172		3,034		3,187		2.0	%
					28,468		27,755		28,439		17.3	%
Wireless telecommunication services
Centerline Communications, LLC	First lien senior secured delayed draw loan	11.55% (S + 6.00%)	8/10/2027		668		659		651		0.4	%
	First lien senior secured delayed draw loan	11.53% (S + 6.00%)	8/10/2027		2,306		2,275		2,249		1.4	%
	First lien senior secured loan	11.53% (S + 6.00%)	8/10/2027		665		650		649		0.4	%
					3,639		3,584		3,549		2.2	%
Total Private Credit Debt Investments					146,023		142,972		145,692		88.5	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of September 30, 2023

(amounts in 000’s)

(Unaudited)

	Number of				Fair			Percentage
	Shares		Cost		Value			of Net Assets
Short-Term Investments
First American Treasury Obligations Fund - Institutional Class Z, 5.22% (7)		20,409		20,409		20,409			12.4	%
Total Short-Term Investments		20,409		20,409		20,409			12.4	%

Total Investments			$	163,381	$	166,101			100.9	%

Liabilities in Excess of Other Assets						(1,423	)		(0.9	)%
Net Assets					$	164,678			100.0	%

(1)

As of September 30, 2023, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

(2)	The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(3)	As of September 30, 2023, the tax cost of the Company’s investments approximates their amortized cost.

(4)

Loan contains a variable rate structure, that may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the Secured Overnight Funding Rate (“SOFR” or “S”) (which can include one-, three- or six-month SOFR), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate or “P”).

(5)

Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2023, 2.7% of the Company’s total assets were in non-qualifying investments.

(6)

The Company may be entitled to receive additional interest as a result of an arrangement with other lendersin the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss. Certain lenders represent a “first out” portion of the investment and have priority to the “last out” portion with respect to payments of principal and interest.

(7)	The indicated rate is the yield as of September 30, 2023.

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized		Fair		Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		Assets
Debt Investments
Private Credit Investments⁽⁴⁾
Aerospace & defense
Basel U.S. Acquisition Co., Inc. (IAC) (5)	First lien senior secured revolving loan	11.10% (S + 6.50%)	12/5/2028		-	$	-	$	-		0.0	%
	First lien senior secured loan	11.10% (S + 6.50%)	12/5/2028		4,601		4,477		4,601		4.3	%
Precinmac (US) Holdings, Inc.	First lien senior secured loan	10.42% (S + 6.00%)	8/31/2027		284		278		280		0.3	%
					4,885		4,755		4,881		4.6	%
Asset management & custody banks
Atria Wealth Solutions, Inc.	First lien senior secured delayed draw loan	10.84% (S + 6.00%)	2/29/2024		216		187		212		0.2	%
					216		187		212		0.2	%
Auto components
Vehicle Accessories, Inc.	First lien senior secured loan	10.34% (S + 5.50%)	11/30/2026		1,714		1,689		1,701		1.6	%
					1,714		1,689		1,701		1.6	%
Biotechnology
Alcami Corporation (Alcami)	First lien senior secured delayed draw loan	11.42% (S + 7.00%)	6/30/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	11.42% (S + 7.00%)	12/21/2028		-		-		-		0.0	%
	First lien senior secured loan	11.42% (S + 7.00%)	12/21/2028		4,110		3,935		4,069		3.8	%
					4,110		3,935		4,069		3.8	%
Building products
BCI Burke Holding Corp.	First lien senior secured delayed draw loan	9.70% (L + 5.50%)	12/14/2027		85		82		85		0.1	%
	First lien senior secured loan	10.23% (L + 5.50%)	12/14/2027		2,186		2,155		2,197		2.1	%
	First lien senior secured revolving loan	9.70% (L + 5.50%)	6/14/2027		-		-		-		0.0	%
					2,271		2,237		2,282		2.2	%
Chemicals
Schrieve Chemical Company, LLC	First lien senior secured loan	10.33% (L + 6.00%)	12/2/2024		256		251		256		0.2	%
					256		251		256		0.2	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized			Fair		Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾			Value		Assets
Commercial services & supplies
Allentown, LLC	First lien senior secured delayed draw loan	10.42% (S + 6.00%)	10/22/2023		-		-			-		0.0	%
	First lien senior secured revolving loan	12.50% (P + 5.00%)	4/22/2027		106		102			103		0.1	%
	First lien senior secured loan	10.42% (S + 6.00%)	4/22/2027		2,276		2,256			2,214		2.1	%
American Equipment Holdings LLC	First lien secured delayed draw loan	10.88% (S + 6.00%)	11/5/2026		-		(61	)		-		0.0	%
BLP Buyer, Inc. (Bishop Lifting Products)	First lien senior secured revolving loan	10.67% (S + 6.25%)	2/1/2027		91		87			90		0.1	%
	First lien senior secured loan	10.21% (S + 6.50%)	2/1/2027		2,000		1,952			1,975		1.9	%
	First lien senior secured loan	10.49% (S + 6.25%)	2/1/2027		2,729		2,683			2,695		2.5	%
					7,202		7,019			7,077		6.7	%
Containers & packaging
Drew Foam Companies, Inc.	First lien senior secured loan	10.89% (S + 6.75%)	11/5/2025		2,993		2,949			2,993		2.8	%
FCA, LLC (FCA Packaging)	First lien senior secured revolving loan	9.46% (S + 6.50%)	7/18/2028		-		-			-		0.0	%
	First lien senior secured loan	9.46% (S + 6.50%)	7/18/2028		2,520		2,479			2,545		2.4	%
					5,513		5,428			5,538		5.2	%
Diversified telecommunication services
Pavion Corp., f/k/a Corbett Technology Solutions, Inc.	First lien senior secured loan	8.70% (L + 5.00%)	10/29/2027		932		917			918		0.8	%
	First lien senior secured loan	9.58% (S + 5.00%)	10/29/2027		839		825			827		0.8	%
					1,771		1,742			1,745		1.6	%
Electronic equipment, instruments & components
Process Insights, Inc.	First lien senior secured loan	10.49% (S + 6.00%)	10/30/2025		1,472		1,448			1,461		1.4	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized		Fair		Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		Assets
Food products
BR PJK Produce, LLC (Keany)	First lien senior secured loan	10.47% (S + 6.25%)	11/14/2027		4,772		4,649		4,772		4.5	%
	First lien senior secured delayed draw loan	10.47% (S + 6.25%)	5/14/2024		-		-		-		0.0	%
Gulf Pacific Holdings, LLC	First lien senior secured delayed draw loan	10.73% (S + 6.00%)	9/30/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	10.42% (S + 6.00%)	9/30/2028		128		119		128		0.1	%
	First lien senior secured loan	10.73% (S + 6.00%)	9/30/2028		1,747		1,706		1,747		1.7	%
IF&P Foods, LLC (FreshEdge) (6)	First lien senior secured delayed draw loan	8.91% (S + 5.25%)	10/3/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	8.91% (S + 5.25%)	10/3/2028		195		184		195		0.2	%
	First lien senior secured loan	8.91% (S + 5.25%)	10/3/2028		3,931		3,822		3,931		3.7	%
Siegel Egg Co., LLC	First lien senior secured revolving loan	9.25% (L + 5.50%)	12/29/2026		306		298		304		0.3	%
	First lien senior secured loan	9.25% (L + 5.50%)	12/29/2026		2,484		2,445		2,471		2.3	%
					13,563		13,223		13,548		12.8	%
Health care providers & services
Brightview, LLC	First lien senior secured delayed draw loan	10.14% (L + 5.75%)	12/14/2026		292		289		290		0.3	%
	First lien senior secured revolving loan	10.13% (L + 5.75%)	12/14/2026		-		-		-		0.0	%
	First lien senior secured loan	10.13% (L + 5.75%)	12/14/2026		2,190		2,176		2,168		2.0	%
Guardian Dentistry Partners	First lien senior secured delayed draw loan	10.94% (S + 6.50%)	8/20/2026		1,970		1,942		1,970		1.9	%
	First lien senior secured loan	10.94% (S + 6.50%)	8/20/2026		1,012		992		1,012		0.9	%
Light Wave Dental Management LLC	First lien senior secured delayed draw loan	11.32% (S + 6.50%)	12/31/2023		956		944		956		0.9	%
	First lien senior secured revolving loan	11.32% (S + 6.50%)	12/31/2023		56		55		56		0.0	%
	First lien senior secured loan	11.32% (S + 6.50%)	12/31/2023		1,294		1,285		1,294		1.2	%
OMH-HealthEdge Holdings, LLC	First lien senior secured loan	10.03% (L + 5.25%)	10/24/2025		2,978		2,924		2,978		2.8	%
SGA Dental Partners Holdings, LLC	First lien senior secured delayed draw loan	9.93% (S + 6.00%)	12/30/2026		1,336		1,314		1,336		1.3	%
	First lien senior secured loan	9.93% (S + 6.00%)	12/30/2026		1,434		1,407		1,434		1.4	%
	First lien senior secured revolving loan	9.93% (S + 6.00%)	12/30/2026		-		-		-		0.0	%
					13,518		13,328		13,494		12.7	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized		Fair		Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		Assets
Healthcare equipment & supplies
LSL Industries, LLC (LSL Healthcare)	First lien senior secured delayed draw loan	10.90% (S + 6.50%)	11/3/2024		-		-		-		0.0	%
	First lien senior secured revolving loan	10.90% (S + 6.50%)	11/3/2027		-		-		-		0.0	%
	First lien senior secured loan	10.90% (S + 6.50%)	11/3/2027		1,691		1,629		1,691		1.6	%
					1,691		1,629		1,691		1.6	%
Insurance
Allcat Claims Service, LLC	First lien senior secured delayed draw loan	10.24% (S + 6.00%)	7/7/2027		462		439		462		0.5	%
	First lien senior secured revolving loan	10.33% (S + 6.00%)	7/7/2027		142		136		142		0.1	%
	First lien senior secured loan	10.41% (S + 6.00%)	7/7/2027		668		655		668		0.6	%
					1,272		1,230		1,272		1.2	%
IT services
Domain Information Services Inc. (Integris)	First lien senior secured loan	10.63% (S + 6.25%)	9/30/2025		5,000		4,879		5,000		4.7	%
Improving Acquisition LLC	First lien senior secured revolving loan	10.24% (S + 6.00%)	7/26/2027		-		-		-		0.0	%
	First lien senior secured loan	10.24% (S + 6.00%)	7/26/2027		4,635		4,538		4,635		4.4	%
					9,635		9,417		9,635		9.1	%
Leisure products
MacNeill Pride Group	First lien senior secured delayed draw loan	11.09% (S + 6.25%)	4/22/2026		1,233		1,210		1,202		1.2	%
	First lien senior secured revolving loan	11.09% (S + 6.25%)	4/22/2026		130		126		127		0.1	%
					1,363		1,336		1,329		1.3	%
Machinery
Pennsylvania Machine Works, LLC	First lien senior secured loan	11.09% (S + 6.25%)	3/6/2027		968		959		968		0.9	%
PVI Holdings, Inc	First lien senior secured loan	10.12% (S + 6.38%)	7/18/2027		2,068		2,037		2,068		2.0	%
					3,036		2,996		3,036		2.9	%
Professional services
DISA Holdings Corp. (DISA)	First lien senior secured delayed draw loan	9.73% (S + 5.50%)	9/9/2028		374		349		372		0.4	%
	First lien senior secured revolving loan	9.82% (S + 5.50%)	9/9/2028		9		-		9		0.0	%
	First lien senior secured loan	9.72% (S + 5.50%)	9/9/2028		3,429		3,328		3,412		3.2	%
Universal Marine Medical Supply International, LLC (Unimed)	First lien senior secured revolving loan	12.14% (S + 7.50%)	12/5/2027		147		129		147		0.1	%
	First lien senior secured loan	12.10% (S + 7.50%)	12/5/2027		4,265		4,160		4,265		4.0	%
					8,224		7,966		8,205		7.7	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized		Fair		Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value		Assets
Software
AIDC Intermediate Co 2, LLC (Peak Technologies)	First lien senior secured loan	10.44% (S + 6.25%)	7/22/2027		2,997		2,878		2,997		2.8	%
					2,997		2,878		2,997		2.8	%
Textiles, apparel & luxury goods
American Soccer Company, Incorporated (SCORE)	First lien senior secured revolving loan	11.91% (S + 7.25%)	7/20/2027		162		154		162		0.2	%
	First lien senior secured loan	11.98% (S + 7.25%)	7/20/2027		2,582		2,527		2,582		2.4	%
					2,744		2,681		2,744		2.6	%
Trading companies & distributors
BCDI Meteor Acquisition, LLC (Meteor)	First lien senior secured loan	11.66% (S + 7.00%)	6/29/2028		5,000		4,875		5,000		4.7	%
CGI Automated Manufacturing, LLC	First lien senior secured revolving loan	11.34% (S + 6.50%)	12/17/2026		-		-		-		0.0	%
	First lien senior secured delayed draw loan	11.34% (S + 6.50%)	12/17/2026		1,267		1,222		1,267		1.2	%
	First lien senior secured loan	11.34% (S + 6.50%)	12/17/2026		1,517		1,476		1,517		1.4	%
Genuine Cable Group, LLC	First lien senior secured loan	10.17% (S + 5.75%)	11/1/2026		4,988		4,824		4,925		4.7	%
I.D. Images Acquisition, LLC	First lien senior secured loan	10.67% (S + 6.25%)	7/30/2026		3,085		3,026		3,085		2.9	%
	First lien senior secured loan	10.98% (S + 6.25%)	7/30/2026		696		686		696		0.7	%
					16,553		16,109		16,490		15.6	%

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

			Maturity	Principal /		Amortized		Fair			Percentage of Net
Portfolio Company⁽¹⁾	Investment	Interest Rate	Date	Par		Cost⁽²⁾⁽³⁾		Value			Assets
Wireless telecommunication services
Centerline Communications, LLC	First lien senior secured loan	9.93% (S + 5.50%)	8/10/2027		670		651		667			0.6	%
	First lien senior secured delayed draw loan	9.93% (S + 5.50%)	8/10/2027		2,997		2,948		2,982			2.8	%
					3,667		3,599		3,649			3.4	%
Total Private Credit Investments					107,673		105,083		107,312			101.2	%

Total Debt Investments					107,673		105,083		107,312			101.2	%

Total Investments						$	105,083	$	107,312			101.2	%

Liabilities in Excess of Other Assets									(1,404	)		(1.2	)%
Net Assets								$	105,908			100.0	%

(1)

As of December 31, 2022, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

(2)	The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(3)	As of December 31, 2022, the tax cost of the Company’s investments approximates their amortized cost.

(4)

Loan contains a variable rate structure, that may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), the Secured Overnight Funding Rate (“SOFR” or “S”) (which can include one-, three- or six-month SOFR), or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate or “P”).

(5)

Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2022, 4.2% of the Company’s total assets were in non-qualifying investments.

(6)

The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss. Certain lenders represent a “first out” portion of the investment and have priority to the “last-out” portion with respect to payments of principal and interest.

See accompanying notes to consolidated financial statements.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Note 1. Organization

Organization

Kayne DL 2021, Inc. (the “Company”) is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, the Company intends to qualify as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company was formed as a Delaware corporation to make investments in middle-market companies and commenced operations on December 16, 2021.

As of September 30, 2023, the Company has entered into subscription agreements with investors for an aggregate capital commitment of $353,535 to purchase shares of the Company’s common stock.

KA Credit Advisors II, LLC (the “Advisor”) is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P. ( “Kayne Anderson”), a prominent alternative investment management firm. The Advisor and Kayne Anderson are registered with the United States Securities and Exchange Commission (the “SEC”) under the Investment Advisory Act of 1940, as amended. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of five directors, four of whom are independent (including the Board’s chairperson).

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies.

The Company conducts private offerings of its Common Stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any private offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of its common stock pursuant to a subscription agreement entered into with the Company. Investors will be required to fund drawdowns to purchase Shares up to the amount of their respective Capital Commitments each time the Company delivers a notice to the investors. The Company commenced its loan origination and investment activities on December 16, 2021 contemporaneously with the initial drawdown from investors in the private offering.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Note 2. Significant Accounting Policies

A. Basis of Presentation—the accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company is an investment company and follows accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 — “Financial Services — Investment Companies.” In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair statement of the financial statements for the periods presented, have been included.

B. Consolidation—As provided under Regulation S-X and ASC Topic 946 – “Financial Services – Investment Companies”, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of KDL Corp, LLC in its consolidated financial statements. As of September 30, 2023, KDL Corp, LLC held no investments.

C. Use of Estimates—the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ materially from those estimates.

D. Cash and Cash Equivalents—cash and cash equivalents include short-term, liquid investments with an original maturity of three months or less and include money market fund accounts. Cash equivalents, which are the Company’s investments in money market fund accounts, are presented on the Company’s consolidated schedule of investments, and within investments on the Company’s consolidated statement of assets and liabilities.

E. Investment Valuation, Fair Value—the Company conducts the valuation of its investments consistent with GAAP and the 1940 Act. The Company’s investments will be valued no less frequently than quarterly, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board’s Accounting Standards Codification, Fair Value Measurement and Disclosures (“ASC 820”).

Pursuant to Rule 2a-5 under the 1940 Act, the Board of Directors has designated the Advisor as the “valuation designee” to perform fair value determinations of the Company’s portfolio holdings, subject to oversight by and periodic reporting to the Board. The valuation designee performs fair valuation of the Company’s portfolio holdings in accordance with the Advisor’s Valuation Program, as approved by the Board.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Traded Investments (Level 1 or Level 2)

Investments for which market quotations are readily available will typically be valued at those market quotations. Traded investments such as corporate bonds, preferred stock, bank notes, loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker, the agent bank, syndicate bank or principal market maker. When price quotes for investments are not available, or such prices are stale or do not represent fair value in the judgment of the Company’s Advisor, fair market value will be determined using the Advisor’s valuation process for investments that are privately issued or otherwise restricted as to resale.

The Company may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While the Company anticipates these equity securities to be issued by privately held companies, the Company may hold equity securities that are publicly traded. Equity securities listed on any exchange other than the NASDAQ Stock Market, Inc. (“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices on such day. Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price. Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. Equity securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing bid prices.

Non-Traded Investments (Level 3)

Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of the Company’s Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of the Company’s Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. The Company expects that a significant majority of its investments will be Level 3 investments. Unless otherwise determined by the Advisor, the following valuation process is used for the Company’s Level 3 investments:

●

Valuation Designee. The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made. The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments.

●

Valuation Firm. Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the Company’s remaining investments. The third-party valuation firm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The quarterly report issued by the third-party valuation firm will provide positive assurance on the fair values of the investments reviewed.

●

Oversight. The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to the Company’s financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the Company’s financial statements.

F. Interest Income Recognition—Interest income is recorded on an accrual basis and includes the accretion of discounts, amortization of premiums and payment-in-kind (“PIK”) interest. Discounts from and premiums to par value on investments purchased are accreted/amortized into interest income over the life of the respective security using the effective yield method. To the extent loans contain PIK provisions, PIK interest, computed at the contractual rate specified in each applicable agreement, is accrued and recorded as interest income and added to the principal balance of the loan. PIK interest income added to the principal balance is generally collected upon repayment of the outstanding principal. The Company does not accrue PIK interest if, in the opinion of the Advisor, the portfolio company valuation indicates that the PIK interest is not likely to be collectible. If the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest is generally reversed through PIK interest income. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders in the form of dividends for the year the income was earned, even though the Company has not yet collected the cash. The amortized cost of investments represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest.

Loans are generally placed on non-accrual status when it has been determined that a significant impairment in the financial condition and ability of the borrower to repay principal and interest has occurred and is expected to continue such that it is probable the collectability of full amount of the loan (principal and interest) is doubtful. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. If cash payments are received subsequent to a loan being placed on non-accrual status, these payments will first be applied to previously accrued but uncollected interest, then to recover the principal. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer a reasonable doubt that such principal or interest will be collected in full and, in the Company’s judgment, principal and interest are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value (i.e., typically measured as enterprise value of the portfolio company) or is in the process of collection. As of September 30, 2023 and December 31, 2022, the Company did not have any investments in portfolio companies on non-accrual status.

G. Debt Issuance Costs – Costs incurred by the Company related to the issuance of its debt (credit facilities) are capitalized and amortized over the period the debt is outstanding. The Company has classified the costs incurred to issue its credit facilities as a deduction from the carrying value of the credit facilities on the Statement of Assets and Liabilities. For the purpose of calculating the Company’s asset coverage ratios pursuant to the 1940 Act, deferred issuance costs are not deducted from the carrying value of debt or preferred stock.

H. Dividends to Common Stockholders—Distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Company’s board of directors each quarter and is generally based upon the earnings estimated by management and considers the level of undistributed taxable income carried forward from the prior year for distribution in the current year. Net realized capital gains, if any, are generally distributed, although the Company may decide to retain such capital gains for investment.

I. Organizational Costs—organizational expenses include costs and expenses relating to the formation and organization of the Company. The Company has reimbursed the Advisor for these costs which were expensed as incurred.

J. Offering Costs – offering costs include costs and expenses incurred in connection with the offering of the Company’s common stock. These costs were capitalized as deferred offering expenses and included in prepaid expenses and other assets on the Statement of Assets and Liabilities. These costs were amortized over a twelve-month period beginning with the commencement of operations. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s registration statement and registration fees. The Company reimbursed the Advisor for these costs.

K. Income Taxes – it is the Company’s intention to continue to be treated as and to qualify each year for special tax treatment afforded a RIC under the Code. As long as the Company meets certain requirements that govern its sources of income, diversification of assets and timely distribution of earnings to stockholders, the Company will not be subject to U.S. federal income tax.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

The Company must pay distributions equal to 90% of its investment company taxable income (ordinary income and short-term capital gains) to qualify as a RIC and it must distribute all of its taxable income (ordinary income, short-term capital gains and long-term capital gains) to avoid federal income taxes. The Company will be subject to federal income tax on any undistributed portion of income. For purposes of the distribution test, the Company may elect to treat as paid on the last day of its taxable year all or part of any distributions that are declared after the end of its taxable year if such distributions are declared before the due date of its tax return, including any extensions.

All RICs are subject to a non-deductible 4% excise tax on income that is not distributed on a timely basis in accordance with the calendar year distribution requirements. To avoid the tax, the Company must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary income for the calendar year, (ii) 98.2% of its net capital gains for the one-year period ending on December 31, the last day of our taxable year, and (iii) undistributed amounts from previous years on which the Company paid no U.S. federal income tax. A distribution will be treated as paid during the calendar year if it is paid during the calendar year or declared by the Company in October, November or December of such year, payable to stockholders of record on a date during such months and paid by the Company no later than January of the following year. Any such distributions paid during January of the following year will be deemed to be received by stockholders on December 31 of the year the distributions are declared, rather than when the distributions are actually received.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

L. Commitments and Contingencies – in the normal course of business, the Company may enter into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

Note 3. Agreements and Related Party Transactions

A. Administration Agreement – on December 16, 2021, the Company entered into an Administration Agreement with its Advisor, which serves as its Administrator and will provide or oversee the performance of its required administrative services and professional services rendered by others, which will include (but are not limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing of its tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC. On March 7, 2023, the Board approved a renewal of the Administration Agreement through March 15, 2024.

The Company will reimburse the Administrator for its costs and expenses incurred in performing its obligations under the Administration Agreement. As the Company reimburses the Administrator for its expenses, the Company will indirectly bear such cost. The Administration Agreement may be terminated by either party with 60 days’ written notice.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

B. Investment Advisory Agreement – on December 16, 2021, the Company entered into an Investment Advisory Agreement with its Advisor. Pursuant to the Investment Advisory Agreement with its Advisor, the Company will pay its Advisor a management fee for investment advisory and management services. The Investment Advisory Agreement may be terminated by either party with 60 days’ written notice. On March 7, 2023, the Board approved a renewal of the Investment Advisory Agreement through March 15, 2024.

Management Fee

The management fee will be calculated at an annual rate of 0.75% of the fair market value of the Company’s investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase.

The management fee will be payable quarterly in arrears and calculated based on the average of the Company’s fair market value of investments, at the end of the two most recently completed calendar quarters, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. Management fees for any partial quarter will be appropriately pro-rated.

For the three months ended September 30, 2023 and 2022, the Company incurred management fees of $270 and $90, respectively.

For the nine months ended September 30, 2023 and 2022, the Company incurred management fees of $745 and $181, respectively.

C. Other – Kayne Anderson, an affiliate of the Advisor, made an equity contribution of $500 during the nine months ended September 30, 2023.

Note 4. Investments

The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of September 30, 2023 and December 31, 2022.

	September 30, 2023				December 31, 2022
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
First-lien senior secured debt investments	$	142,972	$	145,692	$	105,083	$	107,312
Short-term investments		20,409		20,409		-		-
Total Investments	$	163,381	$	166,101	$	105,083	$	107,312

As of September 30, 2023 and December 31, 2022, $4,589 and $4,601, respectively, of the Company’s total assets were non-qualifying assets as defined by Section 55(a) of the 1940 Act.

The Company uses Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

The industry composition of long-term investments based on fair value as of September 30, 2023 and December 31, 2022 was as follows:

	September 30, 2023			December 31, 2022

Trading companies & distributors		19.5	%		15.4	%
Food products		13.4	%		12.6	%
Health care providers & services		12.2	%		12.6	%
Commercial services & supplies		10.1	%		6.6	%
IT services		6.6	%		9.0	%
Professional services		5.9	%		7.6	%
Leisure products		4.3	%		1.2	%
Containers & packaging		3.4	%		5.2	%
Aerospace & defense		3.3	%		4.5	%
Biotechnology		2.9	%		3.8	%
Wireless telecommunication services		2.5	%		3.4	%
Chemicals		2.1	%		0.2	%
Capital Markets		2.1	%		-	%
Machinery		2.0	%		2.8	%
Software		2.0	%		2.8	%
Textiles, apparel & luxury goods		1.9	%		2.6	%
Automobile components		1.8	%		1.6	%
Insurance		1.7	%		1.2	%
Diversified telecommunication services		1.2	%		1.6	%
Health care equipment & supplies		1.1	%		1.6	%
Electronic equipment, instruments & components		-	%		1.4	%
Building products		-	%		2.1	%
Asset management & custody banks		-	%		0.2	%
Total		100.0	%		100.0	%

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Note 5. Fair Value

The Fair Value Measurement Topic of the FASB Accounting Standards Codification (ASC 820) defines fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants under current market conditions at the measurement date. As required by ASC 820, the Company has performed an analysis of all investments measured at fair value to determine the significance and character of all inputs to their fair value determination. Inputs are the assumptions, along with considerations of risk, that a market participant would use to value an asset or a liability. In general, observable inputs are based on market data that is readily available, regularly distributed and verifiable that the Company obtains from independent, third-party sources. Unobservable inputs are developed by the Company based on its own assumptions of how market participants would value an asset or a liability.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories.

Level 1

—

Valuations based on quoted unadjusted prices for identical instruments in active markets traded on a national exchange to which the Company has access at the date of measurement.

Level 2

—

Valuations based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

Level 3

—

Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Company’s own assumptions that market participants would use to price the asset or liability based on the best available information.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

The following tables present the fair value hierarchy of investments as of September 30, 2023 and December 31, 2022. Note that the valuation levels below are not necessarily an indication of the risk or liquidity associated with the underlying investment.

	Fair Value Hierarchy as of September 30, 2023
Investments:	Level 1		Level 2		Level 3		Total
First-lien senior secured debt investments	$	-	$	-	$	145,692	$	145,692
Short-term investments		20,409		-		-		20,409
Total Investments	$	20,409	$	-	$	145,692	$	166,101

	Fair Value Hierarchy as of December 31, 2022
Investments:	Level 1		Level 2		Level 3		Total
First-lien senior secured debt investments	$	-	$	-	$	107,312	$	107,312
Short-term investments		-		-		-		-
Total Investments	$	-	$	-	$	107,312	$	107,312

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2023 and 2022, respectively.

	First-lien
	senior secured
For the three months ended September 30, 2023	debt investments
Fair value, beginning of period	$	140,544
Purchases of investments, including PIK, if any		7,594
Proceeds from sales of investments and principal repayments		(2,811	)
Net change in unrealized gain (loss)		120
Net realized gain (loss)		-
Net accretion of discount on investments		245
Transfers into (out of) Level 3		-
Fair value, end of period	$	145,692

	First-lien
	senior secured
For the three months ended September 30, 2022	debt investments
Fair value, beginning of period	$	36,904
Purchases of investments, including PIK, if any		22,021
Proceeds from principal payments and sales of investments		(1,281	)
Net change in unrealized gain (loss)		464
Net accretion of discount on investments		53
Transfers into (out of) Level 3		-
Fair value, end of period	$	58,161

	First-lien
	senior secured
For the nine months ended September 30, 2023	debt investments
Fair value, beginning of period	$	107,312
Purchases of investments, including PIK, if any		44,326
Proceeds from sales of investments and principal repayments		(7,085	)
Net change in unrealized gain (loss)		491
Net realized gain (loss)		-
Net accretion of discount on investments		648
Transfers into (out of) Level 3		-
Fair value, end of period	$	145,692

	First-lien
	senior secured
For the nine months ended September 30, 2022	debt investments
Fair value, beginning of period	$	11,761
Purchases of investments, including PIK, if any		47,057
Proceeds from principal payments and sales of investments		(1,683	)
Net change in unrealized gain (loss)		912
Net accretion of discount on investments		114
Transfers into (out of) Level 3		-
Fair value, end of period	$	58,161

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

For the three and nine months ended September 30, 2023 and 2022, the Company did not recognize any transfers to or from Level 3. The increase in unrealized gain (loss) relates to investments that were held during the period. The Company includes these unrealized gains and losses on the Statement of Operations – Net Change in Unrealized Gains (Losses).

Valuation Techniques and Unobservable Inputs

Non-traded debt investments are typically valued using either a market yield analysis or an enterprise value analysis. For debt investments that are not considered to be credit impaired, the Advisor uses a market yield analysis to determine fair value. If the debt investment is considered to be credit impaired (which is determined by performing an enterprise value analysis), the Advisor will use the enterprise value analysis or a liquidation basis analysis to determine fair value.

To determine fair value using a market yield analysis, the Advisor discounts the contractual cash flows of each investment at an appropriate discount rate (the market yield). To determine the estimated market yield for its debt investments, the Advisor analyzes changes in the risk/reward (measured by yields and leverage) of middle market indices as compared to changes in risk/reward for the underlying investment and estimates the appropriate discount rate for such debt investment. In this context, the discount rate and fair market value of the investment is impacted by the structure and pricing of the security relative to current market yields for similar investments in similar businesses as well as the financial performance of such business. In performing this analysis, the Advisor considers data sources including, but not limited to: (i) industry publications, such as S&P Global’s High-End Middle Market Lending Review; Thomson Reuter’s Refinitiv Middle Market Monthly Stats; CapitalIQ; Pitchbook News; The Lead Left, and other data sources; (ii) comparable investments reviewed or completed by affiliates of the Advisor, and (iii) information obtained and provided by the Advisor’s independent valuation managers.

To determine if a debt investment is credit impaired, the Advisor estimates the enterprise value of the business and compares such estimate to the outstanding indebtedness of such business. The Advisor utilizes the following valuation methodologies to determine the estimated enterprise value of the company: (i) analysis of valuations of publicly traded companies in a similar line of business (“public company comparable analysis”), (ii) analysis of valuations of M&A transaction valuations for companies in a similar line of business (“precedent transaction analysis”), (iii) discounted cash flows (“DCF analysis”) and (iv) other valuation methodologies.

In determining the non-traded debt investment valuations, the following factors are considered, where relevant: the nature and realizable value of any collateral; the company’s ability to make interest payments, amortization payments (if any) and other fixed charges; call features, put features and other relevant terms of the debt security; the company’s historical and projected financial results; the markets in which the company does business; changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be valued; and other relevant factors.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Equity investments in private companies are typically valued using one of or a combination of the following valuation techniques: (i) public company comparable analysis, (ii) precedent transaction analysis and (iii) DCF analysis.

Under all of these valuation techniques, the Advisor estimates operating results of the companies in which it invests, including earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) and free cash flow. These estimates utilize unobservable inputs such as historical operating results, which may be unaudited, and projected operating results, which will be based on operating assumptions for such company. Investment performance data utilized will be the most recently available as of the measurement date which in many cases may reflect up to a one quarter lag in information. These estimates will be sensitive to changes in assumptions specific to such company as well as general assumptions for the industry. Other unobservable inputs utilized in the valuation techniques outlined above include: discounts for lack of marketability, selection of publicly traded companies, selection of similar precedent transactions, selected ranges for valuation multiples and expected required rates of return (discount rates).

Quantitative Table for Valuation Techniques

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of September 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Advisor’s determination of fair value. The Company calculates weighted average, based on the value of the unobservable input of each investment relative to the fair value of the investment compared to the total fair value of all investments.

As of September 30, 2023

Fair

Valuation

Unobservable

Weighted

Value

Technique

Input

Range

Average

First-lien senior secured debt investments

145,692

Discounted cash flow analysis

Discount rate

9.4% - 15.0

10.8

	As of December 31, 2022
	Fair Value		Valuation Technique	Unobservable Input	Range			Weighted Average
First-lien senior secured debt investments	$	107,312	Discounted cash flow analysis	Discount rate		8.7% - 15.0	%		9.8	%

Note 6. Debt

On February 25, 2022, the Company entered into a senior secured revolving credit facility (the “Subscription Credit Facility”), that has a total commitment of $25,000 and a maturity date of February 22, 2024. The Subscription Credit Facility permits the Company to borrow up to $25,000, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate on the Subscription Credit Facility is equal to SOFR plus an applicable spread of 1.975% with no floor. The Company is also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Facility.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Debt obligations consisted of the following as of September 30, 2023 and December 31, 2022.

	September 30, 2023
	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾
Subscription Credit Facility	$	25,000	$	-	$	25,000
Total debt	$	25,000	$	-	$	25,000

	December 31, 2022
	Aggregate Principal Committed		Outstanding Principal		Amount Available⁽¹⁾
Subscription Credit Facility	$	25,000	$	750	$	24,250
Total debt	$	25,000	$	750	$	24,250

(1)	The amounts available reflect any limitations related to the Subscription Credit Facility’s borrowing base as of September 30, 2023 and December 31, 2022, respectively.

For the nine months ended September 30, 2023, the weighted average interest rate of borrowings outstanding was 6.7%. As of September 30, 2023, the Company did not have any amounts outstanding under the Subscription Credit Facility. For the nine months ended September 30, 2022, the Company had $5,000 borrowed under its Subscription Credit Facility on each day from March 23, 2022 to April 5, 2022 at an interest rate of 2.29% and $10,000 borrowed under its Subscription Credit Facility on each day from September 29, 2022 to September 30, 2022 at an interest rate of 5.04%. The Company does not routinely use leverage, and there are many days when there are no borrowings outstanding under its Subscription Credit Facility.

Note 7. Share Transactions

Common Stock Issuances

The following table summarizes the number of common stock shares issued and aggregate proceeds received from such issuances related to the Company’s capital call notices pursuant to subscription agreements with investors for the nine months ended September 30, 2023 and 2022, respectively.

	For the nine months ended September 30, 2023
	Offering price per		Common stock shares		Aggregate offering
Common stock issue date	share		issued		amount
February 28, 2023	$	5,236		4,775	$	25,000
August 10, 2023	$	5,237		4,774		25,000
Total common stock issued				9,549	$	50,000

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

As of September 30, 2023, the Company had subscription agreements with investors for an aggregate capital commitment of $353,535 to purchase shares of common stock. Of this amount, the Company had $200,535 of undrawn commitments at September 30, 2023.

	For the nine months ended September 30, 2022
	Offering price per		Common stock		Aggregate offering
Common stock issue date	share		shares issued		amount
June 29, 2022	$	5,011		1,996	$	10,000
Total common stock issued				1,996	$	10,000

Dividends and Dividend Reinvestment

The following tables summarize the dividends declared and payable by the Company for the nine months ended September 30, 2023 and 2022, respectively. See Note 11 – Subsequent Events.

	For the nine months ended September 30, 2023
	Dividend	Dividend	Dividend
	record	payment	per
Dividend declaration date	date	date	share

March 7, 2023	March 31, 2023	April 14, 2023	$	115.00
May 10, 2023	June 30, 2023	July 14, 2023		136.00
August 10, 2023	September 29, 2023	October 13, 2023		131.00
			$	382.00

	For the nine months ended September 30, 2022
	Dividend	Dividend	Dividend
	record	payment	per
Dividend declaration date	date	date	share
April 19, 2022	April 20, 2022	July 27, 2022	$	6.80
July 19, 2022	July 20, 2022	July 27, 2022		29.00
			$	35.80

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

The following tables summarize the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan (“DRIP”) for the nine months ended September 30, 2023 and 2022, respectively. See Note 11 – Subsequent Events.

	For the nine months ended September 30, 2023
	Dividend	DRIP
	payment	shares		DRIP
Dividend record date	date	issued		value
December 29, 2022	January 13, 2023		340	$	1,750
March 31, 2023	April 14, 2023		564		2,923
June 30, 2023	July 14, 2023		681		3,533
			1,585	$	8,206

	For the nine months ended September 30, 2022
	Dividend	DRIP
	payment	shares		DRIP
Dividend record date	date	issued		value
April 20, 2022	July 27, 2022		12	$	58
July 20, 2022	July 27, 2022		60		304
			72	$	362

For the dividend declared on August 10, 2023 and paid on October 13, 2023, there were 791 shares issued with a DRIP value of $4,112. These shares are excluded from the table above, as the DRIP shares were issued after September 30, 2023.

Note 8. Commitments and Contingencies

The Company had an aggregate of $14,026 and $21,148, respectively, of unfunded commitments to provide debt financing to its portfolio companies as of September 30, 2023 and December 31, 2022. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics. The commitment period for these amounts may be shorter than the maturity date if drawn or funded. These commitments are not reflected in the Company’s consolidated statements of assets and liabilities. Consequently, such commitments result in an element of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

A summary of the composition of the unfunded commitments as of September 30, 2023 and December 31, 2022 is shown in the table below.

	As of		As of
	September 30, 2023		December 31, 2022
Alcami Corporation (Alcami)	$	890	$	890
Allcat Claims Service, LLC		460		1,723
Allentown, LLC		136		606
American Equipment Holdings LLC		-		5,000
American Soccer Company, Incorporated (SCORE)		233		243
Atria Wealth Solutions, Inc.		-		2,784
Basel U.S. Acquisition Co., Inc. (IAC)		399		399
BCI Burke Holding Corp.		618		618
BLP Buyer, Inc. (Bishop Lifting Products)		59		159
BR PJK Produce, LLC (Keany)		228		228
Brightview, LLC		450		489
CGI Automated Manufacturing, LLC		96		160
City Line Distributors, LLC		1,104		-
DISA Holdings Corp. (DISA)		1,101		1,189
FCA, LLC (FCA Packaging)		288		288
Gulf Pacific Holdings, LLC		1,101		1,120
IF&P Foods, LLC (FreshEdge)		234		874
Improving Acquisition LLC		328		354
Krayden Holdings, Inc.		1,813		-
Light Wave Dental Management LLC		392		677
LSL Industries, LLC (LSL Healthcare)		1,305		1,305
MacNeill Pride Group		1,184		1,055
SGA Dental Partners Holdings, LLC		166		207
Siegel Egg Co., LLC		85		192
Universal Marine Medical Supply International, LLC (Unimed)		-		588
Worldwide Produce Acquisition, LLC		1,356		-
Total unfunded commitments	$	14,026	$	21,148

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of September 30, 2023 and December 31, 2022, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

Note 9. Earnings Per Share

In accordance with the provisions of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of September 30, 2023 and 2022, there were no dilutive shares.

The following table sets forth the computation of basic and diluted earnings per share of common stock for the three and nine months ended September 30, 2023 and 2022, respectively.

	For the three months ended				For the nine months ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022

Net increase (decrease) in net assets resulting from operations	$	4,283	$	1,200	$	11,234	$	1,954
Weighted average shares of common stock outstanding - basic and diluted		29,515		10,647		26,096		9,305
Earnings (loss) per share of common stock - basic and diluted	$	145	$	113	$	430	$	210

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Note 10. Financial Highlights

The following per share of common stock data has been derived from information provided in the unaudited financial statements. The following is a schedule of financial highlights for the nine months ended September 30, 2023 and 2022, respectively.

	For the nine months ended September 30,
Per Common Share Operating Performance ⁽¹⁾	2023 (amounts in thousands, except share and per share amounts)			2022 (amounts in thousands, except share and per share amounts)
Net Asset Value, Beginning of Period	$	5,153		$	4,986

Results of Operations:
Net Investment Income		412			112
Net Realized and Unrealized Gain (Loss) on Investments⁽²⁾		14			78
Net Increase (Decrease) in Net Assets Resulting from Operations		426			190

Distributions to Common Stockholders
Distributions from Net Investment Income		(382	)		(36	)
Net Decrease in Net Assets Resulting from Distributions		(382	)		(36	)

Net Asset Value, End of Period	$	5,197		$	5,140

Shares Outstanding, End of Period		31,687			10,668

Ratio/Supplemental Data
Net assets, end of period	$	164,678		$	54,829
Weighted-average shares outstanding		26,096			9,305
Total Return⁽³⁾		8.5	%		3.8	%
Portfolio turnover		5.4	%		5.1	%
Ratio of operating expenses to average net assets		1.6	%		2.9	%
Ratio of net investment income (loss) to average net assets		10.6	%		2.9	%

(1)	The per common share data was derived by using weighted average shares outstanding.

(2)

Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statement of Operations due to share transactions during the period.

(3)

Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. The calculation also assumes reinvestment of dividends at actual prices pursuant to the Company’s dividend reinvestment plan. Total return is not annualized.

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and per share data)

(Unaudited)

Note 11. Subsequent Events

The Company’s management has evaluated subsequent events through the date of issuance of the financial statements included herein. There have been no subsequent events that require recognition or disclosure in these financial statements except as described below.

On October 13, 2023, the Company paid a distribution of $131 per share to each common stockholder of record as of September 29, 2023. The total distribution was $4,151 and $4,112 was reinvested into the Company through the purchase of 791 shares of common stock.

On November 9, 2023, the Board elected Frank P. Karl as Senior Vice President.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to Kayne DL 2021, Inc.

Overview and Investment Framework

Kayne DL 2021, Inc. was formed as a Delaware corporation to make investments in middle-market companies and commenced operations on December 16, 2021. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act, as amended. In addition, for U.S. federal income tax purposes, we intend to qualify, annually, as a RIC under Subchapter M of the Code.

We are managed by KA Credit Advisors II, LLC (the “Advisor”), an affiliate of Kayne Anderson Capital Advisors, L.P. (“Kayne Anderson”), a prominent alternative investment management firm. The Advisor and Kayne Anderson are registered with the United States Securities and Exchange Commission (the “SEC”) under the Investment Advisory Act of 1940, as amended. Subject to the overall supervision of the Company’s board of directors (the “Board”), our Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments, determining the value of our investments and monitoring our investments and portfolio companies on an ongoing basis. The Board consists of five directors, four of whom are independent (including the Board’s chairperson).

Our investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through debt investments in middle-market companies. We define “middle-market companies” as private U.S. middle-market companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and amortization, or EBITDA. Further, we refer to companies that generate between $10 million and $50 million of annual EBITDA as “core middle-market companies” and companies that generate between $50 million and $150 million of annual EBITDA as “upper middle-market companies.”

We intend to achieve our investment objective by investing primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to privately held middle market companies. We expect at least 90% of our portfolio (including investments purchased with proceeds from borrowings) to be invested in first lien senior secured, unitranche and split-lien loans. The remaining 10% of our portfolio may be invested in equity securities (including those purchased in conjunction with other credit investments) and other opportunistic credit investments, including junior debt and other higher yielding investments. Most of these investments (i) will be made in core middle market companies, with the remainder in upper middle market companies and (ii) will generally have stated maturities of no more than six years.

We execute on our investment objective by (1) accessing the established loan sourcing channels developed by Kayne Anderson’s middle market private credit platform and investment and management team (“KAPC” or “Kayne Anderson Private Credit”), which includes an extensive network of private equity firms, other middle market lenders, financial advisors and intermediaries, and management teams, (2) selecting investments within our middle market company focus, (3) implementing KAPC’s time-tested underwriting process, and (4) drawing upon the experience and resources of our Advisor’s investment team and the broader Kayne Anderson network.

We believe our Advisor’s disciplined approach to origination, credit analysis, portfolio construction and risk management should allow us to achieve attractive risk-adjusted returns while preserving investor capital. At a high-level, our Advisor adheres to a strategy it refers to as a “value lending philosophy”, which is comprised of several distinct areas of focus. This philosophy includes an explicit focus on underwriting investments in “evolutionary” not “revolutionary” markets. We tend to avoid high-growth markets as that growth profile attracts substantial capital formation and, in turn, new competition, leading to the potential for longer-term uncertainty and industry upheaval. As such, we tend to invest in markets where the winners and losers have been more-or-less decided and where we can underwrite sustainable, predictable and leverageable cashflows for the long term.

Our portfolio is currently comprised of a broad mix of loans, with diversity among investment size, industry focus and geography. Our Advisor’s team of professionals conducts due diligence on prospective investments during the underwriting process and is involved in structuring the loan’s credit terms of substantially all of our investments. Once an investment has been made, our Advisor closely monitors portfolio investments and takes a proactive approach identifying and addressing sector or company specific risks. Our Advisor maintains a regular dialogue with portfolio company management teams (as well as their financial sponsors, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities.

Recent Developments

On October 13, 2023, we paid a distribution of $131 per share to each common stockholder of record as of September 29, 2023. The total distribution was $4.15 million and $4.11 million was reinvested into the Company through the purchase of 791 shares of common stock.

On November 9, 2023, the Board elected Frank P. Karl as Senior Vice President.

Portfolio and Investment Activity

September 30, 2023

As of September 30, 2023, we had investments in 44 portfolio companies with an aggregate fair value of approximately $145.7 million, and unfunded commitments to these portfolio companies of $14.0 million, and our portfolio consisted of 100% first lien senior secured loans.

As of September 30, 2023, our weighted average yield of debt and income producing securities at fair value and amortized cost was 12.4% and 12.7%, respectively, and 100% of our debt investments at fair value were at floating rates.

As of September 30, 2023, our portfolio was invested across 20 different industries (Global Industry Classification “GICS”, Level 3 – Industry). The largest industries in our portfolio as of September 30, 2023 were Trading Companies & Distributors; Food Products, Health Care Providers & Services and Commercial Services & Supplies, which represented, as a percentage of our portfolio of long-term investments, 19.5%, 13.4%, 12.2% and 10.1%, respectively, based on fair value.

As of September 30, 2023, our average position sized based on commitment (at the portfolio company level) was $3.6 million, and the weighted average and median last twelve months (“LTM”) EBITDA of our portfolio companies was $51.4 million and $46.9 million, respectively, based on fair value.

As of September 30, 2023, the weighted average loan-to-value (“LTV”) of our debt investments at the time of our initial investment was 42.2%, based on fair value. LTV represents the total par value of our debt investment relative to our estimate of the enterprise value of the underlying borrower. Given the senior secured status of nearly all of our investments, the difference between 100% and the LTV of our investment represents the percentage that our estimate of the enterprise value of the underlying borrower would need to degrade prior to a loss on our position.

As of September 30, 2023, none of our debt investments in portfolio companies were on non-accrual.

As of September 30, 2023, 100% of our debt investments included financial maintenance covenants.

September 30, 2022

As of September 30, 2022, we had investments in 28 portfolio companies with an aggregate fair value of approximately $58.2 million, and unfunded commitments to these portfolio companies of $13.6 million, and our portfolio consisted of 100% first lien senior secured loans.

As of September 30, 2022, our weighted average yield of debt and income producing securities at fair value and amortized cost was 9.9% and 10.1%, respectively, and 100% of our debt investments at fair value were at floating rates.

As of September 30, 2022, our portfolio was invested across 19 different industries (GICS, Level 3 – Industry). The largest industries in our portfolio as of September 30, 2022 were Health Care Providers & Services; Trading Companies & Distributors; Commercial Services & Supplies and Food Products, which represented, as a percentage of our portfolio of long-term investments, 22.7%, 14.6%, 8.9% and 7.7%, respectively, based on fair value.

As of September 30, 2022, our average position sized based on commitment (at the portfolio company level) was $2.6 million, and the weighted average and median last twelve months (“LTM”) EBITDA of our portfolio companies was $47.0 million and $36.2 million, respectively, based on fair value.

As of September 30, 2022, the weighted average loan-to-value (“LTV”) of our debt investments at the time of our initial investment was 45.0%, based on fair value. LTV represents the total par value of our debt investment relative to our estimate of the enterprise value of the underlying borrower. Given the senior secured status of nearly all of our investments, the difference between 100% and the LTV of our investment represents the percentage that our estimate of the enterprise value of the underlying borrower would need to degrade prior to a loss on our position.

As of September 30, 2022, none of our debt investments in portfolio companies were on non-accrual.

As of September 30, 2022, 100% of our debt investments included financial maintenance covenants.

Our investment activity for the three months ended September 30, 2023 and 2022 is presented below (information presented herein is at par value unless otherwise indicated).

	For the three months ended September 30,
	2023 ($ in millions)			2022 ($ in millions)

New investments:
Gross new investments commitments	$	5.0		$	24.5
Less: investment commitments sold down, exited or repaid⁽¹⁾		(2.4	)		(1.2	)
Net investment commitments		2.6			23.3

Principal amount of investments funded:
Private credit investments	$	7.7		$	22.8
Liquid credit investments		-			-
Total principal amount of investments funded		7.7			22.8

Principal amount of investments sold / repaid:
Private credit investments		(2.8	)		(1.4	)
Liquid credit investments		-			-
Total principal amount of investments sold or repaid		(2.8	)		(1.4	)

Number of new investment commitments		4			14
Average new investment commitment amount	$	1.2		$	1.8
Weighted average maturity for new investment commitments⁽²⁾		3.7 years			4.8 years
Percentage of new debt investment commitments at floating rates		100.0	%		100.0	%
Percentage of new debt investment commitments at fixed rates		0.0	%		0.0	%
Weighted average interest rate of new investment commitments⁽³⁾		11.4	%		9.6	%
Weighted average spread over SOFR of new floating rate investment commitments		5.8	%		6.2	%
Weighted average interest rate on investment sold or paid down⁽⁴⁾		11.6	%		9.6	%

(1)	Does not include repayments on revolving loans, which may be redrawn.

(2)	For undrawn delayed draw term loans, the maturity date used is that of the associated term loan.

(3)	Based on the rate in effect at September 30, 2023 per our Consolidated Schedule of Investments for new commitments entered into during the quarter.

(4)	Based on the underlying rate if still held at September 30, 2023. For those investments sold or paid down in full during the year, based on the rate in effect at the time of sale or paid down.

We use Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of our portfolio companies.

The table below describes long-term investments by industry composition based on fair value as of September 30, 2023 and December 31, 2022.

	September 30, 2023			December 31, 2022

Trading companies & distributors		19.5	%		15.4	%
Food products		13.4	%		12.6	%
Health care providers & services		12.2	%		12.6	%
Commercial services & supplies		10.1	%		6.6	%
IT services		6.6	%		9.0	%
Professional services		5.9	%		7.6	%
Leisure products		4.3	%		1.2	%
Containers & packaging		3.4	%		5.2	%
Aerospace & defense		3.3	%		4.5	%
Biotechnology		2.9	%		3.8	%
Wireless telecommunication services		2.5	%		3.4	%
Chemicals		2.1	%		0.2	%
Capital Markets		2.1	%		-	%
Machinery		2.0	%		2.8	%
Software		2.0	%		2.8	%
Textiles, apparel & luxury goods		1.9	%		2.6	%
Automobile components		1.8	%		1.6	%
Insurance		1.7	%		1.2	%
Diversified telecommunication services		1.2	%		1.6	%
Health care equipment & supplies		1.1	%		1.6	%
Electronic equipment, instruments & components		-	%		1.4	%
Building products		-	%		2.1	%
Asset management & custody banks		-	%		0.2	%
		100.0	%		100.0	%

Results of Operations

Investment Income

For the three and nine months ended September 30, 2023 and 2022, our total investment income was derived from our portfolio of investments. All debt investments were income producing, and there were no loans on non-accrual status as of September 30, 2023 or 2022.

The following table represents the operating results for the three and nine months ended September 30, 2023 and 2022.

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
	($ in millions)			($ in millions)			($ in millions)			($ in millions)
Total investment income	$	4.71		$	1.12		$	12.33		$	2.08
Less: Net expenses		(0.55	)		(0.39	)		(1.58	)		(1.04	)
Net investment income		4.16			0.73			10.75			1.04
Net realized gains (losses) on investments		-			(0.00	)		-			(0.00	)
Net change in unrealized gains (losses) on investments		0.12			0.47			0.49			0.91
Net increase (decrease) in net assets resulting from operations	$	4.28		$	1.20		$	11.24		$	1.95

Investment Income

Investment income for the three and nine months ended September 30, 2023 totaled $4.7 million and $12.3 million, respectively, and consisted primarily of interest income on our debt investments. Investment income for the three and nine months ended September 30, 2022 totaled $1.1 million and $2.1 million, respectively, and consisted primarily of interest income on our debt investments.

Expenses

Operating expenses for the three and nine months ended September 30, 2023 and 2022 were as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
	($ in millions)		($ in millions)		($ in millions)		($ in millions)
Interest and debt financing expenses	$	0.04	$	0.04	$	0.18	$	0.10
Management fees		0.27		0.09		0.74		0.18
Other operating expenses		0.20		0.19		0.55		0.57
Deferred offering costs		-		0.04		-		0.11
Directors fees		0.04		0.03		0.11		0.08
Total expenses	$	0.55	$	0.39	$	1.58	$	1.04

Total expenses for the three and nine months ended September 30, 2023 included zero of deferred offering costs, respectively. Total expenses for the three and nine months ended September 30, 2022 included $0.04 million and $0.11 million of deferred offering costs, respectively.

Net Unrealized Gains (Losses) on Investments

We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three and nine months ended September 30, 2023 and 2022, net unrealized gains (losses) on our investment portfolio were comprised of the following:

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
	($ in millions)			($ in millions)			($ in millions)			($ in millions)
Unrealized gains on investments	$	0.42		$	0.61		$	1.24		$	0.99
Unrealized (losses) on investments		(0.30	)		(0.14	)		(0.75	)		(0.08	)
Net change in unrealized gains (losses) on investments	$	0.12		$	0.47		$	0.49		$	0.91

For these three-month periods ended September 30, 2023 and 2022, the top five (if significant) largest contributors to the change in unrealized gains and change in unrealized losses on investments are presented in the following tables.

	For the three months ended
	September 30, 2023
	($ in millions)
Portfolio Company
Genuine Cable Group, LLC	$	0.15
City Line Distributors, LLC		0.07
BCDI Meteor Acquisition, LLC (Meteor)		0.05
BR PJK Produce, LLC (Keany)		0.04
BCI Burke Holding Corp.		0.03
Other portfolio companies unrealized gains		0.08
Other portfolio companies unrealized (losses)		(0.15	)
Siegel Egg Co., LLC		(0.02	)
Process Insights, Inc.		(0.02	)
Brightview, LLC		(0.02	)
Centerline Communications, LLC		(0.04	)
IF&P Foods, LLC (FreshEdge)		(0.05	)
Total Unrealized Appreciation (Depreciation), net	$	0.12

	For the three months ended
	September 30, 2022
	($ in millions)
Portfolio Company
Genuine Cable Group, LLC	$	0.17
Improving Acquisition LLC		0.09
AIDC Intermediate Co 2, LLC (Peak Technologies)		0.07
American Soccer Company, Incorporated (SCORE)		0.07
Gulf Pacific Holdings, LLC		0.05
Other portfolio companies unrealized gains		0.16
Other portfolio companies unrealized (losses)		(0.03	)
Atria Wealth Solutions, Inc.		(0.01	)
Light Wave Dental Management LLC		(0.01	)
Corbett Technology Solutions, Inc.		(0.02	)
Allentown, LLC		(0.07	)
Total Unrealized Appreciation (Depreciation), net	$	0.47

For these nine-month periods ended September 30, 2023 and 2022, the top five largest contributors to the change in unrealized gains and change in unrealized losses on investments are presented in the following tables.

	For the nine months ended
	September 30, 2023
	($ in millions)
Portfolio Company
Light Wave Dental Management LLC	$	0.17
Krayden Holdings, Inc.		0.15
Engineered Fastener Company, LLC (EFC International)		0.15
Worldwide Produce Acquisition, LLC		0.14
Alcami Corporation (Alcami)		0.10
Other portfolio companies unrealized gains		0.53
Other portfolio companies unrealized (losses)		(0.33	)
Improving Acquisition LLC		(0.04	)
CGI Automated Manufacturing, LLC		(0.04	)
Centerline Communications, LLC		(0.08	)
IF&P Foods, LLC (FreshEdge)		(0.11	)
Siegel Egg Co., LLC		(0.15	)
Total Unrealized Appreciation (Depreciation), net	$	0.49

	For the nine months ended
	September 30, 2022
	($ in millions)
Portfolio Company
Genuine Cable Group, LLC	$	0.17
AIDC Intermediate Co 2, LLC (Peak Technologies)		0.12
Improving Acquisition LLC		0.09
CGI Automated Manufacturing, LLC		0.09
American Soccer Company, Incorporated (SCORE)		0.07
Other portfolio companies unrealized gains		0.45
Other portfolio companies unrealized (losses)		(0.01	)
Siegel Egg Co., LLC		(0.01	)
Corbett Technology Solutions, Inc.		(0.01	)
Brightview, LLC		(0.01	)
Allentown, LLC		(0.04	)
Total Unrealized Appreciation (Depreciation), net	$	0.91

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from the net proceeds of any offering of our shares of common stock and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. Our primary use of cash will be investments in portfolio companies, payments of our expenses and payment of cash distributions to our stockholders.

In accordance with the 1940 Act, we are required to meet a coverage ratio of total assets (less total liabilities other than indebtedness) to total borrowings and other senior securities (and any preferred stock that we may issue in the future) of at least 150%. If this ratio declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so. As of September 30, 2023, we did not have any borrowings outstanding under our subscription credit facility. As of December 31, 2022, our asset coverage ratio was not meaningful, as we only had $0.7 million borrowed under our subscription credit facility. We do not routinely use leverage, and there are many days when there are no borrowings outstanding under our subscription credit facility.

Over the next twelve months, we expect that cash and cash equivalents, taken together with our undrawn capital commitments and available capacity under our credit facilities, will be sufficient to conduct anticipated investment activities. Beyond twelve months, we expect that our cash and liquidity needs will continue to be met by cash generated from our ongoing operations as well as financing activities.

As of September 30, 2023, we did not have any borrowings outstanding under our subscription credit facility and had cash and cash equivalents of $22.4 million. We do not routinely use leverage, and there are many days when there are no borrowings outstanding under our subscription credit facility. As of November 9, 2023, we did not have any borrowings outstanding under our subscription credit facility and had cash and cash equivalents of $13.5 million.

Capital Contributions

During the nine months ended September 30, 2023, we issued and sold 9,549 shares of our common stock related to capital called at an aggregate purchase price of $50.0 million. During the nine months ended September 30, 2022, we issued and sold 1,996 shares of our common stock related to capital called at an aggregate purchase price of $10.0 million. As of November 9, 2023, we had aggregate capital commitments of $353.5 million and undrawn capital commitments from investors of $200.5 million ($153.0 million or 43.3% funded).

Credit Facility

Subscription Credit Facility. As of September 30, 2023, we are party to a senior secured revolving credit facility (the “Subscription Credit Facility”) that has a total commitment of $25 million and a maturity date of February 22, 2024. The Subscription Credit Facility permits us to borrow up to $25 million, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate on the Subscription Credit Facility is equal to SOFR plus an applicable spread of 1.975% per annum with no floor. We are also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Facility.

Contractual Obligations

We did not have any indebtedness outstanding under our Subscription Credit Facility as of September 30, 2023.

Off-Balance Sheet Arrangements

As of September 30, 2023 and December 31, 2022, we had an aggregate $14.0 million and $21.1 million, respectively, of unfunded commitments to provide debt financing to our portfolio companies. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements. Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities.

Critical Accounting Estimates

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in this Quarterly Report. See Note 2 to our consolidated financial statements for the nine months ended September 30, 2023, for more information on our critical accounting policies.

Investment Valuation

Traded Investments (Level 1 or Level 2)

Investments for which market quotations are readily available will typically be valued at those market quotations. Traded investments such as corporate bonds, preferred stock, bank notes, loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker, the agent bank, syndicate bank or principal market maker. When price quotes for investments are not available, or such prices are stale or do not represent fair value in the judgment of our Advisor, fair market value will be determined using our Advisor’s valuation process for investments that are privately issued or otherwise restricted as to resale.

Infrequently, we may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While we anticipate these equity securities to be issued by privately held companies, we may hold equity securities that are publicly traded. Equity securities listed on any exchange other than the NASDAQ Stock Market, Inc. (“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices on such day. Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price. Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. Equity securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing bid prices.

Non-Traded Investments (Level 3)

Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of our Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of our Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. We expect that a significant majority of our investments will be Level 3 investments. Unless otherwise determined by the Advisor, the following valuation process is used for our Level 3 investments:

●

Refer to Note 5 – Fair Value – for more information on the Company’s valuation process.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, which represents contractual interest accrued and added to the principal balance, we generally will not accrue PIK interest for accounting purposes if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest. OIDs, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment premiums on loans and debt securities as interest income.

Related Party Transactions

Investment Advisory Agreement. On December 16, 2021, we entered into the Investment Advisory Agreement with our Advisor. On March 7, 2023, the Board approved a renewal of the Investment Advisory Agreement through March 15, 2024. Our Advisor will agree to serve as our investment advisor in accordance with the terms of our Investment Advisory Agreement. Payments under our Investment Advisory Agreement in each reporting period will consist of a management fee equal to a percentage of the fair market value of investments, including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase.

For services rendered under the Investment Advisory Agreement, we will pay a management fee quarterly in arrears to our Advisor based on the of the fair market value of our investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase.

Administration Agreement. On December 16, 2021, we entered into an Administration Agreement with our Advisor, which serves as our Administrator, pursuant to which the Administrator will furnish us with administrative services necessary to conduct our day-to-day operations. On March 7, 2023, the Board approved a renewal of the Administration Agreement through March 15, 2024. The Administrator will be reimbursed for administrative expenses it incurs on our behalf in performing its obligations. As we reimburse the Administrator for its expenses, we will indirectly bear such cost. The Administrator engaged U.S. Bank Global Fund Services under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties. On March 28, 2023, the Administrator engaged Ultimus Fund Solutions, LLC under a sub-administration agreement to assist the Administrator in performing certain of its administrative duties effective in the second quarter of 2023. The Administrator may enter into additional sub-administration agreements with third-parties to perform other administrative and professional services on behalf of the Administrator.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Assuming that the consolidated statement of assets and liabilities as of September 30, 2023 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact ($ in millions) of hypothetical base rate changes in interest rate (considering interest rate floors for floating rate instruments).

Change in Interest Rates	Increase (Decrease) in Interest Income			Increase (Decrease) in Interest Expense		Net Increase (Decrease) in Net Investment Income
Down 200 basis points	$	(2.9	)	$	-	$	(2.9	)
Down 100 basis points	$	(1.5	)	$	-	$	(1.5	)
Up 100 basis points	$	1.5		$	-	$	1.5
Up 200 basis points	$	2.9		$	-	$	2.9

The data in the table is based on the Company’s current statement of assets and liabilities.

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of September 30, 2023 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic United States Securities and Exchange Commission (the “SEC”) filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Neither we nor our Advisor is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Advisor.

From time to time, we, or our Advisor, may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

From time to time we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors described below and in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Our business is dependent on bank relationships and recent strain on the banking system may adversely impact us.

The financial markets recently have encountered volatility associated with concerns about the balance sheets of banks, especially small and regional banks, which may have significant losses associated with investments that make it difficult to fund demands to withdraw deposits and other liquidity needs. Although the federal government has announced measures to assist these banks and protect depositors, some banks have already been impacted and others may be materially and adversely impacted. Our business is dependent on bank relationships and we are proactively monitoring the financial health of such bank relationships. Continued strain on the banking system may adversely impact our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

As set forth in the table below (dollars in thousands, except per share and share amounts), during the nine months ended September 30, 2023, we issued and sold 9,549 shares of common stock at an aggregate offering amount of approximately $50.0 million. The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof and previously reported by us on our current reports on Form 8-K. The Company relied, in part, upon representations from the investors in the subscription agreements that each investor was an accredited investor as defined in Regulation D under the Securities Act. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.

Common stock issue date	Offering price per share		Common stock shares issued		Aggregate offering amount
February 28, 2023	$	5,236		4,775	$	25,000
August 10, 2023	$	5,237		4,774		25,000
				9,549	$	50,000

Item 3. Default Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this Report.

Exhibit Index

3.1		Certificate of Incorporation (1)

3.2		Amended and Restated Bylaws (2)

10.1		Investment Advisory Agreement (1)

10.2		Administration Agreement (1)

10.3		License Agreement (1)

10.4		Indemnification Agreement (1)

10.5		Custody Agreement (1)

10.6		Subscription Agreement (1)

10.7		Subscription Credit Agreement (3)

31.1*		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

(1)	Incorporated by reference from the Company’s Amendment No. 1 to Form 10, as filed with the Securities and Exchange Commission on May 11, 2021.

(2)	Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 15, 2022.

(3)	Incorporated by reference from the Company’s Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 3, 2022.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Kayne DL 2021, Inc.

Date: November 14, 2023

		/s/ Douglas L. Goodwillie
	Name:	Douglas L. Goodwillie
	Title:	Co-Chief Executive Officer
		(Co-Principal Executive Officer)

Date: November 14, 2023

		/s/ Kenneth B. Leonard
	Name:	Kenneth B. Leonard
	Title:	Co-Chief Executive Officer
		(Co-Principal Executive Officer)

Date: November 14, 2023

		/s/ Terry A. Hart
	Name:	Terry A. Hart
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)