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10-Q 1 d386694d10q.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2022

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

Commission File Number: 814-01405

Onex Falcon Direct Lending BDC Fund

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State of Incorporation)

21 Custom House Street, 10^th Floor

Boston, MA 02110

(Address of principal executive offices)

(617) 412-2700

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol	Name of each exchange on which registered

None	None	None

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

Common Stock, par value $0.001 per share

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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, anon-accelerated filer, a smaller reporting company or an emerging growth company. See 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 ☒

The issuer had 11,862,101 shares of common stock, $0.001 par value per share, outstanding as of August 12, 2022.

TABLE OF CONTENTS


		Page

PART I	FINANCIAL INFORMATION		3

	Item 1.	Consolidated Financial Statements	3

		Consolidated Statements of Assets and Liabilities as of June 30, 2022 and December 31, 2021 (Unaudited)	3

		Consolidated Statements of Operations for the three and six months ended June 30, 2022 (Unaudited)	4

		Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2022 (Unaudited)	5

		Consolidated Statement of Cash Flows for the six months ended June 30, 2022 (Unaudited)	6

		Consolidated Schedules of Investments as of June 30, 2022 and December 31, 2021 (Unaudited).	7

		Notes to Consolidated Financial Statements (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

	Item 4.	Controls and Procedures	38

PART II	OTHER INFORMATION		39

	Item 1.	Legal Proceedings	39

	Item 1A.	Risk Factors	39

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

	Item 3.	Defaults Upon Senior Securities	39

	Item 4.	Mine Safety Disclosures	39

	Item 5.	Other Information	39

	Item 6.	Exhibits	39

Signatures			40

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (the “Quarterly Report”) 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 our company, our current and prospective portfolio investments, our industry, our beliefs and our 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 our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:

•

our future operating results;

•

our business prospects and the prospects of the companies in which we may invest;

•

the impact of the investments that we expect to make;

•

our ability to raise sufficient capital to execute our investment strategy;

•

the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflict between Russia and Ukraine;

•

general economic and political trends and other external factors, including the impact of the uncertainty of the duration and severity of the current novel coronavirus, or COVID-19, pandemic and recent supply chain disruptions;

•

the ability of our portfolio companies to achieve their objectives;

•

our current and expected financing arrangements and investments;

•

changes in the general interest rate environment;

•

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

•

the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

actual and potential conflicts of interest with Onex, the Adviser and its affiliates, and its senior investment team;

•

the elevating levels of inflation, and its impact on our portfolio companies and on the industries in which we may invest;

•

the dependence of our future success on the general economy and its effect on the industries in which we may invest;

•

our use of financial leverage, including the use of borrowed money to finance a portion of our investments and the effect of the COVID-19 pandemic on the availability of equity and debt capital on favorable terms or at all;

•

the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

•

the impact of any future acquisitions or divestitures;

•

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

•

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

•

the impact on our business of the Dodd-Frank Act and the rules and regulations issued thereunder;

•

the effect of changes to tax legislation and our tax position;

•

the tax status of the enterprises in which we may invest; and

•

other risks, uncertainties, and other factors we identify elsewhere in this Quarterly Report and under “Item 1A. Risk Factors” in our Annual Report on Form 10K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022, and in our other filings with the SEC that we make from time to time.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2021 and Part II, Item IA of this Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. Moreover, we assume no duty and do not undertake to update the forward-looking statements and projections contained in this Quarterly Report are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

PART I – FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Statements of Assets and Liabilities (Unaudited)


	As of June 30, 2022			As of December 31, 2021
Assets:
Non-controlled/non-affiliated investments, at fair value (amortized cost of $400,674,171 and $241,056,450, respectively)	$	395,887,181		$	240,800,172
Cash and cash equivalents		34,190,148			85,376,644
Restricted cash		1,398,247			—
Interest and other receivables		4,570,741			1,407,645
Principal paydown receivables		1,125,303			481,034
Deferred financing costs (net of $352,224 and $93,782 in amortized expenses, respectively)		1,427,769			1,212,383
Deferred offering costs (net of $95,093 and $31,698 in amortized expenses, respectively)		31,698			95,093
Prepaid other expenses		52,902			158,708

Total Assets	$	438,683,989		$	329,531,679

Liabilities:
Credit facility (Note 5)		156,000,000			117,000,000
Due to Adviser (Note 3)		927,639			2,009,680
Management fee payable (Note 3)		1,256,223			761,633
Taxes payable		—			80,550
Interest payable		540,231			154,524
Investments payable		—			14,893,750

Total Liabilities	$	158,724,093		$	134,900,137

Commitments and Contingencies (Note 10)		—			—
Net Assets:
Common Shares, $0.001 par value; unlimited shares authorized, 11,343,074 and 7,772,200 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		11,343			7,772
Additional paid-in capital		284,223,500			194,861,143
Total distributable accumulated losses		(4,274,947	)		(237,373	)

Total Net Assets	$	279,959,896		$	194,631,542

Total Liabilities and Net Assets	$	438,683,989		$	329,531,679

Net Asset Value Per Share	$	24.68		$	25.04

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
Investment Income
Investment income from non-controlled, non-affiliated investments and cash equivalents:
Interest income	$	7,690,454		$	13,699,537
Other income		33,664			33,664

Total investment income from non-controlled, non-affiliated investments and cash equivalents:		7,724,118			13,733,201

Total Investment Income		7,724,118			13,733,201

Expenses:
Management fees		1,256,223			2,359,078
Organizational and offering fees (Note 2)		31,698			63,396
Deferred financing expense		140,039			258,442
Professional fees		225,475			513,600
Directors’ fees and expenses		43,000			88,000
Interest expenses		878,723			1,359,065
Other general and administrative expenses		520,006			952,154

Total Expenses		3,095,164			5,593,735
Less: expense support from Adviser		—			—

Net Expenses		3,095,164			5,593,735

Net Investment Income (Loss)		4,628,954			8,139,466

Realized gains/(losses) and unrealized appreciation/(depreciation) on investments
Net realized gains (losses):
Non-controlled, non-affiliated investments		211,739			231,759

Total net realized gains/(losses)		211,739			231,759

Net change in unrealized appreciation/(depreciation):
Non-controlled, non-affiliated investments		(3,968,683	)		(4,530,711	)

Total net change in unrealized appreciation/(depreciation)		(3,968,683	)		(4,530,711	)

Total net realized gains/(losses) and unrealized appreciation/(depreciation) on investments		(3,756,944	)		(4,298,952	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	872,010		$	3,840,514

Basic and diluted net investment income (loss) per common share	$	0.41		$	0.77

Basic and diluted net increase (decrease) in net assets resulting from operations per common share	$	0.08		$	0.36

Weighted Average Common Shares Outstanding—Basic and Diluted (Note 8)		11,189,171			10,636,159

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Statements of Changes in Net Assets

(Unaudited)


	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
Increase (Decrease) in Net Assets Resulting from Operations:
Net investment income (loss)	$	4,628,954		$	8,139,466
Total net realized gains/(losses)		211,739			231,759
Total net change in unrealized appreciation/(depreciation)		(3,968,683	)		(4,530,711	)

Net Increase (Decrease) in Net Assets Resulting from Operations		872,010			3,840,514

Decrease in Net Assets Resulting from Shareholder Distributions
Dividends and distributions to shareholders		(4,380,471	)		(7,878,088	)

Net Decrease in Net Assets Resulting from Shareholder Distributions		(4,380,471	)		(7,878,088	)

Increase (Decrease) in Net Assets Resulting from Capital Share Transactions
Issuance of common shares		21,600,168			84,573,486
Reinvestment of distributions		4,792,442			4,792,442

Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		26,392,610			89,365,928

Total Increase (Decrease) in Net Assets		22,884,149			85,328,354
Net Assets, Beginning of Period		257,075,747			194,631,542

Net Assets, End of Period	$	279,959,896		$	279,959,896

Net asset value per share	$	24.68		$	24.68

Common shares outstanding at the beginning of the period		10,287,109			7,772,200
Issuance of common shares		864,352			3,379,261
Shares issued in reinvestment of distributions		191,613			191,613

Common shares outstanding at the end of the period		11,343,074			11,343,074

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Statement of Cash Flows

(Unaudited)


	Six Months Ended June 30, 2022
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	3,840,514
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (appreciation)/depreciation on investments		4,530,711
Net realized (gains)/losses on investments		(231,759	)
Net accretion of discount on investments		(1,384,074	)
Purchases and drawdowns of investments		(185,022,599	)
Sales and maturities of and principal paydowns on investments		27,020,712
Changes in operating assets and liabilities:
Interest and other receivables		(3,163,096	)
Principal paydown receivables		(644,269	)
Deferred financing costs		(215,386	)
Deferred offering costs		63,395
Prepaid other expenses		105,806
Due to Advisor		(1,082,041	)
Interest payable		385,707
Management fees payable		494,590
Taxes payable		(80,550	)
Investments payable		(14,893,750	)

Net cash provided by (used in) operating activities		(170,276,089	)

Cash Flows from Financing Activities:
Borrowings on credit facility		191,000,000
Payments on credit facility		(152,000,000	)
Distributions to shareholders		(7,878,088	)
Proceeds from issuance of common shares		89,365,928

Net cash provided by (used in) financing activities		120,487,840

Net increase (decrease) in cash and cash equivalents		(49,788,249	)
Restricted cash, cash and cash equivalents, beginning of period		85,376,644

Restricted cash, cash and cash equivalents, end of period	$	35,588,395


Supplemental and Non-Cash Information
Cash paid during the period for interest	$	973,358
Reinvestments of distributions over the period	$	4,792,442

The following tables provide a reconciliation of cash and cash equivalents and restricted cash reported on the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts on the Consolidated Statement of Cash Flows:


	As of June 30, 2022		As of December 31, 2021
Cash and cash equivalents	$	34,190,148	$	85,376,644
Restricted cash	$	1,398,247	$	—

Total restricted cash, cash and cash equivalents	$	35,588,395	$	85,376,644

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Schedule of Investments

June 30, 2022

(Unaudited)


Portfolio Company	Industry		Spread Above Index	Floor			Interest Rate			Acquisition Date		Maturity/ Expiration Date		Principal / Units		Cost ⁽¹⁾			Fair Value ⁽²⁾			Percentage of Net Assets
Non-Controlled/Non-Affiliated Investments
Senior Secured Loan Debt Investments ^(4,5)
AmeriTex Pipe Term Loan ⁽⁷⁾		Construction & Building	SOFR (1 Month) + 7.50%		1.00	%		9.13	%		11/4/2021		11/04/2024		18,941,484	$	18,649,540		$	18,564,549			6.6	%
AmeriTex Pipe Term Loan ⁽⁷⁾		Construct ion & Building	SOFR (1 Month) + 7.50%		1.00	%		9.13	%		4/14/2022		11/04/2024		3,950,000		3,877,024			3,871,395			1.4	%
AmeriTex Pipe Delayed Draw Term Loan ^(6,7)		Construction & Building	SOFR (1 Month) + 7.50%		1.00	%		9.13	%		11/4/2021		11/04/2024		7,653,125		7,533,203			7,500,828			2.7	%
Amplity Term Loan		Healthcare & Pharmaceuticals	LIBOR (1 Month) + 6.00%		1.00	%		7.67	%		2/4/2022		1/31/2027		22,659,103		22,300,691			21,927,214			7.8	%
Amplity Revolving Loan ⁽⁶⁾		Healthcare & Pharmaceuticals	LIBOR (1 Month) + 6.00%		1.00	%		7.67	%		2/4/2022		1/31/2027		2,227,032		1,077,749			1,041,698			0.4	%
APT Opco Term Loan ⁽⁷⁾		Healthcare & Pharmaceuticals	LIBOR (3 Months) + 6.25%		1.00	%		8.48	%		12/28/2021		12/28/2026		20,136,905		19,770,484			19,428,086			6.9	%
APT Opco Delayed Draw Term Loan ^(6,7)		Healthcare & Pharmaceuticals	LIBOR (3 Months) + 6.25%		1.00	%		8.48	%		12/28/2021		12/28/2026		4,761,905		(42,795	)		(167,619	)		-0.1	%
Atlas Intermediate III Term Loan ⁽⁷⁾		Chemicals, Plastics, & Rubber	LIBOR (3 Months) + 5.75%		1.00	%		7.32	%		3/1/2022		04/29/2025		6,561,333		6,443,274			6,397,300			2.3	%
BCP V Everise Term Loan		Services: Business	SOFR (1 Month) + 6.50%		0.75	%		7.63	%		5/12/2022		05/03/2027		25,000,000		24,388,866			24,375,000			8.7	%
Bullhorn 1st Amendment Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 Months) + 5.75%		1.00	%		8.00	%		11/10/2021		09/30/2026		4,621,633		4,602,132			4,540,292			1.6	%
Bullhorn 1st Amendment Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 Months) + 5.75%		1.00	%		8.00	%		1/11/2022		09/30/2026		5,045,435		5,023,557			4,956,635			1.8	%
Bullhorn Delayed Draw Term Loan ⁽⁶⁾		High Tech Industries	LIBOR (3 Months) + 5.75%		1.00	%		6.75	%		11/10/2021		09/30/2026		5,275,950		(22,873	)		(92,857	)		0.0	%
Connect America.Com Term Loan ^(3,7)		Consumer goods: Non- durable	SOFR (3 Months) + 7.00%		1.00	%		9.83	%		10/1/2021		06/30/2026		20,878,684		20,518,461			20,722,094			7.4	%
Connect America.Com Term Loan ⁽⁷⁾		Healthcare & Pharmaceuticals	SOFR (3 Months) + 7.00%		1.00	%		8.37	%		4/6/2022		06/30/2026		1,233,693		1,198,448			1,224,440			0.4	%
GS Acquisitionco Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 Months) + 5.75%		1.00	%		7.25	%		11/3/2021		5/22/2026		11,066,359		11,032,242			10,796,340			3.9	%
GS Acquisitionco Delayed Draw Term Loan ⁽⁶⁾		High Tech Industries	LIBOR (3 Months) + 5.75%		1.00	%		7.25	%		11/3/2021		5/22/2026		3,864,669		(11,974	)		(94,298	)		0.0	%
GSM Holdings Incremental Term Loan ⁽⁷⁾		Sovereign & Public Finance	LIBOR (1 Months) + 7.25%		1.00	%		8.37	%		3/25/2022		3/25/2027		13,000,000		12,824,455			12,867,400			4.6	%
Hy Cite Enterprises Term Loan ⁽⁷⁾		Consumer goods: Durable	LIBOR (1 Month) + 8.00%		1.00	%		9.42	%		11/12/2021		11/12/2026		29,437,500		28,656,555			28,592,644			10.2	%
IEC Term Loan ⁽⁷⁾		Sovereign & Public Finance	LIBOR (1 Month) + 7.50%		1.00	%		9.75	%		12/17/2021		12/26/2026		27,860,000		27,225,380			27,040,916			9.7	%
Jackson Paper Manufacturing Term Loan ^(3,7)		Forest Products & Paper	LIBOR (1 Month) + 7.25%		1.00	%		8.25	%		10/1/2021		08/26/2026		12,190,000		11,952,750			11,734,094			4.2	%
Jackson Paper Manufacturing Revolving Loan ⁽⁶⁾		Forest Products & Paper	LIBOR (1 Month) + 7.25%		1.00	%		8.25	%		10/1/2021		08/26/2026		1,333,333		(25,425	)		(49,867	)		0.0	%
KeyData Associates Term Loan ^(3,7)		Services: Business	CDOR (1 Month) + 7.00%		1.00	%		9.76	%		10/1/2021		07/16/2026		10,237,414		10,868,902			10,649,941			3.8	%
Keystone Purchaser Term Loan ⁽⁷⁾		Transportation: Cargo	LIBOR (3 Months) + 6.25%		1.00	%		7.25	%		2/1/2022		5/7/2027		14,927,151		14,679,617			14,728,620			5.3	%
Keystone Purchaser Term Loan		Transportation: Cargo	LIBOR (3 Months) + 6.25%		1.00	%		7.25	%		6/14/2022		5/7/2027		6,484,709		6,371,588			6,398,462			2.3	%
KNS Acquisition Term Loan ⁽⁷⁾		Consumer goods: Non- durable	LIBOR (3 Months) + 6.25%		0.75	%		8.50	%		11/16/2021		04/21/2027		14,718,750		14,708,591			13,523,588			4.8	%
Medallia Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 Months) + 6.75%		0.75	%		7.67	%		10/29/2021		10/29/2028		18,401,381		18,078,208			18,213,095			6.5	%
Medallia Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 Months) + 6.75%		0.75	%		7.67	%		2/1/2022		10/29/2028		1,715,394		1,684,229			1,694,466			0.6	%
MMS BidCo Term Loan		Services: Business	SOFR (3 Months) + 6.50%		1.00	%		8.70	%		6/30/2022		06/30/2027		25,000,000		24,500,169			24,500,000			8.7	%
PDFTron US Acquisition Term Loan ⁽⁷⁾		High Tech Industries	SOFR (1 Month) + 5.50%		1.00	%		7.00	%		3/23/2022		07/15/2027		13,042,259		12,791,470			12,840,104			4.6	%
S4T Holdings Term Loan ⁽⁷⁾		Sovereign & Public Finance	SOFR (1 Month) + 6.00%		1.00	%		7.64	%		12/27/2021		12/28/2026		15,377,273		15,134,974			14,983,615			5.3	%
S4T Holdings Delayed Draw Term Loan ⁽⁶⁾		Sovereign & Public Finance	SOFR (1 Month) + 6.00%		1.00	%		7.64	%		12/27/2021		12/28/2026		4,545,455		(30,620	)		(116,364	)		0.0	%
Spark DSO Term Loan		Healthcare & Pharmaceuticals	LIBOR (1 Month) + 6.25%		1.00	%		7.25	%		2/9/2022		04/19/2026		18,287,419		18,128,564			18,040,538			6.4	%
Spark DSO Delayed Draw Term Loan ⁽⁶⁾		Healthcare & Pharmaceuticals	LIBOR (1 Month) + 6.25%		1.00	%		7.25	%		2/9/2022		04/19/2026		4,166,667		—			(56,250	)		0.0	%
Spark DSO Revolving Loan ⁽⁶⁾		Healthcare & Pharmaceuticals	LIBOR (1 Month) + 6.25%		1.00	%		7.25	%		2/9/2022		04/19/2026		2,500,000		(22,672	)		(33,750	)		0.0	%
Steele Solutions Term Loan ⁽⁷⁾		Construction & Building	SOFR (3 Months) + 6.50%		0.50	%		7.41	%		3/18/2022		03/18/2027		14,093,710		13,823,345			13,847,070			4.9	%
Steele Solutions Delayed Draw Term Loan ^(6,7)		Construction & Building	SOFR (3 Months) + 6.50%		0.50	%		7.41	%		3/18/2022		03/18/2027		3,225,806		(30,530	)		(56,452	)		0.0	%
Steele Solutions Revolving Loan ^(6,7)		Construction & Building	SOFR (3 Months) + 6.50%		0.50	%		7.41	%		3/18/2022		03/18/2027		1,935,484		(36,484	)		(33,871	)		0.0	%
WSP Midco Term Loan ^(3,7)		Wholesale	LIBOR (1 Month) + 6.25%		1.00	%		7.92	%		10/1/2021		04/27/2027		18,857,693		18,523,937			18,291,963			6.5	%
WSP Midco Delayed Draw Term Loan ⁽⁶⁾		Wholesale	LIBOR (1 Month) + 6.25%		1.00	%		7.92	%		10/1/2021		4/27/2027		3,401,460		(35,798	)		(102,044	)		0.0	%
WSP Midco Revolving Loan ⁽⁶⁾		Wholesale	LIBOR (1 Month) + 6.25%		1.00	%		7.92	%		10/1/2021		04/27/2027		850,365		(14,725	)		(25,511	)		0.0	%

Total Senior Secured Loan Debt Investments															439,466,533	$	396,094,509		$	392,463,504			140.2	%

Equity Investments
KeyData Associates—Class A ⁽³⁾		Services: Business									10/1/2021		N/A		1,250,000		979,662			1,082,527			0.4	%
S4T Holdings		Sovereign & Public Finance									12/27/2021		N/A		200		200,000			200,000			0.1	%
WSP Midco LLC Series A Shares ⁽³⁾		Wholesale									10/1/2021		N/A		3,400		3,400,000			2,141,150			0.7	%

Total Equity Investments															1,253,600	$	4,579,662		$	3,423,677			1.2	%

Total Non-Controlled/Non-Affiliated Investments																$	400,674,171		$	395,887,181			141.4	%

Liabilities in Excess of Other Assets																				(115,927,285	)		-41.4	%

Net assets																			$	279,959,896			100.0	%

CDOR—Canadian Dollar Offered Rate

LIBOR—London Interbank Offered Rate

SOFR—Secured Overnight Financing Rate

(1)	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.

(2)	Unless otherwise noted, significant unobservable inputs were used to determine fair value, and investments are considered Level 3 securities (Note 4).

(3)	This investment was purchased as part of the Forward Purchase Agreement (Note 3)

(4)	Variable rate security; rate shown is the rate in effect on June 30, 2022. An index may have a negative rate. Interest rate may also be subject to a ceiling or floor.

(5)

Bank loans generally pay interest at rates which are periodically determined by reference to a base lending rate plus a premium. All loans carry a variable rate of interest. These base lending rates are generally (i) the Prime Rate offered by one or more major United States banks, (ii) the lending rate offered by one or more European or other banks such as the CDOR, LIBOR, or SOFR or (iii) the Certificate of Deposit rate. Bank loans, while exempt from registration, under the Securities Act of 1933, contain certain restrictions on resale and cannot be sold publicly. Floating rate bank loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy.

(6)	Please see Note 10 for details on unfunded commitments.

(7)	Assets pledged to lenders as collateral.

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Consolidated Schedule of Investments

December 31, 2021 (Unaudited)


Portfolio Company	Industry		Spread Above Index	LIBOR Floor			Interest Rate			Acquisition Date		Maturity/ Expiration Date		Principal / Units		Cost ⁽¹⁾			Fair Value ⁽²⁾			Percentage of Net Assets
Non-Controlled/Non-Affiliated Investments
Senior Secured Loan Debt Investments ^(4,5)
AmeriTex Pipe Term Loan ⁽⁷⁾		Construction & Building	LIBOR (1 month) + 6.75%		1.00	%		7.75	%		11/4/2021		11/4/2024		19,427,163	$	19,056,996		$	19,038,620			9.8	%
AmeriTex Pipe Delayed Draw Term Loan ⁽⁶⁾		Construction & Building	LIBOR (1 month) + 6.75%		1.00	%		7.75	%		11/4/2021		11/4/2024		7,750,000		1,880,126			1,871,923			1.0	%
AmeriTex Pipe Revolving Loan ^(6,7)		Construction & Building	LIBOR (1 month) + 6.75%		1.00	%		7.75	%		11/4/2021		11/4/2024		3,576,923		2,793,786			2,790,000			1.4	%
APT Opco Term Loan		Healthcare & Pharmaceuticals	LIBOR (3 months) + 6.25%		1.00	%		7.25	%		12/28/2021		12/28/2026		20,238,095		19,834,301			19,833,333			10.2	%
APT Opco Delayed Draw Term Loan ⁽⁶⁾		Healthcare & Pharmaceuticals	LIBOR (3 months) + 6.25%		1.00	%		7.25	%		12/28/2021		12/28/2026		4,761,905		(47,410	)		(47,619	)		0.0	%
Bullhorn 1st Amendment Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 months) + 5.75%		1.00	%		6.75	%		11/10/2021		9/30/2026		4,643,265		4,620,462			4,620,048			2.4	%
Bullhorn Delayed Draw Term Loan ⁽⁶⁾		High Tech Industries	LIBOR (3 months) + 5.75%		1.00	%		6.75	%		11/10/2021		9/30/2026		10,345,000		(50,218	)		(51,725	)		0.0	%
Connect America.Com Term Loan ^(3,7)		Healthcare & Pharmaceuticals	LIBOR (3 months) + 7.00%		1.00	%		8.00	%		10/1/2021		6/30/2026		20,981,522		20,576,005			20,666,799			10.6	%
GS Acquisitionco Term Loan		High Tech Industries	LIBOR (3 months) + 5.75%		1.00	%		6.75	%		11/3/2021		5/25/2026		7,987,669		7,949,243			7,947,731			4.1	%
GS Acquisitionco Delayed Draw Term Loan ⁽⁶⁾		High Tech Industries	LIBOR (3 months) + 5.75%		1.00	%		6.75	%		11/3/2021		5/25/2026		6,992,000		(16,921	)		(34,960	)		0.0	%
Hy Cite Enterprises Term Loan ⁽⁷⁾		Consumer goods: Durable	LIBOR (1 month) + 8.00%		1.00	%		9.00	%		11/12/2021		11/12/2026		29,812,500		28,934,591			28,918,124			14.9	%
IEC Term Loan ⁽⁷⁾		Services: Consumer	LIBOR (1 month) + 7.50%		1.00	%		8.50	%		12/17/2021		12/26/2026		28,000,000		27,302,081			27,300,000			14.0	%
Jackson Paper Manufacturing Term Loan ^(3,7)		Forest Products & Paper	LIBOR (1 month) + 7.25%		1.00	%		8.25	%		10/1/2021		8/26/2026		12,316,667		12,051,021			12,039,542			6.2	%
Jackson Paper Manufacturing Revolving Loan ⁽⁶⁾		Forest Products & Paper	LIBOR (1 month) + 7.25%		1.00	%		8.25	%		10/1/2021		8/26/2026		1,333,333		(28,458	)		(30,000	)		0.0	%
KeyData Associates Term Loan ^(3,7)		Services: Business	CDOR (1 month) + 7.00%		1.00	%		8.00	%		10/1/2021		7/16/2026		11,220,028		10,897,860			10,957,173			5.6	%
KNS Acquisition Term Loan ⁽⁷⁾		Consumer goods: Non- durable	LIBOR (3 months) + 6.25%		0.75	%		7.00	%		11/16/2021		4/21/2027		14,906,250		14,893,828			14,651,577			7.5	%
Medallia Term Loan ⁽⁷⁾		High Tech Industries	LIBOR (3 months) + 6.75%		0.75	%		7.50	%		10/29/2021		10/29/2028		17,729,688		17,384,063			17,375,094			8.9	%
S4T Holdings Term Loan ⁽⁷⁾		Sovereign & Public Finance	SOFR (1 Month) + 6.00%		1.00	%		7.00	%		12/27/2021		6/27/2027		15,454,545		15,184,731			15,184,091			7.8	%
S4T Holdings Delayed Draw Term Loan ⁽⁶⁾		Sovereign & Public Finance	SOFR (1 Month) + 6.00%		1.00	%		7.00	%		12/27/2021		6/27/2027		4,545,455		(33,998	)		(79,545	)		0.0	%
Schumacher Electric Term Loan ^(3,7)		Automotive	LIBOR (3 months) + 7.00%		1.00	%		8.00	%		10/1/2021		6/1/2027		14,925,000		14,781,268			14,775,376			7.6	%
WSP Midco Term Loan ⁽³⁾		Wholesale	LIBOR (1 month) + 6.25%		1.00	%		7.25	%		10/1/2021		4/27/2027		18,952,934		18,587,026			18,573,876			9.5	%
WSP Midco Delayed Draw Term Loan ⁽⁶⁾		Wholesale	LIBOR (1 month) + 6.25%		1.00	%		7.25	%		10/1/2021		4/27/2023		3,401,460		(57,357	)		(68,029	)		0.0	%
WSP Midco Revolving Loan ⁽⁶⁾		Wholesale	LIBOR (1 month) + 6.25%		1.00	%		7.25	%		10/1/2021		4/27/2027		850,365		(16,238	)		(17,007	)		0.0	%

Total Senior Secured Loan Debt Investments															280,151,767	$	236,476,788		$	236,214,422			121.5	%

Equity Investments
KeyData Associates—Class A ⁽³⁾		Services: Business									10/1/2021		N/A		1,250,000	$	979,662		$	985,750			0.5	%
S4T Holdings		Sovereign & Public Finance									12/27/2021		N/A		200		200,000			200,000			0.1	%
WSP Midco LLC Series A Shares ⁽³⁾		Wholesale									10/1/2021		N/A		3,400	$	3,400,000		$	3,400,000			1.7	%

Total Equity Investments															1,253,600	$	4,579,662		$	4,585,750			2.3	%

Total Non-Controlled/Non-Affiliated Investments																$	241,056,450		$	240,800,172			123.8	%

Liabilities in Excess of Other Assets																				(46,168,630	)		-23.8	%

Net assets																			$	194,631,542			100.0	%

CDOR—Canadian Dollar Offered Rate

LIBOR—London Interbank Offered Rate

SOFR—Secured Overnight Financing Rate

(1)	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.

(2)	Unless otherwise noted, significant unobservable inputs were used to determine fair value, and investments are considered Level 3 securities (Note 4).

(3)	This investment was purchased as part of the Forward Purchase Agreement (Note 3)

(4)	Variable rate security; rate shown is the rate in effect on December 31, 2021. An index may have a negative rate. Interest rate may also be subject to a ceiling or floor.

(5)

(6)	Please see Note 10 for details on unfunded commitments.

(7)	Assets pledged to lenders as collateral.

The accompanying notes are an integral part of these consolidated financial statements.

Onex Falcon Direct Lending BDC Fund

Notes to Consolidated Financial Statements

Note 1. Organization

Onex Falcon Direct Lending BDC Fund (the “Company”, “we”, “us” or “our”) is a Delaware statutory trust formed on April 27, 2021, and commenced operations on October 1, 2021. The Company is a non-diversified, closed-end management investment company that filed an election to be regulated as a Business Development Company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company also intends to elect to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”), as amended. Comparative periods are not presented, as the Company was not operational in the second quarter of 2021.

Onex Falcon Investment Advisors, LLC, (the “Adviser”) is our investment adviser. The Adviser, subject to the overall supervision of our Board of Trustees (the “Board of Trustees” or the “Board”), manages the day-to-day operations of the Company and will provide investment advisory services to the Company.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

We will seek to make investments in first-lien senior secured loans, and unsecured loans and other credit investments of “middle market companies” located in the United States. We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” between $10 million and $75 million annually, and even though the Company will not seek to invest in such opportunities, we may on occasion invest in smaller or larger companies if an opportunity presents itself. While most of our investments will be in private U.S. companies (subject to compliance with BDC regulatory requirement to invest at least 70% of its assets in private U.S. companies), we also expect to invest from time to time in Canadian, European and other non-U.S. companies. We expect to invest primarily in senior secured loans including first-lien loans and unitranche loans, and, to a lesser extent, second-lien loans, last-out tranches of unitranche loans and other credit investments. When we invest in such loans, we may acquire equity securities, such as warrants, options and convertible instruments, as well. We may also invest in total return swaps (“TRS”), which are a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate. Subscriptions to purchase Common Shares may be made on an ongoing basis, based on the net asset value (“NAV”) per share as determined as of the last day of the preceding quarter, or if intra-quarter, based on the NAV per share as determined as of the last day of the preceding month.

The Company’s fiscal year ends on December 31.

Note 2. Significant Accounting Policies

Basis of Presentation

The Consolidated Statements of Assets and Liabilities has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The unaudited consolidated financial statements (“consolidated financial statements”) reflect adjustments that in the opinion of the Company are necessary for the fair presentation of the financial position and results of operations as of and for the periods presented herein and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Form 10-K for the year ended December 31, 2021, as filed with the SEC. The Company is considered an investment company under U.S. GAAP and will follow the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification Topic 946 and pursuant to Regulation S-X and Regulation S-K. The current period’s results of operations are not necessarily indicative of results for a full year.

The Company’s first fiscal year ended on December 31, 2021.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates, and such differences could be material.

Cash and Cash Equivalents

Cash consists of deposits held at a custodian bank. Cash equivalents consists of money market investments. Cash and cash equivalents are held at major financial institutions and, at times, may exceed the insured limits under applicable law. As of June 30, 2022, we had approximately $1.4 million of restricted cash related to collateral held for the Loan and Servicing Agreement. This is further discussed in Note 5. There was no restricted cash as of December 31, 2021.

Income Taxes

The Company has elected to be regulated as a BDC under the 1940 Act. The Company intends to elect to be treated as a RIC under the Code effective as of December 31, 2021 has and adopted a December 31 tax-calendar year end. So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its shareholders as dividends. Rather, any tax liability related to income earned and distributed would represent obligations of the Company’s investors and would not be reflected in the financial statements of the Company.

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, ongoing analyses of tax laws, regulations and interpretations thereof.

To qualify for and maintain qualification as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess, if any, of its realized net short-term capital gains over its realized net long-term capital losses.

In addition, based on the excise tax distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner in each taxable year an amount at least equal to the sum of (1) 98% of its ordinary income for the calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in prior years. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.

Accounting Standards Codification 740 Accounting for Uncertainty in Income Taxes (“ASC 740”) provides guidance on the accounting for and disclosure of uncertainty in tax position. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Based on its analysis of its tax position for all open tax years (the current year, as applicable), the Company has concluded that it does not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740. Such open tax year remains subject to examination and adjustment by tax authorities.

Consolidation

In accordance with U.S. GAAP guidance on consolidation, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company’s wholly-owned subsidiaries, Onex Falcon Direct Lending BDC SPV, LLC and Onex Falcon Direct Lending BDC Blocker LLC, in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses on investments are calculated using the specific identification method as the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized, and include investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses are recognized.

Foreign Currency Translation

Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (1) investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates effective on the date of valuation; and (2) purchases and sales of investments and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates prevailing on the transaction dates. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.

Valuation Procedures

The Board of Trustees determines fair value of the Company’s investments on at least a quarterly basis or at such other times when it feels it would be appropriate to do so given the circumstances.

Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from independent pricing services, broker-dealers or market makers. With respect to portfolio investments for which market quotations are not readily available, the Board of Trustees, with the assistance of the Adviser and its senior investment team and independent valuation agent, is responsible for determining, in good faith, the fair value in accordance with the valuation policy approved by the Board of Trustees.

A determination of fair value involves subjective judgments and estimates and depends on the facts and circumstances present at each valuation date. Due to the inherent uncertainty of determining fair value of portfolio investments that do not have a readily available market value, fair value of investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Financial Accounting Standards Board Accounting Standards Codification Topic 820: Fair Value Measurements and Disclosures (“ASC 820”) specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. ASC 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level of information used in the valuation. In accordance with ASC 820, these inputs are summarized in the three levels listed below.

•

Level 1—Valuations are based on quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

•

Level 2—Valuations are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly and model-based valuation techniques for which all significant inputs are observable.

•

Level 3—Valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models incorporating significant unobservable inputs, such as discounted cash flow models and other similar valuation techniques. The valuation of Level 3 assets and liabilities generally requires significant management judgment due to the inability to observe inputs to valuation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of observable input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment.

Under ASC 820, fair value measurement assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset, which may be a hypothetical market, excluding transaction costs. The principal market for any asset is the market with the greatest volume and level of activity for such asset in which the reporting entity would or could sell or transfer the asset. In determining the principal market for an asset or liability, it is assumed that the reporting entity has access to such market as of the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable and willing and able to transact.

When we determine our NAV as of the last day of a month that is not also the last day of a calendar quarter, we intend to update the value of securities with reliable market quotations to the most recent market quotation. For securities without reliable market quotations, the Adviser’s valuation team will generally value such assets at the most recent quarterly valuation unless the Adviser determines that a significant observable change has occurred since the most recent quarter end with respect to the investment (which determination may be as a result of a material event at a portfolio company, material change in market spreads, secondary market transaction in the securities of an investment or otherwise). If the Adviser’s valuation team determines such a change has occurred with respect to one or more investments, the Adviser’s valuation team will determine whether to update the value for each relevant investment, using positive assurance from an independent valuation firm where applicable in accordance with our valuation policy, pursuant to authority delegated by the Board of Trustees.

As part of the valuation process, we utilize the methodologies in the guidance ASC 820, in estimating fair value of investments with the intent to have all investments in portfolio companies reported at fair value on a consistent, transparent and prudent basis after taking account of all available information about the business and its market. U.S. GAAP provides a consistent definition of fair value which focuses on exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of readily ascertainable market values, the Adviser will use valuation techniques consistent with the market, income and cost approaches, in order to estimate the fair value of investments. One such method often used is the “market approach” which utilizes comparable company transactions or performance multiple inputs, as the primary technique to estimate the fair value of its investments in private companies. In certain circumstances, however, other valuation methodologies may be more appropriate, which include discounting cash flows, considering bona fide acquisition offers for the investment, valuing net assets, and industry-specific benchmarking. When an external event such as a purchase transaction, public offering or subsequent equity or debt sale occurs, the Board of Trustees or its delegates will consider whether the pricing indicated by the external event corroborates its valuation.

Revenue Recognition

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. The Company considers many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. Accrued interest is generally reversed when a loan is placed on non-accrual status. Payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability of the outstanding principal and interest. Non-accrual loans may be restored to accrual status when past due principal and interest is paid current and are likely to remain current based on management’s judgment.

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Loan origination fees, original issue discount and market discount are capitalized, and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

Payment-in-Kind Interest

Payment-in-kind (“PIK”) interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income and generally becomes due at maturity. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to shareholders in the form of dividends, even though the Company has not yet collected the cash.

Deferred Financing Costs

Origination and other expenses related to the Company’s borrowings are recorded as deferred financing costs and amortized as part of interest expense using the straight-line method over the stated life of the debt instrument. Unamortized deferred financing costs are presented as a prepaid asset.

Organization and Offering Costs

Organization costs include, among other things, the cost of incorporating, including the cost of legal services, printing, consulting services and other fees pertaining to the Company’s organization. Costs associated with the organization of the Company are expensed as incurred. Offering costs include legal expenses related to the preparation of the Company’s registration statement. Offering costs are capitalized as deferred offering expenses and are amortized over twelve months from incurrence.

Earnings per Share

Basic earnings per share is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated in the same manner, with further adjustments to reflect the dilutive effect of common share equivalents outstanding.

Dividends to Common Shareholders

Distributions to the Company’s shareholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Board of Trustees and is generally based upon earnings estimated by the Adviser. Net realized capital gains, if any, would generally be distributed at least annually, although the Company may decide to retain such capital gains.

The Company has adopted an “opt out” distribution reinvestment plan (“DRP”) for its shareholders. As a result, if the Company makes a cash dividend, its shareholders will have their cash dividends reinvested in additional shares of the Company including fractional shares as necessary, unless they specifically “opt out” of the DRP to receive the distribution in cash. Under the DRP, cash distributions to participating shareholders will be reinvested in additional shares of the Company at a purchase price equal to the net asset value per share as of the last day of the calendar quarter immediately preceding the date such distribution was declared.

The Company may distribute taxable dividends that are payable in cash or shares at the election of each shareholder. Under certain applicable provisions of the Code and the U.S. Treasury regulations, distributions payable in cash or in shares at the election of shareholders are treated as taxable dividends. The Internal Revenue Service has published guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under this guidance, if too many shareholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the shareholders electing to receive cash (with the balance of the distribution paid in shares). If the Company decides to make any distributions consistent with this guidance that are payable in part in its shares, taxable shareholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, shares of the Company’s shares, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of the Company’s current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. shareholder may be

required to pay tax with respect to such dividends in excess of any cash received. If a U.S. shareholder sells the shares it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of the Company’s shares at the time of the sale. Furthermore, with respect to non-U.S. shareholders, the Company may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in shares.

Note 3. Related Party Transactions

Administration Agreement

Pursuant to an agreement between the Company and the Adviser effective September 16, 2021 (the “Administration Agreement”), the Adviser is responsible for furnishing the Company with office facilities and equipment and providing the Company with clerical, bookkeeping, recordkeeping and other administrative services at such facilities. Under the Administration Agreement, the Adviser performs, oversees, or arranges for, the performance of the Company’s required administrative services, which includes being responsible for the financial and other records that the Company is required to maintain and preparing reports to the Company’s shareholders and reports and other materials filed with the SEC or any other regulatory authority. In addition, the Adviser assists the Company in determining and publishing the Company’s NAV per share, oversee the preparation and filing of tax returns and the printing and dissemination of reports and other materials to the Company’s shareholders, and generally oversee the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, the Adviser also provides managerial assistance on the Company’s behalf to those companies that have accepted the Company’s offer to provide such assistance.

Payments under the Administration Agreement are equal to the Company’s allocable portion of the Adviser’s overhead resulting from its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Company’s Chief Compliance Officer and Chief Financial Officer and their respective staffs. In addition, if requested to provide significant managerial assistance to our portfolio companies, the Adviser is paid an additional amount based on the services provided, which shall not exceed the amount the Company receives from such companies for providing this assistance.

Advisory Agreement

The Adviser serves as the Company’s investment adviser pursuant to an investment advisory agreement between the Company and the Adviser effective September 16, 2021 (the “Advisory Agreement”). The principal executive offices of our Adviser are located at 21 Custom House Street, 10th Floor, Boston, MA 02110. Pursuant to the Advisory Agreement, the Adviser will manage the Company on a day-to-day basis and will be responsible for sourcing, reviewing and structuring investment opportunities for the Company, underwriting and performing due diligence on the Company’s investments and monitoring the Company’s investment portfolio on an ongoing basis.

The Company will pay the Adviser a base management fee at an annual rate of 1.25% of the Company’s total assets (excluding cash and cash equivalents) payable quarterly in arrears. The Company will also pay the Adviser incentive fees based on income and capital gains (the “Incentive Fee”), as described below. As of December 31, 2021, the Adviser has earned $761,633, which is reflected as Management fee payable on the Consolidated Statements of Assets and Liabilities.

For the three months ended June 30, 2022, the Adviser has earned $1,256,223, which is reflected as Management fee payable on the Consolidated Statements of Assets and Liabilities.

The Incentive Fee consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the Incentive Fee is based on the Company’s income (such fee referred to herein as the “Subordinated Incentive Fee on Income”) and a portion is based on the Company’s capital gains (such fee referred to herein as the “Incentive Fee on Capital Gains”), each as described below.

(1) Subordinated Incentive Fee on Income

The Subordinated Incentive Fee on Income will be determined and paid quarterly in arrears based on the amount by which (x) the “Pre-Incentive Fee Net Investment Income” (as defined below) in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after July 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of the Company’s first eleven calendar quarters that commences on or after July 1, 2021) (in either case, the “Trailing Twelve Quarters”) exceeds (y) the Preferred Return Amount (as defined below) in respect of the Trailing Twelve Quarters. The Preferred Return Amount will be determined on a quarterly basis, and will be calculated by multiplying 1.75% by the Company’s NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Preferred Return Amount will be calculated after making appropriate adjustments to the Company’s NAV at the beginning of each applicable calendar quarter for Company subscriptions and distributions during the applicable calendar quarter. Subject to Section 4(b)(ii) below, the amount of the Subordinated Incentive Fee on Income that will be paid to the Adviser for a particular quarter will equal the excess of the Subordinated Incentive Fee on Income so calculated less the aggregate Subordinated Incentive Fees on Income that were paid to the Adviser and/or earned, but waived, by the Adviser, in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.

For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including, without limitation, any accrued income that the Company has not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) (the “Ordinary Income”) accrued during the calendar quarter, minus the Company’s operating expenses accrued during the calendar quarter (including, without limitation, the Management Fee, administration expenses and any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the Subordinated Incentive Fee on Income and the Incentive Fee on Capital Gains). For the avoidance of doubt, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.

The calculation of the Subordinated Incentive Fee on Income for each quarter is as follows:

(A) No Subordinated Incentive Fee on Income shall be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters does not exceed the Preferred Return Amount;

(B) 100% of the Company’s Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters, if any, that exceeds the Preferred Return Amount but is less than or equal to an amount (the “Catch-Up Amount”) determined on a quarterly basis by multiplying 2.0588% by the Company’s NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Catch-Up Amount is intended to provide the Adviser with an incentive fee of 15% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.0588% per quarter during the Trailing Twelve Quarters; and

(C) For any quarter in which the Company’s Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters exceeds the Catch-Up Amount, the Subordinated Incentive Fee on Income shall equal 15.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income for such Trailing Twelve Quarters, as the Preferred Return Amount and Catch-Up Amount will have been achieved.

The Subordinated Incentive Fee on Income is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is an amount equal to (a) 15.0% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant Trailing Twelve Quarters less (b) the aggregate Subordinated Incentive Fees on Income that were paid to the Adviser and/or earned, but waived, by the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. For this purpose, “Cumulative Pre-Incentive Fee Net Return” during the relevant Trailing Twelve Quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company shall pay no Subordinated Incentive Fee on Income to the Adviser in that quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is less than

the Subordinated Incentive Fee on Income calculated in accordance with Section 4(b)(i) above, the Company shall pay the Adviser the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap is equal to or greater than the Subordinated Incentive Fee on Income calculated in accordance with Section 4(b)(i) above, the Company shall pay the Adviser the Subordinated Incentive Fee on Income for such quarter. The Subordinated Incentive Fee on Income will be waived by the Adviser until the end of June 2022.

(2) Incentive Fee on Capital Gains

The Incentive Fee on Capital Gains shall be determined and payable in arrears as of the end of each calendar year (or upon termination of this Agreement). This fee shall equal 15.0% of the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any Incentive Fees on Capital Gains previously paid to the Adviser. The aggregate unrealized capital depreciation of the Company shall be calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable calculation date and (b) the accreted or amortized cost basis of such investment.

The Advisory Agreement will be in effect for a period of two years from its effective date and will remain in effect from year-to-year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of the outstanding voting securities of the Company, and (ii) the vote of a majority of the Company’s Board who are not parties to the Advisory Agreement or “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act. The Advisory Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice and, in certain circumstances, upon 120 days’ written notice, by the vote of a majority of the outstanding voting shares of the Company or by the vote of the Board or by the Adviser. As of June 30, 2022, no Incentive Fee on Capital Gains has been accrued, as realized capital gains on a cumulative basis do not exceed realized capital losses and unrealized capital depreciation on a cumulative basis.

Co-investment Exemptive Relief

The 1940 Act generally prohibits a BDC from making certain negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. The SEC has granted the Company such exemptive relief to co-invest in portfolio companies with certain other funds managed by the Adviser or its affiliates (“Affiliated Funds”) and, subject to certain conditions, proprietary accounts of the Adviser or its affiliates (“Proprietary Accounts”) in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with Affiliated Funds and/or Proprietary Accounts if, among other things, a “required majority” (as defined in Section 57(o) of the 1940 Act) of its independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and its shareholders and do not involve overreaching of the Company or its shareholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s shareholders and is consistent with its investment objective and strategies.

Organization and Offering Costs

Under the Advisory Agreement and the Administrative Agreement, the Company, either directly or through reimbursements to the Adviser or its affiliates, is responsible for its organization and offering costs. Prior to the Company’s commencement of operations, the Adviser funded the Company’s organization and offering costs in the amount of $847,610, which will be subject to reimbursement by the Company.

Expense Support Agreement

Commencing with the fourth quarter of 2021 and on a quarterly basis thereafter, the Adviser will pay on behalf of or reimburse the Company for operating expenses in an amount sufficient to meet the Distribution Objective. Any payment so required to be made by the Adviser is referred to herein as an “Expense Payment.”

The Adviser’s obligation to make an Expense Payment becomes a liability of the Adviser, and the right to such Expense Payment becomes an asset of the Company, no later than the last business day of the applicable calendar quarter. The Expense Payment for any calendar quarter shall, as promptly as possible, be: (i) paid by the Adviser to the Company in any combination of cash or other immediately available funds, and/or (ii) offset against amounts due from the Company to the Adviser.

Pursuant to the Expense Support Agreement, “Available Operating Funds” means the sum of (i) the Company’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses), and (iii) dividends and other distributions paid to or otherwise earned by the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above.)

Following any calendar quarter in which Available Operating Funds exceed the cumulative distributions paid to the Company’s shareholders in such calendar quarter (the amount of such excess being hereinafter referred to as “Excess Operating funds”), the Company shall pay such Excess Operating Funds, or a portion thereof in accordance with the stipulation below, as applicable, to the Adviser until such time as all Expense Payments made by the Adviser to the Company within three years prior to the last business day of such calendar quarter have been reimbursed or waived. Any payments required to be made by the Company pursuant to the preceding sentence are referred to herein as a “Reimbursement Payment.”

The amount of the Reimbursement Payment for any calendar quarter will be equal to the lesser of (i) the Excess Operating Funds in such calendar quarter, and (ii) the aggregate amount of all Expense Payments made by the Adviser to the Company within three years prior to the last business day of such calendar quarter that have not been previously reimbursed by the Company to the Adviser. No Reimbursement Payment shall be made if: (1) the Effective Rate of Distributions Per Share declared by the Company at the time of such proposed Reimbursement Payment is less than the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Company’s Operating Expense Ratio at the time of such proposed Reimbursement Payment is greater than the Operating Expense Ratio at the time the Expense Payment was made to which such Reimbursement Payment relates. For purposes of the Agreement, “Effective Rate of Distributions Per Share” means the annualized rate (based on a 365 day year) of regular cash distributions per share exclusive of returns of capital, distribution rate reductions due to distribution and shareholder fees, and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing Operating Expenses, less organizational and offering expenses, base management and incentive fees owed to the Adviser, and interest expense, by the Company’s net assets.

The Company’s obligation to make a Reimbursement Payment becomes a liability to the Company, and the right to such Reimbursement Payment becomes an asset of the Adviser, no later than the last business day of the applicable calendar quarter. The Reimbursement Payment for any calendar quarter shall, as promptly as possible, be paid by the Company to the Adviser in any combination of cash or other immediately available funds. Any Reimbursement Payments shall be deemed to have reimbursed the Adviser for Expense Payments in chronological order beginning with the oldest Expense Payment eligible for reimbursement.

The Expense Support Agreement may be terminated at any time, without penalty, by the Company or the Adviser, with or without notice. The Expense Support Agreement automatically terminates in the event of (a) the termination by the Company of the Advisory Agreement, or (b) the Board determines to dissolve or liquidate the Company.

Since inception, the total Expense Payment provided to the Company by the Adviser was $2.9 million, which includes eligible recoveries of approximately $1.4 million from the Adviser under the Expense Support Agreement for organization and offering costs and operating expenses paid on behalf of the Company prior to commencement of operations. Management believes that the Reimbursement Payments by the Company to the Adviser are not probable under the terms of the Expense Support Agreement as of June 30, 2022. The following table reflects the Expense Payments that may be subject to reimbursement pursuant to the Expense Support Agreement:


Quarter Ended	Expense Payment Received from the Adviser		Reimbursement Payment made to Adviser		Unreimbursed Expense Payment		Eligible for Reimbursement Through
December 31, 2021	$	2,858,000	$	1,459,766	$	1,398,234		December 31, 2024
March 31, 2022		—		—		—		March 31, 2025
June 30, 2022		—		—		—		June 30, 2025

	$	2,858,000	$	1,459,766	$	1,398,234

Shares held by Affiliated Accounts

As of June 30, 2022, certain entities affiliated with the Company held shares of the Company. Onex Falcon Investment Advisors, LLC held 62.4 shares of the Company, approximately .001% of outstanding shares of the Company, Onex Falcon Direct Lending Cayman Fund, LLC held 9,659,255 shares of the Company, approximately 85.2% of outstanding shares of the Company and Onex Falcon Direct Lending Fund held 1,135,842 shares of the Company, approximately 10.0% of outstanding shares of the Company.

Forward Purchase Agreement

On September 15, 2021, the Company entered into a forward purchase agreement with Onex Credit Finance II Corporation (“the Forward Purchase Agreement”) to acquire a select portfolio of investments consisting of funded debt investments, future funding obligations and equity investments (the “Initial Portfolio”).

On September 15, 2021 (the “Valuation Date”), the Forward Purchase Agreement and the Transfer Value were approved by the Company’s Board of Trustees (which include a majority of Independent Trustees). See Item 1A— “Risk Factors.”

On October 1, 2021 (the “Transfer Date”), the Company purchased the Initial Portfolio in the amount of $99,178,431 from Onex Credit Finance II Corporation based on the Forward Purchase Agreement. The purchase price was adjusted for any principal amortization on the investments that had occurred between the Valuation Date and the date on which the Initial Portfolio was sold to the Company (the “Transfer Date”).

Potential Conflicts of Interest

The members of the senior management and investment teams of the Adviser serve or may serve as officers, directors or principals of entities that operate in the same, related or an unrelated line of business as the Company does. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may or may not be in the Company’s best interests or in the best interest of the Company’s shareholders. The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles.

Payment of Expenses under the Advisory and Administration Agreements

Under our Advisory and Administration Agreements, the Adviser maintains investment professional staff within its organization and their compensation is paid for by the Adviser. We will bear all other expenses, as listed in the Advisory and Administration Agreements.

From time to time, the Adviser or its affiliates may pay third-party providers of goods or services. The Company may reimburse the Adviser or such affiliates thereof for any such amounts paid on the Company’s behalf. From time to time, the Adviser may defer or waive fees and/or rights to be reimbursed for expenses. All of the Company’s expenses may ultimately be borne by shareholders.

Note 4. Investments and Fair Value Measurements

The following table summarizes the composition of the Company’s investment portfolio at amortized cost and fair value as of June 30, 2022 and December 31, 2021:


	June 30, 2022					December 31, 2021
	Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value
Senior Secured Loan Debt Instruments	$	396,094,509	$	392,463,504	Senior Secured Loan Debt Instruments	$	236,476,788	$	236,214,422
Equity Investments		4,579,662		3,423,677	Equity Investments		4,579,662		4,585,750

Total Investments	$	400,674,171	$	395,887,181	Total Investments	$	241,056,450	$	240,800,172

Generally, under the 1940 Act, the Company would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of its voting securities. As of June 30, 2022 and December 31, 2021, the Company did not “control” and was not an “affiliated person” of any of its portfolio companies, each as defined in the 1940 Act.

The following tables summarize the industry and geographic composition of the Company’s investment portfolio based on fair value as of June 30, 2022 and December 31, 2021 (percentages are based on net assets and do not include liabilities in excess of other assets):


	June 30, 2022
	Fair Value		Percentage
Healthcare & Pharmaceuticals	$	61,404,357		21.8	%
Services: Business		60,607,468		21.6	%
Sovereign & Public Finance		54,975,567		19.7	%
High Tech Industries		52,853,777		19.0	%
Construction & Building		43,693,519		15.6	%
Consumer goods: Non-durable		34,245,682		12.2	%
Consumer goods: Durable		28,592,644		10.2	%
Transportation: Cargo		21,127,082		7.6	%
Wholesale		20,305,558		7.2	%
Forest Products & Paper		11,684,227		4.2	%
Chemicals, Plastics, & Rubber		6,397,300		2.3	%

Total	$	395,887,181		141.4	%


	June 30, 2022
	Fair Value		Percentage
Canada	$	11,732,468		4.2	%
United States		384,154,713		137.2	%

Total	$	395,887,181		141.4	%


	December 31, 2021
	Fair Value		Percentage
Healthcare & Pharmaceuticals	$	40,452,513		20.8	%
High Tech Industries		29,856,188		15.4	%
Consumer goods: Durable		28,918,124		14.9	%
Services: Consumer		27,300,000		14.0	%
Construction & Building		23,700,543		12.2	%
Wholesale		21,888,840		11.2	%
Sovereign & Public Finance		15,304,546		7.9	%
Automotive		14,775,376		7.6	%
Consumer goods: Non-durable		14,651,577		7.5	%
Forest Products & Paper		12,009,542		6.2	%
Services: Business		11,942,923		6.1	%

Total	$	240,800,172		123.8	%


	December 31, 2021
	Fair Value		Percentage
Canada	$	11,942,923		6.1	%
United States		228,857,249		117.7	%

Total	$	240,800,172		123.8	%

The following table summarizes the fair value hierarchy of the Company’s investment portfolio as of June 30, 2022:


	Fair Value Hierarchy as of June 30, 2022
Description	Level 1		Level 2		Level 3		Total
Senior Secured Loan Debt Instruments	$	—	$	13,523,588	$	378,939,916	$	392,463,504
Equity Investments		—		—		3,423,677		3,423,677

Total	$	—	$	13,523,588	$	382,363,593	$	395,887,181

The following table summarizes the fair value hierarchy of the Company’s investment portfolio as of December 31, 2021:


	Fair Value Hierarchy as of December 31, 2021
Description	Level 1		Level 2		Level 3		Total
Senior Secured Loan Debt Instruments	$	—	$	14,651,577	$	221,562,845	$	236,214,422
Equity Investments		—		—		4,585,750		4,585,750

Total	$	—	$	14,651,577	$	226,148,595	$	240,800,172

The following table presents changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the six months ended June 30, 2022:


	Six months ended June 30, 2022
	Senior Secured Loan Debt Instruments			Equity Investments			Total
Fair value, beginning of period	$	221,562,845		$	4,585,750		$	226,148,595
Purchases of investments		185,022,599			—			185,022,599
Proceeds from principal pre-payments and sales of investments		(26,833,212	)		—			(26,833,212	)
Realized gain (loss)		232,457			—			232,457
Net change in unrealized appreciation/(depreciation)		(2,425,887	)		(1,162,073	)		(3,587,960	)
Net accretion of discount on investments		1,381,114			—			1,381,114
Transfers into (out of) Level 3		—			—			—

Fair value, end of period	$	378,939,916		$	3,423,677		$	382,363,593

The following table presents the net change in unrealized appreciation (depreciation) for the period relating to these Level 3 assets that were still held by the Company at the end of the six months ended June 30, 2022:


Net Change in Unrealized Appreciation/(Depreciation)	Six months ended June 30, 2022
Senior Secured Loan Debt Instruments		(2,425,887	)
Equity Investments		(1,162,073	)

	$	(3,587,960	)

The following table presents changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the period ended December 31, 2021:


	For the period ended December 31, 2021
	Senior Secured Loan Debt Instruments			Equity Investments		Total
Fair value, beginning of period	$	—		$	—	$	—
Purchases of investments		241,139,652			4,579,663		245,719,315
Proceeds from principal pre-payments and sales of investments		(19,976,509	)		—		(19,976,509	)
Realized gain (loss)		14,845			—		14,845
Net change in unrealized appreciation/(depreciation)		(20,115	)		6,087		(14,028	)
Net accretion of discount on investments		404,972			—		404,972
Transfers into (out of) Level 3		—			—		—

Fair value, end of period	$	221,562,845		$	4,585,750	$	226,148,595


Net Change in Unrealized Appreciation/(Depreciation)	Period ended December 31, 2021
Senior Secured Loan Debt Instruments		(20,115	)
Equity Investments		6,087

	$	(14,028	)

As a BDC, the Company is required to invest primarily in the debt and equity of “eligible portfolio companies,” which generally includes companies with market capitalization less than $250 million and includes non-public companies for which there is little, if any, market-observable information. As a result, a significant portion of the Company’s investments at any given time will likely be deemed Level III investments. For those investments that have observable trades but are not traded in active markets, the Company considers them to be Level II. For those investments for which market-observable information is not readily available, the Company considers them to be Level III.

The disclosure below excludes investments for which the determination of fair value is based on prices from recent market transactions of approximately $49.1 million at June 30, 2022. As of June 30, 2022, the Company’s Level III portfolio investments had the following valuation techniques and significant inputs:

Investment type

Fair Value
June 30,
2022

Valuation
Technique

Unobservable
Input

Range/Input

Weighted
Average Inputs

First Lien Senior Secured

330,064,916

Discounted Cash Flow –Yield Build Up

Discount Rate

6.21% - 11.63%

8.50%

Common Equity

3,223,677

EV Waterfall – Market Multiple

Market Multiple

11.00x - 13.45x

12.27x

The disclosure below excludes investments for which the determination of fair value is based on prices from recent market transactions of approximately $187 million at December 31, 2021. As of December 31, 2021, the Company’s Level III portfolio investments had the following valuation techniques and significant inputs:

Investment type

Fair Value
December 31,
2021

Valuation
Technique

Unobservable
Input

Range/Input

Weighted
Average Inputs

Unitranche

39,155,638

Discounted cash flow – Yield Build – Up

Discount Rate

7.79% - 9.00%

8.42%

Note 5. Borrowings

On October 4, 2021, Onex Falcon Direct Lending BDC SPV, LLC, a direct wholly-owned subsidiary of the Company, as borrower, and the Company, solely in its capacities as equity holder and collateral manager, entered into a Loan and Servicing Agreement with Société Générale, as agent and lender and U.S. Bank National Association as collateral agent and collateral custodian. In connection with the Loan and Servicing Agreement, the Company, as seller and Onex Falcon Direct Lending BDC SPV, as purchaser also entered into a Sale and Contribution Agreement, dated as of October 4, 2021.

The Loan and Servicing Agreement created a revolving loan and term loan facility in the maximum principal amount of $100 million to advance funds to Borrower to enable Borrower to purchase loans and related assets from the Company, as seller, pursuant to the Sale and Contribution Agreement, or from other non-affiliated third-parties pursuant to open market purchases. The obligation of the lender to make revolving loans to Onex Falcon Direct Lending BDC SPV under the Loan and Servicing Agreement terminate on October 4, 2024, and all amounts borrowed under the Loan and Servicing Agreement must be repaid by October 2, 2026. On December 27, 2021, the Borrower entered into Amendment No. 1 to the Loan and Servicing Agreement with Société Générale to increase the borrowing capacity thereunder by $100 million to a total of $200 million.

Certain assets have been pledged as collateral, as indicated within the Consolidated Schedules of Investments.

Debt obligations consisted of the following as of June 30, 2022:

Interest Expense and
Amortization on Deferred financing costs

Total Debt

Outstanding

Average Debt
Outstanding

Average
Interest
Rate

Weighted
Average
Interest Rate

Asset
Coverage
Ratio

$1,617,507

$156,000,000

72,602,210

2.90

2.79

279

Debt obligations consisted of the following as of December 31, 2021:

Interest Expense and
Amortization on Deferred financing costs

Total Debt

Outstanding

Average Debt
Outstanding

Average
Interest
Rate

Weighted
Average
Average
Interest Rate

Asset
Coverage
Ratio

$248,418

$117,000,000

11,000,000

2.35

2.36

266

Due to the short-term nature of the Facility, the outstanding principal balance approximates fair value. The fair value of the credit facility would be categorized as Level 3.

For the three and six months ended June 30, 2022, the components of interest expense were as follows:


	Three months ended June 30, 2022		Six months ended June 30, 2022
Interest expense	$	878,723	$	1,359,065
Amortization of deferred financing costs		140,039		258,442

Total interest expense		1,018,762		1,617,507

Note 6. Distributable Taxable Income:

The Company intends to elect to be treated as a RIC under the Code effective as of December 31, 2021 and has adopted a December 31 tax-calendar year end. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to its shareholders as a dividend. The Company’s quarterly distributions, if any, are determined by the Board. The Company anticipates distributing substantially all of its taxable income and gains, within the Subchapter M rules, and thus the Company anticipates that it will not incur any federal or state income tax at the RIC level. As a RIC, the Company is also subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis (e.g., calendar year 2021). Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income, to the extent required.

The federal income tax characteristics of all distributions will be reported to shareholders on the IRS Form 1099 after the end of each calendar year. Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are typically reclassified among the Company’s capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP. The Company had no such reclassifications for the six months ended June 30, 2022, or the year ended December 31, 2021.

As of December 31, 2021, the cost basis for federal income tax purposes and the components of accumulated earnings on tax basis were as follows:


	Period Ended December 31, 2021
Cost of investments	$	241,056,450

Gross tax unrealized appreciation		156,194
Gross tax unrealized depreciation		(412,473	)
Net tax unrealized appreciation (depreciation)		(256,279	)

Undistributed ordinary income (loss)		18,906
Undistributed long-term capital gains (losses)		—

Total distributable earnings		18,906

Other distributable (accumulated) gains (losses)		—

Total distributable (accumulated) earnings (losses)	$	(237,373	)

The tax character of distributions paid during the period ended December 31, 2021 was as follows:


	Onex Falcon Direct Lending BDC Fund
	Period Ended December 31, 2021
Distributions paid from:
Ordinary Income⁽¹⁾	$	2,076,931
Long Term Capital Gains⁽²⁾		—

Total Distributions Paid	$	2,076,931

(1)	(Unaudited) Includes 86.21% interest-related dividends. Interest-related dividends received by nonresident aliens and foreign corporations are generally eligible for exemption from U.S. withholding tax in accordance with Section 871(k) of the Code.

(2)	Designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3).

Capital losses can be carried forward indefinitely to offset future capital gains. As of December 31, 2021, the Company had no capital loss carryforwards.

ASC Topic 740 Accounting for Uncertainty in Income Taxes (“ASC 740”) provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Company’s tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Company’s current year tax return. The Company’s inception to date tax years remain subject to examination by federal, state and local tax authorities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.

Note 7. Share Transactions

The Company is non-exchange traded, meaning its shares are not listed for trading on a stock exchange or other securities market and the Company is a perpetual-life BDC, meaning it is an investment vehicle of indefinite duration, whose Common Shares are intended to be sold by the Company quarterly on a continuous basis at a price generally equal to the Company’s quarterly NAV per share; however, the Company may sell Common Shares intra-quarter. In our perpetual-life structure, we may offer investors an opportunity to repurchase their shares on a quarterly basis, but we are not obligated to offer to repurchase any in any particular quarter in our discretion. We believe that our perpetual nature enables us to execute a patient and opportunistic strategy and be able to invest across different market environments. This may reduce the risk of the Company being a forced seller of assets in market downturns compared to non-perpetual funds. While we may consider a liquidity event at any time in the future, we currently do not intend to undertake a liquidity event, and we are not obligated by our charter or otherwise to effect a liquidity event at any time. The Company will not list its Common Shares on a national securities exchange unless the holders of a majority of the outstanding Common Shares vote to approve such listing.

Our initial private offering of Common Shares (the “Private Offering”) is being conducted in reliance on Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). Investors in our initial private offering are required to be “accredited investors” as defined in Regulation D of the Securities Act. We will also offer Common Shares offshore in reliance on Regulation S of the Securities Act. Common Shares will be offered for subscription on a continuous basis. Each investor in the Private Offering will purchase Common Shares pursuant to a subscription agreement entered into with us (a “Subscription Agreement”).

Subscriptions to purchase Common Shares may be made on an ongoing basis, but after the commencement of operations, investors may only purchase Common Shares pursuant to accepted subscription orders effective as of the first day of each quarter (based on the NAV per share as determined as of the previous day, being the last day of the preceding quarter), or if intra-quarter, the first day of a month (based on the NAV per share as determined as of the previous day, being the last day of the preceding month) and to be accepted, a subscription request including the full subscription amount and payment must be received in good order at least five business days prior to the first day of the quarter or month, as applicable (unless waived by the Adviser).

Notice of each share transaction will be furnished to shareholders (or their financial representatives) as soon as practicable but not later than seven business days after the Company’s NAV is determined and credited to the shareholder’s account, together with information relevant for personal and tax records. While a shareholder will not know the NAV applicable on the effective date of the share purchase, the Company’s NAV applicable to a purchase of shares will be available generally within 20 business days after the effective date of the share purchase; at that time, the number of shares based on that NAV and each shareholder’s purchase will be determined and shares are credited to the shareholder’s account as of the effective date of the share purchase.

During the six months ended June 30, 2022, the Company issued 3,379,261 shares under its subscription agreement. The total number of shares of the Company’s common shares outstanding as of June 30, 2022, was 11,343,074.

Distributions

The Company may fund its cash distributions to shareholders from any sources of funds available to it, including, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has not established limits on the amount of funds it may use from available sources to make distributions. During certain periods, the Company’s distributions may exceed its taxable earnings. As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital. A return of capital generally is a return of a shareholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities.

The following table summarizes the distribution declarations for the six months ended June 30, 2022:


Date Declared	Record Date	Payment Date	Amount Per Share		Distribution Declared
March 29, 2022	March 29, 2022	April 29, 2022	$	0.34	$	3,497,617
May 12, 2022	May 12, 2022	June 24, 2022	$	0.39	$	4,380,471

The following table summarizes the distribution declarations for the period ended December 31, 2021:

Date Declared

Record Date

Payment Date

Amount Per Share

Distribution Declared

December 20, 2021

December 21, 2021

0.27

2,076,933

Note 8. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share for the three and six months ended June 30, 2022:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Net increase (decrease) in net assets resulting from operations	$	872,010	$	3,840,514
Weighted average common shares of common stock outstanding - basic and diluted		11,189,171		10,636,159
Basic and diluted net decrease in net assets resulting from operations per common share	$	0.08	$	0.36

Note 9. Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2022:


	Six Months Ended June 30, 2022
Per Common Share Operating Performance
Net Asset Value, Beginning of Period	$	25.04
Results of Operations:
Net Investment Income (Loss) ⁽¹⁾		0.77
Net Realized Gains/(Losses) and Unrealized Appreciation/(Depreciation)		(0.40	)

Net Increase (Decrease) in Net Assets Resulting from Operations		0.37

Distributions to Common Shareholders
Distributions from Net Investment Income		(0.73	)

Net Decrease in Net Assets Resulting from Distributions		(0.73	)

Net Asset Value, End of Period	$	24.68

Total Return ⁽²⁾		1.46	%

Ratios
Ratio of total expenses to average net assets ⁽³⁾		4.60	%
Ratio of net investment income (loss) to average net assets		6.76	%
Portfolio turnover ⁽⁴⁾		8.20	%

Supplemental Data
Weighted-average shares outstanding		10,636,159
Shares outstanding, end of period		11,343,074
Net assets, end of period	$	279,959,896
Year of formation		2021

(1)	The per common share data was derived using weighted average shares outstanding. Total return is based upon the change in NAV per share between the opening and ending net asset.

(2)	Total return is based upon the change in NAV per share between the opening and ending NAV values per share and the issuance of common shares in the period, and reflects reinvestment of any distributions to common shareholders. Total return is not annualized and does not include a sales load.

(3)	The ratios reflect an annualized amount. Non-recurring expenses were not annualized. During the six months ended June 30, 2022, the Company incurred $63,396 of Organizational Expenses, which were deemed to be non-recurring Ratio of net investment income (loss) to average net assets.

(4)	Portfolio turnover is not an annualized amount.

Note 10. Commitments and Contingencies

As of June 30, 2022, the Company had an aggregate of $36,974,610 of unfunded delayed draw term loan and revolver commitments to provide debt financing to its portfolio companies. The Company believes that it has sufficient cash and other liquid assets to satisfy the unfunded commitments.

In the normal course of its business, the Company may enter into contracts that require it to make certain representations and warranties and which provide for general indemnifications. Given that these would involve future claims against the Company that have not yet been made, the Company’s potential exposure under these arrangements is unknown. Based upon past experience, management expects the risk of loss under these indemnification provisions to be remote.

Note 11. Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through August 12, 2022, the date the financial statements were available to be issued. The Company has determined that there were no subsequent events that occurred during such period that would require disclosure as of June 30, 2022, except as disclosed below.

On July 5, 2022, the Company sold 519,027 unregistered common shares (with the final number of shares being determined on July 22, 2022) to investors, including feeder vehicles. These common shares were sold in a private placement in the United States under the exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and Regulation S under the Securities Act. The following table details the shares sold:


Date of Unregistered Sale	Amount of Common Shares		Consideration
As of July 5, 2022 (number of shares finalized on July 22, 2022)		519,027	$	12,809,581

On July 13, 2022, the Company invested in a delayed draw term loan with Zips Car Wash, with a commitment amount of $25,000,000.

On July 14, 2022, Onex Falcon Direct Lending BDC SPV, LLC (“Onex Falcon Direct Lending BDC SPV” or the “Borrower”), a direct wholly-owned subsidiary of the Company, as borrower, and the Company, solely in its capacities as equity holder and collateral manager, entered into that certain Amendment No. 3 (the “Third Amendment”) to the Loan and Servicing Agreement dated as of October 4, 2021 (the “Loan and Servicing Agreement”) with, among others, Société Générale, as agent and lender and U.S. Bank National Association as collateral agent and collateral custodian. The Third Amendment, among other things, increased the borrowing capacity under the Loan and Servicing Agreement by $140 million to a total of $340 million. Amendment No. 1 to the Loan and Servicing Agreement is described in the Company’s Current Report on Form 8-K filed on April 7, 2022, and Amendment No. 2 to the Loan and Servicing Agreement does not contain any material amendments.

On July 21, 2022, the Company invested in a term loan with Wellful Inc., with a commitment amount of $5,000,000.

On July 25, 2022, the Company invested in a term loan with Apex Analytix, with a commitment amount of $24,150,000. $21,700,000 of the commitment amount is a funded term loan. The remaining $2,450,000 of the commitment is an unfunded revolving credit facility that is valid for 7 years after closing.

On August 8, 2022, the Company invested in a term loan with Crash Champions, with a commitment amount of $10,000,000. $6,356,589 of the commitment amount is a funded term loan. The remaining $3,643,811 of the commitment is a $2,713,178 unfunded revolving credit facility that is valid for 7 years after closing and a $930,233 revolving credit facility that is valid for 6 years after closing. $32,558 of the revolving credit facility was funded at closing, while $897,675 remains unfunded.

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

The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto in this Quarterly Report. This discussion includes forward-looking statements that involve numerous risks and uncertainties and should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Statements” set forth on page 2 of this Quarterly Report. Actual results could differ materially from those implied or expressed in any forward-looking statements. Except as otherwise indicated, the terms “we,” “us,” “our,” and the “Company” refer to Onex Falcon Direct Lending BDC Fund.

Overview:

We are a Delaware statutory trust structured as a non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, for U.S. federal income tax purposes, we intend to elect to be treated as a RIC under the Code. We are managed by our Adviser. The Administrator will provide the administrative services necessary for us to operate.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.

We will seek to make investments in first-lien senior secured loans, and unsecured loans and other credit investments of “middle market companies” located in the United States. We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation, and amortization, or “EBITDA,” between $10 million and $75 million annually, and even though the Company will not seek to invest in such opportunities, we may on occasion invest in smaller or larger companies if an opportunity presents itself. While most of our investments will be in private U.S. companies (subject to compliance with BDC regulatory requirement to invest at least 70% of its assets in private U.S. companies), we also expect to invest from time to time in Canadian, European, and other non-U.S. companies. We expect to invest primarily in senior secured loans including first-lien loans and unitranche loans, and, to a lesser extent, second-lien loans, last-out tranches of unitranche loans and other credit investments. When we invest in such loans, we may acquire equity securities, such as warrants, options and convertible instruments, as well. We may also invest in total return swaps (“TRS”), which are a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate.

On October 1, 2021, we commenced operations as a business development company when we closed on our initial private offering and purchased our initial portfolio, pursuant to a forward purchase agreement, dated as of September 15, 2021.

For a discussion of the competitive landscape we face, please see “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2021.

Key Components of Our Results of Operations

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.

As a BDC, we may not acquire any assets other than “qualifying assets” specified in the Investment Company Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

Revenues

The principal measure of our financial performance is the net increase (decrease) in shareholders’ equity resulting from operations, which includes net investment income (loss) and net realized and unrealized appreciation (depreciation). Net investment income (loss) is the difference between our income from interest, distributions, fees, and other investment income and our operating expenses, including interest expense. Net realized gain (loss) on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost. Net change in unrealized appreciation (depreciation) on investments is the net change in the fair value of our investment portfolio.

Revenues consist primarily of investment income from interest and dividends on our investment portfolio and various ancillary fees related to our investment holdings.

Interest from Investments in Debt Securities.

We generate interest income from our investments in debt securities that consist primarily of senior and junior secured loans. Our debt securities portfolio is spread across multiple industries and geographic locations and, as such, we are broadly exposed to market conditions and business environments. As a result, although our investments are exposed to market risks, we continuously seek to limit concentration of exposure in any particular sector or issuer.

Expenses

Our primary operating expenses include the payment of management and incentive fees, if any, and other expenses under the Advisory Agreement, interest expense from financing arrangements, and other expenses necessary for our operations. The management and incentive fees will compensate the Adviser for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

We reimburse the Administrator for expenses necessary to perform services related to our administration and operations, including the Adviser’s portion of the compensation and related expenses for certain personnel who provide administrative services. Such services include, among other things, clerical, bookkeeping and recordkeeping services, investor relations, performing or overseeing the performance of our corporate operations (which includes being responsible for the financial records that we are required to maintain and preparing reports for our shareholders and reports filed with the SEC), assisting us in calculating the NAV per share, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our shareholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

We will also bear all other costs and expenses of our operations, administration and transactions, including but not limited to:

•

the cost of our organization and the offering, bound by a time limitation;

•

the cost of calculating our NAV, including the cost of any third-party valuation services;

•

the cost of effecting any sales and repurchases of our common shares and other securities;

•

fees and expenses payable under any dealer manager or placement agent agreements, if any;

•

administration fees payable under the Administration Agreement and any sub-administration agreements, including related expenses;

•

debt service and other costs of borrowings or other financing arrangements;

•

costs of hedging;

•

expenses, including travel expense, incurred by the Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

•

transfer agent and custodial fees;

•

fees and expenses associated with marketing efforts;

•

federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;

•

federal, state and local taxes;

•

independent directors’ fees and expenses including certain travel expenses;

•

costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation of the foregoing;

•

the costs of any reports, proxy statements or other notices to shareholders (including printing and mailing costs), the costs of any shareholder or director meetings and the compensation of personnel responsible for the preparation of the foregoing and related matters;

•

commissions and other compensation payable to brokers or dealers;

•

research and market data;

•

fidelity bond, directors’ and officers’ errors and omissions liability insurance and other insurance premiums;

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits, outside legal and consulting costs;

•

costs of winding up our affairs;

•

costs incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement;

•

extraordinary expenses (such as litigation or indemnification); and

•

costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

We are obligated to reimburse the Adviser for expense payments made by the Adviser to us in connection with the Expense Support Agreement following any calendar quarter in which we have available operating funds. The amount of the reimbursement payment for any calendar quarter will be equal to the lesser of (i) the excess operating funds in such calendar quarter, and (ii) the aggregate amount of all expense payments made by the Adviser to us within three years prior to the last business day of such calendar quarter that have not been previously reimbursed by us to the Adviser.

In addition, we and our Administrator have contracted with U.S. Bank N.A. to provide custodial and various accounting and administrative services, including but not limited to, preparing preliminary financial information for review by the Adviser, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing in respect to RIC compliance.

We expect that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.

Leverage

The amount of leverage we intend to use in any period depends on a number of factors, including cash on-hand available for investing, the cost of financing, general economic and market conditions or compliance needs. Prior to the Small Business Credit Availability Act being signed into law, a BDC generally was not permitted to incur indebtedness unless immediately after such borrowing it has an asset coverage for total borrowings of at least 200%. The Small Business Credit Availability Act, signed into law on March 23, 2018, contains a provision that grants a BDC the option, subject to certain conditions and disclosure obligations, to reduce the asset coverage requirement to 150%. Our Board and initial shareholder have approved the decreased asset coverage ratio.

Portfolio and Investment Activity

In October 2021, the Company closed on its first portfolio company investments. As of June 30, 2022 we had investments in 22 portfolio companies with an aggregate fair value of $396 million.

Our investment activity for the three and six months ended June 30, 2022 was as follows (information presented herein is at par value unless otherwise indicated):


	Three Months Ended			Six Months Ended
	June 30, 2022			June 30, 2022
Investments made in portfolio companies		70,276,526			185,022,599
Investments sold		—			—

Net investment activity before investments repaid		70,276,526			185,022,599
Investments repaid		(22,868,507	)		(27,020,712	)

Net investment activity		47,408,019			158,001,887
Portfolio companies at beginning of period		21			14
New portfolio companies		2			9
Exited portfolio companies		1			1
Portfolio companies at end of period		22			22
Number of investments made in existing portfolio companies		3			7
Percentage of investment commitments at floating rates		100.0	%		100.0	%
Percentage of investment commitments at fixed rates		—			—
Weighted average contractual interest rate of investment commitments based on par		8.16	%		8.16	%

The Company commenced operations on October 1, 2021. Accordingly, there is no activity in the comparable period for the three or six months ended June 30, 2021.

As of June 30, 2022 and December 31, 2021, our investments consisted of the following:


	June 30, 2022 Fair Value
Senior Secured Loan Debt Investments	$	392,463,504
Equity Investments		3,423,677

Total	$	395,887,181


	December 31, 2021 Fair Value
Senior Secured Loan Debt Investments	$	236,214,422
Equity Investments		4,585,750

Total	$	240,800,172

As of the periods ended June 30, 2022 and December 31, 2021, all investments were considered to be income-producing investments.

Results of Operations

Our operating results for the three and six months ended June 30, 2022 were as follows:


	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
Total investment income	$	7,724,118		$	13,733,201
Net expenses		3,095,164			5,593,735

Net investment income		4,628,954			8,139,466
Net realized and unrealized loss		(3,756,944	)		(4,298,952	)

Net increase in net assets resulting from operations		872,010			3,840,514

Net investment income per share—basic and diluted	$	0.41		$	0.77
Net increase in net assets resulting from operations per share—basic and diluted	$	0.08		$	0.36

Investment Income

Investment income is primarily dependent on the composition and credit quality of our investment portfolio. Generally, our Debt Securities Portfolio is expected to generate predictable, recurring interest income in accordance with the contractual terms of each loan. Corporate equity securities may pay a dividend and may increase in value for which a gain may be recognized; generally, such dividend payments and gains are less predictable than interest income on our loan portfolio.

As of June 30, 2022, our portfolio, based on fair value, consisted of 99.1% first-lien debt investments and 0.9% other investments. As of December 31, 2021, our portfolio, based on fair value, consisted of 98.1% first-lien debt investments and 1.9% other investments. As of June 30, 2022, we had investments in 22 portfolio companies, with an average investment size of approximately $9.0 million based on fair value. As of December 31, 2021, we had investments in 14 portfolio companies, with an average investment size of approximately $9.2 million based on fair value. As of June 30, 2022 and December 31, 2021, the largest single investment based on fair value represented 7.2% and 12.0%, respectively, of our total investment portfolio. As of June 30, 2022 and December 31, 2021, 100% and 100%, respectively, of the debt investments based on fair value in our portfolio were at floating rates indexed to LIBOR, SOFR, and CDOR.

Investment income for the three and six months ended June 30, 2022, was as follows:


	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
Interest Income	$	7,690,454		$	13,699,537
Fee and other income		33,664			33,664

Total investment income	$	7,724,118		$	13,733,201

Weighted average contractual interest rate on income producing debt investments at par		8.16	%		8.16	%
Weighted average contractual interest rate on income producing debt investments (adjusted for non-accrual and partial non-accrual) at par		8.16	%		8.16	%

For the three and six months ended June 30, 2022, we have generated interest income of $7.7 and $13.7 million, respectively. Such revenues represent cash interest earned as well as non-cash portions relating to accretion of discounts. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

The level of interest income we receive is generally related to the principal balance of income-producing investments, multiplied by the contractual interest rates of our investments. Fee income is transaction based, and typically consists of amendment and consent fees, prepayment fees, structuring fees and other non-recurring fees. As such, fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees. Any such fees generated will be recognized as earned. We expect the dollar amount of interest and any dividend income that we earn to increase as the size of our investment portfolio increases.

Expenses

Expenses for the three and six months ended June 30, 2022 were as follows:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Management fees	$	1,256,223	$	2,359,078
Organizational and offering fees		31,698		63,396
Deferred financing expense		140,039		258,442
Professional fees		225,475		513,600
Directors’ fees and expenses		43,000		88,000
Interest expenses		878,723		1,359,065
Other general and administrative expenses		520,006		952,154

Total Expenses		3,095,164		5,593,735
Less: expense support from Adviser		—		—

Net Expenses		3,095,164		5,593,735

Total expenses were $3.1 and $5.6 million for the three and six months ended June 30, 2022, respectively. Management fees were $1.3 and $2.4 million for the three and six months ended June 30, 2022. All organization and offering costs since inception through June 30, 2022, were funded by the Adviser and we will have no responsibility for such costs until a Reimbursement Payment is required under the terms of the Expense Support Agreement, provided further that the Adviser or its affiliates may not be reimbursed for payment of excess organization and offering expenses that were incurred more than three years prior to the proposed reimbursement. For the three months ended June 30, 2022, the Company accrued organization and offering costs of less than $0.1 million.

On September 15, 2021, the Company entered into the Expense Support Agreement with the Adviser, the purpose of which is to ensure that no portion of distributions made to the Company’s shareholders will be paid from the Company’s offering proceeds or borrowings (the “Distribution Objective”). Commencing with the fourth quarter of 2021 and on a quarterly basis thereafter, the Adviser will pay on behalf of or reimburse the Company for operating expenses in an amount sufficient to meet the Distribution Objective. Any payment so required to be made by the Adviser is referred to herein as an “Expense Payment.”

Amounts due to the Adviser for the expected recoveries of organization, offering and operating expenses incurred on behalf of the Company, are reflected in amounts due to Adviser on the consolidated statements of assets and liabilities.

Net Realized and Unrealized Gains or Losses

Our investments are generally purchased at a discount to par. We sold and received principal repayments of $22.9 and $27 million during the three and six months ended June 30, 2022, from which we realized net gains totaling $.02 and $0.2 million, respectively. We recognized gains on partial principal repayments we received at par value. For the three and six months ended June 30, 2022, the net change in unrealized appreciation (depreciation) on investments totaled $(4.0) and $(4.5) million, respectively, which was primarily due to fair market value depreciation and impact of currency translation.

Net Increase in Net Assets Resulting from Operations

For the three and six months ended June 30, 2022, the net increase in net assets resulting from operations was $0.9 and $3.8 million or $0.08 and $0.36 per share, respectively.

Financial Condition, Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay distributions to our shareholders and other general business needs. We recognize the need to have funds available for operating our business and to make investments. We seek to have adequate liquidity at all times to cover normal cyclical swings in funding availability and to allow us to meet irregular and unexpected funding requirements. We plan to satisfy our liquidity needs through normal operations with the goal of avoiding unplanned sales of assets or emergency borrowing of funds.

Subject to prevailing market conditions, we intend to grow our portfolio of assets by raising additional capital, including through the prudent use of leverage available to us.

Borrowings

We use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our shareholders by reducing our overall cost of capital. As a BDC, we are limited in the amount of leverage we can incur under the 1940 Act. We are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after such borrowing. As of June 30, 2022, we had $156 million of par value of outstanding borrowings and our asset coverage ratio of total assets to total borrowings was 279%, compliant with the minimum asset coverage level of 150% generally required for a BDC by the 1940 Act.

We expect to maintain adequate liquidity and compliance with regulatory and contractual asset coverage requirements.

Shareholder Distributions

We intend to continue to make quarterly distributions to our shareholders. To avoid certain excise taxes imposed on RICs, we generally endeavor to distribute during each calendar year an amount at least equal to the sum of:

•

98% of our ordinary net taxable income for the calendar year;

•

98.2% of our capital gains, if any, in excess of capital losses for the one-year period ending on October 31 of the calendar year; and

•

any net ordinary income and net capital gains for the preceding year that were not distributed during such year and on which we do not pay corporate tax.

We may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income, to the extent required.

The amount of our declared distributions, as evaluated by management and approved by our Board, is based primarily on our evaluation of our net investment income and distributable taxable income.

On December 20, 2021, we made a distribution of $0.27 per share.

On March 29, 2022, we declared a distribution of $0.34 per share, paid on April 29, 2022.

On May 12, 2022, we declared a distribution of $0.39 per share, paid on June 24, 2022.

Off-Balance Sheet Arrangements

From time-to-time we are a party to financial instruments with off-balance sheet risk in the normal course of business in order to meet the needs of our investment in portfolio companies. Such instruments include commitments to extend credit and may involve, in varying degrees, elements of credit risk in excess of amounts recognized on our balance sheet. Prior to extending such credit, we attempt to limit our credit risk by conducting extensive due diligence, obtaining collateral where necessary and negotiating appropriate financial covenants. As of June 30, 2022, the Company had approximately $37 million in commitments to fund investments. We may also enter into derivative contracts with off-balance sheet risk in connection with our investing activities.

Contractual Obligations

The Company had no contractual cash obligations and other commercial commitments as of June 30, 2022.

Critical Accounting Policies

The consolidated financial statements are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our critical accounting policies are those applicable to the basis of presentation, valuation of investments, and certain revenue recognition matters as discussed below. See Note 2 to our consolidated financial statements, “Significant Accounting Policies—Investments”, contained elsewhere herein.

Valuation of Portfolio Investments

The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded.

Value, as defined in Section 2(a)(41) of 1940 Act, is (1) the market price for those securities for which a market quotation is readily available and (2) for all other securities and assets, fair value as determined in good faith by our Board pursuant to procedures approved by our Board. Our valuation policy is intended to provide a consistent basis for determining the fair value of the portfolio based on the nature of the security, the market for the security and other considerations including the financial performance and enterprise value of the portfolio company. Because of the inherent uncertainty of valuation, the Board determined values may differ significantly from the values that would have been used had a ready market existed for the investments, and the differences could be material.

Pursuant to ASC 946: Financial Services—Investment Companies (“ASC 946”), we reflect our investments on our balance sheet at their determined fair value with unrealized gains and losses resulting from changes in fair value reflected as a component of unrealized gains or losses on our statements of operations. Fair value is the amount that would be received to sell the investments in an orderly transaction between market participants at the measurement date (i.e., the exit price).

See Note 2 to the consolidated financial statements for the additional information about the level of market observability associated with investments carried at fair value.

We follow the provisions of ASC 820: Fair Value Measurements and Disclosures (“ASC 820: Fair Value”), which among other matters, requires enhanced disclosures about investments that are measured and reported at fair value. This standard defines fair value and establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value and expands disclosures about assets and liabilities measured at fair value. ASC 820: Fair Value defines “fair value” as the price that would be

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This fair value definition focuses on an exit price in the principle, or most advantageous market, and prioritizes, within a measurement of fair value, the use of market-based inputs (which may be weighted or adjusted for relevance, reliability and specific attributes relative to the subject investment) over entity-specific inputs. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Subsequent to the adoption of ASC 820: Fair Value, the FASB has issued various staff positions clarifying the initial standard (see Note 2 to the consolidated financial statements: “Significant Accounting Policies—Investments”).

ASC 820: Fair Value establishes the following three-level hierarchy, based upon the transparency of inputs to the fair value measurement of an asset or liability as of the measurement date:

Level I—Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed securities. As required by ASC 820: Fair Value, we do not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably affect the quoted price.

Level II—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

Level III—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on our own assumptions about how market participants would price the asset or liability or may use Level II inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level III if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

Investments for which market quotations are readily available will typically be valued at those market quotations. To validate market quotations, we will utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is expected to be the case for substantially all of our investments, will be valued at fair value as determined in accordance with the Company’s valuation policies and procedures as approved by, and subject to the oversight of, the Board of Trustees, based on, among other things, independent third-party valuation firm(s) engaged at the direction of the Board of Trustees to review our investments.

With respect to investments for which market quotations are not readily available, the Board of Trustees undertakes a multi-step valuation process, as described below:

•

The valuation process begins with each portfolio company or investment being initially valued by the Adviser’s investment professionals that are responsible for the portfolio investment;

•

Preliminary valuation conclusions are then documented and discussed with the Adviser’s senior investment team and approved by the Company’s portfolio managers;

•

All valuations are presented to the Company’s Valuation Committee for review and approval

•

At least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm. It is expected that at least 25% of the Company’s portfolio will be reviewed by an independent valuation firm quarterly;

•

The Audit Committee then reviews these preliminary valuations and makes fair value recommendations to the Board of Trustees; and

•

The Board of Trustees then discusses valuations and determines the fair value of each investment in the Company’s portfolio in good faith, based on the input of the Adviser, the respective independent valuation firms, and the Audit Committee.

The independent valuation firm will value 25% of the Company’s investments each quarter. In cases where we determine our NAV at times other than a quarter end, we generally intend to update the value of securities with market quotations to the most recent market quotation. For securities without market quotations, non-quarterly valuations will generally be the most recent quarterly valuation unless a material event has occurred since the most recent quarter end with respect to the investment. The independent valuation firm is generally not used for non-quarterly valuations.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly-traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our business activities contain elements of market risks. We consider our principal market risks to be fluctuations in interest rates and the valuations of our investment portfolio. Managing these risks is essential to our business. Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor these risks and thresholds by means of administrative and information technology systems and other policies and processes.

Uncertainty with respect to the economic effects of the COVID-19 pandemic and other geopolitical events has introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below. We are subject to financial market risks, including interest rate risk and valuation risk. Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor these risks and thresholds by means of administrative and information technology systems and other policies and processes.

Interest Rate Risk

Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest-bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio.

We intend to continue to fund portions of our investments with borrowings, and at such time, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income. As of June 30, 2022, 100% of the debt investments based on par value in our portfolio were at floating rates indexed to LIBOR or SOFR or CDOR, as was our outstanding debt.

Based on our Consolidated Statements of Assets and Liabilities as of June 30, 2022, the following table shows the annualized impact on net income of hypothetical base rate changes in interest rates (considering interest rate floors and ceilings for floating rate instruments assuming no changes in our investment and borrowing structure).


Basis Point Change	Interest Income			Interest Expense			Net Investment Income
Up 300 Basis Points		13,183,996			4,680,000			8,503,996
Up 200 Basis Points		8,789,331			3,120,000			5,669,331
Up 100 Basis Points		4,394,665			1,560,000			2,834,665
Down 100 Basis Points		(2,511,099	)		(1,560,000	)		(951,099	)
Down 200 Basis Points		(3,029,103	)		(3,120,000	)		90,897
Down 300 Basis points		(3,029,103	)		(3,166,223	)		137,120

Although management believes that this measure is indicative of sensitivity to interest rate changes on our Debt Securities Portfolio, it does not adjust for potential changes in credit quality, size and composition of the assets on the balance sheet and other business developments that could affect a net change in assets resulting from operations or net income. Accordingly, no assurances can be given that actual results would not materially differ from the potential outcome simulated by this estimate.

Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firms engaged at the direction of the Board, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The Company’s management, under the supervision and with the participation of various members of management, including its Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures as of the end of the period covered by this report.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the 1934 Act) 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.

We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us. From time to time, we may be 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. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of these legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.

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

Refer to “Item 1. Consolidated Financial Statements—Notes to Consolidated Financial Statements—Note 7. Share Transactions” in this Quarterly Report on Form 10-Q for issuances of our shares during the quarter. Such issuances were part of a private offering pursuant to Section 4(a)(2) of the 1933 Act and Regulation D thereunder.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC (and are numbered in accordance with Item 601 of Regulation S-K):


3.1		Second Amended and Restated Declaration of Trust(2)

3.2		Bylaws(1)

31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Principal 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 Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

(*)	Filed herewith.

(1)	Incorporated by reference for Form 10 filed on September 17, 2021.

(2)	Incorporated by reference to Amendment No. 1 on Form 10 filed on November 15, 2021.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


	ONEX FALCON DIRECT LENDING BDC FUND

August 12, 2022	By:	/s/ Sandeep Alva
	Name:	Sandeep Alva
	Title:	Chief Executive Officer

August 12, 2022	By:	/s/ Ted Gilpin
	Name:	Ted Gilpin
	Title:	Chief Financial Officer and Treasurer