UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 20222023

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

Commission File Number: 814-01393

Kayne DL 2021, Inc.

Delaware86-2440860
(State or other jurisdiction of

incorporation or organization)		(I.R.S. Employer

Identification No.)
811 Main Street, 14th Floor, Houston, TX77002
(Address of principal executive offices)(Zip Code)

(713) 493-2020

(Registrant’s telephone number, including area code)

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

Title of each classTrading Symbol(s)Name of each exchange on which
registered
NoneNoneNone

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

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

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

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

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

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

As of August 11, 2022,10, 2023, the registrant had 10,66831,687 shares of common stock, $0.001 par value per share, outstanding. As of August 11, 2022,issued and outstanding and there was no public market for the registrant’s shares.

 

 

 

 

Table of Contents

Page
PART I.FINANCIAL INFORMATION21
Item 1.Consolidated Financial Statements21
Consolidated Statements of Assets and Liabilities as of June 30, 20222023 (Unaudited) and December 31, 2021202221
Consolidated Statement of Operations for the three and six months ended June 30, 2023 and 2022 (Unaudited)32
Consolidated Statement of Changes in Net Assets for the three and six months ended June 30, 2023 and 2022 (Unaudited)43
Consolidated Statement of Cash Flows for the  six months ended June 30, 2023 and 2022 (Unaudited)54
Consolidated Schedule of Investments as of June 30, 20222023 (Unaudited) and December 31, 2021202265
Notes to Financial Statements (Unaudited)1117
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations2434
Item 3.Quantitative and Qualitative Disclosures About Market Risk3143
Item 4.Controls and Procedures3143
PART II. OTHER INFORMATION3244
Item 1.Legal Proceedings3244
Item 1A.Risk Factors3244
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds3245
Item 3.Defaults Upon Senior Securities3245
Item 4.Mine Safety Disclosures3245
Item 5.Other Information3245
Item 6.Exhibits3346
Signatures3447

i

 

Forward-Looking Statements

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

●future operating results;

●business prospects and the prospects of portfolio companies;

●changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including changes from the impact of the novel coronavirus (SARS-CoV-2) and related respiratory disease pandemic (“COVID-19 pandemic”);markets;

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

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

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

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

the ability of (1) the companies in which the Company invests to achieve their objectives and (2) the Company to continue to effectively manage the business due to disruptions, both of which are caused by the ongoing COVID-19 pandemic;

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

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

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

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

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

●contractual arrangements and relationships with third parties;

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

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

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

ii

 


PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Kayne DL 2021, Inc.

Consolidated Statements of Assets and Liabilities

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

  June 30,
2022 (Unaudited)		  December 31,
2021		 
Assets:      
Investments, at fair value:      
Long-term investments (amortized cost of $36,194 and $11,499) $36,904  $11,761 
Short-term investments (amortized cost of $6,624 and $31,239)  6,624   31,239 
Cash and cash equivalents  10,196   266 
Deferred offering costs  66   137 
Interest receivable  240   12 
Prepaid expenses and other assets  108   112 
Total Assets $54,138  $43,527 
         
Liabilities:        
Distributions payable $58  $- 
Payable to affiliate  -   471 
Management fee payable  58   2 
Accrued expenses and other liabilities  447   175 
Total Liabilities $563  $648 
         
Commitments and contingencies (Note 8)        
         
Net Assets:        
Common Shares, $0.001 par value; 100,000 shares authorized; 10,596 and 8,600 as of June 30, 2022 and December 31, 2021, respectively, issued and outstanding $-  $- 
Additional paid-in capital  52,824   42,824 
Total distributable earnings (deficit)  751   55 
Total Net Assets $53,575  $42,879 
Total Liabilities and Net Assets $54,138  $43,527 
Net Asset Value Per Common Share $5,056  $4,986 
  June 30,
2023
(Unaudited)		  December 31,
2022		 
Assets:      
Investments, at fair value:      
Long-term investments (amortized cost of $137,943 and $105,083) $140,544  $107,312 
Cash and cash equivalents  1,540   715 
Receivable for principal payments on investments  5   22 
Interest receivable  1,253   972 
Prepaid expenses and other assets  41   101 
Total Assets $143,383  $109,122 
         
Liabilities:        
Subscription Credit Facility (Note 6) $3,250  $750 
Unamortized Subscription Credit Facility issuance costs  (37)  (35)
Payable for investments purchased  -   137 
Distributions payable  3,567   1,768 
Management fee payable  254   156 
Accrued expenses and other liabilities  336   438 
Total Liabilities $7,370  $3,214 
         
Commitments and contingencies (Note 8)        
         
Net Assets:        
Common Shares, $0.001 par value; 100,000 shares authorized; 26,231 and 20,554 as of June 30, 2023 and December 31, 2022, respectively, issued and outstanding $-  $- 
Additional paid-in capital  133,484   103,811 
Total distributable earnings (deficit)  2,529   2,097 
Total Net Assets $136,013  $105,908 
Total Liabilities and Net Assets $143,383  $109,122 
Net Asset Value Per Common Share $5,185  $5,153 

See accompanying notes to consolidated financial statements.


 


Kayne DL 2021, Inc.

Consolidated Statements of Operations

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

(Unaudited)

 

  For the three months ended  For the six months ended 
  June 30,
2022		  June 30,
2021		  June 30,
2022		  June 30,
2021		 
Income:            
Investment income from investments:            
Interest income $616  $-  $962  $- 
Total investment income from investments  616   -   962   - 
Total Investment Income  616   -   962   - 
                 
Expenses:                
Interest expense  41   -   59   - 
Management fees  58   -   91   - 
Professional fees  115   -   214   - 
Directors fees  27   -   54   - 
Offering costs  36   -   71   - 
Initial organization costs  -   79   -   333 
Other general and administrative expenses  69   -   167   - 
Total Expenses  346   79   656   333 
Net Investment Income (Loss)  270   (79)  306   (333)
                 
Realized and unrealized gains (losses) on investments                
Net realized gains (losses):                
Investments  -   -   -   - 
Total net realized gains (losses)  -   -   -   - 
Net change in unrealized gains (losses):                
Investments  210   -   448   - 
Total net change in unrealized gains (losses)  210   -   448   - 
Total realized and unrealized gains (losses)  210   -   448   - 
                 
Net Increase (Decrease) in Net Assets Resulting from Operations $480  $(79) $754  $(333)
                 
Per Common Share Data:                
Basic and diluted net investment income per common share $31      $35     
Basic and diluted net increase in net assets resulting from operations $56      $87     
Weighted Average Common Shares Outstanding - Basic and Diluted  8,644       8,622     
  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2023  2022  2023  2022 
Income:            
Investment income from investments:            
Interest income $4,119  $616  $7,618  $962 
Total Investment Income  4,119   616   7,618   962 
                 
Expenses:                
Interest expense  33   41   144   59 
Management fees  254   58   475   91 
Professional fees  79   115   164   214 
Directors fees  38   27   73   54 
Offering costs  -   36   -   71 
Other general and administrative expenses  81   69   182   167 
Total Expenses  485   346   1,038   656 
Net Investment Income (Loss)  3,634   270   6,580   306 
                 
Realized and unrealized gains (losses) on investments                
Net realized gains (losses):                
Investments  -   -   -   - 
Total net realized gains (losses)  -   -   -   - 
Net change in unrealized gains (losses):                
Investments  (117)  210   371   448 
Total net change in unrealized gains (losses)  (117)  210   371   448 
Total realized and unrealized gains (losses)  (117)  210   371   448 
                 
Net Increase (Decrease) in Net Assets Resulting from Operations $3,517  $480  $6,951  $754 
                 
Per Common Share Data:                
Basic and diluted net investment income per common share $139  $31  $270  $35 
Basic and diluted net increase in net assets resulting from operations $134  $56  $285  $87 
Weighted Average Common Shares Outstanding - Basic and Diluted  26,151   8,644   24,358   8,622 

 

See accompanying notes to consolidated financial statements.


 


Kayne DL 2021, Inc.

Consolidated Statements of Changes in Net Assets

(amounts in 000’s)

(Unaudited)

 

  For the three months ended  For the six months ended 
  June 30,
2022		  June 30,
2021		  June 30,
2022		  June 30,
2021		 
Increase (Decrease) in Net Assets Resulting from Operations:            
Net investment income (loss) $270  $(79) $306  $(333)
Net realized gains (losses) on investments  -   -   -   - 
Net change in unrealized gains (losses) on investments  210   -   448   - 
Net Increase (Decrease) in Net Assets Resulting from Operations  480   (79)  754   (333)
                 
Decrease in Net Assets Resulting from Stockholder Distributions                
Dividends and distributions to stockholders  (58)  -   (58)  - 
Net Decrease in Net Assets Resulting from Stockholder Distributions  (58)  -   (58)  - 
                 
Increase in Net Assets Resulting from Capital Share Transactions                
Issuance of common shares  10,000   -   10,000   - 
Net Increase in Net Assets Resulting from Capital Share Transactions  10,000   -   10,000   - 
Total Increase (Decrease) in Net Assets  10,422   (79)  10,696   (333)
Net Assets, Beginning of Period  43,153   (244)  42,879   10 
Net Assets, End of Period $53,575  $(323) $53,575  $(323)
  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2023  2022  2023  2022 
Increase (Decrease) in Net Assets Resulting from Operations:            
Net investment income (loss) $3,634  $270  $6,580  $306 
Net realized gains (losses) on investments  -   -   -   - 
Net change in unrealized gains (losses) on investments  (117)  210   371   448 
Net Increase (Decrease) in Net Assets Resulting from Operations  3,517   480   6,951   754 
                 
Decrease in Net Assets Resulting from Stockholder Distributions                
Dividends and distributions to stockholders  (3,567)  (58)  (6,519)  (58)
Net Decrease in Net Assets Resulting from Stockholder Distributions  (3,567)  (58)  (6,519)  (58)
                 
Increase in Net Assets Resulting from Capital Share Transactions                
Issuance of common shares  -   10,000   25,000   10,000 
Reinvestment of distributions  2,923   -   4,673   - 
Net Increase in Net Assets Resulting from Capital Share Transactions  2,923   10,000   29,673   10,000 
Total Increase (Decrease) in Net Assets  2,873   10,422   30,105   10,696 
Net Assets, Beginning of Period  133,140   43,153   105,908   42,879 
Net Assets, End of Period $136,013  $53,575  $136,013  $53,575 

See accompanying notes to consolidated financial statements.

 


Kayne DL 2021, Inc.

Consolidated Statements of Cash Flows

(amounts in 000’s)

(Unaudited)

  For the six months ended
June 30,		 
  2023  2022 
Cash Flows from Operating Activities:      
Net increase (decrease) in net assets resulting from operations $6,951  $754 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:        
Net realized (gains)/losses on investments  -   - 
Net change in unrealized (gains)/losses on investments  (371)  (448)
Net accretion of discount on investments  (403)  (61)
Sales (purchases) of short-term investments, net  -   24,615 
Purchases of portfolio investments  (36,732)  (25,036)
Proceeds from sales of investments and principal repayments  4,274   402 
Amortization of deferred financing cost  53   33 
Increase/(decrease) in operating assets and liabilities:        
(Increase)/decrease in interest and dividends receivable  (281)  (228)
(Increase)/decrease in deferred offering costs  -   71 
(Increase)/decrease in receivable for principal payments on investments  17   - 
(Increase)/decrease in prepaid expenses and other assets  60   66 
Increase/(decrease) in payable for investments purchased  (137)  - 
Increase/(decrease) in management fees payable  98   56 
Increase/(decrease) in accrued organizational and offering costs, net  -   (471)
Increase/(decrease) in accrued other general and administrative expenses  (102)  272 
Net cash provided by (used in) operating activities  (26,573)  25 
Cash Flows from Financing Activities:        
Borrowings/(payments) on subscription credit facility, net  2,500   - 
Payments of debt issuance costs  (55)  (95)
Distributions paid in cash  (47)  - 
Proceeds from issuance of common shares  25,000   10,000 
Net cash provided by financing activities  27,398   9,905 
Net increase in cash and cash equivalents  825   9,930 
Cash and cash equivalents, beginning of period  715   266 
Cash and cash equivalents, end of period $1,540  $10,196 
         
Supplemental and Non-Cash Information:        
Interest paid during the period $88  $10 
Non-cash financing activities not included herein consisted of reinvestment of dividends $4,673  $- 

See accompanying notes to consolidated financial statements.


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of June 30, 2023

(amounts in 000’s)

(Unaudited)

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt Investments                  
Private Credit Investments(4)                  
Aerospace & defense                  
Basel U.S. Acquisition Co., Inc. (IAC) (5) First lien senior secured revolving loan 11.88% (S + 6.50%) 12/5/2028  -  $-  $-   0.0%
  First lien senior secured loan 11.88% (S + 6.50%) 12/5/2028  4,577   4,463   4,577   3.4%
Precinmac (US) Holdings, Inc. First lien senior secured loan 11.20% (S + 6.00%) 8/31/2027  283   277   277   0.2%
         4,860   4,740   4,854   3.6%
Automobile components                      
Speedstar Holding LLC First lien senior secured delayed draw loan 12.68% (S + 7.25%) 1/22/2027  187   182   187   0.1%
  First lien senior secured loan 12.49% (S + 7.25%) 1/22/2027  794   772   794   0.6%
Vehicle Accessories, Inc. First lien senior secured loan 11.00% (S + 5.50%) 11/30/2026  1,705   1,684   1,705   1.3%
         2,686   2,638   2,686   2.0%
Biotechnology                      
Alcami Corporation (Alcami) First lien senior secured delayed draw loan 12.20% (S + 7.00%) 6/30/2024  -   -   -   0.0%
  First lien senior secured revolving loan 12.20% (S + 7.00%) 12/21/2028  -   -   -   0.0%
  First lien senior secured loan 12.20% (S + 7.00%) 12/21/2028  4,089   3,928   4,171   3.1%
         4,089   3,928   4,171   3.1%
Capital Markets                      
Atria Wealth Solutions, Inc. First lien senior secured delayed draw loan 12.00% (S + 6.50%) 2/29/2024  215   198   215   0.2%
         215   198   215   0.2%

See accompanying notes to consolidated financial statements.

statements

4

 


Kayne DL 2021, Inc.

Consolidated StatementsSchedule of Cash FlowsInvestments

As of June 30, 2023

(amounts in 000’s)

(Unaudited)

 

  For the six months ended 
  June 30,
2022		  June 30,
2021		 
       
Cash Flows from Operating Activities:      
Net increase (decrease) in net assets resulting from operations $754  $(333)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:        
Net change in unrealized (gains)/losses on investments  (448)  - 
Net accretion of discount on investments  (61)  - 
Sales of short-term investments, net  24,615   - 
Purchases of portfolio investments  (25,036)  - 
Proceeds from sales of investments and principal repayments  402   - 
Amortization of deferred financing cost  33   - 
Increase/(decrease) in operating assets and liabilities:        
(Increase)/decrease in interest and dividends receivable  (228)  - 
(Increase)/decrease in deferred offering costs  71   (142)
(Increase)/decrease in prepaid expenses and other assets  66   (56)
Increase/(decrease) in management fees payable  56   - 
Increase/(decrease) in payable to affiliate  -   438 
Increase/(decrease) in accrued organizational and offering costs, net  (471)  93 
Increase/(decrease) in accrued other general and administrative expenses  272   - 
Net cash used in operating activities  25   - 
Cash Flows from Financing Activities:        
Payments of debt issuance costs  (95)  - 
Proceeds from issuance of common shares  10,000   - 
Net cash provided by financing activities  9,905   - 
Net increase in cash and cash equivalents  9,930   - 
Cash and cash equivalents, beginning of period  266   10 
Cash and cash equivalents, end of period $10,196  $10 
         
Supplemental and Non-Cash Information:        
Interest paid during the period $10  $- 
Non-cash financing activities not included herein consisted of reinvestment of dividends $-  $- 
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Chemicals                      
Shrieve Chemical Company, LLC First lien senior secured loan 11.64% (S + 6.38%) 12/2/2024  3,125   3,100   3,125   2.3%
         3,125   3,100   3,125   2.3%
Commercial services & supplies                      
Allentown, LLC First lien senior secured loan 11.20% (S + 6.00%) 4/22/2027  2,265   2,248   2,242   1.6%
  First lien senior secured delayed draw loan 11.20% (S + 6.00%) 4/22/2027  409   405   405   0.3%
  First lien senior secured revolving loan 13.25% (P + 5.00%) 4/22/2027  191   189   189   0.1%
American Equipment Holdings LLC First lien senior secured delayed draw loan 11.24% (S + 6.00%) 11/5/2026  5,000   4,891   5,000   3.7%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured loan 11.44% (S + 6.25%) 2/1/2027  2,716   2,676   2,682   2.0%
  First lien senior secured loan 11.69% (S + 6.50%) 2/1/2027  1,990   1,948   1,980   1.5%
  First lien senior secured loan 11.94% (S + 6.75%) 2/1/2027  2,000   1,943   2,000   1.5%
  First lien senior secured revolving loan 11.44% (S + 6.25%) 2/1/2027  191   188   189   0.1%
         14,762   14,488   14,687   10.8%
Containers & packaging                      
Drew Foam Companies, Inc. First lien senior secured loan 11.97% (S + 6.75%) 11/5/2025  2,978   2,942   2,955   2.2%
FCA, LLC (FCA Packaging) First lien senior secured loan 11.29% (S + 6.50%) 7/18/2028  2,240   2,207   2,262   1.6%
  First lien senior secured revolving loan 11.29% (S + 6.50%) 7/18/2028  -   -   -   0.0%
         5,218   5,149   5,217   3.8%
Diversified telecommunication services                      
Pavion Corp., f/k/a Corbett Technology Solutions, Inc. First lien senior secured loan 11.13% (S + 5.75%) 10/29/2027  835   822   835   0.6%
  First lien senior secured loan 11.14% (S + 5.75%) 10/29/2027  928   914   928   0.7%
         1,763   1,736   1,763   1.3%
Electronic equipment, instruments & components                      
Process Insights, Inc. First lien senior secured loan 11.40% (S + 6.00%) 10/30/2025  1,465   1,445   1,465   1.1%
         1,465   1,445   1,465   1.1%

 

See accompanying notes to consolidated financial statements.statements

 


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of June 30, 20222023

(amounts in 000’s)

(Unaudited)

 

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt Investments                  
Private Credit Investments(4)                  
Aerospace & defense                  
Precinmac (US) Holdings, Inc. First lien senior secured loan 7.63% (S + 6.00%) 8/31/2027  286  $279  $286   0.5%
         286   279   286   0.5%
Asset management & custody banks                      
Atria Wealth Solutions, Inc. First lien senior secured loan 8.32% (S + 6.00%) 2/29/2024  -   (41)  -   0.0%
         -   (41)  -   0.0%
Auto components                      
Vehicle Accessories, Inc. First lien senior secured loan 8.07% (S + 5.50%) 11/30/2026  1,723   1,695   1,723   3.2%
         1,723   1,695   1,723   3.2%
Building products                      
BCI Burke Holding Corp. First lien senior secured delayed draw loan 7.32% (L + 5.75%) 12/14/2023  -   -   -   0.0%
  First lien senior secured loan 7.32% (L + 5.75%) 12/14/2027  2,283   2,246   2,283   4.3%
  First lien senior secured revolving loan 7.32% (L + 5.75%) 6/14/2027  9   6   9   0.0%
         2,292   2,252   2,292   4.3%
Chemicals                      
Shrieve Chemical Company, LLC First lien senior secured loan 8.01% (L + 6.00%) 12/2/2024  258   252   258   0.5%
         258   252   258   0.5%
Commercial services & supplies                      
Allentown, LLC First lien senior secured delayed draw loan 7.60% (S + 6.00%) 10/22/2023  -   -   -   0.0%
  First lien senior secured revolving loan 7.60% (S + 6.00%) 4/22/2027  76   73   76   0.1%
  First lien senior secured loan 7.60% (S + 6.00%) 4/22/2027  2,288   2,264   2,288   4.3%
BLP Buyer, Inc. (Bishop Lifting Products) First lien senior secured revolving loan 7.50% (L + 6.25%) 2/1/2027  91   87   91   0.2%
  First lien senior secured loan 7.54% (L + 6.25%) 2/1/2027  2,743   2,693   2,743   5.1%
         5,198   5,117   5,198   9.7%
Diversified telecommunication services                      
Corbett Technology Solutions, Inc. First lien senior secured loan 6.00% (L + 5.00%) 10/29/2027  843   827   843   1.6%
  First lien senior secured loan 6.00% (L + 5.00%) 10/29/2027  937   920   937   1.7%
         1,780   1,747   1,780   3.3%
Electronic equipment, instruments & components                      
Process Insights, Inc. First lien senior secured loan 8.85% (S + 7.50%) 10/30/2025  1,480   1,451   1,480   2.8%
         1,480   1,451   1,480   2.8%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Food products                      
BR PJK Produce, LLC (Keany) First lien senior secured loan 11.39% (S + 6.25%) 11/14/2027  4,747   4,638   4,771   3.5%
  First lien senior secured delayed draw loan 11.39% (S + 6.25%) 5/14/2024  -   -   -   0.0%
Gulf Pacific Holdings, LLC First lien senior secured loan 11.14% (S + 5.75%) 9/30/2028  1,738   1,708   1,738   1.3%
  First lien senior secured delayed draw loan 10.98% (S + 5.75%) 9/30/2028  147   139   147   0.1%
  First lien senior secured revolving loan 11.14% (S + 5.75%) 9/30/2028  154   144   154   0.1%
IF&P Foods, LLC (FreshEdge) (6) First lien senior secured loan 10.51% (S + 5.63%) 10/3/2028  3,912   3,824   3,873   2.8%
  First lien senior secured delayed draw loan 10.77% (S + 5.63%) 10/3/2028  581   568   575   0.4%
  First lien senior secured revolving loan 10.61% (S + 5.63%) 10/3/2028  254   243   251   0.2%
Siegel Egg Co., LLC First lien senior secured loan 11.34% (S + 6.00%) 12/29/2026  2,471   2,438   2,348   1.7%
  First lien senior secured revolving loan 11.34% (S + 6.00%) 12/29/2026  412   407   392   0.3%
Worldwide Produce Acquisition, LLC First lien senior secured delayed draw loan 11.49% (S + 6.25%) 1/18/2029  634   587   634   0.5%
  First lien senior secured delayed draw loan 11.49% (S + 6.25%) 4/18/2024  -   -   -     
  First lien senior secured revolving loan 11.23% (S + 6.25%) 1/18/2029  127   115   127   0.1%
  First lien senior secured loan 11.23% (S + 6.25%) 1/18/2029  2,874   2,794   2,874   2.1%
         18,051   17,605   17,884   13.1%

 

See accompanying notes to consolidated financial statements.statements

 


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of June 30, 20222023

(amounts in 000’s)

(Unaudited)

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Food products                      
Siegel Egg Co., LLC First lien senior secured revolving loan 6.92% (L + 6.00%) 12/29/2026  235   226   235   0.4%
  First lien senior secured loan 6.50% (L + 6.00%) 12/29/2026  2,496   2,454   2,496   4.7%
         2,731   2,680   2,731   5.1%
Health care providers & services                      
Brightview, LLC First lien senior secured delayed draw loan 8.63% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured revolving loan 8.63% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured loan 8.63% (L + 5.75%) 4/12/2024  2,201   2,178   2,201   4.1%
Guardian Dentistry Partners First lien senior secured delayed draw loan 7.67% (L + 5.75%) 8/20/2026  580   553   580   1.1%
  First lien senior secured loan 7.67% (L + 5.75%) 8/20/2026  1,017   1,005   1,017   1.9%
Light Wave Dental Management LLC First lien senior secured delayed draw loan 8.16% (S + 6.50%) 11/11/2023  91   82   91   0.2%
  First lien senior secured delayed draw loan 8.16% (S + 6.50%) 12/31/2023  412   408   412   0.8%
  First lien senior secured revolving loan 8.16% (S + 6.50%)12/31/2023  -   -   -   0.0%
  First lien senior secured loan 8.16% (S + 6.50%) 12/31/2023  847   839   847   1.6%
  First lien senior secured delayed draw loan 8.16% (S + 6.50%) 12/31/2023  290   287   290   0.5%
  First lien senior secured loan 8.16% (S + 6.50%) 12/31/2023  453   449   453   0.8%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 7.50% (L + 6.00%) 10/24/2025  2,992   2,931   2,992   5.6%
SGA Dental Partners Holdings, LLC First lien senior secured delayed draw loan 7.65% (S + 5.50%) 12/30/2026  1,228   1,204   1,228   2.3%
  First lien senior secured loan 6.76% (S + 5.50%) 12/30/2026  1,441   1,411   1,441   2.7%
  First lien senior secured revolving loan 6.76% (S + 5.50%) 12/30/2026  -   -   -   0.0%
         11,552   11,347   11,552   21.6%
Leisure products                      
MacNeill Pride Group First lien senior secured delayed draw loan 8.57% (S + 6.25%) 4/22/2026  1,239   1,214   1,239   2.3%
  First lien senior secured revolving loan 7.88% (S + 6.25%) 4/22/2026  199   195   199   0.4%
         1,438   1,409   1,438   2.7%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 8.57% (S + 6.25%) 3/6/2027  973   963   973   1.8%
         973   963   973   1.8%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Health care providers & services                      
Brightview, LLC First lien senior secured loan 11.22% (S + 6.00%) 12/14/2026  2,179   2,171   2,157   1.6%
  First lien senior secured delayed draw loan 11.22% (S + 6.00%) 12/14/2026  291   289   288   0.2%
  First lien senior secured revolving loan 11.22% (S + 6.00%) 12/14/2026  39   39   39   0.0%
Guardian Dentistry Partners First lien senior secured loan 11.72% (S + 6.50%) 8/20/2026  1,007   990   1,007   0.7%
  First lien senior secured delayed draw loan 11.72% (S + 6.50%) 8/20/2026  1,960   1,936   1,960   1.4%
Light Wave Dental Management LLC First lien senior secured revolving loan 12.10% (S + 7.00%) 6/30/2029  186   161   186   0.1%
  First lien senior secured loan 12.10% (S + 7.00%) 6/30/2029  6,175   5,992   6,175   4.5%
OMH-HealthEdge Holdings, LLC First lien senior secured loan 10.03% (L + 5.25%) 10/24/2025  2,963   2,918   2,963   2.2%
SGA Dental Partners Holdings, LLC First lien senior secured loan 10.66% (S + 5.50%) 12/30/2026  1,427   1,403   1,427   1.0%
  First lien senior secured delayed draw loan 10.66% (S + 5.50%) 12/30/2026  1,330   1,310   1,330   1.0%
  First lien senior secured revolving loan 10.98% (S + 5.50%) 12/30/2026  -   -   -   0.0%
         17,557   17,209   17,532   12.7%
Health care equipment & supplies                      
LSL Industries, LLC (LSL Healthcare) First lien senior secured loan 11.85% (S + 6.50%) 11/3/2027  1,682   1,629   1,666   1.2%
  First lien senior secured delayed draw loan 11.85% (S + 6.50%) 11/3/2024  -   -   -   0.0%
  First lien senior secured revolving loan 11.85% (S + 6.50%) 11/3/2027  -   -   -   0.0%
         1,682   1,629   1,666   1.2%
Insurance                      
Allcat Claims Service, LLC First lien senior secured loan 11.24% (S + 6.00%) 7/7/2027  665   648   665   0.5%
  First lien senior secured delayed draw loan 11.20% (S + 6.00%) 7/7/2027  1,861   1,829   1,861   1.4%
  First lien senior secured revolving loan 11.24% (S + 6.00%) 7/7/2027  -   -   -   0.0%
         2,526   2,477   2,526   1.9%
IT services                      
Domain Information Services Inc. (Integris) First lien senior secured loan 11.29% (S + 6.25%) 9/30/2025  4,980   4,881   4,980   3.7%
Improving Acquisition LLC First lien senior secured loan 11.61% (S + 6.00%) 7/26/2027  4,612   4,524   4,589   3.4%
  First lien senior secured revolving loan 11.55% (S + 6.00%) 7/26/2027  -   -   -   0.0%
         9,592   9,405   9,569   7.1%

See accompanying notes to consolidated financial statements.statements

 


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of June 30, 20222023

(amounts in 000’s)

(Unaudited)

 

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Software                      
Peak Technologies First lien senior secured loan 8.58% (L + 7.05%) 4/1/2026  368   360   368   0.7%
  First lien senior secured loan 8.72% (L + 7.05%) 4/1/2026  191   188   191   0.4%
  First lien senior secured loan 8.74% (L + 7.05%) 4/1/2026  419   411   419   0.8%
  First lien senior secured loan 8.62% (L + 6.95%) 4/1/2026  1,572   1,541   1,572   2.9%
  First lien senior secured loan 8.68% (L + 7.09%) 4/1/2026  448   439   448   0.8%
         2,998   2,939   2,998   5.6%
Trading companies & distributors                      
CGI Automated Manufacturing, LLC First lien senior secured revolving loan 7.57% (S + 6.50%) 12/17/2026  -   -   -   0.0%
  First lien senior secured delayed draw loan 7.57% (S + 6.50%) 5/17/2023  1,283   1,257   1,283   2.4%
  First lien senior secured loan 8.32% (S + 6.50%) 12/17/2026  1,537   1,513   1,537   2.9%
I.D. Images Acquisition, LLC First lien senior secured loan 8.50% (L + 6.25%) 7/30/2026  700   688   700   1.3%
         3,520   3,458   3,520   6.6%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured delayed draw loan 7.05% (S + 5.50%) 8/10/2023  675   646   675   1.2%
         675   646   675   1.2%
Total Private Credit Investments        36,904   36,194   36,904   68.9%
                  ��    
Total Debt Investments        36,904   36,194   36,904   68.9%
      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Leisure products                      
BCI Burke Holding Corp. First lien senior secured loan 11.00% (S + 5.50%) 12/14/2027  2,175   2,147   2,175   1.6%
  First lien senior secured delayed draw loan 11.00% (S + 5.50%) 12/14/2023  84   83   84   0.1%
  First lien senior secured revolving loan 11.00% (S + 5.50%) 6/14/2027  -   -   -   0.0%
VENUplus, Inc. (f/k/a CTM Group, Inc.) First lien senior secured loan 12.16% (S + 6.75%) 11/30/2026  3,038   2,967   3,038   2.2%
MacNeill Pride Group First lien senior secured delayed draw loan 12.00% (S + 6.50%) 4/22/2026  1,019   996   1,007   0.7%
  First lien senior secured revolving loan 12.00% (S + 6.50%) 4/22/2026  -   -   -   0.0%
         6,316   6,193   6,304   4.6%
Machinery                      
Pennsylvania Machine Works, LLC First lien senior secured loan 11.50% (S + 6.00%) 3/6/2027  924   917   924   0.7%
PVI Holdings, Inc First lien senior secured loan 10.92% (S + 5.94%) 7/18/2027  2,058   2,031   2,058   1.5%
         2,982   2,948   2,982   2.2%
Professional services                      
DISA Holdings Corp. (DISA) First lien senior secured delayed draw loan 10.66% (S + 5.50%) 9/9/2028  427   402   427   0.3%
  First lien senior secured revolving loan 10.66% (S + 5.50%) 9/9/2028  -   -   -   0.0%
  First lien senior secured loan 10.66% (S + 5.50%) 9/9/2028  3,411   3,312   3,411   2.5%
Universal Marine Medical Supply International, LLC (Unimed) First lien senior secured loan 12.88% (S + 7.50%) 12/5/2027  4,087   3,996   4,087   3.0%
  First lien senior secured revolving loan 13.14% (S + 7.50%) 12/5/2027  147   131   147   0.1%
         8,072   7,841   8,072   5.9%
Software                      
AIDC Intermediate Co 2, LLC (Peak Technologies) First lien senior secured loan 11.47% (S + 6.25%) 7/22/2027  2,982   2,874   2,953   2.2%
         2,982   2,874   2,953   2.2%
Textiles, apparel & luxury goods                      
American Soccer Company, Incorporated (SCORE) First lien senior secured loan 11.89% (S + 6.50%) 7/20/2027  2,569   2,520   2,543   1.9%
  First lien senior secured revolving loan 11.70% (S + 6.50%) 7/20/2027  253   246   251   0.2%
         2,822   2,766   2,794   2.1%

 

  Number of     Fair  Percentage 
  Shares  Cost  Value  of Net Assets 
Short-Term Investments                
First American U.S. Treasury Money Market Fund – Institutional Class Z, 0.80% (5)  486   486   486   0.9%
First American Treasury Obligations Fund - Institutional Class Z, 1.27% (5)  6,138   6,138   6,138   11.5%
Total Short-Term Investments  6,624   6,624   6,624   12.4%
                 
Total Investments     $42,818  $43,528   81.3%
                 
Assets in Excess of Other Liabilities          10,047   18.7%
Net Assets         $53,575   100.0%

See accompanying notes to consolidated financial statements

 


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of June 30, 2023

(amounts in 000’s)

(Unaudited)

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Trading companies & distributors                      
BCDI Meteor Acquisition, LLC (Meteor) First lien senior secured loan 12.34% (S + 7.00%) 6/29/2028  4,988   4,873   4,938   3.6%
CGI Automated Manufacturing, LLC First lien senior secured loan 12.22% (S + 7.00%) 12/17/2026  1,498   1,456   1,482   1.1%
  First lien senior secured delayed draw loan 12.22% (S + 7.00%) 12/17/2026  1,251   1,216   1,238   0.9%
  First lien senior secured revolving loan 12.22% (S + 7.00%) 12/17/2026  64   60   64   0.0%
Engineered Fastener Company, LLC (EFC International) First lien senior secured loan 11.89% (S + 6.50%) 11/1/2027  6,982   6,823   6,982   5.1%
Genuine Cable Group, LLC First lien senior secured loan 10.70% (S + 5.50%) 11/1/2026  4,963   4,820   4,838   3.6%
I.D. Images Acquisition, LLC First lien senior secured loan 11.64% (S + 6.25%) 7/30/2026  693   684   693   0.5%
  First lien senior secured loan 11.45% (S + 6.25%) 7/30/2026  3,070   3,019   3,070   2.3%
Krayden Holdings, Inc. First lien senior secured delayed draw loan 11.34% (S + 6.00%) 3/1/2025  -   -   -   0.0%
  First lien senior secured revolving loan 11.34% (S + 6.00%) 3/1/2029  -   -   -   0.0%
  First lien senior secured loan 11.34% (S + 6.00%) 3/1/2029  3,180   3,036   3,180   2.3%
         26,689   25,987   26,485   19.4%
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured delayed draw loan 11.28% (S + 6.00%) 8/10/2027  2,982   2,938   2,937   2.2%
  First lien senior secured loan 11.28% (S + 6.00%) 8/10/2027  667   649   657   0.5%
         3,649   3,587   3,594   2.7%
Total Debt Investments        141,103   $137,943  $ 140,544   103.3%
Liabilities in Excess of Other Assets                (4,531)  (3.3)%
Net Assets               $136,013   100.0%

(1)(1)As of June 30, 2022,2023, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

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

(3)(3)As of June 30, 2022,2023, the tax cost of the Company’s investments approximates their amortized cost.

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

(5)(5)Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940.  The indicated rate isCompany may not acquire any non-qualifying asset unless, at the yield astime of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of June 30, 2022.2023, 3.2% of the Company’s total assets were in non-qualifying investments.

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

See accompanying notes to consolidated financial statements.


 

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

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

See accompanying notes to consolidated financial statements.


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

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

See accompanying notes to consolidated financial statements.


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

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

See accompanying notes to consolidated financial statements.


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

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

See accompanying notes to consolidated financial statements.


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2022

(amounts in 000’s)

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

See accompanying notes to consolidated financial statements.

 


Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 20212022

(amounts in 000’s)

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Debt Investments                  
Private Credit Investments(4)                  
Capital goods                  
I.D. Images Acquisition, LLC First lien senior secured loan 7.25% (L + 6.25%) 7/30/2026  703  $691  $703   1.6%
         703   691   703   1.6%
Consumer durables & apparel                      
BCI Burke Holding Corp. First lien senior secured loan 6.75% (L + 5.75%) 12/14/2027  2,294   2,253   2,294   5.4%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 6/14/2027  52   48   52   0.1%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 12/14/2023  -   -   -   0.0%
         2,346   2,301   2,346   5.5%
Food & beverage                      
Siegel Egg Co., LLC First lien senior secured revolving loan 7.00% (L + 6.00%) 12/29/2026  164   153   164   0.4%
  First lien senior secured loan 7.00% (L + 6.00%) 12/29/2026  2,502   2,456   2,502   5.8%
         2,666   2,609   2,666   6.2%
Health care equipment & services                      
Brightview, LLC First lien senior secured loan 6.75% (L + 5.75%) 4/12/2024  2,212   2,182   2,212   5.1%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
  First lien senior secured revolving loan 6.75% (L + 5.75%) 4/12/2024  -   -   -   0.0%
Guardian Dentistry Partners First lien senior secured loan 6.75% (L + 5.75%) 8/20/2026  1,023   978   1,023   2.4%
  First lien senior secured delayed draw loan 6.75% (L + 5.75%) 8/20/2026  -   -   -   0.0%
SGA Dental Partners Holdings, LLC First lien senior secured loan 6.50% (L + 5.50%) 12/30/2026  1,448   1,402   1,448   3.4%
  First lien senior secured delayed draw loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
  First lien senior secured revolving loan 6.50% (L + 5.50%) 12/30/2026  -   -   -   0.0%
         4,683   4,562   4,683   10.9%
Software & services                      
Peak Technologies First lien senior secured loan 7.50% (L + 6.50%) 4/1/2026  421   413   421   1.0%
         421   413   421   1.0%
Telecommunication services                      
Corbett Technology Solutions, Inc. First lien senior secured loan 6.00% (L + 5.00%) 10/27/2027  942   923   942   2.2%
         942   923   942   2.2%
Total Private Credit Investments        11,761   11,499   11,761   27.4%
Total Debt Investments        11,761   11,499   11,761   27.4%

See accompanying notes to consolidated financial statements. 

9

Kayne DL 2021, Inc.

Consolidated Schedule of Investments

As of December 31, 2021

(amounts in 000’s)

  Number of
Shares		  Cost  Fair
Value		  Percentage
of Net Assets		 
Short-Term Investments            
First American Treasury Obligations Fund - Institutional Class Z, 0.01% (5)  31,239   31,239   31,239   72.9%
Total Short-Term Investments  31,239   31,239   31,239   72.9%
Total Investments     $42,738  $43,000   100.3%
                 
Liabilities in Excess of Other Assets          (121)  (0.3)%
Net Assets         $42,879   100.0%

      Maturity Principal /  Amortized  Fair  Percentage 
Portfolio Company(1) Investment Interest Rate Date Par  Cost(2)(3)  Value  of Net Assets 
Wireless telecommunication services                      
Centerline Communications, LLC First lien senior secured loan 9.93% (S + 5.50%) 8/10/2027  670   651   667   0.6%
  First lien senior secured delayed draw loan 9.93% (S + 5.50%) 8/10/2027  2,997   2,948   2,982   2.8%
         3,667   3,599   3,649   3.4%
Total Private Credit Investments        107,673   105,083   107,312   101.2%
                       
Total Debt Investments        107,673   105,083   107,312   101.2%
                       
Total Investments           $105,083  $107,312   101.2%
                       
Liabilities in Excess of Other Assets                (1,404)  (1.2)%
Net Assets               $105,908   100.0%

(1)As of December 31, 2021,2022, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

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

(3)As of December 31, 2021,2022, the tax cost of the Company’s investments approximates their amortized cost.

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

(5)Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940. The indicated rate isCompany may not acquire any non-qualifying asset unless, at the yield astime of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2021.2022, 4.2% of the Company’s total assets were in non-qualifying investments.
(6)The Company may be entitled to receive additional interest as a result of an arrangement with other lenders in the syndication. In exchange for the higher interest rate, the “last-out” portion is at a greater risk of loss. Certain lenders represent a “first out” portion of the investment and have priority to the “last-out” portion with respect to payments of principal and interest.

See accompanying notes to consolidated financial statements.


 

10

Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 1. Organization

Organization

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

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

As of June 30, 2022,2023, the Company has entered into subscription agreements with investors for an aggregate capital commitment of $353,535 to purchase shares of the Company’s common stock.

KA Credit Advisors II, LLC (the “Advisor”) serves as the Company’s investment advisor. The Advisor is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P. (“KACALP” or “Kayne Anderson”). The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory Act of 1940.1940, as amended. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of fourfive directors, threefour of whom are independent (including the Board’s chairperson).

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

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


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 2. Significant Accounting Policies

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

B. Consolidation—As provided under Regulation S-X and ASC Topic 946 – “Financial Services – Investment Companies”, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of KDL Corp, LLC in its consolidated financial statements. As of June 30, 2022,2023, KDL Corp, LLC held no investments.

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

D. Cash and Cash Equivalents—cash and cash equivalents include short-term, liquid investments with an original maturity of three months or less and include money market fund accounts.

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

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


 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Traded Investments (Level 1 or Level 2)

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

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

Non-Traded Investments (Level 3)

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

●Investment Team Valuation Designee. The applicable investments arewill be valued no less frequently than quarterly by senior professionals of Kayne Anderson who are responsible for the portfolio investments.Advisor, with new investments valued at the time such investment was made. The value of each portfolio company orLevel 3 investment will be initially reviewed by the investment professionalspersons responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments),investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The investmentsAdvisor will be valued no less frequently than quarterly, with new investments valued atspecify the time such investment was made.

●Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by the Company’s executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committeetitles of the Board)persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the Board on a quarterly basis.

●Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, the executive officersportfolio management of the Company are authorizedsuch that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by the Board at its next regular meeting.portfolio investments.

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

●Oversight. The Board Determination. has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Company’sAudit Committee shall aid the Board meetsin overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to consider the valuations provided by the Company’s executive officers and the Audit Committee and ratify valuations for the applicable investments. The Company’s Board considers the report provided by the third-party valuation firms in reviewing and determining in good faithreview the fair value determinations, processes and written reports of the applicable portfolio investments.Advisor as part of the Board’s oversight responsibilities.


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

The Board of Directors will be ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to ourthe Company’s financial statements will express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on ourthe Company’s financial statements.

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

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon the Company’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer any reasonable doubt that such principal or interest will be collected in full and, in the Company’s judgment, principal and interest are likely to remain current. The Company may make exceptions to this policy if the loan has sufficient collateral value (i.e., typically measured as enterprise value of the portfolio company) or is in the process of collection. As of June 30, 2023 and December 31, 2022, the Company did not have any investments in portfolio companies on non-accrual status.

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

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

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

J. Offering Costs – offering costs include costs and expenses incurred in connection with the offering of the Company’s common stock. These costs were capitalized as deferred offering expenses and included in prepaid expenses and other assets on the Statement of Assets and Liabilities. These costs were amortized over a twelve-month period beginning with the commencement of operations. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s share offerings, the preparation of the Company’s registration statement and registration fees. The Company reimbursed the Advisor for these costs. The aggregate amount of organizational expenses and offering costs shall not exceed $350 for such reimbursement to the Advisor.

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


 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

The Company must pay distributions equal to 90% of its investment company taxable income (ordinary income and short-term capital gains) to qualify as a RIC and it must distribute all of its taxable income (ordinary income, short-term capital gains and long-term capital gains) to avoid federal income taxes. The Company will be subject to federal income tax on any undistributed portion of income. For purposes of the distribution test, the Company may elect to treat as paid on the last day of its taxable year all or part of any distributions that are declared after the end of its taxable year if such distributions are declared before the due date of its tax return, including any extensions (October 15th).extensions.

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

The Company does not currently qualify as a “publicly offered regulated investment company,” as defined in the Code. A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market, or (iii) held by at least 500 persons at all times during the taxable year. The Company cannot determine when it will qualify as a publicly offered RIC. If the Company does not qualify as a publicly offered RIC during the tax year, a non-corporate shareholder’s allocable portion of the Company’s affected expenses, including its management fees, may be treated as an additional distribution to shareholders. A non-corporate shareholder’s allocable portion of these expenses may be treated as miscellaneous itemized deductions that are not currently deductible by such shareholders.

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

L. LIBOR Transition — The U.K. Financial Conduct Authority (“FCA”) announced that certain London Interbank Offered Rate (“LIBOR”) tenors in certain currencies ceased to be provided at the end of 2021 with all remaining tenors ceasing in June 2023. Alternatives to LIBOR have been established, or are in development in most major currencies, including the Secured Overnight Financing Rate (“SOFR”) that is intended to replace U.S. dollar LIBOR. Markets are developing in response to these new reference rates. The LIBOR transition has become increasingly well-defined in advance of its anticipated discontinuation, but uncertainly remains related to the liquidity impact of the change in rates, and how to appropriately adjust these rates at the time of transition. At this time, it is not possible to predict fully the ultimate outcome of these changes.

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

Note 3. Agreements and Related Party Transactions

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

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


 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

B. Investment Advisory Agreement – on December 16, 2021, the Company entered into an Investment Advisory Agreement with its Advisor. Pursuant to the Investment Advisory Agreement with its Advisor, the Company will pay its Advisor a management fee for investment advisory and management services. The Investment Advisory Agreement may be terminated by either party with 60 days’ written notice.

The Company has agreed to reimburse On March 7, 2023, the Advisor and its affiliates for the third-party costs incurred on its behalf in connection with the formation and the offering of sharesBoard approved a renewal of the Company’s common stock. Amounts shown as payables to affiliates on the Statement of Assets and Liabilities represent organizational expenses and offering costs of the Company that were paid by the Advisor and its affiliates on behalf of the Company.Investment Advisory Agreement through March 15, 2024.

Management Fee

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

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

For the three and six months ended June 30, 2023 and 2022, the Company incurred management fees of $254 and $58, respectively.

For the six months ended June 30, 2023 and 2022, the Company incurred management fees of $475 and $91, respectively.

C. Other – KACALP, an affiliate of the Advisor, made an equity contributionscontribution of $100$250 during the six months ended June 30, 2022.2023.

Note 4. Investments

The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of June 30, 20222023 and December 31, 2021:2022.

 June 30, 2022  December 31, 2021  June 30, 2023  December 31, 2022 
 Amortized Fair Amortized Fair  Amortized Fair Amortized Fair 
 Cost  Value  Cost  Value  Cost  Value  Cost  Value 
First-lien senior secured debt investments $36,194  $36,904  $11,499  $11,761  $137,943  $140,544  $105,083  $107,312 
Short-term investments  6,624   6,624   31,239   31,239   -   -   -   - 
Total Investments $42,818  $43,528  $42,738  $43,000  $137,943  $140,544  $105,083  $107,312 

As of June 30, 20222023 and December 31, 2021, all2022, $4,577 and $4,601, respectively, of the Company’s investmentstotal assets were qualifyingnon-qualifying assets as defined by Section 55(a) of the 1940 Act.

Beginning with the three months ended March 31, 2022, theThe Company uses Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of its portfolio companies. As of December 31, 2021, the Company used GICS, Level 2 – Industry Group.


 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

The industry composition of long-term investments based on fair value as of June 30, 20222023 and December 31, 20212022 was as follows: 

  June 30,
2023		  December 31,
2022		 
       
Trading companies & distributors  18.8%  15.4%
Food products  12.7%  12.6%
Health care providers & services  12.5%  12.6%
Commercial services & supplies  10.4%  6.6%
IT services  6.8%  9.0%
Professional services  5.7%  7.6%
Leisure products  4.5%  1.2%
Containers & packaging  3.7%  5.2%
Aerospace & defense  3.5%  4.5%
Biotechnology  3.0%  3.8%
Wireless telecommunication services  2.6%  3.4%
Chemicals  2.2%  0.2%
Machinery  2.1%  2.8%
Software  2.1%  2.8%
Textiles, apparel & luxury goods  2.0%  2.6%
Automobile components  1.9%  1.6%
Insurance  1.8%  1.2%
Diversified telecommunication services  1.3%  1.6%
Health care equipment & supplies  1.2%  1.6%
Electronic equipment, instruments & components  1.0%  1.4%
Capital Markets  0.2%  -%
Building products  -%  2.1%
Asset management & custody banks  -%  0.2%
Total  100.0   100.0 


 

June 30,
2022
Health care providers & services31.3%
Commercial services & supplies14.1%
Trading companies & distributors9.6%
Software8.1%
Food products7.4%
Building products6.2%
Diversified telecommunication services4.8%
Auto components4.7%
Electronic equipment, instruments & components4.0%
Leisure products3.9%
Machinery2.6%
Wireless telecommunication services1.8%
Aerospace & defense0.8%
Chemicals0.7%
Asset management & custody banks0.0%
Total100.0%

December 31,
2021
Health care equipment & services39.8%
Food & beverage22.7%
Consumer durables & apparel19.9%
Telecommunication services8.0%
Capital goods6.0%
Software & services3.6%
Total100.0%


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 5. Fair Value

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

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

Level 1 — Valuations based on quoted unadjusted prices for identical instruments in active markets traded on a national exchange to which the Company has access at the date of measurement.

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

Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Company’s own assumptions that market participants would use to price the asset or liability based on the best available information. 

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

The following table presentstables present the fair value hierarchy of investments as of June 30, 20222023 and December 31, 2021.2022. Note that the valuation levels below are not necessarily an indication of the risk or liquidity associated with the underlying investment.

  Fair Value Hierarchy as of June 30, 2023 
Investments: Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $     -  $    -  $140,544  $140,544 
Short-term investments  -   -  $-   - 
Total Investments $-  $-  $140,544  $140,544 

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


 

  Fair Value Hierarchy as of June 30, 2022 
Investments: Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $-  $     -  $36,904  $36,904 
Short-term investments  6,624   -   -   6,624 
Total Investments $6,624  $-  $36,904  $43,528 

  Fair Value Hierarchy as of December 31, 2021 
Investments: Level 1  Level 2  Level 3  Total 
First-lien senior secured debt investments $-  $   -  $11,761  $11,761 
Short-term investments  31,239   -   -   31,239 
Total Investments $31,239  $-  $11,761  $43,000 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and six months ended June 30, 2022. There were no investments in the Company for the three2023 and six months ended June 30, 2021.2022, respectively.

 

 For the three months ended  First-lien 
 June 30,
2022		  senior secured 
   
For the three months ended June 30, 2023 debt investments 
Fair value, beginning of period $24,409  $131,248 
Purchases of investments  12,558   12,688 
Proceeds from sales of investments and principal repayments  (307)  (3,484)
Net change in unrealized gain (loss)  210   (117)
Net realized gain (loss)  - 
Net accretion of discount on investments  34   209 
Transfers into (out of) Level 3  -   - 
Fair value, end of period $36,904  $140,544 

 

 For the six months ended  First-lien 
 June 30,
2022		  senior secured 
   
For the three months ended June 30, 2022 debt investments 
Fair value, beginning of period $11,761  $24,409 
Purchases of investments  25,036   12,558 
Proceeds from principal payments and sales of investments  (402)  (307)
Net change in unrealized gain (loss)  448   210 
Net accretion of discount on investments  61   34 
Transfers into (out of) Level 3  -   - 
Fair value, end of period $36,904  $36,904 

 

  First-lien 
  senior secured 
For the six months ended June 30, 2023 debt investments 
Fair value, beginning of period $107,312 
Purchases of investments  36,732 
Proceeds from sales of investments and principal repayments  (4,274)
Net change in unrealized gain (loss)  371 
Net realized gain (loss)  - 
Net accretion of discount on investments  403 
Transfers into (out of) Level 3  - 
Fair value, end of period $140,544 

  First-lien 
  senior secured 
For the six months ended June 30, 2022 debt investments 
Fair value, beginning of period $11,761 
Purchases of investments  25,036 
Proceeds from principal payments and sales of investments  (402)
Net change in unrealized gain (loss)  448 
Net accretion of discount on investments  61 
Transfers into (out of) Level 3  - 
Fair value, end of period $36,904 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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

 

Valuation Techniques and Unobservable Inputs

 

Non-traded debt investments are typically valued using either a market yield analysis or an enterprise value analysis. For debt investments that are not determinedconsidered to be credit impaired, the CompanyAdvisor uses a market yield analysis to determine fair value. If the debt investment is considered to be credit impaired (which is determined by performing an enterprise value analysis), the CompanyAdvisor will use the enterprise value analysis or a liquidation basis analysis to determine fair value. As of June 30, 2022, none of the Company’s non-traded debt investments were determined to be credit impaired, and the Company used

To determine fair value using a market yield analysis, to determine fair value on these investments.

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

 

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


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

 

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

 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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

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

Quantitative Table for Valuation Techniques

The following tables presentspresent quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of June 30, 20222023 and December 31, 2021.2022. The table istables are not intended to be all-inclusive but instead capturescapture the significant unobservable inputs relevant to the Company’sAdvisor’s determination of fair value.

  As of June 30, 2022 
  Fair  Valuation Unobservable   Weighted 
  Value  Technique Input Range Average 
First-lien senior secured debt investments $36,904  Market Approach - Yield Analysis Credit Spreads 5.00% - 7.50%  6.09%
  As of June 30, 2023 
     Valuation Unobservable   Weighted 
  Fair Value  Technique Input Range Average 
First-lien senior secured debt investments $140,544  Discounted cash flow analysis Discount rate 7.8% - 15.0%  10.1%

  As of December 31, 2021 
  Fair  Valuation Unobservable   Weighted 
  Value  Technique Input Range Average 
First-lien senior secured debt investments $11,761  Market Approach - Yield Analysis Credit Spreads 5.00% - 6.50%  5.77%
  As of December 31, 2022 
  Fair Value  Valuation
Technique		 Unobservable
Input		 Range Weighted
Average		 
First-lien senior secured debt investments $107,312  Discounted cash flow analysis Discount rate 8.7% - 15.0%  9.8%

Note 6. Debt

On February 25, 2022, the Company entered into a senior secured revolving credit facility (the “Subscription Credit Facility”), that has a total commitment of $25,000 and a maturity date of February 25, 2023.22, 2024. The Subscription Credit Facility permits the Company to borrow up to $25,000, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate on the Subscription Credit Facility is equal to SOFR plus an applicable spread of 1.975% with no floor. The Company is also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Facility. For the six months ended June 30, 2022, the Company had $5,000 borrowed under its Subscription Credit Facility on each day from March 23, 2022 to April 5, 2022 at an interest rate of 2.29%.


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

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

 June 30, 2022 
 Aggregate        June 30, 2023 
 Principal Committed Outstanding Principal Amount Available(1)   Aggregate Principal
Committed		   Outstanding
Principal		   Amount
Available(1)		 
Subscription Credit Facility $25,000  $        -  $25,000  $25,000  $3,250  $21,750 
Total debt $25,000  $-  $25,000  $25,000  $3,250  $21,750 

(1)(1)The amount available reflects any limitations related to the Subscription Credit Facility’s borrowing base as of June 30, 2022.2023.

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

(1)The amount available reflects any limitations related to the Subscription Credit Facility’s borrowing base as of December 31, 2022.

For the three and six months ended June 30, 2023 and 2022, the componentsweighted average interest rate of interest expense were as follows. Thereborrowings outstanding was no6.6% and 3.4%, respectively.  As of June 30, 2023, the Company had $3,250 outstanding under the Subscription Credit Facility in place at a weighted average interest rate of 7.1%. As of June 30, 2021.2022, the Company did not have any amounts outstanding under its Subscription Credit Facility.  The Company does not routinely use leverage, and there are many days when there are no borrowings outstanding under its Subscription Credit Facility.


 

  For the three months ended 
  June 30,
2022		 
    
Interest expense $17 
Amortization of debt issuance costs  24 
Total interest expense $41 
Average interest rate  3.3%
Average borrowings $5,000 

  For the six months ended 
  June 30,
2022		 
    
Interest expense $26 
Amortization of debt issuance costs  33 
Total interest expense $59 
Average interest rate  3.4%
Average borrowings $5,000 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 7. Share Transactions

Common Stock Issuances

The following table summarizes the number of common stock shares issued and aggregate proceeds received from such issuances related to the Company’s capital call notices pursuant to subscription agreements with investors for the six months ended June 30, 2022.2023 and 2022, respectively.

For the six months ended June 30, 2023For the six months ended June 30, 2023
Common stock issue date Offering
price per
share		  Common
stock
shares issued		  Aggregate
offering amount		  Offering
price per
share		 Common stock
shares issued		 Aggregate
offering
amount		 
June 29, 2022 $5,011   1,996  $10,000 
February 28, 2023 $5,236  4,775 $25,000 
Total common stock issued      1,996  $10,000      4,775 $25,000 

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

As of June 30, 2022,2023, the Company had subscription agreements with investors for an aggregate capital commitment of $353,535 to purchase shares of common stock. Of this amount, the Company had $300,535$225,535 of undrawn commitments at June 30, 2022.2023. See Note 11 – Subsequent Events.

Dividends and Dividend Reinvestment

The following table summarizestables summarize the dividends declared and payable by the Company for the six months ended June 30, 2022.2023 and 2022, respectively. See Note 11 –- Subsequent Events.

For the six months ended June 30, 2023
Dividend declaration date Dividend
record
date		 Dividend
payment
date		 Dividend
per
share		 
March 7, 2023 March 31, 2023 April 14, 2023 $115.00 
May 10, 2023 June 30, 2023 July 14, 2023 $136.00 
      $251.00 


 

Dividend declaration date Dividend
record date		 Dividend
payment date		 Dividend
per share		 
April 19, 2022 April 20, 2022 July 27, 2022 $6.80 
Total dividends declared     $6.80 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

For the six months ended June 30, 2022
Dividend declaration date Dividend
record
date		 Dividend
payment
date		 Dividend
per
share		 
April 19, 2022 April 20, 2022 July 27, 2022 $6.80 
      $6.80 

The following table summarizes the amounts received and shares of common stock issued to shareholders pursuant to the Company’s dividend reinvestment plan (“DRIP”) for the six months ended June 30, 2023. There were no amounts received and shares of common stock issued to shareholders pursuant to the Company’s DRIP for the six months ended June 30, 2022. See Note 11 – Subsequent Events.

For the six months ended June 30, 2023
Dividend record date Dividend
payment
date		 DRIP
shares
issued		  DRIP
value		 
December 29, 2022 January 13, 2023  340  $1,750 
March 31, 2023 April 14, 2023  564   2,923 
     904  $4,673 

For the dividend declared on May 10, 2023 and paid on July 14, 2023, there were 681 shares issued with a DRIP value of $3,533. These shares are excluded from the table above, as the DRIP shares were issued after June 30, 2023.

Note 8. Commitments and Contingencies

The Company had an aggregate of $11,628$16,369 and $5,300,$21,148, respectively, of unfunded commitments to provide debt financing to its portfolio companies as of June 30, 20222023 and December 31, 2021.2022. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and certain operational metrics; involve, to varying degrees, elementsmetrics. The commitment period for these amounts may be shorter than the maturity date if drawn or funded. These commitments are not reflected in the Company’s consolidated statements of assets and liabilities. Consequently, such commitments result in an element of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities;liabilities.


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

(amounts in 000s, except for shares and are not reflected in the Company’s consolidated statements of assets and liabilities. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.per share data)

(Unaudited)

A summary of the composition of the unfunded commitments as of June 30, 20222023 and December 31, 20212022 is shown in the table below:below.

  As of
June 30,
2023		  As of
December 31,
2022		 
Alcami Corporation (Alcami) $890  $890 
Allcat Claims Service, LLC  460   1,723 
Allentown, LLC  112   606 
American Equipment Holdings LLC  
-  
   5,000 
American Soccer Company, Incorporated (SCORE)  152   243 
Atria Wealth Solutions, Inc.  2,784   2,784 
Basel U.S. Acquisition Co., Inc. (IAC)  399   399 
BCI Burke Holding Corp.  618   618 
BLP Buyer, Inc. (Bishop Lifting Products)  59   159 
BR PJK Produce, LLC (Keany)  228   228 
Brightview, LLC  450   489 
CGI Automated Manufacturing, LLC  96   160 
DISA Holdings Corp. (DISA)  1,144   1,189 
FCA, LLC (FCA Packaging)  288   288 
Gulf Pacific Holdings, LLC  947   1,120 
IF&P Foods, LLC (FreshEdge)  234   874 
Improving Acquisition LLC  328   354 
Krayden Holdings, Inc.  1,813   -   
Light Wave Dental Management LLC  639   677 
LSL Industries, LLC (LSL Healthcare)  1,305   1,305 
MacNeill Pride Group  1,187   1,055 
SGA Dental Partners Holdings, LLC  207   207 
Siegel Egg Co., LLC  85   192 
Universal Marine Medical Supply International, LLC (Unimed)  588   588 
Worldwide Produce Acquisition, LLC  1,356   
-  
 
Total unfunded commitments $16,369  $21,148 

  As of
June 30,
2022		  As of
December 31,
2021		 
Allentown, LLC $636  $- 
Atria Wealth Solutions, Inc.  3,000   - 
BCI Burke Holding Corp.  697   654 
BLP Buyer, Inc. (Bishop Lifting Products)  159   - 
Brightview, LLC  783   783 
Centerline Communications, LLC  2,325   - 
CGI Automated Manufacturing, LLC  160   - 
Guardian Dentistry Partners  1,397   1,977 
Light Wave Dental Management LLC  902   - 
MacNeill Pride Group  985   - 
SGA Dental Partners Holdings, LLC  322   1,552 
Siegel Egg Co., LLC  262   334 
Total unfunded commitments $11,628  $5,300 

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of June 30, 20222023 and December 31, 2021,2022, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.  

Note 9. Earnings Per Share

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

The following table sets forth the computation of basic and diluted earnings per share of common stock for the three and six months ended June 30, 2022. The Company commenced investment operations on December 16, 2021.2023 and 2022, respectively.

  For the three months ended  For the six months ended 
  June 30,
2023		  June 30,
2022		  June 30,
2023		  June 30,
2022		 
Net increase (decrease) in net assets resulting from operations $3,517  $480  $6,951  $754 
Weighted average shares of common stock                
  outstanding - basic and diluted  26,151   8,644   24,358   8,622 
Earnings (loss) per share of common stock - basic and diluted $134  $56  $285  $87 


 

  For the three months ended  For the six months ended 
  June 30,
2022		  June 30,
2022		 
       
Net increase (decrease) in net assets resulting from operations $480  $754 
Weighted average shares of common stock outstanding - basic and diluted  8,644   8,622 
Earnings (loss) per share of common stock - basic and diluted $56  $87 


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 10. Financial Highlights

The following per share of common stock data has been derived from information provided in the unaudited financial statements. The following is a schedule of financial highlights for the six months ended June 30, 2022. The Company commenced investment operations on December 16, 2021.2023 and 2022, respectively.

  For the six months
ended		 
Per Common Share Operating Performance(1) June 30,
2022
(amounts in
thousands, except
share and per share
amounts)		 
Net Asset Value, Beginning of Period $4,986 
     
Results of Operations:    
Net Investment Income  35 
Net Realized and Unrealized Gain (Loss) on Investments(2)  42 
Net Increase (Decrease) in Net Assets Resulting from Operations  77 
     
Distributions to Common Stockholders    
Distributions from Net Investment Income  (7)
Net Decrease in Net Assets Resulting from Distributions  (7)
Net Asset Value, End of Period $5,056 
     
Shares Outstanding, End of Period  10,596 
     
Ratio/Supplemental Data    
Net assets, end of period $53,575 
Weighted-average shares outstanding  8,622 
Total Return(3)  1.5%
Portfolio turnover  1.7%
Ratio of operating expenses to average net assets  2.8%
Ratio of net investment income (loss) to average net assets  1.3%

  For the six months ended
June 30,		 
  2023
(amounts in
thousands,
except share
and per share
amounts)		  2022
(amounts in
thousands,
except share
and per share
amounts)		 
Per Common Share Operating Performance (1)      
Net Asset Value, Beginning of Period $5,153  $4,986 
         
Results of Operations:        
Net Investment Income  270   35 
Net Realized and Unrealized Gain (Loss) on Investments(2)  13   42 
Net Increase (Decrease) in Net Assets Resulting from Operations  283   77 
         
Distributions to Common Stockholders        
Distributions from Net Investment Income  (251)  (7)
Net Decrease in Net Assets Resulting from Distributions  (251)  (7)
         
Net Asset Value, End of Period $5,185  $5,056 
         
Shares Outstanding, End of Period  26,231   10,596 
         
Ratio/Supplemental Data        
Net assets, end of period $136,013  $53,575 
Weighted-average shares outstanding  24,358   8,622 
Total Return(3)  5.6%  1.5%
Portfolio turnover  3.4%  1.7%
Ratio of operating expenses to average net assets  1.7%  2.8%
Ratio of net investment income (loss) to average net assets  10.6%  1.3%

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

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

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


Kayne DL 2021, Inc.

Notes to Consolidated Financial Statements

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

(Unaudited)

Note 11. Subsequent Events

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

On July 27, 2022,14, 2023, the Company paid a distribution of $29.00$136 per share to each common stockholder of record as of July 20, 2022.June 30, 2023. The total distribution was $307$3,567 and $304$3,533 was reinvested into the Company through the purchase of 61681 shares of common stock.

In addition, on this same date of July 27, 2022,On August 10, 2023, the Company paid the previously announcedBoard declared a distribution of $6.80$131 per share to each common stockholder of record as of April 20, 2022.September 29, 2023. The total distribution was $58 and $57 was reinvested intowill be paid on October 13, 2023.

On August 10, 2023, the Company throughsold 4,774 shares of its common stock for an aggregate offering price of $25,000. No underwriting discounts or commissions have been or will be paid in connection with the purchasesale of 11such shares of common stock.  This issuance of the common stock is exempt from the registration requirements of the Securities Act of 1933, as amended, (the “Securities Act”), pursuant to Section 4(a)(2) thereof and Regulation D thereunder. The Company relied, in part, upon representations from the stockholders in the subscription agreements that each stockholder was an accredited investor as defined in Regulation D under the Securities Act. KACALP, an affiliate of the Advisor, made an equity contribution of $250 associated with its 1% commitment for this August 10, 2023 share issuance. The Company has subscription agreements with investors for an aggregate capital commitment of $353,535 to purchase shares of common stock ($200,535 is undrawn).

On August 10, 2023, the Board accepted James C. Baker, Jr.’s resignation as Chief Executive Officer and elected Douglas L. Goodwillie and Kenneth B. Leonard as Co-Chief Executive Officers, effective August 16, 2023. Mr. Baker’s resignation was not due to any disagreement with the Company on any matter relating to its operations, policies or practices.

Mr. Goodwillie and Mr. Leonard have served as Co-Chief Investment Officers of the Company since inception. Additional information regarding Mr. Goodwillie’s and Mr. Leonard’s business experience is available in the Company’s annual proxy statement, which was filed with the SEC on April 26, 2023.

For purposes of SEC disclosure requirements, we note the following:

There is no arrangement or understanding between Mr. Goodwillie or Mr. Leonard and any other persons pursuant to which either Mr. Goodwillie or Mr. Leonard was selected as an officer. There are no family relationships between Mr. Goodwillie or Mr. Leonard and any director, executive officer or person nominated or chosen by the Company to become an executive officer of the Company within the meaning of Item 401(d) of Regulation S-K under the U.S. Securities Act of 1933 (“Regulation S-K”). Since the beginning of the Company’s last fiscal year, the Company has not engaged in any transaction in which Mr. Goodwillie or Mr. Leonard had a direct or indirect material interest within the meaning of Item 404(a) of Regulation S-K.


 


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

  

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

 

Overview and Investment Framework

 

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

 

We are managed by KA Credit Advisors II, LLC (the “Advisor”) which is an indirect subsidiary of Kayne Anderson Capital Advisors, L.P. (“KACALP” or “Kayne Anderson”). The Advisor is registered with the Securities and Exchange Commission (“SEC”) as an investment advisor under the Investment Advisory Act of 1940. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments, determining the value of the investments and monitoring its investments and portfolio companies on an ongoing basis. The Board consists of fourfive directors, threefour of whom are independent.

 

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

 

We intend to achieve our investment objective by investing primarily in first lien senior secured, unitranche and split-lien loans (collectively, “secured middle market loans”) to privately held middle-market companies. Similar to first lien senior secured loans, unitranche loans typically have a first lien on all assets of the borrower, but provide leverage at levels similar to a combination of first lien and second lien and/or subordinated loans. Split-lien loans are loans that otherwise satisfy the criteria of a first lien loan but which have been structured with a credit facility that is senior in right of payment with respect to working capital assets of the borrower and a term loan that is collateralized by all other assets of the borrower. Depending on market conditions, we expect that at least 90% of our portfolio (including investments purchased with proceeds from borrowings, if any) will be invested in secured middle market loans. It is anticipated that most of these investments will be in core middle market companies, with the remainder in upper middle market companies. The remaining 10% of our portfolio may be invested in higher-returning investments, including, but not limited to, equity securities purchased in conjunction with secured middle market loans and other opportunistic investments (collectively “Opportunistic Investments”), including junior debt, real estate debt and infrastructure credit investments. We expect that the secured middle market loans we invest in will generally have stated maturities of no more than six years.

 

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


We believe our Advisor’s disciplined approach to origination, credit analysis, portfolio construction and risk management should allow us to achieve attractive risk-adjusted returns while preserving investor capital. We anticipate the portfolio will be comprised of a broad mix of loans, with diversity among investment size, industry focus and geography. The Advisor’s team of professionals will conduct in-depth due diligence on prospective investments during the underwriting process and will be heavily involved in structuring the loan’s credit terms of each investment. Once an investment has been made, our Advisor will closely monitor portfolio investments and take a proactive approach identifying and addressing sector or company specific risks. The Advisor maintains a regular dialogue with portfolio company management teams (as well as their financial sponsors, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities.

 


Recent Developments

 

On July 27, 2022,14, 2023, we paid a distribution of $29.00$136 per share to each common stockholder of record as of July 20, 2022.June 30, 2023. The total distribution was $0.3$3.57 million and $0.3$3.53 million was reinvested into the Company through the purchase of 61681 shares of common stock.

 

In addition, on this same date of July 27, 2022, we paidOn August 10, 2023, the previously announcedBoard declared a distribution of $6.80$131 per share to each common stockholder of record as of April 20, 2022.September 29, 2023. The total distribution was $0.1 million and $0.1 million was reinvested into the Company through the purchase of 11will be paid on October 13, 2023.

On August 10, 2023, we sold 4,774 shares of common stock.stock for an aggregate offering price of $25.0 million. KACALP, an affiliate of our Advisor, made an equity contribution of $0.2 million associated with its 1% commitment for this August 10, 2023 share issuance. We have subscription agreements with investors for an aggregate capital commitment of $353.5 million to purchase shares of common stock ($200.5 million is undrawn).

 

On August 10, 2023, the Board accepted James C. Baker, Jr.’s resignation as Chief Executive Officer and elected Douglas L. Goodwillie and Kenneth B. Leonard as Co-Chief Executive Officers, effective August 16, 2023. Mr. Baker’s resignation was not due to any disagreement with us on any matter relating to our operations, policies or practices.

Portfolio and Investment Activity

As of June 30, 2022,2023, we had 4588 debt investments in 2144 portfolio companies with an aggregate fair value of approximately $36.9$140.5 million and an amortized cost of $36.2$137.9 million consisting of first lien senior secured debt investments.

 

As of June 30, 2022,2023, our weighted average total yield to maturity of debt and income producing securities at fair value was 8.3%12.1%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was 8.5%12.4%.

 

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

 

  For the three
months ended
June 30,
2022
($ in millions)		 
New investments:   
Gross new investment commitments $16.4 
Less: investment commitments sold down, exited or repaid (1)  (0.1)
Net investment commitments  16.3 
     
Principal amount of investments funded:    
Private credit investments $12.8 
Liquid credit investments  - 
Total principal amount of investments funded  12.8 
     
Principal amount of investments sold:    
Private credit investments  (0.3)
Liquid credit investments  - 
Total principal amount of investments sold or repaid  (0.3)
     
Number of new investment commitments  17 
Average new investment commitment amount $1.0 
Weighted average maturity for new investment commitments (2)  2.6 years 
Percentage of new debt investment commitments at floating rates  100.0%
Percentage of new debt investment commitments at fixed rates  0.0%
Weighted average interest rate of new investment commitments  8.0%
Weighted average spread over benchmark rate of new floating rate investment commitments  6.3%
Weighted average interest rate on investment sold or paid down  7.3%
  For the three months ended   
  June 30,
2023
($ in millions)		  June 30,
2022
($ in millions)		 
New investments:      
Gross new investments commitments $9.0  $16.4 
Less: investment commitments sold down, exited or repaid(1)  (3.8)  (0.1)
Net investment commitments  5.2   16.3 
         
Principal amount of investments funded:        
Private credit investments $12.8  $12.8 
Liquid credit investments  -   - 
Total principal amount of investments funded  12.8   12.8 
         
Principal amount of investments sold / repaid:        
Private credit investments  (3.3)  (0.3)
Liquid credit investments  -   - 
Total principal amount of investments sold or repaid  (3.3)  (0.3)
         
Number of new investment commitments  3   17 
Average new investment commitment amount $3.0  $1.0 
Weighted average maturity for new investment commitments(2)  5.5 years   2.6 years 
Percentage of new debt investment commitments at floating rates  100.0%  100.0%
Percentage of new debt investment commitments at fixed rates  0.0%  0.0%
Weighted average interest rate of new investment commitments(3)  12.1%  8.0%
Weighted average spread over benchmark rate of new floating rate investment commitments  6.9%  6.3%
Weighted average interest rate on investment sold or paid down(4)  11.7%  7.3%

 

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

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

(3)Based on the rate in effect at June 30, 2023 per our Consolidated Schedule of Investments for new commitments entered into during the quarter.
(4)Based on the underlying rate if still held at June 30, 2023.  For those investments sold or paid down in full during the year, based on the rate in effect at the time of sale or paid down.

 

Beginning with the three months ended March 31, 2022, we


We use Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of itsour portfolio companies. As of December 31, 2021, we used GICS, Level 2 – Industry Group.

 


The tablestable below describedescribes long-term investments by industry composition based on fair value as of June 30, 20222023 and December 31, 2021:2022.

 

June 30,
2022
Health care providers & services31.3%
Commercial services & supplies14.1%
Trading companies & distributors9.6%
Software8.1%
Food products7.4%
Building products6.2%
Diversified telecommunication services4.8%
Auto components4.7%
Electronic equipment, instruments & components4.0%
Leisure products3.9%
Machinery2.6%
Wireless telecommunication services1.8%
Aerospace & defense0.8%
Chemicals0.7%
Asset management & custody banks0.0%
Total100.0%
  June 30,
2023		  December 31,
2022		 
       
Trading companies & distributors  18.8%  15.4%
Food products  12.7%  12.6%
Health care providers & services  12.5%  12.6%
Commercial services & supplies  10.4%  6.6%
IT services  6.8%  9.0%
Professional services  5.7%  7.6%
Leisure products  4.5%  1.2%
Containers & packaging  3.7%  5.2%
Aerospace & defense  3.5%  4.5%
Biotechnology  3.0%  3.8%
Wireless telecommunication services  2.6%  3.4%
Chemicals  2.2%  0.2%
Machinery  2.1%  2.8%
Software  2.1%  2.8%
Textiles, apparel & luxury goods  2.0%  2.6%
Automobile components  1.9%  1.6%
Insurance  1.8%  1.2%
Diversified telecommunication services  1.3%  1.6%
Health care equipment & supplies  1.2%  1.6%
Electronic equipment, instruments & components  1.0%  1.4%
Capital Markets  0.2%  -%
Building products  -%  2.1%
Asset management & custody banks  -%  0.2%
   100.0%  100.0%

 

December 31,
2021
Health care equipment & services39.8%
Food & beverage22.7%
Consumer durables & apparel19.9%
Telecommunication services8.0%
Capital goods6.0%
Software & services3.6%
Total100.0%

Results of Operations

 

Investment Income

 

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


The following table represents the operating results for the three and six months ended June 30, 2023 and 2022. For

  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2023  2022  2023  2022 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Total investment income $4.12  $0.62  $7.62  $0.96 
Less: Net expenses  (0.49)  (0.35)  (1.04)  (0.65)
Net investment income  3.63   0.27   6.58   0.31 
Net realized gains (losses) on investments  -   -   -   - 
Net change in unrealized gains (losses) on investments  (0.12)  0.21   0.37   0.44 
Net increase (decrease) in net assets resulting from operations $3.51  $0.48  $6.95  $0.75 

Investment Income

Investment income for the three and six months ended June 30, 2021, our only results consisted of initial organization costs of $0.12023 totaled $4.1 million and $0.3$7.6 million, respectively. We commenced investment operationsrespectively, and consisted primarily of interest income on December 16, 2021.

  For the three
months ended
June 30,
2022
($ in millions)		  For the six
months ended
June 30,
2022
($ in millions)		 
Total investment income $0.62  $0.96 
Less: Net expenses  (0.35)  (0.65)
Net investment income  0.27   0.31 
Net realized gains (losses) on investments  -   - 
Net change in unrealized gains (losses) on investments  0.21   0.44 
Net increase (decrease) in net assets resulting        
from operations $0.48  $0.75 

Investment Income

our debt investments. Investment income for the three and six months ended June 30, 2022 totaled $0.6 million and $0.9$1.0 million, respectively, and consisted primarily of interest income on our debt investments.

 

Expenses

 

Operating expenses for the three and six months ended June 30, 2023 and 2022 waswere as follows. Forfollows:

  For the three months ended
June 30,		  For the six months ended
June 30,		 
  2023  2022  2023  2022 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Interest and debt financing expenses $0.03  $0.04  $0.14  $0.06 
Management fees  0.26   0.06   0.48   0.09 
Other operating expenses  0.16   0.19   0.35   0.38 
Deferred offering costs  -   0.03   -   0.07 
Directors fees  0.04   0.03   0.07   0.05 
Total expenses $0.49  $0.35  $1.04  $0.65 

Total expenses for the three and six months ended June 30, 2021, our only results consisted2023 included zero of initial organizationdeferred offering costs, of $0.1 million and $0.3 million, respectively. We commenced investment operations on December 16, 2021.

  For the three
months ended
June 30,
2022
($ in millions)		  For the six
months ended
June 30,
2022
($ in millions)		 
Interest and debt financing expenses $0.04  $0.06 
Management fees  0.06   0.09 
Other operating expenses  0.19   0.38 
Deferred offering costs  0.03   0.07 
Directors fees  0.03   0.05 
Total expenses $0.35  $0.65 

Total expenses for the three and six months ended June 30, 2022 included $0.03 million and $0.07 million of deferred offering costs, respectively.

 

Net Unrealized Gains (Losses) on Investments

 

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

  For the three months ended
June 30,		  For the six months ended  
June 30,		 
  2023  2022  2023  2022 
  ($ in millions)  ($ in millions)  ($ in millions)  ($ in millions) 
Unrealized gains on investments $0.45  $0.23  $1.25  $0.46 
Unrealized (losses) on investments  (0.57)  (0.02)  (0.88)  (0.02)
Net change in unrealized gains (losses) on investments $(0.12) $0.21  $0.37  $0.44 


The change in unrealized depreciationappreciation for the three and six months ended June 30, 2023 and 2022 wastotaled $0.45 million and $0.23 million, respectively, which primarily attributablerelated to accretion of discounts on investments. We commenced investment operations on December 16, 2021.our investments in the following tables.

 

  For the three
months ended
 June 30,
2022
($ in millions)		  For the six
months ended
June 30,
2022
($ in millions)		 
Unrealized gains on investments $0.23  $0.46 
Unrealized (losses) on investments  (0.02)  (0.02)
Net change in unrealized gains (losses) on investments $0.21  $0.44 

  For the
three months
ended		 
  June 30,
2023		 
  ($ in millions) 
Portfolio Company    
Light Wave Dental Management LLC $0.21 
Alcami Corporation (Alcami)  0.08 
BLP Buyer, Inc. (Bishop Lifting Products)  0.07 
American Equipment Holdings LLC  0.03 
Allentown, LLC  0.02 
BR PJK Produce, LLC (Keany)  0.02 
Improving Acquisition LLC  0.01 
MacNeill Pride Group  0.01 
Total Unrealized Appreciation $0.45 

  For the
three months
ended		 
  June 30,
2022		 
  ($ in millions) 
Portfolio Company    
Allentown, LLC $0.03 
Atria Wealth Solutions, Inc.  0.04 
Centerline Communications, LLC  0.03 
CGI Automated Manufacturing, LLC  0.02 
Light Wave Dental Management LLC  0.03 
AIDC Intermediate Co 2, LLC (Peak Technologies)  0.05 
Process Insights, Inc.  0.03 
Total Unrealized Appreciation $0.23 

The change in unrealized depreciation for the three and sixmonths ended June 30, 2023 totaled $0.57 million, which was primarily related to our investments in the following table.

The change in unrealized depreciation for the three months ended June 30, 2022 total $0.02, million, respectively, which was primarily due to accretion of discounts on investments.

  For the
three months
ended		 
  June 30,
2023		 
  ($ in millions) 
Portfolio Company   
Siegel Egg Co., LLC $(0.13)
BCDI Meteor Acquisition, LLC (Meteor)  (0.06)
IF&P Foods, LLC (FreshEdge)  (0.05)
Genuine Cable Group, LLC  (0.05)
Improving Acquisition LLC  (0.04)
CGI Automated Manufacturing, LLC  (0.03)
American Soccer Company, Incorporated (SCORE)  (0.03)
Centerline Communications, LLC  (0.02)
Light Wave Dental Management LLC  (0.02)
AIDC Intermediate Co 2, LLC (Peak Technologies)  (0.01)
Other portfolio companies  (0.13)
Total Unrealized Depreciation $(0.57)


The change in unrealized appreciation for the three and six months ended June 30, 2023 and 2022 totaled $0.23 million$1.25 and $0.46 million, respectively, which primarily related to our investments in the following tables:

  For the
six months
ended		 
  June 30,
2023		 
  ($ in millions) 
Portfolio Company    
Light Wave Dental Management LLC $0.21 
Engineered Fastener Company, LLC (EFC International)  0.16 
Krayden Holdings, Inc.  0.14 
Worldwide Produce Acquisition, LLC  0.14 
Alcami Corporation (Alcami)  0.11 
VENUplus Inc. (f/k/a CTM Group, Inc.)  0.07 
BLP Buyer, Inc. (Bishop Lifting Products)  0.07 
American Equipment Holdings LLC  0.06 
Domain Information Services Inc. (Integris)  0.06 
DISA Holdings Corp. (DISA)  0.04 
Other portfolio companies  0.19 
Total Unrealized Appreciation $1.25 

  For the
six months
ended		 
  June 30,
2022		 
  ($ in millions) 
Portfolio Company    
Atria Wealth Solutions, Inc.  0.04 
BLP Buyer, Inc. (Bishop Lifting Products)  0.05 
Centerline Communications, LLC  0.03 
CGI Automated Manufacturing, LLC  0.05 
Light Wave Dental Management LLC  0.03 
MacNeill Pride Group  0.03 
OMH-HealthEdge Holdings, LLC  0.06 
AIDC Intermediate Co 2, LLC (Peak Technologies)  0.05 
Process Insights, Inc.  0.03 
Vehicle Accessories, Inc.  0.02 
Other portfolio companies  0.07 
Total Unrealized Appreciation $0.46 


The change in unrealized depreciation for the six months ended June 30, 2023 totaled $0.88 million, which primarily related to our investments in the following table. We commenced investment operations

The change in unrealized depreciation for the six months ended June 30, 2022 totaled $0.02 million, which was primarily due to accretion of discounts on December 16, 2021.investments.

  For the
six months
ended		 
  June 30,
2023		 
  ($ in millions) 
Portfolio Company    
Siegel Egg Co., LLC $(0.14)
Genuine Cable Group, LLC  (0.08)
Domain Information Services Inc. (Integris)  (0.08)
BCDI Meteor Acquisition, LLC (Meteor)  (0.06)
IF&P Foods, LLC (FreshEdge)  (0.06)
Centerline Communications, LLC  (0.04)
Improving Acquisition LLC  (0.04)
AIDC Intermediate Co 2, LLC (Peak Technologies)  (0.04)
American Soccer Company, Incorporated (SCORE)  (0.04)
DISA Holdings Corp. (DISA)  (0.03)
Other portfolio companies  (0.27)
Total Unrealized Depreciation $(0.88)

 

  For the three
months ended
June 30,
2022
($ in millions)		 
Portfolio Company   
Allentown, LLC $0.03 
Atria Wealth Solutions, Inc.  0.04 
Centerline Communications, LLC  0.03 
CGI Automated Manufacturing, LLC  0.02 
Light Wave Dental Management LLC  0.03 
Peak Technologies  0.05 
Process Insights, Inc.  0.03 
Total Unrealized Appreciation $0.23 

  For the six
months ended
June 30,
2022
($ in millions)		 
    
Atria Wealth Solutions, Inc. $0.04 
BLP Buyer, Inc. (Bishop Lifting Products)  0.05 
Centerline Communications, LLC  0.03 
CGI Automated Manufacturing, LLC  0.05 
Light Wave Dental Management LLC  0.03 
MacNeill Pride Group  0.03 
OMH-HealthEdge Holdings, LLC  0.06 
Peak Technologies  0.05 
Process Insights, Inc.  0.03 
Vehicle Accessories, Inc.  0.02 
Other portfolio companies  0.07 
Total Unrealized Appreciation $0.46 

Financial Condition, Liquidity and Capital Resources

 

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

 

In accordance with the 1940 Act, we are required to meet a coverage ratio of total assets (less total liabilities other than indebtedness) to total borrowings and other senior securities (and any preferred stock that we may issue in the future) of at least 150%. If this ratio declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so. As of June 30, 2023 and December 31, 2022, our asset coverage ratios were not meaningful, as we didonly had $3.2 million and $0.7 million, respectively, borrowed under our subscription credit facility. We do not have any borrowings.routinely use leverage, and there are many days when there are no borrowings outstanding under our subscription credit facility.

 

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

 

As of June 30, 2022,2023, we had $3.2 million borrowed under our subscription credit facility and had cash and cash equivalents of $16.8 million (including short-term investments). As of August 11, 2022, we had$1.5 million. We do not routinely use leverage, and there are many days when there are no borrowings outstanding under our Subscription Credit Agreementsubscription credit facility. As of August 10, 2023, we did not have any borrowings outstanding under our subscription credit facility and had cash and cash equivalents of $6.1 million (including short-term investments).$1.9 million.

 

Capital Contributions

 

During the six months ended June 30, 2023, we issued and sold 4,775 shares of our common stock related to capital called at an aggregate purchase price of $25.0 million. During the six months ended June 30, 2022, we issued and sold 1,996 shares of our common stock related to capital called at an aggregate purchase price of $10.0 million. As of August 11, 2022,10, 2023, we had aggregate capital commitments of $353.5 million and undrawn capital commitments from investors of $300.5$200.5 million ($53.0153.0 million or 15.0%43.3% funded).



Credit Facility

 

Subscription Credit FacilityFacility.. On February 25, 2022, As of June 30, 2023, we entered intoare party to a senior secured revolving credit facility (the “Subscription Credit Facility”) that has a total commitment of $25 million and a maturity date of February 25, 2023.22, 2024.  The Subscription Credit Facility permits us to borrow up to $25 million, subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting various eligibility requirements. The interest rate on the Subscription Credit Facility is equal to SOFR plus an applicable spread of 1.975% per annum with no floor. We are also required to pay a commitment fee of 0.25% per annum on any unused portion of the Subscription Credit Facility.

 

Contractual Obligations

A summary of our significant contractual principal payment obligations related to the repayment of our outstanding indebtedness at June 30, 2023 is as follows:

  Payments Due by Period ($ in millions) 
  Total  Less than
1 year		  1-3 years  3-5 years  After
5 years		 
Subscription Credit Facility $3.2  $3.2  $   -  $    -  $    - 
Total contractual obligations $3.2  $3.2  $-  $-  $- 

 

We did not have any indebtedness outstanding under our Subscription Credit Facility as of June 30, 3022.

Off-Balance Sheet Arrangements

 

As of June 30, 20222023 and December 31, 2021,2022, we had an aggregate $11.6$16.4 million and $5.3$21.1 million, respectively, of unfunded commitments to provide debt financing to our portfolio companies. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements. Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities.

 

Critical Accounting Estimates

 

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 and in this Quarterly Report. See Note 2 to our consolidated financial statements for the six months ended June 30, 2022,2023, for more information on our critical accounting policies.

 

Investment Valuation

 

Traded Investments (Level 1 or Level 2)

 

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

 

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


Non-Traded Investments (Level 3)

 

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

 

 ●Investment Team Valuation Designee. The applicable investments arewill be valued no less frequently than quarterly by senior professionals of Kayne Anderson who are responsible for the portfolio investments.Advisor, with new investments valued at the time such investment was made. The value of each portfolio company orLevel 3 investment will be initially reviewed by the investment professionalspersons responsible for such portfolio company or investment and, for non-traded investments (i.e., illiquid securities/instruments),investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs will be used to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of Company investments, including by specifying the particular functions for which they are responsible, and will be valued no less frequently than quarterly, with new investments valued atreasonably segregate fair value determinations from the timeportfolio management of the Company such investment was made.that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments.

 

 ●Investment Team Valuation Documentation. Preliminary valuation conclusions will be determined by our executive officers. Such valuation and supporting documentation is submitted to the Audit Committee (a committee of our Board) and our Board on a quarterly basis.

●Audit Committee. The Audit Committee meets to consider the valuations submitted by our executive officers at the end of each quarter. Between meetings of the Audit Committee, our executive officers are authorized to make valuation determinations. All valuation determinations of the Audit Committee are subject to ratification by our Board at its next regular meeting.

●Valuation Firm. Quarterly, a third-party valuation firmsfirm engaged by our Board reviewthe Advisor reviews the valuation methodologies and calculations employed for each of ourthe Company’s investments that we havethe Advisor has placed on the “watch list” and approximately 25% of ourthe Company’s remaining investments. TheseThe third-party valuation firmsfirm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. We expect theThe quarterly report issued by thesethe third-party valuation firmsfirm will assist the Board in determiningprovide positive assurance on the fair values of the investments reviewed.

 

 ●Board DeterminationOversight. OurThe Board meetshas appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to consider the valuations provided by our executive officers and the Audit Committee and ratify valuations for the applicable investments. Our Board considers the report provided by the third-party valuation firms in reviewing and determining in good faithreview the fair value determinations, processes and written reports of the applicable portfolio investments.Advisor as part of the Board’s oversight responsibilities.

 

The Board of Directors is ultimately responsible for the determination, in good faith, of the fair value of our portfolio investments.

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

 

Revenue Recognition

 

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

 

Related Party Transactions

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


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

 

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


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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

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

 

Assuming that the consolidated statement of assets and liabilities as of June 30, 20222023 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact ($ in millions) of hypothetical base rate changes in interest rate (considering interest rate floors for floating rate instruments).

 

Change in Interest Rates Increase (Decrease) in Interest Income  Increase (Decrease) in Interest Expense  Net Increase (Decrease) in Net Investment Income 
Down 25 basis points $(0.1) $-  $(0.1)
Up 75 basis points $0.3  $-  $0.3 
Up 100 basis points $0.4  $-  $0.4 
Up 200 basis points $0.7  $                  -  $0.7 
Up 300 basis points $1.1  $-  $1.1 
Change in Interest Rates Increase
(Decrease) in
Interest
Income		  Increase
(Decrease) in
Interest
Expense		  Net Increase
(Decrease) in
Net
Investment
Income		 
Down 200 basis points $(2.8) $(0.1) $(2.7)
Down 100 basis points $(1.4) $(0.0) $(1.4)
Up 100 basis points $1.4  $0.0  $1.4 
Up 200 basis points $2.8  $0.1  $

2.7

 

 

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

 

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

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of June 30, 20222023 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in RuleRules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic United States Securities and Exchange Commission (the “SEC”) filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’sSEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

 

Internal Control Over Financial Reporting

 

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


PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

 

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

 

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

 

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

Item 1A. Risk Factors.

 

In addition to the other information set forth in this report, you should carefully consider the risk factors described below and in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including risk factors related to the ongoing COVID-19 pandemic,2022, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

 

Global economic, politicalOur business is dependent on bank relationships and market conditions, including uncertaintyrecent strain on the banking system may adversely impact us.

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

 

The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.


 

For example, the COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets.

 

In addition, the continuing conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.

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

 

As set forth in the table below (dollars in thousands, except per share and share amounts), during the six months ended June 30, 2022,2023, we issued and sold 1,9964,775 shares of common stock at an aggregate offering amount of approximately $10.0$25.0 million. The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof and previously reported by us on our current reports on Form 8-K. The Company relied, in part, upon representations from the investors in the subscription agreements that each investor was an accredited investor as defined in Regulation D under the Securities Act. We did not engage in general solicitation or advertising, and did not offer securities to the public, in connection with such issuances and sales.

 

Common stock issue date Offering
price per
share		  Common stock
shares issued		  Aggregate
offering
amount		 
June 29, 2022 $5,011   1,996  $10,000 
Common stock issue date Offering
price per
share		  Common
stock shares
issued		  Aggregate
offering
amount		 
February 28, 2023 $5,236   4,775  $25,000 

Item 3. Default Upon Senior Securities.

 

None.

Item 4. Mine Safety Disclosures.

 

Not applicable.

Item 5. Other Information.

 

None.


Item 6. Exhibits.

 

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

 

Exhibit Index

3.1Exhibit Index Certificate of Incorporation (1)
3.2*Amended and Restated Bylaws
10.1Investment Advisory Agreement (1)
10.2Administration Agreement (1)
10.3License Agreement (1)
10.4Indemnification Agreement (1)
10.5Custody Agreement (1)
10.6Subscription Agreement (1)
   
10.73.1 Subscription Credit Agreement (2)Certificate of Incorporation (1)
  
31.1*3.2 Amended and Restated Bylaws (2)
10.1Investment Advisory Agreement (1)
10.2Administration Agreement (1)
10.3License Agreement (1)
10.4Indemnification Agreement (1)
10.5Custody Agreement (1)
10.6Subscription Agreement (1)
10.7Subscription Credit Agreement (3)
31.1*Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2* Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
32.2* Certification of Chief ExecutiveFinancial 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)101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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

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

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

SIGNATURES

 


SIGNATURES

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

 

 Kayne DL 2021, Inc.
  
Date: August 15, 202214, 2023/s/ James C. Baker, Jr.
 Name: James C. Baker, Jr.
 Title:Chief Executive Officer
(Principal Executive Officer)
  
Date: August 15, 202214, 2023/s/ Terry A. Hart
 Name:Terry A. Hart
 Title:Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

 

 

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