Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The following is a summary of the significant accounting policies of the Company.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well the reported amounts of revenues and expenses during the reporting periods presented. Although management believes these estimates and assumptions to be reasonable, actual results could differ from those estimates and such differences could be material.

Investment Valuation

Pursuant to Rule 2a-5 (the "Rule") under the 1940 Act, the Board of Directors designated the Advisor as the Company's valuation designee (the "Valuation Designee") to perform certain fair value functions, including performing fair value determinations and has approved policies and procedures adopted by the Advisor to seek to ensure compliance with the requirements of the Rule.

Investments are recorded at fair value in accordance with GAAP, based upon the principles and methods of valuation set forth in the policies adopted by the Valuation Designee and approved by the Board of Directors. Fair value is generally defined as the amount for which an investment would be sold in an orderly transaction between market participants at the measurement date.

All investments are valued at least quarterly based on quotations or other affirmative pricing from independent third-party sources, with the exception of investments priced directly by the Valuation Designee which in the aggregate comprise less than 5% of the capitalization of the Company. Investments listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued using the closing price on the date of valuation.

2. Summary of Significant Accounting Policies (Continued)

Investments not listed on a recognized exchange or market quotation system, but for which reliable market quotations are readily available are valued using prices provided by a nationally recognized pricing service or by using quotations from broker-dealers.

Investments for which market quotations are either not readily available or are determined to be unreliable are priced at fair value using affirmative valuations performed by independent valuation services approved by the Valuation Designee or, for investments aggregating less than 5% of the total assets of the Company, using valuations determined directly by the Valuation Designee. Such valuations are determined under documented valuation policies and procedures reviewed and approved by a committee established by the Valuation Designee (the "Valuation Committee").

Generally, to increase objectivity in valuing the investments, the Valuation Designee will utilize external measures of value, such as public markets or third-party transactions, whenever possible. The Valuation Designee’s valuation is not based on long-term work-out value, immediate liquidation value, nor incremental value for potential changes that may take place in the future. The values assigned to investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated. Such circumstances may include macroeconomic, geopolitical and other events and conditions that may significantly impact the profitability or viability of businesses in which the Company is invested, and therefore may significantly impact the return on the Company’s investments. The foregoing policies apply to all investments, including any in companies and groups of affiliated companies aggregating more than 5% of the Company’s assets.

Fair valuations of investments in each asset class are determined using one or more methodologies including market quotations, the market approach, income approach, or, in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Such information may include observed multiples of earnings and/or revenues at which transactions in securities of comparable companies occur, with appropriate adjustments for differences in company size, operations or other factors affecting comparability.

The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. The discount rates used for such analyses reflect market yields for comparable investments, considering such factors as relative credit quality, capital structure, and other factors.

In following these approaches, the types of factors that may be taken into account also include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, comparable costs of capital, the principal market in which the investment trades and enterprise values, among other factors.

Investments may be categorized based on the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels are recognized as of the beginning of the reporting period.

At June 30, 2024, the Company’s investments were categorized as follows:


Level	Basis for Determining Fair Value	Bank Debt (1)		Equity Securities		Total
2	Other direct and indirect observable market inputs (2)	$	4,856,092	$	—	$	4,856,092
3	Independent third-party valuation sources that employ significant unobservable inputs		252,611,393		1,410,374		254,021,767
3	Advisor valuations with significant unobservable inputs		—		224		224
Total		$	257,467,485	$	1,410,598	$	258,878,083

(1)

Includes senior secured loans

(2)

For example, quoted prices in inactive markets or quotes for comparable investments

2. Summary of Significant Accounting Policies (Continued)

Unobservable inputs used in the fair value measurement of Level 3 investments as of June 30, 2024 included the following:


Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.) (1)
Bank Debt	$	232,177,651	Income approach	Discount rate	9.7%-33.5% (12.9%)
		11,440,066	Market quotations	Indicative bid/ask quotes	1-3 (1)
		5,174,655	Market comparable companies	Revenue Multiples	0.4x-1.7x (0.5x)
		3,819,022	Market comparable companies	EBITDA multiples	3.3x - 9.5x (4.5x)
Equity		1,410,598	Option Pricing Model	EBITDA/Revenue multiples	2.0x -7.3 (2.0x)
				Implied volatility	45.0%-60.0% (59.7%)
				Term	1.0 year-3.0 years (3.0 years)
	$	254,021,991

(1)

Weighted by fair value

Certain fair value measurements may employ more than one valuation technique, with each valuation technique receiving a relative weight between 0% and 100%. Generally, a change in an unobservable input may result in a change to the value of an investment as follows:


Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
Discount rate	Decrease	Increase
Revenue multiples	Increase	Decrease
EBITDA multiples	Increase	Decrease
Book value multiples	Increase	Decrease
Implied volatility	Increase	Decrease
Term	Increase	Decrease
Yield	Increase	Decrease

2. Summary of Significant Accounting Policies (Continued)

Changes in investments categorized as Level 3 during the three months ended June 30, 2024 were as follows:


	Independent Third-Party Valuation
	Bank Debt			Equity Securities			Total
Beginning balance	$	255,259,966		$	1,506,254		$	256,766,220
Net realized and unrealized gains (losses)		(4,434,353	)		(123,080	)		(4,557,433	)
Acquisitions (1)		13,660,295			27,200			13,687,495
Dispositions		(9,711,451	)		—			(9,711,451	)
Transfers into Level 3 (2)		1,109,425			—			1,109,425
Transfers out of Level 3 (3)		(3,272,489	)		—			(3,272,489	)
Ending balance	$	252,611,393		$	1,410,374		$	254,021,767
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(4,366,942	)	$	(123,080	)	$	(4,490,022	)

__________________________

(1)

Includes payments received in kind and accretion of original issue and market discounts

(2)

Comprised of one investment that was transferred from Level 2 due to reduced number of market quotes

(3)

Comprised of two investments that were transferred to Level 2 due to increased observable market activity


	Valuation Designee Valuation
	Bank Debt		Equity Securities		Total
Beginning balance	$	—	$	224	$	224
Ending balance	$	—	$	224	$	224

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	-	$	-	$	-

Changes in investments categorized as Level 3 during the six months ended June 30, 2024 were as follows:


	Independent Third-Party Valuation
	Bank Debt			Equity Securities			Total
Beginning balance	$	244,121,603		$	354,947		$	244,476,550
Net realized and unrealized gains (losses)		(4,771,358	)		(1,679,932	)		(6,451,290	)
Acquisitions (1)		20,778,645			2,735,359			23,514,004
Dispositions		(10,581,911	)		—			(10,581,911	)
Transfers into Level 3 (2)		3,522,652			—			3,522,652
Transfers out of Level 3 (3)		(458,238	)		—			(458,238	)
Ending balance	$	252,611,393		$	1,410,374		$	254,021,767

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(5,866,973	)	$	(1,679,946	)	$	(7,546,919	)

_________________________

(1) Includes payments received in kind and accretion of original issue and market discounts

(2) Comprised of three investments that were transferred from Level 2 due to reduced number of market quotes

(3) Comprised of one investment that was transferred to Level 2 due to increased observable market activity

2. Summary of Significant Accounting Policies (Continued)


	Valuation Designee Valuation
	Bank Debt		Equity Securities		Total
Beginning balance	$	—	$	224	$	224
Ending balance	$	—	$	224	$	224
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	—	$	—	$	—

__________________________

At December 31, 2023, the Company’s investments were categorized as follows:


Level	Basis for Determining Fair Value	Bank Debt (1)		Equity Securities		Total
2	Other direct and indirect observable market inputs (2)	$	9,399,141	$	—	$	9,399,141
3	Independent third-party valuation sources that employ significant unobservable inputs		244,121,603		354,947		244,476,550
3	Advisor valuations with significant unobservable inputs		—		224		224
Total		$	253,520,744	$	355,171	$	253,875,915

(1)

Includes senior secured loans

(2)

For example, quoted prices in inactive markets or quotes for comparable investments

Unobservable inputs used in the fair value measurement of Level 3 investments as of December 31, 2023 included the following:


Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.) (1)
Bank Debt	$	232,076,026	Income approach	Discount rate	9.6%-29.7% (12.9%)
		8,598,975	Market quotations	Indicative bid/ask quotes	1 (1)
		2,888,723	Market comparable companies	Revenue Multiples	0.6x-0.9x (0.8x)
		557,879	Option Pricing Model	EBITDA/Revenue multiples	1.9x (1.9x)
				Implied volatility	65.0% (65.0%)
				Term	1.3 years (1.3 years)
Equity		354,947	Option Pricing Model	EBITDA/Revenue multiples	0.6x-15.3x (9.6x)
				Implied volatility	50.0%-65.0% (55.9%)
				Term	1.0 year-2.5 years (2.0 years)
	$	244,476,550

__________________________

(1)

Weighted by fair value

2. Summary of Significant Accounting Policies (Continued)

Changes in investments categorized as Level 3 during the three months ended June 30, 2023 were as follows:


	Independent Third-Party Valuation
	Bank Debt			Equity Securities			Total
Beginning balance	$	219,500,190		$	426,727		$	219,926,917
Net realized and unrealized gains (losses)		1,151,732			(41,696	)		1,110,036
Acquisitions (1)		11,993,145			—			11,993,145
Dispositions		(5,926,605	)		—			(5,926,605	)
Transfers into Level 3 (2)		2,096,245			—			2,096,245
Transfers out of Level 3 (3)		(3,933,539	)					(3,933,539	)
Ending balance	$	224,881,168		$	385,031		$	225,266,199
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	1,028,574		$	(41,697	)	$	986,877

__________________________

(1)

Includes payments received in kind and accretion of original issue and market discounts

(2)

Comprised of two investments that were transferred from Level 2 due to reduced number of market quotes

(3) Comprised of three investments that were transferred to Level 2 due to increased observable market activity

Changes in investments categorized as Level 3 during the six months ended June 30, 2023 were as follows:


	Independent Third-Party Valuation
	Bank Debt			Equity Securities			Total
Beginning balance	$	202,878,661		$	549,038		$	203,427,699
Net realized and unrealized gains (losses)		804,274			(164,007	)		640,267
Acquisitions (1)		28,086,246			—			28,086,246
Dispositions		(6,886,420	)		—			(6,886,420	)
Transfers into Level 3 (2)		3,931,946			—			3,931,946
Transfers out of Level 3 (3)		(3,933,539	)		—			(3,933,539	)
Ending balance	$	224,881,168		$	385,031		$	225,266,199
Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	626,328		$	(164,007	)	$	462,321

_________________________

(1) Includes payments received in kind and accretion of original issue and market discounts

(2) Comprised of three investments that were transferred from Level 2 due to reduced number of market quotes

(3) Comprised of three investments that were transferred to Level 2 due to increased observable market activity

Investment Transactions

Investment transactions are recorded on the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the investment transaction. Realized gains and losses on investments are recorded based on the specific identification method, which typically allocates the highest cost inventory to the basis of investments sold.

Cash and Cash Equivalents

Cash consists of amounts held in accounts with the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of generally 60 days or less and may not be insured by the FDIC or may exceed federally insured limits. Cash equivalents are classified as Level 1 in the GAAP valuation hierarchy. At June 30, 2024, included in cash and cash equivalents was

2. Summary of Significant Accounting Policies (Continued)

$7.2 million (2.6% of net assets) held in the JPMorgan U.S. Treasury Plus Money Market Fund with a 7-day yield of 5.14%. At December 31, 2023, included in cash and cash equivalents was $1.8 million (0.8% of net assets) held in the JPMorgan U.S. Treasury Plus Money Market Fund with a 7-day yield of 5.20%. There was no restricted cash at June 30, 2024 or December 31, 2023.

Restricted Investments

The Company may invest without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally may be resold to institutional investors in transactions exempt from registration or to the public if the securities are registered. Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted investments is included at the end of the Schedules of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.

Foreign Currency Investments

The Company may invest in instruments traded in foreign countries and denominated in foreign currencies. Such positions are converted at the respective closing foreign exchange rates in effect at June 30, 2024 and December 31, 2023 and reported in U.S. dollars. Purchases and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S. dollars based on the foreign exchange rates in effect on the respective dates of such transactions. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments. The Company did not hold any investments denominated in foreign currency at June 30, 2024 and December 31, 2023.

Investments in foreign companies and securities of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. Government. These risks include, among other things, revaluation of currencies, less reliable information about issuers, different transaction clearance and settlement practices, and potential future adverse political and economic developments. Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. Government.

Organization and Offering Costs

Costs incurred to organize the Company are expensed as incurred. During the period from November 30, 2020 (inception) to December 31, 2023, the Company incurred $71,685 in organizational expenses. During the six months ended June 30, 2024, the Company did not incur any additional organizational expenses. From November 30, 2020 through June 30, 2024, the Company had incurred a total of $267,621 in offering costs, of which $249,780 has been charged to paid-in capital. Remaining offering costs will be charged to paid-in capital as additional capital commitments are called. The Company will not bear more than $1.0 million for organization and offering costs.

Deferred Debt Issuance Costs

Certain costs incurred in connection with the issuance of debt of the Company were capitalized and are being amortized on a straight-line basis over the estimated life of the respective instruments. The impact of utilizing the straight-line amortization method versus the effective-interest method is not material to the operations of the Company.

Revenue Recognition

Interest and dividend income, including income paid in kind, is recorded on an accrual basis, when such amounts are considered collectible. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

2. Summary of Significant Accounting Policies (Continued)

Certain debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Debt investments are generally placed on non-accrual status when it is probable that principal or interest will not be collected according to the contractual terms. When a debt investment is placed on non-accrual status, accrued and unpaid interest (including any accrued PIK interest) is generally reversed, and discount accretion or premium amortization is discontinued. The Company does not reverse previously capitalized PIK income. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the Company’s judgment regarding collectability of the outstanding principal and interest. Non-accrual investments are restored to accrual status if past due principal and interest are paid or, in the Company’s judgement, the repayment of the remaining contractual principal and interest is expected. The Company may opt not to place a distressed debt investment on non-accrual status if principal and interest are secured through sufficient collateral value and are in the process of collection through legal actions or other efforts that are expected to result in repayment of principal and interest.

Income Taxes

The Company intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the financial statements. In accordance with ASC Topic 740 - Income Taxes, the Company recognizes in its financial statements the effect of a tax position when it is determined that such position is more likely than not, based on the technical merits, to be sustained upon examination.

The tax returns of the Company remain open for examination by tax authorities for a period of three years from the date they are filed. No such examinations are currently pending. Management has analyzed tax laws and regulations and their application to the Company as of June 30, 2024, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the financial statements.

The final tax characterization of distributions is determined after the fiscal year and is reported on Form 1099 and in the Company’s annual report to stockholders. Distributions can be characterized as ordinary income, capital gains and/or return of capital. As of December 31, 2023, the Company had no non-expiring capital loss carryforwards available to offset future realized capital gains.

As of December 31, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:


	December 31, 2023
Tax Cost	$	259,777,529

Gross Unrealized Appreciation		2,053,159
Gross Unrealized Depreciation		(7,954,773	)
Net Unrealized Appreciation (Depreciation)	$	(5,901,614	)

Recent Accounting Pronouncements

In March 2020 and January 2021, the FASB issued ASU No. 2020-04 and ASU No. 2021-01, respectively, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional

2. Summary of Significant Accounting Policies (Continued)

expedients for and that are retained through the end of the hedging relationship. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset date of Topic 848, which deferred the sunset date of this guidance to December 31, 2024. The Company is currently evaluating the impact of adopting ASU 2020-04 on its financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”),” which clarifies guidance for fair value measurement of an equity security subject to a contractual sale restriction and establishes new disclosure requirements for such equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and for interim periods within those fiscal years, with early adoption permitted. The Company has concluded that this guidance will not have a material impact on its consolidated financial statements.