Audax Credit BDC Inc. (the “Company”) is a Delaware corporation that was formed on January 29, 2015. The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, effective with the Company’s taxable year ended December 31, 2015, the Company has elected to be treated for federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).

The Company commenced business operations on July 8, 2015, the date on which the Company made its first investment. The Company has been formed for the purpose of investing primarily in the debt of leveraged, non-investment grade middle market companies, with the principal objective of generating income and capital appreciation. The Company’s investment strategy is to invest primarily in first lien senior secured loans and selectively in second lien loans to middle market companies. During the period prior to July 8, 2015, the Company was a development stage company, as defined in Paragraph 915-10-05,Development Stage Entity, of the Financial Accounting Standards Board’s (“FASB’s”) Accounting Standards Codification, as amended (“ASC”). During this time, the Company was devoting substantially all of its efforts to establishing its business and its planned principal operations had not commenced. All losses incurred during the period prior to July 8, 2015 have been considered a part of the Company’s development stage activities.

Audax Management Company (NY), LLC (the “Adviser”) is the investment adviser of the Company. The Adviser is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended.

As an investment company, the accompanying financial statements of the Company are prepared in accordance with the investment company accounting and reporting guidance of ASC Topic 946, “Financial Services – Investment Companies,” as amended (“ASC Topic 946”), which incorporates the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X, as well as generally accepted accounting principles in the United States of America (“GAAP”).

Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management of the Company, the unaudited financial results included herein contain all adjustments, consisting solely of normal accruals, considered necessary for the fair presentation of financial statements for the interim period included herein. The current period’s results of operations are not necessarily indicative of the operating results to be expected for future periods. The accounting records of the Company are maintained in U.S. dollars.

The preparation of financial statements in conformity with GAAP requires management of the Company to make estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ, and these differences could be material.

Cash and cash equivalents are stated at fair value. The Company considers all highly liquid investments purchased with maturities of three months or less and money market mutual funds to be cash equivalents. No cash equivalent balances were held at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. At such dates, cash was not subject to any restrictions on withdrawal.

The Company is responsible for investment expenses, legal expenses, auditing fees and other expenses related to the Company’s operations. Such fees and expenses, including expenses initially incurred by the Adviser, may be reimbursed by the Company.

The Company conducts the valuation of the Company’s investments, pursuant to which the Company’s net asset value is determined, at all times consistent with GAAP and the 1940 Act. The Company’s Board of Directors (the “Board of Directors”), with the assistance of the Company’s Audit Committee (the “Audit Committee”), determines the fair value of the Company’s investments, for investments with a public market and for investments with no readily available public market, on at least a quarterly basis, in accordance with the terms of ASC Topic 820, “Fair Value Measurement ~~and Disclosures~~,” (“ASC 820”). The Company’s valuation procedures are set forth in more detail below.

ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same – to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

~~Level 1~~— Inputs to the valuation methodology are quoted prices available in active markets for identical financial instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these instruments, even in situations where the Company holds a large position, and a sale could reasonably be expected to impact the quoted price.

~~Level 2~~— Inputs to the valuation methodology are quoted prices in markets that are not active or for which all significant inputs are either directly or indirectly observable as of the measurement date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in markets that are not active, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

~~Level 3~~— Inputs to the valuation methodology are unobservable and significant to the overall fair value measurement, and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments in this category include investments in privately held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

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.

Pursuant to the framework set forth above, the Company values securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded in active markets.

Pricing services aggregate, evaluate and report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes, model-based valuations and internal fundamental analysis and research. When doing so, the Company determines whether the quote obtained is sufficient ~~according to~~in accordance with GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.

Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the ~~Company’s~~ Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. Inputs for these valuation techniques include relative credit information, observed market movement, industry sector information, and other market data, which may include benchmarking of comparable securities, issuer spreads, reported trades, and reference data, such as market research publications, when available. The process used to determine the applicable value is as follows:

(i) ~~each~~Each portfolio company or investment is initially valued by the investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable ~~inputs;~~ inputs. Additionally, as a part of the Company’s valuation process, the Adviser may employ the services of one or more independent valuation firms engaged by the Company;

(ii) ~~preliminary~~Preliminary valuation conclusions are documented and discussed with the Company’s senior management and members of the ~~Company’s~~ Adviser’s valuation team;

(iii) ~~the Company’s~~The Audit Committee reviews the assessments of the Adviser or independent valuation firm (to the extent applicable) and provides the ~~Company’s~~ Board of Directors with recommendations with respect to the fair value of the investments in the Company’s portfolio; and

(iv) ~~the Company’s~~The Board of Directors discusses the valuation recommendations of the ~~Company’s~~ Audit Committee and determines the fair value of the investments in the Company’s portfolio in good faith based on the input of the Adviser, the independent valuation firm (to the extent applicable) and in accordance with the Company’s valuation policy.

The ~~Company’s~~ Audit Committee’s recommendation of fair value is generally based on its assessment of the following factors, as relevant:

the nature and realizable value of any collateral;

call features, put features and other relevant terms of debt;

the portfolio company’s ability to make payments;

the portfolio company’s actual and expected earnings and discounted cash flow;

prevailing interest rates for like securities and expected volatility in future interest rates;

the markets in which the portfolio company does business and recent economic and/or market events; and

comparisons to publicly traded securities.

Investment performance data utilized are the most recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.

Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include the following:

private placements and restricted securities that do not have an active trading market;

securities whose trading has been suspended or for which market quotes are no longer available;

debt securities that have recently gone into default and for which there is no current market;

securities whose prices are stale; and

securities affected by significant events.

The ~~Company’s~~ Board of Directors is responsible for the determination, in good faith, of the fair value of the Company’s portfolio investments.

Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the

Company’s financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the Company’s financial statements.

Security transactions are recorded on the trade date (the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which is when all terms of the transactions have been defined).

Realized gains and losses on investments are determined based on the identified cost method.

Refer to Note 3 —Investments for additional information regarding fair value measurements and the Company’s application of ASC 820.

Interest Income Recognition

Interest income, adjusted for amortization of premium, acquisition costs, and amendment fees and the accretion of original issue discount (“OID”), are recorded on an accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 120 days or more past due, or if the Company’s qualitative assessment indicates that the debtor is unable to service its debt or other obligations, the Company will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, the Company will remain contractually entitled to this interest. Interest payments received on non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current or, due to a restructuring, the interest income is deemed to be collectible. As of September 30, 2020, the Company had one investment on non-accrual which totaled 0.28% and 0.18% of its total portfolio at cost and fair market value, respectively. The Company did not have any investments on non-accrual as of December 31, 2019.

The Company currently holds loans in the portfolio that contain OID and expects to hold loans in the future that contain payment-in-kind (“PIK”) provisions. The Company recognizes OID for loans originally issued at a discount and recognizes the income over the life of the obligation based on an effective yield calculation. PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over the life of the obligation. Therefore, the actual collection of PIK income may be deferred until the time of debt principal repayment. To maintain the ability to be taxed as a RIC, the Company may need to pay out of both OID and PIK non-cash income amounts in the form of distributions, even though the Company has not yet collected the cash on either.

As of September 30, 2020, the Company held 186 investments in loans with OID. The Company accrued OID income of $102,083 and $282,729 for the three and nine months ended September 30, 2020, respectively. The unamortized balance of OID on debt investments as of September 30, 2020, totaled $1,901,454. As of December 31, 2019, the Company held ~~154~~162 investments in loans with OID. The Company accrued OID income of $64,494 and $199,813 for the three and nine months ended September 30, 2019, respectively. The unamortized balance of OID ~~on debt~~ investments as of December 31, 2019, totaled $1,733,632.

As of September 30, ~~2019, totaled $1,620,239. As of December 31, 2018,~~2020, the Company held ~~130~~three investments ~~in loans with OID.~~which had a PIK interest component. The Company ~~accrued OID~~recorded $39,222 and $75,145 of PIK interest income ~~of $29,447 and $106,120~~ for the three and nine months ended September 30, ~~2018,~~2020, respectively. ~~The unamortized balance of OID investments as of December 31, 2018, totaled $1,038,045.~~

As of September 30, 2019, the Company held one investment which had a PIK interest component. The Company recorded $0 and $32,822 of PIK interest income for three and nine months ended September 30, 2019. The Company did not hold any investments as of September 30, 2018 which had a PIK interest component. The Company did not record any PIK interest income for the three and nine months ended September 30, ~~2018.~~2019, respectively.

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company held ~~$11,393,113~~$24,955,930 and ~~$17,715,145~~$5,506,217 cash and cash equivalents, respectively. For the three and nine months ended September 30, 2020, the Company earned $1,058 and $31,053, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations. For the three and nine months ended September 30, 2019, the Company earned $28,722 and $122,237, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations. For the three and nine months ended September 30, 2018, the Company earned $32,938 and $101,045, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations.

Other Income Recognition

The Company generally records prepayment fees and amendment fees upon receipt of cash or as soon as the Company becomes aware of the ~~prepayment.~~prepayment or amendment.

Dividend income on equity investments is accrued to the extent that such amounts are expected to be collected and if the Company has the option to collect such amounts in cash.

Prepayment fees, amendment fees and dividend income are ~~both~~ accrued in other income in the accompanying statements of operations.

For the three and nine months ended September 30, 2020, the Company accrued $14,577 and $153,950 of other income, respectively, related to amendment fees. For the three and nine months ended September 30, 2019, the Company accrued $5,214 and $38,364 of other income, respectively, related to amendment and documentation fees. ~~For the three and nine months ended September 30,~~

New Accounting Pronouncements

In August 2018, the ~~Company accrued $26,985~~FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13") which introduces new fair value disclosure requirements as well as eliminates and ~~$75,547~~modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of ~~other income, respectively, related to amendment fees.~~ASU 2018-13 did not have a material impact on the Company’s disclosures.

Note 3. Investments

Fair Value

In accordance with ASC 820, the ~~Company’s investments’~~ fair value of the Company’s investments is determined to be the price that would be received for an investment in a current sale, assuming an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date as described in Note–2 –Significant Accounting Policies.

As of September 30, ~~2019, $198,606,866~~2020, $182,630,994 of the Company’s investments were valued using unobservable inputs, and ~~$124,450,681~~$158,857,789 were valued using observable inputs. During the nine months ended September 30, 2020, $15,434,694 transferred into Level 3 due to a decrease in observable prices in the market and $74,210,909 transferred out of Level 3 due to the liquidity in the market and transparency of inputs.

As of December 31, 2019, $249,452,590 of the Company’s investments were valued using unobservable inputs, and $81,422,321 were valued using observable inputs. During the nine months ended September 30, 2019, $61,185,683 into Level 3 due to a decrease in observable prices in the marker and $20,300,196 ~~of investments~~ transferred ~~into and~~ out of Level 3 ~~respectively.~~

Asdue to the liquidity in the market and transparency of ~~December 31, 2018, $142,020,074 of the Company’s investments were valued using unobservable inputs, and $122,642,807 were valued using observable~~ inputs. ~~During the nine months ended September 30, 2018, $42,655,009 and $15,924,734 of investments transferred into and out of Level 3, respectively.~~

The following ~~tables present~~table presents the Company’s investments carried at fair value as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, by caption on the Company’s accompanying statements of assets and liabilities and by security type.

	Assets at Fair Value as of September 30, 2020
	Level 1		Level 2		Level 3		Total
First lien debt	$	-	$	154,504,124	$	156,281,866	$	310,785,990
Second lien debt		-		4,353,665		25,544,189		29,897,854
Equity and Preferred Shares		-		-		804,939		804,939
Total	$	-	$	158,857,789	$	182,630,994	$	341,488,783

Assets at Fair Value as of September 30, 2019
Level 1 Level 2 Level 3 Total
First lien debt $ - $ 122,346,835 $ 180,890,814 $ 303,237,649
Second lien debt - 1,783,800 17,315,785 19,099,585
Equity and Preferred Shares - 320,046 400,267 720,313
Total $ - $ 124,450,681 $ 198,606,866 $ 323,057,547

Assets at Fair Value as of December 31, 2018
Level 1 Level 2 Level 3 Total
First lien debt $ - $ 118,541,537 $ 124,975,467 $ 243,517,004
Second lien debt 4,101,270 17,044,607 21,145,877
Total $ - $ 122,642,807 $ 142,020,074 $ 264,662,881

	Assets at Fair Value as of December 31, 2019
	Level 1		Level 2		Level 3		Total
First lien debt	$	-	$	81,422,321	$	227,392,535	$	308,814,856
Second lien debt		-		-		21,340,798		21,340,798
Equity and Preferred Shares		-		-		719,257		719,257
Total	$	-	$	81,422,321	$	249,452,590	$	330,874,911

In accordance with ASC 820, the following table provides quantitative information about the Level 3 fair value measurements of the Company’s investments as of September 30, ~~2019.~~2020. The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for the particular input.

Fair Valuation Unobservable Weighted
Value Technique Inputs⁽¹⁾ Range⁽²⁾ Average⁽³⁾

First lien debt $ 177,921,808 Matrix Pricing Senior Leverage 2.75x - 7.11x 4.88 x
Total Leverage 3.27x - 9.43x 5.97 x
Interest Coverage 1.15x - 4.56x 2.17 x
Debt Service Coverage 0.94x - 3.67x 1.81 x
TEV Coverage 1.24x - 4.65x 2.35 x
Liquidity 24.13% - 788.54% 141.48 %
Spread Comparison 275bps - 650bps 425 bps

2,969,006 Market Analysis Senior Leverage 6.10x - 7.72x 7.04 x
Total Leverage 7.45x - 10.20x 9.05 x
Interest Coverage 1.09x - 1.40x 1.22 x
Debt Service Coverage 0.94x - 1.26x 1.07 x
TEV Coverage 1.02x - 1.07x 1.04 x
Liquidity 86.71% - 146.19% 121.29 %
Spread Comparison 400bps - 475bps 431 bps

Second lien debt 16,106,054 Matrix Pricing Senior Leverage 4.45x - 6.11x 5.67 x
Total Leverage 4.45x - 6.25x 5.67 x
Interest Coverage 1.61x - 3.33x 2.19 x
Debt Service Coverage 1.42x - 2.97x 1.93 x
TEV Coverage 1.47x - 2.41x 1.91 x
Liquidity 27.60% - 287.69% 133.57 %
Spread Comparison 675bps - 1025bps 765 bps

1,209,731 Market Analysis Senior Leverage 12.53x 12.53 x
Total Leverage 17.66x 17.66 x
Interest Coverage 3.86x 3.86 x
Debt Service Coverage 1.30x 1.30 x
TEV Coverage 0.61x 0.61 x
Liquidity 73.70% 73.70 %
Spread Comparison 800bps 800 bps

Total $ 198,206,599

As of September 30, 2020

Fair

Valuation

Unobservable

Weighted

Value

Technique

Inputs ⁽¹⁾

Range ⁽²⁾

Average ⁽³⁾

First lien debt

143,094,935

Matrix Pricing

Senior Leverage

2.80x - 10.54x

5.12x

Total Leverage

2.80x - 10.54x

6.20x

Interest Coverage

0.87x - 5.22x

2.31x

Debt Service Coverage

0.80x - 4.04x

1.93x

TEV Coverage

0.78x - 6.88x

2.42x

Liquidity

33.77% - 333.00%

154.79%

Spread Comparison

275bps - 700bps

449bps

12,235,585

Market Analysis

Senior Leverage

5.39x - 18.12x

7.64x

Total Leverage

5.70x - 19.75x

9.21x

Interest Coverage

0.26x - 2.34x

1.57x

Debt Service Coverage

0.26x - 2.34x

1.27x

TEV Coverage

0.44x - 1.82x

1.47x

Liquidity

33.06% - 226.94%

133.59%

Spread Comparison

350bps - 650bps

478bps

Second lien debt

24,275,585

Matrix Pricing

Senior Leverage

4.61x - 8.99x

6.10x

Total Leverage

4.61x - 8.99x

6.10x

Interest Coverage

1.17x - 3.19x

2.13x

Debt Service Coverage

1.01x - 2.83x

1.82x

TEV Coverage

0.87x - 2.51x

1.77x

Liquidity

85.32% - 257.41%

151.86%

Spread Comparison

650bps - 950bps

773bps

Total

179,606,105

~~(1)~~

(1)

For any portfolio company, the unobservable input "Liquidity" is a fraction, expressed as a percentage, the numerator of which is the sum of the company's undrawn revolving credit facility capacity plus cash, and the denominator of which is the total amount that may be borrowed under the company's revolving credit facility. The unobservable input "Spread Comparison" is a comparison of the spread over LIBOR for each investment to the spread over LIBOR for general leveraged loan transactions.


(2)		Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority. The range may be a single data point when there is only one company represented in a specific credit seniority.


(3)		Inputs are weighted based on the fair value of the investments included in the range.

The table above does not include ~~$400,267~~$3,024,889 of debt, equity and preferred shares which management values using other unobservable inputs, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA multiples, as well as other qualitative information, including company specific information.

In accordance with ASC 820, the following table provides quantitative information about the Level 3 fair value measurements of the Company’s investments as of December 31, ~~2018.~~2019. The weighted average calculations in the table below are based on the fair value balances for all debt related calculations for the particular input.

Fair Valuation Unobservable Weighted
Value Technique Inputs⁽¹⁾ Range⁽²⁾ Average⁽³⁾
First lien debt $ 120,756,091 Matrix Pricing Senior Leverage 1.98x - 6.39x 4.67 x
Total Leverage 2.48x - 8.79x 5.97 x
Interest Coverage 1.21x - 4.33x 2.12 x
Debt Service Coverage 1.04x - 2.82x 1.73 x
TEV Coverage 1.31x - 4.84x 2.45 x
Liquidity 8.64% - 608.88% 142.62 %
Spread Comparison 275bps - 650bps 427 bps

4,219,376 Market Analysis Senior Leverage 5.05x - 8.14x 6.88 x
Total Leverage 5.76x - 10.80x 8.74 x
Interest Coverage 0.95x - 2.17x 1.45 x
Debt Service Coverage 0.87x - 1.78x 1.24 x
TEV Coverage 1.11x - 2.04x 1.49 x
Liquidity 63.01% - 89.50% 78.70 %
Spread Comparison 500bps - 525bps 510 bps

Second lien debt 17,044,607 Matrix Pricing Senior Leverage 4.25x - 7.05x 6.05 x
Total Leverage 4.25x - 7.05x 6.05 x
Interest Coverage 1.42x - 3.48x 2.07 x
Debt Service Coverage 1.01x - 3.10x 1.75 x
TEV Coverage 1.28x - 2.17x 1.65 x
Liquidity 18.96% - 283.00% 136.11 %
Spread Comparison 675bps - 1025bps 783 bps

Total $ 142,020,074

As of December 31, 2019

Fair

Valuation

Unobservable

Weighted

Value

Technique

Inputs ⁽¹⁾

Range ⁽²⁾

Average ⁽³⁾

First lien debt

224,772,281

Matrix Pricing

Senior Leverage

2.33x - 7.55x

4.89x

Total Leverage

3.10x - 9.79x

6.07x

Interest Coverage

1.14x - 4.80x

2.10x

Debt Service Coverage

0.93x - 3.68x

1.76x

TEV Coverage

1.27x - 5.70x

2.42x

Liquidity

5.75% - 587.90%

141.43%

Spread Comparison

275bps - 650bps

435bps

Second lien debt

20,071,929

Matrix Pricing

Senior Leverage

4.60x - 7.06x

5.87x

Total Leverage

4.60x - 7.06x

5.88x

Interest Coverage

1.54x - 3.21x

2.17x

Debt Service Coverage

1.38x - 2.86x

1.89x

TEV Coverage

1.52x - 2.44x

1.98x

Liquidity

52.00% - 347.60%

149.91%

Spread Comparison

675bps - 1025bps

764bps

Total

244,844,210

~~(1)~~

(1)


(2)		Each range represents the variance of outputs from calculating each statistic for each portfolio company within a specific credit seniority. The range may be a single data point when there is only one company represented in a specific credit seniority.


(3)		Inputs are weighted based on the fair value of the investments included in the range.

The table above does not include $4,608,380 of debt, equity and preferred shares which management values using other unobservable inputs, such as EBITDA and EBITDA multiples, as well as other qualitative information, including company specific information.

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in market yields, discounts ~~rates,~~rate, leverage, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase or decrease in market yields, discount rates or leverage or a an increase/decrease in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a corresponding decrease or increase, respectively, in the fair value of certain of the Company’s investments.

The following tables provide the changes in fair value, broken out by security type, during the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 for all investments for which the Company determines fair value using unobservable (Level 3) factors.

Nine Months Ended September 30, 2020	First lien debt			Second lien debt			Equity and Preferred Shares		Total
Fair Value as of December 31, 2019	$	227,392,535		$	21,340,798		$	719,257	$	249,452,590
Transfers into Level 3		15,434,694			-			-		15,434,694
Transfers out of Level 3		(71,237,159	)		(2,973,750	)		-		(74,210,909	)
Total gains:
Net realized loss^(a)		(1,221,555	)		-			-		(1,221,555	)
Net unrealized (depreciation) appreciation^(b)		(1,110,239	)		(76,159	)		85,682		(1,100,716	)
New investments, repayments and settlements:^(c)
Purchases		13,199,175			7,709,688			-		20,908,863
Settlements/repayments		(21,689,548	)		(472,222	)		-		(22,161,770	)
Net amortization of premiums, PIK, discounts and fees		253,400			15,834			-		269,234
Sales		(4,739,437	)		-			-		(4,739,437	)
Fair Value as of September 30, 2020	$	156,281,866		$	25,544,189		$	804,939	$	182,630,994

	(a)	Included in net realized loss on the accompanying Statement of Operations for the nine months ended September 30, 2020.
	20

Nine Months Ended September 30, 2019 First lien debt Second lien
debt Equity and
Preferred
Shares Total
Fair Value as of December 31, 2018 $ 124,975,467 $ 17,044,607 $ - $ 142,020,074
Transfers into Level 3 59,681,933 1,503,750 - 61,185,683
Transfers out of Level 3 (18,817,071 ) (1,483,125 ) - (20,300,196 )
Total gains:
Net realized gain^(a) 99,771 5,476 - 105,247
Net unrealized (depreciation) appreciation^(b) (267,439 ) 44,955 (400,268 ) (622,752 )
New investments, repayments and settlements:^(c)
Purchases 41,582,955 2,192,231 800,535 44,575,721
Settlements/repayments (26,036,040 ) (2,000,000 ) - (28,036,040 )
Net amortization of premiums, PIK, discounts and fees 170,738 7,891 - 178,629
Sales (499,500 ) - - (499,500 )
Fair Value as of September 30, 2019 $ 180,890,814 $ 17,315,785 $ 400,267 $ 198,606,866

	(b)	Included in net change in unrealized depreciation on the accompanying Statement of Operations for the nine months ended September 30, 2020.

~~(a)~~

(c)

Includes increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.

Nine Months Ended September 30, 2019	First lien debt			Second lien debt			Equity and Preferred Shares			Total
Fair Value as of December 31, 2018	$	124,975,467		$	17,044,607		$	-		$	142,020,074
Transfers into Level 3		59,681,933			1,503,750			-			61,185,683
Transfers out of Level 3		(18,817,071	)		(1,483,125	)		-			(20,300,196	)
Total gains:
Net realized gain^(a)		99,771			5,476			-			105,247
Net unrealized (depreciation) appreciation^(b)		(267,439	)		44,955			(400,268	)		(622,752	)
New investments, repayments and settlements:^(c)
Purchases		41,582,955			2,192,231			800,535			44,575,721
Settlements/repayments		(26,036,040	)		(2,000,000	)		-			(28,036,040	)
Net amortization of premiums, PIK, discounts and fees		170,738			7,891			-			178,629
Sales		(499,500	)		-			-			(499,500	)
Fair Value as of September 30, 2019	$	180,890,814		$	17,315,785		$	400,267		$	198,606,866

	(a)	Included in net realized gain on the accompanyingStatement of Operations for the nine months ended September 30, 2019.

~~(b)~~	(b)	Included in net change in unrealized depreciation on the accompanyingStatement of Operations for the nine months ended September 30, 2019.

(c)

Nine Months Ended September 30, 2018 First lien debt Second lien
debt Total
Fair Value as of December 31, 2017 $ 64,377,922 $ 15,716,499 $ 80,094,421
Transfers into Level 3 41,650,009 1,005,000 42,655,009
Transfers out of Level 3 (14,138,234 ) (1,786,500 ) (15,924,734 )
Total gains:
Net realized gain^(a) 36,410 52,824 89,234
Net unrealized depreciation^(b) (668,474 ) (41,744 ) (710,218 )
New investments, repayments and settlements:^(c)
Purchases 38,535,700 3,354,000 41,889,700
Settlements/repayments (9,540,558 ) (6,606,429 ) (16,146,987 )
Net amortization of premiums, discounts and fees 82,469 5,529 87,998
Sales (894,087 ) - (894,087 )
Fair Value as of September 30, 2018 $ 119,441,157 $ 11,699,179 $ 131,140,336

~~(a)~~		~~Included in net realized gain on the accompanying~~~~Statement of Operations~~ ~~for the nine months ended September 30, 2018.~~

~~(b)~~		~~Included in net change in unrealized depreciation on the accompanying~~~~Statement of Operations~~ ~~for the nine months ended September 30, 2018.~~

~~(c)~~		Includes increases in the cost basis of investments resulting from portfolio investments, the amortization of discounts, and PIK, as well as decreases in the costs basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.

The change in unrealized value attributable to investments still held at September 30, 2020 and 2019 were $(1,542,355) and ~~2018 were~~ $(949,494) ~~and $(868,824)~~, respectively.

Investment Activities

The Company held a total of ~~168~~202 investments with an aggregate fair value of ~~$323,057,547~~$341,488,783 as of September 30, 2020. During the nine months ended September 30, 2020, the Company invested in 40 new investments for a combined $39,542,336 and in existing investments for a combined $12,834,005. The Company also received $27,907,668 in repayments from investments and $6,437,456 from investments sold during the nine months ended September 30, 2020.

The Company held a total of 176 investments with an aggregate fair value of $330,874,911 as of December 31, 2019. During the nine months ended September 30, 2019, the Company invested in 54 new investments for a combined $90,412,665 and in existing investments for a combined $20,244,318. The Company also received $46,240,554 in repayments from investments and $5,017,964 from investments sold during the nine months ended September 30, 2019.

The Company held a total of 144 syndicated investments with an aggregate fair value of $264,662,881 as of December 31, 2018. During the nine months ended September 30, 2018, the Company invested in 60 new syndicated investments for a combined $94,368,626 and in existing investments for a combined $15,112,788. The Company also received $52,782,500 in repayments from investments and $1,390,962 from investments sold during the nine months.

Investment Concentrations

As of September 30, 2020, the Company’s investment portfolio consisted of investments in 174 companies located in 35 states across 22 different industries, with an aggregate fair value of $341,488,783. The five largest investments at fair value as of September 30, 2020 totaled $21,213,433 or 6.21% of the Company’s total investment portfolio as of such date. As of September 30, 2020, the Company’s average investment was $1,733,010 at cost.

As of December 31, 2019, the Company’s investment portfolio consisted of investments in ~~154~~164 companies located in 33 states across 22 different industries, with an aggregate fair value of ~~$323,057,547.~~$330,874,911. The five largest investments at fair value as of ~~September 30,~~December 31, 2019 totaled ~~$23,134,713,~~$21,465,158 or 7.16% of the Company’s total investment portfolio as of such date. As of ~~September 30,~~December 31, 2019, the Company’s average investment was ~~$1,935,441 at cost.~~

As of December 31, 2018, the Company’s investment portfolio consisted of investments in 135 companies located in 34 states across 20 different industries, with an aggregate fair value of $264,662,881. The five largest investments at fair value as of December 31, 2018 totaled $19,719,053, or 7.45% of the Company’s total investment portfolio as of such date. As of December 31, 2018, the Company’s average investment by obligor was $1,927,447$2,028,793 at cost.

The following table outlines the Company’s investments by security type as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

September 30, 2019 December 31, 2018
Cost Percentage of
Total
Investments Fair Value Percentage of
Total
Investments Cost Percentage
of Total
Investments Fair Value Percentage
of Total
Investments
First lien debt $ 304,702,138 93.71 % $ 303,237,649 93.86 % $ 245,071,304 92.04 % $ 243,517,004 92.01 %
Second lien debt 19,331,406 5.95 % 19,099,585 5.92 % 21,208,995 7.96 % 21,145,877 7.99 %
Total Debt Investments 324,033,544 99.66 % 322,337,234 99.78 % 266,280,299 100.00 % 264,662,881 100.00 %
Equity and Preferred Shares 1,120,581 0.34 % 720,313 0.22 % - 0.00 % - 0.00 %
Total Equity Investments 1,120,581 0.34 % 720,313 0.22 % - 0.00 % - 0.00 %
Total Investments $ 325,154,125 100.00 % $ 323,057,547 100.00 % $ 266,280,299 100.00 % $ 264,662,881 100.00 %

	September 30, 2020										December 31, 2019
			Percentage of					Percentage of					Percentage					Percentage
			Total					Total					of Total					of Total
	Cost		Investments			Fair Value		Investments			Cost		Investments			Fair Value		Investments
First lien debt	$	318,377,852		90.95	%	$	310,785,990		91.01	%	$	310,257,401		93.25	%	$	308,814,856		93.33	%
Second lien debt		30,569,567		8.73	%		29,897,854		8.76	%		21,344,024		6.41	%		21,340,798		6.46	%
Total Debt Investments		348,947,419		99.68	%		340,683,844		99.77	%		331,601,425		99.66	%		330,155,654		99.79	%
Equity and Preferred Shares		1,120,581		0.32	%		804,939		0.23	%		1,120,581		0.34	%		719,257		0.21	%
Total Equity Investments		1,120,581		0.32	%		804,939		0.23	%		1,120,581		0.34	%		719,257		0.21	%
Total Investments	$	350,068,000		100.00	%	$	341,488,783		100.00	%	$	332,722,006		100.00	%	$	330,874,911		100.00	%

Investments at fair value consisted of the following industry classifications as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	September 30, 2019					December 31, 2018					September 30, 2020					December 31, 2019
			Percentage of					Percentage of					Percentage of					Percentage of
Industry	Fair Value		Total Investments			Fair Value		Total Investments			Fair Value		Total Investments			Fair Value		Total Investments
Healthcare & Pharmaceuticals	$	77,982,471		24.14	%	$	47,520,070		17.95	%	$	72,569,221		21.25	%	$	76,108,451		23.00	%
High Tech Industries		57,935,417		17.93			45,031,546		17.01			64,178,581		18.79			58,327,844		17.63
Services: Business		43,807,979		13.56			36,858,954		13.93			45,402,430		13.30			44,376,771		13.41
Chemicals, Plastics & Rubber												28,042,227		8.21			28,747,162		8.69
Services: Consumer		25,325,396		7.84			15,942,194		6.02			19,709,417		5.77			25,757,966		7.78
Chemicals, Plastics & Rubber		24,196,630		7.49			27,716,784		10.47
Aerospace & Defense												19,320,069		5.66			12,911,355		3.90
Banking, Finance, Insurance & Real Estate		11,547,582		3.57			12,125,388		4.58			15,581,549		4.56			10,766,682		3.25
Aerospace & Defense		8,946,601		2.77			5,910,069		2.23
Consumer Goods: Non-durable		8,473,659		2.62			7,914,631		2.99
Containers, Packaging & Glass		8,263,436		2.56			5,586,643		2.11
Transportation: Cargo		8,021,960		2.48			9,133,648		3.45
Wholesale		7,218,603		2.23			8,518,879		3.22
Capital Equipment		6,751,120		2.09			7,256,899		2.74			10,096,648		2.96			7,720,891		2.33
Construction & Building		6,370,540		1.97			6,410,816		2.42			9,583,136		2.81			6,989,790		2.11
Containers, Packaging & Glass												8,793,240		2.57			7,941,602		2.40
Consumer Goods: Non-durable												8,079,292		2.37			8,472,022		2.56
Automotive		6,319,238		1.96			6,221,047		2.35			7,239,147		2.12			6,294,153		1.90
Media: Advertising, Printing & Publishing		5,365,347		1.66			5,615,196		2.12
Wholesale												7,028,587		2.06			7,219,568		2.18
Transportation: Cargo												7,028,298		2.06			7,192,803		2.17
Forest Products & Paper		4,412,811		1.37			2,947,992		1.12			5,171,247		1.51			4,379,293		1.32
Beverage, Food & Tobacco		3,930,313		1.22			5,909,736		2.23			3,910,300		1.15			3,930,263		1.19
Hotel, Gaming & Leisure		3,070,174		0.95			3,204,041		1.21
Media: Advertising, Printing & Publishing												3,740,287		1.10			5,124,527		1.55
Consumer Goods: Durable		2,315,304		0.72			2,344,598		0.90			2,280,340		0.67			2,309,428		0.70
Retail		1,319,466		0.41			2,493,750		0.95			1,253,955		0.37			1,286,070		0.39
Metals & Mining		987,604		0.31			-		-			972,987		0.28			987,604		0.31
Hotel, Gaming & Leisure												951,346		0.27			3,503,815		1.06
Health Care Equipment & Services		495,896		0.15			-		-			556,479		0.16			526,851		0.17
	$	323,057,547		100.00	%	$	264,662,881		100.00	%	$	341,488,783		100.00	%	$	330,874,911		100.00	%

Investments at fair value were included in the following geographic regions of the United States as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

											September 30, 2020					December 31, 2019
	September 30, 2019					December 31, 2018							Percentage of					Percentage of
			Percentage of					Percentage of					Total					Total
Geographic Region	Fair Value		Total Investments			Fair Value		Total Investments			Fair Value		Investments			Fair Value		Investments
Northeast	$	85,599,015		26.50	%	$	61,537,340		23.25	%	$	85,824,540		25.13	%	$	87,146,010		26.34	%
Midwest		66,123,905		20.47			63,396,284		23.95			74,389,638		21.78			68,357,102		20.66
West		45,579,905		14.11			40,497,635		15.30			56,500,337		16.55			52,320,288		15.81
Southwest		41,652,309		12.89			27,587,594		10.42			39,668,478		11.62			42,469,487		12.84
East												39,469,099		11.56			39,053,575		11.80
Southeast		39,186,370		12.13			36,204,672		13.68			37,089,380		10.86			35,674,150		10.78
East		37,670,569		11.66			25,540,011		9.65
Northwest		4,087,070		1.27			4,639,772		1.75			4,027,586		1.18			4,083,800		1.23
South		3,158,404		0.97			3,193,759		1.21			2,556,018		0.75			1,770,499		0.54
Other^(a)		-		-			2,065,814		0.79			1,963,707		0.57			-		-
Total Investments	$	323,057,547		100.00	%	$	264,662,881		100.00	%	$	341,488,783		100.00	%	$	330,874,911		100.00	%

~~(a)~~

(a)

The borrower for ~~Livingston, Livingston International Inc.~~Sophos, Surf Holdings S.a.r.l., is located in ~~Canada.~~ United Kingdom.

The geographic region indicates the location of the headquarters of the Company’s portfolio companies. A portfolio company may have a number of other business locations in other geographic regions.

Investment Principal Repayments

The following table summarizes the contractual principal repayments and maturity of the Company’s investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, ~~2019:~~2020:

For the Fiscal Years Ending December 31:	Amount			Amount
2019	$	608,243
2020		3,296,855		$	754,813
2021		14,451,797			8,813,633
2022		25,161,177			21,775,107
2023		43,518,195			46,356,875
2024					80,285,522
Thereafter		238,617,516			192,862,923
Total contractual repayments		325,653,783			350,848,873
Adjustments to cost basis on debt investments^(a)		(1,620,239	)		(1,901,454	)
Total Cost Basis of Debt Investments Held at September 30, 2019:	$	324,033,544
Total Cost Basis of Debt Investments Held at September 30, 2020:				$	348,947,419

(a)

Adjustment to cost basis related to unamortized balance of OID investments.

COVID-19 Developments

During the three and nine months ended September 30, 2020 and subsequent to September 30, 2020, the COVID-19 pandemic has had a significant impact on the U.S. economy. Certain of the Company's portfolio companies have been adversely impacted by the effects of the COVID-19 pandemic, which have resulted in a material adverse impact on the Company's net asset value, net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of the Company's portfolio companies and may continue to adversely affect the Company’s future net asset value, net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of the Company's portfolio companies.

Note 4. Related Party Transactions

Investment Advisory Agreement

The Company has entered into an investment advisory agreement (the “Investment Advisory Agreement”) with the Adviser. In accordance with the Investment Advisory Agreement, the Company pays the Adviser certain fees as compensation for its services, such fees consisting of a base management fee and an incentive fee (the “Incentive Fee”). The services the Adviser provides to the Company, subject to the overall supervision of the ~~Company’s~~ Board of Directors, include managing the day-to-day operations of, and providing investment services to, the Company. The Company also entered into a management fee waiver agreement with the Adviser (the “Waiver Agreement”), which the Company or the Adviser may terminate upon 60 days’ prior written notice.

Management Fee

The base management fee is calculated at an annual rate of 1.0% of the Company’s average gross assets including cash and any temporary investments in cash-equivalents, including U.S. government securities and other high-quality investment grade debt investments that mature in 12 months or less from the date of investment, payable quarterly in arrears on a calendar quarter basis.

Pursuant to the Waiver Agreement, the Adviser has agreed to waive the right to receive the base management fee to the extent necessary so that the base management fee payable under the Investment Advisory Agreement equals, and is calculated in the same manner as if, the base management fee otherwise payable by the Company were calculated at an annual rate equal to 0.65% (instead of an annual rate of 1.00%).

For the three and nine months ended September 30, 2020, the Company recorded base management fees of $874,188 and $2,697,570, respectively, and waivers to the base management fees of $305,966 and $944,150, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2019, the Company recorded base management fees of $820,094 and $2,367,188, respectively, and waivers to the base management fees of $287,033 and $828,516, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2018, the Company recorded base management fees of $631,114 and $1,792,598, respectively, and waivers to the base management fees of $220,890 and $627,408, respectively, as set forth within the accompanying statements of operations.

Incentive Fee

The Incentive Fee has two parts, as follows: ~~one~~the first part of the Incentive Fee is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses accrued for the quarter (including the base management fee, expenses payable under the Administration Agreement (as defined below) and any interest expense on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee).

The Company determines pre-incentive fee net investment income in accordance with GAAP, including, in the case of investments with a deferred interest feature, such as debt instruments with PIK interest, OID securities and accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.0% per quarter (4.0% annualized). The Company determines its average gross assets during each fiscal quarter and calculates the base management fee payable with respect to such amount at the end of each fiscal quarter. As a result, a portion of the Company’s net investment income is included in its gross assets for the period between the date on which such income is earned and the date on which such income is distributed. Therefore, the Company’s net investment income used to calculate part of the Incentive Fee is also included in the amount of the Company’s gross assets used to calculate the 1.0% annual base management fee. The Company pays its Adviser an Incentive Fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

	·	no amount is paid on the income-portion of the Incentive Fee in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle of 1.0% (4.0% annualized);

	·	100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.1765 % in any calendar quarter (4.706% annualized). The Company refers to this portion of its pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 1.1765%) as the “catch-up” provision. The catch-up is meant to provide the ~~Company’s~~ Adviser with 15.0% of the pre-incentive fee net investment income as if a hurdle rate did not apply if net investment income exceeds 1.1765% in any calendar quarter (4.706% annualized); and

	·	15.0% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.1765% in any calendar quarter (4.706% annualized) is payable to the ~~Company’s~~ Adviser.

Pursuant to the Waiver Agreement, the Adviser has agreed to waive its right to receive the Incentive Fee on pre-incentive fee net investment income to the extent necessary so that such Incentive Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on pre-incentive fee net investment income, if such Incentive Fee (i) were calculated based upon the Adviser receiving 10.0% (instead of 15.0%) of the applicable pre-incentive fee net investment income and (ii) did not include any “catch-up” feature in favor of the Adviser.

The second part of the Incentive Fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 15.0% of the Company’s realized capital gains, if any, on a cumulative basis from June 16, 2015, the effective date of the ~~Registration Statement,~~Company’s registration statement on Form 10 (file no. 000-55426), through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain Incentive Fees with respect to each of the investments in the Company’s portfolio.

Pursuant to the Waiver Agreement, the Adviser has agreed to waive the right to receive the Incentive Fee on capital gains to the extent necessary so that such portion of the Incentive Fee equals, and is calculated in the same manner as, the corresponding Incentive Fee on capital gains, if such portion of the Incentive Fee were calculated based upon the Adviser receiving 10.0% (instead of 15.0%).

In addition, pursuant to the Waiver Agreement, the Adviser has agreed to waive the right to receive both components of the Incentive Fee to the extent necessary so that it does not receive Incentive Fees which are attributable to income and gains of the Company that exceed an annualized rate of 12.0% in any calendar quarter.

The waivers from the Adviser will remain effective until terminated earlier by either party onupon 60 days’ prior to written notice.

For the three and nine months ended September 30, 2020, the Company recorded incentive fees related to net investment income of $356,461 and $1,641,419, respectively. Offsetting the incentive fees were waivers of the incentive fees of $320,815 and $1,437,466 for the three and nine months ended September 30, 2020, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2019, the Company recorded incentive fees related to net investment income of $680,250 and $1,939,486, respectively. Offsetting the incentive fees were waivers of the incentive fees of $543,178 and $1,553,628 for the three and nine months ended September 30, 2019, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2018, the Company recorded incentive fees related to net investment income of $517,587 and $1,392,563, respectively. Offsetting the incentive fees were waivers of the incentive fees of $411,767 and $1,142,863 for the three and nine months ended September 30, 2018, respectively, as set forth within the accompanying statements of operations.

Administrative Fee

The Company has also entered into an administration agreement (the “Administration Agreement”) with Audax Management Company, LLC (the “Administrator”) ~~under~~pursuant to which the Administrator provides administrative services to the Company. Under the Administration Agreement, the Administrator performs, or oversees the performance of administrative services necessary for the operation of the Company, which include being responsible for the financial records which the Company is required to maintain and prepare reports filed with the SEC. In addition, the Administrator assists in determining and publishing the Company’s net asset value, oversees the preparation and filing of the Company’s tax returns and the printing and dissemination of reports to the Company’s stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. The Company reimburses the Administrator for its allocable portion of the costs and expenses incurred by the Administrator for overhead in performance by the Administrator of its duties under the Administration Agreement, including the cost of facilities, office equipment and the Company’s allocable portion of cost of compensation and related expenses of its Chief Financial Officer and Chief Compliance Officer and their respective staffs, as well as any costs and expenses incurred by the Administrator relating to any administrative or operating services provided by the Administrator to the Company. Such costs are reflected as an administrative fee in the accompanying statements of operations.

The Company has also entered into a fee waiver agreement with the Administrator, pursuant to which the Administrator may waive, in whole or in part, its entitlement to receive reimbursements from the Company.

The Company accrued administrative fees of $66,250 and $198,750 for the three and nine months ended September 30, ~~2019,~~2020, respectively, as set forth within the accompanying statements of operations. The Company accrued administrative fees of $66,250 and $198,750 for the three and nine months ended September 30, ~~2018,~~2019, respectively, as set forth within the accompanying statements of operations.

Related Party Fees

Fees due to related parties as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 on the Company’s accompanying statements of assets and liabilities were as follows:

September 30, 2019 December 31, 2018
Net base management fee due to Adviser $ 533,061 $ 424,873
Net incentive fee due to Adviser 137,072 111,041
Other expenses due to Adviser^(a) - -
        Total fees due to Adviser, net of waivers 670,133 535,914
        Fee due to Administrator, net of waivers 66,250 66,250
              Total Related Party Fees Due $ 736,383 $ 602,164

~~(a) Expenses paid on behalf of the Company by the Adviser~~

	September 30, 2020		December 31, 2019
Net base management fee due to Adviser	$	568,222	$	569,600
Net incentive fee due to Adviser		35,646		118,536
Total fees due to Adviser, net of waivers		603,868		688,136
Fee due to Administrator, net of waivers		66,250		66,250
Total Related Party Fees Due	$	670,118	$	754,386

Note 5. Net Increase in Net Assets Resulting from Operations Per Share of Common Stock:

The following table sets forth the computation of basic and diluted net increase in net assets resulting from operations per weighted average share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018 Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Numerator for basic and diluted net increase in net assets resulting from operations per common share $ 3,753,794 $ 3,248,860 $ 11,338,921 $ 8,552,903
Denominator for basic and diluted weighted average common shares 33,504,019 25,169,922 31,856,849 23,695,104
Basic and diluted net increase in net assets resulting from operations per common share $ 0.11 $ 0.13 $ 0.36 $ 0.36

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Numerator for basic and diluted net increase in net assets resulting from operations per common share	$	9,195,505	$	3,753,794	$	4,420,458	$	11,338,921
Denominator for basic and diluted weighted average common shares		38,265,852		33,504,019		37,528,161		31,856,849
Basic and diluted net increase in net assets resulting from operations per common share	$	0.24	$	0.11	$	0.12	$	0.36

Note 6. Income Tax

The Company has elected to be regulated as a BDC under the 1940 Act, as well as elected to be treated as a RIC under Subchapter M of the Code. As a RIC, the Company generally is not subject to corporate-level U.S. federal income taxes on any ordinary income or capital gains that it timely distributes as dividends for U.S. federal income tax purposes to its stockholders. To qualify to be treated as a RIC, the Company is required to meet certain source of income and asset diversification requirements, and to timely distribute dividends out of assets legally available for distributions to its stockholders of an amount generally equal to at least 90% of the sum of its net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any (i.e., “investment company taxable income,” determined without regard to any deduction for dividends paid), for each taxable year. The amount to be paid out as distributions to the Company’s stockholders is determined by the ~~Company’s~~ Board of Directors and is based on management’s estimate of the fiscal year earnings. Based on that estimate, the Company intends to make the requisite distributions to its stockholders, which will generally relieve the Company from corporate-level U.S. federal income taxes. Although the Company currently intends to distribute its net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, recognized in respect of each taxable year as dividends out of the Company’s assets legally available for distribution, the Company in the future may decide to retain for investment and be subject to entity-level income tax on such net capital gains. Additionally, depending on the level of taxable income earned in a taxable year, the Company may choose to carry forward taxable income in excess of current year distributions into the next taxable year and incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company will accrue an excise tax, if any, on estimated excess taxable income as such excess taxable income is earned.

The Company had aggregate distributions declared and paid to its stockholders for the year ended December 31, 2019 of $17,084,202, or $0.52 per share. The tax character of the distributions declared and paid represented $16,941,968 from ordinary income and $142,234 from tax return of capital. The Company had aggregate distributions declared and paid to its stockholders for the year ended December 31, 2018 of $13,002,172, or $0.52 per share. The tax character of the distributions declared and paid represented $12,537,786 from ordinary income, $450,049 capital gains, and $14,337 from tax return of capital. ~~The~~

During the nine months ended September 30, 2020, the Company ~~had aggregate distributions~~ declared and paid ~~to its stockholders for the year ended December 31, 2017~~distributions of ~~$8,915,421,~~$8,125,607, or ~~$0.47~~$0.215 per share. The tax character of the distributions declared and paid represented ~~$8,199,556~~$8,125,607 from ordinary ~~income, $505,988 capital gains, and $209,867 from tax return of capital.~~

income. During the nine months ended September 30, 2019, the Company declared and paid distributions of $8,306,889, or $0.26 per share. The tax character of the distributions declared and paid represented ~~$8,280,510~~$8,246,864 from ordinary income and $26,379 from capital gains. During the nine months ended September 30, 2018, the Company declared and paid distributions of $5,886,063, or $0.25 per share. The tax character of the distributions declared and paid represented $5,736,266 from ordinary income and $149,797$60,025 from capital gains.

The determination of the tax attributes of the Company’s distributions is made annually at the end of the

Company’s taxable year, based upon the Company’s taxable income for the full taxable year and distributions paid for the full taxable year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full taxable year. The actual tax characteristics of distributions to stockholders will be reported to the Company’s stockholders subject to information reporting after the close of each calendar year on Form 1099-DIV.

As of December 31, ~~2018,~~2019, the components of accumulated net unrealized appreciation on investments and net investment losses and losses on a tax basis as detailed below differ from the amounts reflected in the Company’s statements of assets and liabilities by temporary book/tax differences primarily arising from amortization of organizational expenditures.

~~Temporary Differences~~

	As of December 31, 2018			As of December 31, 2019
Other temporary book/tax differences	$	(233,622	)	$	(213,307	)
Net tax basis unrealized depreciation		(1,617,418	)		(1,847,095	)
Accumulated net realized loss					(670,443	)
Components of tax distributable deficit at period end	$	(1,851,040	)	$	(2,730,845	)

Certain losses incurred by the Company after October 31 of a taxable year are deemed to arise on the first business day of the Company’s next taxable year. The Company did not incur such losses after October 31 of the Company’s taxable year ended December 31, ~~2018.~~2019.

Capital losses are generally eligible to be carried forward indefinitely, and retain their status as short-term or long-term in the manner originally incurred by the ~~company.~~Company. The Company did not maintain any capital losses as of December 31, ~~2018.~~2019. The Company has evaluated tax positions it has taken, expects to take, or that are otherwise relevant to the Company for purposes of determining whether any relevant tax positions would “more-likely-than-not” be sustained by the applicable tax authority in accordance with ASC Topic 740, “Income Taxes,” as modified by ASC Topic 946. The Company has analyzed such tax positions and has concluded that no unrecognized tax benefits should be recorded for uncertain tax positions for taxable years that may be open. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Company’s U.S. federal tax returns for fiscal years ~~2015, 2016,~~ 2017, 2018 and ~~2018~~2019 remain subject to examination by the Internal Revenue Service. The Company records tax positions that are not deemed to meet a more-likely-than-not threshold as tax expenses as well as any applicable penalties or interest associated with such positions. During each of the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, no tax expense or any related interest or penalties were incurred.

Note 7. Equity

On June 23, 2015, an investor made a $140,000,000 capital commitment to the Company. On December 2, 2016, the same investor made an additional capital commitment of $50,000,000. On December 7, 2017, the same investor made an additional capital commitment of $100,000,000. On March 22, 2019, the same investor made an additional capital commitment of $40,000,000. On September 23, 2019, the same investor made an additional capital commitment of $30,000,000. On March 20, 2020, the same investor made an additional capital commitment of $11,200,000. As of September 30, ~~2019, $40,000,000~~2020, $6,200,000 of total capital commitments remained unfunded by the Company’s investors.

The number of ~~Shares~~shares of Common Stock issued and outstanding as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, were ~~33,538,562~~38,343,577 and ~~28,269,649,~~35,109,246, respectively.

The following table details the activity of Stockholders’ Equity for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

Three Months Ended September 30, 2019 Common Stock Capital in Excess
of Par Value Total
Distributable
(Loss) Earnings Total
Stockholders'
Equity
Balance as of June 30, 2019 $ 31,950 $ 304,182,330 $ (2,512,777 ) $ 301,701,503
   Net investment income - - 4,397,403 4,397,403
   Net realized gains from investment transactions - - (826,185 ) (826,185 )
   Net change in unrealized depreciation on investments - - 182,576 182,576
   Issuance of shares 1,589 14,998,411 - 15,000,000
Balance as of September 30, 2019 $ 33,539 $ 319,180,741 $ 1,241,017 $ 320,455,297

Three Months Ended September 30, 2020	Common Stock		Capital in Excess of Par Value		Total Distributable (Loss) Earnings			Total Stockholders' Equity
Balance as of June 30, 2020	$	37,793	$	359,092,751	$	(15,631,499	)	$	343,499,045
Net investment income		-		-		3,798,741			3,798,741
Net realized losses from investment transactions		-		-		(1,039,704	)		(1,039,704	)
Net change in unrealized appreciation on investments		-		-		6,436,468			6,436,468
Issuance of shares		550		4,999,450		-			5,000,000
Balance as of September 30, 2020	$	38,343	$	364,092,201	$	(6,435,994	)	$	357,694,550

Nine Months Ended September 30, 2019 Common Stock Capital in Excess
of Par Value Total
Distributable
(Loss) Earnings Total
Stockholders'
Equity
Balance as of December 31, 2018 $ 28,270 $ 269,246,005 $ (1,851,040 ) $ 267,423,235
   Net investment income - - 12,542,535 12,542,535
   Net realized gains from investment transactions - - (724,454 ) (724,454 )
   Net change in unrealized depreciation on investments - - (479,160 ) (479,160 )
   Issuance of shares 5,269 49,994,731 - 50,000,000
   Distributions to Stockholders - (60,025 ) (8,246,864 ) (8,306,889 )
   Reinvested Dividends - 30 - 30
Balance as of September 30, 2019 $ 33,539 $ 319,180,741 $ 1,241,017 $ 320,455,297

Three Months Ended September 30, 2019	Common Stock		Capital in Excess of Par Value		Total Distributable (Loss) Earnings			Total Stockholders' Equity
Balance as of March 31, 2019	$	31,950	$	304,182,330	$	(2,512,777	)	$	301,701,503
Net investment income		-		-		4,397,403			4,397,403
Net realized losses from investment transactions		-		-		(826,185	)		(826,185	)
Net change in unrealized appreciation on investments		-		-		182,576			182,576
Issuance of shares		1,589		14,998,411		-			15,000,000
Balance as of June 30, 2019	$	33,539	$	319,180,741	$	1,241,017		$	320,455,297

Three Months Ended September 30, 2018 Common Stock Capital in Excess
of Par Value Total
Distributable
(Loss) Earnings Total
Stockholders'
Equity
Balance as of June 30, 2018 $ 25,125 $ 239,263,812 $ (675,354 ) $ 238,613,583
   Net investment income - - 3,344,364 3,344,364
   Net realized gains from investment transactions - - 179,556 179,556
   Net change in unrealized depreciation on investments - - (275,060 ) (275,060 )
   Issuance of shares 1,037 9,998,963 - 10,000,000
Balance as of September 30, 2018 $ 26,162 $ 249,262,775 $ 2,573,506 $ 251,862,443

Nine Months Ended September 30, 2020	Common Stock		Capital in Excess of Par Value		Total Distributable (Loss) Earnings			Total Stockholders' Equity
Balance as of December 31, 2019	$	35,110	$	334,095,408	$	(2,730,845	)	$	331,399,673
Net investment income		-		-		12,195,676			12,195,676
Net realized losses from investment transactions		-		-		(1,043,096	)		(1,043,096	)
Net change in unrealized depreciation on investments		-		-		(6,732,122	)		(6,732,122	)
Issuance of shares		3,233		29,996,767		-			30,000,000
Distributions to Stockholders		-		-		(8,125,607	)		(8,125,607	)
Reinvested Dividends		-		26		-			26
Balance as of September 30, 2020	$	38,343	$	364,092,201	$	(6,435,994	)	$	357,694,550

Nine Months Ended September 30, 2018 Common Stock Capital in Excess
of Par Value Total
Distributable
(Loss) Earnings Total
Stockholders'
Equity
Balance as of December 31, 2017 $ 21,989 $ 209,266,921 $ (93,334 ) $ 209,195,576
   Net investment income - - 9,032,923 9,032,923
   Net realized gains from investment transactions - - 397,313 397,313
   Net change in unrealized appreciation on investments - - (877,333 ) (877,333 )
   Issuance of shares 4,173 39,995,827 - 40,000,000
   Distributions to Stockholders - - (5,886,063 ) (5,886,063 )
   Reinvested Dividends - 27 - 27
Balance as of September 30, 2018 $ 26,162 $ 249,262,775 $ 2,573,506 $ 251,862,443

Nine Months Ended September 30, 2019	Common Stock		Capital in Excess of Par Value			Total Distributable (Loss) Earnings			Total Stockholders' Equity
Balance as of December 31, 2018	$	28,270	$	269,246,005		$	(1,851,040	)	$	267,423,235
Net investment income		-		-			12,542,535			12,542,535
Net realized losses from investment transactions		-		-			(724,454	)		(724,454	)
Net change in unrealized depreciation on investments		-		-			(479,160	)		(479,160	)
Issuance of shares		5,269		49,994,731			-			50,000,000
Distributions to Stockholders		-		(60,025	)		(8,246,864	)		(8,306,889	)
Reinvested Dividends		-		30			-			30
Balance as of September 30, 2019	$	33,539	$	319,180,741		$	1,241,017		$	320,455,297

Note 8. Commitments and Contingencies

The Company may enter into certain credit agreements that include loan commitments where all or a portion of such commitment may be unfunded. The Company is generally obligated to fund the unfunded loan commitments at the borrowers’ discretion. Funded portions of credit agreements are presented on the accompanying schedule of investments. Unfunded loan commitments and funded portions of credit agreements are fair valued and unrealized appreciation or depreciation, if any, have been included in the accompanying statements of assets and liabilities and statements of operations.

The following table summarizes the Company’s significant contractual payment obligations as of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Investment Industry September 30, 2019 December 31, 2018
Advarra, Senior Secured Initial Revolving Loan (First Lien), 6.34% (Libor + 4.25%), maturity 7/9/26 Healthcare & Pharmaceuticals $ 761,905 $ -
EverCommerce, Senior Secured Initial Term Loan, 7.59% (Libor + 5.50%), maturity 8/23/25(i) High Tech Industries 654,867
Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 7/18/26(i) Containers, Packaging & Glass 437,500
Allied Universal 2019, Senior Secured Initial Term Loan, 6.34% (Libor + 4.25%), maturity 7/10/26(i) Services: Business 346,535
Mavis, Senior Secured Closing Date Term Loan (First Lien), 6.05% (Libor + 3.25%), maturity 3/20/25 Automotive 345,141 469,764
Service Logic, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 12/31/24 Services: Business 343,333 -
Pathway, Senior Secured Initial Term Loan (First Lien), 7.10% (Libor + 4.50%), maturity 12/20/24 Healthcare & Pharmaceuticals 293,022 -
Advarra, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 7/9/26(i) Healthcare & Pharmaceuticals 288,796 -
Alpaca, Senior Secured Revolver, 6.59% (Libor + 4.50%), maturity 4/19/24(j) Healthcare & Pharmaceuticals 232,967 -
Community Brands, Senior Secured Initial Term Loan (First Lien), 6.80% (Libor + 4.00%), maturity 12/2/22 High Tech Industries 150,710 194,963
Premise Health, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 7/10/25 Healthcare & Pharmaceuticals 147,052 147,052
Stepping Stones, Unitranche, 7.59% (Libor + 5.50%), maturity 12/12/24 Healthcare & Pharmaceuticals 142,789
AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 6/12/26 Banking, Finance, Insurance & Real Estate 122,807 -
MyEyeDr, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 8/31/26(i) Health Care Equipment & Services 115,976
Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 5/14/26(i) Services: Consumer 100,000 -
Ansira, Senior Secured Initial Term Loan, 8.55% (Libor + 5.75%), maturity 12/20/22 Media: Advertising, Printing & Publishing 38,214 85,171
Veritext, Senior Secured Initial Term Loan (First Lien), 6.55% (Libor + 3.75%), maturity 8/1/25 Healthcare & Pharmaceuticals - 166,833
Integrity Marketing Group, Senior Secured Term Loan, 7.05% (Libor + 4.25%), maturity 11/28/25 Banking, Finance, Insurance & Real Estate - 78,740
Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 5.80% (Libor + 3.00%), maturity 3/20/25 Wholesale - 736,196
GlobalLogic, Senior Secured Initial Term Loan, 6.05% (Libor + 3.25%), maturity 8/1/25 High Tech Industries - 250,000
Dermatologists of Central States, Senior Secured Term Loan, 9.30% (Libor + 6.50%), maturity 4/20/22 Healthcare & Pharmaceuticals - 91,116
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 7.30% (Libor + 4.50%), maturity 9/23/24 Healthcare & Pharmaceuticals - 5,682
$ 4,521,614 $ 2,225,517

Investment	Industry	September 30, 2020		December 31, 2019
Advarra, Senior Secured Initial Revolving Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26	Healthcare & Pharmaceuticals	$	761,905	$	761,905
Service Logic, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 12/31/24	Services: Business		540,000		136,667
EverCommerce, Senior Secured Initial Term Loan, 5.73% (Libor + 5.50%), maturity 8/23/25	High Tech Industries		498,632		464,713
Advarra, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26	Healthcare & Pharmaceuticals		288,796		288,796
Ned Stevens, Senior Secured Revolver, 5.75% (Libor + 4.75%), maturity 9/30/25	Services: Consumer		130,719		130,719
Stepping Stones, Unitranche, 6.75% (Libor + 5.75%), maturity 12/12/24	Healthcare & Pharmaceuticals		101,130		9,519
OEConnection, Senior Secured Initial Term Loan, 5.00% (Libor + 4.00%), maturity 9/25/26(i)	High Tech Industries		96,860		142,180
Worley Claims Services, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 6/3/26	Services: Business		50,125		50,125
MyEyeDr, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 8/31/26	Health Care Equipment & Services		37,278		98,225
AmeriLife, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 3/18/27	Banking, Finance, Insurance & Real Estate		-		-
Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 7/18/26	Containers, Packaging & Glass		-		437,500
Premise Health, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 7/10/25	Healthcare & Pharmaceuticals		-		147,052
Mavis, Senior Secured Closing Date Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 3/20/25	Automotive		-		345,141
Tangent, Senior Secured Closing Date Term Loan (First Lien), 4.98% (Libor + 4.75%), maturity 11/30/24	Construction & Building		-		333,333
DuBois Chemicals, Senior Secured Term Loan B (First Lien), 4.73% (Libor + 4.50%), maturity 9/30/26	Chemicals, Plastics & Rubber		-		252,692
Alpaca, Senior Secured Term Loan, 7.75% (Libor + 6.75%), maturity 4/19/24	Healthcare & Pharmaceuticals		-		124,637
Mister Car Wash, Senior Secured Initial Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 5/14/26	Services: Consumer		-		100,000
Ansira, Unitranche, 7.50% (Libor + 6.50%), maturity 12/20/24	Media: Advertising, Printing & Publishing		-		38,214
AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.41% (Libor + 4.50%), maturity 6/12/26	Banking, Finance, Insurance & Real Estate		-		17,544

		$	2,505,445	$	3,878,962

Unfunded commitments represent all amounts unfunded as of September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. These amounts may or may not be funded to the borrowing party now or in the future.

Note 9. Financial Highlights

	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018			Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Per Share Data:
Net asset value, beginning of period	$	9.44		$	9.50		$	9.46		$	9.51		$	9.09		$	9.44		$	9.44		$	9.46
Net investment income^(a)		0.13			0.13			0.39			0.38			0.10			0.13			0.32			0.39
Net realized gain on investments and change in unrealized depreciation on investments^(a)(b)		(0.02	)		-			(0.04	)		(0.01	)
Net increase in net assets resulting from operations	$	0.11		$	0.13		$	0.35		$	0.37
Net realized (loss) gain on investments and change in unrealized depreciation on investments^(a)(b)														0.14			(0.02	)		(0.22	)		(0.04	)
Net increase (decrease) in net assets resulting from operations													$	0.24		$	0.11		$	0.10		$	0.35

Effect of equity capital activity
Distributions to stockholders from net investment income		-			-			(0.26	)		(0.24	)		-			-			(0.21	)		(0.25	)
Distributions to stockholders from capital gains		-			-			-			(0.01	)
Distributions to stockholders from return of capital^(c)		-			-			-			-
Distributions to stockholders from return of capital														-			-			-			(0.01	)
Net asset value at end of period	$	9.55		$	9.63		$	9.55		$	9.63		$	9.33		$	9.55		$	9.33		$	9.55
Total return^(d)(h)		1.17	%		1.37	%		3.69	%		3.89	%
Total return^(c)(g)														2.64	%		1.17	%		1.16	%		3.69	%
Shares of common stock outstanding at end of period		33,538,562			26,162,165			33,538,562			26,162,165			38,343,577			33,538,562			38,343,577			33,538,562

Statement of Assets and Liabilities Data:
Net assets at end of period	$	320,455,297		$	251,862,443		$	320,455,297		$	251,862,443		$	357,694,550		$	320,455,297		$	357,694,550		$	320,455,297
Average net assets^(e)		319,461,535			244,318,953			308,451,516			233,578,899
Average net assets^(d)														353,156,796			319,461,535			348,029,571			308,451,516

Ratio/Supplemental Data:
Ratio of gross expenses to average net assets-annualized^(f)		2.25	%		2.28	%		2.36	%		2.28	%
Ratio of net expenses to average net assets- annualized^(g)		1.22	%		1.25	%		1.32	%		1.26	%
Ratio of net investment income to average net assets-annualized		5.46	%		5.43	%		5.44	%		5.17	%
Portfolio turnover^(h)		1.58	%		0.59	%		1.64	%		0.63	%
Ratio of gross expenses to average net assets- annualized^(e)														1.76	%		2.25	%		2.02	%		2.36	%
Ratio of net expenses to average net assets- annualized^(f)														1.06	%		1.22	%		1.10	%		1.32	%
Ratio of net investment income to average net assets- 4.28% 5.46% 4.68% 5.44% annualized
Portfolio turnover^(g)														0.21	%		1.58	%		1.95	%		1.64	%

(a)

Based on weighted average basic per share of Common Stock data.

(b)

The per share amount varies from the net realized and unrealized gain (loss) for the period because of the timing of sales of fund shares and the per share amount of realized and unrealized gains and losses at such time.

~~(c)~~	~~For the nine months ended September 30, 2019, the 0.00 is due to rounding.~~
~~(d)~~(c)	Total return is based on the change in net asset value during the respective periods. Total return also takes into account dividends and distributions, if any, reinvested in accordance with the Company's dividend reinvestment plan.

~~(e)~~

(d)

Average net assets are computed using the average balance of net assets at the end of each month of the reporting period.

~~(f)~~

(e)

Ratio of gross expenses to average net assets is computed using expenses before waivers from the Adviser and Administrator.

~~(g)~~

(f)

Ratio of net expenses to average net assets is computed using total expenses net of waivers from the Adviser and Administrator.

~~(h)~~

(g)

Not annualized.

Note 10. Indemnification

In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company’s maximum exposure under these indemnities is unknown. The Company does not consider it necessary to record a liability in this regard.

Note 11. Subsequent Events

On September 13, 2019, the Company delivered a capital drawdown notice to an investor relating to the sale of 1,573,977 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) for an aggregate offering price of $15 million. The sale closed on October 2, 2019.COVID-19

The ~~sale of Common Stock was made pursuant~~Company is continuing to assess the adverse financial and operational consequences that have resulted and may in the future result from the COVID-19 pandemic and the associated economic turbulence. The potential impact to our results will depend to a ~~subscription agreement entered into~~large extent on future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic, including the consequences resulting from another wave of infections and the actions taken by authorities and other entities to contain the spread of COVID-19, prevent another wave of infections or reduce its impact, all of which are beyond our control. As such, the Company cannot predict the extent to which its financial condition and results of operations will continue to be affected, and the ~~investor. Under the terms~~magnitude of such consequences remains uncertain as of the ~~subscription agreement, the investor is required to fund drawdowns to purchase shares~~filing of ~~Common Stock up to the amount of its capital commitment on an as-needed basis with a minimum of 10 calendar days’ prior notice.~~

The 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. The Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Common Stock and has not offered securities to the public in connection with such issuance and sale.

this quarterly report.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this quarterly report on Form 10-Q, except where the context suggests otherwise, the terms “we,” us,” our” and the “Company” refer to Audax Credit BDC Inc. The information contained in this section should be read in the conjunction with the financial statements and notes to the financial statements appearing elsewhere in this quarterly report.

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

our future operating results;

our business prospects and the prospects of our portfolio companies;

our ability to continue to effectively manage our business due to COVID-19 and similar pandemics;

the ability of our portfolio companies to achieve their objectives;

the timing of cash flows, if any, from the operations of our portfolio companies;

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

changes in the general economy;

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

the effect of investments that we expect to make;

our contractual arrangements and relationships with third parties;

actual and potential conflicts of interest with Adviser and its affiliates;

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

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes to the value of our assets;

the adequacy of our financing sources and working capital;

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

our ability to qualify and maintain our qualification as a BDC and as a RIC; and

the risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K filed on March 17, 2020 (file no. 814-01154) (the “Annual Report”) and our Current Report on Form 8-K filed on May 18, 2020 (file no. 814-01154) (“Form 8-K”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Item 1A. Risk Factors” of this ~~Report~~quarterly report and our Annual ~~Report.~~Report as well as risk factors described or identified in the Form 8-K. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. The forward-looking statements and projections contained in this quarterly report are excluded from the safe harbor protection provided by Section 27A of the Securities Act and provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

OVERVIEW

Audax Credit BDC Inc. is a Delaware corporation that was formed on January 29, 2015. We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a BDC under the 1940 Act. In addition, we have elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code.

Our investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. We intend to meet our investment objective by investing primarily in senior secured debt of privately owned U.S. middle- market companies. We intend to invest at least 80% of our net assets plus the amount of any borrowings in “credit instruments,” which we define as any fixed income instruments.

Although we have no present intention of doing so, we may decide to incur leverage. If we do incur leverage, however, we anticipate that it will be used in limited circumstances and on a short-term basis for purposes such as funding distributions. As a BDC, we are limited in our use of leverage under the 1940 Act. Under the 1940 Act, a BDC generally is required to maintain asset coverage of 200% for senior securities representing indebtedness (such as borrowings from banks or other financial institutions) or stock (such as preferred stock). The Small Business Credit Availability Act, which was signed into law on March 23, 2018, provides that a BDC's required asset coverage under the 1940 Act may be reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity). This reduction in asset coverage permits a BDC to double the amount of leverage it may utilize, subject to certain approval, timing and reporting requirements, including either stockholder approval or approval of a majority of the directors who are not “interested persons” (as defined in the 1940 Act) of the BDC and who have no financial interest in the arrangement. In addition, as a non-traded BDC, if we receive the relevant approval to increase our authorized leverage, we will be required to offer our stockholders the opportunity to sell their shares of ~~common stock~~Common Stock over the next year following the calendar quarter in which the approval was obtained. In determining whether to use leverage, we will analyze the maturity, covenants and interest rate structure of the proposed borrowings, as well as the risks of such borrowings within the context of our investment outlook and the impact of leverage on our investment portfolio. The amount of any leverage that we will employ as a BDC will be subject to oversight by our Board of Directors.

We generate revenue in the form of interest on the debt securities that we hold in our portfolio companies. The senior debt we invest in generally has stated terms of three to ten years. Our senior debt investments generally bear interest at a floating rate. Interest on debt securities is generally payable quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment and other fees in connection with transactions, although we do not expect to do so. OID as well as market discount and premium are accreted and amortized in determining our interest income. We record any prepayment premiums on loans and debt securities as income.

COVID-19

The market disruptions caused by the COVID-19 pandemic have continued to adversely affect the business operations of some, if not all, of our portfolio companies and have affected, and may continue to affect, our operations and the operations of our Adviser. While we are closely monitoring this situation, we cannot predict the impact of COVID-19 on our future financial condition with any level of certainty. However, we expect that the COVID-19 pandemic will continue to have a material adverse impact on our future net asset value, net investment income, the fair value of our portfolio investments, and the results of operations and financial condition of our portfolio companies. For more information, see “Recent Developments—COVID-19 Developments” below.

PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY

Portfolio Composition

The fair value of our investments, comprised of syndicated loans and equity, as of September 30, ~~2019,~~2020, was approximately ~~$323,057,547~~$341,488,783 and held in ~~154~~174 portfolio companies as of September 30, ~~2019.~~2020. The fair value of our investments, ~~all~~comprised of ~~which were~~ syndicated loans and equity, as of December 31, ~~2018,~~2019, was approximately ~~$264,662,881~~$330,874,911 and held in ~~135~~164 portfolio companies as of December 31, ~~2018.~~2019.

During the nine months ended September 30, 2020, we invested in 40 new syndicated investments for a combined $39,542,336 and in existing investments for a combined $12,834,005. We also received $27,907,668 in repayments from investments and $6,437,456 from investments sold during the nine months ended September 30, 2020. During the nine months ended September 30, 2019, we invested in 54 new syndicated investments for a combined $90,412,665 and in existing investments for a combined $20,244,318. We also received $46,240,554 in repayments from investments and $5,017,964 from investments sold during the nine months ended September 30, 2019. ~~During~~The decrease in the ~~nine months ended September 30, 2018, we invested in 60 new syndicated~~value of our investments ~~for a combined $94,368,626 and in existing investments for a combined $15,112,788. We also received $52,782,500 in repayments from investments and $1,390,962 from investments sold~~ during the nine months ended September 30, ~~2018.~~2020 as compared to the same period during the previous year was primarily due to the adverse impact of the COVID-19 pandemic impact on market conditions.

In addition, for the three and nine months ended September 30, 2020, we had a change in unrealized appreciation (depreciation) of approximately $6,436,468 and $(6,732,122), respectively, and realized losses of $1,039,704 and $1,043,096, respectively. In addition, for the three and nine months ended September 30, 2019, we had a change in unrealized appreciation (depreciation) of approximately $182,576 and $(479,160), respectively, and realized losses of $826,185 and $724,454, respectively. In addition, for the three and nine months ended September 30, 2018, we had a change in unrealized depreciation of approximately $275,060 and $877,333, respectively, and realized gains of $179,556 and $397,313, respectively.

Our investment activity for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, is presented below:

Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Beginning investment portfolio, at fair value $ 264,662,881 $ 184,336,177
           Investments in new portfolio investments 90,412,665 94,368,626
           Investments in existing portfolio investments 20,244,318 15,112,788
           Principal repayments (46,240,554 ) (52,782,500 )
           Proceeds from investments sold (5,017,964 ) (1,390,962 )
           Change in premiums, discounts and amortization 199,813 106,120
           Net change in unrealized depreciation on investments (479,160 ) (877,333 )
           Realized (loss) gain on investments (724,452 ) 397,313
Ending portfolio investment activity, at fair value $ 323,057,547 $ 239,270,229
Number of portfolio investments 168 128
Average investment amount, at cost $ 1,935,441 $ 1,980,280
Percentage of  investments at floating rates 100.00 % 100.00 %
Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Beginning investment portfolio, at fair value $ 330,874,911 $ 264,662,881
Investments in new portfolio investments 39,542,336 90,412,665
Investments in existing portfolio investments 12,834,005 20,244,318
Principal repayments (27,907,668 ) (46,240,554 )
Proceeds from investments sold (6,437,456 ) (5,017,964 )
Change in premiums, discounts and amortization 357,873 199,813
Net change in unrealized depreciation on investments (6,732,122 ) (479,160 )
Realized loss on investments (1,043,096 ) (724,452 )
Ending portfolio investment activity, at fair value $ 341,488,783 $ 323,057,547
Number of portfolio investments 202 168
Average investment amount, at cost $ 1,733,010 $ 1,935,441
Percentage of investments at floating rates 99.41 % 100.00 %

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, our entire portfolio consisted of non-controlled/non-affiliated investments.

RECENT DEVELOPMENTS

Subsequent to September 30, ~~2019~~2020 and through November ~~14, 2019,~~13, 2020, we invested ~~$7,774,333~~$2,453,983 at cost in ~~twelve~~eight portfolio companies.

~~On September 13, 2019,~~COVID-19 Developments
As the ~~Company delivered a capital drawdown notice an investor~~COVID-19 outbreak continues to evolve, we cannot reasonably predict its full impact on our business operations, including its duration in the United States and worldwide and the magnitude of the economic impact of the outbreak, including with respect to the travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities in response to another wave of infections. As such, the extent to which COVID-19 and/or other health pandemics may continue to negatively affect our operating results and financial condition and the operating results and financial condition of our portfolio companies, or the duration of any potential business or supply-chain disruption for us, our Adviser and/or our portfolio companies, is uncertain.
We will continue to monitor the rapidly evolving developments relating to the ~~sale~~COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health officials and may take additional actions based on their recommendations. In these circumstances, there may be developments beyond our control requiring us to adjust our plan of ~~1,573,977 shares~~operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future. However, we do expect that it will continue to have a material adverse impact on our future net asset value, net investment income, the fair value of our portfolio investments, and the results of operations and financial condition of our portfolio companies, and that such adverse effects will persist for the duration of the ~~Common Stock~~pandemic and potentially for ~~an aggregate offering price of $15 million. The sale closed on October 2, 2019.~~some time thereafter.

The sale of Common Stock was made pursuant to a subscription agreement entered into by the Company and the investor. Under the terms of the subscription agreement, the investor is required to fund drawdowns to purchase shares of Common Stock up to the amount of its capital commitment on an as-needed basis with a minimum of 10 calendar days’ prior notice.
The issuance of the Common Stock is exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. The Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Common Stock and has not offered securities to the public in connection with such issuance and sale.
34
RESULTS OF OPERATIONS

The net increase or decrease in net assets from operations may vary substantially from period to period as a result of various factors, including the recognition of realized gains and/or losses and net change in unrealized appreciation and depreciation. This “Results of Operations” section should be read in conjunction with the “COVID-19 Developments” section above.

Revenue

Total investment income for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019 is presented in the table below.

Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018 Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Total interest income from non-controlled/non-affiliated investments $ 5,347,398 $ 4,055,676 $ 15,433,946 $ 11,061,333
Total other interest income 28,722 32,938 122,237 101,045
Total other income 5,214 26,985 38,364 75,547
Total investment income $ 5,381,334 $ 4,115,599 $ 15,594,547 $ 11,237,925
Three Months Ended
September 30, 2020 Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Total interest income from non-controlled/non- affiliated
investments
$ 4,721,470 $ 5,347,398 $ 14,885,290 $ 15,433,946
Total other interest income 1,058 28,722 31,053 122,237
Total other income 14,577 5,214 153,950 38,364
Total investment income $ 4,737,105 $ 5,381,334 $ 15,070,293 $ 15,594,547

Total investment income for the three months ended September 30, ~~2019 increased~~2020 decreased to ~~$5,381,334~~$4,737,106 from ~~$4,115,599~~$5,381,334 for the three months ended September 30, ~~2018,~~2019, and was driven by ~~our interest income from~~a decrease in LIBOR over the period which was partially offset by our increasing investment balance. Total investment income for the nine months ended September 30, ~~2019 increased~~2020 decreased to ~~$15,594,547~~$15,070,293 from ~~$11,237,925~~$15,594,547 for the nine months ended September 30, ~~2018,~~2019, and was driven by ~~our interest income from~~a decrease in LIBOR over the period which was partially offset by our increasing investment balance. As of September 30, ~~2019~~2020 and ~~2018,~~2019, the size of our debt portfolio was ~~$324,033,544~~$348,947,419 and ~~$239,986,958~~$324,033,544 at amortized cost, respectively, with total debt principal amount outstanding of ~~$325,653,783~~$350,848,873 and ~~$240,668,821,~~$325,653,783, respectively.

Expenses
Total expenses net of waivers for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, were as follows:

Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018 Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
Base management fee^(a) $ 820,094 $ 631,114 $ 2,367,188 $ 1,792,598
Incentive fee^(a) 680,250 517,587 1,939,486 1,392,563
Administrative fee^(a) 66,250 66,250 198,750 198,750
Directors' fees 52,500 48,750 157,500 146,250
Professional fees 136,660 100,641 524,791 313,660
Other expenses 58,388 39,550 246,441 131,452
Total expenses 1,814,142 1,403,892 5,434,156 3,975,273
Base management fee waivers^(a) (287,033 ) (220,890 ) (828,516 ) (627,408 )
Incentive fee waivers^(a) (543,178 ) (411,767 ) (1,553,628 ) (1,142,863 )
Total expenses, net of waivers $ 983,931 $ 771,235 $ 3,052,012 $ 2,205,002
Three Months Ended
September 30, 2020 Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Base management fee^(a) $ 874,188 $ 820,094 $ 2,697,570 $ 2,367,188
Incentive fee^(a) 356,461 680,250 1,641,419 1,939,486
Administrative fee^(a) 66,250 66,250 198,750 198,750
Directors' fees 52,500 52,500 157,500 157,500
Professional fees 132,514 136,660 369,572 524,791
Other expenses 83,232 58,388 191,422 246,441
Total expenses 1,565,145 1,814,142 5,256,233 5,434,156
Base management fee waivers^(a) (305,966 ) (287,033 ) (944,150 ) (828,516 )
Incentive fee waivers^(a) (320,815 ) (543,178 ) (1,437,466 ) (1,553,628 )
Total expenses, net of waivers $ 938,364 $ 983,931 $ 2,874,617 $ 3,052,012

(a) Refer to Note 4-Related Party Transactionswithin the financial statements for a description of the relevant fees.

The increase in base management fees before waivers for the three months ended September 30, ~~2019~~2020 in comparison to the three months ended September 30, ~~2018~~2019 was driven by our increasing invested balance. For the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we accrued gross base management fees before waivers of ~~$820,094~~$874,188 and ~~$631,114,~~$820,094, respectively. Offsetting those fees, we recognized base management fee waivers of $305,966 and $287,033, ~~and $220,890,~~ respectively. For the three months ended September 30, 2020, we accrued incentive fees related to net investment income before waivers of $356,461, offset by incentive fee waivers of $320,815. For the three months ended September 30, 2019, we accrued incentive fees related to net investment income before waivers of $680,250, offset by incentive fee waivers of $543,178. ~~For the three months ended September 30, 2018, we accrued incentive fees related to net investment income before waivers of $517,587, offset by incentive fee waivers of $411,767.~~ Additionally, we accrued $66,250 of administrative fees for the three months ended September 30, ~~2019~~2020 and ~~2018.~~2019. Refer to Note 4 —Related Party Transactionsin the notes accompanying our financial statements for more information related to base management fees, incentive fees and waivers.

35
During the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we incurred professional fees of ~~$136,660~~$132,514 and ~~$100,641,~~$136,660, respectively, related to audit fees, tax fees, and legal fees. ~~The increase in professional fees was driven by an increase in legal expenses during the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.~~ We also incurred expenses related to fees paid to our independent directors of $52,500 ~~and $48,750~~ for both the three months ended September 30, ~~2019~~2020 and ~~2018, respectively.~~2019.

The increase in base management fees before waivers for the nine months ended September 30, ~~2019~~2020 in comparison to the nine months ended September 30, ~~2018~~2019 was driven by our increasing invested balance. For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we accrued gross base management fees before waivers of ~~$2,367,188~~$2,697,570 and ~~$1,792,598,~~$2,367,188, respectively. Offsetting those fees, we recognized base management fee waivers of $944,150 and $828,516, ~~and $627,408,~~ respectively. For the nine months ended September 30, 2020, we accrued incentive fees related to net investment income before waivers of $1,641,419, offset by incentive fee waivers of $1,437,466. For the nine months ended September 30, 2019, we accrued incentive fees related to net investment income before waivers of $1,939,486, offset by incentive fee waivers of $1,553,628. ~~For the nine months ended September 30, 2018, we accrued incentive fees related to net investment income before waivers of $1,392,563, offset by incentive fee waivers of $1,142,863.~~ Additionally, we accrued $198,750 of administrative fees for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. Refer to Note 4 —Related Party Transactionsin the notes accompanying our financial statements for more information related to base management fees, incentive fees and waivers.

During the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we incurred professional fees of ~~$524,791~~$369,572 and ~~$313,660,~~$524,791, respectively, related to audit fees, tax fees, and legal fees. The ~~increase~~decrease in professional fees was driven by ~~an increase~~a decrease in legal expenses during the nine months ended September 30, ~~2019~~2020 as compared to the nine months ended September 30, ~~2018.~~2019. We also incurred expenses related to fees paid to our independent directors of $157,500 ~~and $146,250~~ for both the nine months ended September 30, ~~2019~~2020 and ~~2018, respectively.~~2019.

Realized and Unrealized Gains and Losses

We recognized ~~$(826,185)~~$1,039,704 and ~~$179,556~~$826,185 in net realized ~~(losses) gains~~losses for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. We recognized ~~$(724,454)~~$1,043,096 and ~~$397,313~~$724,454 in net realized ~~(losses)~~losses gains for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Net change in unrealized ~~depreciation~~appreciation (depreciation) on investments for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 was as follows:

Type Three Months Ended
September 30, 2019 Three Months Ended
September 30, 2018 Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018
First Lien Debt $ 232,811 $ (244,752 ) $ 89,811 $ (787,562 )
Second Lien Debt (50,235 ) (30,308 ) (168,705 ) (89,771 )
Equity and Preferred Shares - - (400,266 ) -
Net change in unrealized appreciation (depreciation) on investments $ 182,576 $ (275,060 ) $ (479,160 ) $ (877,333 )
Type Three Months Ended
September 30, 2020 Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
First Lien Debt $ 6,103,810 $ 232,811 $ (6,149,319 ) $ 89,811
Second Lien Debt 381,273 (50,235 ) (668,484 ) (168,705 )
Equity and Preferred Shares (48,615 ) - 85,681 (400,266 )
Net change in unrealized appreciation (depreciation) on investments
$ 6,436,468 $ 182,576 $ (6,732,122 ) $ (479,160 )

Net change in unrealized appreciation (depreciation) on investments during the three and nine months ended September 30, ~~2019~~2020 was primarily due to the change in the results and financial position of the portfolio companies. Net change in unrealized depreciation on investments during the three and nine months ended September 30, ~~2018~~2019 was primarily due to the change in the results and financial position of the portfolio companies.

36
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We generate cash primarily from the net proceeds of any offering of shares of our ~~common stock~~Common Stock (“Shares”), from cash flows from interest and fees earned from our investments, and from principal repayments and proceeds from sales of our investments. Our primary use of cash is investments in portfolio companies, payments of our expenses and cash distributions to our stockholders. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had cash of ~~$11,393,113~~$24,955,930 and ~~$17,715,145,~~$5,506,217, respectively. This “Financial Condition, Liquidity and Capital Resources” section should be read in conjunction with the “COVID-19 Developments” section above.
Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2020 was $2,424,706. The primary operating activities during this period were investments in portfolio companies. This was partially offset by repayments of bank loans. Net cash used in operating activities for the nine months ended September 30, 2019 was $48,015,173. The primary operating activities during this period were investments in portfolio companies. This was partially offset by repayments of bank loans. Net cash used in operating activities for the nine months ended September 30, 2018 was $43,558,701. The primary operating activities during this period were investments in portfolio companies. This was partially offset by repayments of bank loans and interest received from investments.

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had 16nine and 10eighteen investments, respectively, with unfunded commitments of ~~$4,521,614~~$2,505,445 and ~~$2,225,517,~~$3,878,962, respectively. We believe that, as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had sufficient assets to adequately cover any obligations under our unfunded commitments.

The following table summarizes our total portfolio activity during the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:
Nine Months Ended
September 30, 2019 Nine Months Ended
September 30, 2018 Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Beginning investment portfolio $ 264,662,881 $ 184,336,177 $ 330,874,911 $ 264,662,881
Investments in new portfolio investments 90,412,665 94,368,626 39,542,336 90,412,665
Investments in existing portfolio investments 20,244,318 15,112,788 12,834,005 20,244,318
Principal repayments (46,240,554 ) (52,782,500 ) (27,907,668 ) (46,240,554 )
Proceeds from sales of investments (5,017,964 ) (1,390,962 ) (6,437,456 ) (5,017,964 )
Net change in unrealized depreciation on investments (479,160 ) (877,333 ) (6,732,122 ) (479,160 )
Net realized (loss) gain on investments (724,452 ) 397,313
Net realized loss on investments (1,043,096 ) (724,452 )
Net change in premiums, discounts and amortization 199,813 106,120 357,873 199,813
Investment Portfolio, at Fair Value $ 323,057,547 $ 239,270,229 $ 341,488,783 $ 323,057,547
Financing Activities

Net cash provided by our financing activities for the nine months ended September 30, 2020 was $21,874,419 from issuances of 3,234,331 Shares to our stockholders, in connection with our capital calls and our dividend reinvestment program during the period. This was partially offset by $8,125,581 of distributions paid to our common stockholders. Net cash provided by our financing activities for the nine months ended September 30, 2019 was $41,693,141 from issuances of 5,268,913 Shares to our stockholders, in connection with our capital calls and our dividend reinvestment program during the period. This was partially offset by $8,306,859 of distributions paid to our common stockholders. Net cash provided by our financing activities for the nine months ended September 30, 2018 was $34,113,964 from issuances of 4,173,924 of Shares to our stockholders, in connection with our capital calls during the period. This was partially offset by $5,886,036 of distributions paid to our common stockholders.

Equity Activity
On June 23, 2015, an investor made a $140,000,000 capital commitment to the Company. On December 2, 2016, the same investor made an additional capital commitment of $50,000,000. On December 7, 2017, the same investor made an additional capital commitment of $100,000,000. On March 22, 2019, the same investor made an additional capital commitment of $40,000,000. On September 23, 2019, the same investor made an additional capital commitment of $30,000,000. On March 20, 2020, the same investor made an additional capital commitment of $11,200,000. As of September 30, ~~2019, $40,000,000~~2020, $6,200,000 of total capital commitments remained unfunded by the Company’s investors.
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The number of Shares issued and outstanding as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, were ~~33,538,562~~38,343,577 and ~~28,269,649,~~35,109,246, respectively.
Distributions to Stockholders – Common Stock Distributions

We have elected to be treated as a RIC for U.S. federal income tax purposes. As a RIC, we generally are not subject to corporate-level U.S. federal income taxes on ordinary income or capital gains that we timely distribute as dividends for U.S. federal income tax purposes to our stockholders. To qualify to be taxed as a RIC and thus avoid corporate-level income tax on the income that we distribute as dividends to our stockholders, we are required to distribute dividends to our stockholders each taxable year generally of an amount at least equal to 90% of our investment company taxable income, determined without regard to the deduction for any dividends paid. To avoid a 4% excise tax on undistributed earnings, we are required to distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of (i) 98% of our ordinary income (taking into account certain deferrals and elections) for such calendar year, (ii) 98.2% of our capital gain net income, adjusted for certain ordinary losses, for the one-year period ending October 31 of that calendar year and (iii) any income or capital gains recognized, but not distributed, in preceding calendar years and on which we incurred no federal income tax. We intend to make distributions to stockholders on an annual basis of substantially all of our net investment income. Although we intend to make distributions of net realized capital gains, if any, at least annually, out of assets legally available for such distributions, we may in the future decide to retain such capital gains for investment. In addition, the extent and timing of special dividends, if any, will be determined by our Board of Directors and will largely be driven by portfolio specific events and tax considerations.

We may fund our cash distributions from any sources of funds available, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and fee waivers from our Adviser. Our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from an offering. As a result, a portion of the distributions may represent a return of capital for U.S. federal income tax purposes. Thus the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a BDC under the 1940 Act. We declared and paid distributions of $8,125,607, or $0.215 per share during the nine months ended September 30, 2020. We declared and paid distributions of $8,306,889, or $0.26 per share during the nine months ended September 30, 2019. ~~We declared and paid distributions of $5,886,063, or $0.25 per share during the nine months ended September 30, 2018.~~

The determination of the tax attributes of our distributions is made annually at the end of our taxable year, based upon our taxable income for the full taxable year and distributions paid for the full taxable year. Therefore, estimates made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. The actual tax characteristics of distributions to stockholders will be reported to stockholders subject to information reporting after the close of each calendar year on Form 1099-DIV.
Related Party Fees

For the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we recorded base management fees of ~~$820,094~~$874,188 and ~~$631,114,~~$820,094, respectively. Offsetting these fees were waivers to the base management fees of ~~$287,033~~$305,966 and ~~$220,890,~~$287,033, respectively, as set forth within the accompanying statements of operations.

For the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we recorded base management fees of ~~$2,367,188~~$2,697,570 and ~~$1,792,598,~~$2,367,188, respectively. Offsetting those fees were waivers to the base management fees of ~~$828,516~~$944,150 and ~~$627,408,~~$828,516, respectively, as set forth within the accompanying statements of operations.

For the three and nine months ended September 30, 2020, we recorded incentive fees of $356,461 and $1,641,419, respectively. Offsetting these fees were waivers to the incentive fees of $320,815 and $1,437,466, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2019, we recorded incentive fees of $680,250 and $1,939,486, respectively. Offsetting these fees were waivers to the incentive fees of $543,178 and $1,553,628, respectively, as set forth within the accompanying statements of operations. For the three and nine months ended September 30, 2018, we recorded incentive fees of $517,587 and $1,392,563, respectively. Offsetting these fees were waivers to the incentive fees of $411,767 and $1,142,863, respectively, as set forth within the accompanying statements of operations.
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For the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we recorded administrative fees of $62,500, respectively, as set forth within the accompanying statements of operations. For both the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, we recorded administrative fees of ~~$132,500, respectively,~~$198,750 as set forth within the accompanying statements of operations.

Fees due to related parties as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 on our accompanying statements of assets and liabilities were as follows:

September 30, 2019 December 31, 2018 September 30, 2020 December 31, 2019
Net base management fee due to Adviser $ 533,061 $ 424,873 $ 568,222 $ 569,600
Net incentive fee due to Adviser 137,072 111,041 35,646 118,536
Other expenses due to Adviser^(a) - -
Total fees due to Adviser, net of waivers 670,133 535,914 603,868 688,136
Fee due to Administrator, net of waivers 66,250 66,250 66,250 66,250
Total Related Party Fees Due $ 736,383 $ 602,164 $ 670,118 $ 754,386

~~(a) Expenses paid on behalf of the Company by the Adviser~~

Tender Offers

We do not currently intend to list ~~the Shares~~shares of our Common Stock on any securities exchange, and we do not expect a public market for them to develop in the foreseeable future. Therefore, stockholders should not expect to be able to sell their ~~Shares~~shares of our Common Stock promptly or at a desired price. To provide our stockholders with limited liquidity, we may, in the absolute discretion of our Board of Directors, conduct an annual tender offer. Our tenders for the ~~Shares,~~shares of Common Stock, if any, would be conducted on such terms as may be determined by our Board of Directors and in accordance with the requirements of applicable law, including Section 23(c) of the 1940 Act and Regulation M under the Exchange Act. We have not commenced any tender offers, and we do not currently intend to conduct any tender offers.

CRITICAL ACCOUNTING POLICIES

This discussion of our operations is based upon our financial statements, which are prepared in accordance with GAAP. The preparation of these financial statements requires our management 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. In addition to the discussion below, we describe our critical accounting policies in the notes to our financial statements.
Valuation of Investments

We conduct the valuation of our investments, pursuant to which our net asset value is determined, at all times consistent with GAAP and the 1940 Act. Our Board of Directors, with the assistance of our Audit Committee, determines the fair value of our investments, for investments with a public market and for investments with no readily available public market, on at least a quarterly basis, in accordance with the terms of ASC 820. Our valuation procedures are set forth in more detail below.

ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same – to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

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ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

The three-level hierarchy for fair value measurement is defined as follows:
Level 1— Inputs to the valuation methodology are quoted prices available in active markets for identical financial instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including equities and derivatives, listed in active markets. We do not adjust the quoted price for these instruments, even in situations where we hold a large position, and a sale could reasonably be expected to impact the quoted price.
Level 2— Inputs to the valuation methodology are quoted prices in markets that are not active or for which all significant inputs are either directly or indirectly observable as of the measurement date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in markets that are not active, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level 3— Inputs to the valuation methodology are unobservable and significant to the overall fair value measurement, and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments in this category include investments in privately held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

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.

Pursuant to the framework set forth above, we value securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. We may also obtain quotes with respect to certain of our investments from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded in active markets.

Pricing services aggregate, evaluate and report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes, model-based valuations and internal fundamental analysis and research. When doing so, we determine whether the quote obtained is sufficient according to GAAP to determine the fair value of the security. If determined adequate, we use the quote obtained.

Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the our Board of Directors, does not represent fair value, are each valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data are available. These valuation techniques vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. Inputs for these valuation techniques include relative credit information, observed market movement, industry sector information, and other market data, which may include benchmarking of comparable securities, issuer spreads, reported trades, and reference data, such as market research publications, when available. The process used to determine the applicable value is as follows:
(i) ~~each~~Each portfolio company or investment is initially valued by the investment professionals of the Adviser responsible for the portfolio investment using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable ~~inputs;~~ inputs. Additionally, as a part of our valuation process, the Adviser may employ the services of one or more independent valuation firms engaged by us;
(ii) ~~preliminary~~Preliminary valuation conclusions are documented and discussed with our senior management and members of ~~our~~the Adviser’s valuation team;
(iii) ~~our~~Our Audit Committee reviews the assessments of the Adviser or independent valuation firm (to the extent applicable) and provides our Board of Directors with recommendations with respect to the fair value of the investments in our portfolio; and
(iv) ~~our~~Our Board of Directors discusses the valuation recommendations of our Audit Committee and determines the fair value of the investments in our portfolio in good faith based on the input of the Adviser, the independent valuation firm (to the extent applicable) and in accordance with our valuation policy.
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Our Audit Committee’s recommendation of fair value is generally based on its assessment of the following factors, as relevant:

· the nature and realizable value of any collateral;

· call features, put features and other relevant terms of debt;

· the portfolio company’s ability to make payments;

· the portfolio company’s actual and expected earnings and discounted cash flow;

· prevailing interest rates for like securities and expected volatility in future interest rates;

· the markets in which the portfolio company does business and recent economic and/or market events; and

· comparisons to publicly traded securities.

Investment performance data utilized are the most recently available as of the measurement date, which in many cases may reflect up to a one quarter lag in information.

Securities for which market quotations are not readily available or for which a pricing source is not sufficient may include the following:

· private placements and restricted securities that do not have an active trading market;

· securities whose trading has been suspended or for which market quotes are no longer available;

· debt securities that have recently gone into default and for which there is no current market;

· securities whose prices are stale; and

· securities affected by significant events.

Our Board of Directors is 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 our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

Security transactions are recorded on the trade date (the date the order to buy or sell is executed or, in the case of privately issued securities, the closing date, which is when all terms of the transactions have been defined). Realized gains and losses on investments are determined based on the identified cost method.

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Refer to Note 3 —Investmentsin the notes to our accompanying financial statements included elsewhere in this quarterly report for additional information regarding fair value measurements and our application of ASC 820.

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. OID, 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.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
PIK Interest

We may have investments in our portfolio that contain a PIK interest provision. Any PIK interest will be added to the principal balance of such investments and is recorded as income if the portfolio company valuation indicates that such PIK interest is collectible. In order to maintain our status as a RIC, substantially all of this income must be included in the amounts paid out by us to stockholders in the form of dividends, even if we have not collected any cash.
U.S. Income Taxes

We have elected to be subject to tax as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to incur any corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute as dividends to our stockholders. To qualify and maintain our qualification as a RIC, we must meet certain source-of-income and asset diversification requirements as well as distribute dividends to our stockholders each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to any distributions paid.

Depending on the level of taxable income earned in a taxable year, we may choose to retain taxable income in excess of current year distributions into the next taxable year. We would then incur a 4% excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year distributions, we will accrue an excise tax, if any, on estimated excess taxable income as taxable income is earned. We did not accrue any excise tax for the fiscal years ended December 31, 2019, 2018, ~~2017,~~ and ~~2016.~~2017.

Because U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified within capital accounts in the financial statements to reflect their tax character. Permanent differences may also result from differences in classification in certain items, such as the treatment of short-term gains as ordinary income for tax purposes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
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We evaluate tax positions taken or expected to be taken in the course of preparing our financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current fiscal year. All penalties and interest associated with any income taxes accrued are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax law, regulations and interpretations thereof. Our accounting policy on income taxes is critical because if we are unable to qualify, or once qualified, maintain our tax status as a RIC, we would be required to record a provision for corporate-level U.S. federal income taxes, as well as any related state or local taxes which may be significant to our financial results.

COMMITMENTS AND CONTINGENCIES

From time to time, we, or the Adviser, may become party to legal proceedings in the ordinary course of business, including proceedings related to the enforcement of our rights under contracts with our portfolio companies. Neither we nor the Adviser is currently subject to any material legal proceedings.

Unfunded commitments to provide funds to portfolio companies are not reflected in our accompanying statements of assets and liabilities. Our unfunded commitments may be significant from time to time. These commitments are subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn, the total commitment amount does not necessarily represent future cash requirements. We use cash flow from normal and early principal repayments and proceeds from borrowings and offerings to fund these commitments. As of September 30, ~~2019,~~2020, we had ~~sixteen~~nine investments with unfunded commitments of ~~$4,521,614.~~$2,505,445. As of December 31, ~~2018,~~2019, we had ~~ten~~eighteen investments with unfunded commitments of ~~$2,225,517.~~$3,878,962. We believe that, as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had sufficient assets to adequately cover any obligations under our unfunded commitments.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. During the period covered by our financial statements, many of the loans in our portfolio had floating interest rates, and we expect that many of our loans to portfolio companies in the future will also have floating interest rates based on LIBOR or an equivalent risk-free index rate. Interest rate fluctuations may have a substantial negative impact on our investments, the value of our Common Stock and our rate of return on invested capital. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities held by us. 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. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, all of our investments included variable rates with a minimum guaranteed rate, or floor, and bore interest at the minimum guaranteed rate.
~~Assuming that~~
In addition, the ~~accompanying statement~~COVID-19 pandemic has resulted in a decrease in LIBOR and a general reduction of ~~assets~~certain interest rates by the U.S. Federal Reserve and liabilities as of September 30, 2019 was to remain constant and that we took no actions to alter interest rate sensitivity as of such date, the following table shows the annualized impact of hypothetical base rate changesother central banks. A continued decline in interest ~~rates.~~rates, including LIBOR, could result in a reduction of our gross investment income.

~~Increase (decrease) in~~
Change in interest rates Increase (decrease) in
investment income
Down 300 basis points (~~4,640,015~~208,207 )
Down 200 basis points (~~4,619,187~~208,207 )
Down 100 basis points (~~3,256,538~~208,207 )
Up 100 basis points ~~3,256,538~~1,736,360
Up 200 basis points ~~6,513,076~~5,244,849
Up 300 basis points ~~9,769,613~~8,753,338

Although we believe that this measure is indicative of our sensitivity to interest rate changes, it does not reflect potential changes in the credit market, credit quality, size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that could affect our net increase in net assets resulting from operations or net investment income. Accordingly, no assurances can be given that actual results would not differ materially from those shown above.
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In addition, any investments we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved.

We may hedge against interest rate and currency exchange 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

Disclosure Controls and Procedures
As of ~~September 30, 2019,~~the period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective at a reasonable assurance level in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings. However, in evaluation of 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 possible controls and procedures.
Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II–OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently subject to any material legal proceeding, nor, to our knowledge, is any material legal proceeding threatened against us.

From time to time, we, our Adviser or Administrator 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 risks discussed below, important risk factors that could cause results or events to differ from current expectations are described in Part I, Item 1A “Risk Factors” of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the SEC on March 17, 2020 as well as our Current Report on Form 8-K filed with the SEC on May 18, ~~2019.~~
2020.
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Legislation passed in 2018 allows us to incur additional leverage and would require us to offer liquidity to our stockholders.

Under the 1940 Act, a BDC generally is required to maintain asset coverage of 200% for senior securities representing indebtedness (such as borrowings from banks or other financial institutions) or stock (such as preferred stock). The Small Business Credit Availability Act, which was signed into law on March 23, 2018, provides that a BDC’s required asset coverage under the 1940 Act may be reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity). This reduction in asset coverage permits a BDC to double the amount of leverage it may utilize, subject to certain approval, timing and reporting requirements, including either stockholder approval or approval of a majority of the directors who are not “interested persons” (as defined in the 1940 Act) of the BDC and who have no financial interest in the arrangement. As a result, if we receive the relevant approval and we comply with the applicable disclosure requirements, we would be able to incur additional leverage, which may increase the risk of investing in us. In addition, since our base management fee is payable based upon our average adjusted gross assets, which includes any borrowings for investment purposes, our base management fee expenses may increase if we incur additional leverage.

We have not commenced any tender offers, and we do not currently intend to conduct any tender offers. As a non-traded BDC, however, if we receive the relevant approval to increase our authorized leverage, we will be required to offer our stockholders the opportunity to sell their Shares over the next year following the calendar quarter in which the approval was obtained. The timing and method for such offers has not been determined at this time.
Global capital markets could enter a period of severe disruption and instability due to future recessions, political instability, geopolitical turmoil and foreign hostilities, disease pandemics and other serious health events. These market disruptions have historically had and could again have a materially adverse effect on debt and equity capital markets in the United States, which could have a materially adverse impact on our business and financial condition.
The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets and valuation impacts. Such disruptions are adversely affecting our business, and future market disruptions and/or illiquidity could continue to impact us negatively. These events have limited, and could continue to limit, our investment opportunities, may limit our ability to grow and could negatively impact our operating results and the fair values of our investments.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.
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ITEM 6. EXHIBITS

3.1 Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 (File no. 000-55426), filed on April 17, 2015).

3.2 Form of Bylaws (Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 (File no. 000-55426), filed on April 17, 2015).

10.1* ~~Subscription Agreement, dated as of September 23, 2019, by and between the Company and Mercer Audax Credit Feeder Fund LP.~~
31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
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, as amended (18 U.S.C. 1350).

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

99.1 Code of Ethics (Incorporated by reference to Exhibit 99.1 to Pre-Effective Amendment No. 1 to the Registration Statement on Form 10, File No. 000-55426, filed on June 5, 2015).

*            Filed herewith

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SIGNATURES

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

Audax Credit BDC Inc.

Date: November ~~14, 2019~~13, 2020 By: /s/ Michael P. McGonigle
Michael P. McGonigle
Chief Executive Officer

Date: November ~~14, 2019~~13, 2020 By: /s/ Richard T. Joseph
Richard T. Joseph
Chief Financial Officer

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DELAWARE		47-3039124
~~DELAWARE~~		~~47-3039124~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS		02199
(Address of principal executive office)		(Zip Code)

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	¨

Emerging growth company	x

PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements

	Statements of Assets and Liabilities as of September 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	2
	Statements of Operations for the three and nine months ended September 30, ~~2019~~2020 (unaudited) and ~~2018~~2019 (unaudited)	3
	Statements of Changes in Net Assets for the nine months ended September 30, ~~2019~~2020 (unaudited) and ~~2018~~2019 (unaudited)	4
	Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 (unaudited) and ~~2018~~2019 (unaudited)	5
	Schedules of Investments as of September 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	6
	Notes to Financial Statements (unaudited)	1315

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

	Overview	3335
	Results of Operations	3537
	Financial Condition, Liquidity and Capital Resources	3739

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4346

Item 4.	Controls and Procedures	4447

PART II.	OTHER INFORMATION:	47

Item 1.	Legal Proceedings	4447

Item 1A.	Risk Factors	4447

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4548

Item 3.	Defaults Upon Senior Securities	4548

Item 4.	Mine Safety Disclosures	4548

Item 5.	Other Information	4548

Item 6.	Exhibits	4649

SIGNATURES		4750

	September 30, 2019					September 30, 2020			December 31, 2019
	(unaudited)		December 31, 2018			(unaudited)
Assets
Investments, at fair value
Non-Control/Non-Affiliate investments (Cost of $325,154,125 and $266,280,299, respectively)	$	323,057,547	$	264,662,881
Non-Control/Non-Affiliate investments (Cost of $350,068,000 and $332,722,006, respectively)						$	341,488,783		$	330,874,911
Cash and cash equivalents		11,393,113		17,715,145			24,955,930			5,506,217
Interest receivable		967,884		558,114			1,031,575			942,329
Receivable from investments sold							-			1,993,379
Receivable from bank loan repayment		43,846		9,713			21,569			80,161
Other assets		45,000		-			49,265			-

Total assets	$	335,507,390	$	282,945,853		$	367,547,122		$	339,396,997

Liabilities
Accrued expenses and other liabilities	$	427,684	$	517,621		$	224,959		$	297,938
Fee due to administrator^(a)		66,250		66,250			66,250			66,250
Fees due to investment advisor, net of waivers^(a)		670,133		535,914			603,868			688,136
Payable for investments purchased		13,888,026		14,402,833			8,957,495			6,945,000

Total liabilities	$	15,052,093	$	15,522,618		$	9,852,572		$	7,997,324
Commitments and contingencies^(b)

Net Assets
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 33,538,562 and 28,269,649 shares issued and outstanding, respectively	$	33,539	$	28,270
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 38,343,577 and 35,109,246 shares issued and outstanding, respectively						$	38,343		$	35,110
Capital in excess of par value		319,180,741		269,246,005			364,092,201			334,095,408
Total distributable earnings		1,241,017		(1,851,040	)		(6,435,994	)		(2,730,845	)
Total Net Assets	$	320,455,297	$	267,423,235		$	357,694,550		$	331,399,673

Net Asset Value per Share of Common Stock at End of Period	$	9.55	$	9.46		$	9.33		$	9.44

Shares Outstanding		33,538,562		28,269,649			38,343,577			35,109,246

	^(a)	Refer to Note 4-Related Party Transactions for additional information.
	2
	^(b)	Refer to Note 8-Commitments and Contingencies for additional information.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Investment Income
Interest income
Non-Control/Non-Affiliate	$	5,347,398		$	4,055,676		$	15,433,946		$	11,061,333
Other		28,722			32,938			122,237			101,045
Total interest income		5,376,120			4,088,614			15,556,183			11,162,378
Other income
Non-Control/Non-Affiliate		5,214			26,985			38,364			75,547
Total income		5,381,334			4,115,599			15,594,547			11,237,925

Expenses
Base management fee^(a)	$	820,094		$	631,114		$	2,367,188		$	1,792,598
Incentive fee^(a)		680,250			517,587			1,939,486			1,392,563
Administrative fee^(a)		66,250			66,250			198,750			198,750
Directors' fees		52,500			48,750			157,500			146,250
Professional fees		136,660			100,641			524,791			313,660
Other expenses		58,388			39,550			246,441			131,452
Expenses before waivers from investment adviser and administrator		1,814,142			1,403,892			5,434,156			3,975,273
Base management fee waivers^(a)		(287,033	)		(220,890	)		(828,516	)		(627,408	)
Incentive fee waivers^(a)		(543,178	)		(411,767	)		(1,553,628	)		(1,142,863	)
Total expenses, net of waivers		983,931			771,235			3,052,012			2,205,002
Net Investment Income		4,397,403			3,344,364			12,542,535			9,032,923

Realized and Unrealized (Loss) Gain on Investments
Net realized (loss) gain on investments		(826,185	)		179,556			(724,454	)		397,313
Net change in unrealized appreciation (depreciation) on investments		182,576			(275,060	)		(479,160	)		(877,333	)
Net realized and unrealized loss on investments		(643,609	)		(95,504	)		(1,203,614	)		(480,020	)

Net Increase in Net Assets Resulting from Operations	$	3,753,794		$	3,248,860		$	11,338,921		$	8,552,903

Basic and Diluted per Share of Common Stock:
Net investment income	$	0.13		$	0.13		$	0.39		$	0.38
Net increase in net assets resulting from operations	$	0.11		$	0.13		$	0.36		$	0.36

Weighted average shares of common stock outstanding basic diluted		33,504,019			25,169,922			31,856,849			23,695,104

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Operations
Net investment income	$	12,542,535		$	9,032,923
Net realized (loss) gain on investments		(724,454	)		397,313
Net change in unrealized depreciation on investments		(479,160	)		(877,333	)
Net increase in net assets resulting from operations		11,338,921			8,552,903

Distributions:
Distributions to common stockholders		(8,246,864	)		(5,886,063	)
Return of capital to common stockholders		(60,025	)		-
Total distributions		(8,306,889	)		(5,886,063	)

Capital Share Transactions:
Issuance of common stock		50,000,000			40,000,000
Reinvestment of common stock		30			27
Net increase in net assets from capital share transactions		50,000,030			40,000,027

Net Increase in Net Assets		53,032,062			42,666,867

Net Assets, Beginning of Period		267,423,235			209,195,576

Net Assets, End of Period	$	320,455,297		$	251,862,443

Portfolio Investments^{(a) (b) (c) (d) (e) (f)}	Par		Cost			Value
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS - (100.6%)^(g)(h):

Healthcare & Pharmaceuticals
Radiology Partners, Senior Secured Term B Loan (First Lien), 6.84% (Libor + 4.75%), maturity 7/9/25⁽ⁱ⁾	$	5,200,603	$	5,161,127		$	5,148,594
Pathway, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 12/20/24		4,675,631		4,630,724			4,652,251
Tecomet, Senior Secured 2017 Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 5/1/24		3,969,544		3,952,226			3,959,618
Advarra, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 7/9/26⁽ⁱ⁾		3,949,300		3,907,971			3,909,805
Young, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 11/7/24		3,843,984		3,833,192			3,805,543
Navicure, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 11/1/24		3,439,981		3,430,229			3,439,980
Specialty Care, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 9/1/23		3,351,482		3,355,289			3,343,103
Zest Dental, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 3/14/25		3,341,694		3,366,036			3,308,277
Veritext, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 8/1/25⁽ⁱ⁾		3,195,951		3,181,538			3,188,898
Confluent Health, Senior Secured Initial Term Loan, 7.09% (Libor + 5.00%), maturity 6/24/26		2,992,500		2,963,600			2,970,056
Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 8/18/23		2,914,160		2,893,439			2,855,877
Waystar, Senior Secured Term Loan B, 6.09% (Libor + 4.00%), maturity 9/18/26⁽ⁱ⁾		2,500,000		2,487,500			2,487,500
MedRisk, Senior Secured Initial Term Loan (First Lien), 4.84% (Libor + 2.75%), maturity 12/27/24		2,456,250		2,461,697			2,456,250
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 9/23/24		2,452,138		2,432,357			2,427,617
Upstream Rehabilitation, Senior Secured Initial Term Loan, 6.09% (Libor + 4.00%), maturity 1/3/24		2,388,335		2,386,392			2,382,364
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 8/1/24⁽ⁱ⁾		2,316,088		2,304,835			2,316,088
MedRisk, Senior Secured Initial Loan (Second Lien), 8.84% (Libor + 6.75%), maturity 12/29/25		2,100,000		2,073,887			2,100,000
Press Ganey, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 7/24/26⁽ⁱ⁾		2,000,000		1,992,588			1,993,925
Zelis RedCard, Senior Secured Initial Term Loan, 6.84% (Libor + 4.75%), maturity 9/30/26⁽ⁱ⁾		2,000,000		1,980,000			1,985,000
Avalign Technologies, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 12/22/25		1,985,000		1,966,884			1,965,150
CareCentrix, Senior Secured Initial Term Loan, 6.59% (Libor + 4.50%), maturity 4/3/25		1,925,000		1,917,049			1,925,000
Premise Health, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 7/10/25		1,834,419		1,843,192			1,825,247
Alpaca, Senior Secured Term Loan, 6.59% (Libor + 4.50%), maturity 4/19/24^(j)		1,678,333		1,653,971			1,674,138
CPS, Unitranche, 7.34% (Libor + 5.25%), maturity 2/28/25		1,492,500		1,471,798			1,488,769
Stepping Stones, Unitranche, 7.59% (Libor + 5.50%), maturity 12/12/24		1,354,175		1,346,840			1,344,019
Ensemble, Senior Secured Closing Date Term Loan, 5.84% (Libor + 3.75%), maturity 8/3/26⁽ⁱ⁾		1,000,000		995,055			1,001,314
Veritext, Senior Secured Initial Term Loan (Second Lien), 9.09% (Libor + 7.00%), maturity 7/31/26		1,000,000		995,491			992,500
Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 6/30/23		987,245		993,322			977,372
Alcami, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 7/14/25		990,000		985,724			972,675
Dermatologists of Central States, Senior Secured Term Loan, 8.59% (Libor + 6.50%), maturity 4/20/22		979,804		972,900			965,107
Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 7.59% (Libor + 5.50%), maturity 5/9/25		990,000		977,475			957,825
ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 5/10/23⁽ⁱ⁾		924,411		929,618			912,448
Specialty Care, Senior Secured Initial Term Loan (Second Lien), 10.34% (Libor + 8.25%), maturity 9/1/24		850,000		843,043			847,875
Athena, Senior Secured Term B Loan (First Lien), 6.59% (Libor + 4.50%), maturity 2/11/26⁽ⁱ⁾		498,747		496,253			495,785
RMP & MedA/Rx, Senior Secured Term Loan, 6.59% (Libor + 4.50%), maturity 3/2/22		445,794		444,572			444,679
Injured Workers Pharmacy, Senior Secured Term Loan (First Lien), 6.84% (Libor + 4.75%), maturity 7/22/20		380,245		373,931			377,393
Alpaca, Senior Secured Revolver, 6.59% (Libor + 4.50%), maturity 4/19/24^(j)		25,885		22,002			25,821
Advarra, Senior Secured Initial Revolving Loan (First Lien), 6.34% (Libor + 4.25%), maturity 7/9/26		-		(7,619	)		-

High Tech Industries
Qlik, Senior Secured 2019 Incremental Term Loan, 6.34% (Libor + 4.25%), maturity 4/26/24		3,990,000		3,963,164			3,960,075
Barracuda, Senior Secured 2019 Incremental Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 2/12/25⁽ⁱ⁾		3,459,981		3,473,588			3,462,744
Masergy, Senior Secured Initial Loan (Second Lien), 9.59% (Libor + 7.50%), maturity 12/16/24		3,428,571		3,419,711			3,411,429
Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 8/16/24		3,430,350		3,404,601			3,404,622
Sparta, Senior Secured New Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 8/21/24		3,430,000		3,431,844			3,352,825
Infogroup, Senior Secured Term Loan (First Lien), 7.09% (Libor + 5.00%), maturity 4/3/23		2,927,444		2,901,246			2,905,488
McAfee, Senior Secured Term B USD Loan, 5.84% (Libor + 3.75%), maturity 9/30/24⁽ⁱ⁾		2,871,683		2,883,121			2,878,923
Jaggaer, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 8/14/26⁽ⁱ⁾		2,500,000		2,495,124			2,500,000
ECi Software Solutions, Senior Secured Initial Term Loan, 6.34% (Libor + 4.25%), maturity 9/27/24⁽ⁱ⁾		2,469,880		2,456,791			2,466,928
HelpSystems, Senior Secured Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 3/28/25		2,468,750		2,466,733			2,462,578
Idera, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 6/28/24⁽ⁱ⁾		2,151,590		2,150,729			2,162,348
eResearch (ERT), Senior Secured Initial Term Loan, 5.84% (Libor + 3.75%), maturity 5/2/23⁽ⁱ⁾		2,044,597		2,044,597			2,043,584
QuickBase, Senior Secured Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 4/2/26⁽ⁱ⁾		1,995,000		1,985,763			1,990,013
Intermedia , Senior Secured New Term Loan (First Lien), 8.09% (Libor + 6.00%), maturity 7/21/25⁽ⁱ⁾		1,985,000		1,967,681			1,988,749
Flexera Software, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 2/26/25⁽ⁱ⁾		1,970,000		1,975,508			1,976,166
EverCommerce, Senior Secured Initial Term Loan, 7.59% (Libor + 5.50%), maturity 8/23/25⁽ⁱ⁾		2,000,000		1,960,256			1,960,000
GlobalLogic, Senior Secured Initial Term Loan, 5.34% (Libor + 3.25%), maturity 8/1/25		1,732,500		1,723,719			1,732,500
Bomgar, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 4/18/25		1,728,125		1,738,745			1,706,523
Ultimate Software , Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 5/4/26⁽ⁱ⁾		1,500,000		1,502,508			1,509,737
OEConnection, Senior Secured Initial Term Loan, 6.09% (Libor + 4.00%), maturity 9/25/26⁽ⁱ⁾		1,500,000		1,491,789			1,496,019
Navex Global, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 9/5/25⁽ⁱ⁾		1,485,000		1,470,253			1,467,567
Compusearch Software Systems, Senior Secured Initial Term Loan, 6.34% (Libor + 4.25%), maturity 5/7/21		1,436,570		1,435,883			1,429,387
Insurity, Senior Secured Closing Date Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 7/31/26⁽ⁱ⁾		1,000,000		995,055			1,002,500
Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 12.34% (Libor + 10.25%), maturity 1/20/22		1,000,000		994,958			988,750
LANDesk, Senior Secured Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 1/20/24⁽ⁱ⁾		981,003		971,897			977,054
Corsair, Senior Secured Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 8/28/24⁽ⁱ⁾		984,951		980,979			975,102
Community Brands, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 12/2/22		836,376		832,410			828,012
Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 12/15/23		486,158		484,569			483,727
Endurance Int'l Group, Senior Secured Refinancing Loan (2018), 5.84% (Libor + 3.75%), maturity 2/9/23⁽ⁱ⁾		421,270		420,496			412,067

Portfolio Investments ^{(a) (b) (c) (d) (e) (f)}	Par		Cost			Value
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS - (95.2%)^(g)(h):

Healthcare & Pharmaceuticals
Radiology Partners, Senior Secured Term B Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/25⁽ⁱ⁾	$	4,215,792	$	4,345,712		$	4,081,429
Advarra, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26		3,909,806		3,873,848			3,909,805
Tecomet, Senior Secured 2017 Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 5/1/24⁽ⁱ⁾		3,928,827		3,914,207			3,860,072
Young, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 11/7/24		3,804,669		3,795,542			3,757,109
Specialty Care, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 9/1/23		3,317,371		3,320,262			3,309,076
Veritext, Senior Secured Initial Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 8/1/25		3,161,388		3,147,073			3,113,966
Zest Dental, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 3/14/25		3,247,592		3,265,442			2,955,308
Confluent Health, Senior Secured Initial Term Loan, 5.23% (Libor + 5.00%), maturity 6/24/26		2,962,500		2,938,237			2,955,094
Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 5.25% (Libor + 4.25%), maturity 8/18/23		2,887,958		2,870,561			2,794,100
Waystar, Senior Secured Term Loan B, 4.23% (Libor + 4.00%), maturity 10/22/26		2,487,500		2,477,839			2,487,500
PharMedQuest, Senior Secured Initial Term Loan, 6.25% (Libor + 5.25%), maturity 10/31/24		2,481,250		2,452,364			2,481,250
MedRisk, Senior Secured Initial Term Loan (First Lien), 2.98% (Libor + 2.75%), maturity 12/27/24		2,431,250		2,435,776			2,431,250
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 5.50% (Libor + 4.50%), maturity 9/23/24		2,427,643		2,410,238			2,415,505
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 8/1/24		2,316,088		2,306,941			2,316,088
Premise Health, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 7/10/25		2,312,092		2,318,760			2,312,092
MedRisk, Senior Secured Initial Loan (Second Lien), 6.98% (Libor + 6.75%), maturity 12/29/25		2,100,000		2,077,798			2,100,000
Packaging Coordinators, Senior Secured Term Loan, 9.75% (Libor + 8.75%), maturity 10/1/27⁽ⁱ⁾		2,000,000		1,992,500			2,000,000
Zelis RedCard, Senior Secured Initial Term Loan, 4.98% (Libor + 4.75%), maturity 9/30/26⁽ⁱ⁾		1,950,004		1,935,858			1,943,542
Avalign Technologies, Senior Secured Initial Term Loan (First Lien), 4.73% (Libor + 4.50%), maturity 12/22/25		1,965,000		1,950,929			1,930,613
Press Ganey, Senior Secured Initial Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 7/24/26⁽ⁱ⁾		1,980,000		1,973,551			1,927,953
CareCentrix, Senior Secured Initial Term Loan, 4.73% (Libor + 4.50%), maturity 4/3/25⁽ⁱ⁾		1,875,000		1,868,441			1,802,578
Alpaca, Senior Secured Term Loan, 7.75% (Libor + 6.75%), maturity 4/19/24^(j)		1,661,508		1,640,127			1,615,816
Upstream Rehabilitation, Senior Secured Term Loan, 4.73% (Libor + 4.50%), maturity 11/20/26		1,492,500		1,490,402			1,481,306
CPS, Unitranche, 6.50% (Libor + 5.50%), maturity 2/28/25		1,481,331		1,464,014			1,451,704
Stepping Stones, Unitranche, 6.75% (Libor + 5.75%), maturity 12/12/24		1,472,873		1,466,532			1,450,780
Ensemble, Senior Secured Closing Date Term Loan, 3.98% (Libor + 3.75%), maturity 8/3/26⁽ⁱ⁾		990,000		985,710			985,317
Veritext, Senior Secured Initial Term Loan (Second Lien), 7.23% (Libor + 7.00%), maturity 7/31/26		1,000,000		995,998			985,000
Athena, Senior Secured Term B Loan (First Lien), 4.73% (Libor + 4.50%), maturity 2/11/26⁽ⁱ⁾		989,956		981,393			982,969
Packaging Coordinators, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 6/30/23⁽ⁱ⁾		977,041		981,570			977,041
Alcami, Senior Secured Initial Term Loan (First Lien), 4.48% (Libor + 4.25%), maturity 7/14/25		980,000		976,396			948,150
Dermatologists of Central States, Senior Secured Term Loan, 7.50% (Libor + 6.50%), maturity 4/20/22		969,861		969,861			943,190
Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 6.50% (Libor + 5.50%), maturity 5/9/25		980,000		969,429			940,800
ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 4.50% (Libor + 3.50%), maturity 5/10/23⁽ⁱ⁾		914,856		918,723			880,549
Specialty Care, Senior Secured Initial Term Loan (Second Lien), 9.25% (Libor + 8.25%), maturity 9/1/24		850,000		844,216			850,000
Waystar, Senior Secured 2020 Incremental Term Loan (First Lien), 4.75% (Libor + 4.00%), maturity 10/22/26⁽ⁱ⁾		500,000		498,750			498,750
RMP & MedA/Rx, Senior Secured Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 2/6/25		433,366		432,651			433,366
Alpaca, Senior Secured Revolver, 7.75% (Libor + 6.75%), maturity 4/19/24^(j)		258,852		254,969			251,734
Advarra, Senior Secured Initial Revolving Loan (First Lien), 5.25% (Libor + 4.25%), maturity 7/9/26		-		(7,619	)		-

High Tech Industries
Qlik, Senior Secured 2019 Incremental Term Loan, 4.48% (Libor + 4.25%), maturity 4/26/24⁽ⁱ⁾		3,950,000		3,928,594			3,923,465
Netsmart, Senior Secured Initial Term Loan (First Lien), 4.75% (Libor + 4.00%), maturity 10/1/27⁽ⁱ⁾		3,500,000		3,484,375			3,500,000
Masergy, Senior Secured Initial Loan (Second Lien), 8.50% (Libor + 7.50%), maturity 12/16/24		3,428,571		3,421,397			3,428,571
Barracuda, Senior Secured 2019 Incremental Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 2/12/25⁽ⁱ⁾		3,424,943		3,436,190			3,410,505
Syncsort, Senior Secured 2018 Refinancing Term Loan (First Lien), 6.48% (Libor + 6.25%), maturity 8/16/24⁽ⁱ⁾		3,395,700		3,374,769			3,360,917
EverCommerce, Senior Secured Initial Term Loan, 5.73% (Libor + 5.50%), maturity 8/23/25		3,130,180		3,084,621			3,130,180
Jaggaer, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 8/14/26⁽ⁱ⁾		3,130,629		3,126,018			3,109,327
McAfee, Senior Secured Term B USD Loan, 3.98% (Libor + 3.75%), maturity 9/30/24⁽ⁱ⁾		2,842,676		2,852,276			2,828,873
Idera, Senior Secured Initial Term Loan (First Lien), 5.00% (Libor + 4.00%), maturity 6/28/24⁽ⁱ⁾		2,625,742		2,624,087			2,625,742
Infogroup, Senior Secured Term Loan (First Lien), 6.00% (Libor + 5.00%), maturity 4/3/23⁽ⁱ⁾		2,897,419		2,878,026			2,567,475
ECi Software, Senior Secured Initial Term Loan, 5.25% (Libor + 4.25%), maturity 9/27/24⁽ⁱ⁾		2,444,677		2,435,896			2,444,677
ECi Software, Senior Secured Term Loan, 4.50% (Libor + 3.75%), maturity 9/30/27⁽ⁱ⁾		2,000,000		1,992,500			1,992,500
Sophos, Senior Secured Dollar Tranche Term Loan (First Lien), 3.73% (Libor + 3.50%), maturity 3/5/27^(i)(q)		1,995,000		1,878,459			1,963,707
QuickBase, Senior Secured Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 4/2/26		1,975,000		1,966,886			1,960,188
Intermedia , Senior Secured New Term Loan (First Lien), 7.00% (Libor + 6.00%), maturity 7/21/25		1,965,000		1,952,993			1,950,263
Flexera Software, Senior Secured Initial Term Loan (First Lien), 4.25% (Libor + 3.25%), maturity 2/26/25⁽ⁱ⁾		1,950,000		1,955,844			1,945,125
GlobalLogic, Senior Secured Initial Term Loan, 2.98% (Libor + 2.75%), maturity 8/1/25		1,719,688		1,712,086			1,719,688
Bomgar, Senior Secured Initial Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 4/18/25⁽ⁱ⁾		1,710,625		1,719,334			1,697,795
Corsair, Senior Secured Term Loan (First Lien), 4.75% (Libor + 3.75%), maturity 8/28/24		1,598,987		1,588,670			1,598,987
Ultimate Software , Senior Secured Initial Term Loan (First Lien), 3.98% (Libor + 3.75%), maturity 5/4/26⁽ⁱ⁾		1,571,241		1,571,186			1,564,433
OEConnection, Senior Secured Initial Term Loan, 5.00% (Libor + 4.00%), maturity 9/25/26⁽ⁱ⁾		1,530,207		1,523,837			1,518,730
Liaison, Senior Secured Initial Term Loan, 5.50% (Libor + 4.50%), maturity 12/20/26		1,488,750		1,485,119			1,488,750
Navex Global, Senior Secured Initial Term Loan (First Lien), 3.48% (Libor + 3.25%), maturity 9/5/25⁽ⁱ⁾		1,470,000		1,457,569			1,441,426
Unison, Senior Secured 2020 Term Loan, 8.00% (Libor + 7.00%), maturity 6/25/26^(j)		997,500		973,344			990,019
Insurity, Senior Secured Closing Date Term Loan (First Lien), 4.23% (Libor + 4.00%), maturity 7/31/26		992,500		988,209			987,538

Portfolio Investments^{(a) (b) (c) (d) (e) (f)}	Par		Cost		Value
BANK LOANS: NON-CONTROL/NON-AFFILIATE INVESTMENTS^(h)(Continued):

Containers, Packaging & Glass
ProAmpac, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 11/20/23⁽ⁱ⁾	$	3,434,525	$	3,454,978	$	3,287,320
Anchor Packaging, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 7/18/26⁽ⁱ⁾		2,000,000		1,990,121		2,002,500
Tank Holding, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 3/26/26⁽ⁱ⁾		1,000,000		995,312		1,000,936
Pregis Corporation, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 7/31/26⁽ⁱ⁾		1,000,000		997,524		1,000,000
TricorBraun, Senior Secured Closing Date Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 11/30/23⁽ⁱ⁾		496,176		496,176		487,493
Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 6.34% (Libor + 4.25%), maturity 5/12/20		490,087		489,456		485,187

Transportation: Cargo
Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 10/12/24⁽ⁱ⁾		3,893,929		3,889,552		3,871,054
Transplace, Senior Secured Closing Date Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 10/7/24		2,959,950		2,951,556		2,959,950
Capstone Logistics, Senior Secured Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 10/7/21		1,209,092		1,209,266		1,190,956

Wholesale
Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 5.09% (Libor + 3.00%), maturity 3/20/25		3,945,633		3,946,035		3,906,177
PetroChoice, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 5.00%), maturity 8/19/22		1,920,184		1,896,755		1,886,581
ABB Optical, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 5.00%), maturity 6/15/23		1,458,665		1,455,777		1,425,845

Capital Equipment
MW Industries, Senior Secured 2018 New Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 9/30/24		2,450,000		2,450,000		2,425,500
BAS, Senior Secured Repricing Term Loan, 5.84% (Libor + 3.75%), maturity 5/21/24		1,974,735		1,976,053		1,964,861
Edward Don, Senior Secured Initial Term Loan, 6.34% (Libor + 4.25%), maturity 7/2/25		1,482,513		1,476,214		1,456,569
Excelitas, Senior Secured Initial USD Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 12/2/24		494,962		498,777		491,250
TriMark, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 8/28/24⁽ⁱ⁾		492,463		493,992		412,940

Construction & Building
PlayPower, Senior Secured Initial Term Loan, 7.59% (Libor + 5.50%), maturity 5/8/26⁽ⁱ⁾		1,939,583		1,939,583		1,937,159
CHI Overhead Doors, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 7/29/22		1,484,578		1,471,986		1,480,867
DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 5.09% (Libor + 3.00%), maturity 6/3/24		1,478,613		1,466,172		1,463,827
PlayCore, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 9/30/24⁽ⁱ⁾		979,411		977,482		963,450
Hoffman Southwest, Senior Secured Initial Term Loan, 6.59% (Libor + 4.50%), maturity 8/14/23		527,876		523,001		525,237

Automotive
Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.34% (Libor + 3.25%), maturity 3/20/25⁽ⁱ⁾		3,601,718		3,586,884		3,538,688
Truck Hero, Senior Secured Initial Term Loan (Second Lien), 10.34% (Libor + 8.25%), maturity 4/21/25		1,800,000		1,798,452		1,795,500
Safe Fleet, Senior Secured Tranche B-1 Term Loan (First Lien), 5.84% (Libor + 3.75%), maturity 2/3/25		990,000		965,164		985,050

Media: Advertising, Printing & Publishing
Ansira, Unitranche, 7.84% (Libor + 5.75%), maturity 12/20/22		1,910,370		1,897,583		1,886,491
Northstar, Senior Secured Term Loan, 8.34% (Libor + 6.25%), maturity 6/7/22		1,470,723		1,470,723		1,459,692
Imagine! Print Solutions, Senior Secured Term B-1 Loan (First Lien), 6.84% (Libor + 4.75%), maturity 6/21/22		1,462,500		1,454,115		1,243,125
Vestcom International, Senior Secured L/C Collaterilized, 6.09% (Libor + 4.00%), maturity 12/19/23		783,878		786,865		776,039

Forest Products & Paper
Hoffmaster Group, Senior Secured Tranche B-1 Term Loan (First Lien), 6.09% (Libor + 4.00%), maturity 11/21/23⁽ⁱ⁾		2,934,822		2,922,148		2,912,811
Loparex, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.50%), maturity 7/31/26⁽ⁱ⁾		1,500,000		1,485,165		1,500,000

Beverage, Food & Tobacco
Sovos Brands, Senior Secured Initial Term Loan (2018), 7.09% (Libor + 5.00%), maturity 11/20/25		1,985,000		1,967,048		1,970,113
Kettle Cuisine, Senior Secured Initial Term Loan (First Lien) , 5.84% (Libor + 3.75%), maturity 8/25/25⁽ⁱ⁾		1,980,000		1,971,388		1,960,200

Hotel, Gaming & Leisure
On Location, Senior Secured Second Amendment Term Loan, 7.09% (Libor + 5.00%), maturity 9/29/21		1,912,374		1,898,616		1,893,251
Auto Europe, Senior Secured Initial Dollar Term Loan, 7.09% (Libor + 5.00%), maturity 10/21/23		1,176,923		1,167,900		1,176,923

Consumer Goods: Durable
Strategic Partners, Senior Secured Initial Term Loan, 5.84% (Libor + 3.75%), maturity 6/30/23		2,315,304		2,311,862		2,315,304

Retail
Grocery Outlet, Senior Secured 2019 Term Loan (First Lien), 5.59% (Libor + 3.50%), maturity 10/22/25⁽ⁱ⁾		1,310,862		1,308,090		1,319,466

Metals & Mining
Dynatect, Senior Secured Term B Loan, 6.59% (Libor + 4.50%), maturity 9/30/22⁽ⁱ⁾		997,579		988,371		987,604

Health Care Equipment & Services
MyEyeDr, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.25%), maturity 8/31/26⁽ⁱ⁾		500,000		493,783		495,896
Total Bank Loans			$	324,033,544	$	322,337,234

	(a)	All companies are located in the United States of America, unless otherwise noted.
	(b)	Interest rate percentages represent actual interest rates which are indexed from then 30-day London Interbank Offered Rate ("LIBOR") unless otherwise noted. LIBOR rates are subject to interest rate floors which can vary based on the contractual agreement with the borrower. Due dates represent the contractual maturity date.
	(c)	All loans are income-producing, unless otherwise noted.
	(d)	All investments are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act") unless otherwise noted.
	(e)	All ~~loans~~investments are ~~restricted,~~exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act.
	(f)	Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the FASB Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
	(g)	Percentages are calculated using fair value of investments over net assets.
	(h)	As defined in 1940 Act, the Company is not deemed to be an “Affiliated Person” of or “Control” this portfolio company because it neither owns 5% or more of the portfolio company’s outstanding voting securities nor has the power to exercise control over the management or policies of such portfolio company (including through a management agreement).
	(i)	Investment was valued using Level 2 inputs within the ASC 820 fair value hierarchy. Refer to Note 3 – Investments in the accompanying Notes to Financial Statements for additional information.
	(j)	Three of our affiliated funds, Audax Direct Lending Solutions Fund - A, L.P., Audax Direct Lending Solutions Fund - C, L.P., and Audax Direct Lending Solutions Fund - D, L.P., 'co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.
	(k)	Represents an investment owned by APD Dbi Preferred, Inc., a holding company for the investment in DBi.
	(l)	Represents an investment owned by APD Dbi Common, Inc., a holding company for the investment in DBi.

	(m)	Investment is non-income producing.
	(n)	Represents an investment in APD NS Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
	(o)	Other net assets of $0 at the aggregator levels are included in the fair value of the investments when using the net asset value as a practical expedient.
	(p)	Represents an investment in APD ALP Equity, L.P., a holding company, made through an affiliated equity aggregator vehicle.
	(q)	The borrower for Sophos, Surf Holdings S.a.r.l., is located in United Kingdom.
	(r)	At September 30, 2020, the cost of investments for income tax purposes was $350,068,000 the gross unrealized depreciation for federal tax purposes was $9,547,748, the gross unrealized appreciation for federal income tax purposes was $968,531, and the net unrealized depreciation was $8,579,217.

Nine Months Ended September 30, 2018	First lien debt			Second lien debt			Total
Fair Value as of December 31, 2017	$	64,377,922		$	15,716,499		$	80,094,421
Transfers into Level 3		41,650,009			1,005,000			42,655,009
Transfers out of Level 3		(14,138,234	)		(1,786,500	)		(15,924,734	)
Total gains:
Net realized gain^(a)		36,410			52,824			89,234
Net unrealized depreciation^(b)		(668,474	)		(41,744	)		(710,218	)
New investments, repayments and settlements:^(c)
Purchases		38,535,700			3,354,000			41,889,700
Settlements/repayments		(9,540,558	)		(6,606,429	)		(16,146,987	)
Net amortization of premiums, discounts and fees		82,469			5,529			87,998
Sales		(894,087	)		-			(894,087	)
Fair Value as of September 30, 2018	$	119,441,157		$	11,699,179		$	131,140,336

Three Months Ended September 30, 2018	Common Stock		Capital in Excess of Par Value		Total Distributable (Loss) Earnings			Total Stockholders' Equity
Balance as of June 30, 2018	$	25,125	$	239,263,812	$	(675,354	)	$	238,613,583
Net investment income		-		-		3,344,364			3,344,364
Net realized gains from investment transactions		-		-		179,556			179,556
Net change in unrealized depreciation on investments		-		-		(275,060	)		(275,060	)
Issuance of shares		1,037		9,998,963		-			10,000,000
Balance as of September 30, 2018	$	26,162	$	249,262,775	$	2,573,506		$	251,862,443

	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Beginning investment portfolio, at fair value	$	264,662,881		$	184,336,177
Investments in new portfolio investments		90,412,665			94,368,626
Investments in existing portfolio investments		20,244,318			15,112,788
Principal repayments		(46,240,554	)		(52,782,500	)
Proceeds from investments sold		(5,017,964	)		(1,390,962	)
Change in premiums, discounts and amortization		199,813			106,120
Net change in unrealized depreciation on investments		(479,160	)		(877,333	)
Realized (loss) gain on investments		(724,452	)		397,313
Ending portfolio investment activity, at fair value	$	323,057,547		$	239,270,229
Number of portfolio investments		168			128
Average investment amount, at cost	$	1,935,441		$	1,980,280
Percentage of investments at floating rates		100.00	%		100.00	%

Type	Three Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
First Lien Debt	$	232,811		$	(244,752	)	$	89,811		$	(787,562	)
Second Lien Debt		(50,235	)		(30,308	)		(168,705	)		(89,771	)
Equity and Preferred Shares		-			-			(400,266	)		-
Net change in unrealized appreciation (depreciation) on investments	$	182,576		$	(275,060	)	$	(479,160	)	$	(877,333	)

	~~Increase (decrease) in~~
Change in interest rates	Increase (decrease) in investment income
Down 300 basis points		(~~4,640,015~~208,207	)
Down 200 basis points		(~~4,619,187~~208,207	)
Down 100 basis points		(~~3,256,538~~208,207	)
Up 100 basis points		~~3,256,538~~1,736,360
Up 200 basis points		~~6,513,076~~5,244,849
Up 300 basis points		~~9,769,613~~8,753,338

	Audax Credit BDC Inc.


Date: November ~~14, 2019~~13, 2020		By:	/s/ Michael P. McGonigle
			Michael P. McGonigle
			Chief Executive Officer

Date: November ~~14, 2019~~13, 2020	By:	/s/ Richard T. Joseph
		Richard T. Joseph
		Chief Financial Officer