Audax Credit BDC Inc. - FORM 10-Q

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Audax Credit BDC Inc. Reports

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EX-32.2 - EXHIBIT 32.2 - Audax Credit BDC Inc.	tv500817_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Audax Credit BDC Inc.	tv500817_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Audax Credit BDC Inc.	tv500817_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Audax Credit BDC Inc.	tv500817_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2018

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

For the transition period from to

Commission file number: 814-01154

AUDAX CREDIT BDC INC.

(Exact name of registrant as specified in its charter)

DELAWARE

47-3039124

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


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

(617) 859-1500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

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

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

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

The registrant had 25,124,820 shares of common stock, par value $0.001 per share, outstanding as of August 14, 2018.

AUDAX CREDIT BDC INC.

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements

	Statements of Assets and Liabilities as of June 30, 2018 (unaudited) and December 31, 2017	2
	Statements of Operations for the three and six months ended June 30, 2018 (unaudited) and 2017 (unaudited)	3
	Statements of Changes in Net Assets for the six months ended June 30, 2018 (unaudited) and 2017 (unaudited)	4
	Statements of Cash Flows for the six months ended June 30, 2018 (unaudited) and 2017 (unaudited)	5
	Schedules of Investments as of June 30, 2018 (unaudited) and December 31, 2017	6
	Notes to Financial Statements (unaudited)	11

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

	Overview	30
	Results of Operations	31
	Financial Condition, Liquidity and Capital Resources	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION:

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3.	Defaults Upon Senior Securities	42

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	42

SIGNATURES		43

Audax Credit BDC Inc.

Statements of Assets and Liabilities

June 30, 2018 and December 31, 2017

(Expressed in U.S. Dollars)

	June 30, 2018			December 31, 2017
	(unaudited)
Assets
Investments, at fair value
Non-Control/Non-Affiliate investments (Cost of $237,294,506 and $184,175,573, respectively)	$	236,852,837		$	184,336,177
Cash and cash equivalents		15,041,814			29,721,559
Interest receivable		516,790			429,426
Receivable from bank loan repayment		19,304			-
Other assets		83,270			2,511

Total assets	$	252,514,015		$	214,489,673

Liabilities
Accrued expenses and other liabilities	$	412,765		$	238,821
Fee due to administrator^(a)		66,250			66,250
Fees due to investment advisor, net of waivers^(a)		493,451			531,055
Payable for investments purchased		12,927,966			4,457,971

Total liabilities	$	13,900,432		$	5,294,097
Commitments and contingencies^(b)

Net Assets
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 25,124,820 and 21,988,238 shares issued and outstanding, respectively	$	25,125		$	21,989
Capital in excess of par value		239,263,812			209,266,921
Accumulated net (depreciation) appreciation on investments		(441,669	)		160,604
Accumulated net realized gain		67,960			-
Accumulated distributions in excess of net investment income		(301,645	)		(253,938	)
Total Net Assets	$	238,613,583		$	209,195,576

Net Asset Value per Share of Common Stock at End of Period	$	9.50		$	9.51

Shares Outstanding		25,124,820			21,988,238

^(a)

Refer to Note 4-Related Party Transactions for additional information

^(b)

Refer to Note 8-Commitments and Contingencies for additional information

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

Audax Credit BDC Inc.

Statements of Operations

(Expressed in U.S. Dollars)

(unaudited)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017

Investment Income
Interest income
Non-Control/Non-Affiliate	$	3,789,055		$	2,480,149		$	7,005,657		$	4,820,902
Other		31,119			33,746			68,107			56,630
Total interest income		3,820,174			2,513,895			7,073,764			4,877,532
Other income
Non-Control/Non-Affiliate		16,452			17,067			48,562			61,462
Total income		3,836,626			2,530,962			7,122,326			4,938,994

Expenses
Base management fee^(a)	$	623,184		$	438,585		$	1,161,484		$	877,248
Incentive fee^(a)		476,412			305,227			874,976			424,625
Administrative fee^(a)		66,250			66,250			132,500			132,500
Directors' fees		48,750			48,750			97,500			97,500
Professional fees		101,309			51,967			213,019			187,737
Other expenses		39,551			44,352			91,902			93,389

Expenses before waivers from investment adviser and administrator		1,355,456			955,131			2,571,381			1,812,999
Base management fee waivers^(a)		(218,114	)		(153,504	)		(406,518	)		(307,036	)
Incentive fee waivers^(a)		(388,030	)		(273,912	)		(731,096	)		(381,370	)
Total expenses, net of waivers		749,312			527,715			1,433,767			1,124,593
Net Investment Income		3,087,314			2,003,247			5,688,559			3,814,401

Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments		67,959			350,613			217,757			440,930
Net change in unrealized depreciation on investments		(639,079	)		(351,691	)		(602,273	)		(481,597	)
Net realized and unrealized loss on investments		(571,120	)		(1,078	)		(384,516	)		(40,667	)

Net Increase in Net Assets Resulting from Operations	$	2,516,194		$	2,002,169		$	5,304,043		$	3,773,734

Basic and Diluted per Share of Common Stock:
Net investment income	$	0.13		$	0.11		$	0.25		$	0.21
Net increase in net assets resulting from operations	$	0.11		$	0.11		$	0.23		$	0.21

Weighted average shares of common stock outstanding basic diluted		23,840,839			17,831,894			22,945,473			17,831,894

^(a)

Refer to Note 4-Related Party Transactions for additional information

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

Audax Credit BDC Inc.

Statements of Changes in Net Assets

(Expressed in U.S. Dollars)

(unaudited)

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017

Operations
Net investment income	$	5,688,559		$	3,814,401
Net realized gain on investments		217,757			440,930
Net change in unrealized depreciation on investments		(602,273	)		(481,597	)
Net increase in net assets resulting from operations		5,304,043			3,773,734

Distributions:
Distributions to common stockholders from net investment income		(5,736,266	)		(3,606,521	)
Distributions to common stockholders from realized gains		(149,797	)		(138,177	)
Total distributions		(5,886,063	)		(3,744,698	)


Capital Share Transactions:
Issuance of common stock		30,000,000			-
Reinvestment of common stock		27			22
Net increase in net assets from capital share transactions		30,000,027			22

Net Increase in Net Assets		29,418,007			29,058

Net Assets, Beginning of Period		209,195,576			170,369,661

Net Assets, End of Period	$	238,613,583		$	170,398,719

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

Audax Credit BDC Inc.

Statements of Cash Flows

(Expressed in U.S. Dollars)

(unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2018			June 30, 2017

Cash flows from operating activities:
Net increase in net assets resulting from operations	$	5,304,043		$	3,773,734
Adjustments to reconcile net increase in net assets from operations to net cash (used in) provided by operating activities:
Net realized gain on investments		(217,757	)		(440,930	)
Net change in unrealized depreciation on investments		602,273			481,597
Accretion of original issue discount interest		(76,643	)		(132,661	)
Increase in interest receivable		(87,364	)		(21,605	)
Increase in receivable from bank loan repayment		(19,304	)		(10,835	)
Increase in other assets		(80,759	)		(83,494	)
Increase in accrued expenses and other liabilities		173,944			92,508
Increase in fee due to administrator^(a)		-			44,375
Decrease in fees due to investment advisor^(a)		(37,604	)		(1,332	)
Increase (decrease) in payable for investments purchased		8,469,995			(227,323	)
Investment activity:
Investments purchased		(85,799,027	)		(44,953,583	)
Proceeds from investments sold		1,390,962			-
Repayment of bank loans		31,583,532			42,382,537
Total investment activity		(52,824,533	)		(2,571,046	)

Net cash (used in) provided by operating activities		(38,793,709	)		902,988

Cash flows from financing activities:
Issuance of shares of common stock		30,000,000			-
Distributions paid to common stockholders		(5,886,036	)		(3,744,676	)

Net cash provided by financing activities		24,113,964			(3,744,676	)

Net decrease in cash and cash equivalents		(14,679,745	)		(2,841,688	)

Cash and cash equivalents:
Cash and cash equivalents, beginning of period		29,721,559			30,566,068

Cash and cash equivalents, end of period	$	15,041,814		$	27,724,380


Supplemental non-cash information
Issuance of common shares in connection with dividend reinvestment plan	$	27		$	22

^(a)

Refer to Note 4-Related Party Transactions for additional information

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

Audax Credit BDC Inc.

Schedule of Investments

As of June 30, 2018

(Expressed in U.S. Dollars)

(unaudited)

Portfolio Investments ^{(a) (b) (c) (d)}	Par		Cost		Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS - (99.3%)^(e)(f):

Healthcare & Pharmaceuticals
Radiology Partners, Senior Secured Term B Loan, 6.46% (Libor + 4.00%), maturity 7/9/25	$	4,000,000	$	3,960,000	$	3,960,000
Beaver-Visitec, Senior Secured Closing Date Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 8/21/23		3,933,712		3,933,712		3,933,712
Young, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 11/7/24		3,513,417		3,500,915		3,522,199
Zest Dental, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 3/14/25		3,384,101		3,413,712		3,405,251
Specialty Care, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 9/1/23		3,394,122		3,399,020		3,360,180
Radiology Partners, Senior Secured Term A Loan, 8.09% (Libor + 5.75%), maturity 12/4/23		3,178,618		3,140,163		3,178,617
Pathway, Senior Secured Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 10/10/24		2,982,125		2,968,045		2,952,303
Physicians Endoscopy, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 8/18/23		2,951,149		2,926,503		2,906,881
MedRisk, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.00%), maturity 12/27/24		2,487,500		2,494,059		2,487,500
Curo Health Services, Senior Secured Term B Loan (First Lien), 6.34% (Libor + 4.00%), maturity 2/7/22		2,472,026		2,478,315		2,472,026
Upstream Rehabilitation, Senior Secured Initial Term Loan, 6.84% (Libor + 4.50%), maturity 1/3/24		2,424,061		2,421,710		2,418,001
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 9/23/24		2,375,270		2,352,006		2,369,332
CareCentrix, Senior Secured Initial Term Loan, 6.84% (Libor + 4.50%), maturity 4/3/25		1,987,500		1,977,775		1,977,563
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 8/1/24		1,970,000		1,961,070		1,970,000
Aegis Sciences, Senior Secured Initial Term Loan (2018) (First Lien), 7.84% (Libor + 5.50%), maturity 5/9/25		1,000,000		985,000		992,500
ATI Physical Therapy, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 5/10/23		936,354		943,149		938,110
Dermatologists of Central States, Senior Secured Term Loan, 8.84% (Libor + 6.50%), maturity 4/20/22		858,593		849,887		852,154
Specialty Care, Senior Secured Initial Term Loan (Second Lien), 10.59% (Libor + 8.25%), maturity 9/1/24		850,000		841,731		843,625
U.S. Renal Care, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 12/30/22		497,449		498,607		491,022
RMP & MedA/Rx, Senior Secured Term Loan, 7.09% (Libor + 4.75%), maturity 3/2/22		476,728		474,866		473,153

High Tech Industries

Navicure, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 11/1/24		3,483,747		3,471,907		3,492,456
Syncsort, Senior Secured Initial Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 8/16/24		3,473,750		3,442,110		3,489,950
Sparta, Senior Secured New Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 8/21/24		3,473,750		3,476,014		3,434,670
Masergy, Senior Secured Initial Loan (Second Lien), 9.84% (Libor + 7.50%), maturity 12/16/24		3,428,571		3,417,814		3,411,429
Barracuda, Senior Secured Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 2/12/25		3,000,000		3,019,886		2,993,130
Infogroup, Senior Secured Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 4/3/23		2,964,975		2,930,683		2,950,150
McAfee, Senior Secured Closing Date USD Term Loan, 6.84% (Libor + 4.50%), maturity 9/29/24		2,486,225		2,500,055		2,502,659
HelpSystems, Senior Secured Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 3/28/25		2,500,000		2,497,562		2,496,875
Flexera Software, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 2/26/25		1,995,000		2,000,106		1,994,072
GlobalLogic, Senior Secured Refinancing Term B-1 Loan, 6.09% (Libor + 3.75%), maturity 6/20/22		1,980,000		1,965,091		1,980,000
Bomgar, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 4/18/25		1,750,000		1,763,125		1,763,125
Idera, Senior Secured Initial Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 6/28/24		1,674,000		1,675,610		1,669,815
SciQuest, Senior Secured Term Loan, 6.34% (Libor + 4.00%), maturity 12/28/24		1,496,250		1,489,150		1,492,509
Compusearch Software Systems, Senior Secured Initial Term Loan, 6.59% (Libor + 4.25%), maturity 5/7/21		1,481,816		1,480,636		1,479,963
ECi Software Solutions, Senior Secured Initial Term Loan, 6.59% (Libor + 4.25%), maturity 9/27/24		992,500		983,734		997,463
Corsair, Senior Secured Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 8/28/24		997,491		992,638		990,010
Intermedia, Senior Secured Initial Term Loan (First Lien), 7.84% (Libor + 5.50%), maturity 2/1/24		990,000		990,000		990,000
LANDesk, Senior Secured Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 1/20/24		992,879		981,321		986,058
Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 12.59% (Libor + 10.25%), maturity 1/20/22		1,000,000		992,728		977,500
Community Brands, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 12/2/22		709,555		704,676		706,007
Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 12/15/23		492,500		490,483		494,347
Endurance Int'l Group, Senior Secured Refinancing Loan, 6.34% (Libor + 4.00%), maturity 2/9/23		458,213		457,172		458,692

Services: Business
CoAdvantage, Senior Secured Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 10/1/23		3,965,038		3,951,383		3,965,038
Sungard Public Sector, Senior Secured Term Loan (Second Lien), 10.84% (Libor + 8.50%), maturity 1/31/25		3,500,000		3,518,111		3,548,125
Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 6/19/24		2,938,745		2,938,745		2,931,398
Systems Maintenance Services, Senior Secured Initial Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 10/30/23		2,955,000		2,955,000		2,659,500
Kellermeyer Bergensons Services, Senior Secured Initial Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 10/29/21		2,330,747		2,319,446		2,330,747
Vistage, Senior Secured Term B Loan (First Lien), 6.34% (Libor + 4.00%), maturity 2/10/25		1,995,000		1,990,324		2,004,975
First Advantage, Senior Secured Term Loan (First Lien), 7.59% (Libor + 5.25%), maturity 6/30/22		2,000,000		1,990,545		1,975,000
DBi Services, Senior Secured Term B Loan, 7.59% (Libor + 5.25%), maturity 8/1/21		1,982,881		1,966,729		1,953,138
General Info Solutions, Senior Secured Initial Term Loan, 7.09% (Libor + 4.75%), maturity 1/26/23		1,706,827		1,694,507		1,706,827
Livingston, Senior Secured Refinancing Term B-3 Loan (First Lien), 8.05% (Libor + 5.75%), maturity 3/20/20 ^(g)		1,492,500		1,497,264		1,470,113
OSG Billing Services, Senior Secured Term B Loan (First Lien), 6.59% (Libor + 4.25%), maturity 3/27/24		1,240,481		1,234,397		1,234,278
Intralinks, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 11/14/24		995,000		990,370		995,313
Service Logic, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 7/31/23		995,000		990,636		990,025
Equian, Senior Secured 2018 Incremental Term Loan, 5.59% (Libor + 3.25%), maturity 5/20/24		497,487		501,160		496,657
Sungard Public Sector, Senior Secured Term Loan, 6.59% (Libor + 4.25%), maturity 2/1/24		246,875		245,855		244,098

Chemicals, Plastics & Rubber

Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 5/30/24		2,977,538		2,977,637		2,984,981
Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 10/4/21		2,921,296		2,911,915		2,941,380
Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 1/31/25		2,723,175		2,734,600		2,719,875
Borchers, Senior Secured Term Loan, 6.84% (Libor + 4.50%), maturity 11/1/24		1,979,962		1,973,584		1,970,063
Zep, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 8/12/24		1,986,244		1,983,711		1,963,899
Prince Minerals, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 3/31/25		997,500		992,603		998,747
Houghton International, Senior Secured Term Loan (Second Lien), 10.84% (Libor + 8.50%), maturity 12/21/20		1,000,000		1,000,000		995,000
DuBois, Senior Secured Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 3/15/24		995,151		995,151		985,200

Wholesale

SRP, Senior Secured Term Loan, 8.84% (Libor + 6.50%), maturity 9/8/23		3,759,062		3,729,331		3,730,869
Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.00%), maturity 3/20/25		3,255,644		3,255,963		3,255,644
Ohio Transmission, Senior Secured Initial Term Loan, 6.59% (Libor + 4.25%), maturity 10/2/21		1,959,545		1,948,043		1,959,545
Colony Hardware, Senior Secured Initial Term Loan, 8.34% (Libor + 6.00%), maturity 10/23/21		1,953,717		1,940,561		1,939,064
PetroChoice, Senior Secured Initial Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 8/19/22		1,945,000		1,912,299		1,925,550
ABB Optical, Senior Secured Initial Term Loan (First Lien), 7.34% (Libor + 5.00%), maturity 6/15/23		1,476,666		1,471,807		1,492,441

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

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of June 30, 2018

(Expressed in U.S. Dollars)

(unaudited)

Portfolio Investments ^{(a) (b) (c) (d)}	Par		Cost		Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS^(f)(Continued):

Services: Consumer
Restaurant Technologies, Senior Secured Term Loan (Second Lien ), 11.09% (Libor + 8.75%), maturity 11/23/23	$	3,140,309	$	3,161,780	$	3,124,607
A Place For Mom, Senior Secured Term Loan, 6.09% (Libor + 3.75%), maturity 8/10/24		2,707,056		2,706,103		2,720,592
CIBT Holdings, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 6/3/24		1,989,950		2,006,528		1,975,025
Weld North, Senior Secured Initial Term Loan, 6.59% (Libor + 4.25%), maturity 2/7/25		1,496,250		1,481,873		1,485,028
Smart Start, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 2/21/22		1,462,500		1,462,500		1,455,188
Smart Start, Senior Secured First Incremental Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 2/21/22		995,453		995,544		990,476
Mister Car Wash, Senior Secured Term Loan, 5.59% (Libor + 3.25%), maturity 8/20/21		498,702		502,442		502,442

Banking, Finance, Insurance & Real Estate
Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 8.09% (Libor + 5.75%), maturity 10/31/22		2,925,854		2,845,152		2,867,337
Inst. Shareholder Services, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 10/16/24		2,488,021		2,482,265		2,475,581
American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 9.84% (Libor + 7.50%), maturity 4/30/23		2,000,000		2,000,000		2,000,000
AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 7/10/22		1,902,054		1,884,409		1,887,788
EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 9/6/24		1,492,500		1,489,012		1,485,038
Genex Services, Senior Secured Initial Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 3/7/25		997,500		996,289		990,852

Consumer Goods: Non-durable
Manna Pro, Senior Secured Term Loan, 8.34% (Libor + 6.00%), maturity 12/8/23		3,257,917		3,208,697		3,241,627
Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 9/11/23		1,964,871		1,949,328		1,950,135
Augusta Sportswear Group, Senior Secured Initial Term Loan, 6.84% (Libor + 4.50%), maturity 10/26/23		1,858,228		1,842,498		1,830,354

Transportation: Cargo
Odyssey Logistics & Technology , Senior Secured New Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 10/12/24		2,985,019		2,971,322		2,970,094
Transplace, Senior Secured Closing Date Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 10/7/24		1,995,000		1,990,126		2,004,975
Capstone Logistics, Senior Secured Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 10/7/21		1,237,631		1,237,904		1,225,254
GlobalTranz, Senior Secured Closing Date Term Loan (First Lien), 5.96% (Libor + 3.25%), maturity 6/29/25		802,083		798,073		798,073

Capital Equipment
MW Industries, Senior Secured 2018 New Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 9/29/24		2,481,250		2,481,250		2,484,919
TriMark, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 8/28/24		498,744		500,614		498,275
Edward Don, Senior Secured Initial Term Loan, 6.46% (Libor + 4.25%), maturity 7/2/25		2,000,000		1,990,000		1,990,000
BAS, Senior Secured Initial Term Loan, 6.59% (Libor + 4.25%), maturity 5/21/24		995,000		990,790		995,000
United Flexible, Senior Secured Term Loan, 7.09% (Libor + 4.75%), maturity 2/16/21		471,532		468,227		471,532

Containers, Packaging & Glass
ProAmpac, Senior Secured Initial Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 11/20/23		3,478,671		3,504,827		3,467,800
Pregis Corporation, Senior Secured Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 5/20/21		1,741,426		1,749,275		1,732,719
Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 6.59% (Libor + 4.25%), maturity 5/12/20		496,337		495,352		496,958
Tapp Label Company, Senior Secured Term Loan, 7.84% (Libor + 5.50%), maturity 7/6/20		380,936		381,111		266,655

Hotel, Gaming & Leisure
TravelCLICK, Senior Secured Term-3 Loan (First Lien), 5.84% (Libor + 3.50%), maturity 5/6/21		2,918,727		2,918,727		2,896,837
On Location, Senior Secured Second Amendment Term Loan, 7.84% (Libor + 5.50%), maturity 9/29/21		1,481,250		1,464,817		1,470,141
Auto Europe, Senior Secured Initial Dollar Term Loan, 7.34% (Libor + 5.00%), maturity 10/21/23		1,390,385		1,378,735		1,379,957

Automotive
Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 3/20/25		3,469,742		3,452,929		3,478,417
Truck Hero, Senior Secured Initial Term Loan (Second Lien), 10.59% (Libor + 8.25%), maturity 4/21/25		1,800,000		1,798,195		1,786,500

Aerospace & Defense
StandardAero, Senior Secured Initial Term Loan, 6.06% (Libor + 3.75%), maturity 7/7/22		1,984,694		1,997,593		1,988,115
Consolidated Precision Products, Senior Secured Initial Term Loan (Second Lien), 10.09% (Libor + 7.75%), maturity 4/30/26		1,500,000		1,517,500		1,515,000
Tronair, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 9/8/23		1,478,712		1,469,982		1,449,138

Media: Advertising, Printing & Publishing
Ansira, Senior Secured Initial Term Loan, 8.09% (Libor + 5.75%), maturity 12/20/22		1,872,070		1,855,800		1,858,031
Northstar, Senior Secured Term Loan, 8.59% (Libor + 6.25%), maturity 6/7/22		1,577,221		1,577,221		1,579,193
Imagine! Print Solutions, Senior Secured Term B-1 Loan (First Lien), 7.09% (Libor + 4.75%), maturity 6/21/22		1,481,250		1,469,115		1,466,437

Beverage, Food & Tobacco
Lipari, Senior Secured Term Loan A, 6.84% (Libor + 4.50%), maturity 10/1/22		1,972,180		1,961,815		1,949,993
Kettle Cuisine, Senior Secured Term Loan, 7.34% (Libor + 5.00%), maturity 8/21/21		1,948,146		1,948,146		1,943,276
Sovos Brands, Senior Secured Initial Term Loan, 6.84% (Libor + 4.50%), maturity 7/18/24		992,500		988,063		972,650

Construction & Building
PlayPower, Senior Secured Initial Term Loan (First Lien), 7.09% (Libor + 4.75%), maturity 6/23/21		1,959,596		1,946,933		1,954,697
PlayPower, Senior Secured Initial Term Loan (Second Lien), 11.09% (Libor + 8.75%), maturity 6/23/22		1,000,000		993,368		997,500
DiversiTech Corporation, Senior Secured Tranche B-1 Term Loan (First Lien), 5.34% (Libor + 3.00%), maturity 6/3/24		994,977		994,977		992,494
PlayCore, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 9/30/24		874,345		872,053		867,788

Consumer Goods: Durable
Strategic Partners, Senior Secured Initial Term Loan, 6.09% (Libor + 3.75%), maturity 6/30/23		2,473,837		2,469,072		2,492,391

Media: Broadcasting & Subscription
Encompass, Senior Secured Tranche B Term Loan (Second Lien), 10.09% (Libor + 7.75%), maturity 6/6/22		1,500,000		1,482,611		1,485,000
Encompass, Senior Secured Tranche B Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 6/6/21		969,697		969,697		952,727

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

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of June 30, 2018

(Expressed in U.S. Dollars)

(unaudited)

Portfolio Investments ^{(a) (b) (c) (d)}	Par		Cost		Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS^(f)(Continued):

Retail
Grocery Outlet, Senior Secured Incremental Term Loan (First Lien), 5.84% (Libor + 3.50%), maturity 10/21/21	$	1,989,924	$	2,006,230	$	2,007,336

Forest Products & Paper
Hoffmaster Group, Senior Secured Initial Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 11/21/23		1,970,000		1,953,925		1,978,364

Utilities: Electric
CLEAResult, Senior Secured Initial Term Loan, 7.84% (Libor + 5.50%), maturity 8/31/23		1,390,987		1,379,288		1,384,032

Total Portfolio Investments^(h)			$	237,294,506	$	236,852,837

(a)

All companies are located in the United States of America.

(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)

Percentages are calculated using fair value of investments over net assets.

(f)

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).

(g)

The borrower for Livingston, Livingston International Inc., is located in Canada.

(h)

At June 30, 2018, the cost of investments for income tax purposes was $237,294,506 the gross unrealized depreciation for federal tax purposes was $1,059,487, the gross unrealized appreciation for federal income tax purposes was $617,818, and the net unrealized depreciation was $441,669.

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

Audax Credit BDC Inc.

Schedule of Investments

As of December 31, 2017

(Expressed in U.S. Dollars)

Portfolio Investments ^{(a) (b) (c) (d)}	Par		Cost		Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS - (88.1%)^(e)(f):

High Tech Industries
Masergy, Senior Secured Initial Loan (Second Lien), 10.19% (Libor + 8.50%), maturity 12/16/24	$	4,000,000	$	3,986,617	$	3,989,999
Sparta, Senior Secured Initial Term Loan (First Lien), 5.69% (Libor + 4.00%), maturity 8/21/24		3,491,250		3,493,682		3,473,793
Help/Systems, Senior Secured Refinancing Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 10/8/21		3,473,418		3,469,538		3,473,417
Syncsort, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 8/16/24		3,491,250		3,457,390		3,429,425
Navicure, Senior Secured Initial Term Loan (First Lien), 5.44% (Libor + 3.75%), maturity 11/1/24		3,000,000		2,985,311		3,011,250
Infogroup, Senior Secured Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 4/3/23		2,979,987		2,942,629		2,965,088
GlobalLogic, Senior Secured Closing Date Term Loan, 6.19% (Libor + 4.50%), maturity 6/20/22		1,985,000		1,968,369		1,989,963
Idera, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 6/28/24		1,682,535		1,684,149		1,678,329
SciQuest, Senior Secured Term Loan, 5.69% (Libor + 4.00%), maturity 12/28/24		1,500,000		1,492,500		1,492,500
Flexera Software, Senior Secured Term Loan (Second Lien), 8.69% (Libor + 7.00%), maturity 4/2/21		1,000,000		981,929		997,500
Intermedia, Senior Secured Initial Term Loan (First Lien), 7.19% (Libor + 5.50%), maturity 2/1/24		995,000		995,000		997,488
ECi Software Solutions, Senior Secured Initial Term Loan, 5.94% (Libor + 4.25%), maturity 9/27/24		997,500		987,787		990,019
Compusearch Software Systems, Senior Secured Initial Term Loan, 6.19% (Libor + 4.50%), maturity 5/7/21		989,420		989,420		989,420
Global Knowledge, Senior Secured Initial Term Loan (Second Lien), 11.94% (Libor + 10.25%), maturity 1/20/22		1,000,000		991,916		977,500
McAfee, Senior Secured Closing Date USD Term Loan, 6.19% (Libor + 4.50%), maturity 9/30/24		498,750		493,884		497,860
Masergy, Senior Secured 2017 Replacement Term Loan (First Lien), 5.44% (Libor + 3.75%), maturity 12/15/23		495,000		492,815		493,763
Endurance Int'l Group, Senior Secured Refinancing Loan, 5.69% (Libor + 4.00%), maturity 2/9/23		473,057		471,912		476,775
LANDesk, Senior Secured Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 1/20/24		497,630		491,604		474,615

Healthcare & Pharmaceuticals
Beaver-Visitec, Senior Secured Closing Date Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 8/21/23		3,953,731		3,953,731		3,933,962
Physicans Endoscopy, Senior Secured Initial Term Loan, 6.69% (Libor + 5.00%), maturity 8/18/23		2,965,975		2,939,822		2,936,315
Young, Senior Secured Initial Term Loan (First Lien), 5.69% (Libor + 4.00%), maturity 11/7/24		2,750,000		2,732,984		2,750,000
Pathway, Senior Secured Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 10/10/24		2,176,311		2,161,569		2,159,989
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 9/23/24		2,153,693		2,129,086		2,137,540
OB Hospitalist Group, Senior Secured Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 8/1/24		2,000,000		1,990,432		2,012,500
Sarnova, Senior Secured Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 1/28/22		1,965,000		1,950,833		1,965,000
Upstream Rehabilitation, Senior Secured Term Loan, 5.69% (Libor + 4.00%), maturity 12/15/21		1,936,242		1,904,024		1,936,242
Radiology Partners, Senior Secured Term Loan, 7.44% (Libor + 5.75%), maturity 12/4/23		1,824,433		1,804,541		1,806,189
Specialty Care, Senior Secured Initial Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 9/1/23		1,500,000		1,507,781		1,488,750
Curo Health Services, Senior Secured Term B Loan (First Lien), 5.69% (Libor + 4.00%), maturity 2/7/22		1,484,770		1,487,960		1,486,255
CareCentrix, Senior Secured Initial Term Loan, 6.69% (Libor + 5.00%), maturity 7/8/21		1,471,187		1,456,513		1,485,899
NAPA, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 4/19/23		903,118		896,101		894,087
Dermatologists of Central States, Senior Secured Term Loan, 8.19% (Libor + 6.50%), maturity 4/20/22		862,583		853,203		856,113
RMP & MedA/Rx, Senior Secured Term Loan, 6.44% (Libor + 4.75%), maturity 3/2/22		490,625		488,507		485,719

Services: Business
CoAdvantage, Senior Secured Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 10/1/23		3,985,013		3,970,218		3,955,125
Sungard Public Sector, Senior Secured Term Loan (Second Lien), 10.19% (Libor + 8.50%), maturity 1/31/25		3,500,000		3,519,114		3,482,500
Sterling Backcheck, Senior Secured Initial Term Loan (First Lien), 5.19% (Libor + 3.50%), maturity 6/19/24		2,953,587		2,953,587		2,968,860
Systems Maintenance Services, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 10/30/23		2,970,000		2,970,000		2,895,750
Kellermeyer Bergensons Services, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 10/29/21		2,342,823		2,329,977		2,336,966
ABILITY Network, Senior Secured Initial Term Loan (First Lien), 5.44% (Libor + 3.75%), maturity 12/13/24		2,000,000		1,990,000		2,007,500
First Advantage, Senior Secured Term Loan (First Lien), 6.94% (Libor + 5.25%), maturity 6/30/22		2,000,000		1,989,326		1,945,000
General Info Solutions, Senior Secured Initial Term Loan, 6.44% (Libor + 4.75%), maturity 1/26/23		1,215,625		1,204,679		1,206,508
Service Logic, Senior Secured Initial Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 7/31/23		1,000,000		995,254		995,000
Intralinks, Senior Secured Initial Term Loan (First Lien), 5.69% (Libor + 4.00%), maturity 11/14/24		1,000,000		995,052		992,500
DBi Services, Senior Secured Term B Loan, 6.94% (Libor + 5.25%), maturity 8/1/21		989,985		981,912		987,510
ACA Compliance Group, Senior Secured Term Loan, 6.44% (Libor + 4.75%), maturity 1/30/21		497,500		493,116		493,769
Sungard Public Sector, Senior Secured Term Loan, 5.94% (Libor + 4.25%), maturity 2/1/24		248,125		247,024		251,057

Banking, Finance, Insurance & Real Estate
Integro Insurance Brokers, Senior Secured Initial Term Loan (First Lien), 7.44% (Libor + 5.75%), maturity 10/31/22		2,940,854		2,851,768		2,911,446
Inst. Shareholder Services, Senior Secured Initial Term Loan (First Lien), 5.44% (Libor + 3.75%), maturity 10/16/24		2,291,667		2,285,541		2,303,125
American Beacon Advisors, Senior Secured Tranche C Term Loan (Second Lien), 9.19% (Libor + 7.50%), maturity 4/30/23		2,000,000		2,000,000		2,000,000
AmeriLife Group, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 7/10/22		1,945,641		1,926,032		1,923,752
EPIC Insurance, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 9/6/24		1,500,000		1,496,280		1,492,500
GENEX Services, Senior Secured Initial Term Loan (Second Lien), 9.44% (Libor + 7.75%), maturity 5/30/22		1,271,000		1,216,818		1,266,234

Wholesale
SRP, Senior Secured Term Loan, 8.19% (Libor + 6.50%), maturity 9/8/23		3,436,401		3,404,984		3,419,219
PetroChoice, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 8/19/22		1,955,000		1,919,234		1,967,219
Ohio Transmission, Senior Secured Initial Term Loan, 5.94% (Libor + 4.25%), maturity 10/2/21		1,969,545		1,956,406		1,964,622
Colony Hardware, Senior Secured Initial Term Loan, 7.69% (Libor + 6.00%), maturity 10/23/21		1,963,741		1,948,815		1,949,013
ABB Optical, Senior Secured Initial Term Loan (First Lien), 6.69% (Libor + 5.00%), maturity 6/15/23		1,484,981		1,479,366		1,490,131

Chemicals, Plastics & Rubber
Transcendia, Senior Secured 2017 Refinancing Term Loan (First Lien), 5.19% (Libor + 3.50%), maturity 5/30/24		2,992,500		2,992,608		2,992,500
Universal Fiber Systems, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 10/4/21		2,939,995		2,929,297		2,903,245
Borchers, Senior Secured Term Loan, 6.19% (Libor + 4.50%), maturity 11/1/24		1,989,987		1,983,107		1,985,012
Zep, Senior Secured Initial Term Loan (First Lien), 5.69% (Libor + 4.00%), maturity 8/12/24		1,496,250		1,489,035		1,485,028
Houghton International, Senior Secured Term Loan (Second Lien), 10.19% (Libor + 8.50%), maturity 12/21/20		1,000,000		1,000,000		1,005,000

Services: Consumer
Restaurant Technologies, Senior Secured Term Loan (Second Lien ), 10.44% (Libor + 8.75%), maturity 11/23/23		3,140,309		3,163,677		3,163,861
A Place For Mom, Senior Secured Term Loan, 5.69% (Libor + 4.00%), maturity 8/10/24		2,219,438		2,215,736		2,213,889
Smart Start, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 2/21/22		1,470,000		1,470,000		1,466,325
Smart Start, Senior Secured First Incremental Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 2/21/22		998,484		995,988		997,236

Consumer Goods: Non-durable
Manna Pro, Senior Secured Term Loan, 7.69% (Libor + 6.00%), maturity 12/8/23		2,916,667		2,864,167		2,872,917
Badger Sportswear, Senior Secured Initial Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 9/11/23		1,974,957		1,958,097		1,955,207
Augusta Sportswear Group, Senior Secured Initial Term Loan, 6.19% (Libor + 4.50%), maturity 10/26/23		1,868,354		1,851,317		1,849,671

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

Audax Credit BDC Inc.

Schedule of Investments (Continued)

As of December 31, 2017

(Expressed in U.S. Dollars)

Portfolio Investments ^{(a) (b) (c) (d)}	Par		Cost		Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS^(f)(Continued):

Consumer Goods: Durable
Pelican Products, Senior Secured Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 4/10/20	$	3,977,987	$	3,962,506	$	3,992,904
Strategic Partners, Senior Secured Initial Term Loan, 6.19% (Libor + 4.50%), maturity 6/30/23		1,980,038		1,974,869		1,994,888

Capital Equipment
MW Industries, Senior Secured Initial Term Loan (First Lien), 5.69% (Libor + 4.00%), maturity 9/30/24		2,493,750		2,481,542		2,522,096
FCX, Senior Secured Eighth Amendment Acquisition Loan, 5.94% (Libor + 4.25%), maturity 8/4/20		997,500		992,710		992,513
BAS, Senior Secured Initial Term Loan, 5.94% (Libor + 4.25%), maturity 5/21/24		1,000,000		995,111		992,500
FCX, Senior Secured Seventh Amendment Acquisition Loan, 6.19% (Libor + 4.50%), maturity 8/4/20		987,500		987,500		982,563
United Flexible, Senior Secured Term Loan, 6.44% (Libor + 4.75%), maturity 2/16/21		477,858		473,970		476,663

Media: Advertising, Printing & Publishing
Ansira, Senior Secured Initial Term Loan, 8.19% (Libor + 6.50%), maturity 12/20/22		1,868,492		1,850,917		1,854,480
Northstar, Senior Secured Term Loan, 7.94% (Libor + 6.25%), maturity 6/7/22		1,620,083		1,620,083		1,607,932
Imagine! Print Solutions, Senior Secured Term B-1 Loan (First Lien), 6.44% (Libor + 4.75%), maturity 6/21/22		1,488,750		1,475,137		1,462,697
Mspark, Senior Secured Term Loan, 7.19% (Libor + 5.50%), maturity 4/22/21		926,356		919,435		926,356

Hotel, Gaming & Leisure
TravelCLICK, Senior Secured Term-1 Loan (First Lien), 5.69% (Libor + 4.00%), maturity 5/6/21		2,933,431		2,933,431		2,953,539
On Location, Senior Secured Second Amendment Incremental Term Loan, 7.19% (Libor + 5.50%), maturity 9/29/21		1,490,625		1,471,992		1,471,992
Auto Europe, Senior Secured Initial Dollar Term Loan, 6.69% (Libor + 5.00%), maturity 10/21/23		1,407,692		1,395,010		1,404,173

Aerospace & Defense
StandardAero, Senior Secured Initial Term Loan, 5.44% (Libor + 3.75%), maturity 7/7/22		1,994,898		2,009,478		2,013,191
MB Aerospace, Senior Secured Initial Term Loan, 7.19% (Libor + 5.50%), maturity 12/15/22		1,962,456		1,946,911		1,952,644
Tronair, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 9/8/23		1,486,237		1,476,682		1,482,522

Beverage, Food & Tobacco
Lipari, Senior Secured Term Loan A, 6.19% (Libor + 4.50%), maturity 10/1/22		1,982,180		1,968,907		1,962,358
Kettle Cuisine, Senior Secured Term Loan, 6.69% (Libor + 5.00%), maturity 8/21/21		1,958,093		1,958,093		1,958,093
Sovos Brands, Senior Secured Initial Term Loan, 6.19% (Libor + 4.50%), maturity 7/18/24		997,500		992,745		990,019

Transportation: Cargo
Odyssey Logistics & Technology , Senior Secured Initial Term Loan (First Lien), 5.94% (Libor + 4.25%), maturity 10/12/24		3,000,000		2,985,000		2,977,500
Capstone Logistics, Senior Secured Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 10/7/21		1,280,194		1,280,506		1,267,392

Construction & Building
PlayPower, Senior Secured Initial Term Loan (First Lien), 6.44% (Libor + 4.75%), maturity 6/23/21		1,969,697		1,954,979		1,979,545
PlayPower, Senior Secured Initial Term Loan (Second Lien), 10.44% (Libor + 8.75%), maturity 6/23/22		1,000,000		992,705		997,500
PlayCore, Senior Secured Initial Term Loan (First Lien), 5.44% (Libor + 3.75%), maturity 9/30/24		878,750		876,316		872,159

Media: Broadcasting & Subscription
Encompass, Senior Secured Tranche B Term Loan (Second Lien), 9.44% (Libor + 7.75%), maturity 6/6/22		1,500,000		1,480,811		1,485,000
Encompass, Senior Secured Tranche B Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 6/6/21		974,748		974,748		965,000

Forest Products & Paper
Hoffmaster Group, Senior Secured Initial Term Loan (First Lien), 6.19% (Libor + 4.50%), maturity 11/21/23		1,980,000		1,962,639		1,998,977

Automotive
Truck Hero, Senior Secured Initial Term Loan (Second Lien), 9.94% (Libor + 8.25%), maturity 4/21/25		1,800,000		1,798,099		1,786,500

Utilities: Electric
CLEAResult, Senior Secured Initial Term Loan, 7.19% (Libor + 5.50%), maturity 8/31/23		1,390,987		1,378,314		1,390,987

Media: Diversified & Production
Vubiquity, Senior Secured Initial Term Loan, 7.19% (Libor + 5.50%), maturity 8/12/21		980,000		973,568		970,200

Containers, Packaging & Glass
Tapp Label Company, Senior Secured Term Loan, 7.19% (Libor + 5.50%), maturity 7/6/20		463,487		462,519		324,441
Alpha Packaging, Senior Secured Tranche B-1 Term Loan, 5.94% (Libor + 4.25%), maturity 5/12/20		498,392		497,269		498,392

Total Portfolio Investments^(g)			$	184,175,573	$	184,336,177

(a)

All companies are located in the United States of America.

(b)

(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)

Percentages are calculated using fair value of investments over net assets.

(f)

(g)

At December 31, 2017, the cost of investments for income tax purposes was $184,175,573 the gross unrealized appreciation for federal tax purposes was $745,404, the gross unrealized depreciation for federal income tax purposes was $584,800, and the net unrealized appreciation was $160,604.

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

Audax Credit BDC Inc.

Notes to Financial Statements

June 30, 2018

(unaudited)

Note 1. Organization

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.

Note 2. Significant Accounting Policies

Basis of Presentation

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, which incorporates the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X, as well as accounting principles generally accepted 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.

Use of Estimates

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

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 June 30, 2018 and December 31, 2017. At such dates, cash was not subject to any restrictions on withdrawal.

Offering Expenses

The Company incurred offering costs of $145,358 in prior periods. The Company’s offering costs included legal fees and other costs pertaining to the preparation of the Company’s registration statement on Form 10 (the “Registration Statement”) and sale of the Company’s shares of common stock. The Company capitalized these expenses and amortized them on a straight-line basis over a twelve-month period. The Company did not amortize offering costs during the three and six months ended June 30, 2018 or 2017.

Expenses

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.

Investment Valuation Policy

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, with the assistance of 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.

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. 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 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. The process used to determine the applicable value is as follows: (i) 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; (ii) 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 Audit Committee reviews the assessments of the Adviser 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 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 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 trade date (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 in the notes accompanying the financial statements 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”), is 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.

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 June 30, 2018, the Company held 110 investments in loans with OID. The Company accrued OID income of $33,697 and $76,643 for the three and six months ended June 30, 2018, respectively. The unamortized balance of OID investments as of June 30, 2018, totaled $702,556. As of December 31, 2017, the Company held 89 investments in loans with OID. The unamortized balance of OID investments as of December 31, 2017, totaled $1,028,002. The Company accrued OID income of $68,127 and $132,661 for the three and six months ended June 30, 2017, respectively.

As of June 30, 2018 and December 31, 2017, the Company held $15,041,814 and $29,721,559 cash and cash equivalents, respectively. For the three and six months ended June 30, 2018, the Company earned $31,119 and $68,107, respectively, of interest income related to cash, which is included in other interest income within the accompanying statement of operations. For the three and six months ended June 30, 2017, the Company earned $33,746 and $56,630, 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 upon receipt of cash or as soon as the Company becomes aware of the prepayment.

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 and dividend income are both accrued in other income in the accompanying statements of operations.

For the three and six months ended June 30, 2018, the Company accrued $16,452 and $48,562 of other income, respectively, related to amendment fees. For the three and six months ended June 30, 2017, the Company accrued $17,067 and $61,462 of other income, respectively, related to amendment fees.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606).” The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016 and interim periods therein. The Company has determined that this standard will not have a material impact on the financial statements, primarily because the majority of the Company’s revenue is accounted for under FASB ASC Topic 320, “Investments – Debt and Equity Securities”, which is scoped out of this standard.

Note 3. Investments

Fair Value

In accordance with ASC 820, the Company’s investments’ fair value 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 June 30, 2018, $124,405,787 of the Company’s investments were valued using unobservable inputs, and $112,447,050 were valued using observable inputs. During the six months ended June 30, 2018, $48,655,402 and $17,862,753 of investments transferred into and out of Level 3, respectively.

As of December 31, 2017, $80,094,421 of the Company’s investments were valued using unobservable inputs, and $104,241,756 were valued using observable inputs. During the six months ended June 30, 2017, $9,181,233 and $17,406,407 of investments transferred into and out of Level 3, respectively.

The following tables present the Company’s investments carried at fair value as of June 30, 2018 and December 31, 2017, by caption on the Company’s accompanying statements of assets and liabilities and by security type.

	Assets at Fair Value as of June 30, 2018
	Level 1		Level 2		Level 3		Total
First lien debt	$	-	$	106,386,425	$	109,782,126	$	216,168,551
Second lien debt				6,060,625		14,623,661		20,684,286
Total	$	-	$	112,447,050	$	124,405,787	$	236,852,837

	Assets at Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
First lien debt	$	-	$	98,806,661	$	64,377,922	$	163,184,583
Second lien debt				5,435,095		15,716,499		21,151,594
Total	$	-	$	104,241,756	$	80,094,421	$	184,336,177

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 June 30, 2018. 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

106,855,971

Matrix Pricing

Senior Leverage

2.67x - 6.89x

4.62x

Total Leverage

3.28x - 8.65x

5.77x

Interest Coverage

1.24x - 4.02x

2.35x

Debt Service Coverage

1.14x - 3.28x

1.86x

TEV Coverage

1.45x - 3.89x

2.45x

Liquidity

45.95% - 625.29%

128.27%

Spread Comparison

325bps - 650bps

463bps

2,926,155

Market Analysis

Senior Leverage

5.51x - 6.91x

6.78x

Total Leverage

9.22x - 14.62x

9.71x

Interest Coverage

0.39x - 1.35x

1.27x

Debt Service Coverage

0.31x - 1.23x

1.14x

TEV Coverage

0.91x - 1.29x

1.26x

Liquidity

6.22% - 123.44%

112.76%

Spread Comparison

500bps - 550bps

505bps

Second lien debt

14,623,661

Matrix Pricing

Senior Leverage

4.61x - 6.58x

5.85x

Total Leverage

4.61x - 6.58x

5.85x

Interest Coverage

1.10x - 3.35x

1.82x

Debt Service Coverage

0.97x - 2.99x

1.56x

TEV Coverage

1.33x - 2.43x

1.81x

Liquidity

23.00% - 212.51%

116.03%

Spread Comparison

750bps - 1025bps

818bps

Total

124,405,787

(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.

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, 2017. 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

64,053,481

Matrix Pricing

Senior Leverage

1.87x - 6.08x

4.55x

Total Leverage

2.86x - 8.32x

5.72x

Interest Coverage

1.38x - 3.91x

2.27x

Debt Service Coverage

1.15x - 2.72x

1.70x

TEV Coverage

1.44x - 4.88x

2.48x

Liquidity

50.39% - 280.44%

120.80%

Spread Comparison

375bps - 650bps

473bps

324,441

Market Analysis

Senior Leverage

(55.65)x

Total Leverage

(130.28)x

Interest Coverage

(0.37)x

Debt Service Coverage

(0.27)x

TEV Coverage

(0.09)x

Liquidity

52.10%

Spread Comparison

550bps

Second lien debt

15,716,499

Matrix Pricing

Senior Leverage

4.65x - 6.61x

5.93x

Total Leverage

4.65x - 6.61x

5.92x

Interest Coverage

1.51x - 3.97x

2.24x

Debt Service Coverage

1.14x - 3.42x

1.84x

TEV Coverage

1.33x - 2.15x

1.79x

Liquidity

32.50% - 222.30%

125.66%

Spread Comparison

700bps - 1025bps

830bps

Total

80,094,421

(1)

(2)

(3)

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

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in market yields, discounts rates, leverage, earnings before interest, taxes, depreciation and amortization (“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 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 six months ended June 30, 2018 and 2017 for all investments for which the Company determines fair value using unobservable (Level 3) factors.

Six Months Ended June 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		44,486,541			4,168,861			48,655,402
Transfers out of Level 3		(13,382,753	)		(4,480,000	)		(17,862,753	)
Total gains:
Net realized gain^(a)		25,705			19,140			44,845
Net unrealized depreciation^(b)		(528,494	)		(73,511	)		(602,005	)
New investments, repayments and settlements:^(c)
Purchases		23,171,724			841,500			24,013,224
Settlements/repayments		(7,532,490	)		(1,571,429	)		(9,103,919	)
Net amortization of premiums, discounts and fees		58,058			2,601			60,659
Sales		(894,087	)		-			(894,087	)
Fair Value as of June 30, 2018	$	109,782,126		$	14,623,661		$	124,405,787

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

	(b)	Included in net change in unrealized depreciation on the accompanying Statement of Operations for the six months ended June 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.

Six Months Ended June 30, 2017	First lien debt			Second lien debt			Total
Fair Value as of December 31, 2016	$	83,470,626		$	9,705,218		$	93,175,844
Transfers into Level 3		9,181,233			-			9,181,233
Transfers out of Level 3		(41,593,080	)		-			(41,593,080	)
Total gains:
Net unrealized depreciation^(a)		(300,709	)		(36,115	)		(336,824	)
New investments, repayments and settlements:^(b)
Purchases		22,041,729			-			22,041,729
Settlements/repayments		(614,938	)		-			(614,938	)
Net amortization of premiums, discounts and fees		51,848			12,937			64,785
Fair Value as of June 30, 2017	$	72,236,709		$	9,682,040		$	81,918,749

(a)

Included in net change in unrealized depreciation on the accompanying Statement of Operations for the six months ended June 30, 2017.

(b)

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 June 30, 2018 and 2017 $(564,292) and $(336,824), respectively.

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. For the six months ended June 30, 2018 and 2017, transfers between Level 2 to Level 3 were primarily due to increased or decreased price transparency.

Investment Activities

The Company held a total of 124 syndicated investments with an aggregate fair value of $236,852,837 as of June 30, 2018. During the six months ended June 30, 2018, the Company invested in 44 new syndicated investments for a combined $72,398,817 and in existing investments for a combined $13,400,210. The Company also received $31,583,532 in repayments from investments and $1,390,962 from investments sold during the six months.

The Company held a total of 102 syndicated investments with an aggregate fair value of $184,336,177 as of December 31, 2017. During the six months ended June 30, 2017, the Company invested in 24 new syndicated investments for a combined $39,414,095 and in existing investments for a combined $5,539,488. The Company also received $42,382,537 in repayments from investments during the six months.

Investment Concentrations

As of June 30, 2018, the Company’s investment portfolio consisted of investments in 117 companies located in 29 states across 22 different industries, with an aggregate fair value of $236,852,837. The five largest investments at fair value as of June 30, 2018 totaled $19,137,744, or 8.08% of the Company’s total investment portfolio as of such date. As of June 30, 2018, the Company’s average investment was $1,913,665 at cost.

As of December 31, 2017, the Company’s investment portfolio consisted of investments in 96 companies located in 28 states across 22 different industries, with an aggregate fair value of $184,336,177. The five largest investments at fair value as of December 31, 2017 totaled $19,354,490, or 10.50% of the Company’s total investment portfolio as of such date. As of December 31, 2017, the Company’s average investment was $1,918,496 at cost.

	June 30, 2018										December 31, 2017
	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	$	216,570,668		91.27	%	$	216,168,551		91.27	%	$	163,043,887		88.53	%	$	163,184,583		88.53	%
Second lien debt		20,723,838		8.73	%		20,684,286		8.73	%		21,131,686		11.47	%		21,151,594		11.47	%
Total Investments	$	237,294,506		100.00	%	$	236,852,837		100.00	%	$	184,175,573		100.00	%	$	184,336,177		100.00	%

Investments at fair value consisted of the following industry classifications as of June 30, 2018 and December 31, 2017:

	June 30, 2018					December 31, 2017
Industry	Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
Healthcare & Pharmaceuticals	$	45,504,129		19.21	%	$	28,334,560		15.37	%
High Tech Industries		41,750,880		17.63			32,398,704		17.58
Services: Business		28,505,232		12.03			24,518,045		13.30
Chemicals, Plastics & Rubber		15,559,145		6.57			10,370,785		5.63
Wholesale		14,303,113		6.04			10,790,204		5.85
Services: Consumer		12,253,358		5.17			7,841,311		4.25
Banking, Finance, Insurance & Real Estate		11,706,596		4.94			11,897,057		6.45
Consumer Goods: Non-durable		7,022,116		2.96			6,677,795		3.62
Transportation: Cargo		6,998,396		2.95			4,244,892		2.30
Capital Equipment		6,439,726		2.72			5,966,335		3.24
Containers, Packaging & Glass		5,964,132		2.52			822,833		0.46
Hotel, Gaming & Leisure		5,746,935		2.43			5,829,704		3.16
Automotive		5,264,917		2.22			1,786,500		0.97
Aerospace & Defense		4,952,253		2.09			5,448,357		2.96
Media: Advertising, Printing & Publishing		4,903,661		2.07			5,851,465		3.17
Beverage, Food & Tobacco		4,865,919		2.05			4,910,470		2.66
Construction & Building		4,812,479		2.03			3,849,204		2.09
Consumer Goods: Durable		2,492,391		1.05			5,987,792		3.25
Media: Broadcasting & Subscription		2,437,727		1.03			2,450,000		1.33
Retail		2,007,336		0.85			-		-
Forest Products & Paper		1,978,364		0.85			1,998,977		1.08
Utilities: Electric		1,384,032		0.59			1,390,987		0.75
Media: Diversified & Production		-		-			970,200		0.53
	$	236,852,837		100.00	%	$	184,336,177		100.00	%

Investments at fair value were included in the following geographic regions of the United States as of June 30, 2018 and December 31, 2017:

	June 30, 2018					December 31, 2017
Geographic Region	Fair Value		Percentage of Total Investments			Fair Value		Percentage of Total Investments
Midwest	$	53,273,026		22.49	%	$	43,870,888		23.80	%
Northeast		52,222,115		22.05			44,603,594		24.20
Southeast		39,984,602		16.88			28,690,823		15.56
West		36,314,973		15.33			21,087,825		11.44
Southwest		25,088,576		10.59			20,144,926		10.93
East		23,360,840		9.86			20,861,634		11.32
Northwest		2,720,592		1.15			2,213,889		1.20
South		2,418,000		1.03			2,862,598		1.55
Other^(a)		1,470,113		0.62			-		-
Total Investments	$	236,852,837		100.00	%	$	184,336,177		100.00	%

(a)

The borrower for Livingston, Livingston International Inc., is located in Canada.

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 June 30, 2018:

For the Fiscal Years Ending December 31:	Amount
2018	$	1,172,417
2019		5,591,211
2020		3,959,260
2021		30,342,013
2022		33,371,736
Thereafter		163,560,425
Total contractual repayments		237,997,062
Adjustments to cost basis on debt investments^(a)		(702,556	)
Total Cost Basis of Investments Held at June 30, 2018:	$	237,294,506

(a)

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

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 six months ended June 30, 2018, the Company recorded base management fees of $623,184 and $1,161,484, respectively, and waivers to the base management fees of $218,114 and $406,518, respectively, as set forth within the accompanying statements of operations. For the three and six months ended June 30, 2017, the Company recorded base management fees of $438,585 and $877,248, respectively, and waivers to the base management fees of $153,504 and $307,036, respectively, as set forth within the accompanying statements of operations.

Incentive Fee

The Incentive Fee has two parts, as follows: one 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 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 OID, debt instruments with PIK interest and OID securities, 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% 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% (instead of 15%) 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% of the Company’s realized capital gains, if any, on a cumulative basis from June 16, 2015, the effective date of the Registration Statement, 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% (instead of 15%).

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% in any calendar quarter.

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

For the three and six months ended June 30, 2018, the Company recorded incentive fees related to net investment income of $476,412 and $874,976, respectively. Offsetting the incentive fees were waivers of the incentive fees of $388,030 and $731,096 for the three and six months ended June 30, 2018, respectively, as set forth within the accompanying statements of operations. For the three and six months ended June 30, 2017, the Company recorded incentive fees related to net investment income of $305,227 and $424,625, respectively. Offsetting the incentive fees were waivers of the incentive fees of $273,912 and $381,370 for the three and six months ended June 30, 2017, 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 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 $132,500 for the three and six months ended June 30, 2018, respectively, as set forth within the accompanying statements of operations. The Company accrued administrative fees of $66,250 and $132,500 for the three and six months ended June 30, 2017, respectively, as set forth within the accompanying statements of operations.

Related Party Fees

Fees due to related parties as of June 30, 2018 and December 31, 2017 on the Company’s accompanying statements of assets and liabilities were as follows:

	June 30, 2018		December 31, 2017
Net base management fee due to Adviser	$	405,070	$	309,784
Net incentive fee due to Adviser		88,381		68,237
Other expenses due to Adviser ^(a)		-		153,034
Total fees due to Adviser, net of waivers		493,451		531,055
Fee due to Administrator, net of waivers		66,250		66,250
Total Related Party Fees Due	$	559,701	$	597,305

(a)

Expenses paid on behalf of the Company by the Adviser

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 Company’s common stock for the three and six months ended June 30, 2018 and 2017:

	Three Months Ended June 30, 2018		Three Months Ended June 30, 2017		Six Months Ended June 30, 2018		Six Months Ended June 30, 2017

Numerator for basic and diluted net increase in net assets resulting from operations per common share	$	2,516,194	$	2,002,169	$	5,304,043	$	3,773,734

Denominator for basic and diluted weighted average common shares		23,840,839		17,831,894		22,945,473		17,831,894
Basic and diluted net increase in net assets resulting from operations per common share	$	0.11	$	0.11	$	0.23	$	0.21

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 shareholders for the year ended December 31, 2017 of $8,915,421, or $0.47 per share. The tax character of the distributions declared and paid represented $8,199,556 from ordinary income, $505,988 capital gains, and $209,867 from tax return of capital. The Company had aggregate distributions declared and paid to its shareholders for the year ended December 31, 2016 of $5,144,149, or $0.35 per share. The tax character of the distributions declared and paid represented $4,798,829 from ordinary income, $103,499 capital gains, and $241,821 from tax return of capital. We estimate that the full amount of the distributions declared and paid during such period will be characterized, for U.S. federal income tax purposes, as ordinary income.

During the three and six months ended June 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 from capital gains. During the three and six months ended June 30, 2017, the Company declared and paid distributions of $3,744,698, or $0.21 per share. The estimated tax character of the distributions declared and paid represented $3,606,521 from ordinary income and $138,177 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 reported to the Company’s stockholders subject to information reporting after the close of each calendar year on Form 1099-DIV.

At December 31, 2017, 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, 2017
Other temporary book/tax differences	$	(253,937	)
Net tax basis unrealized appreciation		160,604
Components of tax distributable deficit at period end	$	(93,333	)

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, 2017.

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. The Company did not maintain any capital losses as of December 31, 2017. 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 2017, 2016, 2015 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 six months ended June 30, 2018 and 2017, 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. As of June 30, 2018, $50,000,000 of total capital commitments remained unfunded by the Company’s investors.

The number of Shares issued and outstanding as of June 30, 2018 and December 31, 2017, were 25,124,820 and 21,988,238, respectively.

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 June 30, 2018 and December 31, 2017:

Investment	Industry	June 30, 2018		December 31, 2017

Carlisle FoodService, Senior Secured Initial Term Loan (First Lien), 5.34% (Libor + 3.00%), maturity 3/20/25	Wholesale	$	644,172	$	-
Mavis, Senior Secured Closing Date Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 3/20/25	Automotive		521,562		-
Community Brands, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 12/2/22	High Tech Industries		287,557		-
Spectrum Plastics, Senior Secured Closing Date Term Loan (First Lien), 5.59% (Libor + 3.25%), maturity 1/31/25	Chemicals, Plastics & Rubber		270,000		-
OSG Billing Services, Senior Secured Term B Loan (First Lien), 6.59% (Libor + 4.25%), maturity 3/27/24	Services: Business		256,410		-
Manna Pro, Senior Secured Term Loan, 8.34% (Libor + 6.00%), maturity 12/8/23	Consumer Goods: Non-durable		227,500		583,333
SRP, Senior Secured Term Loan, 8.84% (Libor + 6.50%), maturity 9/8/23	Wholesale		196,429		535,714
Dermatologists of Central States, Senior Secured Term Loan, 8.84% (Libor + 6.50%), maturity 4/20/22	Healthcare & Pharmaceuticals		133,257		133,257
PlayCore, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 9/30/24	Construction & Building		119,048		119,048
Young, Senior Secured Initial Term Loan (First Lien), 6.34% (Libor + 4.00%), maturity 11/7/24	Healthcare & Pharmaceuticals		119,048		687,500
Eating Recovery Center, Senior Secured Initial Term Loan (First Lien), 6.84% (Libor + 4.50%), maturity 9/23/24	Healthcare & Pharmaceuticals		107,955		340,909
Ansira, Senior Secured Initial Term Loan, 8.09% (Libor + 5.75%), maturity 12/20/22	Media: Advertising, Printing & Publishing		100,392		113,346
Pathway, Senior Secured Term Loan (First Lien), 6.59% (Libor + 4.25%), maturity 10/10/24	Healthcare & Pharmaceuticals		-		818,454
Inst. Shareholder Services, Senior Secured Initial Term Loan (First Lien), 6.09% (Libor + 3.75%), maturity 10/16/24	Banking, Finance, Insurance & Real Estate		-		208,333
Radiology Partners, Senior Secured Term A Loan, 8.09% (Libor + 5.75%), maturity 12/4/23	Healthcare & Pharmaceuticals		-		175,567

		$	2,983,330	$	3,715,461

Note 9. Financial Highlights

	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017			Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Per Share Data:
Net asset value, beginning of period	$	9.64		$	9.65		$	9.51		$	9.55
Net investment income^(a)		0.13			0.11			0.25			0.21
Net realized gain on investments and change in unrealized (depreciation) appreciation on investments^(a)(b)		(0.02	)		0.01			(0.01	)		0.01
Net increase in net assets resulting from operations	$	0.11		$	0.12		$	0.24		$	0.22

Effect of equity capital activity
Distributions to stockholders from net investment income		(0.24	)		(0.20	)		(0.24	)		(0.20	)
Distributions to stockholders from capital gains		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Net asset value at end of period	$	9.50		$	9.56		$	9.50		$	9.56
Total return^(c)(g)		1.10	%		1.22	%		2.49	%		2.28	%
Shares of common stock outstanding at end of period		25,124,820			17,831,896			25,124,820			17,831,896

Statement of Assets and Liabilities Data:
Net assets at end of period	$	238,613,583		$	170,398,719		$	238,613,583		$	170,398,719
Average net assets^(d)		231,990,089			172,190,226			226,000,729			171,894,623

Ratio/Supplemental Data:
Ratio of gross expenses to average net assets-annualized^(e)		2.34	%		2.23	%		2.29	%		2.13	%
Ratio of net expenses to average net assets-annualized^(f)		1.30	%		1.23	%		1.28	%		1.32	%
Ratio of net investment income to average net assets-annualized		5.34	%		4.67	%		5.08	%		4.47	%
Portfolio turnover^(g)		0.61	%		19.58	%		0.65	%		29.13	%

(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)	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.
(d)	Average net assets are computed using the average balance of net assets at the end of each month of the reporting period.
(e)	Ratio of gross expenses to average net assets is computed using expenses before waivers from the Adviser and Administrator.
(f)	Ratio of net expenses to average net assets is computed using total expenses net of waivers from the Adviser and Administrator.
(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

The Company has considered the effects, if any, of events occurring after the date of the Company’s Statement of Assets and Liabilities through August 14, 2018, the date the quarterly report on Form 10-Q was issued. The Company has concluded there are no material items that warrant disclosure.

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 report.

This 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;

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;

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 (file no. 814-01154) (the “Annual Report”).

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 of our Annual Report entitled “Item 1A. Risk Factors”. 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 report are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, 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% to 150%. This reduction in asset coverage would permit 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 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.

PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY

Portfolio Composition

The fair value of our investments, all of which were syndicated loans as of June 30, 2018, was approximately $236,852,837 and held in 117 portfolio companies as of June 30, 2018. The fair value of our investments, all of which were syndicated loans as of December 31, 2017, was approximately $184,336,177 and held in 96 portfolio companies as of December 31, 2017.

During the six months ended June 30, 2018, we invested in 44 new syndicated investments for a combined $72,398,817 and in existing investments for a combined $13,400,210. We also received $31,583,532 in repayments from investments and $1,390,962 from investments sold during the six months. During the six months ended June 30, 2017, we invested in 24 new syndicated investments for a combined $39,414,095 and in existing investments for a combined $5,539,488. We also received $42,382,537 in repayments from investments. In addition, for the three and six months ended June 30, 2018, we had a change in unrealized depreciation of approximately $639,079 and $602,273, respectively, and realized gains of $67,959 and $217,757, respectively. In addition, for the three and six months ended June 30, 2017, we had a change in unrealized depreciation of approximately $351,691 and $481,597, respectively, and realized gains of $350,613 and $440,930, respectively.

Our investment activity for the six months ended June 30, 2018 and 2017, is presented below:

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017

Beginning investment portfolio, at fair value	$	184,336,177		$	143,789,221
Investments in new portfolio investments		72,398,817			39,414,095
Investments in existing portfolio investments		13,400,210			5,539,488
Principal repayments		(31,583,532	)		(42,382,537	)
Proceeds from investments sold		(1,390,962	)		-
Change in premiums, discounts and amortization		76,643			132,661
Net unrealized depreciation on investments		(602,273	)		(481,597	)
Realized gain on investments		217,757			440,930
Ending portfolio investment activity, at fair value	$	236,852,837		$	146,452,261
Number of portfolio investments		124			85
Average investment amount, at cost	$	1,913,665		$	1,715,192
Percentage of investments at floating rates		100.00	%		100.00	%

As of June 30, 2018 and December 31, 2017, our entire portfolio consisted of non-controlled/non-affiliated investments.

RECENT DEVELOPMENTS

Subsequent to June 30, 2018 and through August 14, 2018, we invested $1,129,108 at cost in three portfolio companies.

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.

Revenue

Total investment income for the three and six months ended June 30, 2018 and 2017, is presented in the table below.

	Three Months Ended June 30, 2018		Three Months Ended June 30, 2017		Six Months Ended June 30, 2018		Six Months Ended June 30, 2017

Total interest income from non-controlled/non-affiliated investments	$	3,789,055	$	2,480,149	$	7,005,657	$	4,820,902
Total other interest income		31,119		33,746		68,107		56,630
Total other income		16,452		17,067		48,562		61,462
Total investment income	$	3,836,626	$	2,530,962	$	7,122,326	$	4,938,994

Total investment income for the three months ended June 30, 2018 increased to $3,836,626 from $2,530,962 for the three months ended June 30, 2017, and was driven by our interest income from our increasing investment balance. Total investment income for the six months ended June 30, 2018 increased to $7,122,326 from $4,938,994 for the six months ended June 30, 2017, and was driven by our interest income from our increasing investment balance. As of June 30, 2018 and 2017, the size of our portfolio was $237,294,506 and $145,791,288 at amortized cost, respectively, with total principal amount outstanding of $237,997,062 and $146,778,216, respectively.

Expenses

Total expenses net of waivers for the three and six months ended June 30, 2018 and 2017, were as follows:

	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017			Six Months Ended June 30, 2018			Six Months Ended June 30, 2017

Base management fee^(a)	$	623,184		$	438,585		$	1,161,484		$	877,248
Incentive fee^(a)		476,412			305,227			874,976			424,625
Administrative fee^(a)		66,250			66,250			132,500			132,500
Directors' fees		48,750			48,750			97,500			97,500
Professional fees		101,309			51,967			213,019			187,737
Other expenses		39,551			44,352			91,902			93,389
Total expenses		1,355,456			955,131			2,571,381			1,812,999
Base management fee waivers^(a)		(218,114	)		(153,504	)		(406,518	)		(307,036	)
Incentive fee waivers^(a)		(388,030	)		(273,912	)		(731,096	)		(381,370	)
Total expenses, net of waivers	$	749,312		$	527,715		$	1,433,767		$	1,124,593

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

The increase in base management fees before waivers for the three months ended June 30, 2018 in comparison to the three months ended June 30, 2017 was driven by our increasing invested balance. For the three months ended June 30, 2018 and 2017, we accrued gross base management fees before waivers of $623,184 and $438,585, respectively. Offsetting those fees, we recognized base management fee waivers of $218,114 and $153,504, respectively. For the three months ended June 30, 2018, we accrued incentive fees related to net investment income before waivers of $476,412, offset by incentive fee waivers of $388,030. For the three months ended June 30, 2017, we accrued incentive fees related to net investment income before waivers of $305,227, offset by incentive fee waivers of $273,912. Additionally, we accrued $66,250 of administrative fees for each of the three months ended June 30, 2018 and 2017. Refer to Note 4 — Related Party Transactions in the notes accompanying our financial statements for more information related to base management fees, incentive fees and waivers.

During the three months ended June 30, 2018 and 2017, we incurred professional fees of $101,309 and $51,967, 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 June 30, 2018 as compared to the three months ended June 30, 2017. We also incurred expenses related to fees paid to our independent directors of $48,750 for each of the three months ended June 30, 2018 and 2017.

The increase in base management fees before waivers for the six months ended June 30, 2018 in comparison to the six months ended June 30, 2017 was driven by our increasing invested balance. For the six months ended June 30, 2018 and 2017, we accrued gross base management fees before waivers of $1,161,484 and $877,248, respectively. Offsetting those fees, we recognized base management fee waivers of $406,518 and $307,036, respectively. For the six months ended June 30, 2018, we accrued incentive fees related to net investment income before waivers of $874,976, offset by incentive fee waivers of $731,096. For the six months ended June 30, 2017, we accrued incentive fees related to net investment income before waivers of $424,625, offset by incentive fee waivers of $381,370. Additionally, we accrued $132,500 of administrative fees for each of the six months ended June 30, 2018 and 2017. Refer to Note 4 — Related Party Transactions in the notes accompanying our financial statements for more information related to base management fees, incentive fees and waivers.

During the six months ended June 30, 2018 and 2017, we incurred professional fees of $213,019 and $187,737, 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 six months ended June 30, 2018 as compared to the six months ended June 30, 2017. We also incurred expenses related to fees paid to our independent directors of $97,500 for each of the six months ended June 30, 2018 and 2017, respectively.

Realized and Unrealized Gains and Losses

We recognized $67,959 and $350,613 in net realized gains for the three months ended June 30, 2018 and 2017, respectively. We recognized $217,757 and 440,930 in net realized gains for the six months ended June 30, 2018 and 2017, respectively.

Net change in unrealized (depreciation) appreciation on investments for the three and six months ended June 30, 2018 and 2017 was as follows:

Type	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017			Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
First Lien Debt	$	(658,243	)	$	(349,500	)	$	(542,810	)	$	(563,809	)
Second Lien Debt		19,164			(2,191	)		(59,463	)		82,212
Net change in unrealized depreciation on investments	$	(639,079	)	$	(351,691	)	$	(602,273	)	$	(481,597	)

Net change in unrealized depreciation on investments during the three and six months ended June 30, 2018 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 six months ended June 30, 2017 was primarily due to the reversal of previously appreciated investments due to full principal paydowns.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We generate cash primarily from the net proceeds of any offering of shares of our common stock, 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 June 30, 2018 and December 31, 2017, we had cash of $15,041,814 and $29,721,559, respectively.

Operating Activities

Net cash used in operating activities for the six months ended June 30, 2018 was $38,793,709. 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. Net cash provided by operating activities for the six months ended June 30, 2017 was $902,988. The primary operating activities during this period were repayments of bank loans and interest received from investments. This was partially offset by investments in portfolio companies.

As of June 30, 2018 and December 31, 2017, we had twelve and ten investments with unfunded commitments of $2,983,330 and $3,715,461, respectively. We believe that, as of June 30, 2018 and December 31, 2017, we had sufficient assets to adequately cover any obligations under our unfunded commitments.

The following table summarizes our total portfolio activity during the six months ended June 30, 2018 and 2017:

	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017

Beginning investment portfolio	$	184,336,177		$	143,789,221
Investments in new portfolio investments		72,398,817			39,414,095
Investments in existing portfolio investments		13,400,210			5,539,488
Principal repayments		(31,583,532	)		(42,382,537	)
Proceeds from sales of investments		(1,390,962	)		-
Net unrealized depreciation on investments		(602,273	)		(481,597	)
Net realized gain on investments		217,757			132,661
Net change in premiums, discounts and amortization		76,643			440,930
Investment Portfolio, at Fair Value	$	236,852,837		$	146,452,261

Financing Activities

Net cash provided by in our financing activities for the six months ended June 30, 2018 was $24,113,964 from issuances of 3,136,580 of Shares to our shareholders, in connection with our capital calls during the period. This was partially offset by $5,886,036 of distributions paid to our common stockholders. Net cash used in our financing activities for the six months ended June 30, 2017 was $3,744,676 from distributions paid to our common stockholders.

Equity Activity

The number of Shares issued and outstanding as of June 30, 2018 and December 31, 2017, were 25,124,820 and 21,988,238, 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 the imposition of 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 U.S. 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 we 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 $5,886,063, or $0.25 per share during the three and six months ended June 30, 2018. We declared and paid distributions of $3,744,698, or $0.21 per share during the three and six months ended June 30, 2017.

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 June 30, 2018 and 2017, we recorded base management fees of $623,184 and $438,585, respectively. Offsetting these fees were waivers to the base management fees of $218,114 and $153,504, respectively, as set forth within the accompanying statements of operations.

For the six months ended June 30, 2018 and 2017, we recorded base management fees of $1,161,484 and $877,248, respectively. Offsetting those fees were waivers to the base management fees of $406,518 and $307,036, respectively, as set forth within the accompanying statements of operations.

For the three and six months ended June 30, 2018, we recorded incentive fees of $476,412 and $874,976, respectively. Offsetting these fees were waivers to the incentive fees of $388,030 and $731,096, respectively, as set forth within the accompanying statements of operations. For the three and six months ended June 30, 2017, we recorded incentive fees of $305,227 and $424,625, respectively. Offsetting these fees were waivers to the incentive fees of $273,912 and $381,370, respectively, as set forth within the accompanying statements of operations.

For each of the three months ended June 30, 2018 and 2017, we recorded administrative fees of $62,500, respectively, as set forth within the accompanying statements of operations. For each of the six months ended June 30, 2018 and 2017, we recorded administrative fees of $132,500, respectively, as set forth within the accompanying statements of operations.

Fees due to related parties as of June 30, 2018 and December 31, 2017 on our accompanying statements of assets and liabilities were as follows:

	June 30, 2018		December 31, 2017
Net base management fee due to Adviser	$	405,070	$	309,784
Net incentive fee due to Adviser		88,381		68,237
Other expenses due to Adviser ^(a)		-		153,034
Total fees due to Adviser, net of waivers		493,451		531,055
Fee due to Administrator, net of waivers		66,250		66,250
Total Related Party Fees Due	$	559,701	$	597,305

(a)

Expenses paid on behalf of the Company by the Adviser

Tender Offers

We do not currently intend to list our common stock on any securities exchange, and we do not expect a public market for it to develop in the foreseeable future. Therefore, stockholders should not expect to be able to sell 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 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.

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.

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 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 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. The process used to determine the applicable value is as follows: (i) 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; (ii) preliminary valuation conclusions are documented and discussed with our senior management and members of our Adviser’s valuation team; (iii) our Audit Committee reviews the assessments of the Adviser and provides our Board of Directors with recommendations with respect to the fair value of the investments in our portfolio; and (iv) 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 and in accordance with our valuation policy.

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.

Refer to Note 3 — Investments in 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.

Organization and Offering Expenses

We incurred offering costs of $145,358 in prior periods. Our offering costs included legal fees and other costs pertaining to the preparation of the Registration Statement and sale of our shares of common stock. We capitalized these expenses and amortized them on a straight-line basis over a twelve-month period. We did not amortize offering costs for each of the three and six months ended June 30, 2018 and 2017.

U.S. Federal 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, 2017, 2016, and 2015.

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.

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 June 30, 2018, we had twelve investments with unfunded commitments of $2,983,330. As of December 31, 2017, we had ten investments with unfunded commitments of $3,715,461. We believe that, as of June 30, 2018 and December 31, 2017, 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. 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 June 30, 2018 and December 31, 2017, all of our investments included variable rates with a minimum guaranteed rate, or floor, and bore interest at the minimum guaranteed rate.

Assuming that the accompanying statement of assets and liabilities as of June 30, 2018 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 changes in interest rates.

Change in interest rates	Increase (decrease) in investment income
Down 200 basis points		(2,611,749	)
Down 100 basis points		(2,375,989	)
Up 100 basis points		2,379,971
Up 200 basis points		4,759,941
Up 300 basis points		7,139,912

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.

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 June 30, 2018, 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 Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on March 16, 2018.

Recently passed legislation may allow 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% to 150%. This reduction in asset coverage would permit 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 of common stock 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.

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.

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).

11.1	Computation of per share earnings (included in the notes to the financial statements included in this report).

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).

SIGNATURES

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

Audax Credit BDC Inc.

Date: August 14, 2018	By:	/s/ Michael P. McGonigle
		Michael P. McGonigle
		Chief Executive Officer

Date: August 14, 2018	By:	/s/ Richard T. Joseph
		Richard T. Joseph
		Chief Financial Officer

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