Filed pursuant to Rule 424(b)(3)

File No. 333-260095

 

Owl Rock Technology Income Corp.

 

 

Supplement No. 3 dated August 12, 2022

To

Prospectus dated February 11, 2022

This supplement contains information that amends, supplements or modifies certain information contained in the accompanying prospectus of Owl Rock Technology Income Corp. dated February 11, 2022, as amended and supplemented (the “Prospectus”), and is part of, and should be read in conjunction with, the Prospectus. The Prospectus has been filed with the U.S. Securities and Exchange Commission, and is available free of charge at www.sec.gov or by calling (212) 419-3000. Capitalized terms used in this supplement have the same meanings as in the Prospectus, unless otherwise stated herein.

 

 

Before investing in shares of our common stock, you should read carefully the Prospectus and this supplement and consider carefully our investment objective, risks, charges and expenses. You should also carefully consider the “Risk Factors” beginning on page 43 of the Prospectus before you decide to invest in our common stock.

RECENT DEVELOPMENTS

Quarterly Report on Form 10-Q

On August 10, 2022, we filed our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the “Form 10-Q”) with the U.S. Securities and Exchange Commission. The Form 10-Q, excluding the exhibits thereto, is attached to this supplement as Annex A, and incorporated herein by reference.

Annex A

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the fiscal quarter ended June 30, 2022

OR

 

☐	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: 801-113628

 

 

OWL ROCK TECHNOLOGY INCOME CORP.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Maryland		87-1346173
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
399 Park Avenue New York, New York		10022
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 419-3000

 

 

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

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ☐    NO  ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    YES  ☐    NO  ☒

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 12b-2 of the Exchange Act.

 

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    YES  ☐    NO  ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management`s assessment of the effectiveness of its internal control over financial reporting under Section 4040(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    YES  ☐    NO  ☒

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

As of August 10, 2022, the registrant had 65.7 and 1.3 million shares of Class I and Class S common stock, $0.01, par value per share, outstanding, respectively.

 

 

 

Table of Contents

 

				Page
PART I.		Financial Information
Item 1.		Consolidated Financial Statements			5
		Consolidated Statements of Assets and Liabilities as of June  30, 2022 (Unaudited) and December 31, 2021			5
		Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 (Unaudited)			6
		Consolidated Schedule of Investments as of June 30, 2022 (Unaudited)			7
		Consolidated Statement of Changes in Net Assets for the Three and Six Months Ended June 30, 2022 (Unaudited)			12
		Consolidated Statement of Cash Flows for the Six Months Ended June  30, 2022 (Unaudited)			13
		Notes to Consolidated Financial Statements (Unaudited)			14
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations			41
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			69
Item 4.		Controls and Procedures			70
PART II		Other Information
Item 1.		Legal Proceedings			71
Item 1A.		Risk Factors			72
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			72
Item 3.		Defaults Upon Senior Securities			72
Item 4.		Mine Safety Disclosures			72
Item 5.		Other Information			72
Item 6.		Exhibits			72
Signatures					73

 

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains 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 Owl Rock Technology Income Corp. (the “Company,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” 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 without limitation:

 

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

 

•

an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;

 

•

an economic downturn could also impact availability and pricing of our financing and our ability to access the debt and equity capital markets;

 

•

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

 

•

the impact of the “COVID-19” pandemic, changes in base interest rates and significant market volatility on our business, and our portfolio companies (including our business prospects and the prospects of our portfolio companies including the ability to achieve our and their business objectives), our industry and the global economy, including as a result of supply chain disruptions;

 

•

interest rate volatility, including the decommissioning of LIBOR, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

 

•

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;

 

•

our future operating results;

 

•

the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;

 

•

our contractual arrangements and relationships with third parties;

 

•

the ability of our portfolio companies to achieve their objectives;

 

•

competition with other entities and our affiliates for investment opportunities;

 

•

the speculative and illiquid nature of our investments;

 

•

the use of borrowed money to finance a portion of our investments as well as any estimates regarding potential use of leverage;

 

•

the adequacy of our financing sources and working capital;

 

•

the loss of key personnel;

 

•

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

 

•

the ability of Owl Rock Technology Advisors II LLC (“the Adviser” or “our Adviser”) to locate suitable investments for us and to monitor and administer our investments;

 

•

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

 

•

our ability to qualify for and maintain our tax treatment as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”);

 

•

the effect of legal, tax and regulatory changes;

 

•

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

 

•

other risks, uncertainties and other factors previously identified in the reports and other documents we have filed with the Securities and Exchange Commission (“SEC”).

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

 

3

be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

4

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Owl Rock Technology Income Corp.

Consolidated Statements of Assets and Liabilities

(Amounts in thousands, except share and per share amounts)

 

		June 30, 2022 (Unaudited)				December 31, 2021
Assets
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost of $995,684 and none, respectively)		$	983,655			$	—
Cash			5,323				86
Interest receivable			3,878				—
Due from Adviser			239				65
Investments funded in advance			96,855				—
Prepaid expenses and other assets			478				—
Total Assets		$	1,090,428			$	151
Liabilities
Debt (net of unamortized debt issuance costs of $12,357 and none, respectively)		$	490,433			$	—
Distribution payable			3,439				—
Payable for investments purchased			12,985				—
Accrued expenses and other liabilities			2,963				—
Total Liabilities			509,820				—
Commitments and contingencies (Note 7)
Net Assets
Class S Common shares $0.01 par value, 1,000,000,000 shares authorized; 75,301 shares issued and outstanding			1				—
Class D Common shares $0.01 par value, 1,000,000,000 shares authorized; 0 shares issued			—				—
Class I Common shares $0.01 par value, 1,000,000,000 shares authorized; 59,110,575 and 15,100 shares issued and outstanding, respectively(1)			591				—
Additional paid-in-capital			591,037				151
Accumulated undistributed (overdistributed) earnings			(11,021	)			—
Total Net Assets			580,608				151
Total Liabilities and Net Assets		$	1,090,428			$	151
Net Asset Value Per Class S Share(2)		$	9.81			$	—
Net Asset Value Per Class D Share(3)		$	—			$	—
Net Asset Value Per Class I Share		$	9.81			$	10.00

 

(1)	As December 31, 2021, Class I shares of common stock’s par value was insignificant.

 

(2)	There were no Class S shares of common stock outstanding as of December 31, 2021.

 

(3)	There were no Class D shares of common stock outstanding as of June 30, 2022 and December 31, 2021.

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

 

 

5

Owl Rock Technology Income Corp.

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

		For the Three Months Ended June 30, 2022(1)				For the Six Months Ended June 30, 2022(1)
Investment Income
Investment income from non-controlled, non-affiliated investments:
Interest income		$	7,270			$	7,270
Payment-in-kind interest income			1,215				1,215
Payment-in-kind dividend income			1,052				1,052
Other income			639				639
Total investment income from non-controlled, non-affiliated investments			10,176				10,176
Total Investment Income
Operating Expenses
Interest expense			3,353				3,353
Management fees			278				278
Performance based incentive fees			853				853
Shareholder servicing fees			1				1
Total Operating Expenses			4,485				4,485
Management fees waived (Note 3)			(278	)			(278	)
Performance based incentive fees waived (Note 3)			(853	)			(853	)
Expense support (Note 3)			(174	)			(174	)
Net Operating Expenses			3,180				3,180
Net Investment Income (Loss) Before Taxes			6,996				6,996
Net Investment Income (Loss) After Taxes		$	6,996			$	6,996
Net Realized and Change in Unrealized Gain (Loss)
Net change in unrealized gain (loss):
Non-controlled, non-affiliated investments		$	(11,399	)		$	(11,399	)
Translation of assets and liabilities in foreign currencies			(204	)			(204	)
Total Net Change in Unrealized Gain (Loss)			(11,603	)			(11,603	)
Net realized gain (loss):
Non-controlled, non-affiliated investments			17				17
Foreign currency transactions			(543	)			(543	)
Total Net Realized Gain (Loss)			(526	)			(526	)
Total Net Realized and Change in Unrealized Gain (Loss)			(12,129	)			(12,129	)
Total Net Increase (Decrease) in Net Assets Resulting from Operations		$	(5,133	)		$	(5,133	)
Total Net Increase (Decrease) in Net Assets Resulting from Operations - Class S Common Stock			(7	)			(7	)
Total Net Increase (Decrease) in Net Assets Resulting from Operations - Class D Common Stock(2)			N/A				N/A
Total Net Increase (Decrease) in Net Assets Resulting from Operations - Class I Common Stock			(5,126	)			(5,126	)
Earnings Per Share - Basic and Diluted of Class S Common Stock(2)			(0.17	)			(0.17	)
Weighted Average Shares of Class S Common Stock Outstanding - Basic and Diluted			37,651				37,651
Earnings Per Share - Basic and Diluted of Class D Common Stock(3)			N/A				N/A
Weighted Average Shares of Class D Common Stock Outstanding - Basic and Diluted(3)			N/A				N/A
Earnings Per Share - Basic and Diluted of Class I Common Stock			(0.09	)			(0.09	)
Weighted Average Shares of Class I Common Stock Outstanding - Basic and Diluted			56,276,752				56,276,752

 

(1)	The Company was initially capitalized on September 30, 2021 and commenced operations on May 2, 2022.

(2)	The computation of EPS based on amounts presented differs slightly from actuals due to rounding.

(3)	There were no Class D shares of common stock outstanding as of June 30, 2022.

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

 

6

Owl Rock Technology Income Corp.

Consolidated Schedule of Investments

(Amounts in thousands)

(Unaudited)

 

Company(1)(2)(4)(19)		Investment		Interest		Maturity Date				Par / Units				Amortized Cost(3)				Fair Value				Percentage of Net Assets
Non-controlled/non-affiliated portfolio company investments
Debt Investments(5)
Application Software
Anaplan INC(9)		First lien senior secured loan		S + 6.50%			6/21/2029			$	90,055			$	89,155			$	89,153				15.4	%
Anaplan INC(15)(16)		First lien senior secured revolving loan		S + 6.50%			6/21/2028				—				(65	)			(65	)			—	%
Armstrong Bidco Limited(12)(20)		First lien senior secured loan		SA + 5.75%			6/28/2029				32,268				31,874				31,462				5.4	%
Armstrong Bidco Limited(12)(15)(17)(20)		First lien senior secured delayed draw term loan		SA + 5.75%			6/30/2025				—				—				—				—	%
Certify, Inc.(6)		First lien senior secured loan		L + 5.50%			2/28/2024				5,704				5,612				5,647				1.0	%
Certify, Inc.(6)(15)		First lien senior secured delayed draw term loan		L + 5.50%			2/28/2024				1,141				1,077				1,084				0.2	%
Community Brands ParentCo, LLC(9)		First lien senior secured loan		S + 5.75%			2/24/2028				6,359				6,238				6,152				1.1	%
Community Brands ParentCo, LLC(15)(16)(17)		First lien senior secured delayed draw term loan		S + 5.75%			2/24/2024				—				(7	)			(17	)			—	%
Community Brands ParentCo, LLC(15)(16)		First lien senior secured revolving loan		S + 5.75%			2/24/2028				—				(7	)			(12	)			—	%
Fullsteam Operations, LLC(7)(15)(17)		First lien senior secured multi-draw term loan		L + 3.00% (incl. 4.00% PIK)			5/13/2024				10,356				9,619				9,602				1.7	%
Motus Group, LLC(6)		Second lien senior secured loan		L + 6.50%			12/10/2029				16,557				16,400				16,061				2.8	%
Perforce Software, Inc.(9)		First lien senior secured loan		S + 4.50%			7/1/2026				14,963				14,588				14,588				2.5	%
											177,403				174,484				173,655				30.1	%
Beverages
Innovation Ventures HoldCo, LLC(9)		First lien senior secured loan		S + 6.25%			3/11/2027				30,000				29,573				29,175				5.0	%
Innovation Ventures HoldCo, LLC(9)		First lien senior secured delayed draw term loan		S + 6.25%			3/11/2027				10,000				9,758				9,725				1.7	%
Innovation Ventures HoldCo, LLC(9)		First lien senior secured delayed draw term loan		S + 6.25%			3/11/2027				10,000				9,758				9,725				1.7	%
											50,000				49,089				48,625				8.4	%
Buildings and real estate
Associations, Inc.(10)		First lien senior secured loan		S + 6.50% (incl. 2.50% PIK)			7/2/2027				20,254				19,992				20,051				3.5	%
Commercial Services & Supplies
Denali BuyerCo, LLC (dba Summit Companies)(7)		First lien senior secured loan		L + 6.00%			9/15/2028				42,458				41,520				41,503				7.1	%
SimpliSafe Holding Corporation(9)		First lien senior secured loan		S + 6.25%			5/2/2028				61,728				60,509				60,494				10.4	%
SimpliSafe Holding Corporation(15)(16)(17)		First lien senior secured delayed draw term loan		S + 6.25%			5/2/2024				—				(76	)			(77	)			—	%
											104,186				101,953				101,920				17.5	%

 

7

Owl Rock Technology Income Corp.

Consolidated Schedule of Investments

(Amounts in thousands)

(Unaudited)

 

Company(1)(2)(4)(19)		Investment		Interest		Maturity Date				Par / Units				Amortized Cost(3)				Fair Value				Percentage of Net Assets
Construction & Engineering
Dodge Data & Analytics LLC(8)		First lien senior secured loan		L + 4.75%			9/15/2028				12,500				12,317				12,188				2.1	%
Containers and packaging
Five Star Lower Holding LLC(9)		First lien senior secured loan		S + 4.25%			5/5/2029				21,875				21,552				21,547				3.7	%
Diversified Consumer Services
Litera Bidco LLC(6)		First lien senior secured loan		L + 6.00%			5/29/2026				20,572				20,333				20,520				3.5	%
Sophia, L.P.(9)		First lien senior secured loan		S + 4.25%			10/7/2027				10,000				9,903				9,900				1.7	%
											30,572				30,236				30,420				5.2	%
Diversified Financial Services
Ministry Brands Holdings, LLC(7)		First lien senior secured loan		L + 5.50%			12/28/2028				17,611				17,279				16,951				2.9	%
Ministry Brands Holdings, LLC(15)(16)(17)		First lien senior secured delayed draw term loan		L + 5.50%			12/27/2023				—				(52	)			(155	)			—	%
Ministry Brands Holdings, LLC(15)(16)		First lien senior secured revolving loan		L + 5.50%			12/27/2027				—				(31	)			(64	)			—	%
Smarsh Inc.(11)		First lien senior secured loan		S + 6.50%			2/16/2029				26,667				26,411				26,067				4.5	%
Smarsh Inc.(15)(16)(17)		First lien senior secured delayed draw term loan		S + 6.50%			2/18/2024				—				(32	)			(83	)			—	%
Smarsh Inc.(15)(16)		First lien senior secured revolving loan		S + 6.50%			2/16/2029				—				(16	)			(38	)			—	%
											44,278				43,559				42,678				7.4	%
Food & Staples Retailing
CFS Brands LLC(6)		First lien senior secured loan		L + 3.00%			3/20/2025				7,712				7,469				7,288				1.2	%
CFS Brands LLC(15)(17)		First lien senior secured delayed draw term loan		L + 3.00%			12/2/2022				—				—				(45	)			—	%
											7,712				7,469				7,243				1.2	%
Health Care Technology
Athenahealth Group Inc.(9)(13)		First lien senior secured loan		S + 3.50%			2/15/2029				6,841				6,473				6,280				1.1	%
Athenahealth Group Inc.(13)(15)(16)(17)		First lien senior secured delayed draw term loan		S + 3.50%			8/15/2023				—				(62	)			(89	)			—	%
GI Ranger Intermediate, LLC (dba Rectangle Health)(10)(15)(16)(17)		First lien senior secured delayed draw term loan		S + 6.00%			10/29/2023				—				(95	)			(225	)			—	%
Hyland Software, Inc.(6)		Second lien senior secured loan		L + 6.25%			7/7/2025				7,187				7,098				7,025				1.2	%
Iconic IMO Merger Sub, Inc.(10)		First lien senior secured loan		S + 6.00%			5/11/2029				20,846				20,436				20,429				3.5	%
Iconic IMO Merger Sub, Inc.(15)(16)(17)		First lien senior secured delayed draw term loan		S + 6.00%			5/13/2024				—				(49	)			(50	)			—	%
Iconic IMO Merger Sub, Inc.(9)(15)		First lien senior secured revolving loan		S + 6.00%			5/11/2028				248				200				199				—	%
Imprivata, Inc.(9)		First lien senior secured loan		S + 4.25%			12/1/2027				5,420				5,283				5,263				0.9	%

 

8

Owl Rock Technology Income Corp.

Consolidated Schedule of Investments

(Amounts in thousands)

(Unaudited)

 

Company(1)(2)(4)(19)		Investment		Interest		Maturity Date				Par / Units				Amortized Cost(3)				Fair Value				Percentage of Net Assets
Imprivata, Inc.(9)		Second lien senior secured loan		S + 6.25%			12/1/2028				17,648				17,475				17,472				3.0	%
Inovalon Holdings, Inc.(6)		First lien senior secured loan		L + 6.25% (incl. 2.75% PIK)			11/24/2028				12,838				12,544				12,325				2.1	%
Inovalon Holdings, Inc.(15)(16)(17)		First lien senior secured delayed draw term loan		L + 5.75%			5/24/2024				—				(15	)			(37	)			—	%
Inovalon Holdings, Inc.(6)		Second lien senior secured loan		L + 10.50% PIK			11/25/2033				37,565				37,000				36,532				6.3	%
Interoperability Bidco, Inc. (dba Lyniate)(10)		First lien senior secured loan		S + 7.00%			12/28/2026				23,853				23,715				23,436				4.0	%
Interoperability Bidco, Inc. (dba Lyniate)(10)(17)		First lien senior secured delayed draw term loan		S + 7.00%			1/28/2023				4,771				4,735				4,687				0.8	%
Interoperability Bidco, Inc. (dba Lyniate)(15)(16)		First lien senior secured revolving loan		S + 7.00%			12/26/2024				—				(7	)			(23	)			—	%
											137,217				134,731				133,224				22.9	%
Health Care Equipment & Supplies
Medline Borrower, LP(6)(13)		First lien senior secured loan		L + 3.25%			10/23/2028				4,364				4,154				4,040				0.7	%
Health Care Providers & Services
Plasma Buyer LLC(10)		First lien senior secured loan		S + 5.75%			5/12/2029				17,017				16,681				16,676				2.9	%
Plasma Buyer LLC(15)(16)(17)		First lien senior secured delayed draw term loan		S + 5.75%			5/12/2024				—				(43	)			(44	)			—	%
Plasma Buyer LLC(15)(16)		First lien senior secured revolving loan		S + 5.75%			5/12/2028				—				(37	)			(38	)			—	%
TC Holdings, LLC (dba TrialCard)(10)		First lien senior secured loan		S + 5.00%			4/14/2027				8,929				8,843				8,839				1.5	%
TC Holdings, LLC (dba TrialCard)(15)(16)		First lien senior secured revolving loan		S + 5.00%			4/14/2027				—				(10	)			(11	)			—	%
											25,946				25,434				25,422				4.4	%
Insurance
Asurion, LLC(6)(13)		Second lien senior secured loan		L + 5.25%			1/22/2029				29,332				27,270				24,785				4.3	%
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(9)(15)(17)		First lien senior secured delayed draw term loan		L + 6.00%			8/16/2023				21,000				20,676				20,792				3.6	%
											50,332				47,946				45,577				7.9	%
IT Services
BCPE Nucleon (DE) SPV, LP(8)		First lien senior secured loan		L + 7.00%			9/24/2026				22,679				22,458				22,395				3.9	%
Kaseya Inc.(10)		First lien senior secured loan		S + 5.75%			6/25/2029				66,900				65,566				65,562				11.3	%
Kaseya Inc.(15)(16)(17)		First lien senior secured delayed draw term loan		S + 5.75%			6/24/2024				—				(40	)			(41	)			—	%
Kaseya Inc.(15)(16)		First lien senior secured revolving loan		S + 5.75%			6/25/2029				—				(81	)			(81	)			—	%
											89,579				87,903				87,835				15.2	%

 

9

Owl Rock Technology Income Corp.

Consolidated Schedule of Investments

(Amounts in thousands)

(Unaudited)

 

Company(1)(2)(4)(19)		Investment		Interest		Maturity Date				Par / Units				Amortized Cost(3)				Fair Value				Percentage of Net Assets
Life Sciences Tools & Services
Parexel International, Inc.(6)		Second lien senior secured loan		L + 6.50%			11/15/2029				5,000				4,901				4,824				0.8	%
Professional Services
Sovos Compliance, LLC(6)(13)		First lien senior secured loan		L + 4.50%			8/11/2028				7,120				6,955				6,689				1.2	%
Sovos Compliance, LLC(6)(13)(17)		First lien senior secured delayed draw term loan		L + 4.50%			8/12/2023				1,236				1,204				1,161				0.2	%
											8,356				8,159				7,850				1.4	%
Real Estate Management & Development
Realpage, Inc.(6)(13)		Second lien senior secured loan		L + 6.50%			4/23/2029				25,000				24,659				23,688				4.1	%
Road & Rail
Lazer Spot Holdings, Inc. (f/k/a Lazer Spot GB Holdings, Inc.)(15)(16)(17)		First lien senior secured delayed draw term loan		L + 5.50%			8/18/2023				—				(32	)			—				—	%
Systems Software
Appfire Technologies, LLC(15)(16)(17)		First lien senior secured delayed draw term loan		S + 5.50%			6/14/2024				—				(136	)			(138	)			—	%
Appfire Technologies, LLC(10)(15)		First lien senior secured revolving loan		S + 5.50%			3/9/2027				93				69				69				—	%
Delta TopCo, Inc. (dba Infoblox, Inc.)(8)(13)		First lien senior secured loan		L + 3.75%			12/1/2027				10,000				9,457				9,031				1.6	%
Rubrik, Inc.(6)		First lien senior secured loan		S + 6.50%			6/10/2027				28,269				27,709				27,761				4.8	%
Rubrik, Inc.(15)(16)		First lien senior secured delayed draw term loan		S + 6.50%			6/10/2027				—				—				(58	)			—	%
Securonix, Inc.(10)		First lien senior secured loan		S + 6.50%			4/5/2028				19,774				19,579				19,576				3.4	%
Securonix, Inc.(15)(16)		First lien senior secured revolving loan		S + 6.50%			4/5/2028				—				(35	)			(36	)			—	%
											58,136				56,643				56,205				9.8	%
Technology Infrastructure
Help/Systems Holdings, Inc.(9)(13)		First lien senior secured loan		S + 4.00%			11/19/2026				14,962				14,288				13,982				2.4	%
Help/Systems Holdings, Inc.(10)		Second lien senior secured loan		S + 6.75%			11/19/2027				20,000				19,810				19,050				3.3	%
											34,962				34,098				33,032				5.7	%
Total non-controlled/non-affiliated portfolio company debt investments											907,670				889,247				880,024				151.6	%
Equity Investments
Application Software
Alpine-22(18)(21)		LP Interest		N/A			N/A				6,667				6,670				6,667				1.1	%
Health Care Technology
Minerva Holdco, Inc.(14)(21)		Senior A Preferred Stock		10.75% PIK			N/A				41,634				40,882				38,303				6.6	%
IT Services
Knockout Intermediate Holdings I Inc. (dba Kaseya) (14)(21)		Perpetual Preferred Stock		11.75% PIK			N/A				50,000				48,753				48,750				8.4	%
Technology Infrastructure
Halo Parent Newco, LLC(14)(21)		Class H PIK Preferred Equity		11.00% PIK			N/A				10,324				10,132				9,911				1.7	%
Total non-controlled/non-affiliated portfolio company equity investments														$	106,437			$	103,631				17.8	%
Total Investments														$	995,684			$	983,655				169.4	%

 

10

Owl Rock Technology Income Corp.

Consolidated Schedule of Investments

(Amounts in thousands)

(Unaudited)

 

(1)	Certain portfolio company investments are subject to contractual restrictions on sales.

 

(2)	Unless otherwise indicated, all investments are considered Level 3 investments.

 

(3)	The amortized cost represents the original cost adjusted for the amortization or accretion of premium or discount, as applicable, on debt investments using the effective interest method.

 

(4)

As of June 30, 2022, the net estimated unrealized loss for U.S. federal income tax purposes was $10.9 million based on a tax cost basis of $994.6 million. As of June 30, 2022, the estimated aggregate gross unrealized loss for U.S. federal income tax purposes was $11.4 million and the estimated aggregate gross unrealized gain for U.S. federal income tax purposes was $0.5 million.

 

(5)

Unless otherwise indicated, loan contains a variable rate structure and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, three-, six-, or twelve-month LIBOR), Secured Overnight Financing Rate (“SOFR” or “S”) (which can include one-, three-, or six- SOFR), or an Sterling Overnight Interbank Average Rate (“SONIA” or “SA”) at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

 

(6)	The interest rate on these loans is subject to 1 month LIBOR, which as of June 30, 2022 was 1.79%.

 

(7)	The interest rate on these loans is subject to 3 month LIBOR, which as of June 30, 2022 was 2.29%.

 

(8)	The interest rate on these loans is subject to 6 month LIBOR, which as of June 30, 2022 was 2.94%.

 

(9)	The interest rate on these loans is subject to 1 month SOFR, which as of June 30, 2022 was 1.69%.

 

(10)	The interest rate on these loans is subject to 3 month SOFR, which as of June 30, 2022 was 2.12%.

 

(11)	The interest rate on these loans is subject to 6 month SOFR, which as of June 30, 2022 was 2.63%.

 

(12)	The interest rate on these loans is subject to SONIA, which as of June 30, 2022 was 1.19%.

 

(13)	Level 2 investment.

 

(14)	Contains a fixed rate structure.

 

(15)	Position or portion thereof is an unfunded loan or equity commitment. See Note 7 “Commitments and Contingencies”.

 

(16)	The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value is the result of the capitalized discount on the loan.

 

(17)	The date disclosed represents the commitment period of the unfunded term loan. Upon expiration of the commitment period, the funded portion of the term loan may be subject to a longer maturity date.

 

(18)	Investment is non-income producing.

 

(19)	Unless otherwise indicated, the Company’s portfolio companies are pledged as collateral supporting the amounts outstanding under the Revolving Credit Facility. See Note 6 “Debt”.

 

(20)

This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. As of June 30, 2022, non-qualifying assets represented 2.9% of total assets as calculated in accordance with the regulatory requirements.

 

(21)

Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of June 30, 2022, the aggregate fair value of these securities is $103.6 million or 17.8% of the Company’s net assets. The acquisition dates of the restricted securities are as follows:

 

Portfolio Company		Investment		Acquisition Date
Halo Parent Newco, LLC		Class H PIK Preferred Equity			May 4, 2022
Knockout Intermediate Holdings I Inc. (dba Kaseya)		Perpetual Preferred Stock			June 23, 2022
Minerva Holdco, Inc.		Senior A Preferred Stock			May 2, 2022
Project Alpine Co-Invest Fund, LP		LP Interest			June 10, 2022

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

 

11

Owl Rock Technology Income Corp.

Consolidated Statement of Changes in Net Assets

(Amounts in thousands, except share amounts)

(Unaudited)

 

		For the Three Months Ended June 30, 2022(1)				For the Six Months Ended June 30, 2022(1)
Increase (Decrease) in Net Assets Resulting from Operations
Net investment income (loss)		$	6,996			$	6,996
Net change in unrealized gain (loss)			(11,603	)			(11,603	)
Net realized gain (loss) on investments			(526	)			(526	)
Net Increase (Decrease) in Net Assets Resulting from Operations			(5,133	)			(5,133	)
Distributions
Class S			(4	)			(4	)
Class I			(5,884	)			(5,884	)
Net Decrease in Net Assets Resulting from Shareholders’ Distributions			(5,888	)			(5,888	)
Capital share Transactions
Class S:
Issuance of shares of common stock			750				750
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions - Class S			750				750
Class I:
Issuance of shares of common stock			589,741				589,741
Reinvestment of shareholders’ distributions			987				987
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions - Class I			590,728				590,728
Total Increase (Decrease) in Net Assets			580,457				580,457
Net Assets, at beginning of period			151				151
Net Assets, at end of period		$	580,608			$	580,608

 

(1)	The Company was initially capitalized on September 30, 2021 and commenced operations on May 2, 2022.

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

 

12

Owl Rock Technology Income Corp. Consolidated Statement of Cash Flows

(Amounts s in thousands, except share amounts)

(Unaudited)

 

		Six Months Ended June 30, 2022(1)
Cash Flows from Operating Activities
Net Increase (Decrease) in Net Assets Resulting from Operations		$	(5,133	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Purchases of investments, net			(1,024,029	)
Proceeds from investments and investment repayments, net			30,761
Net accretion/amortization of discount/premium on investments			(291	)
Payment-in-kind interest			(1,203	)
Payment-in-kind dividends			(905	)
Net change in unrealized (gain) loss on investments			11,399
Net change in unrealized (gain) loss on translation of assets and liabilities in foreign currencies			204
Net realized (gain) loss on investments			(17	)
Amortization of debt issuance costs			362
Changes in operating assets and liabilities:
(Increase) decrease in interest receivable			(3,878	)
(Increase) decrease in prepaid expenses and other assets			(478	)
(Increase) decrease in investments funded in advance			(96,855	)
(Increase) decrease in due from advisor			(174	)
Increase (decrease) in payable for investments purchased			12,985
Increase (decrease) in accrued expenses and other liabilities			2,963
Net cash provided by (used in) operating activities			(1,074,289	)
Cash Flows from Financing Activities
Borrowings on debt			503,216
Debt issuance costs			(12,719	)
Proceeds from issuance of common shares			590,491
Cash distributions paid to shareholders			(1,462	)
Net cash provided by (used in) financing activities			1,079,526
Net increase (decrease) in cash			5,237
Cash, beginning of period			86
Cash, end of period		$	5,323
Supplemental and Non-Cash Information
Interest paid during the period		$	369
Distributions declared during the period		$	5,888
Reinvestment of distributions during the period		$	987
Distribution payable		$	3,439

 

(1)	The Company was initially capitalized on September 30, 2021 and commenced operations on May 2, 2022.

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

 

13

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization and Principal Business

Owl Rock Technology Income Corp., (“Owl Rock” or the “Company”) is a Maryland corporation formed on June 22, 2021. The Company was formed primarily to originate and make loans to, and make debt and equity investments in, technology-related companies based primarily in the United States. The Company`s investment objective is to maximize total return by generating current income from its debt investments and other income producing securities, and capital appreciation from its equity and equity-linked investments. The Company intends to invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and equity-related securities which include common and preferred stock, securities convertible into common stock, and warrants. The Company may on occasion invest in smaller or larger companies if an attractive opportunity presents itself, especially when there are dislocations in the capital markets, including the high yield and large syndicated loan markets, which are often referred to as “junk” investments. Once the Company raises sufficient capital, the target credit investments will typically have maturities between three and ten years and generally range in size between $20 million and $500 million, although the investment size will vary with the size of the Company`s capital base. Prior to raising sufficient capital, the Company may make a greater number of investments in syndicated loan opportunities than it otherwise would expect to make in the future.

The Company is an externally managed closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company intends to elect to be treated for federal income tax purposes, and intends to qualify annually thereafter, as a regulated investment company (a “RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”).

On December 9, 2021, the Company formed a wholly-owned subsidiary, OR Tech Lending IC LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Tech Lending IC LLC makes loans to borrowers headquartered in California. From time to time the Company may form wholly-owned subsidiaries to facilitate the normal course of business.

Owl Rock Technology Advisors II LLC (“the Adviser” or “ORTA II”) serves as the Company’s investment adviser. The Adviser is an indirect subsidiary of Blue Owl Capital Inc. (“’Blue Owl”) (NYSE: OWL) and part of Owl Rock, a division of Blue Owl focused on direct lending. The Adviser is registered with the U.S. Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Blue Owl consists of three divisions: (1) Owl Rock, which focuses on direct lending, (2) Dyal, which focuses on providing capital to institutional alternative asset managers and (3) Oak Street, which focuses on real estate strategies. Subject to the overall supervision of the Company`s Board of Directors (the “Board”), the Adviser manages the day-to-day operations of, and provides investment advisory and management services to the Company.

The Company relies on an exemptive order issued to an affiliate of the Adviser that permits it to offer multiple classes of shares of common stock and to impose asset-based servicing and distribution fees and early withdrawal fees. The Company intends to offer on a best efforts, continuous basis up to $5,000,000,000 in any combination of amount of shares of Class S, Class D, and Class I common stock. The share classes have different upfront selling commissions and ongoing servicing fees. Each class of common stock will be offered through Blue Owl Securities LLC (d/b/a Blue Owl Securities) (the “Dealer Manager” or “Blue Owl Securities”). No upfront selling commission, dealer manager fees, or other similar placement fees will be paid to the Company or Dealer Manager with respect to the Class S and Class D shares, however, if Class S shares or Class D shares are purchased through certain financial intermediaries, those financial intermediaries may directly charge transaction or other fees, including upfront placement fees or brokerage commissions, in such amount as they may determine, provided that the selling agents limit such charge to 3.5% of the net offering price per share for each Class S share and 1.5% of the net offering price per share of each Class D share. Class I shares are not subject to upfront selling commissions. In addition, the Class S and Class D share classes have different ongoing servicing fees. Class I shares are not subject to ongoing servicing fees. Class S, Class D and Class I shares will be offered at initial purchase prices per shares of $10.00. Thereafter, the purchase price per share for each class of common stock will vary and will not be sold at a price below the Company`s net asset value per share of such class, as determined in accordance with the Company`s share pricing policy, plus applicable upfront selling commissions.

On September 30, 2021, an affiliate of the Adviser (the “Initial Shareholder”), purchased 100 shares of the Company`s Class I common stock at $10.00 per share, which represents the initial public offering price. The Initial Shareholder will not tender these shares for repurchase as long as the Adviser remains the Company’s investment adviser. There is no current intention for the Adviser to discontinue its role.

 

14

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

On October 6, 2021, the Company received a subscription agreement, totaling $50.0 million for the purchase of Class I common shares of its common stock from Owl Rock Feeder FIC ORTIC LLC (“Feeder FIC ORTIC”) and Blue Owl Capital Holdings LP (“Blue Owl Holdings”), entities affiliated with the Adviser. The Company called $0.2 million and $50.0 million under the subscription agreement as of December 31, 2021 and June 30, 2022, respectively.

The Company is currently publicly offering on a continuous basis up to $5.0 billion in shares. Since meeting the minimum offering requirement and commencing its continuous public offering through June 30, 2022, the Company has issued 75,301 shares of Class S common stock, and 5,000,100 shares of Class I common stock, for gross proceeds of $0.7 million, and $50.0 million, respectively, including $1,000 of seed capital contributed by its Initial Shareholder. The Company has issued 54,011,353 shares of its Class I common stock in the private offering and raised gross proceeds of approximately $539.9 million.

As of June 30, 2022, there were no shares of Class D common stock outstanding.

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements, have been included. The Company was initially capitalized on September 30, 2021. The Company commenced operations on May 2, 2022, and therefore comparative financial statements are not presented. The Company’s fiscal year ends on December 31.

Use of Estimates

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

Cash

Cash consists of deposits held at a custodian bank. Cash is carried at cost, which approximates fair value. The Company deposits its cash with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.

Investments at Fair Value

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of the Company’s investments, are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, the Company’s audit committee, and independent third-party valuation firm(s) engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company’s investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase or sale transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

 

15

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

 

•

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

 

•

With respect to investments for which market quotations are not readily available, the valuation process begins with the independent valuation firm(s) providing a preliminary valuation of each investment to the Adviser’s valuation committee;

 

•

Preliminary valuation conclusions are documented and discussed with the Adviser’s valuation committee. Agreed upon valuation recommendations are presented to the Audit Committee;

 

•

The Audit Committee reviews the valuation recommendations and recommends values for each investment to the Board; and

 

•

The Board reviews the recommended valuations and determines the fair value of each investment.

The Company conducts this valuation process on a quarterly basis.

The Company applies Financial Accounting Standards Board (“FASB”) Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

 

•

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

 

•

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

 

•

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurs. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820. Consistent with the valuation policy, the Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (such as broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company, or the independent valuation firm(s), reviews pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

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

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

Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We intend to comply with the new rule`s mandatory requirements on or before the compliance date in September 2022.

 

16

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Interest and Dividend Income Recognition

Interest income is recorded on the accrual basis and includes accretion or amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest and dividends represent accrued interest or dividends that are added to the principal amount or liquidation amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or at the occurrence of a liquidation event. For the three and six months ended June 30, 2022, PIK interest and PIK dividend income earned was $1.2 million and $1.1 million, representing 11.9% and 10.3% of investment income, respectively.

Discounts to par value on securities purchased are accreted into interest income over the contractual life of the respective security using the effective yield method. Premiums to par value on securities purchased are amortized to first call date. The amortized cost of investments represents the original cost adjusted for the accretion or amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point the Company believes PIK interest is not expected to be realized, the investment generating PIK interest will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

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

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are normally paid at the closing of the investments, are generally non-recurring, and are recognized as revenue when earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to the Company’s portfolio companies.

Organization Expenses

Costs associated with the organization of the Company are expensed as incurred. These expenses consist primarily of legal fees and other costs of organizing the Company.

Offering Expenses

Costs associated with the offering of common shares of the Company are capitalized as deferred offering expenses and are included in prepaid expenses and other assets in the Consolidated Statement of Assets and Liabilities and are amortized over a twelve-month period from incurrence. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s continuous public offering of its common shares, the preparation of the Company’s registration statement, and registration fees.

Debt Issuance Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized utilizing the effective yield method, over the life of the related debt instrument. Debt issuance costs are presented on the Consolidated Statement of Assets and Liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the Consolidated Statement of Assets and Liabilities as an asset until the debt liability is recorded.

 

17

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Reimbursement of Transaction-Related Expenses

The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are generally expected to be reimbursed by the Company’s portfolio companies, are typically deferred until the transaction is consummated and are recorded in prepaid expenses and other assets on the date incurred. The costs of successfully completed investments not otherwise reimbursed are borne by the Company and are included as a component of the investment’s cost basis.

Cash advances received in respect of transaction-related expenses are recorded as cash with an offset to accrued expenses and other liabilities. Accrued expenses and other liabilities are relieved as reimbursable expenses are incurred.

Income Taxes

The Company intends to elect to be treated as a RIC under the Code beginning with the taxable year ended December 31, 2021 and intends to continue to qualify as a RIC. So long as the Company maintains its tax treatment as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its shareholders as dividends. Instead, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain income tax provisions through December 31, 2021.

Income and Expense Allocations

Income and realized and unrealized capital gains and losses are allocated to each class of shares of the Company on the basis of the aggregate net asset value of that class in relation to the aggregate net asset value of the Company.

Expenses that are common to all share classes are borne by each class of shares based on the net assets of the Company attributable to each class. Expenses that are specific to a class of shares are allocated to such class either directly or through the servicing fees paid pursuant to the Company’s distribution plan. See Note 3. “Agreements and Related Party Transactions – Shareholder Servicing Plan.”

Distributions to Common Shareholders

Distributions to common shareholders are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would be generally distributed at least annually although the Company may decide to retain such capital gains for investment.

Subject to the Company’s board of directors’ discretion and applicable legal restrictions, the Company intends to authorize and declare cash distributions to the Company’s shareholders on a monthly or quarterly basis and pay such distributions on a monthly basis. The per share amount of distributions for Class S, Class D, and Class I shares will differ because of different allocations of class-specific expenses. Specifically, because the ongoing servicing fees are calculated based on the Company’s net asset value for the Company’s Class S and Class D shares, the ongoing service fees will reduce the net asset value or, alternatively, the distributions payable, with respect to the shares of each such class, including shares issued under the Company’s distribution reinvestment plan. As a result, the distributions on Class S shares and Class D shares may be lower than the distributions on Class I shares.

 

18

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

The Company has adopted a distribution reinvestment plan pursuant to which shareholders will have their cash distributions automatically reinvested in additional shares of the Company’s same class of common stock to which the distribution relates unless they elect to receive their distributions in cash. The Company expects to use newly issued shares to implement the distribution reinvestment plan.

Consolidation

As provided under Regulation S-X and ASC Topic 946—Financial Services—Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company’s wholly-owned subsidiaries in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.

New Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Revenue Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The updated guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are elective and effective upon issuance through December 31, 2022. ASU No. 2020-04 provides increased flexibility as the Company continues to evaluate the transition of reference rates and is currently evaluating the impact of adopting ASU No. 2020-04 on the consolidated financial statements.

Other than the aforementioned guidance, the Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

Note 3. Agreements and Related Party Transactions

Administration Agreement

The Company has entered into an Administration Agreement (the “Administration Agreement”) with the Adviser. Under the terms of the Administration Agreement, the Adviser performs, or oversees the performance of, required administrative services, which include providing office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others. On May 3, 2022, the Board approved the continuation of the Administration Agreement.

The Administration Agreement also provides that the Company reimburses the Adviser for certain organization costs incurred prior to the commencement of the Company’s operations, and for certain offering costs.

The Company reimburses the Adviser for services performed for it pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Adviser for any services performed for it by such affiliate or third party.

From October 1, 2021 to November 30, 2021, the Company was advised by Owl Rock Technology Advisers LLC (“ORTA”), an affiliate of the Adviser, which also served as the Company’s administrator. On November 30, 2021, the Company entered into the Investment Advisory Agreement and the Administration Agreement, under which the Adviser serves as the Company’s Adviser and administrator, respectively.

Unless earlier terminated as described below, the Administration Agreement will remain in effect for two years from the date it first became effective, and will remain in effect and from year to year thereafter if approved annually (1) the vote of the Board, or by the vote of a majority of its outstanding voting securities and (2) the vote of a majority of the Company’s directors who are not “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act. The Administration Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company (as defined in the 1940 Act), or by the vote of a majority of the Board or by the Adviser.

 

19

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

No person who is an officer, director, or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s officers who provide operational and administrative services, as well as their respective staffs and other professionals who provide services to the Company, who assist with the preparation, coordination and administration of the foregoing or provide other “back office” or “middle office,” financial or operational services to the Company (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.

Investment Advisory Agreement

The Company has entered into an Investment Advisory Agreement (the “Investment Advisory Agreement”) with the Adviser. Under the terms of the Investment Advisory Agreement, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring its investments, and monitoring its portfolio companies on an ongoing basis through a team of investment professionals. On May 3, 2022, the Board approved the continuation of the Investment Advisory Agreement.

The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired.

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect for two years from the date it first becomes effective and from year-to-year thereafter if approved annually by a majority of the Board or by the holders of a majority of the Company`s outstanding voting securities and, in each case, by a majority of independent directors.

The Investment Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related SEC guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of penalty, the Company may terminate the Investment Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board of Directors or the shareholders holding a majority (as defined under the 1940 Act) of the outstanding shares of the Company’s common stock or the Adviser. In addition, without payment of penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 120 days’ written notice.

From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.

Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser a base management fee and an incentive fee. The cost of both the management fee and the incentive fee will ultimately be borne by the Company’s shareholders.

The base management fee is payable monthly in arrears. The base management fee is calculated at an annual rate of 1.25% based on the average value of the Company`s net assets at the end of the two most recently completed calendar months. All or part of the base management fee not taken as to any month will be deferred without interest and may be taken in any such month prior to the occurrence of a liquidity event. Base management fees for any partial month are prorated based on the number of days in the month. The Adviser and its affiliates have agreed to waive the base management fee through October 31, 2022. Any portion of management fees waived shall not be subject to recoupment.

For the three and six months ended June 30, 2022, management fees were $0.3 million and $0.3 million, respectively, of which $0.3 million and $0.3 million was waived for each respective period.

The incentive fee consists of two parts: (i) an incentive fee on income and (ii) an incentive fee on capital gains. Each part of the incentive fee is outlined below.

The incentive fee on income will be calculated and payable quarterly in arrears and will be based upon the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. In the case of a liquidation of the Company or if the Investment Advisory Agreement is terminated, the fee will also become payable as of the effective date of the event.

The incentive fee on income for each calendar quarter will be calculated as follows:

 

•

No incentive fee on income will be payable in any calendar quarter in which the pre-incentive fee net investment income does not exceed a quarterly return to investors of 1.25% of the Company’s net asset value at the beginning of the quarter. The Company refers to this as the quarterly preferred return.

 

20

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

•

All of the Company’s pre-incentive fee net investment income, if any, that exceeds the quarterly preferred return, but is less than or equal to 1.43%, which the Company refers to as the upper level breakpoint, of the Company’s net asset value at the beginning of the quarter, will be payable to the Company’s Adviser. The Company refers to this portion of the incentive fee on income as the “catch-up.” It is intended to provide an incentive fee of 12.50% on all of the Company’s pre-incentive fee net investment income when the pre-incentive fee net investment income reaches 1.43% of the Company’s net asset value at the beginning of the quarter, measured as of the end of the immediately preceding calendar quarter. The quarterly preferred return of 1.25% and upper level breakpoint of 1.43% are also adjusted for the actual number of days each calendar quarter.

 

•

For any quarter in which the Company’s pre-incentive fee net investment income exceeds the upper level break point of 1.43% of the Company’s net asset value at the beginning of the quarter, the incentive fee on income will equal 12.50% of the amount of the Company’s pre-incentive fee net investment income, because the quarterly preferred return and catch up will have been achieved.

 

•

Pre-incentive fee net investment income is defined as investment income and any other income, accrued during the calendar quarter, minus operating expenses for the quarter, including the base management fee, expenses payable under the Investment Advisory Agreement and the Administration Agreement, any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee. Pre-incentive fee net investment income does not include any expense support payments or any reimbursement by the Company of expense support payments, or any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

The incentive fee on capital gains will be determined and payable in arrears as of the end of each calendar year during which the Investment Advisory Agreement is in effect. In the case of a liquidation, or if the Investment Advisory Agreement is terminated, the fee will also become payable as of the effective date of such event. The annual fee will equal (i) 12.50% of the Company’s realized capital gains on a cumulative basis from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less (ii) the aggregate amount of any previously paid incentive fees on capital gains as calculated in accordance with U.S. GAAP. In no event will the incentive fee on capital gains payable pursuant hereto be in excess of the amount permitted by the Advisers Act, including Section 205 thereof.

For the three and six months ended June 30, 2022, performance-based incentive fees were $0.9 million and $0.9 million, respectively, of which $0.9 million and $0.9 million was waived for each respective period.

The Adviser and its affiliates have agreed to waive the performance-based incentive fee and capital gains based incentive fee through October 31, 2022. Any portion of the incentive fees waived shall not be subject to recoupment.

Under the terms of the Investment Advisory Agreement, upon satisfaction of the minimum offering requirement, the Adviser is entitled to receive up to 1.50% of gross proceeds raised in the Company`s continuous public offering until all organization and offering costs funded by the Adviser or its affiliates have been recovered. Any reimbursements will not exceed actual expenses incurred by the Adviser and its affiliates.

For the three and six months ended June 30, 2022, subject to the 1.5% organization and offering cost cap, the Company did not accrue any organization and offering expenses that are reimbursable to the Adviser.

From October 1, 2021 to November 30, 2021, the Company was advised by ORTA, an affiliate of the Adviser, which also served as the Company’s administrator. On November 30, 2021, the Company entered into the Investment Advisory Agreement and the Administration Agreement, under which the Adviser serves as the Company’s Adviser and administrator, respectively.

Affiliated Transactions

The Company may be prohibited under the 1940 Act from participating in certain transactions with its affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. The Company, and certain of its affiliates rely on an order for exemptive relief (the “Order”) that has been granted to Owl Rock Capital Advisors LLC to co-invest with other funds managed by the Adviser or its affiliates, in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such Order, the Company generally is permitted to co-invest with certain of its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its shareholders and do not involve

 

21

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

overreaching of the Company or its shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of the Company’s shareholders and is consistent with its investment objective and strategies, (3) the investment by its affiliates would not disadvantage the Company, and the Company’s participation would not be on a basis different from or less advantageous than that on which its affiliates are investing, and (4) the proposed investment by the Company would not benefit the Adviser or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.

The Adviser is affiliated with Owl Rock Capital Advisors LLC (“ORCA”), ORTA, Owl Rock Capital Private Fund Advisors LLC (“ORPFA”) and Owl Rock Diversified Advisors LLC (“ORDA” and together with ORCA, ORTA, ORPFA and the Adviser, the “Owl Rock Advisers”), which are also investment advisers. The Owl Rock Advisers are indirect affiliates of Blue Owl and comprise part of “Owl Rock”, a division of Blue Owl focused on direct lending. The Owl Rock Advisers’ allocation policy seeks to ensure equitable allocation of investment opportunities over time between the Company, and other funds managed by the Adviser, or its affiliates. As a result of the Order, there could be significant overlap in the Company’s investment portfolio and the investment portfolio of other funds managed by the Adviser or its affiliates that could avail themselves of the the Order and that have a similar investment objective to the Company’s.

Dealer Manager Agreement

The Company has entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Blue Owl Securities, an affiliate of the Adviser, and participating broker-dealer agreements with certain broker-dealers. Under the terms of the Dealer Manager Agreement and the participating broker-dealer agreements, Blue Owl Securities serves as the dealer manager, and certain participating broker- dealers solicit capital, for the Company`s public offering of shares of Class S, Class D, and Class I common stock. Blue Owl Securities will not receive upfront selling commissions with respect to purchases of Class S, Class D and Class I shares or shares of any class of shares issued pursuant to the Company`s distribution reinvestment plan.

Subject to FINRA limitations on underwriting compensation, the Company will pay Blue Owl Securities selling commissions over time as servicing fees for ongoing services rendered to shareholders by participating broker-dealers or broker-dealers servicing investors’ accounts, referred to as servicing broker-dealers:

 

•

With respect to the Company`s outstanding Class S shares equal to 0.85% per annum of the aggregate net asset value of the Company`s outstanding Class S shares; and

 

•

With respect to the Company`s outstanding Class D shares equal to 0.25% per annum of the aggregate net asset value of the Company`s outstanding Class D shares.

The Company will not pay an ongoing servicing fee with respect to the Company`s outstanding Class I shares.

The servicing fees will be paid monthly in arrears. Blue Owl Securities will reallow (pay) all or a portion of the ongoing servicing fees to participating broker-dealers and servicing broker-dealers for ongoing services performed by such broker-dealers, and will waive ongoing servicing fees to the extent a broker-dealer is not eligible to receive it for failure to provide such services. Because the ongoing servicing fees are calculated based on the Company`s net asset values for the Company`s Class S and Class D shares, they will reduce the net asset values or, alternatively, the distributions payable, with respect to the shares of each such class, including shares issued under it’s distribution reinvestment plan. The Company will cease paying ongoing servicing fees at the date at which total underwriting compensation from any source in connection with this offering equals 10% of the gross proceeds from it’s offering (excluding proceeds from issuances pursuant to it`s distribution reinvestment plan). This limitation is intended to ensure that the Company satisfies the requirements of FINRA Rule 2310, which provides that the maximum aggregate underwriting compensation from any source, including compensation paid from offering proceeds and in the form of “trail commissions,” payable to underwriters, broker-dealers, or affiliates thereof participating in an offering may not exceed 10% of gross offering proceeds, excluding proceeds received in connection with the issuance of shares through a distribution reinvestment plan.

Upfront selling commissions for sales of Class S and Class D shares may be reduced or waived in connection with volume or other discounts, other fee arrangements or for sales to certain categories of purchasers.

 

22

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Expense Support and Conditional Reimbursement Agreement

The Company has entered into the Expense Support Agreement with the Adviser, the purpose of which is to ensure that no portion of the Company’s distributions to shareholders will represent a return of capital for U.S. federal income tax purposes. The Expense Support Agreement will become effective as of the date that the Company meets the minimum offering requirement. On a quarterly basis, the Adviser shall reimburse the Company for “Operating Expenses” (as defined below) in an amount equal to the excess of the Company’s cumulative distributions paid to the Company’s shareholders in each quarter over “Available Operating Funds” (as defined below) received by the Company on account of the Company’s investment portfolio during such quarter. Any payments required to be made by the Adviser pursuant to the preceding sentence are referred to herein as an “Expense Payment”.

Pursuant to the Expense Support Agreement, “Operating Expenses” means all of the Company’s operating costs and expenses incurred, as determined in accordance with generally accepted accounting principles for investment companies. “Available Operating Funds” means the sum of (i) the Company’s estimated investment company taxable income (including realized net short-term capital gains reduced by realized net long-term capital losses), (ii) the Company’s realized net capital gains (including the excess of realized net long-term capital gains over realized net short-term capital losses) and (iii) dividends and other distributions paid to us on account of preferred and common equity investments in portfolio companies, if any (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

The Adviser’s obligation to make an Expense Payment shall automatically become a liability of the Adviser and the right to such Expense Payment will be an asset of the Company’s on the last business day of the applicable quarter. The Expense Payment for any quarter will be paid by the Adviser to the Company in any combination of cash or other immediately available funds, and/or offset against amounts due from the Company to the Adviser no later than the earlier of (i) the date on which the Company closes it’s books for such quarter, or (ii) forty-five days after the end of such quarter.

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

The amount of the Reimbursement Payment for any quarter shall equal the lesser of (i) the Excess Operating Funds in respect of such quarter and (ii) the aggregate amount of all Expense Payments made by the Adviser to us within three years prior to the last business day of such quarter that have not been previously reimbursed by the Company to the Adviser. The payment will be reduced to the extent that such Reimbursement Payments, together with all other Reimbursement Payments paid during the fiscal year, would cause Other Operating Expenses defined as the Company’s total Operating Expenses, excluding base management fees, incentive fees, organization and offering expenses, distribution and shareholder servicing fees, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses on an annualized basis and net of any Expense Payments received by the Company during the fiscal year to exceed the lesser of: (i) 1.75% of the Company’s average net assets attributable to the shares of the Company’s common stock for the fiscal year-to-date period after taking such Expense Payments into account; and (ii) the percentage of the Company’s average net assets attributable to shares of its common stock represented by Other Operating Expenses during the fiscal year in which such Expense Payment was made (provided, however, that this clause (ii) shall not apply to any Reimbursement Payment which relates to an Expense Payment made during the same fiscal year).

No Reimbursement Payment for any quarter will be made if: (1) the “Effective Rate of Distributions Per Share” (as defined below) declared by the Company at the time of such Reimbursement Payment is less than the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Company’s “Operating Expense Ratio” (as defined below) at the time of such Reimbursement Payment is greater than the Operating Expense Ratio at the time the Expense Payment was made to which such Reimbursement Payment relates. Pursuant to the Expense Support Agreement, “Effective Rate of Distributions Per Share” means the annualized rate (based on a 365 day year) of regular cash distributions per share exclusive of returns of capital, distribution rate reductions due to distribution and shareholder fees, and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing Operating Expenses, less organizational and offering expenses, base management and incentive fees owed to Adviser, and interest expense, by the Company’s net assets.

The specific amount of expenses reimbursed by the Adviser, if any, will be determined at the end of each quarter. The Company or the Adviser will be able to terminate the Expense Support Agreement at any time, with or without notice. The Expense Support Agreement will automatically terminate in the event of (a) the termination of the Investment Advisory Agreement, or (b) a determination by the Company’s Board to dissolve or liquidate the Company. Upon termination of the Expense Support Agreement, the Company will be required to fund any Expense Payments that have not been reimbursed by the Company to the Adviser.

 

23

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

There was $0.2 million of expense support recorded for the three and six months ended June 30, 2022.

 

For the Quarter Ended		Amount of Expense Support				Recoupment of Expense Support				Unreimbursed Expense Support				Effective Rate of Distribution per Share(1)				Reimbursement Eligibility Expiration				Operating Expense Ratio(2)(3)
($ in thousands)
June 30, 2022		$	(174	)		$	—			$	(174	)			6.3	%			June 30, 2025				—	%
Total		$	(174	)		$	—			$	(174	)

 

(1)

The effective rate of distribution per share is expressed as a percentage equal to the projected annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular monthly cash distributions per share as of such date without compounding), divided by the Company’s net asset value per share as of such date.

(2)	The operating expense ratio is calculated by dividing operating expenses, less organizational and offering expenses, base management and incentive fees owed to the Adviser, and interest expense, by the Company’s net assets.

(3)	The operating expense ratio for the period presented rounds to less than 0.01%.

Expense Deferral Agreement

On March 23, 2022, the Company and the Adviser entered into the expense deferral agreement (the “Expense Deferral Agreement”), under which the Adviser has agreed to incur and pay all of the Company’s expenses, other than amounts used to pay organizational and offering costs, other fees payable under the Investment Advisory Agreement, interest expense and shareholder servicing and/or distribution fees, until the Company receives and accepts, in cash, $1.75 billion in aggregate subscriptions from the sale of its shares in the offering (the “First Subscription Condition”).

If the Company meets the First Subscription Condition, the Company will be required to repay one-third of the aggregate amount of expenses incurred by the Adviser under the terms of the Expense Deferral Agreement following the calendar month in which the Company satisfies the First Subscription Condition. If the Company receives and accepts, in cash, $2.25 billion in aggregate subscriptions from the sale of its shares in the offering (the “Second Subscription Condition”), the Company will be required to repay an additional one-third of the aggregate amount of expenses incurred by the Adviser under the terms of the Expense Deferral Agreement following the calendar month in which the Company satisfies the Second Subscription Condition. If the Company receives and accepts, in cash, $2.75 billion in aggregate subscriptions from the sale of its shares in the offering (the “Third Subscription Condition”), the Company will be required to repay an additional one-third of the aggregate amount of expenses incurred by the Adviser under the terms of the Expense Deferral Agreement following the calendar month in which the Company satisfies the Third Subscription Condition. However, we will not be required to repay expenses to the Adviser under the Expense Deferral Agreement to the extent that such expenses (1) have previously been classified as Expense Payments or Reimbursement Payments under the Expense Support Agreement, or (2) are Organization and Offering Expenses in excess of 1.50% of gross offering proceeds from the sale of the Company’s securities.

The Expense Deferral Agreement may be terminated at any time, without the payment of any penalty, by the Company or the Adviser, with or without notice, and will automatically terminate (i) in the event of the termination of the Investment Advisory Agreement, or (ii) if the Board makes a determination to dissolve or liquidate the Company. If the agreement is terminated, the Company will remain obligated to repay the Adviser for expenses the Company received if the Company satisfies the Subscription Condition.

License Agreement

On October 1, 2021, the Company entered into a license agreement (the “License Agreement”), pursuant to which an affiliate of Blue Owl has granted the Company a non-exclusive license to use the name “Owl Rock.” Under the License Agreement, the Company has a right to use the Owl Rock name for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company has no legal right to the “Owl Rock” name or logo.

Promissory Note

On October 4, 2021, the Board authorized the Company, as Borrower, to enter into a revolving promissory note (the “Promissory Note”) with an entity affiliated with the Adviser. On June 22, 2022, the Company and Feeder FIC, as lender, entered into a termination agreement pursuant to which the Promissory Note was terminated. Upon execution of the Termination Agreement there were no amounts outstanding pursuant to the Promissory Notes. See Note 6 “Debt”.

 

24

Owl Rock Technology Income Corp.

Notes to Consolidated Financial Statements (Unaudited) - Continued

 

Note 4. Investments

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act, “non-affiliated investments” are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedule of investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments.

Investments at fair value and amortized cost consisted of the following as of June 30, 2022:

 

		June 30, 2022
($ in thousands)		Amortized Cost				Fair Value
First-lien senior secured debt investments		$	734,634			$	730,587
Second-lien senior secured debt investments			154,613				149,437
Preferred equity investments			99,767				96,964
Common equity investments			6,670				6,667
Total Investments		$	995,684			$	983,655

The Company uses Global Industry Classification Standards (“GICS”) for classifying the industry groupings of its portfolio companies. The industry composition of investments based on fair value as of June 30, 2022 was as follows:

 

		June 30, 2022
Application Software			18.4	%
Beverages			4.9	%
Buildings and real estate			2.1	%
Commercial Services & Supplies			10.4	%
Construction & Engineering			1.2	%
Containers and packaging			2.2	%
Diversified Consumer Services			3.1	%
Diversified Financial Services			4.3	%
Food & Staples Retailing			0.7	%
Health Care Technology			17.4	%
Health Care equipment & supplies			0.4	%
Health Care providers & services			2.6	%
Insurance			4.6	%
IT Services			13.9	%
Life Sciences Tools & Services			0.5	%
Professional Services			0.8	%
Real Estate Management & Development			2.4	%
Systems Software			5.7	%
Technology Infrastructure			4.4	%
Total			100.0	%

 

25