Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Unless indicated otherwise, the "Company," "we," "us," and "our" refer to Muzinich BDC, Inc., and the "Adviser" refers to Muzinich BDC Adviser, LLC, an affiliate of Muzinich & Co., Inc. ("Muzinich").

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Such statements are not historical facts and are based on current expectations, estimates, projections, opinions and/or beliefs of the Company and/or Muzinich. You can identify these statements by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" or the negatives thereof, or other variations thereon or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. These forward-looking statements include, but are not limited to, information in this Form 10-Q regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company ("BDC") and the expected performance of, and the yield on, our portfolio companies. In particular, there are forward-looking statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations." There may be events in the future, however, that we are not able to predict accurately or control. The factors referenced under "Part II, Item 1A. Risk Factors," as well as any cautionary language in this Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in these risk factors and elsewhere in this Form 10-Q could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which we make it. Factors or events that could cause actual results to differ may emerge from time to time, and it is not possible to predict all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

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our future operating results;

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changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes to the value of our assets, or other external factors, including ongoing geopolitical conflicts and trade negotiations, including the imposition of tariffs;

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our business prospects and the prospects of our prospective portfolio companies, including our and their ability to achieve our respective objectives as a result of ongoing geopolitical conflicts or trade negotiations, including the imposition of tariffs;

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the impact of investments that we expect to make;

	●	the impact of increased competition;
	●	actual and potential conflicts of interest with our Adviser and its affiliates;

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our contractual arrangements and relationships with third parties;

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

	●	the ability of our portfolio companies to achieve their objectives;
	●	the use of borrowed money to finance a portion of our investments;

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the relative and absolute performance of our Adviser;

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the ability of our Adviser and its affiliates, including Muzinich, to attract and retain talented professionals;

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our expected financings and investments;

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our ability to pay dividends or make distributions;

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the adequacy of our financing sources and working capital;

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

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the impact of future acquisitions and divestitures;

	●	the timing and manner in which we conduct an initial public offering ("IPO") and/or listing, if at all;
	●	the timing and manner in which we conduct any share repurchase offers;

	●	our regulatory structure and tax status as a BDC and as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code").
	●	the impact on our business of U.S. and international financial reform legislation, rules and regulations;
	●	the effect of changes in tax laws and regulations and interpretations thereof; and
	●	the risks, uncertainties and other factors we identify under "Part II, Item 1A. Risk Factors" and elsewhere in this Form 10-Q.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those referenced in the section entitled "Item 1A. Risk Factors" in Part II of this Form 10-Q and elsewhere in this Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-Q. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

Please note that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.

Overview

We were incorporated under the laws of the State of Delaware on May 29, 2019. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the "1940 Act"), and have elected to be treated, qualify, and intend to qualify annually as a RIC under Subchapter M of the Code for U.S. federal income tax purposes. As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in "qualifying assets," source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

As of September 30, 2025, we had capital commitments from investors in the amount of $205,000,000 with 169,101 shares outstanding. As of September 30, 2025, we had equity capital in the amount of $179,587,692 with 169,101 shares outstanding. See "Equity Activity" under "Financial Condition, Liquidity and Capital Resources" below for further details. We anticipate raising additional equity capital for investment purposes through drawdowns in respect of capital commitments made by investors pursuant to private offerings of our common stock ("Private Offerings").

Subject to the overall supervision of our Board of Directors and in accordance with the 1940 Act, the Adviser manages our day-to-day operations and provides investment advisory services to us. The Adviser is registered with the Securities and Exchange Commission ("SEC") as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and manages our investment activities pursuant to an investment management agreement (the "Investment Management Agreement") with us. The Adviser has entered into a resource sharing agreement with Muzinich, pursuant to which Muzinich makes certain personnel and resources available to the Adviser to provide certain investment advisory services to us under the Investment Management Agreement. Under the Investment Management Agreement, we pay the Adviser fees for investment management services consisting of a Management Fee and Incentive Fee (each as defined below). See the notes to the consolidated financial statements in this Form 10-Q for more information.

We have also entered into an administration services agreement (the "Administration Agreement") with U.S. Bancorp Fund Services, LLC ("U.S. Bank," and in such capacity, the "Administrator"), pursuant to which the Administrator provides the administrative and recordkeeping services necessary for us to operate. In addition, we have entered into a fund accounting servicing agreement with U.S. Bank (the "Fund Accounting Servicing Agreement"), pursuant to which U.S. Bank provides accounting services to us. We will reimburse U.S. Bank for all reasonable costs and expenses incurred by U.S. Bank in providing these services as provided by the Administration Agreement and Fund Accounting Servicing Agreement, respectively.

The Board has ultimate authority as to our investments, but it delegates authority to the Adviser to select and monitor our investments, subject to the supervision of the Board. A majority of the Board will at all times consist of members who are not "interested persons," as defined in Section 2(a)(19) of the 1940 Act (the "Independent Directors").

Revenues

We generate revenue in the form of interest income from the debt securities we hold and dividends and capital appreciation on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Most of the debt securities we hold are floating rate in nature. The debt we invest in typically is not rated by any rating agency, but if it were, it is likely that such debt would be below investment grade (rated lower than "Baa3" by Moody's Investors Service, Inc. and lower than "BBB-" by Fitch Ratings, Inc. or Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc.), which is an indication of having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. We intend to structure our debt investments with interest payable quarterly, semi-annually or annually, but we may structure certain investments with terms to provide for longer interest payment periods or to allow interest to be paid by adding amounts due to the principal balance of the loan, resulting in deferred cash receipts. In addition, we may also generate revenue in the form of commitment, loan origination, structuring or diligence fees, fees for providing managerial assistance to our portfolio companies, and possibly consulting fees. Certain of these fees may be capitalized and amortized as additional interest income over the life of the related loan.

Expenses

All investment professionals and staff of our Adviser, when and to the extent engaged in providing us with investment advisory and management services, and the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, is provided and paid for by our Adviser and its affiliates. We bear all other costs and expenses of our operations, administration and transactions, including, without limitation, those described in "Item 1. Business - Fees and Expenses" in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

From time to time, our Adviser or its affiliates may pay amounts owed by us to third-party providers of goods or services. We will subsequently reimburse our Adviser for or its affiliates such amounts paid on our behalf. There is no contractual cap on the amount of reasonable costs and expenses for which our Adviser will be reimbursed.

We have entered into a credit facility, may enter into a further credit facility or other debt arrangements to partially fund our operations, and have and could incur costs and expenses, including commitment, origination, legal and/or structuring fees and the related interest costs, associated with any amounts borrowed.

Portfolio Composition and Investment Activity

As of September 30, 2025, we had 14 debt investments totaling $109,417,690 and 18 equity investments totaling $7,810,946 across 10 portfolio companies with an aggregate fair value of approximately $117.2 million. As of September 30, 2025, our debt investments consisted entirely of senior secured loans. Short-term investments as of September 30, 2025 consisted of United States Treasury bills that will expire within sixty days of purchase, with an aggregate fair value of $115,237,061.

Our investment activity for the nine months ended September 30, 2025 and 2024 is presented below (information presented herein is at cost unless otherwise indicated).

		For the nine months ended September 30, 2025				For the nine months ended September 30, 2024
New investments:
Gross investment purchases		$	415,292,037			$	428,216,967
Less: sold investments			(454,233,250	)			(434,305,972	)
Total new investments		$	(38,941,213	)		$	(6,089,005	)
Principal/par/units amount of investments funded:
Term loan debt investments		$	1,670,250			$	137,017,256
Equity investments			391,589				11,592,417
Number of new investment commitments			5				3
Average new investment commitment amount		$	412,368			$	783,456
Weighted average maturity for new investment commitments			2.33 Years				4.1 Years
Percentage of new debt investment commitments at floating rates			50	%			100	%
Percentage of new debt investment commitments at fixed rates			50	%			0	%
Weighted average spread Secured Overnight Financing Rate of new floating rate investment commitments			9.00	%			9.25	%

As of September 30, 2025 and December 31, 2024, our investments consisted of the following:

		September 30, 2025												December 31, 2024
		Amortized Cost				Fair Value				Percentage of Total Investments at Fair Value				Amortized Cost				Fair Value				Percentage of Total Investments at Fair Value
Senior secured loan debt instruments		$	132,289,380			$	109,417,691				47.07	%		$	143,426,913			$	139,921,361				49.24	%
Equity investments - Common Stock			6,179,944				4,328,103				1.85	%			6,020,001				3,957,055				1.39	%
Equity investments - Preferred Stock			5,988,431				3,482,843				1.51	%			5,756,785				3,656,818				1.29	%
Short-term investments			115,237,061				115,237,061				49.57	%			136,650,611				136,650,611				48.08	%
Total Investments		$	259,694,816			$	232,465,698				100.00	%		$	291,854,310			$	284,185,845				100.00	%

The Adviser believes that actively managing an investment allows it to identify problems early and work with companies to develop constructive solutions when necessary. The Adviser monitors our portfolio with a focus toward anticipating negative credit events. In seeking to maintain portfolio company performance and to help ensure a successful exit, the Adviser works closely with, as applicable, the lead equity sponsor, portfolio company management, consultants, advisers and other security holders to discuss financial positions, compliance with covenants, financial requirements and execution of the portfolio company's business plan. In addition, the Adviser's personnel may occupy a seat or serve as an observer on a portfolio company's board of directors or similar governing body.

Typically, the Adviser receives financial reports detailing operating performance, sales volumes, margins, cash flows, financial position and other key operating metrics on a quarterly basis from portfolio companies. The Adviser uses this data, combined with knowledge gained through due diligence of the portfolio company's customers, suppliers and competitors, as well as market research and other methods, to conduct an ongoing assessment of the portfolio company's operating performance and prospects.

Results of Operations

Our operating results for the three and nine months ended September 30, 2025 and 2024 were as follows:

		For the nine months ended September 30, 2025				For the three months ended September 30, 2025				For the nine months ended September 30, 2024				For the three months ended September 30, 2024
Total investment income		$	14,621,301			$	3,594,085			$	16,606,357			$	5,397,804
Total expenses			3,305,400				828,378				3,496,261				1,335,406
Net investment income (loss)			11,315,901				2,765,707				13,110,096				4,062,398
Total net change in unrealized appreciation/(depreciation)			(19,560,652	)			(10,857,124	)			(4,158,220	)			(479,383	)
Total net unrealized appreciation/(depreciation)			(19,560,652	)			(10,857,124	)			(4,158,220	)			(479,383	)
Net increase (decrease) in net assets resulting from operations		$	(8,244,751	)		$	(8,091,417	)		$	8,951,876			$	3,583,015

Net increase (decrease) in net assets resulting from operations decreased from $8,951,876 for the nine months ended September 30, 2024 to $(8,244,751) for the nine months ended September 30, 2025, primarily due to changes in unrealized depreciation. Net increase (decrease) in net assets resulting from operations decreased from $3,583,015 for the three months ended September 30, 2024 to $(8,091,417) for the three months ended September 30, 2025, primarily due to changes in unrealized depreciation.

Investment Income

Investment income for the three and nine months ended September 30, 2025 and 2024 was as follows:

		For the nine months ended September 30, 2025				For the three months ended September 30, 2025				For the nine months ended September 30, 2024				For the three months ended September 30, 2024
Investment income from non-controlled/non-affiliated investments and cash equivalents		$	7,598,581			$	1,301,115			$	10,187,180			$	3,181,109
Income from non-controlled/non-affiliated payment-in-kind ("PIK") interest			3,580,561				1,858,324				3,591,594				1,263,958
Investment income from affiliated investments			1,823,058				359,707				2,366,369				731,088
Income from affiliated PIK interest			1,619,101				74,939				461,214				221,649
Total investment income		$	14,621,301			$	3,594,085			$	16,606,357			$	5,397,804

Investment income decreased from $16,606,357 for the nine months ended September 30, 2024 to $14,621,301 for the nine months ended September 30, 2025, primarily due to a decrease in interest income. Investment income decreased from $5,397,804 for the three months ended September 30, 2024 to $3,594,085 for the three months ended September 30, 2025, primarily due to a decrease in interest income.

Expenses

Operating expenses for the three and nine months ended September 30, 2025 and 2024 were as follows:

		For the nine months ended September 30, 2025				For the three months ended September 30, 2025				For the nine months ended September 30, 2024				For the three months ended September 30, 2024
Management fee		$	1,215,231			$	391,157			$	1,302,443			$	435,792
Other operating expenses			2,090,169				437,221				2,193,818				899,614
Total expenses		$	3,305,400			$	828,378			$	3,496,261			$	1,335,406

Total expenses decreased from $3,496,261 for the nine months ended September 30, 2024 to $3,305,400 for the nine months ended September 30, 2025, primarily due to a decrease in other operating expenses. Total expenses decreased from $1,335,406 for the three months ended September 30, 2024 to $828,378 for the three months ended September 30, 2025, primarily due to a decrease in other operating expenses.

Financial Condition, Liquidity and Capital Resources

We generate and expect to continue to generate cash from (1) future offerings of our common stock, (2) cash flows from operations, and (3) borrowings from banks or other lenders. We have entered into a committed facility agreement with BNP Paribas Prime Brokerage International, Limited ("BNP") (as amended, the "Loan Agreement"), and we may seek to enter into any further bank debt, credit facility or other financing arrangements on at least customary market terms; however, we cannot assure you we will be able to do so. Our primary uses of cash will be for (i) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (ii) paying our operating expenses (including fees payable to the Adviser), (iii) debt service of any borrowings and (iv) cash distributions to the holders of our common stock.

Equity Activity

We anticipate generating further cash from drawdowns in respect of capital committed by investors in Private Offerings. We have the authority to issue 500,000 shares of common stock at a $0.001 per share par value. Additionally, we have the authority to issue 15,000 shares of preferred stock at a $0.001 per share par value.

During the nine months ended September 30, 2025 and 2024, we had no common stock issuances.

Borrowings

We expect to borrow funds to make investments. This is known as "leverage" and may cause our financial results to be more volatile than if we had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of our net assets. Additionally, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance (e.g., for every $100 of net assets, we may raise $200 from borrowing and issuing senior securities). For purposes of the 1940 Act, "asset coverage" means the ratio of (1) the total assets of a BDC, less all liabilities and indebtedness not represented by senior securities, to (2) the aggregate amount of senior securities representing indebtedness (plus, in the case of senior securities represented by preferred stock, the aggregate involuntary liquidation preference of such BDC's preferred stock). Under the 1940 Act, any preferred stock we may issue will constitute a "senior security" for purposes of the 150% asset coverage requirement. Furthermore, while any indebtedness and senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or repurchase our securities unless we meet the applicable asset coverage ratio requirements at the time of the distribution or repurchase. In connection with borrowings, our lenders may require us to pledge assets, investor commitments to fund capital calls and/or the proceeds of those capital calls, thereby allowing the lender to call for capital contributions upon the occurrence of an event of default under such financing arrangement. In addition, the lenders may ask us to comply with affirmative or negative covenants that could have an effect on our operations.

The use of leverage involves significant risks. Certain trading practices and transactions, which may include, among others, reverse repurchase agreements and the use of when-issued, delayed delivery or forward commitment transactions, may be considered "borrowings" or involve leverage, and thus are also subject to 1940 Act restrictions. Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be considered "borrowings" for these purposes. Practices and investments that may involve leverage but are not considered to be borrowings are not subject to the asset coverage requirement. These investments may include certain investments or instruments that have embedded leverage, which may increase the risk of loss from such investments, but are not considered to be borrowings.

In connection with our use of leverage, we intend to borrow money to purchase assets in order to comply with certain regulatory requirements for RICs, including diversification requirements. Accordingly, we have entered into the Loan Agreement with BNP and have engaged in borrowings under the Loan Agreement for this purpose. Although we expect to continue to be able to borrow under the Loan Agreement as needed for this purpose, we are subject to the risk that BNP can terminate the Loan Agreement or that the amount available to be borrowed thereunder will be insufficient to allow us to satisfy the applicable requirements.

The amount of leverage that we employ will depend on our Adviser's and our Board of Directors' assessment of market conditions and other factors at the time of any proposed borrowing, and there can be no assurance that we will use leverage or that our leveraging strategy will be successful during any period in which it is employed.

Contractual Obligations

We have entered into certain contracts under which we have material future commitments. We have entered into the Investment Management Agreement with the Adviser, pursuant to which the Adviser: determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); determines the assets we will originate, purchase, retain or sell; closely monitors and administers the investments we make, including the exercise of any rights in our capacity as a lender; and provides us with such other investment advice, research and related services as we may, from time to time, require. For these services, we will pay the Adviser the Management Fee and Incentive Fee described under the heading "Compensation of the Adviser" below.

In addition, we have entered into the Administration Agreement with the Administrator, pursuant to which the Administrator provides the administrative and recordkeeping services necessary for us to operate, and we have entered into the Fund Accounting Servicing Agreement with U.S. Bank, pursuant to which U.S. Bank provides us with accounting services.

Hedging

We may, but are not required to, enter into interest rate, foreign exchange or other derivative agreements to hedge interest rate, currency, credit or other risks, but we do not generally intend to enter into any such derivative agreements for speculative purposes. Any derivative agreements entered into for speculative purposes are not expected to be material to our business or results of operations. These hedging activities, which will be in compliance with applicable legal and regulatory requirements should we undertake them, may include the use of futures, options and forward contracts. We will bear the costs incurred in connection with entering into, administering and settling any such derivative contracts. There can be no assurance any hedging strategy we employ will be successful.

Critical Accounting Policies

Valuation of Portfolio Securities

In accordance with the procedures adopted by our Board of Directors, the net asset value ("NAV") per share of our outstanding shares of common stock is determined at least quarterly by dividing the value of total assets minus liabilities by the total number of shares outstanding.

As a BDC, we generally invest in illiquid securities, including debt and equity securities of middle-market companies. We expect that there will not be readily available market quotations for many of the investments which are or will be in our portfolio. With respect to investments for which market quotations are not readily available, the Adviser determines the fair values of such investments in good faith pursuant to Rule 2a-5 under the 1940 Act. Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser to perform the fair valuation determinations of our investments for which market quotations are not readily available, subject to Board oversight, pursuant to valuation procedures approved by the Board of Directors, which follow a multi-step valuation process each quarter (or more frequently, as appropriate) as described below:

(1)

each portfolio company or investment is initially valued by the investment professionals of our Adviser responsible for the portfolio investment and the "Portfolio Committee" of the Adviser;

(2)

preliminary valuation conclusions are then documented and discussed with our senior management and that of our Adviser;

(3)

at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm.

(4)

in following these approaches, the types of factors that are taken into account in determining the fair value of such investments include, as relevant, but are not limited to: comparison to publicly traded securities, including such factors as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company's ability to make payments and its earning and discounted cash flow; and the markets in which the portfolio company does business;

(5)

the Audit Committee of our Board of Directors reviews the valuations of the Adviser on a quarterly basis; and

(6)

our Board of Directors oversees our valuation process and in support of this oversight, the Adviser provides periodic reports to the Board on valuation matters.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Under current auditing standards, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.

Fair value, as defined under Topic 820 of the Financial Accounting Standards Board's Accounting Standards Codification, as amended ("ASC 820"), is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of our Adviser. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us at the reporting period date.

PIK Interest

We currently hold, and may hold in the future, certain investments in our portfolio that contain PIK interest provisions. PIK interest, which is computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment. PIK interest, which is a non-cash source of income, is included in our taxable income, and therefore affects the amount we are required to distribute to our stockholders to maintain our qualification as a RIC for U.S. federal income tax purposes, even though we have not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the investment on nonaccrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. We write off any accrued and uncollected PIK interest when we determine that the PIK interest is no longer collectible.

Dividends

We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. All dividends and distributions will be subject to lawfully available funds therefor, and no assurance can be given that we will be able to declare distributions in future periods. For the nine months ended September 30, 2025, we declared the following distributions:

Record Date		Payable Date		Distribution Rate per Share				Distribution Paid
March 21, 2025		April 3, 2025		$	2.67			$	450,654
May 13, 2025		May 20, 2025		$	25.19			$	4,259,653
August 7, 2025		August 19, 2025		$	23.98			$	4,055,041

We have elected to be treated, qualify, and intend to qualify annually to be subject to taxation as a RIC under Subchapter M of the Code. To maintain our ability to be subject to tax as a RIC, we must, among other things, timely distribute to our stockholders at least 90% of our investment company taxable income for each taxable year as dividends. We intend to timely distribute to our stockholders substantially all of our annual taxable income for each taxable year. However, we may retain certain net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) for reinvestment and, depending upon the level of taxable income earned in a taxable year, we may choose to carry forward taxable income for distribution in the following taxable year. In such a case, we would be subject to U.S. federal income tax and possibly U.S. federal excise tax on such retained amounts. We generally will be required to pay such U.S. federal excise tax if our distributions in respect of a calendar year do not exceed the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses (adjusted for certain ordinary losses) for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gains in excess of capital losses for preceding calendar years that were not distributed during such calendar years and on which we did not pay any U.S. federal income tax. If we retain net capital gains, we may treat such amounts as deemed distributions to our stockholders. In that case, you will be treated as if you had received an actual distribution of the capital gains we retained and then you reinvested the net after-tax proceeds in our common stock. In general, you also will be eligible to claim a tax credit (or, in certain circumstances, obtain a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. The distributions we pay to our stockholders in a taxable year may exceed our taxable income for that taxable year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The specific tax characteristics of our distributions will be reported to stockholders after the end of the calendar year. Please refer to "Certain U.S. Federal Income Tax Consequences" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for further information regarding the tax treatment of our distributions and the tax consequences of our retention of net capital gains.

Security Transactions, Realized/Unrealized Gains or Losses and Appreciation or Depreciation, and Income Recognition

Security transactions are recorded on a trade-date basis. We measure realized gains or losses from the repayment or sale of investments using the specific identification method. The amortized cost basis of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees. We report changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments in our statement of operations.

Compensation of the Adviser

Management Fee. Pursuant to the Investment Management Agreement, our Adviser will accrue, on a quarterly basis in arrears, a management fee (the "Management Fee") equal to 0.25% (i.e., 1.00% annually) of the average of (i) our NAV (excluding uninvested cash and cash equivalents, which are defined for these purposes as money market funds, U.S. government securities and investment-grade debt instruments maturing within one year of purchase of such instrument) at the end of the then-current calendar quarter and (ii) our NAV at the end of the prior calendar quarter. For the nine months ended September 30, 2025 and 2024, we incurred Management Fees of $1,215,231 and $1,302,443, respectively.

The Management Fee is generally expected to be paid using available funds quarterly, in which case these payments will not reduce unfunded capital commitments. However, we may draw down unfunded capital commitments in order to pay the Management Fee, and any such drawdown amounts would reduce unfunded capital commitments.

Incentive Fee. Pursuant to the Investment Management Agreement, we will pay an incentive fee (the "Incentive Fee") to the Adviser. The Incentive Fee will not be released to the Adviser until the liquidation of our portfolio. The Incentive Fee will accrue as a liability on our Consolidated Statements of Assets and Liabilities throughout our life, and we may set aside assets in anticipation of paying it. However, we do not intend to actually pay the Incentive Fee to the Adviser until the end of our life.

In order to determine the size of the Incentive Fee, we refer to the incentive fee calculation methodology described below (the "Incentive Fee Calculation Methodology").

For the avoidance of doubt, the Incentive Fee Calculation Methodology is not intended to describe our actual operations with respect to the making of distributions, and the Incentive Fee Calculation Methodology does not limit our ability to make distributions to stockholders over our life (other than our actual payment of the Incentive Fee upon our liquidation). Rather, the Incentive Fee Calculation Methodology is a tool, the sole purpose of which is to calculate the size of the Incentive Fee.

To calculate the size of the Incentive Fee, we will refer to (1) the amounts and timing of stockholders' capital contributions to us and (2) the amounts and timing of our distributions, and will analyze those contributions and distributions under the Incentive Fee Calculation Methodology. The Incentive Fee will equal the total amount of distributions that would be made to the Adviser under paragraphs (c) and (d) of the Incentive Fee Calculation Methodology.

The Incentive Fee Calculation Methodology is as follows:

(a)

First, we will make distributions to our stockholders until stockholders have received 100% of their Contributed Capital (as defined below).

(b)

Second, we will make distributions to our stockholders until stockholders have received a 7% return per annum, compounded annually, on their capital contributions, from the date each capital contribution is made through the date such capital has been returned.

(c)

Third, we will make distributions to the Adviser under this paragraph (c) until it has received 12.5% of the total amount distributed by us under paragraph (b) and this paragraph (c).

(d)

Thereafter, any additional amounts that we distribute will be paid 87.5% to stockholders and 12.5% to the Adviser.

Notwithstanding anything to the contrary herein, in no event will an amount be paid with respect to the Incentive Fee to the extent it would exceed the limitations set forth in Section 205(b)(3) of the Advisers Act. As of both September 30, 2025 and 2024, no Incentive Fee has been accrued or is payable.

"Contributed Capital" is the aggregate amount of capital contributions that have been made by all stockholders in respect of their shares of our common stock. All distributions (or deemed distributions) to stockholders, including investment income (i.e., proceeds received in respect of interest payments, dividends and fees) and proceeds attributable to the repayment or disposition of any investment, to stockholders will be considered a return of Contributed Capital. Unreturned Contributed Capital equals aggregate Contributed Capital minus cumulative distributions but is never less than zero.

The term "distribution" includes all distributions of our assets, including in respect of proceeds from the full or partial realization of our investments and income from investing activities, and may include amounts treated as return of capital, ordinary income and capital gains for accounting, tax and/or other purposes.