Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this annual report on Form 10-K.

Overview

We make impact investments in SMEs that provide the opportunity to achieve both competitive financial returns and positive measurable impact. We were organized as a Delaware limited liability company on April 30, 2012. We have operated and intend to continue to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940, as amended. We have used the proceeds raised from the issuance of units to invest in SMEs through local market sub-advisors in a diversified portfolio of financial assets, including direct loans, loan participations, convertible debt instruments, trade finance, structured credit and preferred and common equity investments. A substantial portion of our assets consists of collateralized private debt instruments, which we believe offer opportunities for competitive risk-adjusted returns and income generation. We are externally managed and advised by TriLinc Advisors, LLC, or the Advisor. The Advisor is an investment advisor registered with the SEC.

Our business strategy is to generate competitive financial returns and positive economic, social and environmental impact by providing financing to SMEs, which we define as those business having less than 500 employees, primarily in developing economies. To a lesser extent, we may also make impact investments in companies that may not meet our technical definition of SMEs due to a larger number of employees but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. We generally expect that such investments will have similar investment characteristics as SMEs as defined by us. Our style of investment is referred to as impact investing, which J.P. Morgan Global Research and Rockefeller Foundation in a 2010 report called "an emerging alternative asset class" and defined as investing with the intent to create positive impact beyond financial return. We believe it is possible to generate competitive financial returns while creating positive, measurable impact. We measure the economic, social and environmental impact of our investments using industry-standard metrics, including the Impact Reporting and Investment Standards. Through our investments in SMEs, we intend to enable job creation and stimulate economic growth.

We commenced the Offering on February 25, 2013. Pursuant to the Offering, we were offering on a continuous basis up to $1.5 billion in units of our limited liability company interest, consisting of up to $1.25 billion of units in the primary offering consisting of Class A and Class C units at initial offering prices of $10.00 and $9.576 per unit, respectively, and Class I units at $9.025 per unit, and up to $250 million of units pursuant to our DRP. In May 2012, the Advisor purchased 22,161 Class A units for aggregate gross proceeds of $200,000. On June 11, 2013, we satisfied the minimum offering requirement of $2,000,000 when the Sponsor purchased 321,330 Class A units for aggregate gross proceeds of $2,900,000 and we commenced operations. The Offering terminated on March 31, 2017. Through the termination of the Offering, we raised approximately $361,776,000 in gross proceeds, including approximately $13,338,000 raised through our DRP.

For the period from April 1, 2017 to November 29, 2024, the Company raised an additional $99,753,000 pursuant to a private placement offering. The Company's private placement offering terminated on November 29, 2024. Upon termination of the primary portion of the Offering, we registered $75 million in Class A, Class C and Class I units to continue to be offered pursuant to our DRP to the investors who purchased units in the Offering. Units issued pursuant to our DRP are offered at the price equal to the net asset value per unit of each class of units, as most recently disclosed by the Company in a public filing with the SEC at the time of reinvestment. Our DRP was amended, effective May 25, 2020, to allow holders of all classes of units other than Class Z units to participate, including holders who purchased units in our private placements. The offering must be registered or exempt from registration in every state in which we offer or sell units. If the offering is not exempt from registration, the required registration generally is for a period of one year. Therefore, we may have to stop selling units in any state in which the registration is not renewed annually and the offering is not otherwise exempt from registration.

For the year ended December 31, 2025, we did not issue any units through the private placement or the DRP. As of December 31, 2025, $21,439,000 in units remained available for sale pursuant to the DRP, which was temporarily suspended effective April 1, 2023. The suspension of the DRP was lifted effective April 24, 2024. In addition, the Company's unit repurchase program was suspended effective April 1, 2023. On August 9, 2024, the Company's board of managers approved the reopening of the unit repurchase program, effective September 1, 2024, solely with respect to repurchase requests submitted in connection with the death or disability of a unitholder, subject to the other terms and limitations of the unit repurchase program. Due to the terms and limitations of the unit repurchase program, no units have been repurchased since the program was reopened in September 2024.

From our inception through December 31, 2025, we issued an aggregate of approximately 56,404,000 of our units, including 8,179,306 units issued under our DRP, for gross proceeds of approximately $515,089,000 including approximately $66,897,000 reinvested under our DRP (before dealer manager fees of approximately $4,801,000 and selling commissions of $16,862,000), for net proceeds of $493,427,000. We have not issued any units since the first quarter of 2023.

Outlook

Over the past several years, the global economy weathered tighter monetary policy triggered by high inflation better than most economists originally forecasted, particularly the United States. However, growth expectations were modestly revised downward during the year ended December 31, 2025. Many of the Company's borrowers experienced significant negative effects during the 2020 - 2022 period, due to higher operating costs and supply chain issues that began in 2020 with the onset of the COVID-19 pandemic, which were further exacerbated by the conflict between Russia and Ukraine. Fortunately, most supply side conditions normalized in 2023, providing some economic relief to borrower companies. However, the combination of pandemic period effects, in many cases, had devastating and long-lasting impacts on the businesses, financial condition and results of operations of several borrower companies. Together, these factors have made it more difficult for borrowers to repay their obligations to the Company in a timely manner or at all, resulting in the Company experiencing inconsistent cash flows. The Company believes that the central issue driving results is the fact that many borrower companies continue to struggle to recover from the compound impact of approximately three years of economic hardship stemming from the COVID-19 pandemic from 2020 to 2022, while current macroeconomic conditions are not strong enough for borrower companies to achieve a rapid and significant recovery in operating performance. The U.S. government has imposed, and may in the future increase, tariffs on specific countries and commodities. In response, certain non-U.S. countries have imposed or may impose retaliatory tariffs. The foregoing has created significant uncertainty about the future relationship between the United States and certain other countries with respect to trade policies, treaties and new and increased tariffs. Such uncertainty may be further exacerbated by ongoing geopolitical tensions and conflicts, including the continuing Russia-Ukraine conflict, conflicts and instability in the Middle East, and broader geopolitical competition among major global economies, which have contributed to volatility in global energy markets, supply chains, commodity prices and financial markets. These developments, and the continued uncertainty, may have a material adverse effect on global economic conditions and the stability of global financial markets. As of December 31, 2025, material direct effects on the Company's borrowers have been limited to a few select cases, as many announced tariffs remained suspended through the end of 2025. The Company's NAV per unit decreased by approximately $0.18 as of December 31, 2025, compared to the NAV per unit as of December 31, 2024. The decrease in net asset value per unit resulted from further unrealized losses for some of the Company's most impaired borrowers who have struggled to regain their footing since the COVID-era supply chain breakage normalized three years ago. While inflation trends eased in many developed economies, the persistence of core inflation and uncertainty around monetary policy timing continues to contribute to a fragmented global outlook. In developing economies, macroeconomic conditions varied widely, with some regions benefitting from earlier monetary easing and others still constrained by weak external demand. However, with respect to the unrealized losses recorded during the year ended December 31, 2025, we do not believe that specific macroeconomic conditions were not the primary driver directly affecting the relevant borrowers.

As a result of the inconsistent cash flows generated from the Company's existing portfolio, the Company has experienced decreased liquidity, which, among other things, may continue to impact the Company's ability to pay distributions to its unitholders or meet other Company obligations. Additionally, due to an event of default triggered under the Company's credit facilities as a result of the resignation of the Company's former independent registered public accounting firm in February 2023, which rendered the Company unable to timely file its Annual Report on Form 10-K for the year ended December 31, 2022, the Company entered into a Waiver and Agreement, dated as of May 9, 2023, pursuant to which the Company agreed to accelerate its repayment of the $18 million outstanding under the credit facilities. Pursuant to the terms of the Waiver and Agreement, the Company repaid the amounts outstanding under the credit facilities in full on August 31, 2023. Accordingly, the Company expects that in the near term it will experience additional significant constraints on its liquidity. As a result, with the exception of special distributions paid to unitholders in February 2024 and March 2024, the Company did not pay monthly distributions for periods subsequent to June 2023 and anticipates that it may not be able to pay regular monthly distributions in the coming quarters. In addition, the Company's unit repurchase program, which was suspended effective April 1, 2023, has been reinstated, but only with respect to repurchase requests made in connection with the death or disability of a unitholder and remains subject to the other terms and limitations of the program, which generally limit funds available for redemption to proceeds from our DRP. Since we have not paid distributions since early 2024, there have not been any proceeds from our DRP. Our NAV per unit as of December 31, 2025 is higher than it would have been if the Company had paid regular monthly distributions during the year ended December 31, 2025.

The Company intends to continue exploring and pursuing multiple strategies in order to address its liquidity needs, which may include the sale of all or a portion of certain investments and seeking to obtain new credit facilities. For example, during the year ended December 31, 2025, the Company sold a portion of its investment in TriLinc Peru S.A.C. to TriLinc Global Impact Fund II, Master, Ltd., an entity whose advisor is under common ownership with the Company's Advisor, for a sale price of $1.0 million, as well as entered into multiple settlement agreements, which are expected to close and provide the Company with liquidity in 2026. There can be no assurances as to when or if the Company will receive payment with respect to these settlement agreements.

Investments

Our investment objectives are to provide our unitholders current income, capital preservation, and modest capital appreciation. These objectives are achieved primarily through SME trade finance and term loan financing, while employing rigorous risk-mitigation and due diligence practices, and transparently measuring and reporting the economic, social and environmental impacts of our investments. The majority of our investments are senior and other collateralized loans to SMEs with established, profitable businesses in developing economies. To a lesser extent, we may also make investments in financing to companies that may not meet our technical definition of SMEs due, for example, to the companies having a larger number of employees, but that also provide the opportunity to achieve both competitive financial returns and positive measurable impact. Furthermore, we may also make investments in developed economies, including the United States. With the sub-advisors that our Advisor has contracted with to assist the Advisor in implementing the Company's investment program, we expect to provide growth capital financing generally ranging in size from $5-20 million per transaction for direct SME loans and $500,000 to $15 million for trade finance transactions. We seek to protect and grow investor capital by: (1) targeting countries with favorable economic growth and investor protections; (2) partnering with sub-advisors with significant experience in local markets; (3) focusing on creditworthy lending targets who have at least 3-year operating histories and demonstrated cash flows enabling loan repayment; (4) making primarily debt investments, backed by collateral and borrower guarantees; (5) employing best practices in our due diligence and risk mitigation processes; and (6) monitoring our portfolio on an ongoing basis. By providing additional liquidity to growing small businesses, we believe we support both economic growth and the expansion of the global middle class.

Investments will continue to be primarily credit facilities and participations in credit facilities to developing economy SMEs, including trade finance and term loans, through the Advisor's team of professional sub-advisors with a local presence in the markets where they invest. As of December 31, 2025, some of our investments were in the form of participations, and we expect that some of our future investments will continue to be in the form of participations. We typically provide financing that is collateralized, has a short to medium-term maturity and is self-liquidating through the repayment of principal. Our counterparty for certain participations generally is the respective sub-advisor or its affiliate that originates the loan in which we are participating. In such case, we will not have a contract with the underlying borrower and therefore, in the event of default, we will not have the ability to directly seek recovery against the collateral and instead will have to seek recovery through our sub-advisor counterparty, which increases the risk of full recovery.

Certain investments, including loans and participations, may carry equity warrants on borrowers, which allow us to buy shares of the portfolio company at a given price, which we will exercise at our discretion during the life of the portfolio company. Our goal is to ultimately dispose of such equity interests and realize gains upon the disposition of such interests. However, these warrants and equity interests are illiquid and it may be difficult for the Company to dispose of them. In addition, we expect that any warrants or other return enhancements received when we make or invest in loans may require several years to appreciate in value and may not appreciate at all.

Floating Interest Rates

As of December 31, 2025, 2.8% of the fair value of the Company's total investments bore interest at floating rates based on the Secured Overnight Financing Rate ("SOFR"), serving as an alternative rate designated by the Company following the discontinuation of LIBOR, which was phased out completely in June 2023. In July 2023, the Company's legacy loans transitioned from LIBOR to Synthetic LIBOR, which was in effect until September 30, 2024. The Company's legacy loans have transitioned to SOFR following the complete phase-out of LIBOR as of September 30, 2024.

The discontinuation of both LIBOR and Synthetic LIBOR and the use of alternative rates, such as SOFR, could result in interest rate decreases on our investments, which could adversely affect our cash flow, operating results and ability to make distributions to our unitholders at expected levels or at all.

Revenues

Since we anticipate that the majority of our assets will continue to consist of trade finance instruments and term loans, we expect that the majority of our revenue will continue to be generated in the form of interest income. Our senior and subordinated debt investments may bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semi-annually. In some cases, some of our investments provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally is due at the maturity date. In addition, we generate revenue in the form of acquisition and other fees in connection with some transactions. Original issue discounts and market discounts or premiums are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses

Our primary operating expenses include the payment of asset management fees and expenses reimbursable to our Advisor under the Advisory Agreement. We bear all other costs and expenses of our operations and transactions.

Portfolio and Investment Activity

During the year ended December 31, 2025, the Company did not make any new investments. Additionally, we received proceeds from repayments and dispositions of investment principal of approximately $8.5 million.

During the year ended December 31, 2024, the Company did not make any new investments. Additionally, we received proceeds from repayments and dispositions of investment principal of approximately $14.4 million.

At December 31, 2025 and 2024, the Company's investment portfolio included 28 companies, and the fair value of our portfolio was comprised of the following:

		As of December 31, 2025								As of December 31, 2024
		Investments				Percentage of				Investments				Percentage of
		at				Total				at				Total
		Fair Value				Investments				Fair Value				Investments
Senior secured term loans		$	123,807,284				47.2	%		$	121,679,322				45.3	%
Senior secured term loan participations			71,371,727				27.2	%			78,156,693				29.1	%
Senior secured trade finance participations			26,493,018				10.1	%			27,665,139				10.3	%
Convertible notes			29,092,471				11.1	%			25,387,189				9.5	%
Other investments			11,451,817				4.4	%			13,054,395				4.9	%
Equity warrants			-				0.0	%			2,466,534				0.9	%
Total investments		$	262,216,317				100.0	%		$	268,409,272				100.0	%

As of December 31, 2025, the weighted average contractual yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and convertible notes were 9.7%, 14.3%, 16.1%, and 11.8%, respectively, for a weighted average contractual yield on investments of approximately 13.5% on our total portfolio.

As of December 31, 2024, the weighted average contractual yields, based upon the cost of our portfolio, on trade finance participations, term loan participations, senior secured term loans, and convertible notes were 7.6%, 13.3%, 15.6%, and 11.8%, respectively, for a weighted average contractual yield on investments of approximately 12.6% on our total portfolio.

Concentration Limits

The Company is subject to the following concentration limits:

•

Maximum 45% regional exposure

•

Maximum 20% country exposure

•

Maximum 5% individual investment exposure

We may only make investments that do not cause us to exceed these limits on the date of investment. These limits are calculated as a percentage of the aggregate of all outstanding principal balances on our investments and our cash balances on the date of investment. As of December 31, 2025 and 2024, the Company was in compliance with all of the above concentration limits.

Watch List Investments

The Company monitors and reviews the performance of its investments and if the Company determines that there are any significant changes in the credit and collection risk of an investment, the investment will be placed on the Watch List. The Company places an investment on the Watch List when it believes the investment has a material performance weakness driven by company-specific and macro events that may affect the timing of future cash flows. For all Watch List investments, the Company evaluates: (i) liquidation value of collateral; (ii) rights and remedies enforceable against the borrower; (iii) any credit insurance and/or guarantees; (iv) market, sector and macro events and (v) other relevant information (e.g., third party purchase of the borrower and potential or ongoing litigation). At December 31, 2025, 19 portfolio companies were on non-accrual status with an aggregate fair value of approximately $134,642,632 or 51.3% of the fair value of the Company's total investments. At December 31, 2024, 14 portfolio companies were on non-accrual status with an aggregate fair value of approximately $100,342,070 or 37.4% of the fair value of the Company's total investments. As of December 31, 2025 and 2024, the Company had 22 and 19 Watch List investments, respectively, representing 57.1% and 57.2%, respectively, of the fair value of the Company's total investments.

As of December 31, 2025, the Company's Watch List investments consisted of the following:

																		Interest not accrued on Investments on Watch List status
																		Three Months Ended								Twelve Months Ended
Portfolio Company		Principal Balance				Fair Value				Accrued Interest				Sub-advisor		Valuation Approach		December 31, 2025				December 31, 2024				December 31, 2025				December 31, 2024
Trustco Group Holdings Ltd. (3)		$	18,717,631			$	18,029,698			$	-			N/A		Collateral based approach		$	681,842			$	654,877			$	2,664,897			$	2,566,343
Maritime One Limited (1)			1,754,281				1,668,687				29,719			N/A		Income approach			-				-				-				-
Compania Argentina de Granos S.A. (2), (3)			5,834,471				6,040,979				-			N/A		Income approach			-				-				-				-
Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (2), (3)			6,499,323				2,955,774				-			N/A		Collateral based approach			-				-				-				-
Sancor Cooperativas Unidas Ltda (3)			5,670,694				4,252,363				1,347,047			N/A		Collateral based approach			-				158,216				311,272				629,424
IIG TOF B.V. (2), (3)			5,883,971				3,124,260				-			N/A		Collateral based approach			-				-				-				-
Algodonera Avellaneda S.A. (1), (2), (3)			4,935,048				1,792,698				-			N/A		Collateral based approach			-				-				-				-
Triton Metallics Pte Ltd.(3)			21,799,281				19,025,670				1,513,671			N/A		Income approach			737,527				686,878				2,949,503				2,666,253
Ecsponent Holdings Limited (1), (3)			5,601,000				1,777,308				-			Scipion		Hybrid income/collateral based approach			190,692				198,894				777,054				829,740
Producam S.A. (3)			16,077,863				13,525,607				-			N/A		Income approach			501,546				456,660				1,921,976				1,754,571
Multiple ICD (Kenya) Limited (3)			15,092,408				3,099,538				-			N/A		Collateral based approach			711,987				695,464				2,751,153				2,780,444
Agilis Partners Holding LLC (1)			828,540				694,668				27,102			Origin		Income approach			-				-				-				-
Agilis Partners			15,361,873				12,676,945				2,239,301			Origin		Income approach			-				-				-				-
Itelecom Holding Chile SPA (1), (2), (3)			1,250,194				764,426				-			N/A		Collateral based approach			-				-				-				-
Limas Commodities House Limited (3)			22,219,565				14,551,857				-			N/A		Income approach			922,134				822,016				3,506,761				3,133,994
Vikudha Malaysia Sdn Bhd (3)			18,484,703				4,019,175				-			N/A		Hybrid income/collateral based approach			700,196				652,630				2,706,534				2,529,286
Cevher International B.V. Netherlands (3)			8,020,009				11,036,073				897,707			CCL		Income approach			91,453				-				1,755,890				-
Worldwide Investments and Representations Winrep S.A. and Vannapack S.A. (1), (3)			4,424,931				2,674,069				-			N/A		Collateral based approach			132,871				132,871				527,151				528,596
Lidas SRL (3)			6,836,622				6,982,214				2,159,477			N/A		Income approach			450,158				-				450,158				-
PT Citra Labuantirta (3)			15,000,000				12,949,836				8,368,416			N/A		Hybrid income/collateral based approach			735,563				-				735,563				-
Dock Brasil Engenharia E Servicos S.A. (3)			8,079,450				5,520,952				-			TRG		Income approach			351,007				-				351,007				-
Grupo Surpapel (1), (3)			5,966,448				2,520,135				-			Origin		Income approach			273,719				-				547,592				-
Total Watchlist		$	214,338,306			$	149,682,932			$	16,582,440							$	6,480,695			$	4,458,506			$	21,956,511			$	17,418,651

1

Investments with a fair value equal to less than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2025. Additional information regarding Watch List investments with a fair value equal to or greater than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2025 is presented below.

2	Excludes interest not accrued with respect to investments which the Company may not legally accrue interest, such as those that are the subject of bankruptcy proceedings.

3	Investments were on non-accrual status.

As of December 31, 2024, the Company's Watch List investments consisted of the following:

Portfolio Company		Principal Balance				Fair Value				Accrued Interest				Sub-advisor			Valuation Approach
Trustco Group Holdings Ltd. (3)		$	18,717,631			$	16,540,160			$	-			N/A			Collateral based approach
Maritime One Limited			5,808,563				5,298,417				41,201			N/A			Income approach
Compania Argentina de Granos S.A. (2), (3)			12,500,000				5,723,296				-			N/A			Income approach
Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay (2), (3)			6,499,323				2,955,774				-			N/A			Collateral based approach
Sancor Cooperativas Unidas Ltda (3)			5,802,296				4,528,841				1,347,047			N/A			Collateral based approach
IIG TOF B.V. (2), (3)			5,924,697				3,164,987				-			N/A			Collateral based approach
Algodonera Avellaneda S.A. (1), (2), (3)			4,935,048				1,792,698				-			N/A			Collateral based approach
Triton Metallics Pte Ltd. (3)			21,799,281				19,329,238				1,513,671			N/A			Income approach
Ecsponent Holdings Limited (1), (3)			5,601,000				2,437,540				-			Scipion			Hybrid income/collateral based approach
Producam S.A. (3)			16,077,863				14,519,154				-			Scipion			Income approach
Multiple ICD (Kenya) Limited (3)			15,092,408				3,874,961				-			N/A			Collateral based approach
Agilis Partners Holding LLC (1)			730,724				498,234				23,903			Origin			Income approach
Agilis Partners			14,188,395				12,265,720				1,691,418			Origin			Income approach
Itelecom Holding Chile SPA (1), (2), (3)			1,456,162				970,393				3,699			N/A			Collateral based approach
Limas Commodities House Limited (3)			22,219,566				15,079,739				-			N/A			Income approach
Vikudha Malaysia Sdn Bhd (3)			18,484,704				6,531,441				-			N/A			Hybrid income/collateral based approach
Qintess Tecnologia e Participacoes Ltda, Series B			26,362,131				24,739,380				-			TRG			Income approach
Cevher International B.V. Netherlands			8,275,000				10,397,895				3,819,407				CCL		Income approach
Worldwide Investments and Representations Winrep S.A. and Vannapack S.A. (3)			4,424,931				2,893,848				-			N/A			Collateral based approach
Total Watchlist		$	214,899,723			$	153,541,716			$	8,440,346

1	Investments with a fair value equal to less than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2024. Additional information regarding Watch List investments with a fair value equal to or greater than 1.0% of the aggregate fair value of the Company's net assets as of December 31, 2024 is presented below.
2	Excludes interest not accrued with respect to investments which the Company may not legally accrue interest, such as those that are the subject of bankruptcy proceedings.
3	Investments were on non-accrual status.

Investments through The International Investment Group L.L.C. ("IIG") as the Sub-Advisor

IIG was the sub-advisor with respect to certain investments that the Company made in South America, including 5 of the 22 Watch List investments as of December 31, 2025. Since June 30, 2018, the Company has discovered, among other things, that IIG failed to provide the Company with complete and accurate information with respect to the investments for which IIG was the sub-advisor and, in 2017, sold the Company a $6 million participation in a loan to Nacadie (defined below) that did not exist. In November of 2019, the SEC charged IIG with fraud and revoked IIG's registration. Shortly thereafter, IIG ceased all operations. A fund managed by IIG, which sold most of the participations to the Company, was placed into bankruptcy in January 2020. Subsequently, the Company filed a bankruptcy claim against the remaining assets of the estate.

The SEC charged IIG with fraud on November 21, 2019 and revoked IIG's registration as an investment adviser on November 26, 2019. On March 30, 2020, the SEC obtained a final judgment on consent that enjoins IIG from violating the antifraud provisions of the federal securities laws. On July 17, 2020, the SEC filed fraud charges against David Hu, one of IIG's co-founders, who was also charged by the U.S. Attorney's Office for the Southern District of New York in a parallel criminal action. On January 28, 2021, David Hu pled guilty to one count of securities fraud, one count of wire fraud, and one count of conspiracy to commit securities fraud and wire fraud. On April 13, 2021, the U.S. Attorney's Office for the Southern District of New York announced that Martin Silver, IIG's other co-founder, pled guilty to one count of conspiracy to commit investment adviser fraud, securities fraud, and wire fraud, one count of securities fraud, and one count of wire fraud for his role in overvaluing and selling fake loans to investors so IIG could collect management and performance fees. Also on April 13, 2021, the SEC filed a civil complaint against Martin Silver, asserting several claims that involve allegations of a string of frauds perpetrated by Mr. Silver and others at IIG in order to keep IIG afloat. IIG has ceased operations and the Company does not expect to receive any further reporting from IIG with respect to its outstanding investments. The Company is taking necessary steps, including legal action in some cases, in order to ascertain as much information as possible regarding these investments.

Most of the outstanding investments for which IIG was the sub-advisor were purchased from IIG TOF B.V., a Dutch Limited Liability Company advised by IIG. On December 11, 2019, a subsidiary of the Company filed an application in Amsterdam District Court to declare IIG TOF B.V. bankrupt. As set forth in the application for the Declaration of Bankruptcy, the Company and other creditors believe they have multiple due and payable claims against IIG TOF B.V. which IIG TOF B.V. has acknowledged it is unable to pay. On January 21, 2020, the Amsterdam District Court declared IIG TOF B.V. bankrupt and appointed a Dutch law firm as liquidator. The Company is seeking recovery of amounts due and payable to the Company with respect to the Participations it acquired from IIG TOF B.V. There can be no assurances as to when or if the Company will recover the amounts to which the Company believes it is entitled. Additional information regarding Watch List investments for which IIG was the sub-advisor with a fair value equal to or greater than 1.0% of the Company's net assets as of December 31, 2025 is presented below.

Compania Argentina de Granos

Between October 2016 and February 2017, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Compania Argentina de Granos ("CAGSA"), as borrower. The Company purchased the initial Participation in October 2016 for $10,000,000 and subsequently increased the Participation by another $2,500,000 in February 2017. This facility was collateralized by two export contracts. CAGSA, an Argentine company, is mainly engaged in the trading of grain and oilseed and the distribution and processing of food ingredients. Due to unfavorable weather conditions, CAGSA was unable to make delivery of toasted soybean meal under the terms of its export contracts. As a result, it failed to pay IIG its outstanding principal due on June 30, 2018.

IIG previously informed the Company that it had been in active discussions with CAGSA and other CAGSA lenders to protect its rights under the credit facility. Additionally, IIG had previously informed the Company that IIG is a member of the creditors committee, which would determine all financial and restructuring options of CAGSA, which may include additional equity infusions by the existing shareholders. In February 2019, CAGSA disclosed that it had reached a preliminary settlement with its creditors. The administrator of IIG TOF B.V.'s bankruptcy proceedings in the Netherlands notified the Company that the settlement discussions with CAGSA's creditors had resumed and were close to being finalized. The administrator indicated that the terms of the settlement being discussed are different from the terms that had been part of the preliminary settlement that had been reached in February 2019. The settlement is expected to result in the assumption of the entirety of CAGSA's debt by its parent company, Molinos Cañuelas ("MolCa"), with a portion to be repaid over a ten-year period and the remaining portion to be repaid over a period of up to ten years from the proceeds of the sale of 62.5% of the outstanding interests in MolCa, which are expected to be pledged to the unsecured creditors of CAGSA and MolCa as part of the proposed settlement. On September 27, 2021, MolCa and CAGSA filed for debt restructuring in the Argentinian bankruptcy court. On March 11, 2022, IIG TOF BV filed claims on behalf of the Company for the court to recognize the amounts due. The terms of the restructuring had been widely pre-approved by the creditors group prior to the filing. Since then, there have been several iterations of the settlement terms, with each set of terms representing slightly better terms for the lenders. The final restructuring proposal was submitted on December 31, 2024. On July 31, 2025, the court approved the restructuring plan. The Company received the first payment of the settlement proceeds as expected in early October 2025. The second payment was subsequently received in February 2026 as expected. As the Company continued to receive settlement payments, an increase in fair value of approximately $884,000 was recognized as a result of the quarterly valuation during the year ended December 31, 2025.

Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay and Algodonera Avellaneda S.A.

Between June 2016 and July 2016, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Frigorifico Regional Industrias Alimentarias, S.A., Sucursal Uruguay ("FRIAR"), an Argentine company that produces, processes and exports beef, as the borrower. In June 2017, IIG called a technical event of default due to non-payment by FRIAR. In an effort to seek repayment from FRIAR, IIG filed the promissory notes for FRIAR in the commercial court in Buenos Aires, Argentina.

In March 2017, the Company purchased a Participation in a trade finance facility originated by IIG TOF B.V., with Algodonera Avellaneda S.A. ("Algodonera") as the borrower for $6,000,000. The loan agreement states that Vicentin has guaranteed the payments to be made by Algodonera under the facility. Algodonera is an Argentinian vertically integrated cotton business. IIG informed the Company that in June 2017, IIG called a technical default on Algodonera under the facility due to nonpayment of interest and on Vicentin under the payment guarantee due to the breach of informational covenants. Thereafter, IIG made a filing against Vicentin and Algodonera in the commercial court in Buenos Aires, Argentina on July 4, 2017.

In August 2019, the Company was informed by IIG's legal counsel that the commercial court proceedings with FRIAR and Algodonera had been terminated due to the parties having reached a settlement. The Company obtained evidence that the settlement proceeds for all participant holders had been placed in an escrow account with a New York law firm. In January 2022, the largest participant holder with respect to claims against the escrow account filed an action in New York district court to release these funds to all the participant holders. In August of 2023, the court awarded the Company $4.6 million in proceeds from the escrow account. As of December 31, 2025, the creditors continue to work with the IIG TOF B.V. liquidator on further claims to satisfy the remaining debt owed.

Sancor Cooperativas Unidas Limitada

In April 2016, the Company purchased two Participations in a trade finance facility originated by IIG TOF B.V., with Sancor Cooperativas Unidas Limitada ("Sancor"), an Argentine company that distributes dairy products, as the borrower. IIG had worked with Sancor to restructure the existing loan and extended the maturity to July 29, 2019, with an annual renewal option. Since February 2019, Sancor has announced the sale of certain of its assets, which allowed it to make some payments to creditors and maintain operations, but the Company did not receive any payment as a result of those asset sales. As noted above, IIG has ceased operations and the Company has taken legal action in an attempt to recover amounts due. During the quarter ended December 31, 2020, the Company learned, in connection with certain court proceedings in the United States Bankruptcy Court for the Southern District of New York regarding a fund advised by IIG, that funds had been received in a New York bank account controlled by an affiliate of IIG and that such funds may include prior debt service payments by Sancor related to the Company's interests in the Sancor trade finance facility. During the year ended December 31, 2021, the Company was able to obtain control of the assets in the bank account and determined that they should primarily be allocated to outstanding interest. During the year ended December 31, 2021, Sancor was engaged in ongoing negotiations with its lenders regarding a debt restructuring, including discussions with the administrator of IIG TOF B.V.'s bankruptcy proceedings in the Netherlands. During the year ended December 31, 2021, the Company received interest payments of approximately $700,000 and principal payments of approximately $198,000 from the borrower. The Company is cooperating with the lender group in seeking a default judgement in a court in Argentina to take control of the collateral in an effort to facilitate negotiation with Sancor on settlement of the debt. In July 2024, a joint liquidation agreement for the warrants was executed between Sancor and the creditor group, providing for the immediate liquidation of 70% of the warrants, the proceeds of which were to be transferred to the creditors, with the remaining warrants to be liquidated, deposited into an escrow account, and paid in four equal installments starting in September 2024. In August 2024, a deposit of approximately $500,000 was transferred to an Argentinean escrow agent to be held for 9 to 12 months on behalf of all creditors, with a currency hedge in place. While a partial payment of $150,000 was paid in September 2024, Sancor has not fulfilled its installment obligations as agreed per the joint liquidation agreement. In the aggregate, Sancor has paid only approximately $650,000 of the $2.2 million owed through 2024 to the escrow account in Argentina. As a result, counsel arranged for the auction of the warrants to be recommenced. However, in December 2024, Sancor requested to pause the auction process in exchange for an immediate payment of $80,000. In the interest of providing Sancor with further time to repay the debt, counsel to the lender group agreed. Sancor deposited $40,000 into the escrow account in December 2024 and advised that a second payment of $40,000 would be forthcoming in 2-3 weeks. Payment was never received, so counsel to the lender group once again began the process of auctioning the warrants. While the auction was expected to begin in the first half of 2025, in early February 2025, Sancor filed for concurso preventivo protection (equivalent to a U.S. Chapter 11 bankruptcy filing) in Argentina. In June 2025, the Company, as part of the lender group, filed claims in the concurso proceeding, and in August and September 2025, Sancor filed objections to the claims. In September 2025, the Argentine court granted an extension for the concurso deadlines, extending the exclusivity period to February 9, 2026. The court further extended the timeline during the fourth quarter of 2025, setting the next deadline in May 2026. Counsel to the lender group intends to meet in-person with the judge and bankruptcy trustee in the near future. Due to the ongoing uncertainty as to the Company's ability to recover amounts due to it by Sancor, a decrease in fair value of approximately $144,000 was recognized during the year ended December 31, 2025.

IIG Trade Opportunities Fund B.V. Receivable

In March 2017, the Company purchased a Participation from IIG TOF B.V. in what the Company at that time believed to be a trade finance facility originated by IIG TOF B.V., with Nacadie Commercial S.A. ("Nacadie") as the borrower. The Company purchased the Participation in March 2017 for $6,000,000. In connection with the Company's review of this investment during the third quarter of 2018, IIG informed the Company that IIG had misapplied the funds the Company had transmitted at the time the Company made this investment. As a result, IIG offered to refund the Company's investment amount, including all accrued interest. However, IIG did not repay the Company for this Participation. As noted above, the Company knows that the Nacadie facility in which it purchased this Participation did not exist and the Company considers this asset to be a receivable from IIG TOF B.V. rather than a Participation in a trade finance facility.

As noted above, IIG TOF B.V. was declared bankrupt in the Netherlands, and the Company is seeking to recover amounts to which it is entitled through the bankruptcy proceedings. The Company has applied a discount to the fair value based on the risk created by the uncertainty of the ultimate resolution of the Company's attempt to recover amounts to which it is entitled through the bankruptcy proceedings in the Netherlands. On July 25, 2024, the Company received $75,000 from the U.S. Attorney's Office as part of a restitution settlement with David Hu and was notified that a restitution settlement with Martin Silver is still in process. On August 29, 2025, the Company received $40,726 from the U.S. Attorney's Office as further recovery from the restitution settlement with David Hu. The Company also received immaterial proceeds in February 2026 in connection with a settlement involving Martin Silver's spouse. As of December 31, 2025, the creditors continue to work with the IIG TOF B.V. liquidator on further claims to satisfy the remaining debt owed.

Investments through Scipion Capital, Ltd. ("Scipion") as the Sub-Advisor

Producam SA

Between March 2018 and June 2018, the Company purchased three Participations totaling $15,986,369 in a trade finance facility with Producam SA ("Producam"), a Cameroon-based cocoa and coffee exporter, as the borrower. Repayment on these Participations has been slower than originally anticipated due to short run cash flow pressure on Producam. The original sub-advisor for this facility was Africa Merchant Capital Group ("AMC"). In the third quarter of 2018, AMC informed the Company that the borrower misapplied the proceeds from the sale of certain of its inventory to finance its own cash flow needs rather than repay the facility. AMC then began working with the borrower to restructure the facility to recover amounts due. In April 2021, Scipion replaced AMC as the sub-advisor with respect to Producam and agreed to undertake efforts to liquidate the collateral underlying the facility in order to recover amounts due to the Company, and the restructuring process was finalized. Under the new agreement, the loan was restructured with the interest rate reduced from 17.5% to 9.5% for the cocoa facility and 6.0% for the coffee facility retroactively to January 1, 2019. As part of the restructure, the Company included a PIK component which increased the principal amount. The fair value of the investment decreased during the year ended December 31, 2021 due to collections from completed cocoa and coffee shipments being slower than anticipated. As all interest was capitalized as part of the amendment, no accrued interest remains outstanding as of the date of the new agreement. During the period from April 1, 2021 through April 14, 2021 (the date the loan was restructured), $49,014 of interest income was recognized. As of December 31, 2025, recovery is expected to come primarily from the legal claim filed in the UK courts against the collateral manager and its insurer. Due to ongoing delays, a decrease in fair value of approximately $994,000 was recognized during the year ended December 31, 2025.

Ecsponent Holdings, Ltd.

In December 2017, the Company made a $4.74 million investment in Ecsponent Holdings, Ltd. ("Ecsponent") to finance SMEs and provide fee-based services to entrepreneurs based in Botswana through the borrower's Business Credit Unit. Subsequently, during the third quarter of 2020, Ecsponent announced that its board of directors had launched a forensic investigation into the use of proceeds for various financial transactions executed by its former management, including the Company's investment. The combination of misapplied financing transactions and significant poor performance by other business units of the group caused Ecsponent to seek deferment of its interest payments while it sought additional fund raising due to financial and liquidity challenges, which the Company granted in the fourth quarter of 2020. However, the COVID-19 pandemic and the resulting economic environment delayed several of the borrower's plans and initiatives.

Throughout the first three quarters of 2022, the Company worked closely with the CEO of the group of companies Ecsponent is a part of and several of its existing creditors as part of a potential restructuring. During the fourth quarter of 2022 and the first quarter of 2023, one of the key companies in the borrower's group was placed into judicial management, which materially increased the risk of liquidation for itself and Ecsponent. The Company remains in close contact with Ecsponent's CEO, the group's creditors and judicial administrators in Botswana to reach an agreement, which the Company expected to progress in future quarters. During a conversation with Ecsponent's CEO during the three months ended June 30, 2025, the Company learned that Ecsponent will pursue a liquidation, in which case, the Company will make a creditor's claim. In November 2025, an Ecsponent investor submitted an intervention application, effectively pausing the liquidation process. The Company continues to monitor the progress of the liquidation filing. As a result of the ongoing uncertainty regarding a portion of the payment expected to be covered through an insurance claim, a decrease in fair value of approximately $660,000 was recognized during the year ended December 31, 2025.

Investments through Origin Capital Ltd. ("Origin") as the Sub-Advisor

Agilis Partners

In 2018, the Company originally provided financing totaling approximately $10,968,000 to Agilis Partners ("Agilis"), a Ugandan company engaged in the farming, storage, processing, and trading of maize, soybean, and sunflower seeds through Scipion. This financing was refinanced into a new loan through Origin in July 2021 as part of a broader financial restructuring. Repayment on the facility has been slower than originally anticipated due to ongoing liquidity challenges of the borrower, as well as record drought conditions in Uganda. The Company and Origin agreed to a deferral of Agilis' March 2022 interest payment and are actively working with the borrower on solutions to increase working capital, manage other creditor relationships and improve the overall financial condition of the borrower. During 2025, Origin, the borrower, and the Company continued working toward a comprehensive restructuring of Agilis' capital structure in connection with a potential merger of Agilis with two other farms in Uganda owned by a prospective investor. In January 2026, the relevant parties executed a restructuring term sheet establishing the framework for the refinancing and restructuring of Agilis' capital structure, including the potential conversion of a portion of lender exposure into equity interests and the separation of land ownership from operating activities. The parties are currently negotiating definitive documentation to implement the restructuring, which is expected to close in 2026, but there can be no assurance that it will close in that timeframe or at all. Similarly, there can be no assurance as to when the Company's investment in the facility will be repaid. Due to ongoing delays, a decrease in fair value of approximately $762,000 was recognized during the year ended December 31, 2025.

SurpapelcorpS.A. and Productora Cartonera S.A

In January 2020, the Company acquired a $10.0 million Participation in a term loan facility extended to Surpapelcorp S.A. and Productora Cartonera S.A. ("Surpapel"). Productora Cartonera S.A. is a well-established manufacturer of cardboard boxes, primarily serving food producers in Ecuador. Surpapelcorp S.A. operates one of Ecuador's largest paper mills and supplies Productora Cartonera with recycled paper rolls. In April 2020, the Company funded an additional $3.25 million under the same term loan.

In the third quarter of 2024, Surpapel encountered significant challenges due to an ongoing energy crisis in Ecuador, driven by the country's dependence on hydroelectric power amid severe drought conditions. As a result, Surpapel asked for a six-month deferral of two principal repayments due in December 2024 and June 2025. During the fourth quarter of 2024, the Company, along with the lender group, began working with Surpapel on a proposed debt rescheduling plan.

At the request of the Company's syndicate, Surpapel engaged FTI Consulting to serve as financial advisor to support a potential sale process. During the year ended December 31, 2025, Surpapel continued to experience liquidity constraints that limited its ability to operate at scale. As the lender group was not positioned to provide additional rescue financing, a sale of the senior secured debt was explored as an alternative path to recovery. An Ecuadorian packaging company emerged as the lead buyer and provided Surpapel with limited short-term working capital while it conducted its due diligence. In December 2025, the lender group and the buyer executed a binding memorandum of understanding outlining the agreed framework for the acquisition of lenders' economic interests in the syndicated debt. The parties are currently working toward completion of the transaction; however, there can be no assurance the transaction will close within the expected timeframe or at all. Accordingly, a decrease in fair value of approximately $4.3 million was recognized during the year ended December 31, 2025. The Company expects that all or a portion of the proceeds recognized from such transaction will be used to repay a participation interest in a term loan (see Note 5. Contingencies and Related Parties for additional information).

Cevher International B.V. Netherlands

In February 2019, the Company purchased an $8,275,000 Participation in a term loan facility with Cevher International B.V. Netherlands ("Cevher"), a Netherlands-domiciled company that wholly owns Cevher Jant Sanayii A.S., a manufacturer of aluminum alloy wheels in Türkiye. In early 2024, Cevher experienced liquidity and operational challenges due in part to significant inflation in Türkiye, which reached 68.5% in March 2024. This sharp rise in inflation led the aluminum workers' union, which represents Cevher factory employees, to impose substantial wage increases. On September 30, 2025, the Company and Cevher executed a term sheet outlining a potential discounted cash settlement of the Company's exposure, which contemplated repayment funded in part by a potential investment in Cevher by a strategic investor. In January 2026, the strategic investor withdrew from negotiations in connection with the potential investment. Subsequently, the Company and Cevher agreed on an amended settlement and continue to evaluate strategic alternatives. Cevher is also pursuing a potential initial public offering in Türkiye, which could provide a source of liquidity for repayment of the Company's loan. The settlement framework was reflected in the fair value of the loan for the year ended December 31, 2025. Accordingly, the Company recognized an increase in fair value of approximately $893,000 for the year ended December 31, 2025.

Investments through TRG Management LP ("TRG") as the Sub-Advisor

Dock Brasil Engenharia E Serviços S.a.

In December 2018, the Company funded $5,500,000 as part of a $13,000,000 senior secured term loan facility to Dock Brasil Engenharia e Serviços S.A. ("Dock Brasil"). Dock Brasil is a privately held Brazilian company providing maintenance and repair services for offshore oil and gas vessels through its floating dock and shipyard facilities. The proceeds of the facility were used to finance shipyard construction and prepay existing debt. The loan is secured by a first-priority pledge over 100% of Dock Brasil's shares, mortgages on its floating dock and shipyard assets, and assignments of rights related to Dock Brasil's federally leased waterfront property.

Following strong performance in 2023, primarily driven by a joint venture contract with a third-party shipyard, results deteriorated in 2024 as a result of the reduced revenues from the joint-venture contract, the impact of major flooding in the area and shipyard availability. Given the disruption to its joint venture revenue, Dock Brasil entered a series of repayment deferrals and capitalization agreements throughout 2024, supported by the Company and TRG.

In early 2025, Dock Brasil's shareholders initiated a sale process led by BroadSpan Capital ("BroadSpan"). Although multiple bids were received, only two of the bids were considered by BroadSpan to be reasonable. After an initial bid from a leading publicly listed Brazilian offshore maritime services company, Dock Brasil countered and sought superior offers from the second bidder. Late in the third quarter of 2025, the Company learned that the second bidder withdrew from contention as a potential purchaser. The Company consented to the sale to the Brazilian offshore maritime services company to facilitate an orderly exit. In November 2025, the Company and Dock Brasil's shareholders agreed to a settlement allocating $73 million Brazilian reais (approximately US$14.1 million based on the exchange rate on December 31, 2025) of the sale proceeds to the Company. As of December 31, 2025, the sale continues to progress and is expected to be finalized during the first quarter of 2026. As a result of this settlement, a decrease in fair value of approximately $4.3 million was recognized during the year ended December 31, 2025.

Other Investments

Trustco Group Holdings Ltd

In January 2017, the Company purchased a $15,000,000 Participation in a term loan facility with Trustco Group Holdings Ltd ("Trustco"), a Namibia based group operating a diversified set of business lines including property development, financial services (insurance, retail banking), education, and diamond mining. Repayment on this position has been slower than originally anticipated, largely due to a slowdown in the local real estate market. Helios actively worked with the borrower to restructure the facility, but as this proved challenging, Helios issued a notice of default and acceleration notice to Trustco along with launching initial legal proceedings on April 15, 2020. A demand was also made against Elisenheim as guarantor in respect of Trustco's obligations to Helios as described below. In addition to recourse against Trustco, Helios has the benefit of a security interest in property owned by the guarantor. During the fourth quarter of 2021, an initial judgment was issued in Helios' favor in the UK and Trustco appealed the court's decision and the requirements to deposit the full outstanding balance into an escrow account. This appeal was dismissed in February 2022, and the Company's next step is to seek enforcement of the UK judgment in Namibia. On July 31, 2024, the local court ordered Trustco to pay Helios a total amount of 636,410.18 in Namibian dollars (approximately US$35,870) as payment for Helios to defend Trustco's legal action, which was ultimately dismissed. This will be applied toward incurred costs and future retainer for the advocate for work going forward. The Trustco enforcement proceeding hearing was held on March 18 and 19, 2025. Following the hearing, the judge indicated that a judgement was expected to be handed down by the end of July 2025. Subsequently, the judge postponed her judgement until September 19, 2025, to follow the Elisenheim hearing. On September 24, 2025, the judge granted Helios' application to have the UK judgement recognized and enforced in Namibia. As expected by counsel, Trustco filed an appeal, and counsel filed to oppose in December 2025. Counsel continues to pursue the enforcement process and corresponding options.

A trial was held for the Elisenheim property case in Namibia from June 24, 2024 to July 5, 2024. The judge ruled in favor of the Company via Helios, and a hearing was set for July 14, 2024 during which the judge determined that the judge presiding over the case to enforce the UK judgement in Namibia should first rule on the referral relief. A case management meeting for the UK Trustco case was held on December 10, 2023, and a hearing was set for July 31, 2024 during which the judge gave Trustco time to determine if they would bring an application for leave. At a subsequent hearing held on November 28, 2024, the judge set trial dates from September 2 to September 12, 2025. Trustco submitted an application for dismissal of the Company's claim, which was dismissed by the court, after which Trustco formally requested a postponement of the remainder of the trial and was granted postponement until January 2026. A procedural issue delayed the trial again with the next hearing set for June 2026. Due to the increase in value of the Namibian dollar as of December 31, 2025, an increase in fair value of approximately $1.5 million was recognized for the year ended December 31, 2025.

Maritime One Limited (formerly known as Helios Maritime I)

Between July 2015 and December 2017, the Company purchased six Participations totaling $15,300,000 in a term loan facility with Maritime One Limited ("Maritime"), a company setup for the purposes of on-lending to Starz Investment Company, Ltd., a Nigerian shipping and logistics company for the purpose of acquiring a handling tug vessel. Repayment on this position has been slower than originally anticipated due to delays in acquiring a long-term contract, which was further prolonged based on challenges presented by the COVID-19 pandemic and the volatility in oil prices. The borrower has pledged a marine vessel as collateral in support of its repayment obligations under this facility.

The borrower received a term sheet subsequent to the fourth quarter of 2021 to support its performance against its obligations, which requires an $8 million payment in exchange for a partial forgiveness of debt ("Tranche 1") and restructured amortization profile ("Tranche 2"). An extension was granted to the borrower to meet this requirement and while the borrower was able to secure a loan facility from a local bank for the payment, it was funded in Naira, which is a difficult currency to convert to USD. As of June 30, 2023, approximately 3 billion Naira were converted and paid, completing Tranche 1 requirements. The Company began to service the remaining loan in Tranche 2 with a payment in September 2023. An agreement on the final terms of the full restructuring was reached in the fourth quarter of 2023. The borrower has continued servicing the debt since the restructuring was completed. As a result, an increase in fair value of approximately $425,000 was recognized during the year ended December 31, 2025.

Worldwide Investments and Representations Winrep S.A. and Vannapack S.A.

In the beginning of 2023, the Company made investments through Working Capital Associates, LLP ("WCA") in Worldwide Investments and Representations Winrep S.A. and Vannapack S.A. ("WinRep"), a frozen fish and seafood company located in Ecuador, comprised of three trade finance participations for an aggregate amount of $5,400,000.

In March 2023, WinRep started experiencing liquidity issues due to problems related to its main offtake market in China. The Company, through WCA, made several attempts to support WinRep through debt restructuring, which were rejected by WinRep. WinRep's financial situation worsened, and the Company decided to sign a Loan Purchase and Elevation Agreement dated as of September 28, 2023, to take over direct responsibility of the loan from WCA. The Company is currently evaluating several recovery strategies, including the liquidation of the Ecuadorian trust holding the collateral, which primarily consists of a land parcel in Ecuador. Due to the recent instability in Ecuador, the value of the land has decreased. The instability in Ecuador has improved; however, real estate prices remain relatively low. During the second quarter of 2024, the Company engaged several brokers on a non-exclusive basis to begin marketing the property for sale. In June 2025, the Company filed a hecho relevante (relevant fact) notification with the Superintendencia de Compañías (Superintendent of Companies, or "SIC") to formally inform the authority about the existence of our defaulted debt, which WinRep failed to report in its financial statements used to raise bond financing. Our local counsel then met with the Intendente Nacional de Mercado de Valores (National Intendant of the Stock Market) to provide further context. At the intendant's request, our loan documentation with the borrower was submitted to the SIC as evidence of the Company's debt. During the third quarter of 2025, the SIC initiated an internal investigation and requested further information from the trustee regarding the debtors, with a report expected during the second quarter of 2026. As a result of the ongoing delay, a decrease in fair value of approximately $220,000 was recognized during the year ended December 31, 2025.

Triton Metallics Pte. Ltd.

In November 2019, the Company made an investment in Triton Metallics Pte. Ltd. ("Triton") totaling $16,456,270 in a trade finance facility. Triton is a Singapore-based diversified commodities trading company. TransAsia Private Capital Ltd. ("TransAsia"), the sub-advisor for the Triton investment, informed the Company in early 2020 that due to the COVID-19 pandemic there have been constrained trading volumes. As a result, TransAsia then began working with the borrower to restructure the facility, and a restructuring agreement was executed on August 17, 2020. The Company further amended the facility in June 2021, which reduced the interest rate from 11.5% to 6% PIK-only for a period of two years, in order to give Triton additional flexibility as it managed its business amidst the resurgence of the pandemic in Asia. The unpaid interest of $1,503,463 under the old trade finance facility has been capitalized and added to the outstanding principal balance as of the date of the new agreement. During the period of July 1, 2020 through August 16, 2020, $241,816 of interest income was recognized prior to the date the loan was restructured. During the year ended December 31, 2025, the borrower was able to modestly increase its trading business; however, considering the extended timeline anticipated for business ramp-up, the borrower is not expected to be able to provide debt service for the next 12 months. As a result of this delay in debt service, a decrease in fair value of approximately $304,000 was recognized during the year ended December 31, 2025.

Vikudha Malaysia Sdn Bhd

In March 2017, the Company provided a $15,000,000 term loan facility to Vikudha Malaysia Sdn Bhd ("Vikudha"). Vikudha is a trading and manufacturing company, founded in 2007, principally involved in procurement of fast-moving consumer goods and agricultural related products. The borrower company had strong performance through year-end 2019 and then was significantly impacted by COVID-19 and was unable to meet scheduled debt repayments due to commence. The facility was successfully restructured in November 2020, and the borrower was able to service the debt until there was a resurgence of the COVID-19 pandemic in the Asia region and global supply chains continued to be disrupted. In June 2021, a six-month final maturity extension was granted to June 2023. During the second quarter of 2022, the local office of one of Vikudha's local bank lenders filed a wind-up petition against the company's Hong Kong-based parent company and loan guarantor. The Company issued a Reservation of Rights Letter to Vikudha in June 2022. Subsequently, in August 2022, the Company issued an Acceleration Notice to the borrower and Demand Notices to Corporate and Personal Guarantors. Once the wind-up petition was granted by the Hong Kong court, the Company also filed proof of debt forms at the Hong Kong Receiver office to ensure legal rights are protected. The borrower continues to provide updates on its efforts to repay the debt, including the recent launch of a trading business currently handling only modest shipments, which the borrower hopes to scale by 2026, and the borrower continues to seek additional equity and working capital as part of its efforts to rebuild its trading volumes. As a result of the delays in restarting its non-credit business and the modest volumes of its new trading business, the expected maturity has been extended. Accordingly, a decrease in fair value of approximately $2.5 million was recognized during the year ended December 31, 2025.

Limas Commodities House Limited

In August 2017, the Company provided a $15,000,000 senior secured term loan facility to Limas Commodities House Limited ("Limas"), a Hong Kong-based company 100% owned by an Indonesian entrepreneur. Limas was established as a financing SPV for PT Limas Tunggal, an Indonesian resource trader, for the purpose of gaining better access to international banking and capital markets. As a resource trading company, demand for Limas' products were significantly affected by the global pandemic, reflected in lower shipping volume in 2020 and early 2021. The Company's sub-advisor provided $6 million of working capital to Limas, which secured additional collateral for the sub-advisor and the Company in the form of assignment of three claims won in Korean cases totaling $15,000,000. The collateral was assigned pro-rata, adding $13.4 million to the Company's existing collateral pool. Due to the continued impact of COVID-19, in June 2020, the Company executed an extension of final maturity to June 2023. Subsequent to June 30, 2022, PT Limas Tunggal, the corporate guarantor of the Company's facility, entered restructuring legal proceedings in Indonesia, and as a result, the Company issued an Acceleration Notice to the borrower and a Demand Notice to the Guarantor. The restructuring legal proceedings were concluded during the third quarter of 2022, resulting in an extension of the debt repayment period.

The borrower has progressed slowly towards materially ramping up its trading activity. Progress is expected to accelerate following the government's issuance of production quotas in the third quarter of 2025. Part of the collateral package for this loan are proceeds from the Korean cases, which continue to be delayed. As a result, a decrease in fair value of approximately $528,000 was recognized during the year ended December 31, 2025.

Multiple ICD (Kenya) Limited

In July 2017, the Company purchased a $15,000,000 Participation in a term loan facility with Multiple ICD (Kenya) Limited ("MICD"), an inland container depot storage and warehousing company. Repayment on this position has been slower than originally anticipated due initially to unfavorable local industry dynamics at the Port of Mombasa, which were further complicated by the COVID-19 pandemic. Barak Fund Management Ltd, the sub-advisor for the MICD investment, has been actively seeking to restructure the loan facility with MICD and its other lenders. While the loan is no longer on standstill, the lenders are requiring additional progress with the negotiations to renew it. During the second half of 2024, progress on the restructuring stalled as there were parties potentially interested in acquiring MICD and Multiple Hauliers, a sister company. The ongoing uncertainty regarding the restructuring continued to increase the probability that MICD may be liquidated; however, in early 2025, the senior lenders agreed to meet with the Company to discuss a potential settlement of the mezzanine lenders' debt. The Company met with DLA Piper, the senior lenders' counsel, during the year ended December 31, 2025. As a result of Multiple Hauliers being put into Administration (a formal insolvency process), the lenders for MICD have been restricted from enforcing on those assets. The lenders have filed an appeal and requested the replacement of the administrator. During the year ended December 31, 2025, administrator appointments remained suspended pending court proceedings related to the administration process. Therefore, settlement of the Company's debt will be delayed until there is progress on the senior lenders' enforcement. Due to these delays, a decrease in fair value of approximately $775,000 was recognized during the year ended December 31, 2025.

Lidas S.R.L.

In May 2021 and December 2022, the Company acquired participations of $3,735,195 and $2,000,000, respectively, in a term loan facility with Lidas S.R.L. ("Lidas"), a producer of frozen bread and pastries based in Tulcea, a city in Southeastern Romania. Lidas primarily operates a production line that is currently the second-largest producer of frozen bakery products in Romania. The company also owns and manages eleven supermarkets throughout Tulcea.

In 2022, Lidas began facing liquidity challenges, largely due to the impact of Russia's invasion of Ukraine, which drove up input costs, particularly for wheat, a key raw material sourced significantly from both countries. To mitigate these challenges, Lidas received financial support from the Romanian government, with subsidies for budgeted expenses expected in 2023. In the second quarter of 2023, Lidas received approximately €2.0 million in government subsidies, followed by an additional €5.8 million in grants in July 2024. Despite this financial support, Lidas continued to face declining sales, primarily due to technical issues associated with the launch of its new production facility. Furthermore, a shortage of working capital led to a temporary suspension of new orders from the facility in 2024. As a result, Lidas has been unable to service its loan from the Company without raising equity to support further growth. In September 2025, Lidas entered into a court supervised restructuring process, in which the Company is actively participating. In November 2025, Lidas initiated a preventative composition proceeding with its creditors under Romanian law, which is comparable to a U.S. Chapter 11 bankruptcy filing, and a restructuring plan was circulated to creditors in early 2026. The Company is currently evaluating the proposal and coordinating with other creditors regarding next steps. Due to the ongoing uncertainty, a decrease in fair value of approximately $154,000 was recognized during the year ended December 31, 2025.

PT Citra Labuantirta

In March 2021, the Company invested $15,000,000 in a senior secured term loan facility with PT Citra Labuantirta ("PT Citra"), an independent, privately held cocoa processor based in South Sulawesi, Indonesia, the nation's center of cocoa bean production. Founded in 1992, PT Citra began as a trader of cocoa beans before expanding into cocoa processing in 2008. PT Citra produces cocoa butter and cocoa cake, which are exported primarily to customers in Europe, the United States, and Australia. The facility is secured by a first lien on PT Citra's production lines, pledged insurance policies, and a debt service reserve account equal to three months of scheduled debt service.

In early 2022, TAEL Partners, a Singapore-based private equity firm and PT Citra's majority shareholder, assumed operational control to address liquidity constraints. PT Citra subsequently developed a revised business plan and resumed limited operations. The Company continued to work with PT Citra through 2023 and 2024 to finalize restructuring documentation, share-pledge agreements, and working-capital financing.

In September 2025, one of PT Citra's suppliers filed a Penundaan Kewajiban Pembayaran Utang ("PKPU") claim (Indonesia's equivalent to a U.S. Chapter 11 bankruptcy filing), which was granted by the court. Subsequently, the Company filed a claim that was recognized by the court. PT Citra has appointed a financial advisor to prepare a restructuring plan for all creditors. As PT Citra's largest creditor, the Company remains actively engaged in the process. As a result of the uncertainty introduced by the PKPU proceeding, a decrease in fair value of approximately $3.4 million was recognized during the year ended December 31, 2025.

Equity Participation in Cocoa Transaction (formerly known as Alfa Systems and Commodity Company Limited and Courtyard Farms Limited)

Since December 2017, the Company made investments through Africa Global Trade Finance Ltd. ("AGTF") in Alfa Systems and Commodity Company Limited ("Alfa") and Courtyard Farms Limited ("Courtyard"), cocoa trading companies located in Nigeria, comprised of multiple trade finance participations for an outstanding aggregate amount of approximately $1,074,000 and $929,000, respectively, prior to the settlement in 2023.

The two borrowers were significantly impacted by COVID-19 and were not able to meet scheduled debt repayments since mid-2019. Due to the delays in the repayments, the Company, along with other lenders in the lending group, entered into a settlement agreement for the outstanding amount and termination of the transaction with the borrowers during the year ended December 31, 2023. With respect to the agreement, the Company planned to combine them as one equity participation and trade the collateral through a local agent. The Company owns 34.02% of the total settlement and has completed one trade. As of December 31, 2025, approximately $271,000 was recovered through cocoa sales by the local agent. As cocoa prices continued to decline toward normalized levels throughout 2025 and into the first quarter of 2026, the expected proceeds from cocoa sales correspondingly decreased. Accordingly, a decrease in fair value of approximately $276,000 was recognized during the year ended December 31, 2025.

Interest Receivable

Depending on the specific terms of our investments, interest earned by us is payable either monthly, quarterly, or, in the case of most trade finance investments, at maturity. As such, some of our investments have up to a year or more of accrued interest receivable as of December 31, 2025. In addition, certain of our investments in term loans accrue deferred interest, which is not payable until the maturity of the loans. Lastly, certain of the Company's investments have PIK interest, which is accrued as interest receivable and capitalized on a regular basis. As a result, a significant portion of the Company's interest receivable balance may not be received in cash in the short term. Our interest receivable balances at December 31, 2025 and 2024 are recorded at net realizable value.

Results of Operations

Consolidated operating results for the years ended December 31, 2025 and 2024 are as follows:

		Year Ended
		December 31, 2025				December 31, 2024
Investment income
Interest income		$	2,155,237			$	6,691,428
Payment-in-kind interest income			16,245,179				18,492,603
Fee income			36,577				485,906
Other income			68,766				184,788
Interest from cash			484				2,264
Total investment income			18,506,243				25,856,989
Expenses
Asset management fees			5,641,735				5,562,244
Professional fees			6,068,831				6,372,609
General and administrative expenses			1,021,952				1,462,370
Interest expenses			553,792				-
Board of managers fees			257,500				257,500
Total expenses			13,543,810				13,654,723
Net investment income		$	4,962,433			$	12,202,266
Net change in unrealized (depreciation) appreciation on investments			(7,361,847	)			1,737,905
Net realized losses on investments			(6,094,524	)			(1,471,793	)
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS		$	(8,493,938	)		$	12,468,378

Revenues

For the years ended December 31, 2025 and 2024, total investment income amounted to $18,506,243 and $25,856,989, respectively. The decrease was primarily attributable to the reclassification of income from certain investments in connection with the quarterly assessment of the net realizable value of interest receivable, which was the result of a decline in the overall fair value of certain debt investments. In addition, a few investments were placed on non-accrual status during the year ended December 31, 2025. Additionally, fee income decreased by $449,329 during the year ended December 31, 2025 compared to the same period in 2024, mainly due to the completion of amortization related to certain deferred revenue. Other income primarily consists of certain rental income, payments from legal settlements, and other miscellaneous sources, which are generally considered a minor component of our total investment income.

During the year ended December 31, 2025, $1,100,009 or 5.9% of the interest income earned came from loan and trade finance participations and $14,158,506 or 76.5% came from direct loans. In addition, we earned $484 in interest income on our cash balances.

During the year ended December 31, 2024, $8,254,228 or 31.9% of the interest income earned came from loan and trade finance participations and $14,565,459 or 56.3% came from direct loans. In addition, we earned $2,264 in interest income on our cash balances.

Expenses

Total operating expenses, excluding the asset management and incentive fees, incurred for the year ended December 31, 2025 decreased by approximately $190,404 to $7,902,075 from $8,092,479 for the year ended December 31, 2024. This decrease was primarily attributable to lower reimbursements of consulting fees incurred in connection with an ESG analysis, which fees were paid by the Company's advisor on behalf of the Company, as well as reduced professional fees associated with certain investments, reflecting the Company's efforts to minimize overall costs during the year ended December 31, 2025 compared to the year ended December 31, 2024. This decrease was partially offset by an increase in interest expense related to the repurchase obligation, (see Note 5. Contingencies and Related Parties for additional information), as interest began accruing after the related asset and corresponding liability were recognized on June 18, 2025.

For the years ended December 31, 2025 and 2024, the asset management fees amounted to $5,641,735 and $5,562,244, respectively. The incentive fees for each of the years ended December 31, 2025 and 2024amounted to $0.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments.

We measure net realized gains or losses by the difference between the net proceeds from the repayment or sale of an investment and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment fair market values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. We recorded net realized losses of $6,094,524 and $1,471,793 for the years ended December 31, 2025 and 2024. We recorded net change in unrealized depreciation of $7,361,847 and net change in appreciation of $1,737,905 for the years ended December 31, 2025 and 2024, respectively. The net change in unrealized depreciation for the year ended December 31, 2025 was primarily driven by increased uncertainty regarding the future cash flows of certain investments and the Company's strategic liquidation of certain investments to mitigate prevailing liquidity challenges.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2025, we had $54,612 in cash. The Company is in the process of realizing liquidity from the settlement of certain investments and expects to receive several million dollars in cash in the near term. Subsequent to December 31, 2025, the Company received $3.2 million, consisting of regularly scheduled payments and settlements. The Company expects to fund the payment of past and current operating and other accrued expenses with these proceeds. We generate cash primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, proceeds from sales of our investments and from sales of promissory notes, proceeds from the issuance of notes payable, and proceeds from private placements of our units. We may also generate cash in the future from debt financing. We have been facing liquidity constraints, primarily due to our borrowers experiencing challenges in their ability to repay amounts owed to us in a timely manner or at all, as described above under "Outlook." Until we are able to accumulate more cash, our primary use of our limited cash will be the payment of our expenses. While we currently anticipate payments on certain investments during 2026, there can be no assurances that anticipated payments will be made when expected or at all. We may determine to execute additional sales of all or a portion of our interest in one or more investments to increase liquidity from time to time.

The following discussions provide additional detail regarding our cash flows.

Cash Flows from Operating Activities

Cash flows from operating activities for the year ended December 31, 2025 decreased by $3.3 million compared to the prior year. This decrease is primarily driven by a $5.9 million reduction in proceeds from dispositions and investment paydowns of investments, attributable to delays in scheduled payments and the liquidation of certain investments through ongoing legal proceedings compared to the same period in 2024. This decrease was partially offset by a $2.8 million increase in accrued expenses, reflecting the Company's decision to delay payment of certain invoices.

Cash Flows Used in Financing Activities

Cash flows used in financing activities for the year ended December 31, 2025 increased by $4.2 million compared to the same period in 2024, primarily because no distributions were made for the year ended December 31, 2025.

Debt Financings and Financing Obligations

We may borrow additional funds to make investments. We have not decided to what extent going forward we will finance portfolio investments using debt or the specific form that any such financing would take, but we believe that obtaining financing is necessary for us to fully achieve our long-term goals. We have been, and still are, actively seeking further financing through both development banks and several commercial banks. Accordingly, we cannot predict with certainty what terms any such financing would have or the costs we would incur in connection with any such arrangement. On November 3, 2022, we entered into a transaction with an unrelated financial institution, whereby we sold a $5.0 million participation interest in one of our term loan positions and, as of March 31, 2023, we had agreed to repurchase the participation by October 2023 at a price equal to the sum of the original sales price plus accrued interest calculated at a simple 10% annualized rate. On March 21, 2023, the terms were amended. The repurchase date was extended to October 17, 2023, and the interest rate was increased to 11.5% per annum. The amendment also granted the buyer the right to elevate its position to a direct interest or sell the position to a third party. In October 2024, the agreement was further amended. The repurchase date was extended to June 18, 2025, subject to partial principal and interest payments. As of December 31, 2025, we had approximately $2.9 million in total debt outstanding, solely related to the repurchase obligation, resulting in a debt to equity ratio of 1.0%.

Company Strategy

Although the Company has a perpetual duration, it disclosed previously that if the Company did not consummate a liquidity event by August 25, 2021, it would commence an orderly liquidation of its assets unless a majority of the board of managers, including a majority of the independent managers, determined that liquidation is not in the best interests of the Company's unitholders. Since then, the continuation of the Company's operations has been regularly monitored and reviewed by the board of managers on a quarterly basis. The board of managers may, in its discretion, pursue a liquidation of the Company or one or more alternative transactions in the event it deems such action to be appropriate.

Distributions

We have paid monthly distributions commencing with the month beginning July 1, 2013 until December 31, 2022. For the year ended December 31, 2023, we paid distributions to unitholders for the months of January through June 2023, but we did not pay the distributions on our regular cadence and instead paid some of the distributions months after the month to which the distributions related. We have not resumed the payment of regular monthly distributions, but paid special distributions to unitholders in February and March 2024 totaling approximately $4,181,000.

From time to time, we may also pay interim distributions at the discretion of our board. Distributions are subject to the board of managers' discretion and applicable legal restrictions and accordingly, there can be no assurance that we will make distributions at a specific rate or at all. Distributions are made on all classes of our units at the same time. The cash distributions received by our unitholders with respect to the Class C units, Class W units and certain Class I units, are and will continue to be lower than the cash distributions with respect to Class A and certain other Class I units because of the distribution fee relating to Class C units, the ongoing dealer manager fee relating to Class W units and Class I units issued pursuant to a private placement and the ongoing service fee relating to the Class W units, which are expenses specific to those classes of units. Amounts distributed to each class are allocated among the unitholders in such class in proportion to their units. Distributions are paid in cash or reinvested in units, for those unitholders participating in the DRP. For the year ended December 31, 2025, no distributions were made.

Related Party Transactions

Legal Proceedings

As of December 31, 2025, the Company was not a defendant in any material litigation.

Critical Accounting Policies and Use of Estimates

In preparing our Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations promulgated by the SEC, we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and discuss our critical accounting policies and estimates with the audit committee of our board of managers. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

There have been no significant changes to our critical accounting policies, estimates and judgments during year ended December 31, 2025, compared to the critical accounting policies, estimates and judgments disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2024.

The preparation of financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in the financial statements. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates. As noted in prior quarters, the combination of COVID-19 pandemic period effects, in many cases, had devastating and long-lasting impacts on the businesses, financial condition and results of operations of several borrower companies. Together, these factors made it more difficult for some borrowers to repay their obligations to the Company in a timely manner or at all, resulting in the Company experiencing inconsistent cash flows. The Company believes that the central issue driving results is the legacy effect from borrower companies struggling to recover from the compound impact of approximately three years of economic hardship stemming from the COVID-19 pandemic from 2020 to 2022. However, as of 2025, macroeconomic conditions have modestly improved for most borrower companies, though improvement ultimately has been slow. Still, the Company has seen several borrowers improve, particularly in 2024 and into 2025, due in large part to the sustained improvement in supply side macroeconomic conditions over the last few years. The U.S. government has imposed, and may further increase, tariffs on certain countries and commodities. In response, some non-U.S. countries have imposed or may impose retaliatory tariffs. These actions and the resulting uncertainty surrounding U.S. trade and tariff policies, including ongoing dispute and negotiations with China, continue to be a critical near-term macroeconomic risk factor which could negatively affect the Company's borrowers. Additionally, ongoing geopolitical tensions and conflicts in various regions, including conflicts and instability in the Middle East, the continuing Russia-Ukraine conflict, and broader geopolitical competition among major global economies, have contributed to volatility in global commodity markets, energy prices, supply chains and financial markets. Any escalation of these conflicts, expansion of economic sanctions, or disruptions to global trade routes, shipping channels or energy supplies could adversely affect global economic conditions and international trade. Such developments may increase operating costs, disrupt supply chains or reduce demand in certain markets, which could in turn negatively impact the financial performance and repayment capacity of the Company's borrowers. As of December 31, 2025, the Company had observed only a few selected cases where borrowers were materially affected by specific macroeconomic conditions, other than general declines in business risk taking, capital investment, and some reduced availability of both debt and equity financing generally applicable to all of the Company's borrowers.

Revenue Recognition

The Company records interest income on an accrual basis to the extent that we expect to collect such amounts. Following the initial accrual of interest income, receivable balances are adjusted to reflect their net realizable value at each reporting date. The Company determines the net realizable value using the same methodologies used to determine the fair value of investments. Structuring, upfront and similar fees are recorded as a discount on investments purchased and are accreted into interest income, on a straight line basis, which we have determined not to be materially different from the effective yield method.

The Company records prepayment penalties for loans and debt securities paid back to us prior to the maturity date as interest income upon receipt.

The Company generally places loans on non-accrual status when there is a reasonable doubt that principal or interest will be collected. If, however, management believes the principal and interest will be collected, a loan may be left on accrual status during the period the Company is pursuing repayment of the loan. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment of the financial condition of the borrower. Non-accrual loans are generally restored to accrual status when past due principal and interest is paid and, in our management's judgment, is likely to remain current over the remainder of the term.

Valuation of Investments

The Company accounts for all of its investments at fair value with changes in fair value recognized in the consolidated statement of operations. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has categorized its investments into a three-level fair value hierarchy as discussed in Note 2.

Most of the Company's investments are loans to private companies, which are not actively traded in any market and for which quotations are not available. For those investments for which market quotations are not readily available, or when such market quotations are deemed by the Advisor not to represent fair value, the Company's board of managers has approved a multi-step valuation process to be followed each fiscal quarter, as described below:

1.

Each investment is valued by the Advisor on a quarterly basis;

2.

Materiality is assessed quarterly on all investments to determine whether an independent review is appropriate. The Advisor engages a third-party valuation firm to conduct an independent review of the reasonableness of the Advisor's internal estimates of fair value on all term loans and trade finance Watch List investments, and to provide an opinion of whether they concur with the Advisor's analysis. The independent assessment occurs on a discretionary basis based on qualifications that takes into account both quantitative thresholds and qualitative considerations, as determined by the Advisor. The analysis performed by the independent valuation firm was based upon data and assumptions provided to it by the Company and received from third party sources, which the independent valuation firm relied upon as being accurate without independent verification. The results of the analyses performed by the independent valuation firm are among the factors taken into consideration by the Company and its management in making its determination with respect to the fair value of such investments, but are not determinative. The Company and its management are solely and ultimately responsible for determining the fair value of the Company's investments in good faith;

3.

The audit committee of the Company's board of managers reviews and discusses the preliminary valuation prepared by the Advisor and any report rendered by the independent valuation firm; and

4.

The board of managers discusses the valuations and determines the fair value of each investment in the Company's portfolio in good faith based on the inputs which include but are not limited to, inputs of the Advisor, the independent valuation firm and the audit committee. The Company and its board of managers are solely and ultimately responsible for the determination, in good faith, of the fair value of each investment.

Below is a description of factors that the Company's board of managers may consider when valuing its investments.

Any potential valuation adjustments are subject to a materiality threshold as determined by the Advisor. Due to the fact that all non-Watch List investments are performing loans, with no macroeconomic indicator or other event observed that would reasonably be expected to have a material impact on the underlying performance or collateral value of the investment, most of these investments have a fair value that that does not deviate materially from amortized cost. If, pursuant to the Company's quarterly review, the Company determines that one or more material valuation adjustments are appropriate, then the Company adjusts the fair value. Historically, in most cases when these adjustments have resulted in a fair value that is materially different from amortized cost, it has resulted in the Company's determination to place the investment on the Watch List.

Fixed income investments are typically valued utilizing a market approach, income approach, collateral based approach, or a combination of these approaches (and any others, as appropriate). The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including the sale of a business) and is used less frequently due to the private nature of our investments. The income approach uses valuation techniques to convert future amounts (for example, interest and principal payments) to a single present value amount (Discounted Cash Flow or "DCF") calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts. For Watch List investments, we may use a collateral based approach (also known as a liquidation or net recovery approach). The collateral based approach uses estimates of the collateral value of the borrower's assets using an expected recovery model. When using the collateral based approach, the Company determines the fair value of the remaining assets, discounted to reflect the anticipated amount of time to recovery and the uncertainty of recovery. The Company also may make further adjustments to account for anticipated costs of recovery, including legal fees and expenses. In following a given approach, the types of factors that the Company may take into account in valuing our investments include, as applicable:

•

Macro-economic factors that are relevant to the investment or the underlying borrower

•

Industry factors that are relevant to the investment or the underlying borrower

•

Historical and projected financial performance of the borrower based on most recent financial statements

•

Borrower draw requests and payment track record

•

Loan covenants, duration and drivers

•

Performance and condition of the collateral (nature, type and value) that supports the investment

•

Sub-Advisor recommendation as to possible impairment or reserve, including updates and feedback

•

For participations, our ownership percentage of the overall facility

•

Key inputs and assumptions that are believed to be most appropriate for the investment and the approach utilized

•

Applicable global interest rates

•

Impact of investments placed on non-accrual status

With respect to warrants and other equity investments, as well as certain fixed income investments, the Company may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies, option pricing models or industry practices in determining fair value. The Company may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors we deem relevant in measuring the fair values of its investments.

Recent Accounting Pronouncements

See Note 2 to the Company's accompanying Consolidated Financial Statements for a description of recent accounting pronouncements and its expectation of their impact on the Company's results of operations and financial condition.

Subsequent Events

Please see "Notes to Consolidated Financial Statements-Note 9. Subsequent Events."