Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to "we," "us," "our," or the "Company" refer to MSC Capital LLC prior to the Conversion (as defined herein), and Steele Creek Capital Corporation on and after the Conversion.

Forward-Looking Statements

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

●

our future operating results;

●

our business prospects and the prospects of our portfolio companies;

●

the impact of investments that we expect to make;

●

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets;

●

the ability of the Steele Creek Investment Management LLC (the "Investment Advisor") to locate suitable investments for us and to monitor and administer our investments;

●

the ability of the Investment Advisor and its affiliates to attract and retain highly talented professionals;

●

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

●

the timing of cash flows, if any, from the operations of the companies in which we invest;

●

the adequacy of our cash resources and working capital;

●

the ability of the companies in which we invest to achieve their objectives;

●

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

●

our ability to maintain our qualification as a BDC and as a RIC under the Code;

●

the use of borrowed money to finance a portion of our investments;

●

the adequacy, availability and pricing of our financing sources and working capital;

●

actual or potential conflicts of interest with the Investment Advisor and its affiliates;

●

our contractual arrangements and relationships with third parties;

●

our expected financings and investments;

●

the economic downturn, interest rate volatility, loss of key personnel, and the illiquid nature of our investments; and

●

the risks, uncertainties and other factors we identify under "Item 1A. Risk Factors" and elsewhere in this quarterly report on Form 10-Q.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the U.S. Securities and Exchange Commission ("SEC") in the future, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In addition, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled "Item 1A. Risk Factors" and elsewhere in this report. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements.

Overview

We are a financial services company that primarily invests in syndicated corporate bank loans, bonds, other debt securities, and structured products. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC and has elected to be treated for U.S. federal income tax purposes, and to qualify annually thereafter, as a RIC under the Code. We were formed on June 3, 2020 as a Delaware limited liability company under the name MSC Capital LLC. MSC Capital LLC was formed by Steele Creek Investment Management LLC, Moelis Asset and two affiliates. On October 7, 2020, MSC Capital LLC converted to a Maryland corporation (the "Conversion"), named Steele Creek Capital Corporation. On September 3, 2020, we formed a wholly-owned consolidated special purpose financing vehicle, Steele Creek Capital Funding I, LLC ("Funding I"), a Delaware limited liability company. Funding I was formed to hold the Company's investments, and a first priority continuing security interest in, to and under each investment, all underlying investments and underlying assets were granted to BNP Paribas ("BNP") and to be used as collateral for the credit facility. On August 28, 2024, we formed a wholly-owned special purpose financing vehicle, Steele Creek Capital Funding II, LLC ("Funding II"), a Delaware limited liability company. Funding II was formed to hold the Company's investments, and a first priority continuing security interest in, to and under each investment, all underlying investments and underlying assets were granted to Bank of America ("BoA") and to be used as collateral for the credit facility. As of September 24, 2025, Funding I was completely wound down and accounts were closed.

Our investment objective is to generate high current income by investing primarily in fixed income instruments, including broadly syndicated bank loans, structured products, mezzanine financings and senior secured bonds. We provide moderate liquidity to our shareholders by offering a quarterly share repurchase program. As of June 30, 2026, approximately 1,605,568 shares have been tendered through the share repurchase program. Broadly syndicated loans are generally more liquid than directly originated investments and may provide more attractive financing terms than less liquid assets. Mezzanine financings are generally unrated or below investment grade rated investments that have greater credit and liquidity risk than more highly rated debt obligations. Moreover, mezzanine financings are generally unsecured and subordinate to other obligations of the obligor and are subject to many of the same risks as those associated with high-yield debt securities.

Revenues

We generate revenue primarily in the form of interest and fee income on debt investments we hold and capital gains, if any, on investments. We generally expect our debt investments to bear interest at a floating rate usually determined on the basis of a benchmark such as the Secured Overnight Financing Rate ("SOFR"). Interest on debt securities is generally payable monthly, quarterly or semi-annually. In some instances, we expect to receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments is expected to fluctuate significantly from period to period. Our portfolio activity is also expected to reflect the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.

Expenses

Our primary operating expenses include the payment of fees to our Investment Advisor under the Investment Advisory Agreement, our allocable portion of overhead and rental expenses under the Administration Agreement and other operating costs described below. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:

●

our initial organization costs incurred prior to the commencement of our operations;

●

operating costs incurred prior to the commencement of our operations;

●

the cost of calculating our net asset value, including the cost of any third-party valuation services;

●

the cost of effecting sales and repurchases of shares of our common stock and other securities, including in connection with the Private Offering;

●

distribution and shareholder servicing fees payable to our dealer manager and financial intermediaries;

●

fees payable to third parties relating to making investments, including our Investment Advisor's or its affiliates' travel expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

●

interest expense and other costs associated with our indebtedness;

●

transfer agent and custodial fees;

●

out-of-pocket fees and expenses associated with marketing efforts;

●

federal and state registration fees and any stock exchange listing fees;

●

U.S. federal, state and local taxes;

●

Independent Directors' fees and expenses;

●

brokerage commissions and markups;

●

fidelity bond, directors' and officers' liability insurance and other insurance premiums;

●

direct costs, such as printing, mailing, long distance telephone and staff;

●

fees and expenses associated with independent audits and outside legal costs;

●

costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws; and

●

other expenses incurred by the Administrator or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion (subject to the review and approval of our Board) of including overhead expenses.

From time to time, the Administrator or its affiliates may pay third-party providers of goods or services. We will reimburse the Administrator or such affiliates thereof for any such amounts paid on our behalf under the Administration Agreement. All of the foregoing expenses will ultimately be borne by our stockholders.

Our Investment Advisor is authorized to determine the broker to be used for each portfolio transaction. In selecting brokers to execute transactions, the Investment Advisor need not solicit competitive bids and does not have an obligation to seek the lowest available commission cost. In selecting brokers, the Investment Advisor may or may not negotiate "execution only" commission rates and thus we may be deemed to be paying for other services provided by the broker that are included in the commission rate. In negotiating commission rates, the Investment Advisor will take into account the financial stability and reputation of the broker and the brokerage, research and other services provided to us, the Investment Advisor and other customers of the Investment Advisor and its affiliates by such broker, even though we may not, in any particular instance, be the direct or indirect beneficiaries of the research or other services provided and the management fee payable to the Investment Advisor is not reduced because it receives such services. In addition, the Investment Advisor may direct commissions to certain brokers that on the foregoing basis may furnish other services to us, the Investment Advisor and other customers of the Investment Advisor and its affiliates, such as telephone lines, news and quotation equipment, electronic office equipment, account record keeping and clerical services, trading software, financial publications and economic consulting services. As a result of the brokerage practices described above, the levels of commission paid, and prices paid or received by us in portfolio transactions may be less favorable than in portfolio transactions effected on a best price and execution basis.

Compensation Paid to the Dealer Manager and Participating Financial Intermediaries

The Company has engaged S2K Financial LLC as dealer manager to assist with the placement of the Company's shares ("Dealer Manager"). Investors will pay a maximum upfront sales load of up to 5.5% of the Company's net asset value per share for combined upfront selling commissions and dealer manager fees. Investors will pay a maximum upfront selling commission of 3.0% and a maximum dealer manager fee of 2.5%. The purchase price paid by an investor will be the Company's net asset value per share plus all upfront selling commissions and dealer manager fees. All or a portion of selling commissions and dealer manager fees may be reduced or eliminated in connection with certain categories of sales such as, without limitation, sales through investment advisers or sales to our affiliates.

The Company will pay to the Dealer Manager a shareholder servicing fee ("Shareholder Servicing Fee") at a maximum annual rate equal to 0.0% of the Company's net assets up to $28,200 thousand and of 1.0% of the Company's net assets over $28,200 thousand. The Shareholder Servicing Fee will be payable on a monthly basis. With respect to each share sold, the Shareholder Servicing Fee will be paid until the third anniversary of the applicable month of purchase. All or a portion of which may be reallowed by the Dealer Manager to participating Financial Intermediaries. The purpose of the Shareholder Servicing Fee is to reimburse our Dealer Manager for costs incurred by selected Financial Intermediaries and investment representatives for providing ongoing shareholder services. The Shareholder Servicing Fee is paid pursuant to a Servicing Plan adopted by the Board, including a majority of the Independent Directors and who have no direct or indirect financial interest in the operation of the Servicing Plan or in any agreements entered into in connection therewith. The Servicing Plan will remain in effect for so long as such continuance is reapproved annually by the Board.

The Investment Advisor or its affiliates, in Investment Advisor's discretion and from their own resources, will pay additional compensation to our Dealer Manager in connection with the sale and servicing of shares ("Additional Compensation"). In return for the Additional Compensation, the Company may receive certain marketing advantages. Our Dealer Manager may reallow all or a portion of the Additional Compensation to participating Financial Intermediaries. The Additional Compensation will not be paid by our shareholders.

Current Market Conditions

Syndicated bank loan prices rebounded alongside other risk assets in the second quarter as market participants navigated AI concerns and an uncertain geopolitical backdrop. A favorable technical coming out of Q1 further buoyed loan prices in the first half, which was met by an active new-issue market driven by opportunistic repricing/refinancing activity. Strong issuance combined with tech concerns that reignited towards the back half of the quarter partially pulled back gains. The J.P. Morgan Leveraged Loan Index returned 1.93% for the quarter with the average bid price closing out at 95.22 versus 94.90 in Q1.

Portfolio and Investment Activity

As of June 30, 2026, our portfolio had a fair market value of approximately $107,651 thousand, a cost basis of approximately $112,400 thousand and was comprised of investments, measured at fair value. Our loan portfolio consisted of 231 investments in 28 industries and in 11 domiciled countries. The following table depicts a summary of the portfolio as of June 30, 2026 (in thousands):

		Investments
Cost		$	112,400
Cumulative Net Unrealized Depreciation			(4,749	)
Fair Value		$	107,651
Yield at Cost			6.78	%

As of December 31, 2025, our portfolio had a fair market value of approximately $115,326 thousand, a cost basis of approximately $121,179 thousand and was comprised of investments, measured at fair value. Our loan portfolio consisted of 222 investments in 28 industries and in 9 domiciled countries. The following table depicts a summary of the portfolio as of December 31, 2025 (in thousands):

		Investments
Cost		$	121,179
Cumulative Net Unrealized Depreciation			(5,853	)
Fair Value		$	115,326
Yield at Cost			6.94	%

As of June 30, 2026, 100.0% of the term loan investments in the portfolio bore interest at floating rates, with 45.7% of our loan portfolio (at fair value) and 47.3% of our loan portfolio (at cost) having an interest rate floor above 0.0%. Given the current interest rate environment in the United States SOFR base rates are above the floors in effect as of quarter end. Base rates on 100.0% of the loans in the portfolio exceed the stated floors.

As of December 31, 2025, 100% of the term loan investments in the portfolio bore interest at floating rates, with 36.4% of our loan portfolio (at fair value) and 39.0% of our loan portfolio (at cost) having an interest rate floor above 0.0%. Given the current interest rate environment in the United States SOFR base rates are above the floors in effect as of year end. Base rates on 100% of the loans in the portfolio exceed the stated floors.

The portfolio is actively managed, with a turnover ratio of 21.3% and 52.5% for the six months ended June 30, 2026 and 2025, respectively. Our loan portfolio rotation was reflective of the active management style, which seeks to optimize the portfolio based on current market conditions by rotating into positions that have better relative values. The annualized average yield as of June 30, 2026 and 2025 on the investment was 7.07% and 7.68%, respectively. The following tables depict the portfolio activity (in thousands).

		Three months ended June 30, 2026				Six months ended June 30, 2026
Fair Value, Beginning		$	108,642			$	115,326
Purchases			14,632				23,509
Sales and Repayments			(16,309	)			(30,273	)
Payment in-kind interest income			80				197
Non-cash income accrual			50				120
Net realized gains (losses)			(1,715	)			(2,332	)
Net unrealized appreciation (depreciation)			2,271				1,104
Fair Value, Ending		$	107,651			$	107,651

		Three months ended June 30, 2025				Six months ended June 30, 2025
Fair Value, Beginning		$	114,297			$	121,572
Purchases			18,782				61,551
Sales and Repayments			(18,010	)			(66,283	)
Payment in-kind interest income			61				133
Non-cash income accrual			46				113
Net realized gains (losses)			(2,701	)			(2,546	)
Net unrealized appreciation (depreciation)			3,306				1,241
Fair Value, Ending		$	115,781			$	115,781

		Three months ended June 30, 2026				Six months ended June 30, 2026
Investments, Beginning			223				222
Purchases (new)			59				100
Complete exit			(51	)			(91	)
Investments, Ending			231				231

		Three months ended June 30, 2025				Six months ended June 30, 2025
Investments, Beginning			187				190
Purchases (new)			32				84
Complete exit			(26	)			(81	)
Investments, Ending			193				193

The portfolio was diversified across both issuers and industries with the average investment exposure in our portfolio of $466 thousand at fair value, or 0.4% of the total portfolio, as of the six months ended June 30, 2026. The following table shows the portfolio composition by industry grouping at fair value as a percentage of the total portfolio as of June 30, 2026:

Industry		As of June 30, 2026
Banking, Finance, Insurance & Real Estate			15.4	%
Services: Business			14.5	%
Healthcare & Pharmaceuticals			11.1	%
Construction & Building			5.8	%
High Tech Industries			5.1	%
Chemicals, Plastics, & Rubber			4.4	%
Hotel, Gaming & Leisure			4.0	%
Containers, Packaging & Glass			3.9	%
Aerospace & Defense			3.9	%
Telecommunications			3.2	%
Energy: Oil & Gas			2.9	%
Retail			2.9	%
Media: Broadcasting & Subscription			2.7	%
Services: Consumer			2.6	%
Transportation: Consumer			2.0	%
Consumer goods: Non-durable			1.9	%
Consumer goods: Durable			1.8	%
Capital Equipment			1.8	%
Automotive			1.8	%
Transportation: Cargo			1.6	%
Beverage, Food & Tobacco			1.4	%
Energy: Electricity			1.3	%
Utilities: Electric			1.1	%
Media: Diversified & Production			0.9	%
Metals & Mining			0.8	%
Media: Advertising, Printing & Publishing			0.5	%
Utilities: Oil & Gas			0.5	%
Environmental Industries			0.2	%
			100.0	%

The portfolio was diversified across both issuers and industries with the average investment exposure in our portfolio of $519 thousand at fair value, or 0.5% of the total portfolio, as of the year ended December 31, 2025. The following table shows the portfolio composition by industry grouping at fair value as a percentage of the total portfolio as of December 31, 2025:

		As of December 31, 2025
Services: Business			14.4	%
Banking, Finance, Insurance & Real Estate			13.2	%
Healthcare & Pharmaceuticals			10.0	%
High Tech Industries			6.3	%
Telecommunications			5.8	%
Construction & Building			5.1	%
Hotel, Gaming & Leisure			5.1	%
Chemicals, Plastics, & Rubber			4.2	%
Containers, Packaging & Glass			4.1	%
Aerospace & Defense			3.5	%
Retail			3.0	%
Energy: Oil & Gas			2.9	%
Capital Equipment			2.7	%
Services: Consumer			2.6	%
Media: Broadcasting & Subscription			2.2	%
Utilities: Electric			2.2	%
Consumer goods: Durable			1.9	%
Automotive			1.9	%
Transportation: Consumer			1.9	%
Beverage, Food & Tobacco			1.9	%
Transportation: Cargo			1.5	%
Consumer goods: Non-durable			1.0	%
Metals & Mining			0.8	%
Energy: Electricity			0.7	%
Forest Products & Paper			0.3	%
Media: Diversified & Production			0.3	%
Media: Advertising, Printing & Publishing			0.3	%
Environmental Industries			0.2	%
			100.0	%

Results of Operations

Operating results were as follows (in thousands):

		Three months ended June 30, 2026				Six months ended June 30, 2026
Investment income:
Interest income		$	1,882			$	3,898
Payment in-kind interest income			80				197
Other income			25				37
Total investment income			1,987				4,132
Expenses:
Management fees			302				614
Interest and debt financing expenses			893				1,825
Professional fees			117				246
Administration expenses			84				172
Directors' fees			20				40
Custody fees			14				28
Other general and administrative expenses			55				114
Total expenses			1,485				3,039
Less: management fees waived			(302	)			(614	)
Net expenses			1,183				2,425
Net investment income			804				1,707
Net realized (loss) gain on investments			(1,715	)			(2,332	)
Net unrealized appreciation (depreciation) on investments			2,271				1,104
Net realized and unrealized gain (loss) on investments			556				(1,228	)
Net increase (decrease) in net assets		$	1,360			$	479

		Three months ended June 30, 2025				Six months ended June 30, 2025
Investment income:
Interest income		$	2,254			$	4,817
Payment in-kind interest income			61				133
Total investment income			2,315				4,950
Expenses:
Management fees			353				715
Interest and debt financing expenses			1,069				2,169
Professional fees			107				228
Incentive fees			-				4
Administration expenses			80				133
Directors' fees			20				40
Custody fees			21				34
Other general and administrative expenses			143				340
Total expenses			1,793				3,663
Less: management fees waived			(353	)			(420	)
Net expenses			1,440				3,243
Net investment income			875				1,707
Net realized (loss) gain on investments			(2,701	)			(2,546	)
Net unrealized appreciation (depreciation) on investments			3,306				1,241
Net realized and unrealized gain (loss) on investments			605				(1,305	)
Net increase (decrease) in net assets		$	1,480			$	402

Investment Income

Investment income is recorded on the accrual basis to the extent that such amounts are expected to be collected. Where applicable, OID and purchased discounts and premiums are accreted into interest income using the effective interest method. We record prepayment premiums on loans and other investments as interest income when such amounts are received. Investment income for the three and six months ended June 30, 2026 was approximately $1,987 thousand and $4,132 thousand, respectively. Investment income for the three and six months ended June 30, 2025 was approximately $2,315 thousand and $4,950 thousand, respectively. The decrease in total investment income was driven by repricing/refinancing activities and lower SOFR rates during the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025.

Total Expenses

Total expenses for the three and six months ended June 30, 2026 of approximately $1,485 thousand and $3,039 thousand, respectively. Total expenses for the three and six months ended June 30, 2025 of approximately $1,793 thousand and $3,663 thousand, respectively. Total expenses include management, incentive, audit and tax preparation fees, organizational costs, offering costs, interest and debt financing costs, directors' fees, administration expenses and other general and administrative expenses. Expenses are recognized on an accrual basis.

For the three and six months ended June 30, 2026, the Investment Advisor waived $302 thousand of management fees and $614 thousand, respectively. The actions taken by Moelis Asset and the Investment Advisor effectively reduced total expenses incurred by the Company for the three and six months ended June 30, 2026 of approximately $1,485 thousand to approximately $1,183 thousand and $3,039 thousand to approximately $2,425 thousand.

For the three and six months ended June 30, 2025, the Investment Advisor waived $353 thousand of management fees and $420 thousand, respectively. The actions taken by Moelis Asset and the Investment Advisor effectively reduced total expenses incurred by the Company for the three and six months ended June 30, 2025 of approximately $1,793 thousand to approximately $1,440 thousand and $3,663 thousand to approximately $3,243 thousand, respectively.

Net Realized Gain and Losses on Investments

Sales and repayments of investments during the three and six months ended June 30, 2026 totaled approximately $16,309 thousand and $30,273 thousand, respectively, resulting in net realized loss of approximately $1,715 thousand and $2,332 thousand, respectively.

Sales and repayments of investments during the three and six months ended June 30, 2025 totaled approximately $18,010 thousand and $66,283 thousand, respectively, resulting in net realized losses of approximately $2,701 thousand and $2,546 thousand, respectively.

Net Unrealized Appreciation or Depreciation on Investments

Unrealized appreciation for the three and six months ended June 30, 2026 totaled approximately $2,271 thousand and $1,104 thousand, respectively. Unrealized appreciation for the three and six months ended June 30, 2025 totaled approximately $3,306 thousand and $1,241 thousand, respectively. This activity reflects the changes in fair value of investments as determined in compliance with the Investment Advisor's valuation policy.

Taxes

We elected to be treated and intend to qualify annually to maintain our election to be treated, as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid.

Although not required for us to maintain our RIC tax status, in order to avoid the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the Excise tax Avoidance Requirement.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and net realized gain recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

We have formed and expect to continue to form certain taxable subsidiaries, including the Taxable Subsidiary, which are taxed as corporations. These taxable subsidiaries allow us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.

Financial Condition, Liquidity and Capital Resources

We generate cash primarily from the net proceeds of any offering of shares of our common stock and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. We may also fund a portion of our investments through borrowings from banks and issuances of senior securities, including before we have fully invested the proceeds of the Private Offering. Our primary use of cash is investments in portfolio companies, payments of our expenses and payment of cash distributions to our stockholders.

Capital Contributions

For the three and six months ended June 30, 2026, the Company issued and sold 46,435 and 107,504 shares of Common Stock with a par value of $0.001 per share for an aggregate offering price of $396 thousand and $906 thousand. For the three and six months ended June 30, 2025, the Company issued and sold 178,684 and 336,410 shares of Common Stock with a par value of $0.001 per share for an aggregate offering price of $1,602 thousand and $3,081 thousand, respectively.

The sale of its common stock was made pursuant to subscription agreements between the Company and the investors, and the issuance of the common stock was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Regulation D thereunder.

Our shares of common stock constitute illiquid investments for which there is not, and will likely not be, a secondary market at any time prior to a public offering and listing of our shares on a national securities exchange. There can be no guarantee that we will conduct a public offering and list our shares on a national securities exchange. Investment in the Company is suitable only for sophisticated investors and requires the financial ability and willingness to be exposed to higher liquidity risk than would be the case were the securities publicly listed and actively traded.

We provide moderate liquidity to our shareholders by offering a quarterly share repurchase program. During the three and six months ended June 30, 2026, approximately 204,160 and 415,325 shares with an aggregate value of $1,710 thousand and $3,537 thousand were tendered and accepted by the Company. During the three and six months ended June 30, 2025, approximately 65,854 and 90,484 shares with an aggregate value of $595 thousand and $827 thousand were tendered and accepted by the Company.

In September 2024, the Company adopted a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends and other distributions on behalf of its stockholders that elect to participate in such plan. When the Company declares a dividend or distribution, the Company's current stockholders who have "opted in" to the DRIP will have their cash dividend automatically reinvested in additional shares of the Company's common stock. Existing investors were given the option to be enrolled into the DRIP, any investor that did not enroll will continue to receive their dividends in cash. All new stockholders will automatically be enrolled in the DRIP unless they opt out. Newly issued shares are valued based upon the month end closing price prior to payment of the dividend.

The following table summarizes the Company's distributions reinvested during the six months ended June 30, 2026.

Reinvestment Date		NAV Per Share				DRIP Shares Issued				DRIP Shares Value
Six months ended June 30, 2026:
March 1, 2026			8.32				46,830			$	390
June 1, 2026			8.52				46,435				396
Total distributions reinvested							93,265			$	786

The following table summarizes the Company's distributions reinvested during the six months ended June 30, 2025.

Reinvestment Date		NAV Per Share				DRIP Shares Issued				DRIP Shares Value
Six months ended June 30, 2025:
January 1, 2025			9.40				14,115			$	133
March 1, 2025			9.32				43,693				407
April 1, 2025			9.03				14,845				134
June 1, 2025			9.09				43,144				392
Total distributions reinvested							115,797			$	1,066

As of August 14, 2026, 5,735,115 shares of the Company's Common Stock was issued and outstanding.

Borrowings

Bank of America

On October 18, 2024 the Company entered into a three-year secured revolving Credit Agreement (the "BoA Credit Agreement") with BoA as lender and administrative agent (the "BoA Credit Facility") providing a maximum of $80,000 thousand ("BoA Maximum Facility Amount") to Funding II. Funding II will be used to hold the Company's investments, and a first priority continuing security interest in, to and under each investment, all underlying investments and underlying assets have been granted to BoA to use as collateral for the BoA Credit Facility. The BoA Credit Facility bears interest at Term Secured Overnight Financing Rate ("SOFR") plus 1.50%.

Funding II was required to pay an upfront fee equal to $400 thousand, calculated as 0.50% of the BoA Maximum Facility Amount. Additionally, an unused fee is payable monthly in arrears commencing in December 2024 in an amount equal to 0.50% until the four-month anniversary of the Closing Date. The unused fee rate after the four-month Closing Date is equal to 1.50%. The unused fee is calculated off the positive daily balance of 80% of the BoA Maximum Facility amount minus the aggregate outstanding amount.

The maturity date of the BoA Credit Facility is October 18, 2027, unless terminated earlier by the Company.

The average debt outstanding and weighted average interest rate as of June 30, 2026 and December 31, 2025 was $67,808 thousand and 5.15% and $71,778 thousand and 5.82%, respectively. As of June 30, 2026 and December 31, 2025, we incurred interest and debt financing expenses of $1,825 thousand and $4,296 thousand, respectively, on the BoA Credit Facility. As of June 30, 2026 there was $65,296 thousand outstanding and $14,704 thousand available to be drawn under the BoA Credit Facility. As of December 31, 2025 there was $71,615 thousand outstanding and $8,385 thousand available to be drawn under the BoA Credit Facility. As of June 30, 2026 and December 31, 2025, the BoA Credit Facility had a fair value of $65,296 thousand and $71,615 thousand, respectively. The fair value of the BoA Credit Facility is determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions and is measured with Level 2 inputs. As of June 30, 2026 and December 31, 2025, Funding II was in compliance with all covenants of the BoA Credit Facility.

In addition, we may enter into additional agreements for a credit facility and/or subscription facility (each, a "Credit Facility"). A Credit Facility may be secured by all of the assets of a wholly-owned subsidiary and special purpose entity, formed in order to establish such Credit Facility. Each Credit Facility will provide for borrowings to make additional investments and for other general corporate purposes. It is anticipated that a Credit Facility will bear interest at floating rates at to be determined spreads over SOFR and will be secured by the Company's assets. The Credit Facility's interest rate is subject to change, including as a result of establishment of alternative reference rates.

Distribution Policy

To the extent that we have income available, we intend to distribute quarterly dividends to our stockholders. Our quarterly dividends, if any, will be determined by our Board. Any dividends to our stockholders will be declared out of assets legally available for distribution.

We intend for the Company to elect to be treated, and intend to qualify annually thereafter, as a RIC under the Code. To obtain and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses ("investment company taxable income"), determined without regard to any deduction for dividends paid. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses ("capital gain net income"), adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) any net ordinary income and capital gain net income for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax.

We currently intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to you. If this happens, you will be treated for U.S. federal income tax purposes as if you had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. We cannot assure you that we will achieve results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.

Asset Coverage

In accordance with the 1940 Act, the Company has historically only been allowed to borrow amounts such that its "asset coverage," as defined in the 1940 Act, is at least 200% after such borrowing, permitting the Company to borrow up to one dollar for investment purposes for every one dollar of investor equity. "Asset coverage" generally refers to a company's total assets, less all liabilities and indebtedness not represented by "senior securities," as defined in the 1940 Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. "Senior securities" for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.

On March 23, 2018, the SBCAA was signed into law. The SBCAA, among other things, modifies the applicable provisions of the 1940 Act to reduce the required asset coverage ratio applicable to BDCs from 200% to 150% subject to certain approval, time and disclosure requirements (including either stockholder approval or approval of a majority of the directors who are not interested persons of the BDC and who have no financial interest in the proposal). On October 5, 2020, the Board and the Members of MSC Capital LLC voted to approve the adoption of the reduced asset coverage ratio.

As of June 30, 2026 and December 31, 2025, the Company had total senior securities of $65,296 thousand and $71,615 thousand, respectively, consisting of borrowings under the Credit Facility, and had asset coverage ratios of 176.2% and 174.6%, respectively. For a discussion of certain risks associated with the reduction of the required minimum asset coverage ratio applicable to the Company, see "Risk Factors - Risks Related to Our Business and Structure - The SBCAA allows us to incur additional leverage, which may increase the risk of investing with us."

Critical Accounting Policies

Valuation Procedures

Under procedures established by our Board and in accordance with the 1940 Act, our Investment Advisor values investments for which market quotations are readily available at such market quotations. Assets listed on an exchange will be valued at their last sales prices as reported to the consolidated quotation service at 4:00 P.M. eastern time on the date of determination. If no such sales of such securities occurred, such securities will be valued at the mean between the last available bid and ask prices as reported by an independent, third-party pricing service on the date of determination. Debt and equity securities that are not publicly traded or whose market prices are not readily available will be valued at fair value, subject at all times to the oversight and approval of our Board. Such determination of fair values may involve subjective judgments and estimates, although we will also engage independent valuation providers to review the valuation of each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation at least once annually. With respect to unquoted securities, our Investment Advisor, together with our independent valuation advisors, and subject at all times to the oversight and approval of our Board, will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. We have retained one or more independent providers of financial advisory services to assist the Investment Advisor and the Board by performing certain limited third-party valuation services. We may appoint additional or different third-party valuation firms in the future.

When an external event such as a purchase transaction, public offering or subsequent equity sale occurs with respect to a fair-valued portfolio company or comparable company, our Board will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Investment Advisor under the supervision of our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had readily available market quotations existed for such investments, and the differences could be material.

ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level of information used in the valuation. In accordance with ASC Topic 820, these inputs are summarized in the three levels listed below.

Level 1 - Valuations are based on quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

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

Level 3 - Valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models incorporating significant unobservable inputs, such as discounted cash flow models and other similar valuations techniques. The valuation of Level 3 assets and liabilities generally requires significant management judgment due to the inability to observe inputs to valuation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of observable input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment.

With respect to investments for which market quotations are not readily available, our Investment Advisor will undertake a multi-step valuation process each quarter, as described below:

●

Investments for which no such market prices are available or reliable will be preliminarily valued at such value as the Investment Advisor may reasonably determine, which may include third-party valuations;

●

At least once annually, the valuation for each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed by an independent valuation firm; and

●

Our Investment Advisor will then discuss valuations and determine the fair value of each investment in our portfolio in good faith, based on the input of the respective independent valuation firms.

Investment Transactions, Realized/Unrealized Gains or Losses, and Income Recognition

Investment transactions are recorded on a trade date basis (for publicly-traded investments and securities traded through dealer markets) or upon closing of the transaction (for private investments). The cost of an investment includes all costs incurred by the Company as part of the purchase of such investment. The difference between the initially recognized cost and the subsequent fair value measurement of an investment is reflected as "net change in unrealized appreciation on non-controlled/non-affiliated company investments" on the Consolidated Statements of Operations.

Realized gain or loss from an investment is recorded at the time of disposition and calculated using the weighted average cost method. Unrealized gain or loss reflects the changes in fair value of investments as determined in compliance with the Investment Advisor's valuation policy.

Interest income, adjusted for amortization of market premium and accretion of market discount, is recorded on an accrual basis to the extent that we expect to collect such amounts. Interest income on debt instruments is accrued and recognized for those issuers who are currently paying in full or expected to pay in full. For those issuers who are in default or expected to default, interest is not accrued and is only recognized when received. Interest income and expense include discounts accreted and premiums amortized on certain debt instruments as determined in good faith by the Adviser and calculated using the effective interest method. Loan origination fees, original issue discounts and market discounts or premiums are capitalized as part of the underlying cost of the investments and accreted or amortized over the life of the investment as interest income.

Management and Incentive Fees

The base management fee and the income-based incentive fees are expensed each quarter and payable in arrears. Additionally, we accrue a capital gains-based incentive fee quarterly that is paid annually in arrears. The accrual for the capital incentive fee includes the recognition of incentive fee on unrealized capital gains, even though such incentive fee is neither earned nor payable to the Adviser until the gains are both realized and in excess of unrealized depreciation on investments. The amount of capital gains incentive fee expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to the Adviser in the event of a complete liquidation of the Company's portfolio as of period end and the termination of the Advisory Agreement on such date. Also, it should be noted that while we accrue the capital incentive fee quarterly, the expense will fluctuate with the Company's overall investment results and the expense will be finalized at year end.

Expenses

For the three and six months ended June 30, 2026 , the Company incurred expenses of approximately $1,485 thousand and $3,039 thousand, respectively. For the three and six months ended June 30, 2025, the Company incurred expenses of approximately $1,793 thousand and $3,663 thousand, respectively. The expenses are primarily related to management fees, incentive fees, interest and debt financing expenses, organization expenses, professional fees, directors' fees, offering costs and administration and custodian fees. Expenses are recognized on an accrual basis.

Federal Income Taxes

We have elected to be treated, and to qualify annually, as a RIC under Subchapter M of the Code. Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes at least 90% of its net ordinary income and net short-term capital gains in excess of its net long-term capital losses, if any, to its stockholders. We intend to distribute sufficient dividends to maintain our RIC status each year and we do not anticipate paying any material federal income taxes in the future.

Investment Income

For debt investments, we record interest income on the accrual basis to the extent that such amounts are expected to be collected. OID and purchased discounts and premiums are accreted/amortized into interest income using the effective interest method, where applicable. We record prepayment premiums on loans and other investments as interest income when such amounts are received.

Non-accrual: Debt investments are placed on non-accrual status when principal or interest payments become materially past due, or when there is reasonable doubt that principal or interest will be collected. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment. Non-accrual debt investments are restored to accrual status when past due principal or interest are paid, or are expected to be paid, and, in management's judgment are likely to remain current. The Company may make exceptions to this policy and partially record interest if the loan has sufficient collateral value or is in process of collection and there is the expectation of collection of principal and a portion of the contractual interest. For the three and six months ended June 30, 2026, there were no loans on non-accrual status. For the three and six months ended June 30, 2025, there was one loan on non-accrual status.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

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

Realized gains and losses from securities transactions and unrealized appreciation and depreciation of securities are determined using the weighted average cost basis method for financial reporting.

Contractual Obligations

Commitments to extend credit include loan proceeds we are obligated to advance, such as delayed draws. Commitments generally have fixed expiration dates or other termination clauses. As of June 30, 2026 and December 31, 2025, the Company had $127 thousand and $24 thousand of unfunded commitments, respectively.

Off-Balance Sheet Arrangements

Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not expect to have any off-balance sheet financings or liabilities. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of June 30, 2026 and December, 31, 2025, the Company had $127 thousand and $24 thousand of unfunded commitments, respectively. These outstanding commitments can be comprised of investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded.

Related Party Transactions

As of June 30, 2026, affiliates owned approximately 47% of the Company representing approximately $23,145 thousand of the Company's net assets. As of December 31, 2025, affiliates owned approximately 43% of the Company representing approximately $22,912 thousand of the Company's net assets.

The Company may, from time to time, purchase investments from, or sell investments to affiliates of our Investment Advisor at fair value on the trade date. For the three months ended June 30, 2026 and 2025, there were no purchases of investments from or sales of investments to affiliates of our Investment Advisor.

For the three and six months ended June 30, 2026 and 2025, the Company incurred $20 thousand and $40 thousand in directors' fees expense.

The Company carries employment practices liability, directors and officers and errors and omission insurance. For the best interests of the Company, these policies are joint liability policies with Moelis Asset and its affiliates.

Organizational and Offering Expenses

For the three and six months ended June 30, 2026 and 2025 the Company did not incur organizational or offering expenses. Organizational costs are expensed as incurred and offering cost are amortized over a twelve-month period.

Investment Advisory Agreement

We have initially entered into the Investment Advisory Agreement with the Investment Advisor, an affiliate of Moelis Asset, which was approved by our Board and our sole stockholder for an initial two-year term, under which the Investment Advisor, subject to the overall supervision of our Board manages the day-to-day operations of and provides investment advisory services to us. Subsequent to that two-year term, the Board has approved the Investment Advisory Agreement of Investment Advisor for renewal annually.

On August 8, 2025, the Board approved the renewal of the Investment Advisory Agreement.

Our Investment Advisor has agreed to waive its fees (base management and incentive fee), without recourse against or reimbursement by us, for any quarter where net investment income plus net realized capital gains is not sufficient to maintain a targeted annual distribution payment on shares of common stock outstanding on the relevant payment dates of 6.0% based on our net asset value per share.

The base management fee is calculated at a maximum annual rate of 1.0% of the average of the weighted average (based on the number of shares outstanding each day in the quarter) of our gross assets (including uninvested cash and cash equivalents) at the end of each of the two most recently completed calendar quarters. On August 13, 2021, the Board agreed to make investments rather than gross assets the basis for their fee to be more in line with the waivers implemented for management fees. Net management fees for the three and six months ended June 30, 2026 were zero and zero, respectively. Net management fees for the three and six months ended June 30, 2025 were zero and $295 thousand, respectively. The Company elected to waive a portion of the management fee and charged management fees on investments rather than gross assets. The Investment Advisor has agreed to a 6.0% priority dividend to shareholders before receiving a fee for the services it provides to the Company.

Administration Agreement

We have initially entered into the Administration Agreement with the Administrator, an affiliate of Moelis Asset, which was approved by our Board and our sole stockholder for an initial two-year term, under which the Administrator, subject to the overall supervision of our Board manages the day-to-day operations of, and provides office space, office services and equipment and other administration services to us. Subsequent to that two-year term, the Board has approved the Administration Agreement of Administrator for renewal annually.

On August 8, 2025 the Board approved the renewal of the Administration Agreement which automatically renews for successive one-year periods each September 17th; provided that such continuance is specifically approved at least annually by the vote of the Board or by the vote of a majority of the outstanding voting securities of the Company and the vote of a majority of the members of the Company's Board who are not parties to this Agreement or "interested persons" (as such term defined in Section 2(a)(19) of the Investment Company Act) of any such party, in accordance with the Investment Company Act.

Recent Developments

Management has evaluated subsequent events through the date of issuance of these consolidated financial statements and has determined that there are no subsequent events outside the ordinary scope of business that require adjustment to, or disclosure in, the consolidated financial statements other than those disclosed below.

On July 1, 2026, the Company accepted approximately 133,227 shares tendered in the June 2026 tender offer. On July 22, 2026, the Company paid approximately $1,130 thousand for the tendered shares.

On July 15, 2026, the Company paid its quarterly distribution of approximately $750 thousand, of which approximately $396 thousand or approximately 46,435 shares of the regular dividend were reinvested into the fund on June 1, 2026.