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

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

The information in this section contains forward-looking statements that involve risks and uncertainties. Please see "Item 1A. - Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results could differ materially from those implied or expressed in any forward-looking statements.

The following discussion is designed to provide a better understanding of our consolidated financial statements, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing in "Item 8. - Consolidated Financial Statements and Supplementary Data" found elsewhere in this Annual Report. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking information that involves risks and uncertainties.

Overview

Andalusian Credit Company, LLC is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended. In addition, we intend to elect to be treated as a RIC for U.S. federal income tax purposes under Subchapter M of the Code for the tax period ended December 31, 2025 and we intend to maintain our qualification as a RIC annually thereafter. We currently qualify and intend to continue to qualify annually to be treated as a RIC for U.S. federal income tax purposes. For periods prior to the effectiveness of the RIC election, the Company has been taxed as a corporation for U.S. federal income tax purposes.

We are externally managed by Andalusian Credit Partners, LLC, pursuant to the Advisory Agreement. ACP also serves as the administrator under the Administration Agreement. The Adviser is supervised by our Board, of which a majority of the Board Members are not "interested persons," as defined in Section 2(a)(19) of the 1940 Act, of us, the Adviser and its affiliates.

As a specialty finance company focused on lending to middle-market companies, our primary business objectives are to generate current income and capital appreciation by investing primarily in senior secured loans with a first lien on collateral, including "unitranche" loans, which are loans that combine the characteristics of both first lien and second lien debt, and to a lesser extent second lien, subordinated loans, and equity securities of U.S. middle-market companies. We generally define middle-market companies as those having earnings before interest, taxes, depreciation and amortization of less than $150 million annually and we seek to achieve our investment objectives by:

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Our target portfolio is intended to be comprised primarily of first lien senior secured debt of U.S. middle-market companies, with target hold size of approximately $10 million to $50 million. However, during our initial ramp-up period we may hold more concentrated positions and deploy capital into temporary investments, including broadly syndicated loans. Additionally, we may invest a portion of the portfolio in second lien, subordinated loans, and equity securitiesin order to seek to enhance returns to Members.

Our origination strategy focuses on leading the negotiation and structuring of the loans or securities in which we invest and holding the investments in our portfolio to maturity. In some cases, we may be the sole investor in a loan or security in our portfolio. Where there are multiple investors, we will generally seek to control or obtain significant influence over the rights of investors in the loan or security. We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities, which are often referred to as "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which could increase our risk of losing part or all of our investment.

As of December 31, 2025, we have raised and received Capital Commitments of approximately $509.2 million of which $162.9 million was undrawn as of December 31, 2025. Since we began our investment activities in February 2024 through December 31, 2025, we have originated approximately $420.2 million aggregate principal commitments to over 32 portfolio companies.

Portfolio Composition

As of December 31, 2025 and 2024, the total value of our investment portfolio was $316.0 million and $91.2 million, respectively. As of December 31, 2025 and 2024, we had investments in 29 and 12 portfolio companies, respectively. As of December 31, 2025 and December 31, 2024, the number of our portfolio companies that represented greater than 10% of the total fair value of our investment portfolio was zero and three, respectively.

The following table summarizes certain additional characteristics of our investment portfolio as of December 31, 2025 and December 31, 2024:

The weighted average yield of our accruing debt and income producing securities will not be the same as a return on investment for our Members but, rather, relates to our investment portfolio and is calculated before the payment of all and any of our subsidiaries' fees and expenses. The weighted average yield will be computed using the effective interest rates as of each respective date, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.

Investment Activity

Our portfolio activity for the years ended December 31, 2025 and 2024 was comprised of the following (in thousands):

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Our level of investment activity can and is expected to vary substantially from period to period depending on many factors, including the amount of debt available to middle-market companies, the general economic environment and the competitive environment for the types of investments we make.

Macroeconomic Market

The capital markets are subject to fluctuations caused by various external factors such as changes in the inflationary environment, interest rate movements, concerns over economic growth, changes to U.S. tariff and import/export regulations, uncertainty and disruption caused by geopolitical conflicts, among other factors. These macroeconomic developments are outside our control and could require us to adjust our plan of operations, and impact our financial position, results of operations, or cash flows in the future. We monitor macroeconomic market developments and their related impact to our business, including impacts to our portfolio companies, due diligence and underwriting processes, and the broader financial markets.

Our investment portfolio is currently focused on industries and sectors that are generally expected to be more resilient to U.S. and global economic cycles. This includes being partially insulated from declining interest rates as we expect the majority of our debt investments to be floating rate instruments. As of December 31, 2025 and December 31, 2024, floating rate debt represented 100% and 100% of our portfolio, respectively. While our portfolio is not immune to the impact of macroeconomic events, we believe we and our portfolio are well positioned to manage the current environment. Given the unpredictability and fluidity of the macroeconomic market, neither our management nor our Board can predict the full impact of the macroeconomic events on our business, future results of operations, financial position, or cash flows. For additional information, refer to "Item 1A. - Risk Factors" in this Annual Report.

Portfolio Grading

Our Adviser monitors on an ongoing basis, the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following: (i) assessment of success in adhering to the portfolio company's business plan and compliance with covenants, (ii) periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments, (iii) comparisons to our other portfolio companies in the industry, if any, (iv) attendance at and participation in board meetings or presentations by portfolio companies, and (v) review of monthly and quarterly financial statements and financial projections of portfolio companies.

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As part of the monitoring process, no less frequently than quarterly, the Adviser regularly assesses the risk profile of each of our investments based on an internal performance risk rating system that grade investments on a scale of 1 to 5. This system is intended primarily to reflect the underlying risk of a Portfolio Investment relative to our initial cost basis in respect of such Portfolio Investment (i.e., at the time of origination or acquisition), although it may also take into account under certain circumstances the performance of the Portfolio Investment's business, the collateral coverage of the investment and other relevant factors. In evaluating the appropriate grade, the Adviser considers, as applicable, the portfolio company's operating performance, financial condition, liquidity, leverage, capital structure, covenant compliance, collateral coverage, and other relevant factors. The grade of a Portfolio Investment may be reduced or increased over time. Generally, new investments will initially be assigned a grade of 2. The following is a description of each investment grade:

For investments graded 3, 4, or 5, the Adviser enhances its level of scrutiny over the monitoring of such portfolio company.The Investment Team will review the investment credit risk more frequently, no less than monthly, and may perform additional research on areas of concern with the objective of early intervention with the portfolio company to avoid further deterioration.The Adviser reviews our investment ratings in connection with our quarterly valuation process. The following table summarizes the internal performance ratings assigned as of December 31, 2025 and December 31, 2024 (in thousands):

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As of December 31, 2025 and December 31, 2024, our debt investments had a weighted average investment grading of 2.0 and 2.0 on a cost basis, respectively. Changes in a portfolio company's investment grading may be a result of changes in a portfolio company's performance and/or timing of expected liquidity events. For instance, we may downgrade a portfolio company if it is not meeting our financing criteria or is underperforming relative to its business plan. Conversely, we may upgrade a portfolio company's investment grading when it is exceeding our financial performance expectations and/or is expected to mature/repay in full due to a liquidity event.

Non-accrual Investments

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. When a loan is placed on non-accrual status, the Company ceases to recognize interest income until the portfolio company has paid all principal and interest due or demonstrated the ability to repay its current and future contractual obligations to the Company. The Company may

determine to continue to accrue interest on a loan where the investment has sufficient collateral value to collect all of the contractual amount due and is in the process of collection. Interest collected on non-accrual investments are generally applied to principal. As of December 31, 2025 and December 31, 2024, there were no loans placed on non-accrual status.

Results of Operations

The followingtable sets forth certain of our financial data for the years ended December 31, 2025 and December 31, 2024. The selected financial data has been derived from our audited financial statements, which are included elsewhere in this Annual Report.

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Investment Income

Our investment income is primarily comprised of interest income and fees from our debt investments. Overall, for the years ended December 31, 2025 and 2024 we generated $20.4 million and $6.9 million of investment income, respectively. Interest income from investments for the years ended December 31, 2025 and 2024 totaled approximately $18.2 million and $5.8 million, respectively. The increase in interest income from investments for the year ended December 31, 2025 is primarily attributable to an increase in the weighted average principal held during the year. Note that in some cases, our debt investments may pay PIK interest. No PIK interest was earned in either of the years ended December 31, 2025 and 2024.

Interest income on cash and cash equivalents primarily relates to cash held in money market accounts, which for the year ended December 31, 2025 totaled approximately $2.2 million. Interest income on cash and cash equivalents for the year ended December 31, 2024 totaled approximately $0.8 million. Cash is held for investment purposes and as needed held to ensure the portfolio remains in compliance with RIC diversification requirements.

Operating Expenses

Our operating expenses are comprised of management, incentive, and administration fees, professional fees, interest and other financing fees, offering expenses, and general and administrative expenses. For the years ended December 31, 2025 and 2024, our operating expenses totaled approximately $12.3 million and $11.2 million, respectively.

Management, Incentive, and Administration Fees

For the years ended December 31, 2025 and 2024, gross management fees totaled approximately $6.7 million and $6.8 million, respectively. For the year ended December 31, 2024, approximately $1.0 million of the gross management fees were waived. The management fee waiver was made pursuant to the waiver election which ended in November 2024. As such, there was no management fee waiver for the year ended December 31, 2025. On a net basis, management fees (net of management fee waiver) increased for the year ended December 31, 2025 primarily due to the absence of a management fee waiver during the year ended December 31, 2025.

For the year ended December 31, 2025, incentive fees earned by the Adviser totaled approximately $0.3 million. No incentive fees were earned during the year ended December 31, 2024. Incentive fees increased for the year ended December 31, 2025 primarily due to outperformance of net investment income above the target hurdle, as calculated each quarter in arrears. Refer to "Note 3. - Related Party Agreements - Advisory Agreement" in the notes to our consolidated financial statements for additional discussion related to management and incentive fees.

During the years ended December 31, 2025 and 2024, administration fees totaled approximately $1.3 million and $1.2 million, respectively. Administration fees increased primarily due to our increase in Capital Commitments. Refer to "Note 3. - Related Party Agreements - Administration Agreement" in the notes to our consolidated financial statements for additional discussion related to administration fees.

Professional and Legal Fees

Professional fees include legal, audit, tax, valuation and other professional fees incurred related to the management of the Company. During the years ended December 31, 2025 and 2024, professional fees totaled approximately $2.0 million and $1.3 million, respectively. Professional fees increased primarily due to an increase in legal expenses.

Interest and Other Financing Expenses

Interest and other financing expenses relates to interest and costs associated with our CIBC Credit Facility. During the years ended December 31, 2025 and 2024, interest expenses totaled approximately $0.2 million and $0.1 million, respectively. During the years ended December 31, 2025 and 2024, other financing costs totaled approximately $0.6 million and $0.7 million, respectively.

For the years ended December 31, 2025 and 2024 average borrowings outstanding were approximately $4.0 million and $1.4 million, respectively. The weighted average interest rate (excluding unused fees and financing costs) of the aggregate borrowings outstanding for the years ended December 31, 2025 and 2024 were 6.23% and 8.22%, respectively. Refer to "Note 6. - Borrowings" in the notes to our consolidated financial statements for more information.

Other Expenses

Other expenses include board fees, certain allocated technology, research, other regulatory and compliance expenses, and excise taxes (as applicable) incurred related to the management of the Company. During the years ended December 31, 2025 and 2024, other expenses totaled approximately $1.0 million and $2.1 million, respectively. Other expenses declined primarily due to lower offering and organizational expenses.

Pursuant to the terms of the Company's governing documents, the Company will bear all costs associated with the initial organizational and offering expenses of the Private Offering of its Shares up to a maximum amount of 1.50% of aggregate Capital Commitments. Since Inception through December 31, 2025, the Company has incurred $2.2 million of organizational and offering expenses. During the year ended December 31, 2025 there were no additional offering expenses incurred. During the year ended December 31, 2024, offering expenses totaled approximately $1.1 million.

Income Taxes, Including Excise Taxes

We intend to elect to be treated as a RIC under Subchapter M of the Code for the tax period ended December 31, 2025 and intend to maintain qualification as a RIC annually thereafter. To qualify for tax treatment as a RIC, we must, among other things, distribute to our Members in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income, if any for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the required distributions to our Members, which generally relieves us from U.S. federal income taxes at corporate rates to the extent of such distributions. The character of income and gains that the Company distributes is determined in accordance with U.S. income tax regulations that may differ from GAAP. Book and tax basis differences relating to Member dividends and distributions and other permanent book and tax differences are reclassified as paid-in capital. For periods prior to the effectiveness of our RIC election, we expect to be taxed as a corporation. It is not anticipated that we will incur U.S. federal, state, and local taxes (other than nominal state and local taxes) as a corporation and consequently, no such taxes were accrued for the year ended December 31, 2025.

Upon our qualification as a RIC, depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income. As of December 31, 2025, no accrual for excise taxes was considered necessary.

Net Change in Unrealized Appreciation and Depreciation

The net change in unrealized appreciation and depreciation of our investments is derived from the changes in fair value of each investment determined in good faith by the Adviser, in its capacity as our valuation designee under rule 2a-5 under the 1940 Act, in accordance with valuation policies and procedures that were approved by the Board. The following table summarizes the change in net unrealized appreciation or depreciation of investments for the years ended December 31, 2025 and 2024 (in thousands):

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For the year ended December 31, 2025, the net change in unrealized depreciation was primarily related to depreciation of our debt investments due to an increase in discount rates.

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are derived from investor drawdowns, debt borrowings and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur.

We have used, and expect to continue to use, the proceeds from the turnover of our portfolio and from private offerings of Shares to finance our investment objectives. We may also raise additional equity or debt capital through private offerings of securities, by securitizing a portion of our investments. As noted previously, we areconducting, on a continuous basis, a private offering of our limited liability company interests, at par value $0.001 per Share, to accredited investors, as defined in Regulation D under the Securities Act in reliance on exemptions from the registration requirements of the Securities Act. Shares are offered for subscription continuously, pursuant to the terms set forth in our Memorandum. This "Financial Condition, Liquidity and Capital Resources" section should be read in conjunction with the "Macroeconomic Market Developments" section above.

As of December 31, 2025, the Company had Capital Commitments of $509.2 million of which $162.9 million was undrawn.

During the year ended December 31, 2025 we principally funded our operations from (i) cash receipts from interest and fee income from our investment portfolio, (ii) cash proceeds from the realization of Portfolio Investments through the repayments of debt investments, (iii) borrowings under the CIBC Credit Facility and (iv) drawdowns from unfunded equity commitments.

During the year ended December 31, 2025, our operating activities used $218.1 million of cash and cash equivalents, compared to $93.7 million used during the year ended December 31, 2024. The $124.4 million increase in cash used in operating activities was primarily due to increased purchases of investments of approximately $129.5 million.

During the year ended December 31, 2025, our financing activities provided $186.3 million of cash, compared to $152.1 million provided during the year ended December 31, 2024. The $34.2 million increase in cash flows from financing activities was primarily the result of $36.1 million of increased proceeds from issuances of Shares during the year ended December 31, 2025, compared to the year ended December 31, 2024. This was partially offset by distributions paid of $2.6 million.

Available Liquidity and Capital Resources as of December 31, 2025

As of December 31, 2025, we had $240.5 million in available liquidity, including $27.6 million of cash and cash equivalents, and $50.0 million of availability under the CIBC Credit Facility, subject to certain conditions, and undrawn Capital Commitments of $162.9 million. We believe we have adequate financial resources to satisfy unfunded portfolio company commitments of $62.6 million and ample liquidity to support our near-term capital requirements. We will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the Company's circumstances and considering the macroeconomic environment.

The 1940 Act permits BDCs to incur borrowings, issue debt securities, or issue preferred stock unless immediately after the borrowings or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock is less than 200% (or 150% if certain requirements are met). On August 1, 2023, the Company received approval from ACP, as the Company's sole initial Member, for the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective on August 2, 2023, the Company's asset coverage requirement applicable to senior securities was reduced from 200% to 150%. The Company had no debt outstanding as of December 31, 2025.

Share Issuances

As of December 31, 2025 the Company had the authority to issue an unlimited number of Shares at $0.001 par value per Share.

Since Inception through December 31, 2025 the Company has completed the following Share issuances (in thousands, except for Shares):

(1)Shares were issued under the Company's DRP.

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The sales of the Shares were made pursuant to Subscription Agreements entered into by the Company with its investors, as described in "Note 8. Net Assets" in the notes to our consolidated financial statements, with the exception of Shares issued pursuant to the DRP. As of December 31, 2025 and December 31, 2024, the Company had 22,293,620 and 9,863,357 Shares outstanding, respectively.

Commitments and Obligations

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These consist primarily of unfunded contractual commitments to extend credit, in the form of loans, to our portfolio companies. Unfunded contractual commitments to provide funds to portfolio companies are not reflected on our balance sheet. As of December 31, 2025 and December 31, 2024, the Company had unfunded commitments to portfolio companies totaling approximately $62.6 million and $22.1 million, respectively.

Related Party Transactions

As detailed in "Note 3. Related Party Transactions" in the notes to our consolidated financial statements, we have entered into a number of business relationships with affiliated or related parties, including the Advisory Agreement and the Administration Agreement. In addition to the aforementioned agreements, the Company has received an exemptive order from the SEC that permits the Company, Adviser and certain of its affiliates to co-invest with ACP Funds and their affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.

Critical Accounting Policies

The preparation of our consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. On an ongoing basis, management evaluates its estimates and assumptions, which are based on the information that is currently available to them, historical experience and on various other inputs and assumptions that it believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. For a description of our critical accounting

policies, refer to "Note 2. Summary of Significant Accounting Policies" in the notes to our consolidated financial statements. We consider the most significant accounting policies to be those related to our Investments at Fair Value, Fair Valuation Measurements, and Income Recognition. The valuation of investments is our most significant critical estimate. The most significant input to this estimate is the discount interest rate, which includes the hypothetical market yield plus premium or discount adjustment, used in determining the fair value of our debt investments.