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

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

The information contained in this section should be read in conjunction with "Item 1. Financial Statements". This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition of Andalusian Credit Company, LLC and its wholly-owned subsidiaries ("ACC," "we," " us," " our," or the " Company") and involves numerous risks and uncertainties, including, but not limited to, those described in our Form 10-K for the fiscal year ended December 31, 2025 in "Part I - Item 1A. Risk Factors". Actual results could differ materially from those implied or expressed in any forward-looking statements.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Words such as "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," "target," "goals," "plan," "forecast," "project," other variations on these words or comparable terminology, or the negative of these words are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements, and undue reliance should not be placed thereon. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as to:

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Although we believe the forward-looking statements included in this quarterly report on Form 10-Q are based on reasonable assumptions, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. The factors listed under "Item 1A. Risk Factors" in our Form 10-K for the fiscal year ended December 31, 2025, as well as any cautionary language in this quarterly report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

These forward-looking statements apply only as of the date of this report. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law. However, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the United States Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Because we are an investment company, the forward-looking statements and projections contained in this Quarterly Report are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

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 securities in 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

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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 June 30, 2026, we have raised and received Capital Commitments of approximately $509.1 million of which $162.9 million was undrawn as of June 30, 2026. Since we began our investment activities in February 2024 through June 30, 2026, we have originated approximately $736.4 million aggregate principal commitments to over 50 portfolio companies.

Portfolio Composition

As of June 30, 2026 and December 31, 2025, the total value of our investment portfolio was $452.0 million and $316.0 million, respectively. As of June 30, 2026 and December 31, 2025, we had investments in 42 and 29 portfolio companies, respectively. As of June 30, 2026 and December 31, 2025, none of our portfolio companies represented greater than 10% of the total fair value of our investment portfolio.

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The following table summarizes certain characteristics of our investment portfolio as of June 30, 2026 and December 31, 2025:

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(3) Weighted average spread is calculated by weighting the spread above benchmark of each investment by its ending funded par amount. Calculation excludes fixed rate investments. Spreads used are the current actual spreads, inclusive of any step-ups or step-down adjustments.

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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 of our 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 six months ended June 30, 2026 and 2025 was comprised of the following (in thousands):

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Macroeconomic Market Developments

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

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by geopolitical events, 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. While our portfolio is not immune to the impact of macroeconomic events, we believe the Company 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 "Part I - Item 1A. Risk Factors" in our Form 10-K filed on March 12, 2026.

Portfolio Monitoring

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:

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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 June 30, 2026 and December 31, 2025 (in thousands):

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As of June 30, 2026 and December 31, 2025, 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 are underperforming relative to their respective business plans. We may also downgrade a portfolio company as it approaches a point in time when it will require additional equity capital to continue operations. 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. Any proceeds collected on non-accrual investments will be applied to principal until the Company's principal investment has been repaid or the loan returns to accrual status. As of June 30, 2026 and December 31, 2025, there were no loans placed on non-accrual status.

Results of Operations

The selected financial data has been derived from our unaudited consolidated financial statements, which are included elsewhere in this quarterly report on Form 10-Q. The following table sets forth our financial data for the six months ended June 30, 2026 and 2025 (in thousands).

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Investment Income

Our investment income is primarily comprised of interest income and fees from our debt investments. Interest income from investments for the three and six months ended June 30, 2026 totaled approximately $9.6 million and $18.0 million, respectively. Interest income from investments for the three and six months ended June 30, 2025 totaled approximately $3.2 million and $5.8 million, respectively. The increase in interest income from investments for the three and six months ended June 30, 2026 is primarily attributable to an increase in the weighted average principal held during the period. Note that in some cases, our debt investments may pay PIK interest. During the three and six months ended June 30, 2026, the Company earned less than $0.1 million in PIK interest. No PIK interest was earned in the three and six months ended June 30, 2025.

Interest income on cash and cash equivalents primarily relates to cash held in money market accounts, which for the three and six months ended June 30, 2026 totaled approximately $0.1 million and $0.2 million, respectively. Interest income on cash and cash equivalents, which for the three and six months ended June 30, 2025 totaled approximately $0.9 million and $1.6 million, respectively. The decrease in interest income from cash and cash equivalents for the three and six months ended June 30, 2026 is primarily attributable to lower average cash held during the period. 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 and legal fees, interest and other financing fees, offering expenses, and general and administrative expenses. During the three and six months ended June 30, 2026, our operating expenses totaled approximately $5.4 million and $9.7 million, respectively. During the three and six months ended June 30, 2025, our operating expenses totaled approximately $2.7 million and $5.3 million, respectively.

Management, Incentive, and Administration Fees

During the three months ended June 30, 2026 and 2025, management fees totaled approximately $2.3 million and $1.5 million, respectively. During the six months ended June 30, 2026 and 2025, management fees totaled approximately $4.4 million and $3.1 million, respectively. Management fees increased during the three and six months ended June 30, 2026, primarily due to an increase in total assets.

During the three and six months ended June 30, 2026, incentive fees earned by the Adviser totaled approximately $0.3 million and $0.7 million, respectively. No incentive fees were earned during the three and six months ended June 30, 2025. Incentive fees increased for the three and six months ended June 30, 2026 primarily due to outperformance of net investment income above the target hurdle, as calculated each quarter in arrears.

During the three months ended June 30, 2026 and 2025, administration fees totaled approximately $0.3 million and $0.3 million, respectively. During the six months ended June 30, 2026 and 2025, administration fees totaled approximately $0.6 million and $0.6 million, respectively. Administration fees are charged on capital commitments.

Refer to "Note 3. - Related Party Agreements - Advisory Agreement" in the notes to our consolidated financial statements for additional discussion related to management, incentive fees, and administration fees.

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Professional and Legal Fees

Professional fees include audit, tax, valuation and other professional fees incurred related to the management of the Company. During the three ended June 30, 2026 and 2025, professional and legal fees totaled approximately $0.4 million and $0.4 million, respectively. During the six months ended June 30, 2026 and 2025, professional and legal fees totaled approximately $1.1 million and $0.8 million, respectively.

Interest and Other Financing Expenses

Interest and other financing expenses relates to interest and costs associated with our debt borrowings. During the three months ended June 30, 2026 and 2025, interest expenses totaled approximately $1.1 million and $0.0 million, respectively. During the six months ended June 30, 2026 and 2025, interest expenses totaled approximately $1.4 million and $0.0 million, respectively During the three months ended June 30, 2026 and 2025, other financing costs totaled approximately $0.4 million and $0.1 million, respectively. During the six months ended June 30, 2026 and 2025, other financing costs totaled approximately $0.6 million and $0.3 million, respectively.

For the three and six months ended June 30, 2026 average borrowings outstanding were approximately $79.5 million and $49.7 million, respectively. The weighted average interest rate (excluding unused fees and financing costs) of the aggregate borrowings outstanding for the three and six months ended June 30, 2026 was 5.73% and 5.73%, respectively. There were no outstanding borrowings for the three and six months ended June 30, 2025. See Note 6 - Borrowings, for more information.

Other Expenses

Other expenses includes board fees, certain allocated technology, research, other regulatory and compliance expenses, and excise taxes incurred related to the management of the Company. During the three months ended June 30, 2026 and 2025, other expenses totaled approximately $0.5 million and $0.3 million, respectively. During the six months ended June 30, 2026 and 2025, other expenses totaled approximately $0.9 million and $0.5 million, respectively. The increase in other expenses was driven by an increase in transfer agent, compliance and technology related costs. These other expenses are included as part of general and administrative expenses.

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. 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 three and six months ended June 30, 2026.

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 June 30, 2026, no accrual for excise taxes was considered necessary.

Net Realized Gains and Losses

Realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of an investment without regard to unrealized appreciation or depreciation previously recognized, and includes investments written off during the period, net of recoveries. During the three and six months ended June 30, 2026, we recognized a net realized gain of $0.1 million and $0.1 million, respectively. The net realized gains (losses) were generated from the sale of our debt investments. There were no realized gain or losses recognized during the three and six months ended June 30, 2025.

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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 three and six months ended June 30, 2026 and 2025 (in thousands):

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For the three and six months ended June 30, 2026 the net change in unrealized depreciation was primarily related to depreciation of our debt investments due to an increase in market discount rates. For the three and six months ended June 30, 2025 the net change in unrealized depreciation was primarily related to depreciation of our debt investments due to an increase in market discount rates.

Distributions

On May 11, 2026, the Board declared a cash distribution of $0.14 per share paid on May 28, 2026 to Members of record as of May 18, 2026. On May 28, 2026 the Company distributed $2.1 million in cash and $1.0 million in the form of 69,314 shares at a price of $15.28 per share in connection with the Company's DRP.

The character of income and gains that the Company distributes is determined in accordance with U.S. income tax regulations that may differ from U.S. GAAP. Book and tax basis differences relating to Member dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.

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 in Note 1. Organization, we are conducting, 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 confidential private placement memorandum as may be amended, amended and restated, and/or supplemented from time to time. This "Financial Condition, Liquidity and Capital Resources" section should be read in conjunction with the "Macroeconomic Market Developments" section above.

As of June 30, 2026, the Company had received Capital Commitments of $509.1 million of which $162.9 million was undrawn.

During the three and six months ended June 30, 2026, 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, and (iii) borrowings under our debt facilities.

During the six months ended June 30, 2026, our operating activities used $127.7 million of cash and cash equivalents, compared to $46.5 million used during the six months ended June 30, 2025. The $81.2 million increase in cash used in operating activities was primarily due to increased purchases of investments of approximately $230.7 million, offset by repayments received from investments of $142.7 million.

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During the six months ended June 30, 2026, our financing activities provided $121.1 million of cash, compared to $82.0 million provided during the six months ended June 30, 2025. The $39.1 million increase in cash flows from financing activities was primarily the result of debt borrowings during the six months ended June 30, 2026, compared to none during the six months ended June 30, 2025. During the six months ended June 30, 2025, our financing activities were principally funded from proceeds received through issuance of shares. None were issued during the six months ended June 30, 2026. Additionally, during the six months ended June 30, 2026, the Company paid out distributions of $6.8 million, compared to none during the six months ended June 30, 2025.

Available liquidity and capital resources as of June 30, 2026

As of June 30, 2026, we had $20.9 million of cash and cash equivalents, $120.0 million of availability through our credit facilities, and undrawn Capital Commitments of $162.9 million. As of June 30, 2026, we believed we had adequate financial resources to satisfy unfunded investment commitments of $139.8 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 August 2, 2023, the Company's asset coverage requirement applicable to senior securities was reduced from 200% to 150%. As of June 30, 2026, the Company's asset coverage ratio was 364.96%. The Company had no debt outstanding as of December 31, 2025.

Share Issuances

As of June 30, 2026, the Company had the authority to issue an unlimited number of Shares at $0.001 par value per Share.

Since inception through June 30, 2026, the Company has issued 22,194,328 shares receiving approximately $345.4 million in cash proceeds. Additionally, the Company has issued 326,102 DRP shares with an implied value of approximately $5.0 million.

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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 and appearing elsewhere in this report, with the exception of Shares issued pursuant to the DRP. As of June 30, 2026 and December 31, 2025, the Company had 22,520,430 and 22,293,620 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 June 30, 2026 and December 31, 2025, the Company had unfunded commitments to investments totaling approximately $139.8 million and $62.6 million, respectively.

Related Party Transactions

As detailed in "Note 3. Related Party Transactions", in the notes to the 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 other funds managed by the Adviser and its 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

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