North Mill Holdco LLC

and Subsidiaries

(A Delaware Limited Liability Company)

Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

	Page(s)
Independent Auditors’ Report	1-2
Consolidated Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Changes in Members’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7-15

Independent Auditors' Report

To the Audit Committee of

North Mill Holdco LLC and Subsidiaries

Opinion

We have audited the consolidated financial statements of North Mill Holdco LLC and Subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2024, and the related consolidated statements of operations, members’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Matter

The financial statements of the Company for the year ended December 31, 2023 were audited by another auditor, who expressed an unmodified opinion on those statements on February 23, 2024.

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

1

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.

•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit.

Philadelphia, Pennsylvania

February 12, 2025

2

North Mill Holdco LLC and Subsidiaries

Consolidated Balance Sheets

December 31, 2024 and 2023

		2024			2023
Assets:
Cash and cash equivalents	$	15,876,966		$	20,229,478
Finance receivables:
Loans receivable		169,439,798			168,427,831
Less: Unearned fee income		(39,691	)		(103,286	)
		169,400,107			168,324,545
Accounts receivable		318,962,336			105,113,189
Less: allowance for uncollectible finance receivables		(2,861,153	)		(2,328,391	)
Finance receivables, net		485,501,290			271,109,343
Accrued interest receivable		2,270,511			2,158,775
Other assets		621,987			335,799
Furniture and equipment, net		714,884			604,124
Goodwill		19,242,729			19,242,729
Right-of-use asset		2,848,724			1,654,855
Total assets	$	527,077,091		$	315,335,103
Liabilities and Members' Equity:
Credit facility payable, net of issuance costs (Note 7)	$	230,608,319		$	222,061,862
Due to factoring clients		174,789,928			25,073,717
Accounts payable and accrued expenses		24,295,595			4,928,206
Lease liability		2,848,724			1,654,855
Total liabilities		432,542,566			253,718,640
Commitments and Contingencies (Note 8)
Members' Equity		94,534,525			61,616,463
Total liabilities and members' equity	$	527,077,091		$	315,335,103

3

North Mill Holdco LLC and Subsidiaries

Consolidated Statements of Operations

Years Ended December 31, 2024 and 2023

		2024		2023
Net interest income:
Interest and finance charges	$	40,569,447	$	33,700,679
Interest expense		16,119,927		15,047,895
Net interest income		24,449,520		18,652,784
Service fees and other finance charges		5,321,529		4,442,246
Net interest and other non-interest income		29,771,049		23,095,030
Provision (credit) for uncollectible finance receivables		479,725		(453,120	)
Net interest income after provision (credit) for    uncollectible finance receivables		29,291,324		23,548,150
Operating expenses:
Compensation and benefits		16,102,962		12,384,594
Acquisition expenses		1,490,294		-
General and administrative expenses		2,772,032		3,266,764
Legal and professional fees		379,829		439,601
Total operating expenses		20,745,117		16,090,959
Other income (loss):
Impairment of goodwill		-		(16,945,000	)
Bargain purchase gain (Note 3)		1,903,881		-
Total other income (loss), net		1,903,881		(16,945,000	)
Net income (loss)	$	10,450,088	$	(9,487,809	)

4

North Mill Holdco LLC and Subsidiaries

Consolidated Statements of Changes in Members' Equity

Years Ended December 31, 2024 and 2023

Balance, December 31, 2022	$	79,265,946
Cumulative effect of adopting new accounting standard (Note 2)		(1,085,173)
Net loss		(9,487,809)
Distributions to members		(7,076,501)
Balance, December 31, 2023		61,616,463
Member contributions		30,000,000
Net income		10,450,088
Distributions to members		(7,532,026)
Balance, December 31, 2024	$	94,534,525

5

North Mill Holdco LLC and Subsidiaries

Consolidated Statements of Cash Flows

Years Ended December 31, 2024 and 2023

		2024			2023
Cash flows from operating activities:
Net income (loss)	$	10,450,088		$	(9,487,809	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision (credit) for uncollectible finance receivables		479,725			(453,120	)
Depreciation		206,370			182,428
Amortization of deferred debt issuance costs		514,268			495,283
Bargain purchase gain (Note 3)		(1,903,881	)		-
Impairment of goodwill		-			16,945,000
Changes in assets and liabilities, net of acquisition related amounts:
(Increase) decrease in:
Accrued interest receivable		(111,736	)		(423,616	)
Other assets		(286,188	)		(78,884	)
Increase (decrease) in:
Unearned fee income		(63,595	)		(181,354	)
Accounts payable and accrued expenses		4,795,010			1,526,741
Due to factoring clients		(4,989,077	)		(9,126,335	)
Net cash provided by (used in) operating activities		9,090,984			(601,666	)
Cash flows from investing activities:
Decrease in finance receivables, net		65,429,209			12,326,922
Acquisition of Hollywood BC, net of cash acquired		(109,055,738	)		-
Purchases of furniture and equipment		(317,130	)		(241,215	)
Net cash (used in) provided by investing activities		(43,943,659	)		12,085,707
Cash flows from financing activities:
Net borrowings from credit facility payable		8,117,189			8,491,955
Member contributions		30,000,000			-
Payment of debt issuance costs		(85,000	)		(66,984	)
Distributions to members		(7,532,026	)		(7,076,501	)
Net cash provided by financing activities		30,500,163			1,348,470
Net change in cash, cash equivalents, and restricted cash		(4,352,512	)		12,832,511
Cash, cash equivalents, and restricted cash at beginning of year		20,229,478			7,396,967
Cash, cash equivalents and restricted cash at end of year	$	15,876,966		$	20,229,478
Supplemental disclosure of cash flow information:
Cash paid for interest	$	15,401,870		$	14,027,175
Deferred acquisition consideration payable	$	14,572,379		$	-
Supplemental disclosure of non-cash financing activities:
Right-of-use asset and lease liability	$	-		$	1,451,570

6

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 1. Nature of the Business

The operations of North Mill Holdco LLC (“Holdco”) and Subsidiaries (collectively, the “Company”) consist primarily of those financial activities common to the commercial asset-based finance industry.

Holdco, a subsidiary of SLR Investment Corp. (“SLRC”), was formed on May 17, 2019 in connection with the acquisition of Summit Financial Resources, LLC (“Summit”). As of December 31, 2024, Holdco has majority ownership of two subsidiaries, North Mill Capital LLC (“NMC”) and Summit.

NMC was formed as a single-member Delaware limited liability company on August 18, 2010 and commenced operations on October 29, 2010. SLRC acquired a controlling interest in NMC on October 20, 2017. SLRC contributed its interests in NMC to Holdco on June 28, 2019. As of December 31, 2024, NMC has two wholly-owned subsidiaries, PrinSource Capital Companies, LLC (“PrinSource”) and SLR Digital Finance LLC (“Digital Finance”).

NMC is a specialty finance company based in New Jersey that is engaged in providing asset-based commercial financing to small and medium-sized businesses. NMC’s core business is providing and servicing loans ranging from $200,000 to $40,000,000 secured by assets such as accounts receivable, inventory, and equipment.

Borrowers are located throughout the United States. PrinSource, based in Minnesota, was acquired by NMC on December 30, 2011. Prinsource provides working capital financing solutions primarily through invoice factoring. Digital Finance, based in Los Angeles, was acquired by NMC on June 3, 2021. Digital Finance provides factoring and asset-based loans to companies in the ad tech and media spaces.

Summit, based in Salt Lake City, was acquired by Holdco on June 28, 2019. Summit provides accounts receivable factoring to clients across various industries. Hollywood BC AcquisitionCo LLC (“Hollywood”), a wholly owned subsidiary of Summit, was formed on August 26, 2024. Through its ownership in Hollywood, Holdco acquired an asset-based factoring portfolio from Webster Bank, N.A. effective September 27, 2024 (Note 3).

Note 2: Summary of Significant Accounting Policies

Significant accounting policies are as follows:

Basis of accounting: The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Principles of consolidation: The consolidated financial statements include the accounts of Holdco and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Reclassification: Certain prior period amounts have been reclassified to conform to the current period presentation.

Revenue recognition: The Company recognizes interest and fee income in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 310, Receivables. Interest income is recognized as earned based on the terms of the underlying credit agreement. Fees received for the origination of loans are deferred and amortized into income over the contractual lives of the loans and annual fees received for loans are deferred and amortized into income over a twelve-month period using the straight-line method, which approximates the effective interest rate method. Unamortized amounts are recognized as income at the time that loans are paid in full. Interest income on finance receivable is recognized using the interest method. Interest and fee income are accrued based on the outstanding receivable balance and charged monthly to the receivable balance as earned, except in instances that a reasonable doubt exists as to the collectability of interest, in which case the accrual of income may be suspended.

Service fees and other finance charges include wire transfer fees, field examination charges, late reporting fees and other items charged to borrowers. These items are recognized as income in the statements of operations as charged.

7

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 2: Summary of Significant Accounting Policies…continued

Cash: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash includes all deposits held at banks. Deposits in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) are exposed to loss in the event of nonperformance by the institution. The Company has had cash deposits in excess of the FDIC insurance coverage and has not experienced any losses on such accounts.

Loans receivable: The Company’s loan portfolio consists of asset based loans. The loans are further classified as either performing or non-performing. The Company provides asset-based financing primarily in the form of revolving credit facilities collateralized by the borrower’s assets, including, but not limited to, accounts receivable, inventory, equipment and general intangibles. The loan terms are generally one to three years and management has the intention and ability to hold until maturity or payoff. Provisions for credit losses for finance receivables are charged to operations in amounts sufficient to maintain the allowance for uncollectible finance receivables at an amount considered adequate to cover the estimated losses of principal and accrued interest in the existing loan portfolio. The Company’s charge-off policy is based on a loan-by-loan review of all receivables. Management periodically evaluates the adequacy of the allowance for uncollectible finance receivables by reviewing credit loss experience, change in size and character of credit risks, the value of collateral and general economic conditions. Receivables are charged off against the allowance when management determines that there is insufficient collateral to support the loan and believes that it is no longer probable that principal and/or interest payments will be collected.

Accounts receivable: Accounts receivable consist of factored receivables including factored receivables specifically for digital media companies sourced by Digital Finance. As of December 31, 2024 and 2023, the factored receivables portfolio totals $318,962,336 and $105,113,189, respectively. Accounts receivable are stated at cost, net of an allowance for uncollectible finance receivables.

Allowance for credit losses: On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan and accounts receivables. The method utilized by the Company to estimate expected credit losses is the weighted average maturity (“WARM”) methodology which contemplates expected losses at a pool-level, utilizing historic loss information. During the year ended December 31, 2023, there was an adjustment to retained earnings of $1,085,173 as a result of the adoption of ASC 326.

The cumulative loss rate used as the basis for the estimate of credit losses for uncollectible finance receivables is comprised of the Company’s historical loss experience from 2010 to 2024.

In accordance with CECL, the Company’s allowance for credit losses may be adjusted to reflect management’s assessment of current and future economic conditions that may impact the performance of the borrowers, historical charge-offs, trends in loan volumes, industry concentrations including providing working capital facilities to digital media companies, the weighted average maturity of the loan portfolio, and the likelihood of funding unfunded commitments.

When the Company determines that there is insufficient collateral to support an outstanding loan or account receivable balance and believes it is no longer probable that principal and/or interest payments will be collected, the Company will generally place the loan on non-accrual status. When placed on non-accrual, specific allowances for credit losses are generally applied. The specific allowance is measured based on a comparison of the recorded carrying value of the loan to the present value of the loan’s expected cash flow using the loan’s effective interest rate, the loan’s estimated market price, or the estimated fair value of the underlying collateral, if the loan is collateral-dependent. Uncollectible receivables are charged off against the allowance at the earlier of either the substantial completion of the liquidation of assets securing the loan, or when senior management deems the loan to be permanently impaired. Non-accrual receivables may be restored to accrual status if past due principal and interest are paid in cash, and, in management’s judgment, are likely to continue.

8

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 2: Summary of Significant Accounting Policies…continued

Allowance for credit losses…continued: The Company also maintains an allowance on unfunded commitments. The methodology for determining the allowance for unfunded commitments is consistent with the methodology used for determining the allowance for credit losses, with the exception that the allowance is only applied against the portion of the unfunded commitment expected to be drawn upon. At December 31, 2024, an allowance of $16,677 was recorded relating to these commitments.

Loan participations: The Company enters into participation funding arrangements with third-party lending institutions, whereby those institutions participate in loans originated by the Company. These arrangements are used by the Company to manage risk associated with loans and accounts receivable that may potentially exceed funding limits. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: the assets have been isolated from the Company – put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership; the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

Furniture and equipment, net: Furniture and equipment is recorded at cost and stated net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated lives of the assets, which is generally three to five years for equipment, ten years for furniture and fixtures, and the shorter of the remaining lease term or the asset’s estimated useful life for leasehold improvements.

Debt issuance costs: Debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s revolving credit facility. Such costs are capitalized and recorded as a reduction to the revolving credit facility on the accompanying consolidated balance sheets. These costs are amortized using the straight-line method into earnings as interest expense ratably over the contractual term of the facility.

Impairment of long-lived assets: The Company reviews long-lived assets, including furniture and equipment and intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying amount. No impairments have occurred in 2024 or 2023.

Goodwill: Goodwill represents the excess of consideration paid for an acquired business over the fair value of the related assets acquired and liabilities assumed. The Company is required to assess its goodwill for impairment annually, or more frequently if events or changes in circumstances indicate impairment may have occurred.

The Company has elected to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the conclusion is supported that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform a quantitative impairment test. If the conclusion cannot be supported, or if the Company does not elect to do the qualitative assessment, then the Company will perform a quantitative assessment. If a quantitative goodwill impairment assessment is performed, the Company utilizes a combination of market and income valuation approaches. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the reporting unit is less than its carrying value. No impairment charge was recorded for the year ended December 31, 2024. For the year ended December 31, 2023, the Company recorded an impairment charge totaling $16,945,000. The impairment charge was caused by the measurement of discounting cash flows of future earnings resulting in a value less than the Company’s carrying value as the estimated growth in the loan portfolio and corresponding revenues were not sufficient to support its current carrying value.

9

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 2: Summary of Significant Accounting Policies…continued

Income taxes: No provision has been made for income taxes, if any, as these are the obligation of the members. The Company files income tax returns as a partnership in the U.S. federal jurisdiction and in various state jurisdictions.

The Company applies the provisions set forth in Accounting for Uncertainty in Income Taxes (ASC 740-10). ASC 740-10 provides a comprehensive model for the recognition, measurement and disclosure of uncertain income tax positions. The Company recognizes the tax effect of certain tax positions when it is more likely than not that the tax position will be sustained upon examination, based solely on the technical merits of the tax position. As of December 31, 2024, the Company does not have any uncertain tax positions that meet the recognition or measurement criteria of ASC 740-10.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Leases: The Company recognizes and measures its leases in accordance with FASB ASC 842, Leases. The Company is a lessee in several non-cancellable operating leases for office space. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a right- of- use (ROU) asset and a lease liability asset, initially and subsequently, based on the present value of its future lease payments. The discount rate is the implicit rate, if it is readily determinable, or otherwise the Company uses its incremental borrowing rate. The implicit rates of the Company’s leases are not readily determinable and accordingly, the Company uses an incremental borrowing rate based on the information available at the commencement date for all leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The ROU asset is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepared (accrued) lease payments, less the unamortized balance of lease incentives received, and any impairment recognized.

Subsequent events: The Company has evaluated subsequent events through February 14, 2025, the date which the financial statements were available to be issued.

Note 3. Acquisition

On September 27, 2024, the Company acquired 100% of an asset-based factoring portfolio and its related operations from Webster Bank, N.A. The total purchase price of $127,497,653 was calculated based on the estimated average net funds employed in the acquired portfolio prior to the acquisition, plus a premium, less certain adjustments, as described in the purchase agreement. Of the $127,497,653 purchase price, $112,925,274 was paid in cash on the closing date and the remaining $14,572,379 is deferred until 2025 and is recorded as a component of accounts payable and accrued expenses on the accompanying consolidated balance sheet for the year ended December 31, 2024. The acquisition was accounted for as a business combination in accordance with FASB ASC 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date.

Assets Acquired
Accounts receivable	$	280,237,286
Cash		3,869,537
	$	284,106,823
Liabilities Assumed
Due to factoring clients	$	154,705,288

10

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 3. Acquisition…continued

The acquisition date fair value of the assets acquired less liabilities assumed was less than the purchase price. This resulted in a bargain purchase gain totaling $1,903,881, which is recorded on the consolidated statement of operations for the year ended December 31, 2024.

Acquisition related costs totaling $1,490,294, including legal, professional and other expenses, are recorded as acquisition expenses on the consolidated statement of operations and are not included in the purchase price.

Note 4. Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements (“ASC 820”), establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions.

These inputs create the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, such as interest rates and foreign exchange rates that are observable at commonly quoted intervals.

Level 3 – Unobservable inputs.

ASC 820 also requires that the Company disclose estimated fair values for its financial instruments. No quoted market exists for the Company’s financial instruments. Therefore, fair market estimates are based on judgments, risk characteristics of various financial instruments and other factors. Changes in these assumptions could significantly affect the estimates.

Management estimates that the carrying value of cash and accrued interest receivable approximates its fair value at both December 31, 2024 and 2023. Since there is no liquid secondary market for the Company’s financing receivables, management estimates the fair value of its secured loans by comparing the average yield of the portfolio to recent issuances of similar loans. The inputs used to measure the fair value of secured loans and credit facility payable are considered Level 3 under the fair value hierarchy described above.

The carrying amount and estimated fair values of the Company’s financial instruments at December 31, 2024 and 2023 are as follows:

December 31, 2024
					Fair Value Measurements
		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Loans receivable, net of allowance	$	166,939,597	$	166,939,597	$	-	$	-	$	166,939,597
Accounts receivable, net of allowance		318,561,693		318,561,693		-		-		318,561,693
Financial liabilities:
Credit facility payable, net of issuance costs		230,608,319		230,608,319		-		-		230,608,319
December 31, 2023
					Fair Value Measurements
		Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets:
Loans receivable, net of allowance	$	166,218,761	$	166,218,761	$	-	$	-	$	166,939,597
Accounts receivable, net of allowance		104,890,582		104,890,582		-		-		104,890,582
Financial liabilities:
Credit facility payable, net of issuance costs		222,061,862		222,061,862		-		-		222,061,862

11

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 5. Loans and Accounts Receivable and Allowance for Uncollected Finance Receivables

Loans receivable at December 31, 2024 and 2023 consist of revolving lines of credit to commercial customers that range from one to three years and are secured by accounts receivable, inventory and equipment. Commitments to borrowers are dependent on the borrowing base and are generally limited to 85% of the collateral being presented.

Changes in the allowance for credit losses for loans receivable and accounts receivable are as follows:

		Loans Receivable		Accounts Receivable		Total
Balance, December 31, 2022, prior to    adoption of ASC 326	$	1,726,973	$	107,088	$	1,834,061
Impact of adopting ASC 326 (Note 2)		896,474		188,699		1,085,173
Provision (credit) for uncollectible finance    receivables		(379,941)		(73,180)		(453,121)
Net (charge offs) recoveries		(137,722)		-		(137,722)
Balance, December 31, 2023		2,105,784		222,607		2,328,391
Provision (credit) for uncollectible finance    receivables		301,690		178,035		479,725
Net (charge offs) recoveries		53,037		-		53,037
Balance, December 31, 2024	$	2,460,511	$	400,642	$	2,861,153

The Company has implemented and adheres to an internal review system and credit loss allowance methodology designed to provide for the detection of problem receivables and an adequate allowance to cover credit losses. At least quarterly, a risk rating is assigned to individual balances. Management assigns a higher risk rating when they determine that their credit exposure has increased. Management assigns these risk ratings based on a number of factors including, but not limited to, the profitability, cash flow position, tangible net worth, strength of collateral performance and coverage, the probability of a loss being realized and results of internal audits and verifications related to each specific receivable.

The Company’s credit risk rating system has nine grades, with each grade corresponding to a progressively greater risk of default. Risk ratings of (1) through (6) are performing categories and risk ratings of (7) through (9) are non- performing categories. Non-performing credits are: a (7) rated credit has a potential weakness which, if uncorrected, may result in a deterioration of the repayment prospects or inadequately protect the Company’s credit position at some time in the future; (8) rated credits are credits that have a well-defined weakness or weaknesses that jeopardize the full repayment of the debt or make collection or liquidation in full highly questionable and improbable, when considering existing facts, conditions, and values. Credits rated (9) are considered uncollectible and of such little value that their continuance as assets is not warranted.

Loans receivable that are classified as performing loans total $169,439,798 and $168,427,831 at December 31, 2024 and 2023, respectively. There were no loans receivable classified as non-performing at December 31, 2024 and 2023.

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North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 5. Loans and Accounts Receivable and Allowance for Uncollected Finance Receivables…continued

Accounts receivable that are classified as performing total $318,962,336 and $105,113,189 at December 31, 2024 and 2023, respectively. There were no accounts receivable classified as non-performing at December 31, 2024 and 2023. The following table presents the net book value of the Company’s finance receivables as of December 31, 2024 and 2023, by year of origination, type of receivable and risk classification.

December 31, 2024
	Net Book Value of Finance Receivables by Year of Origination
		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Total
Loans receivable
Performing	$	-	$	-	$	-	$	-	$	-	$	169,400,107	$	169,400,107
Non-performing		-		-		-		-		-		-		-
Total loans receivable		-		-		-		-		-		169,400,107		169,400,107
Accounts receivable
Performing	$	13,173,778		70,093,043		20,234,320		9,653,964		205,807,231		-		318,962,336
Non-performing		-		-		-		-		-		-		-
Total accounts receivable		13,173,778		70,093,043		20,234,320		9,653,964		205,807,231		-		318,962,336
Total finance receivables	$	13,173,778	$	70,093,043	$	20,234,320	$	9,653,964	$	205,807,231	$	169,400,107		488,362,443
Allowance for credit losses														(2,861,153)
Finance receivables, net													$	485,501,290

December 31, 2023
	Net Book Value of Finance Receivables by Year of Origination
		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Total
Loans receivable
Performing	$	-	$	-	$	-	$	-	$	168,324,545	$	168,324,545
Non-performing		-		-		-		-		-		-
Total loans receivable		-		-		-		-		168,324,545		168,324,545
Accounts receivable
Performing		8,309,198		9,549,677		16,465,555		70,788,758		-		105,113,189
Non-performing		-		-		-		-		-		-
Total accounts receivable		8,309,198		9,549,677		16,465,555		70,788,758		-		105,113,189
Total finance receivables	$	8,309,198	$	9,549,677	$	16,465,555	$	70,788,758	$	168,324,545		273,437,734
Allowance for credit losses												(2,328,391)
Finance receivables, net											$	271,109,343

The Company typically classifies all loans as held to maturity.

A finance receivable is considered non-performing when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments in accordance with the contractual terms of the receivable. Factors considered in determining non-performing loans and accounts receivable include payment status, collateral value and the probability of collecting payments when due. The significance of payment delays and/or shortfalls is determined on a case-by-case basis. All circumstances surrounding the receivable are taken into account. Such factors include the length of the delinquency, the underlying reasons and the borrower’s prior payment record. These factors are considered on a receivable-by-receivable basis.

Accrued interest receivable totals $2,270,511 and $2,158,775 at December 31, 2024 and 2023 and is reported on the consolidated balance sheets. The accrual of accrued interest is in accordance with the non-accrual policy as stated in Note 2.

The Company did not have any loans or accounts receivable that are non-performing, modified, or past due 30 days or more as of December 31, 2024 and 2023.

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North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 6. Furniture and Equipment, net

Furniture and equipment consists of the following at December 31, 2024 and 2023:

	December 31,
		2024		2023
Furniture and fixtures	$	728,493	$	457,122
Equipment		2,097,032		2,054,073
Leasehold improvements		136,069		133,269
		2,961,594		2,644,464
Less: Accumulated depreciation		(2,246,710)		(2,040,340)
	$	714,884	$	604,124

Depreciation expense was $206,370 and $182,428 for the years ended December 31, 2024 and 2023 and is included as a component of General and administrative expenses on the accompanying consolidated statements of operations.

Note 7. Credit Facility Payable

The Company has entered into a $325,307,000 credit facility which expires November 13, 2025. Borrowings are secured by substantially all of the Company’s assets. Interest on borrowings under the facility is payable monthly and is based on the SOFR plus an applicable margin, as defined. The interest rate was 6.65 percent at December 31, 2024 and 7.69 percent at December 31, 2023. Outstanding borrowings under the credit facility are generally limited to 85 percent of eligible receivables, less any reserves established by the bank, as defined. The Company is required to maintain specified financial ratios and to comply with other customary covenants. The balance outstanding under this credit facility totals $231,034,349 at December 31, 2023 and $222,917,160 at December 31, 2023. The credit facility payable totaling $230,608,319 and $222,061,862 at December 31, 2024 and 2023, respectively, consists of the following:

	December 31,
	2024		2023
Outstanding borrowings	$	231,034,349	$	222,917,160
Less: debt issuance costs, net of accumulated amortization of $2,741,909 and $2,227,641,    respectively		(426,030)		(855,298)
Credit facility payable, net	$	230,608,319	$	222,061,862

Total interest expense related to the credit facility totaled $15,347,341 and $14,314,816 for the years ended December 31, 2024 and 2023, respectively, and is included as a component of interest expense on the accompanying consolidated statements of operations.

Note 8. Commitments

Employment agreements: The Company has entered into service agreements with certain members of management. Annual base compensation due under these agreements is included in personnel expenses in the consolidated statements of operations. The annual base compensation is subject to review and adjustment by the Company. The employees are also eligible to receive bonus compensation at the discretion of the Board of Managers. The agreements can be terminated by either the Company or the employees at any time upon written notice. Certain additional amounts may be paid to the employees, contingent upon the circumstances surrounding the termination, as defined in the service agreements.

14

North Mill Holdco LLC and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

Note 8. Commitments…continued

Operating leases: The Company rents its office space under non-cancelable operating leases that expire through 2033. A right-of-use asset and lease liability totaling $2,848,724 and $1,654,855 at December 31, 2024 and December 31, 2023, respectively, have been recorded on the consolidated balance sheets. The increase in the right-of-use asset and lease liability during 2024 is the result of the Company extending two of its four lease agreements. The Company’s leases have a weighted average remaining lease term of 7.49 years and a weighted average discount rate of 2.67%.

As of December 31, 2024, future minimum lease commitments under the leases include:

	Operating Lease
2025	$	596,649
2026		610,186
2027		497,153
2028		295,967
2029		302,636
Thereafter		838,626
Total lease payments		3,141,217
Less: interest expense		(292,493	)
Lease liability balance	$	2,848,724

Rent expense was $661,048 and $677,446 for the years ended December 31, 2024 and 2023, respectively.

Unfunded Commitments: Commitments under loan and account receivable facilities aggregated $857,952,611 at December 31, 2024, of which $369,550,477 were unfunded. Advances relating to these unfunded commitments were limited to those facilities with available collateral which totaled $242,309,619 at December 31, 2024. At December 31, 2023, total commitments were $610,948,740, of which $337,407,720 were unfunded. Advances relating to these unfunded commitments were limited to those facilities with available collateral and totaled $78,759,635 at December 31, 2023.

Note 9. Related Party Transactions

NMC has sold participations in various loan agreements to SLRC and its affiliates. These transactions occur in the normal course of business.

Effective July 17, 2024, NMC and SLRC entered into a subordinated revolving loan and security agreement whereby SLRC committed to provide NMC with an $8,000,000 revolving loan facility. The facility expires on May 13, 2026. Borrowings under the facility incur interest at a rate of SOFR plus 7.00%. There were no amounts outstanding on the revolving loan facility at December 31, 2024. Interest expense incurred on the facility totals $24,831 during the year ended December 31, 2024 and is included as a component of interest expense on the consolidated statement of operations.

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