INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

NOTE 12 — INCOME TAXES

As of December 31, 2025 and December 31, 2024, the Company had $37,016,258 and $44,184,991, respectively, of undistributed ordinary income. ⁽¹⁾ Undistributed capital gains were $0 and $0 for the periods ended December 31, 2025 and December 31, 2024, respectively. Undistributed qualified dividends were $0 and $1,256,046 for the periods ended December 31, 2025 and December 31, 2024, respectively. All of the undistributed ordinary income as of December 31, 2025 will have been distributed within the required period of time such that the Company will not be subject to U.S. federal income tax related to 2025 taxable income. The Company will be subject to a 4% nondeductible U.S. federal excise tax on its undistributed income to the extent it did not distribute an amount equal to at least 98% of its net ordinary income plus 98.2% of its capital gain net income attributable to the period. As a result, the Company’s effective U.S. federal income tax rate is expected to be 0%, exclusive of any excise taxes and income taxes incurred by any taxable subsidiaries. Accordingly, a reconciliation of the differences between the Company’s reported income tax expense and the U.S. federal statutory income tax rate of 21% is not considered meaningful.

The Company has accrued $1,450,802 and $1,743,964 of U.S. federal excise tax for the tax years ended December 31, 2025 and December 31, 2024, respectively, independent of prior year adjustments. See Note 1 for further discussion of tax expense in each year.

Ordinary dividend distributions from a RIC do not qualify for the reduced maximum tax rate on qualified dividend income from domestic corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax character⁽²⁾ of distributions paid in the years ended December 31, 2025 and 2024 was as follows:

	December 31, 2025		December 31, 2024
Ordinary income	$	44,255,588	$	40,674,964
Qualified dividends		1,205,839		4,344
Distributions of long-term capital gains(2)		—		544,367
Total distributions paid to common stockholders	$	45,461,427	$	41,223,675

(1) The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, final taxable income earned in each period, and the undistributed ordinary income and capital gains for each period carried forward for distribution in the following period, may be different than this estimate.

(2) Distributions of long-term capital gains of $0 and $544,367 as of December 31, 2025 and December 31, 2024, respectively, may differ from distributions of net capital gains on the Consolidated Statement of Changes in Net Assets because certain prepayment gains are characterized differently for tax reporting purposes. The qualified dividend amount in 2025 and 2024, respectively, represents the completion of a distribution of qualified dividends derived from qualified dividends received by the Company from a portfolio company in 2024 and 2023, respectively, for tax purposes.

Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and total distributions declared to common stockholders for the years ended December 31, 2025, 2024, and 2023:

	2025		2024		2023
Net increase in net assets resulting from operations (includes net investment income, realized gain (loss), unrealized appreciation (depreciation) and taxes)	$	27,045,329	$	45,844,627	$	17,533,167
Net change in unrealized depreciation (appreciation)		11,073,858		(19,555,654)		(2,785,648)
Income tax provision		1,580,338		(191,114)		(2,860,890)
Loss on debt extinguishment		226,095		—		—
Pre-tax expense, loss reported at Taxable Subsidiaries, not consolidated for tax purposes		2,120,912		1,810,914		20,172,550
(Decrease) increase in long term capital loss carryover		(1,988,306)		20,257,106		—
Book income and tax income differences, including debt origination, interest accrual, income from pass-through investments, dividends, realized gains (losses) and changes in estimates		(3,021,577)		1,501,004		11,860,086
Estimated taxable income(1)	$	37,036,649	$	49,666,883	$	43,919,265
Taxable income earned in prior year and carried forward for distribution in current year		45,441,036		36,997,828		28,606,043
Adjustment for cumulative effect of distributions carried forward		—		—		—
Taxable income earned prior to period end and carried forward		(40,874,927)		(49,104,269)		(36,997,828)
Distribution payable as of period end and paid in following period		3,858,669		3,663,233		—
Total distributions accrued or paid to common stockholders	$	45,461,427	$	41,223,675	$	35,527,480

(1) The Company’s taxable income for each period represents a preliminary estimate and will not be finalized until the applicable federal income tax return is filed. Accordingly, the actual taxable income for each period, including amounts available to be carried forward for distribution in subsequent periods, may differ from these estimates.

The aggregate gross unrealized appreciation and depreciation, the net unrealized appreciation, and the aggregate cost of the Company’s portfolio company securities for U.S. federal income tax purposes as of December 31, 2025 and December 31, 2024 were as follows:

	December 31, 2025		December 31, 2024
Aggregate cost of portfolio company securities	$	1,026,139,686	$	961,788,706
Gross unrealized appreciation of portfolio company securities		59,298,870		47,590,719
Gross unrealized depreciation of portfolio company securities		(77,718,103)		(54,903,019)
Gross unrealized appreciation on foreign currency translations of portfolio company securities		26,900		3,973
Gross unrealized depreciation on foreign currency translations of portfolio company securities		(123,958)		(982,691)
Aggregate fair value of portfolio company securities	$	1,007,623,395	$	953,497,688

As of December 31, 2025 and 2024, the Taxable Subsidiaries had unrealized losses in investments and NOL carryovers creating a deferred tax asset equal to $6,631,206 and $5,520,821, respectively, as reflected below. As of December 31, 2025, for U.S. federal income tax purposes, the Taxable Subsidiaries had net operating loss carryforwards totaling $19,265,177, of which $918,232 will expire during the tax years 2034 through 2037 if unused. Due to the nature of the Taxable Subsidiaries’ holdings, a valuation allowance was established as the Company determined it is more likely than not that some of the deferred tax assets will not be realized prior to expiration. Although the Company’s future projections indicate that it may be able to realize a portion of these deferred tax assets, due to the degree of uncertainty of these projections, management has recorded a deferred tax asset valuation allowance of $6,631,206 and $5,520,821 as of December 31, 2025 and 2024, respectively.

	2025		2024
Deferred tax asset	$	6,631,206	$	5,520,821
Deferred tax liability		—		—
Total deferred tax asset before valuation allowance	$	6,631,206	$	5,520,821
Deferred tax valuation allowance	$	(6,631,206)	$	(5,520,821)
Net deferred tax asset (liability)	$	—	$	—

The Company has recorded a tax reclassification of stockholders’ equity in accordance with U.S. GAAP to reduce paid-in capital and to increase distributable earnings (increasing accumulated undistributed investment income) for book to tax differences that it has determined to be permanent. For the years ended December 31, 2025 and 2024, this reclassification was $1,391,127 and $1,727,556, respectively. The total adjustment on the Consolidated Statements of Assets and Liabilities as of December 31, 2025 and 2024 was $8,825,985 and $7,434,858, respectively.

The Company remains subject to examination by the IRS for tax years 2022 through 2024.