What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-03-10 · 1471 added, 1533 removed, 909 unchanged (77% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Assets and Liabilities as of December 31, 2022 and December 31, 2021

Consolidated Statement of Operations for the years ended December 31, 2022 and December 31, 2021

Consolidated Statement of Changes in Net Assets for the years ended December 31, 2022 and December 31, 2021

Consolidated Statement of Cash Flows for the years ended December 31, 2022 and December 31, 2021

Consolidated Statement of Assets and Liabilities as of December 31, 2023 and 2022

Consolidated Statement of Operations for the years ended December 31, 2023, 2022, and 2021

Consolidated Statement of Changes in Net Assets for the years ended December 31, 2023, 2022, and 2021

Consolidated Statement of Cash Flows for the years ended December 31, 2023, 2022, and 2021

Consolidated Schedule of Investments as of December 31, 2023 and 2022

Notes to Consolidated Financial Statements

Report of Independent Registered

Public Accounting Firm

To the Board of Directors and

Stockholders of Palmer Square Capital BDC Inc.

Opinion on the Financial

We have audited the accompanying

consolidated statements of assets and liabilities, including the consolidated schedules of investments of Palmer Square Capital BDC Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations,

of changes in net assets and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2022 and 2021, and the results of its operations, changes in its net assets and its cash flows

for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Report of Independent Registered Public Accounting

To the Board of Directors and Stockholders of Palmer Square Capital

Opinion on the Financial Statements

We have audited the accompanying consolidated

statements of assets and liabilities, including the consolidated schedules of investments, of Palmer Square Capital BDC Inc.

and its subsidiaries

(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in net assets

and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to

as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations, changes

in its net assets and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These consolidated financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of

these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform

the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for

the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we

express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining,

on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating

the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated

financial statements.

Our procedures included confirmation of securities owned as of December 31, 2022 and 2021 by correspondence with

the custodian, brokers and agent banks.

We believe that our audits provide a reasonable basis for our opinion.

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated

financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

Our procedures included confirmation

of securities owned as of December 31, 2023 and 2022 by correspondence with the custodian, brokers and agent banks.

We believe that our

audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Kansas City, Missouri

March 10, 2023

February 28, 2024

We have served as the Company’s auditor since 2019.

19 unchanged sentences

Management fee payable

Directors fee payable

Accrued other general and administrative expenses

9 unchanged sentences

( 58,734,816 )

( 110,502,182 )

Total Net Assets

9 unchanged sentences

Consolidated Statement of Operations

For the Year Ended

For the Year Ended December 31

Investment income from non-controlled, non-affiliated investments:

Interest income

$ 107,739,382

Dividend income

9 unchanged sentences

( 1,051,009 )

( 1,041,089 )

Net Investment Income (Loss)

3 unchanged sentences

( 2,715,413 )

( 8,130,187 )

Total net realized gains (losses)

( 2,715,413 )

( 8,130,187 )

Net change in unrealized gains (losses):

10 unchanged sentences

$ 107,835,651

( 74,482,335 )

Per Common Share Data:

6 unchanged sentences

Consolidated Statement of Changes in Net Assets

For the Year Ended

For the Year Ended December 31

Increase (Decrease) in Net Assets Resulting from Operations:

2 unchanged sentences

( 2,715,413 )

( 8,130,187 )

Net change in unrealized gains (losses) on investments, foreign currency translations, and foreign currency exchange contracts

7 unchanged sentences

( 43,102,007 )

( 17,845,775 )

Distributions declared from realized gains

3 unchanged sentences

( 44,055,117 )

( 25,952,493 )

Increase in Net Assets Resulting from Capital Share Transactions

8 unchanged sentences

$ 363,443,482

The accompanying notes are an integral part of these

consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

Palmer Square Capital BDC Inc.

4 unchanged sentences

$ 107,835,651

$ ( 74,482,335 )

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:

2 unchanged sentences

Net change in unrealized (gains)/losses on investments

( 52,563,544 )

Net accretion of discount on investments

( 1,851,339 )

( 1,717,453 )

Purchases of short-term investments

1 unchanged sentence

( 374,447,403 )

( 662,604,311 )

Purchases of portfolio investments

1 unchanged sentence

( 278,951,054 )

( 926,351,937 )

Proceeds from sale of short-term investments

8 unchanged sentences

( 2,770,690 )

( 2,224,325 )

(Increase)/decrease in due from investment adviser

( 1,484,858 )

(Increase)/decrease in receivable for paydowns of investments

3 unchanged sentences

( 28,040,224 )

( 61,528,210 )

Increase/(decrease) in management fees payable

8 unchanged sentences

( 28,500,000 )

( 92,000,000 )

Payments of debt issuance costs

( 1,812,482 )

Distributions paid in cash

1 unchanged sentence

( 18,829,187 )

( 6,288,461 )

Proceeds from issuance of common shares, net of change in subscriptions receivable of $ -

1 unchanged sentence

( 19,077,288 )

( 24,555,386 )

Net increase/(decrease) in cash and cash equivalents

11 unchanged sentences

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Debt Investments

Lien Senior Secured (2)

AAdvantage Loyalty IP Ltd.

8.99 % (L + 4.75 %)

AccentCare, Inc.

Healthcare Providers and Services

8.73 % (L + 4.00 %)

Acrisure, LLC (7)

7.88 % (L + 3.50 %)

Acrisure, LLC (7)

8.63 % (L + 4.25 %)

AI Aqua Merger Sub, Inc., (7)(8)

Holdings PLC (4)(6)

Restaurants and Leisure

(S + CSA + 5.25%)

Loyalty IP Ltd.

(S + CSA + 4.75%)

Providers and Services

(S + CSA + 4.00%)

Risk Management Group, Inc.

(S + CSA + 6.00%)

Risk Management Group, Inc.

(S + CSA + 5.50%)

Risk Management Group, Inc.

(S + CSA + 5.50%)

Aqua Merger Sub, Inc., (6)(7)

Food Products

7.97 % (S + 3.75 %)

Aimbridge Acquisition Co., Inc.

Hotels, Restaurants and Leisure

8.13 % (L + 3.75 %)

Alliant Holdings Intermediate LLC (7)

7.85 % (L + 3.50 %)

Allied Universal Holdco LLC (7)

Professional Services

Acquisition Co., Inc.

Restaurants and Leisure

(S + CSA + 3.75%)

Amentum Government Services Holdings LLC (7)

Aerospace and Defense

8.76 % (S + 4.00 %)

American Rock Salt Company LLC (7)

Metals and Mining

8.38 % (L + 4.00 %)

Amynta Agency Borrower, Inc.

8.88 % (L + 4.50 %)

AP Gaming I, LLC (4)(5)(7)

Hotels, Restaurants and Leisure

Holdings Intermediate LLC (6)

Universal Holdco LLC (6)

(S + CSA + 3.75%)

Aptean Inc (7)(8)

8.98 % (L + 4.25 %)

AQA Acquisition Holding, Inc.

8.98 % (L + 4.25 %)

ARC Falcon I Inc.

8.13 % (L + 3.75 %)

Aruba Investments Holdings, LLC (7)

8.14 % (L + 4.00 %)

Government Services Holdings LLC (6)

Rock Salt Company LLC (6)

(S + CSA + 4.00%)

Agency Borrower, Inc.

Gaming I, LLC (4)(6)

Restaurants and Leisure

(S + CSA + 4.00%)

(S + CSA + 4.25%)

Acquisition Holding, Inc.

(S + CSA + 4.25%)

Falcon I Inc.

(S + CSA + 3.50%)

Financial Services

(S + CSA + 4.50%)

Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Ascend Learning, LLC (6)

Professional Services

7.88 % (L + 3.50 %)

8.96% (S + CSA + 3.50%)

Aspire Bakeries Holdings, LLC (6)

Food Products

9.61% (S + 4.25%)

AssuredPartners, Inc.

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

AssuredPartners, Inc.

5 unchanged sentences

Auto Components

8.79 % (L + 4.50 %)

9.97% (S + CSA + 4.50%)

Aveanna Healthcare LLC (4)(6)

Healthcare Providers and Services

8.14 % (L + 3.75 %)

9.24% (S + CSA + 3.75%)

Barracuda Networks, Inc.

9.88% (S + 4.50%)

BBB Industries (8)

Auto Components

9.67 % (S + CSA + 5.25 %)

BCP Renaissance Parent LLC (7)

Oil, Gas and Consumable Fuels

B’laster Holdings, LLC (7)

10.94% (S + 5.50%)

Belfor Holdings, Inc.

Commercial Services and Supplies

8.38 % (L + 3.75 %)

Boxer Parent Company, Inc.

9.61% (S + 4.25%)

Castle US Holding Corporation (7)

Professional Services

8.38 % (L + 4.00 %)

9.40% (S + CSA + 3.75%)

Castle US Holding Corporation (6)(7)

Professional Services

8.13 % (L + 3.75 %)

9.65% (S + CSA + 4.00%)

CCI Buyer, Inc.

1 unchanged sentence

9.35% (S + 4.00%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2022

Portfolio Company (3)

Interest Rate

of Net Assets

CCS-CMGC Holdings, Inc.

Healthcare Providers and Services

9.91 % (L + 5.50 %)

11.32% (S + CSA + 5.50%)

CDK Global (6)

4 unchanged sentences

Connectwise LLC (6)

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

Consolidated Communications, Inc.

Diversified Telecommunication Services

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

ConvergeOne Holdings Corp.

9.38 % (L + 5.00 %)

12.50% (P + 4.00%)

Corelogic, Inc.

Internet Software and Services

7.94 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

CP Atlas Buyer, Inc (6)

Building Products

7.88 % (L + 3.50 %)

9.21% (S + CSA + 3.75%)

CPM Holdings, Inc.

9.84% (S + 4.50%)

Creation Technologies, Inc.

Electronic Equipment, Instruments and Components

9.25 % (L + 5.50 %)

11.18% (S + CSA + 5.50%)

Crown Subsea Communications Holding, Inc.

Construction and Engineering

10.71% (S + CSA + 5.25%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Curia Global, Inc.

Healthcare Providers and Services

8.16 % (L + 3.75 %)

Dave & Buster’s, Inc.

Hotels, Restaurants and Leisure

9.23% (S + CSA + 3.75%)

DCert Buyer, Inc.

8.70 % (S + 4.00 %)

Deerfield Dakota Holding, LLC (6)

3 unchanged sentences

9.12% (S + 3.75%)

Digi International Inc.

Technology Hardware, Storage and Peripherals

9.38 % (L + 5.00 %)

DIRECTV Financing, LLC (6)

9.38 % (L + 5.00 %)

10.65% (S + CSA + 5.00%)

Dotdash Meredith, Inc.

2 unchanged sentences

Professional Services

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

ECI Software Solutions, Inc.

8.48 % (L + 3.75 %)

9.36% (S + CSA + 3.75%)

ECL Entertainment, LLC (7)

Hotels, Restaurants and Leisure

11.88 % (L + 7.50 %)

10.11% (S + 4.75%)

EFS Cogen Holdings I, LLC (6)(7)

Independent Power and Renewable Electricity Producers

8.23 % (L + 3.50 %)

9.11% (S + 3.50%)

Endurance International Group, Inc., The (6)

Professional Services

7.72 % (L + 3.50 %)

Ensemble RCM, LLC (7)

Healthcare Technology

9.42% (S + CSA + 3.50%)

EnergySolutions, LLC (6)

Commercial Services and Supplies

9.36% (S + 4.00%)

Enverus Holdings, Inc.

10.86% (S + 5.50%)

EP Purchaser, LLC (6)

Professional Services

10.11% (S + CSA + 4.50%)

EPIC Y-Grade Services, LP (6)

Energy Equipment and Services

11.49% (S + CSA + 6.00%)

Fertitta Entertainment, LLC (6)

1 unchanged sentence

9.36% (S + 4.00%)

Filtration Group Corporation (7)

Filtration Group Corp.

Industrial Conglomerates

7.88 % (L + 3.50 %)

9.72% (S + CSA + 4.25%)

Flexera Software LLC (6)(7)

8.14 % (L + 3.75 %)

9.22% (S + CSA + 3.75%)

Fugue Finance, LLC (4)(6)

Diversified Consumer Services

9.39% (S + 4.00%)

Gainwell Acquisition Corp.

Healthcare Providers and Services

9.45% (S + CSA + 4.00%)

Garda World Security Corporation (4)(6)

Diversified Consumer Services

9.62% (S + 4.25%)

Generation Bridge Northeast, LLC (6)

Independent Power and Renewable Electricity Producers

9.61% (S + 4.25%)

Genuine Financial Holdings LLC (4)(6)

Professional Services

9.36% (S + 4.00%)

Palmer Square Capital BDC Inc.

1 unchanged sentence

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Garda World Security Corporation (4)(5)(7)

Diversified Consumer Services

8.53 % (S + 4.25 %)

Getty Images, Inc.

8.94 % (L + 4.50 %)

GIP III Stetson I, LP (7)

Energy Equipment and Services

8.63 % (L + 4.25 %)

9.95% (S + CSA + 4.50%)

Global Medical Response, Inc.

Healthcare Providers and Services

8.42 % (L + 4.25 %)

9.93% (S + CSA + 4.25%)

Gloves Buyer, Inc.

10.47% (S + CSA + 5.00%)

Grab Holdings Inc (4)(6)

8.89 % (L + 4.50 %)

9.97% (S + CSA + 4.50%)

Great Outdoors Group, LLC (6)

Specialty Retail

8.13 % (L + 3.75 %)

9.22% (S + CSA + 3.75%)

Grinding Media Inc.

Metals and Mining

7.93 % (L + 4.00 %)

9.68% (S + CSA + 4.00%)

HAH Group Holding Company LLC (6)

6 unchanged sentences

Independent Power and Renewable Electricity Producers

8.17 % (L + 4.50 %)

9.97% (S + CSA + 4.50%)

Helios Software Holdings, Inc.

Diversified Financial Services

9.70% (S + CSA + 4.25%)

Help/Systems Holdings, Inc.

9.48% (S + CSA + 4.00%)

Hyland Software, Inc.

7.88 % (L + 3.50 %)

7.5 % (L + 3.75 %)

HUB International Ltd.

9.66% (S + 4.25%)

9.28% (S + CSA + 3.75%)

IMA Financial Group, Inc.

7.88 % (L + 3.50 %)

Ineos US Finance LLC (4)(5)(7)

9.22% (S + CSA + 3.75%)

Imagefirst Holdings, LLC (7)

Healthcare Providers and Services

10.72% (S + CSA + 5.00%)

Indicor, LLC (6)

9.35% (S + 4.00%)

Indy US Holdco, LLC (6)

11.61% (S + 6.25%)

Infinite Bidco, LLC (6)

Electronic Equipment, Instruments and Components

7.98 % (L + 3.25 %)

9.39% (S + CSA + 3.75%)

Infinite Bidco, LLC

Electronic Equipment, Instruments and Components

11.88% (S + CSA + 6.25%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Professional Services

8.47 % (L + 4.00 %)

10.85% (S + 5.50%)

Invenergy Thermal Operating I LLC (7)

Independent Power and Renewable Electricity Producers

9.92% (S + CSA + 4.50%)

Invenergy Thermal Operating I LLC (7)

Independent Power and Renewable Electricity Producers

9.92% (S + CSA + 4.50%)

iSolved, Inc.

9.48% (S + 4.00%)

Ivanti Software, Inc.

8.73 % (L + 4.00 %)

9.67% (S + CSA + 4.00%)

Ivanti Software, Inc.

9.01 % (L + 4.25 %)

9.91% (S + CSA + 4.25%)

IVC Acquisition, Ltd.

Professional Services

10.87% (S + 5.50%)

Jack Ohio Finance LLC (7)

Hotels, Restaurants and Leisure

9.13 % (L + 4.75 %)

10.22% (S + CSA + 4.75%)

Jones DesLauriers Insurance Management Inc.

9.62% (S + 4.25%)

Kestrel Acquisition, LLC (6)

Independent Power and Renewable Electricity Producers

8.64 % (L + 4.25 %)

9.72% (S + CSA + 4.25%)

Kleopatra Finco S.a.r.l (4)(6)

3 unchanged sentences

Building Products

7.12 % (L + 3.75 %)

9.21% (S + CSA + 3.75%)

Life Time, Inc.

Hotels, Restaurants and Leisure

9.48 % (L + 4.75 %)

10.11% (S + CSA + 4.25%)

Lifescan Global Corporation (6)

Healthcare Equipment and Supplies

9.74 % (L + 6.00 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2022

of Net Assets

Holdco LLC (7)

Independent Power and Renewable Electricity

11.98% (S + CSA + 6.50%)

Lightstone Holdco LLC (6)

Independent Power and Renewable Electricity Producers

11.13% (S + 5.75%)

3 unchanged sentences

LogMeIn, Inc.

9.14 % (L + 4.75 %)

LSF9 Atlantis Holdings, LLC (7)

Specialty Retail

11.83 % (S + 7.25 %)

10.28% (S + CSA + 4.75%)

Magenta Buyer LLC (6)

9.17 % (L + 4.75 %)

10.64% (S + CSA + 5.00%)

Mariner Wealth Advisors, LLC (7)

1 unchanged sentence

9.70% (S + CSA + 4.25%)

Maxar Technologies, Inc.

Aerospace and Defense

Maverick 1, LLC

9.89% (S + CSA + 4.25%)

Max US Bidco Inc.

Food Products

10.35% (S + 5.00%)

Medical Solutions L.L.C.

Healthcare Providers and Services

7.88 % (L + 3.50 %)

8.71% (S + CSA + 3.25%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Mermaid Bidco, Inc.

9.88% (S + 4.50%)

Michael Baker International, LLC (7)

Construction and Engineering

9.38 % (L + 5.00 %)

10.47% (S + CSA + 5.00%)

Micro Holding Corp.

8.13 % (L + 3.75 %)

9.61% (S + 4.25%)

Midwest Veterinary Partners, LLC (6)

Healthcare Providers and Services

8.38 % (L + 4.00 %)

Milano Acquisition Corporation (5)(7)

Healthcare Providers and Services

8.73 % (L + 4.00 %)

9.47% (S + CSA + 4.00%)

Minotaur Acquisition, Inc.

3 unchanged sentences

Professional Services

8.41 % (L + 3.75 %)

9.40% (S + CSA + 3.75%)

MLN US HoldCo LLC (6)

Diversified Telecommunication Services

8.25 % (L + 4.50 %)

Moneygram International, Inc.

Diversified Consumer Services

8.88 % (L + 4.50 %)

9.97% (S + CSA + 4.50%)

Momentive Performance Materials USA, LLC (6)

9.86% (S + 4.50%)

NAPA Management Services Corporation (6)

3 unchanged sentences

Healthcare Providers and Services

8.33 % (L + 3.75 %)

9.20% (S + CSA + 3.75%)

National Mentor Holdings, Inc.

Healthcare Providers and Services

8.48 % (L + 3.75 %)

9.20% (S + CSA + 3.75%)

Navicure, Inc.

Healthcare Technology

8.38 % (L + 4.00 %)

9.47% (S + CSA + 4.00%)

Nexus Buyer LLC (6)

Diversified Financial Services

9.86% (S + 4.50%)

NorthStar Group Services, Inc.

4 unchanged sentences

10.70% (S + CSA + 5.25%)

OMNIA Partners, LLC (6)

Professional Services

9.63% (S + 4.25%)

OneDigital Borrower LLC (6)

4 unchanged sentences

Pharmaceuticals

8.49 % (L + 4.75 %)

PECF USS Intermediate Holding III Corporation (8)

Professional Services

8.63 % (L + 4.25 %)

Peraton Corp.

Aerospace and Defense

8.13 % (L + 3.75 %)

PetVet Care Centers, LLC (7)

Healthcare Providers and Services

7.88 % (L + 3.50 %)

10.43% (S + CSA + 4.75%)

2 unchanged sentences

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

PQ Performance Chemicals (7)

7.39 % (L + 3.25 %)

Patriot Growth Insurance Services, LLC (7)(10)

11.10% (S + 5.75%)

PECF USS Intermediate Holding III Corporation (7)

Professional Services

9.89% (S + CSA + 4.25%)

Peraton Corp.

Aerospace and Defense

9.21% (S + CSA + 3.75%)

9.81% (S + CSA + 4.25%)

Prairie ECI Acquiror LP (6)

Oil, Gas and Consumable Fuels

9.13 % (L + 4.75 %)

10.21% (S + CSA + 4.75%)

Pretium PKG Holdings, Inc.

Containers and Packaging

8.73 % (L + 4.00 %)

10.39% (S + 5.00%) incl.

Pretium PKG Holdings, Inc.

Containers and Packaging

9.99% (S + 4.60%) incl.

Project Alpha Intermediate Holding, Inc.

8.39 % (L + 4.00 %)

10.11% (S + 4.75%)

Project Boost Purchaser, LLC (6)

Professional Services

7.88 % (L + 3.50 %)

Proofpoint, Inc.

7.98 % (L + 3.25 %)

8.97% (S + CSA + 3.50%)

Prometric Holdings, Inc.

Diversified Consumer Services

10.72% (S + CSA + 5.25%)

PS Holdco, LLC (7)

Road and Rail

8.63 % (L + 4.25 %)

9.72% (S + CSA + 4.25%)

PT Intermediate Holdings III, LLC (7)

10.23 % (L + 5.50 %)

11.47% (S + CSA + 5.98%)

PT Intermediate Holdings III, LLC (7)

10.23 % (L + 5.50 %)

11.47% (S + CSA + 5.98%)

PT Intermediate Holdings III, LLC (7)

10.23 % (L + 5.50 %)

PT Intermediate Spider DD T/L (Parts Town) (8)

10.23 % (L + 5.50 %)

11.47% (S + CSA + 5.98%)

PT Intermediate Holdings III, LLC (7)

11.47% (S + CSA + 5.98%)

PT Intermediate Holdings III, LLC

11.85% (S + 6.50%)

Quest Software US Holdings Inc.

2 unchanged sentences

Healthcare Providers and Services

8.64 % (L + 4.25 %)

10.18% (S + CSA + 4.25%)

RC Buyer, Inc.

Auto Components

8.23 % (L + 3.50 %)

8.89% (S + CSA + 3.25%)

RealPage, Inc.

Real Estate Management and Development

7.38 % (L + 3.00 %)

8.47% (S + CSA + 3.00%)

RealTruck Group, Inc.

Auto Components

10.47% (S + CSA + 5.00%)

RealTruck Group, Inc.

Auto Components

8.97% (S + CSA + 3.50%)

Red Planet Borrower, LLC (6)

Internet Software and Services

8.13 % (L + 3.75 %)

9.21% (S + CSA + 3.75%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Redstone Holdco 2 LP (6)(7)

9.11 % (L + 4.75 %)

10.22% (S + CSA + 4.75%)

Refresco (4)(6)

1 unchanged sentence

9.63% (S + 4.25%)

Renaissance Holdings Corp.

Renaissance Holding Corp.

10.11% (S + 4.75%)

Rocket Software, Inc.

8.63 % (L + 4.25 %)

Rocket Software, Inc.

8.63 % (L + 4.25 %)

Rodan & Fields, LLC (7)

Textiles, Apparel and Luxury Goods

8.32 % (L + 4.00 %)

10.11% (S + 4.75%)

Rohm Holding GMBH (4)(6)(7)

8.37 % (L + 4.75 %)

RSC Acquisition, Inc.

10.88% (S + CSA + 5.00%)

1 unchanged sentence

Household Durables

10.23 % (L + 5.50 %)

Sabert Corporation (8)

Containers and Packaging

8.94 % (L + 4.50 %)

11.00% (S + CSA + 5.50%)

Ryan, LLC (7)

Professional Services

9.86% (S + 4.50%)

Shearer’s Foods, LLC (6)

Food Products

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

Simon & Schuster, Inc.

9.39% (S + 4.00%)

9.61% (S + 4.25%)

Sovos Compliance, LLC (7)

8.57 % (L + 4.50 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2022

of Net Assets

Specialty Building Products Holdings,

9.97% (S + CSA + 4.50%)

Specialty Building Products Holdings, LLC (6)(7)

Building Products

7.64 % (L + 3.25 %)

9.21% (S + CSA + 3.75%)

Summer BC Holdco B LLC (4)(7)

8.17 % (L + 4.50 %)

Surgery Center Holdings, Inc.

Healthcare Providers and Services

8.05 % (L + 3.75 %)

10.11% (S + CSA + 4.50%)

Talen Energy Supply, LLC (4)(6)

Independent Power and Renewable Electricity Producers

9.87% (S + 4.50%)

Talen Energy Supply, LLC (4)(6)

Independent Power and Renewable Electricity Producers

9.87% (S + 4.50%)

Tank Holding Corp.

Containers and Packaging

11.46% (S + CSA + 6.00%)

Tank Holding Corp.

Containers and Packaging

11.21% (S + CSA + 5.75%)

Tank Holding Corp.

Containers and Packaging

11.46% (S + CSA + 6.00%)

Tecta America Corp.

3 unchanged sentences

Diversified Financial Services

7.88 % (L + 3.50 %)

8.97% (S + CSA + 3.50%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Professional Services

12.88 % (L + 8.50 %)

Tidal Power Holdings, LLC (4)(7)

Independent Power and Renewable Electricity Producers

8.48 % (L + 3.75 %)

13.97% (S + CSA + 8.50%)

Titan US Finco, LLC (4)(7)

7.67 % (L + 4.00 %)

9.61% (S + CSA + 4.00%)

Tosca Services, LLC (6)

1 unchanged sentence

9.14% (S + CSA + 3.50%)

Traverse Midstream Partners LLC (7)

Oil, Gas and Consumable Fuels

8.95 % (S + CSA + 4.25 %)

Truck Hero, Inc.

Auto Components

8.13 % (L + 3.50 %)

Renal Care, Inc.

Healthcare Providers and Services

9.44 % (L + 5.00 %)

Transnetwork, LLC (7)

Diversified Financial Services

10.85% (S + 5.50%)

Renal Care, Inc.

Healthcare Providers and Services

9.94 % (L + 5.50 %)

Silica Company (4)(7)

Metals and Mining

8.44 % (L + 4.00 %)

8.13 % (L + 3.75 %)

United Airlines, Inc.

8.11 % (L + 3.75 %)

10.47% (S + CSA + 5.00%)

9.99% (S + CSA + 4.50%)

US Radiology Specialists, Inc.

Healthcare Providers and Services

8.94 % (L + 5.25 %)

10.75% (S + CSA + 5.25%)

9.98% (S + CSA + 4.50%)

VeriFone Systems, Inc.

Commercial Services and Supplies

8.36 % (L + 4.00 %)

9.64% (S + 4.00%)

Verscend Holding Corp.

Healthcare Technology

8.38 % (L + 4.00 %)

9.47% (S + CSA + 4.00%)

Vision Solutions, Inc.

8.36 % (L + 4.00 %)

9.64% (S + CSA + 4.00%)

Vocus Group DD T/L (4)(6)

Diversified Telecommunication Services

9.14% (S + CSA + 3.50%)

WarHorse Gaming, LLC

Hotels, Restaurants and Leisure

14.74% (S + CSA + 9.25%)

WaterBridge Midstream Operating, LLC (6)

Energy Equipment and Services

9.13 % (L + 5.75 %)

11.39% (S + CSA + 5.75%)

Watlow Electric Manufacturing Company (6)

1 unchanged sentence

9.40% (S + CSA + 3.75%)

Wencor Group (7)

Aerospace and Defense

8.42 % (S + CSA + 4.25 %)

White Cap Buyer LLC (6)

3 unchanged sentences

Building Products

7.98 % (L + 3.25 %)

Zelis Cost Management Buyer,

Healthcare Technology

7.88 % (L + 3.50 %)

Lien Senior Secured

8.70% (S + CSA + 3.25%)

Total First Lien Senior Secured

$ 984,089,538

3 unchanged sentences

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Lien Senior Secured (2)

Second Lien Senior Secured (2)

American Rock Salt Company LLC

Metals and Mining

11.63 % (L + 7.25 %)

12.72% (S + CSA + 7.25%)

ARC Falcon I Inc.

11.38 % (L + 7.00 %)

12.46% (S + CSA + 7.00%)

Artera Services, LLC (6)

Construction and Engineering

11.98 % (L + 7.25 %)

12.70% (S + CSA + 7.25%)

Aruba Investments, Inc.

12.14 % (L + 7.75 %)

13.21% (S + CSA + 7.75%)

Asurion, LLC (6)

9.63 % (L + 5.25 %)

10.72% (S + CSA + 5.25%)

Barracuda Networks, Inc.

1 unchanged sentence

DCert Buyer, Inc.

11.7 % (L + 7.00 %)

12.36% (S + 7.00%)

Delta Topco, Inc.

2 unchanged sentences

Electrical Equipment

12.88 % (L + 8.50 %)

Epicor Software Corporation (7)

12.13 % (L + 7.75 %)

13.96% (S + CSA + 8.50%)

Gainwell Acquisition Corp.

Healthcare Providers and Services

13.52% (S + CSA + 8.00%)

Help/Systems Holdings, Inc.

12.35% (S + CSA + 6.75%)

10.5 % (L + 6.75 %)

12.28% (S + CSA + 6.75%)

Infinite Bidco, LLC (6)

Electronic Equipment, Instruments and Components

11.73 % (L + 7.00 %)

Professional Services

12.38 % (L + 8.00 %)

12.64% (S + CSA + 7.00%)

Ivanti Software, Inc.

12.01 % (L + 7.25 %)

12.91% (S + CSA + 7.25%)

Magenta Buyer LLC

12.67 % (L + 8.25 %)

13.89% (S + CSA + 8.25%)

Paradigm Outcomes

1 unchanged sentence

13.04% (S + CSA + 7.50%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

Peraton Corp.

Aerospace and Defense

12.09 % (L + 7.75 %)

13.22% (S + CSA + 7.75%)

Pretium PKG Holdings, Inc.

Containers and Packaging

11.54 % (L + 6.75 %)

12.21% (S + CSA + 6.75%)

Quest Software US Holdings Inc.

11.59 % (S + 7.50 %)

13.03% (S + CSA + 7.50%)

Vision Solutions, Inc.

11.61 % (L + 7.25 %)

Lien Senior Secured

12.89% (S + CSA + 7.25%)

Total Second Lien Senior Secured

Corporate Bonds

KOBE US Midco 2

Total Corporate

Altice Financing S.A.

Diversified Telecommunication Services

KOBE US Midco 2 Inc

Total Corporate Bonds

Total Debt Investments

$ 1,068,784,821

1 unchanged sentence

$ 1,012,329,819

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2022

of Net Assets

Mezzanine (2)

CLO Mezzanine (2)

522 Funding CLO 2020-6, Ltd.

Structured Note

12.36 % (L + 8.04 %)

Barings CLO 2013-IA Class FR (4)

Structured Note

10.99 % (L + 6.75 %)

13.71% (S + CSA + 8.04%)

Carlyle US CLO 2020-2, Ltd (4)

Structured Note

12.89 % (L + 8.53 %)

14.17% (S + CSA + 8.53%)

Elmwood CLO III Ltd.

Structured Note

11.98 % (L + 7.74 %)

13.42% (S + CSA + 7.74%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2023

Portfolio Company (3)

Interest Rate

of Net Assets

GoldenTree Loan Management US 2020-7A (4)

Structured Note

11.99 % (L + 7.75 %)

13.43% (S + CSA + 7.75%)

GoldenTree Loan Management US 2021-10A (4)

Structured Note

12.03 % (L + 7.79 %)

13.47% (S + CSA + 7.79%)

GoldenTree Loan Management US 2021-9A (4)

Structured Note

10.99 % (L + 6.75 %)

Magnetite CLO, Ltd.

Structured Note

10.69 % (L + 6.50 %)

12.43% (S + CSA + 6.75%)

Thayer Park CLO, Ltd.

Structured Note

13.11 % (L + 8.87 %)

14.55% (S + CSA + 8.87%)

Total CLO Mezzanine

Ares CLO Ltd 2021-62A (4)

14 unchanged sentences

Structured Subordinated Note

Total CLO Equity

Total Equity and Other Investments

Palmer Square Capital BDC Inc.

11 unchanged sentences

$ 461,955,393

(1) The amortized cost represents the original cost adjusted for

the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(2) Loan contains a variable rate structure, subject to an interest

Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate

(“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), SOFR + Credit Spread Adjustment (S+CSA),

where the Credit Spread Adjustment is a defined additional spread amount based on the tenor of SOFR the borrower selects, or an alternate

base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically

based on the terms of the loan agreement.

For the holdings as of December 31, 2022 that have S+CSA as the base rate, the CSA is 10bp

for 1M SOFR, 15bp for 3M SOFR, and 25bp for 6M SOFR.

For the avoidance of doubt, loan floors apply to S+CSA, not S.

(3) As of December 31, 2022, all investments are non-controlled,

non-affiliated investments.

Non-controlled, non-affiliated investments are defined as investments in which the Company owns less

than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management

or policies of such portfolio company.

(4) Non-qualifying investment as defined by Section 55(a) of the

Investment Company Act of 1940.

The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets

represent at least 70% of the Company’s total assets.

As of December 31, 2022, 14.9% of the Company’s total assets were in non-qualifying

(5) Investments or a portion of investments are unsettled as of

December 31, 2022.

(6) As of December 31, 2022, the tax cost of the Company’s investments

approximates their amortized cost.

(7) Security or portion thereof held within Palmer Square BDC Funding

I, LLC (“PS BDC Funding”) and is pledged as collateral supporting the amounts outstanding under a revolving credit facility

with Bank of America, N.A.

(1) The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments

using the effective interest method.

(2) Loan contains a variable rate structure, subject to an interest rate

Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR”

or “L”) (which can include one-, two-, three- or six-month LIBOR), the Secured Overnight Financing Rate (“SOFR”

or “S”), SOFR + Credit Spread Adjustment (S+CSA), where the Credit Spread Adjustment is a defined additional spread amount

based on the tenor of SOFR the borrower selects, the Euro Interbank Offered Rate (“Euribor” or “E”), the U.S.

Rate (“P”), or an alternate base rate (which can include the Federal Funds Effective Rate), at the borrower’s option,

and which reset periodically based on the terms of the loan agreement.

For the holdings as of December 31, 2023 that have S+CSA as the

base rate, the credit spread adjustment ranges from 10bps to 42.8bps.

(3) As of December 31, 2023, all investments are non-controlled, non-affiliated investments.

Non-controlled, non-affiliated investments

are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and

does not have the power to exercise control over the management or policies of such portfolio company.

(4) Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940.

The Company may not acquire any non-qualifying

asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets.

As of December 31,

2023, 13.2% of the Company’s total assets were in non-qualifying investments.

(5) As of December 31, 2023, the tax cost of the Company’s investments approximates their amortized cost.

(6) Security or portion thereof held within Palmer Square BDC Funding I, LLC (“PS BDC Funding”) and is pledged as collateral supporting

the amounts outstanding under a revolving credit facility with Bank of America, N.A.

(“BofA N.A.”) (see Note 6 to the consolidated financial statements).

(8) Security or portion thereof held within Palmer Square BDC Funding

II, LLC (“PS BDC Funding II”) and is pledged as collateral supporting the amounts outstanding under a revolving credit facility

with Wells Fargo Bank, National Association (“WFB”) (see Note 6 to the consolidated financial statements).

(7) Security or portion thereof held within Palmer Square BDC Funding II, LLC (“PS BDC Funding II”) and is pledged as collateral

supporting the amounts outstanding under a revolving credit facility with Wells Fargo Bank, National Association (“WFB”) (see

Note 6 to the consolidated financial statements).

(8) 7-day effective yield as of December 31, 2023.

The accompanying notes are

an integral part of these consolidated financial statements.

(9) Of the $2,625,000 commitment to Accession Risk Management Group, Inc., $2,457,857.14 was unfunded as of December 31, 2023.

(10) Of the $5,000,000 commitment to Patriot Growth Insurance Services, LLC, $4,650,000 was unfunded as of December 31, 2023.

(11) Of the $899,242.50 commitment to Tank Holding Corp., $597,000 was unfunded as of December 31, 2023.

The accompanying notes are an integral part of these consolidated financial statements.

Palmer Square Capital BDC Inc.

2 unchanged sentences

Portfolio Company (3)

Lien Senior Secured (2)

Loyalty IP Ltd.

5.50 % (L + 4.75 %)

Providers and Services

4.18 % (L + 4.00 %)

3.63 % (L + 3.50 %)

4.75 % (L + 4.25 %)

Health Partners, Inc.

Equipment and Supplies

4.00 % (L + 3.50 %)

Aqua Merger Sub, Inc., (5)(7)(8)

4.50 % (L + 4.00 %)

Acquisition Co., Inc.

Restaurants and Leisure

3.84 % (L + 3.75 %)

Methods Corporation (7)

Interest Rate

of Net Assets

Debt Investments

First Lien Senior Secured (2)

AAdvantage Loyalty

8.99% (L + 4.75%)

Holdings Intermediate LLC (7)

AccentCare, Inc.

Healthcare Providers and Services

8.73% (L + 4.00%)

Universal Holdco LLC (7)

Acrisure, LLC (7)

7.88% (L + 3.50%)

Mountain Company (7)

Restaurants and Leisure

Acrisure, LLC (7)

8.63% (L + 4.25%)

Government Services Holdings LLC (7)

AI Aqua Merger Sub, Inc., (7)(8)

Food Products

7.97% (S + 3.75%)

Aimbridge Acquisition Co.,

Hotels, Restaurants and Leisure

8.13% (L + 3.75%)

Government Services Holdings LLC (7)

Alliant Holdings Intermediate

7.85% (L + 3.50%)

Airlines, Inc.

Allied Universal Holdco LLC

Professional Services

8.17% (S + CSA + 3.75%)

Amentum Government Services

Holdings LLC (7)

Aerospace and Defense

8.76% (S + 4.00%)

American Rock Salt Company

Metals and Mining

8.38% (L + 4.00%)

Airlines, Inc.

Amynta Agency Borrower, Inc.

8.88% (L + 4.50%)

Rock Salt Company LLC (7)

AP Gaming I, LLC (4)(5)(7)

Hotels, Restaurants and Leisure

8.73% (S + CSA + 4.00%)

Aptean Inc (7)(8)

8.98% (L + 4.25%)

Agency Borrower, Inc.

AQA Acquisition Holding, Inc.

8.98% (L + 4.25%)

Gaming I, LLC (7)

Restaurants and Leisure

ARC Falcon I Inc.

8.13% (L + 3.75%)

Corporation (4)(7)

Aruba Investments Holdings,

8.14% (L + 4.00%)

Inc (5)(7)(8)

Ascend Learning, LLC (7)

Professional Services

7.88% (L + 3.50%)

Acquisition Holding, Inc.

AssuredPartners, Inc.

7.88% (L + 3.50%)

Falcon I Inc.

AssuredPartners, Inc.

7.82% (S + 3.50%)

Athletico Management, LLC (7)

Healthcare Providers and Services

8.98% (S + CSA + 4.25%)

Autokiniton US Holdings, Inc.

Auto Components

8.79% (L + 4.50%)

Aveanna Healthcare LLC (4)(5)(7)

Healthcare Providers and Services

8.14% (L + 3.75%)

International PTY Ltd (4)(5)(7)(8)

Restaurants and Leisure

Barracuda Networks, Inc.

8.59% (S + 4.50%)

BBB Industries (8)

Auto Components

9.67% (S + CSA + 5.25%)

BCP Renaissance Parent LLC

Oil, Gas and Consumable Fuels

7.82% (S + 3.50%)

Belfor Holdings, Inc.

Commercial Services and Supplies

8.38% (L + 3.75%)

Investments Holdings, LLC (7)

Castle US Holding Corporation

Professional Services

8.38% (L + 4.00%)

Learning, LLC (5)(7)

Castle US Holding Corporation

Professional Services

8.13% (L + 3.75%)

CCI Buyer, Inc.

Wireless Telecommunication Services

8.58% (S + 4.00%)

Palmer Square Capital BDC Inc.

2 unchanged sentences

Portfolio Company (3)

AssuredPartners,

4.00 % (L + 3.50 %)

Athenahealth,

Equipment and Supplies

4.40 % (L + 4.25 %)

US Holdings, Inc.

5.00 % (L + 4.50 %)

Telecommunication Services

4.11 % (L + 4.00 %)

Telecommunication Services

4.36 % (L + 4.25 %)

Healthcare LLC (4)(7)

Providers and Services

4.25 % (L + 3.75 %)

3.63 % (L + 3.50 %)

Networks, Inc.

4.50 % (L + 3.75 %)

Raptor, LLC (5)(7)

Gas and Consumable Fuels

5.25 % (L + 4.25 %)

Renaissance Parent L.L.C.

Gas and Consumable Fuels

4.50 % (L + 3.50 %)

Holdings Inc.

Services and Supplies

3.85 % (L + 3.75 %)

Parent Company, Inc.

3.88 % (L + 3.75 %)

Resort Collection, LLC (4)(7)

Restaurants and Leisure

3.60 % (L + 3.50 %)

US Holding Corporation (8)

3.88 % (L + 3.75 %)

US Holding Corporation (8)

4.75 % (L + 4.00 %)

Telecommunication Services

4.50 % (L + 3.75 %)

Holdings, Inc.

Providers and Services

5.63 % (L + 5.50 %)

Healthcare Services, Inc (7)

Providers and Services

4.00 % (L + 3.50 %)

Communications, Inc.

Telecommunication Services

4.25 % (L + 3.50 %)

Holdings Corp.

5.10 % (L + 5.00 %)

Software and Services

Interest Rate

of Net Assets

CCS-CMGC Holdings, Inc.

Healthcare Providers and Services

9.91% (L + 5.50%)

Atlas Buyer, Inc (7)

CDK Global (7)

9.08% (S + 4.50%)

Congruex Group LLC (8)

Construction and Engineering

9.99% (S + CSA + 5.75%)

Connectwise LLC (7)

7.88% (L + 3.50%)

Technologies, Inc.

Equipment, Instruments and Components

Consolidated Communications, Inc.

Diversified Telecommunication Services

7.88% (L + 3.50%)

Providers and Services

ConvergeOne Holdings Corp.

9.38% (L + 5.00%)

Corelogic, Inc.

Internet Software and Services

7.94% (L + 3.50%)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Dakota Holding, LLC (7)

Diversified Financial

CP Atlas Buyer, Inc (7)

Building Products

7.88% (L + 3.50%)

US Holdings, Inc.

Oil, Gas and Consumable Fuels

Creation Technologies, Inc.

Electronic Equipment, Instruments and Components

9.25% (L + 5.50%)

Curia Global, Inc.

Healthcare Providers and Services

8.16% (L + 3.75%)

International Inc.

Technology Hardware, Storage

and Peripherals

Dave & Buster’s, Inc.

Hotels, Restaurants and Leisure

9.44% (S + CSA + 5.00%)

DCert Buyer, Inc.

8.70% (S + 4.00%)

Deerfield Dakota Holding, LLC (7)

Diversified Financial Services

8.07% (S + 3.75%)

Delta Topco, Inc.

8.15% (S + 3.75%)

Digi International Inc.

Technology Hardware, Storage and Peripherals

9.38% (L + 5.00%)

Financing, LLC (7)

DIRECTV Financing, LLC (7)

9.38% (L + 5.00%)

Meredith, Inc.

4.50 % (C + SCA + 4.00 %)

Dotdash Meredith, Inc.

8.22% (S + CSA + 4.00%)

EAB Global, Inc.

Professional Services

7.88% (L + 3.50%)

Software Solutions, Inc.

ECI Software Solutions, Inc.

8.48% (L + 3.75%)

Entertainment, LLC (8)

ECL Entertainment, LLC (8)

Hotels, Restaurants and Leisure

11.88% (L + 7.50%)

Cogen Holdings I LLC (5)(7)(8)

Independent Power and Renewable

Electricity Producers

EFS Cogen Holdings I, LLC (7)(8)

Independent Power and Renewable Electricity Producers

8.23% (L + 3.50%)

International Group, Inc.

Endurance International Group, Inc., The (7)

Professional Services

7.72% (L + 3.50%)

Ensemble RCM, LLC (7)

Healthcare Technology

3.88 % (L + 3.75 %)

Development Authority (8)

7.94% (S + CSA + 3.75%)

Fertitta Entertainment, LLC (7)

Hotels, Restaurants and Leisure

5.00 % (L + 4.25 %)

Software Corporation (7)

4.00 % (L + 3.25 %)

Technologies Corp.

Industrial Conglomerates

4.50 % (L + 3.50 %)

Group Corporation (7)

8.32% (S + 4.00%)

Filtration Group Corporation (7)

Industrial Conglomerates

7.88% (L + 3.50%)

Software LLC (7)(8)

4.50 % (L + 3.75 %)

Bridge Acquisition, LLC (5)(8)

Electric Utilities

5.75 % (L + 5.00 %)

Bridge Acquisition, LLC (5)(8)

Electric Utilities

5.75 % (L + 5.00 %)

4.63 % (L + 4.50 %)

Environmental Inc.

Commercial Services and Supplies

Flexera Software LLC (7)(8)

8.14% (L + 3.75%)

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

World Security Corporation (4)(5)(7)

Consumer Services

III Stetson I, LP (7)

Equipment and Services

Medical Response, Inc.

Healthcare Providers and Services

5.25 % (L + 4.25 %)

Providers and Services

Holdings Inc (4)(7)

5.50 % (L + 4.50 %)

Outdoors Group, LLC (7)

Specialty Retail

4.50 % (L + 3.75 %)

Metals and Mining

4.75 % (L + 4.00 %)

Group Holding Company LLC (5)(7)

Healthcare Providers and Services

6.00 % (L + 5.00 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Providers and Services

(S + CSA + 5.00%)

Group Holding Company LLC (5)(7)

Healthcare Providers

6.00 % (L + 5.00 %)

Providers and Services

(S + CSA + 5.00%)

Projects Acquiror, LLC (7)(8)

Independent Power and Renewable

Electricity Producers

5.50 % (L + 4.50 %)

Freight Tools USA, Inc.

Specialty Retail

3.25 % (L + 2.75 %)

Power and Renewable Electricity Producers

Holdings, Inc.

4.75 % (L + 4.00 %)

International Limited (7)

4.00 % (L + 3.25 %)

(S + CSA + 4.00%)

Software, Inc.

4.25 % (L + 3.50 %)

Refinance S.a.r.l.

4.00 % (L + 3.25 %)

4.50 % (L + 3.75 %)

Financial Group, Inc.

4.25 % (L + 3.75 %)

US Finance LLC (4)(5)(7)

(S + CSA + 3.75%)

Bidco LLC (7)

Electronic Equipment, Instruments

and Components

4.25 % (L + 3.75 %)

Professional Services

5.00 % (L + 4.00 %)

Holding Corporation (7)

Hotels, Restaurants and Leisure

4.25 % (L + 3.25 %)

Equipment, Instruments and Components

Software, Inc.

4.75 % (L + 4.00 %)

Software, Inc.

5.00 % (L + 4.25 %)

Ohio Finance LLC (8)

Hotels, Restaurants and Leisure

5.50 % (L + 4.75 %)

Restaurants and Leisure

Acquisition, LLC (7)

Independent Power and Renewable

Electricity Producers

5.25 % (L + 4.25 %)

Power and Renewable Electricity Producers

Finco S.a.r.l (4)(7)

Containers and Packaging

5.25 % (L + 4.75 %)

Finance Acquisition Co

Hotels, Restaurants and Leisure

13.00 % (L + 12.00 %)

and Packaging

(S + CSA + 4.75%)

Acquisition LLC (7)(8)

Building Products

4.50 % (L + 3.75 %)

Hotels, Restaurants and Leisure

5.75 % (L + 4.75 %)

Restaurants and Leisure

Global Corporation (7)

Healthcare Equipment and Supplies

6.13 % (L + 6.00 %)

Independent Power and Renewable

Electricity Producers

4.75 % (L + 3.75 %)

Independent Power and Renewable

Electricity Producers

4.75 % (L + 3.75 %)

Gate Capital Holdings LLC (4)(7)

2.35 % (L + 2.25 %)

4.86 % (L + 4.75 %)

Energy Group II Borrower, LLC (7)

Oil, Gas and Consumable Fuels

5.00 % (L + 4.25 %)

Equipment and Supplies

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Schedule of Investments

of December 31, 2022

of Net Assets

Holdco LLC (7)

Power and Renewable Electricity Producers

Holdco LLC (7)

Power and Renewable Electricity Producers

Atlantis Holdings, LLC (7)

Buyer LLC (7)

5.75 % (L + 5.00 %)

3.84 % (L + 3.75 %)

Wealth Advisors, LLC (5)(8)

Financial Services

(S + CSA + 4.25%)

Technologies, Inc.

(S + CSA + 4.25%)

Solutions L.L.C.

Providers and Services

4.00 % (L + 3.50 %)

Systems Holdings, LLC (7)(8)

Telecommunication Services

4.50 % (L + 3.75 %)

Baker International, LLC (8)

and Engineering

5.75 % (L + 5.00 %)

Holding Corp.

4.75 % (L + 3.75 %)

Veterinary Partners, LLC (7)

Providers and Services

4.75 % (L + 4.00 %)

Acquisition Corporation (5)(7)

Providers and Services

4.75 % (L + 4.00 %)

Acquisition, Inc.

Financial Services

4.84 % (L + 4.75 %)

(S + CSA + 5.00%)

International, Inc.

4.25 % (L + 3.75 %)

US HoldCo LLC (7)

Telecommunication Services

4.60 % (L + 4.50 %)

International, Inc.

Consumer Services

5.00 % (L + 4.50 %)

Mentor Holdings, Inc.

Management Services Corporation (7)

Providers and Services

4.50 % (L + 3.75 %)

(S + CSA + 5.25%)

Mentor Holdings, Inc.

Providers and Services

4.50 % (L + 3.75 %)

4.10 % (L + 4.00 %)

Buyer LLC (7)

3.85 % (L + 3.75 %)

Holdings, Inc.

Mentor Holdings, Inc.

Providers and Services

6.00 % (L + 5.00 %)

Group Services, Inc.

Services and Supplies

6.50 % (L + 5.50 %)

(S + CSA + 5.50%)

Top Holdings Corp.

Equipment and Supplies

5.35 % (L + 5.25 %)

(S + CSA + 5.25%)

Borrower LLC (7)

4.75 % (C + SCA + 4.25 %)

(S + CSA + 4.25%)

Merger Sub II, LLC (4)(7)

5.25 % (L + 4.75 %)

Clean Energy, LLC (7)

Power and Renewable Electricity Producers

4.75 % (L + 3.75 %)

Evergreen Group Holdings Inc.

and Packaging

4.00 % (L + 3.50 %)

(S + CSA + 4.75%)

Pharmaceuticals

5.25 % (L + 4.75 %)

Vet Alliance LLC (7)

Providers and Services

3.85 % (L + 3.75 %)

USS Intermediate Holding III Corporation (8)

4.75 % (L + 4.25 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

4.50 % (L + 3.75 %)

Care Centers, LLC (7)

Healthcare Providers and Services

4.25 % (L + 3.50 %)

Guarantor Inc.

Healthcare Providers and Services

3.60 % (L + 3.50 %)

Road and Rail

3.75 % (L + 3.00 %)

Providers and Services

(S + CSA + 4.25%)

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

Performance Chemicals (7)

4.25 % (L + 3.50 %)

ECI Acquiror LP (7)

Oil, Gas and Consumable Fuels

4.85 % (L + 4.75 %)

Holdings, Inc.

Professional Services

3.61 % (L + 3.50 %)

Gas and Consumable Fuels

PKG Holdings, Inc.

Containers and Packaging

4.50 % (L + 4.00 %)

Security Services Borrower, LLC (4)(7)

Diversified Consumer Services

3.50 % (L + 2.75 %)

and Packaging

Alpha Intermediate Holding, Inc.

4.11 % (L + 4.00 %)

Boost Purchaser, LLC (7)

Professional Services

4.00 % (L + 3.50 %)

3.75 % (L + 3.25 %)

Holdco, LLC (8)

Road and Rail

5.00 % (L + 4.25 %)

Intermediate Holdings III LLC (8)

6.25 % (L + 5.50 %)

Intermediate Holdings III LLC (8)

6.25 % (L + 5.50 %)

Intermediate Holdings III LLC (8)

Intermediate Spider DD T/L (Parts Town) (8)

Software US Holdings Inc.

4.38 % (L + 4.25 %)

Holdco, LLC (7)

4.00 % (L + 3.25 %)

(S + CSA + 4.25%)

Partners, Inc.

Healthcare Providers and Services

4.35 % (L + 4.25 %)

Auto Components

4.25 % (L + 3.50 %)

Real Estate Management and

3.75 % (L + 3.25 %)

Providers and Services

Estate Management and Development

Planet Borrower, LLC (7)

Internet Software and Services

4.25 % (L + 3.75 %)

Software and Services

Holdco 2 LP (7)(8)

5.50 % (L + 4.75 %)

Hospital Partners Holdings, Inc.

Healthcare Providers and Services

3.85 % (L + 3.75 %)

Holdings Corp.

Software, Inc.

4.75 % (L + 4.25 %)

Software, Inc.

& Fields, LLC (7)

Textiles, Apparel and Luxury

4.11 % (L + 4.00 %)

Apparel and Luxury Goods

Holding GMBH (4)(7)(8)

4.90 % (L + 4.75 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Acquisition, Inc.

6.25 % (L + 5.50 %)

Acquisition, Inc.

6.25 % (L + 5.50 %)

Acquisition, Inc.

6.25 % (L + 5.50 %)

Household Durables

6.25 % (L + 5.50 %)

Specialty Group LLC (4)(7)

3.75 % (L + 3.00 %)

(S + CSA + 5.50%)

Corporation (8)

Containers and Packaging

5.50 % (L + 4.50 %)

Acquisition, LLC (7)

Diversified Consumer Services

3.10 % (L + 3.00 %)

and Packaging

Foods, LLC (7)

Food Products

4.25 % (L + 3.50 %)

Health Holdings, LLC (7)

Healthcare Equipment and Supplies

3.25 % (L + 2.75 %)

Compliance, LLC (8)

5.00 % (L + 4.50 %)

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

Building Products Holdings, LLC (7)(8)

Building Products

4.25 % (L + 3.75 %)

Nature Deutschland GmbH (4)(7)

3.75 % (L + 3.00 %)

BC Holdco B LLC (4)(8)

5.25 % (L + 4.50 %)

Holdings, LLC (7)

3.69 % (L + 3.50 %)

Center Holdings, Inc.

Healthcare Providers and Services

4.50 % (L + 3.75 %)

Energy Supply, LLC (7)

Independent Power and Renewable

Electricity Producers

3.85 % (L + 3.75 %)

Providers and Services

America Corp.

Construction and Engineering

5.00 % (L + 4.25 %)

Edelman Financial Engines Centre, LLC (7)

Diversified Financial Services

4.25 % (L + 3.50 %)

Professional Services

9.50 % (L + 8.50 %)

Software Inc (7)

3.85 % (L + 3.75 %)

and Engineering

(S + CSA + 4.25%)

Edelman Financial Center, LLC (7)

Financial Services

Power Holdings, LLC (4)(7)

Independent Power and Renewable

Electricity Producers

4.75 % (L + 3.75 %)

Acquisition, LLC (7)

Industrial Conglomerates

3.75 % (L + 3.25 %)

Power and Renewable Electricity Producers

US Finco, LLC (4)(8)

4.50 % (L + 4.00 %)

Specialty Retail

6.25 % (L + 5.50 %)

Burch LLC (7)

Specialty Retail

3.50 % (L + 3.00 %)

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Services, LLC (7)

and Packaging

4.25 % (L + 3.50 %)

(S + CSA + 3.50%)

Midstream Partners LLC (7)

Gas and Consumable Fuels

5.25 % (C + SCA + 4.25 %)

Water Holdings, Inc.

4.00 % (L + 3.50 %)

4.00 % (L + 3.25 %)

(S + CSA + 4.25%)

Renal Care, Inc.

Providers and Services

5.13 % (L + 5.00 %)

Renal Care, Inc.

Providers and Services

6.50 % (L + 5.50 %)

Silica Company (4)(7)

5.00 % (L + 4.00 %)

Software Group, The (7)

3.85 % (L + 3.75 %)

Airlines, Inc.

4.50 % (L + 3.75 %)

Communications Inc.

4.00 % (L + 3.25 %)

Radiology Specialists, Inc.

Providers and Services

6.00 % (L + 5.25 %)

(S + CSA + 4.75%)

Systems, Inc.

Services and Supplies

4.18 % (L + 4.00 %)

Holding Corp.

4.10 % (L + 4.00 %)

Solutions, Inc.

4.75 % (L + 4.00 %)

Midstream Operating, LLC (7)

Equipment and Services

Electric Manufacturing Company (7)

4.25 % (L + 3.75 %)

Restaurants and Leisure

3.75 % (L + 3.25 %)

(S + CSA + 3.75%)

(S + CSA + 4.25%)

Cap Buyer LLC (7)(8)

4.50 % (L + 4.00 %)

4.50 % (L + 3.50 %)

Cost Management Buyer, Inc.

3.60 % (L + 3.50 %)

First Lien Senior Secured

1,012,130,228

$ 1,003,839,402

$ 1,007,407,474

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

Lien Senior Secured (2)

8.25 % (L + 7.25 %)

Rock Salt Company LLC

Falcon I Inc.

7.50 % (L + 7.00 %)

Services, LLC (7)

Construction and Engineering

8.25 % (L + 7.25 %)

and Engineering

Investments, Inc.

8.50 % (L + 7.75 %)

5.35 % (L + 5.25 %)

BidCo S.a r.l.

Pharmaceuticals

8.50 % (L + 7.75 %)

7.10 % (L + 7.00 %)

Networks, Inc.

Acquisition LP

Electrical Equipment

8.50 % (L + 8.50%)

Software Corporation (7)

8.75 % (L + 7.75 %)

Holdings, Inc.

7.50 % (L + 6.75 %)

(S + CSA + 6.75%)

Bidco LLC (7)

Electronic Equipment, Instruments

and Components

7.50 % (L + 7.00 %)

Professional Services

9.00 % (L + 8.00 %)

Equipment, Instruments and Components

Software, Inc.

7.75 % (L + 7.25 %)

9.00 % (L + 8.25 %)

8.50 % (L + 7.75 %)

Providers and Services

(S + CSA + 7.50%)

PKG Holdings, Inc.

Containers and Packaging

7.25 % (L + 6.75 %)

and Packaging

Software US Holdings Inc.

8.38 % (L + 8.25 %)

Software Inc (5)

7.35 % (L + 7.25 %)

Solutions, Inc.

8.00 % (L + 7.25 %)

Second Lien Senior Secured

Diversified Consumer Services

US Midco 2 Inc

Corporate Bonds

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Network Corp (4)

Convertible Bonds

Debt Investments

1 unchanged sentence

1,025,151,042

$ 1,075,955,626

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

Mezzanine (2)

Funding CLO 2020-6, Ltd.

Structured Note

8.17 % (L + 8.04 %)

Structured Note

6.88 % (L + 6.75 %)

CLO 2013-IA Class FR (4)

US CLO 2020-2, Ltd (4)

Structured Note

8.66 % (L + 8.53 %)

Structured Note

7.86 % (L + 7.74 %)

Loan Management US 2020-7A (4)

Structured Note

7.88 % (L + 7.50 %)

Loan Management US 2021-10A (4)

Structured Note

7.92 % (L + 7.79 %)

Loan Management US 2021-9A (4)

Structured Note

6.88 % (L + 6.75 %)

Loan Management Series 15A-19 (4)

Structured Note

6.73 % (L + 6.60 %)

CLO Ltd 2015-16A (4)

Structured Note

6.62 % (L + 6.50 %)

Park CLO, Ltd.

Structured Note

9.00 % (L + 8.87 %)

CLO Mezzanine

CLO Ltd 2021-62A (4)

Structured Subordinated Note

Subordinated Note

CLO 2018-4A, Ltd.

Subordinated Note

Loan Management 12-2018, Ltd.

Subordinated Note

Point Park CLO, Ltd.

Structured Subordinated Note

Subordinated Note

XII Funding Ltd.

Structured Subordinated Note

Subordinated Note

Peak CLO, LLC (4)

Subordinated Note

CLO Series 2021-1A (4)

Structured Subordinated Note

Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021

Portfolio Company (3)

Custom Truck One Source Inc (4)

Commercial Services and Supplies

Total Equity Investments

Total Equity and Other Investments

Short-Term Investments

Subordinated Note

Other Investments

Square Capital BDC Inc.

Schedule of Investments

of December 31, 2022

of Net Assets

Fidelity Investments Money Market Government Portfolio - Institutional Class, 4.10 % (9)

Total Short-Term Investments

Total Investments

$ 1,189,713,653

Short-Term Investments

1,120,099,935

Liabilities in Excess of Other Assets

1,017,211,732

in Excess of Other Assets

( 653,768,250

(1) The amortized cost represents the original cost adjusted

for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(2) Loan contains a variable rate structure, subject to an interest

Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate

(“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), SOFR + Credit Spread Adjustment (S+CSA),

where the Credit Spread Adjustment is a defined additional spread amount based on the tenor of SOFR the borrower selects, or an

alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which

reset periodically based on the terms of the loan agreement.

For the holdings as of 12/31/21 that have S+CSA as the base rate, the CSA

is 10bp for 1M SOFR, 15bp for 3M SOFR, and 25bp for 6M SOFR.

(1) The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(2) Loan contains a variable rate structure, subject to an interest rate floor.

Variable rate loans bear interest at a rate that may be determined by reference to either the London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR), SOFR + Credit Spread Adjustment (S+CSA), where the Credit Spread Adjustment is a defined additional spread amount based on the tenor of SOFR the borrower selects, or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement.

For the holdings as of December 31, 2022 that have S+CSA as the base rate, the CSA is 10bp for 1M SOFR, 15bp for 3M SOFR, and 25bp for 6M SOFR.

For the avoidance of doubt, loan floors apply to S+CSA, not S.

1 unchanged sentence

Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company.

(4) Non-qualifying investment as defined by Section 55(a) of

the Investment Company Act of 1940.

(4) Non-qualifying investment as defined by Section 55(a) of the Investment Company Act of 1940.

The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets.

As of December 31, 2022, 14.9% of the Company’s total assets were in non-qualifying investments.

(5) Investments or a portion of investments are unsettled as

of December 31, 2021.

(6) As of December 31, 2021, the tax cost of the Company’s investments

approximates their amortized cost.

(7) Security or portion thereof held within Palmer Square BDC

Funding I, LLC (“PS BDC Funding”) and is pledged as collateral supporting the amounts outstanding under a revolving credit

facility with Bank of America, N.A.

(5) Investments or a portion of investments are unsettled as of December 31, 2022.

(6) As of December 31, 2022, the tax cost of the Company’s investments approximates their amortized cost.

(7) Security or portion thereof held within Palmer Square BDC Funding I, LLC (“PS BDC Funding”) and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Bank of America, N.A.

(“BofA N.A.”) (see Note 6 to the consolidated financial statements).

(8) Security or portion thereof held within Palmer Square BDC

Funding II, LLC (“PS BDC Funding II”) and is pledged as collateral supporting the amounts outstanding under a revolving credit

facility with Wells Fargo Bank, National Association (“WFB”) (see Note 6 to the consolidated financial statements).

(8) Security or portion thereof held within Palmer Square BDC Funding II, LLC (“PS BDC Funding II”) and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Wells Fargo Bank, National Association (“WFB”) (see Note 6 to the consolidated financial statements).

(9) 7-day effective yield as of December 31, 2022.

(10) Of the $3,765,060 commitment to RSC Acquisition, Inc., $3,237,952

was unfunded as of December 31, 2021.

The accompanying notes are an integral part of these consolidated financial

Palmer Square Capital BDC Inc.

Notes to Consolidated Financial Statements

Palmer Square Capital BDC

(the “Company”) is a financial services company that primarily lends to and invests in corporate debt securities of companies,

including small to large private U.S.

The Company was organized as a Maryland corporation on August 26, 2019 and is structured

as an externally managed, non-diversified closed-end management investment company.

The Company has elected to be regulated as a business

development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

Beginning with

its taxable year ending December 31, 2020, the Company has elected to be treated as a regulated investment company (“RIC”)

under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) and expects to qualify as a RIC each year

accompanying notes are an integral part of these consolidated financial statements.

Square Capital BDC Inc.

to Consolidated Financial Statements

Square Capital BDC Inc.

(the “Company”) is a financial services company that primarily lends to and invests in corporate

debt securities of companies, including small to large private U.S.

The Company was organized as a Maryland corporation on

August 26, 2019 and is structured as an externally managed, non-diversified closed-end management investment company.

The Company has

elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the

Beginning with its taxable year ending December 31, 2020, the Company has elected to be treated as a regulated

investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) and

expects to qualify as a RIC each year thereafter.

The Company commenced operations on January 23, 2020.

Palmer Square BDC Funding I, LLC (“PS BDC Funding”) was

formed on January 21, 2020 and entered into a senior, secured revolving credit facility with Bank of America, N.A.

(“BofA N.A.”)

Palmer Square BDC Funding II LLC (“PS BDC Funding II”) was formed on September 8, 2020 and entered into a senior, secured

credit facility with Wells Fargo, National Association (“WFB”).

The Company’s investment

objective is to maximize total return, comprised of current income and capital appreciation.

The Company’s current investment focus

is guided by two strategies that facilitate its investment opportunities and core competencies:

(1) investing in corporate debt securities

and, to a lesser extent, (2) investing in collateralized loan obligation (“CLO”) structured credit funds that typically own

corporate debt securities, including the equity and junior debt tranches of CLOs.

To a limited extent, the Company may enter into derivatives

transactions, which may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors

to seek to hedge against fluctuations in the relative values of the Company’s portfolio positions from changes in currency exchange

rates and market interest rates or to earn income and enhance the Company’s total returns.

The Company may receive or purchase warrants

or rights to acquire equity or other securities in connection with making a debt investment in a company.

During the years ended December

31, 2022 and December 31, 2021, the Company did not invest in any derivative contracts.

The Company is externally

managed by Palmer Square BDC Advisor LLC (the “Investment Advisor”), an investment adviser that is registered with the Securities

and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, pursuant to an investment advisory agreement

between the Company and the Investment Advisor (the “Advisory Agreement”).

The Investment Advisor, in its capacity as administrator

(the “Administrator”), provides the administrative services necessary for the Company to operate pursuant to an administration

agreement between the Company and the Administrator (the “Administration Agreement”).

The Company’s fiscal year ends

on December 31.

The Company has two wholly-owned

subsidiaries:

PS BDC Funding, a special purpose wholly-owned subsidiary established for utilizing the Company’s revolving credit

facility with BofA N.A., and PS BDC Funding II, a special purpose wholly-owned subsidiary established for utilizing the Company’s

credit facility with WFB.

Palmer Square BDC Funding I,

LLC (“PS BDC Funding”) was formed on January 21, 2020 and entered into a senior, secured revolving credit facility with Bank

of America, N.A.

(“BofA N.A.”) Palmer Square BDC Funding II LLC (“PS BDC Funding II”) was formed on September

8, 2020 and entered into a senior, secured credit facility with Wells Fargo, National Association (“WFB”).

The Company’s investment objective is to maximize total return,

comprised of current income and capital appreciation.

The Company’s current investment focus is guided by two strategies that facilitate

its investment opportunities and core competencies:

(1) investing in corporate debt securities and, to a lesser extent, (2) investing

in collateralized loan obligation (“CLO”) structured credit funds that typically own corporate debt securities, including

the equity and junior debt tranches of CLOs.

To a limited extent, the Company may enter into derivatives transactions, which may utilize

instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations

in the relative values of the Company’s portfolio positions from changes in currency exchange rates and market interest rates or

to earn income and enhance the Company’s total returns.

The Company may receive or purchase warrants or rights to acquire equity

or other securities in connection with making a debt investment in a company.

During the years ended December 31, 2023, 2022, and 2021,

the Company did not invest in any derivative contracts.

Company is externally managed by Palmer Square BDC Advisor LLC (the “Investment Advisor”), an investment adviser that is

registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, pursuant to

an investment advisory agreement between the Company and the Investment Advisor (the “Advisory Agreement”).

The Investment

Advisor, in its capacity as administrator (the “Administrator”), provides the administrative services necessary for the Company

to operate pursuant to an administration agreement between the Company and the Administrator (the “Administration Agreement”).

The Company’s fiscal year ends on December 31.

Company has two wholly-owned subsidiaries:

PS BDC Funding, a special purpose wholly-owned subsidiary established for utilizing the Company’s

revolving credit facility with BofA N.A., and PS BDC Funding II, a special purpose wholly-owned subsidiary established for utilizing

the Company’s credit facility with WFB.

These subsidiaries are consolidated in the financial statements of the Company.

On January 22, 2024, the Company completed its initial public offering

(“IPO”), issuing 5,450,000 shares of common stock, par value $ 0.001 , at a public offering price of $ 16.45 per share.

The Company’s

common stock began trading on the New York Stock Exchange under the symbol “PSBD” on January 18, 2024.

See Note 13 “Subsequent

Significant Accounting Policies

The Company is an investment

company and applies specific accounting and financial reporting requirements under Financial Accounting Standards Board (“FASB”)

Accounting Standards Topic 946, Financial Services-Investment Companies .

The Company’s functional currency is U.S.

(“USD”) and these consolidated financial statements have been prepared in that currency.

The accompanying consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)

and pursuant to Regulation S-X.

Use of Estimates

The preparation of the consolidated

financial statements in conformity with 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.

results could differ from those estimates.

Company is an investment company and applies specific accounting and financial reporting requirements under Financial Accounting Standards

Board (“FASB”) Accounting Standards Topic 946, Financial Services-Investment Companies .

The Company’s functional

currency is U.S.

dollars (“USD”) and these consolidated financial statements have been prepared in that currency.

The accompanying

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“GAAP”) and pursuant to Regulation S-X.

preparation of the consolidated financial statements in conformity with 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.

Actual results could differ from those estimates.

Indemnifications

In the normal course of business,

the Company enters into contracts that contain a variety of representations which provide general indemnifications.

The Company’s

maximum exposure under these arrangements cannot be known;

the normal course of business, the Company enters into contracts that contain a variety of representations which provide general indemnifications.

The Company’s maximum exposure under these arrangements cannot be known;

however, the Company expects any risk of loss to be remote.

Cash and Cash Equivalents

Cash is comprised of cash

on deposit with major financial institutions.

Cash equivalents consist of highly liquid investments with original maturities of three

months or less.

and Cash Equivalents

is comprised of cash on deposit with major financial institutions.

Cash equivalents consist of highly liquid investments with original

maturities of three months or less.

The Company places its cash with high credit quality institutions to minimize credit risk exposure.

Debt Issuance Costs

Issuance Costs

The Company records origination

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on the consolidated statement of assets and liabilities.

The Company has elected to

be treated as a RIC under Subchapter M of the Code.

So long as the Company maintains its status as a RIC, it generally will not pay corporate-level

federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends.

To qualify as a RIC, the Company

must, among other things, meet certain source-of-income and asset diversification requirements.

In addition, to qualify for RIC tax treatment,

the Company must distribute to its stockholders, for each taxable year, at least 90 % of its “investment company taxable income”

for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net

long-term capital losses.

Company has elected to be treated as a RIC under Subchapter M of the Code.

So long as the Company maintains its status as a RIC, it generally

will not pay corporate-level U.S.

federal income taxes on any ordinary income or capital gains that it distributes at least annually

to its stockholders as dividends.

qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements.

to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least 90 % of its “investment

company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital

gains over its realized net long-term capital losses.

In order for the Company not to be subject to U.S.

federal excise taxes, it must distribute annually an amount

at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar

year, (ii) 98.2% of its capital gains in excess of capital losses for the one year period ending October 31 in such calendar year and

(iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such

The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible

federal excise taxes, it must

distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals

and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one year period ending October

31 in such calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were

not distributed during such years.

The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends

and pay a 4% nondeductible U.S.

federal excise tax on this income.

The Company evaluates tax

positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax

positions are “more-likely-than-not” to be sustained by the applicable tax authority.

Tax positions not deemed to meet the

“more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year.

All penalties

and interest associated with income taxes are included in income tax expense.

Conclusions regarding tax positions are subject to review

and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations

Basis of Consolidation

As provided under ASC 946, the Company will generally

not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary or a controlled operating

company whose business consists of providing services to the Company.

Accordingly, the Company consolidated the results of the Company’s

wholly owned investment company subsidiaries (PS BDC Funding and PS BDC Funding II) in its consolidated financial statements.

Interest and Dividend Income Recognition

Interest income is recorded

on the accrual basis and includes amortization of premiums or accretion of discounts.

Discounts and premiums to par value on securities

purchased are accreted and amortized, respectively, into interest income over the contractual life of the respective security using the

effective interest method.

The amortized cost of investments represents the original cost adjusted for the amortization of premiums or

accretion of discounts, if any.

Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination

fees, paydown gains/losses and unamortized discounts are recorded as interest income in the current period.

Dividend income on preferred

equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected

to be collected.

Dividend income on common equity securities and money market funds is recorded on the record date for private portfolio

companies or on the ex-dividend date for publicly-traded portfolio companies.

Non-Accrual Status

Loans are generally placed

on non-accrual status when there is reasonable doubt that principal or interest will be collected in full.

Accrued interest is generally

reversed when a loan is placed on non-accrual status.

Interest payments received on non-accrual loans may be recognized as income or applied

to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual status when

past due principal and interest is paid current and, in management’s judgment, are likely to remain current.

Management may make

exceptions to this treatment and determine not to place a loan on non-accrual status if the loan has sufficient collateral value and is

in the process of collection.

Management reviews all

loans that have principal or interest that is 90 days past due, or when there is reasonable doubt as to the collection of principal or

interest to determine if a loan will be placed on non-accrual status.

When a loan is placed on non-accrual status, the accrued interest

and unpaid interest is generally reversed, and any discount (market or original) is no longer accreted to interest income.

Interest payments

received while a loan is on non-accrual status may be applied to principal or recognized as income, as determined by management’s

Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine

whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority.

Tax positions not deemed

to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year.

penalties and interest associated with income taxes are included in income tax expense.

Conclusions regarding tax positions are subject

to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations

and interpretations thereof.

of Consolidation

provided under ASC 946, the Company will generally not consolidate its investment in a company other than a substantially wholly owned

investment company subsidiary or a controlled operating company whose business consists of providing services to the Company.

the Company consolidated the results of the Company’s wholly owned investment company subsidiaries (PS BDC Funding and PS BDC Funding

II) in its consolidated financial statements.

and Dividend Income Recognition

income is recorded on the accrual basis and includes amortization of premiums or accretion of discounts.

Discounts and premiums to par

value on securities purchased are accreted and amortized, respectively, into interest income over the contractual life of the respective

security using the effective interest method.

The amortized cost of investments represents the original cost adjusted for the amortization

of premiums or accretion of discounts, if any.

Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront

loan origination fees, paydown gains/losses and unamortized discounts are recorded as interest income in the current period.

income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company

and are expected to be collected.

Dividend income on common equity securities and money market funds is recorded on the record date for

private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full.

interest is generally reversed when a loan is placed on non-accrual status.

Interest payments received on non-accrual loans may be recognized

as income or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored

to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current.

Management may make exceptions to this treatment and determine not to place a loan on non-accrual status if the loan has sufficient collateral

value and is in the process of collection.

reviews all loans that have principal or interest that is 90 days past due, or when there is reasonable doubt as to the collection of

principal or interest to determine if a loan will be placed on non-accrual status.

When a loan is placed on non-accrual status, the accrued

interest and unpaid interest is generally reversed, and any discount (market or original) is no longer accreted to interest income.

payments received while a loan is on non-accrual status may be applied to principal or recognized as income, as determined by management’s

judgement regarding collectability.

A loan may be taken off non-accrual

status if past due payments are made, and if management determines the issuer is likely to remain current on future payments.

may make exceptions to this policy if the loan has sufficient collateral value or is in the process of collection.

Management may also

leave a loan on accrual status while actively seeking recovery of past due payment.

As of December 31, 2022, the Company had no portfolio

investments on non-accrual status.

From time to time, the Company

may receive fees for services provided to portfolio companies.

These fees are generally only available to the Company as a result of closing

investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned

upon closing of the investment.

The services that the Investment Advisor provides vary by investment, but can include closing, work, diligence

or other similar fees and fees for providing managerial assistance to the Company’s portfolio companies.

In addition, the Company

may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees and possibly consulting and

performance- based fees.

Offering Costs

loan may be taken off non-accrual status if past due payments are made, and if management determines the issuer is likely to remain current

on future payments.

Management may make exceptions to this policy if the loan has sufficient collateral value or is in the process of

Management may also leave a loan on accrual status while actively seeking recovery of past due payment.

As of December 31,

2023 and 2022 the Company had no portfolio investments on non-accrual status.

time to time, the Company may receive fees for services provided to portfolio companies.

These fees are generally only available to the

Company as a result of closing investments, are normally paid at the closing of the investments, are generally non-recurring and are

recognized as revenue when earned upon closing of the investment.

The services that the Investment Advisor provides vary by investment,

but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to the Company’s portfolio

In addition, the Company may generate revenue in the form of consent, waiver, amendment, unused, and prepayment fees associated

with the Company’s investment activities and commitment, organization, structuring or diligence fees, monitoring fees and possibly

consulting and performance- based fees.

Offering costs in connection

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These expenses consist primarily of legal fees and other costs incurred

with Company’s share offerings, the preparation of the Company’s registration statement, and registration fees.

Net Realized Gains or Losses and Net Change

in Unrealized Appreciation or Depreciation

The Company measures realized

gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment,

without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment

Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting

period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

New Accounting Pronouncements

In March 2020, the FASB issued

Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on

Financial Reporting (“ASU 2020-04”).

The guidance provides optional expedients and exceptions for applying generally accepted

accounting principles to contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference

LIBOR or another reference rate expected to be discontinued.

ASU 2020-04 was effective for all entities as of March 12, 2020 through December

In December 2022 the FASB issued Accounting Standards Update 2022-06, Reference Rate Reform (Topic 848) – Deferral of

the Sunset Date of Topic 848 which extended the effective period through December 31, 2024.

with the Company’s share offerings, the preparation of the Company’s registration statement, and registration fees.

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

Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost

basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized

upfront fees and prepayment penalties.

Net change in unrealized appreciation or depreciation reflects the change in portfolio investment

values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains

or losses are realized.

Accounting Pronouncements

March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects

of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

The guidance provides optional expedients and exceptions

for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions, subject to meeting

certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

ASU 2020-04 was effective for all entities

as of March 12, 2020 through December 31, 2022.

In December 2022 the FASB issued Accounting Standards Update 2022-06, Reference Rate

Reform (Topic 848) – Deferral of the Sunset Date of Topic 848 which extended the effective period through December 31, 2024.

On July 26, 2023, the SEC adopted amendments intended to enhance and

standardize disclosures related to cybersecurity.

The amendments require timely disclosure of material cybersecurity incidents and annual

disclosures related to cybersecurity risk management, strategy, and governance.

The disclosures are effective beginning with annual reports

for fiscal years ending on or after December 15, 2023.

The Company has evaluated the impact of adoption on its consolidated financial

statements and is effective for the current filing.

Agreements and Related Party Transactions

Administration Agreement

The Company has entered into

the Administration Agreement with the Administrator.

Pursuant to the Administration Agreement, the Administrator furnishes office facilities

and equipment and provides clerical, bookkeeping, compliance, recordkeeping and other administrative services at such facilities.

the Administration Agreement, the Administrator performs, or oversees the performance of, required administrative services, which include

being responsible for the financial and other records that the Company is required to maintain and preparing reports to stockholders and

reports and other materials filed with the SEC.

In addition, the Administrator assists the Company in determining and publishing the Company’s

net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports and other materials

to stockholders, and generally overseeing the payment of expenses and the performance of administrative and professional services rendered

to the Company by others.

Under the Administration Agreement, the Administrator also provides managerial assistance on the Company’s

behalf to those portfolio companies that have accepted the offer to provide such assistance.

Under the Administration Agreement,

the Company reimburses the Administrator based upon its allocable portion of the Administrator’s overhead (including rent) in performing

its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions

and the Company’s allocable portion of the cost of its officers (including the Company’s Chief Financial Officer and Chief

Compliance Officer), and any of their respective staff who provide services to the Company, operations staff who provide services to the

Company, and internal audit staff, if any, to the extent internal audit performs a role in the Company’s Sarbanes-Oxley internal

control assessment.

In addition, if requested to provide managerial assistance to portfolio companies, the Administrator is reimbursed

based on the services provided.

The Administration Agreement has an initial term of two years and may be renewed with the approval of

the Company’s board of directors (the “Board”).

The agreement was renewed during the year for an additional one year

The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other

To the extent that the Administrator outsources any of its functions, the Company pays the fees associated with such functions

on a direct basis without any incremental profit to the Administrator.

In addition, the Administrator

has, pursuant to a sub-administration agreement, engaged U.S.

Bancorp Fund Services, LLC to act on behalf of the Company’s Administrator

in the performance of certain other administrative services.

The Company has also engaged U.S.

Bank, National Association or its affiliates

(“US Bank”) directly to serve as custodian, transfer agent, distribution paying agent and registrar.

Administration

Company has entered into the Administration Agreement with the Administrator.

Pursuant to the Administration Agreement, the Administrator

furnishes office facilities and equipment and provides clerical, bookkeeping, compliance, recordkeeping and other administrative services

at such facilities.

Under the Administration Agreement, the Administrator performs, or oversees the performance of, required administrative

services, which include being responsible for the financial and other records that the Company is required to maintain and preparing

reports to stockholders and reports and other materials filed with the SEC.

In addition, the Administrator assists the Company in determining

and publishing the Company’s net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination

of reports and other materials to stockholders, and generally overseeing the payment of expenses and the performance of administrative

and professional services rendered to the Company by others.

Under the Administration Agreement, the Administrator also provides managerial

assistance on the Company’s behalf to those portfolio companies that have accepted the offer to provide such assistance.

the Administration Agreement, the Company reimburses the Administrator based upon its allocable portion of the Administrator’s

overhead (including rent) in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated

with performing compliance functions and the Company’s allocable portion of the cost of its officers (including the Company’s

Chief Financial Officer and Chief Compliance Officer), and any of their respective staff who provide services to the Company, operations

staff who provide services to the Company, and internal audit staff, if any, to the extent internal audit performs a role in the Company’s

Sarbanes-Oxley internal control assessment.

In addition, if requested to provide managerial assistance to portfolio companies, the Administrator

is reimbursed based on the services provided.

The Administration Agreement has an initial term of two years and may be renewed with the

approval of the Company’s board of directors (the “Board”).

The agreement was renewed during the year for an additional

one year period.

The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to

the other party.

To the extent that the Administrator outsources any of its functions, the Company pays the fees associated with such

functions on a direct basis without any incremental profit to the Administrator.

In addition, the Administrator has, pursuant to a sub-administration

agreement, engaged U.S.

Bancorp Fund Services, LLC to act on behalf of the Company’s Administrator in the performance of certain

other administrative services.

The Company has also engaged Equiniti Trust Company, LLC or its affiliates (“Equiniti”) directly

to serve as transfer agent, registrar and dividend disbursing agent and engaged U.S.

Bank or its affiliates directly to serve as custodian.

Prior to the Company’s engagement of Equiniti upon the closing of the IPO, U.S.

Bank served as the Company’s transfer agent, distribution

paying agent and registrar.

Investment Advisory Agreement

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is responsible for all business activities and oversight of the investment decisions made for the Company.

In return for providing management

services to the Company, the Company pays the Investment Advisor a base management fee, calculated and paid quarterly in arrears at an

annual rate of 2.00 % of the average value of the weighted average (based on the number of shares outstanding each day in the quarter)

Subsequent to the IPO, in return for providing management services

to the Company, the Company pays the Investment Advisor a base management fee, calculated and paid quarterly in arrears at an annual rate

of 1.75 % of the average value of the weighted average (based on the number of shares outstanding each day in the quarter) of the Company’s

total net assets at the end of the two most recently completed calendar quarters.

The base management fee for any partial quarter will

be pro-rated based on the number of days actually elapsed in that quarter relative to the total number of days in such quarter.

Prior to the IPO, the base

management fee was 2.00 % of the average value of the weighted average (based on the number of shares outstanding each day in the quarter)

of the Company’s total net assets at the end of the two most recently completed calendar quarters.

The base management fee for any

partial quarter will be pro-rated based on the number of days actually elapsed in that quarter relative to the total number of days in

such quarter.

The Investment Advisor, however,

has agreed to waive its right to receive management fees in excess of 1.75% of the total net assets during any period prior to the listing

of the Company’s common stock on a national securities exchange (a “Listing”).

If a Listing does not occur, such fee

waiver will remain in place through liquidation of the Company.

The Investment Advisor will not be permitted to recoup any waived amounts

at any time and the waiver may only be modified or terminated prior to a Listing with the approval of the Board.

Additionally, pursuant to

the Advisory Agreement, the Investment Advisor is not entitled to an incentive fee prior to a Listing.

Following a Listing, the Investment

Advisor will be entitled to an incentive fee (the “Income Incentive Fee”) based on the Company’s pre-incentive fee net

investment income for the then most recently completed calendar quarter, as adjusted downward (but not upward) if over the most recently

completed and three preceding calendar quarters aggregate net realized losses on the Company’s investments exceed the Company’s

aggregate net investment income over the same period, excluding the most recently completed quarter, as described in more detail below.

In this regard, if the Company’s net realized losses over the most recently completed and three preceding calendar quarters are

greater than the Company’s net investment income over the same period, excluding the most recently completed quarter, then the pre-incentive

during any period prior to the IPO, agreed to waive its right to receive management fees in excess of an annual rate of 1.75 % of the

average value of the weighted average total net assets at the end of each of our two most recently completed calendar quarters.

The Investment

Advisor will not be permitted to recoup any base management fees waived for any period of time prior to the IPO.

Additionally, pursuant

to the Advisory Agreement, the Investment Advisor is not entitled to an incentive fee prior to the IPO because the Advisory Agreement

provides that no incentive fee is payable prior to the listing of the Company’s common stock on a national securities exchange.

Effective upon completion of the IPO, the Investment Advisor is entitled to an incentive fee (the “Income Incentive Fee”)

based on the Company’s pre-incentive fee net investment income for the then most recently completed calendar quarter, as adjusted

downward (but not upward) if over the most recently completed and eleven preceding calendar quarters since the IPO (or if shorter, the

number of calendar quarters since the IPO) (each such period is referred to herein as the “Trailing Twelve Quarters”) aggregate

net realized losses on the Company’s investments exceed the Company’s aggregate net investment income over the same period,

excluding the most recently completed quarter, as described in more detail below.

In this regard, if the Company’s net realized

losses over the Trailing Twelve Quarters since the IPO (or if shorter, the number of calendar quarters since the IPO) are greater than

the Company’s net investment income over the same period, excluding the most recently completed quarter, then the pre-incentive

fee net income used in the calculation of the Income Incentive Fee would be subject to a downward adjustment.

2 unchanged sentences

On the other hand, if the Company’s

net investment income over the most recently completed and three preceding calendar quarters is equal to or greater than the Company’s

net realized losses over the same period, excluding the most recently completed quarter, then no adjustment to pre-incentive fee net investment

income would be made.

The Income Incentive Fee will be calculated and payable quarterly in arrears commencing with the first calendar

quarter following a Listing.

The Company will pay the Investment Advisor an Income Incentive Fee with respect to its “adjusted net

investment income” in each calendar quarter as follows:

net investment income over the Trailing Twelve Quarters since the IPO (or if shorter, the number of calendar quarters since the IPO)

is equal to or greater than the Company’s net realized losses over the same period, excluding the most recently completed quarter,

then no adjustment to pre-incentive fee net investment income would be made.

The Income Incentive Fee will be calculated and payable

quarterly in arrears commencing with the first calendar quarter following the IPO.

The Company will pay the Investment Advisor an Income

Incentive Fee with respect to its “adjusted net investment income” in each calendar quarter as follows:

● no Income Incentive Fee in any calendar quarter in which the Company’s “adjusted net investment income” does not exceed an amount equal to a “hurdle rate” of 1.5 % per quarter ( 6 % annualized) of the Company’s total net assets at the end of that quarter (the “Hurdle Amount”);

4 unchanged sentences

income” means the Company’s “pre-incentive fee net investment income” during the then most recently completed

calendar quarter minus the difference, if positive, between (i) the Company’s “net realized losses” over the then most

recently completed and three preceding calendar quarters (or if shorter, the number of calendar quarters that have occurred since the

Listing) and (ii) the Company’s “net investment income” over the three preceding calendar quarters (or if shorter, the

number of calendar quarters that have occurred since the Listing).

No adjustment (downward or upward) will be made to “pre-incentive

fee net investment income” if the difference between clause (i) minus clause (ii) is zero or negative.

“Pre-incentive fee net

investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination,

structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing

managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee,

any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock,

but excluding the Income Incentive Fee).

“Pre-incentive fee net investment income” includes, in the case of investments with

a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments with payment-in-kind

(“PIK”) interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet

received in cash.

calendar quarter minus the difference, if positive, between (i) the Company’s “net realized losses” over the then Trailing

Twelve Quarters (or if shorter, the number of calendar quarters that have occurred since the IPO) and (ii) the Company’s “net

investment income” over the Trailing Twelve Quarters (excluding the then most recently completed calendar quarter).

No adjustment

(downward or upward) will be made to “pre-incentive fee net investment income” if the difference between clause (i) minus

clause (ii) is zero or negative.

“Pre-incentive

fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment,

origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding

fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the

base management fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding

preferred stock, but excluding the Income Incentive Fee).

“Pre-incentive fee net investment income” includes, in the case

of investments with a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments

with payment-in-kind (“PIK”) interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that

the Company has not yet received in cash.

“Net realized losses”

1 unchanged sentence

investments in such period and (ii) the aggregate realized capital gains on the Company’s investments in such period.

investment income” in respect of the particular period means interest income, dividend income and any other income (including any

other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio

companies but excluding fees for providing managerial assistance) accrued during the particular period, minus operating expenses for the

particular period (including the base management fee, the Income Incentive Fee, any expenses payable under the Administration Agreement,

and any interest expense and dividends paid on any outstanding preferred stock).

“Net investment income” includes, in the

case of investments with a deferred interest feature such as market discount, OID, debt instruments with PIK interest, preferred stock

with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.

The Income Incentive Fee amount,

or the calculations pertaining thereto, as appropriate, will be pro-rated for any period less than a full calendar quarter.

The following table presents

the composition of the Company’s investment portfolio at amortized cost and fair value as of December 31, 2022 and December 31,

As noted above,

“net realized losses” will not by itself cause an upward adjustment to adjusted net investment income.

“Net investment

income” in respect of the particular period means interest income, dividend income and any other income (including any other fees

such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies

but excluding fees for providing managerial assistance) accrued during the particular period, minus operating expenses for the particular

period (including the base management fee, the Income Incentive Fee, any expenses payable under the Administration Agreement, and any

interest expense and dividends paid on any outstanding preferred stock).

“Net investment income” includes, in the case of

investments with a deferred interest feature such as market discount, OID, debt instruments with PIK interest, preferred stock with PIK

dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.

Income Incentive Fee amount, or the calculations pertaining thereto, as appropriate, will be pro-rated for any period less than a full

calendar quarter.

Effective upon completion

of the IPO, the Investment Advisor has also agreed to use the most recently completed and three preceding calendar quarters (each such

period is referred to herein as the “Trailing Four Quarters”) in addition to the Trailing Twelve Quarters to compute the

incentive fee payable to it by the Company.

In conjunction therewith, the Investment Advisor has agreed to calculate the incentive fee

based on the Trailing Twelve Quarters and the Trailing Four Quarters and in the event that any Trailing Four Quarter period calculation

produces a lower incentive fee as compared to the applicable Trailing Twelve Quarter period calculation for any quarterly period, then

the Trailing Four Quarter Period will be used in connection with the calculation of the incentive fee payable to the Investment Advisor

by the Company for such quarter.

The Investment Advisor has agreed to pay all offering costs in connection

with the IPO.

These expenses consist primarily of legal fees and other costs incurred with the Company’s share offerings, the preparation

of the Company’s registration statement, and registration fees.

The Company is not obligated to repay any such offering costs paid

by our Investment Advisor.

As the December 31, 2023, the balance of Due from Advisor was $ 1.4 million, representing the offering costs

incurred on the statement of assets and liabilities.

following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of December

31, 2023 and December 31, 2022:

December 31, 2023

7 unchanged sentences

Corporate Bonds

Convertible Bond

CLO Mezzanine

5 unchanged sentences

$ 1,017,211,732

As of December 31, 2022, approximately

16.0 % of the long-term investment portfolio at amortized cost and 16.3 % of the long-term investment portfolio measured at fair value,

respectively, were invested in non-qualifying assets.

As of December 31, 2021 approximately 14.4 % of the long-term investment portfolio

at amortized cost and 14.5 % of the long-term investment portfolio measured at fair value, respectively, were invested in non-qualifying

With respect to the Company’s total assets, 14.9 % and 13.3 % of the Company’s total assets were in non-qualifying assets

as defined by Section 55(a) of the 1940 Act as of December 31, 2022 and December 31, 2021, respectively.

The industry composition of

investments based on fair value, as a percentage of total investments at fair value, as of December 31, 2022 and December 31, 2021 was

As of December 31, 2023, approximately 14.2 % of the long-term investment

portfolio at amortized cost and 14.1 % of the long-term investment portfolio measured at fair value, respectively, were invested in non-qualifying

As of December 31, 2022 approximately 16.0 % of the long-term investment portfolio at amortized cost and 16.3 % of the long-term

investment portfolio measured at fair value, respectively, were invested in non-qualifying assets.

With respect to the Company’s

total assets, 13.2 % and 14.9 % of the Company’s total assets were in non-qualifying assets as defined by Section 55(a) of the 1940

Act as of December 31, 2023 and December 31, 2022, respectively.

industry composition of investments based on fair value, as a percentage of total investments at fair value, as of December 31, 2023

and December 31, 2022 was as follows:

Healthcare Providers and Services

Professional Services

Cash and Cash Equivalents

Short Term Investments

Diversified Financial Services

Hotels, Restaurants and Leisure

Building Products

Independent Power and Renewable Electricity Producers

Diversified Financial Services

Aerospace and Defense

Building Products

Construction and Engineering

Structured Subordinated Note

Healthcare Technology

Metals and Mining

Food Products

Auto Components

Oil, Gas and Consumable Fuels

Diversified Consumer Services

Structured Subordinated Note

Containers and Packaging

Structured Note

Food Products

Specialty Retail

Commercial Services and Supplies

Diversified Consumer Services

Electronic Equipment, Instruments and Components

Internet Software and Services

Energy Equipment and Services

Commercial Services and Supplies

Structured Note

Aerospace and Defense

Metals and Mining

Healthcare Technology

Oil, Gas and Consumable Fuels

Diversified Telecommunication Services

Healthcare Equipment and Supplies

Specialty Retail

Real Estate Management and Development

1 unchanged sentence

Pharmaceuticals

Energy Equipment and Services

Electrical Equipment

Road and Rail

Technology Hardware, Storage and Peripherals

Industrial Conglomerates

Household Durables

Diversified Telecommunication Services

Industrial Conglomerates

Technology Hardware, Storage and Peripherals

Textiles, Apparel and Luxury Goods

Leisure Products

Electric Utilities

Fair Value of Investments

Fair value is defined as the

price that the Company would receive upon selling an investment or paying to transfer a liability in an orderly transaction to a market

participant in the principal or most advantageous market for the investment.

Accounting guidance emphasizes that valuation techniques

maximize the use of observable market inputs and minimize the use of unobservable inputs.

Inputs refer broadly to the

assumptions that market participants would use in pricing an asset or liability, including assumptions about risk.

Inputs may be observable

or unobservable.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability

developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the assumptions

market participants would use in pricing an asset or liability developed based on the best information available in the circumstances.

The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement

value is defined as the price that the Company would receive upon selling an investment or paying to transfer a liability in an orderly

transaction to a market participant in the principal or most advantageous market for the investment.

Accounting guidance emphasizes that

valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs.

refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk.

Inputs may be observable or unobservable.

Observable inputs are inputs that reflect the assumptions market participants would use in

pricing an asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are

inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information

available in the circumstances.

The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the

investment as of the measurement date.

The three levels are defined as follows:

Level 1 — Valuations based on

quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Valuations based on

inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement

This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar

assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and

observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models

to determine the value of derivatives or other assets or liabilities.

Level 3 — Valuations based on

inputs that are unobservable and where there is little, if any, market activity at the measurement date.

Investments in private investment

companies measured based upon net asset value as a practical expedient to determine fair value are not required to be categorized in the

fair value hierarchy.

As of December 31, 2022 and as of December 31, 2021, there were no investments accounted for using the practical

The inputs for the determination

of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions

that market participants would use in pricing the assets or liabilities.

These investments include debt and equity investments in private

companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment

or estimation because of the absence of any meaningful current market data for identical or similar investments.

The inputs in these valuations

may include, but are not limited to, capitalization and discount rates, beta and earnings before interest, taxes, depreciation, and amortization

(“EBITDA”) multiples.

The information may also include pricing information or broker quotes, which include a disclaimer that

the broker would not be held to such a price in an actual transaction.

The non-binding nature of consensus pricing and/or quotes accompanied

by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

Pricing inputs and weightings

applied to determine fair value require subjective determination.

Accordingly, valuations do not necessarily represent the amounts that

may eventually be realized from sales or other dispositions of investments.

A financial instrument’s

categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table presents

the fair value hierarchy of investments as of December 31, 2022:

1 — Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.

2 — Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly

observable at the measurement date.

This category includes quoted prices for similar assets or liabilities in active markets, quoted

prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately

held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered

directly into valuation models to determine the value of derivatives or other assets or liabilities.

3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date.

in private investment companies measured based upon net asset value as a practical expedient to determine fair value are not required

to be categorized in the fair value hierarchy.

As of December 31, 2023 and as of December 31, 2022, there were no investments accounted

for using the practical expedient.

inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s

assessment of the assumptions that market participants would use in pricing the assets or liabilities.

These investments include debt

and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose

inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar

The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and earnings

before interest, taxes, depreciation, and amortization (“EBITDA”) multiples.

The information may also include pricing information

or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction.

The non-binding

nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no

additional corroborating evidence.

inputs and weightings applied to determine fair value require subjective determination.

Accordingly, valuations do not necessarily represent

the amounts that may eventually be realized from sales or other dispositions of investments.

financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant

to the fair value measurement.

following table presents the fair value hierarchy of investments as of December 31, 2023:

Fair Value Hierarchy as of December 31, 2023

4 unchanged sentences

Corporate Bonds

Convertible Bond

CLO Mezzanine

3 unchanged sentences

$ 1,108,810,753

The following table presents

the fair value hierarchy of investments as of December 31, 2021:

following table presents the fair value hierarchy of investments as of December 31, 2022:

Fair Value Hierarchy as of December

4 unchanged sentences

Corporate Bonds

Convertible Bond

CLO Mezzanine

3 unchanged sentences

$ 1,017,211,732

For the years ended December

31, 2022 and December 31, 2021, the Company did not recognize any transfers to or from Level 3.

Debt Not Carried at Fair Value

The fair value of the BoA

Credit Facility and the WF Credit Facility, which would be categorized as Level 3 within the fair value hierarchy as of December 31, 2022,

approximates their respective carrying values because the BoA Credit Facility and WF Credit Facility each have variable interest based

on selected short term rates.

In accordance with the 1940

Act, with certain limitations, BDCs are permitted to borrow amounts such that their asset coverage ratios, as defined in the 1940 Act,

are at least 150 % after such borrowing.

Not Carried at Fair Value

fair value of the BoA Credit Facility and the WF Credit Facility, which would be categorized as Level 3 within the fair value hierarchy

as of December 31, 2023, approximates their respective carrying values because the BoA Credit Facility and WF Credit Facility each have

variable interest based on selected short term rates.

accordance with the 1940 Act, with certain limitations, BDCs are permitted to borrow amounts such that their asset coverage ratios, as

defined in the 1940 Act, are at least 150 % after such borrowing.

As of December 31, 2023, the Company’s asset coverage ratio was

Bank of America Credit Facility

On February 18, 2020, the

Company, through a special purpose wholly-owned subsidiary, PS BDC Funding (together with the Company, the “Borrowers”) entered

into a Credit Agreement (the “Credit Agreement”) with certain financial institutions as lenders (“Lenders”), BofA

of America Credit Facility

February 18, 2020, the Company, through a special purpose wholly-owned subsidiary, PS BDC Funding (together with the Company, the “Borrowers”)

entered into a Credit Agreement (the “Credit Agreement”) with certain financial institutions as lenders (“Lenders”),

as the Administrative Agent and BofA Securities, Inc.

(“BofA Securities”), as Lead Arranger and Sole Book Manager, pursuant

to which the Lenders agreed to provide the Company with a revolving line of credit (the “BoA Credit Facility”).

Under the BoA Credit Facility,

which matures on February 18, 2025, the Lenders have agreed to extend credit to PS BDC Funding in an aggregate amount up to the Commitment

(as defined in the Credit Agreement) amount.

The Commitment amount for the BoA Credit Facility was $200.0 million as of the closing date

of the Credit Agreement, increased to $400.0 million on the one-month anniversary of the closing date, further increased to $475.0 million

on October 12, 2020, and further increased to $725 million on September 29, 2021.

The Borrowers’ ability to draw under the BoA Credit

Facility is scheduled to terminate on February 11, 2025.

All amounts outstanding under the BoA Credit Facility are required to be repaid

by February 18, 2025.

As the Company raises additional capital, we may enter into additional credit agreements to expand our borrowing

Debt obligations under the

BoA Credit Facility consisted of the following as of December 31, 2022:

(“BofA Securities”), as Lead Arranger and Sole Book Manager,

pursuant to which the Lenders agreed to provide the Company with a revolving line of credit (the “BoA Credit Facility”).

Under the BoA Credit Facility, which matures on February 18, 2025,

the Lenders have agreed to extend credit to PS BDC Funding in an aggregate amount up to the Commitment (as defined in the Credit Agreement)

The Commitment amount for the BoA Credit Facility is currently $725 million.

The Borrowers’ ability to draw under the BoA

Credit Facility is scheduled to terminate on February 11, 2025.

All amounts outstanding under the BoA Credit Facility are required to

be repaid by February 18, 2025.

As the Company raises additional capital, we may enter into additional credit agreements to expand our

borrowing capacity.

obligations under the BoA Credit Facility consisted of the following as of December 31, 2023:

December 31, 2023

Aggregate Principal Committed

Available (1)

8 unchanged sentences

$ 505,417,357

(1) The amount available reflects any limitations related to the BoA Credit Facility’s borrowing base.

(2) The carrying value of the BoA Credit Facility is presented net of deferred financing costs of $ 1.358 million and accrued interest of $ 584 thousand.

Debt obligations under the

BoA Credit Facility consisted of the following as of December 31, 2021:

December 31, 2021

Aggregate Principal Committed

amount available reflects any limitations related to the BoA Credit Facility’s borrowing base.

carrying value of the BoA Credit Facility is presented net of deferred financing costs of $ 739 thousand and accrued interest of $ 2.156

obligations under the BoA Credit Facility consisted of the following as of December 31, 2022:

Principal Committed

Available (1)

BoA Credit Facility

$ 725,000,000

$ 552,000,000

$ 173,000,000

$ 550,262,297

$ 725,000,000

$ 552,000,000

$ 173,000,000

$ 550,262,297

(1) The amount available reflects any limitations related to the BoA Credit Facility’s borrowing base.

(2) The carrying value of the BoA Credit Facility is presented net of deferred financing costs of $ 1.993 million and accrued interest of $ 255 thousand.

Average debt outstanding under

the BoA Credit Facility during the years ended December 31, 2022 and December 31, 2021, was $ 544.0 million and $ 433.1 million, respectively.

The loans under the BoA Credit

Facility may be base rate loans or eurocurrency rate loans.

The base rate loans will bear interest at the base rate plus 1.30%, and the

eurocurrency rate loans will bear interest at 1-month or 3-month LIBOR plus 1.30%.

The “base rate” will be equal to the highest

of (a) the federal funds rate plus 0.5%, (b) the prime rate, and (c) 1-month or 3-month LIBOR.

The Credit Agreement includes fallback

language in the event that LIBOR becomes unavailable.

Interest pursuant to base rate loans is payable quarterly in arrears, and interest

pursuant to eurocurrency loans is payable either quarterly or monthly, as specified by the Borrowers in a loan notice pertaining thereto.

The Credit Agreement requires the payment of a commitment fee of 0.50% for unused Commitments until the four-month anniversary of the

Second Amendment to the Credit Agreement.

Thereafter, the commitment fee is 0.50% on unused Commitments up to 30% of the BoA Credit Facility,

and 1.30% on unused Commitments in excess of 30% of the BoA Credit Facility.

Such fee is payable quarterly in arrears.

The advance rate

for PS BDC Funding’s Eligible Collateral Assets ranges from 40% for Second Lien Bank Loans to 70% for First Lien Bank Loans that

are B Assets to 100% for Cash (excluding Excluded Amounts) (as each such term is defined in the Credit Agreement).

For the years ended December

31, 2022 and December 31, 2021, the components of interest expense with respect to the BoA Credit Facility were as follows:

For the Year Ended

Credit Facility

amount available reflects any limitations related to the BoA Credit Facility’s borrowing base.

carrying value of the BoA Credit Facility is presented net of deferred financing costs of $ 1.358 million and accrued interest of $ 584

debt outstanding under the BoA Credit Facility during the years ended December 31, 2023, 2022, and 2021 was $ 498.3 million, $ 544.0 million

and $ 433.1 million, respectively.

Prior to February 3, 2023, the loans under the BOA Credit Facility

may have been base rate loans or euro currency loans.

The base rate loans bore interest at the base rate plus 1.30%, and the eurocurrency

rate loans bore interest at 1-month or 3-month LIBOR plus 1.30%.

The “base rate” was equal to the highest of (a) the federal

funds rate plus 0.50%, (b) the prime rate, and (c) 1-month or 3-month LIBOR.

On February 3, 2023, the Company entered into an omnibus

amendment to the BoA Credit Facility that, among other things:

(i) removed LIBOR transition language and (ii) replaced eurocurrency rate

loans with SOFR loans.

As of February 3, 2023, the loans under the BoA Credit Facility may

be base rate loans or Secured Overnight Financing Rate (“SOFR”) loans.

The base rate loans will bear interest at the base

rate plus 1.40%, and the SOFR loans will bear interest at 1-month SOFR plus 1.40% or 3-month SOFR plus 1.45%.

The “base rate”

will be equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate, and (c) 1-month or 3-month SOFR plus 0.10%.

The Credit Agreement includes fallback language in the event that SOFR becomes unavailable.

Interest pursuant to base rate loans is payable

quarterly in arrears, and interest pursuant to SOFR loans is payable either quarterly or monthly, as specified by the Borrowers in a loan

notice pertaining thereto.

The Credit Agreement requires the payment of a commitment fee of 0.50% for unused Commitments until the four-month

anniversary of the Second Amendment to the Credit Agreement.

Thereafter, the commitment fee is 0.50% on unused Commitments up to 30% of

the BoA Credit Facility, and 1.30% on unused Commitments in excess of 30% of the BoA Credit Facility.

Such fee is payable quarterly in

The advance rate for PS BDC Funding’s Eligible Collateral Assets ranges from 40% for Second Lien Bank Loans to 70% for

First Lien Bank Loans that are B Assets to 100% for Cash (excluding Excluded Amounts) (as each such term is defined in the Credit Agreement).

the years ended December 31, 2023, 2022, and 2021, the components of interest expense with respect to the BoA Credit Facility were as

For the Year Ended December 31

Interest expense

8 unchanged sentences

leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions

and custody (Section 17, as modified by Section 57, of the 1940 Act).

The custodian of the assets pledged to BofA N.A.

pursuant to the BoA Credit Facility is U.S.

Bank National Administration

The obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default under

the Credit Agreement, including in the event of a change of control of PS BDC Funding or if the Investment Advisor ceases to serve as

investment adviser to the Company.

Wells Fargo Credit Facility

pursuant to the

BoA Credit Facility is U.S.

Bank National Administration (“US Bank”).

The obligations under the Credit Agreement may be accelerated

upon the occurrence of an event of default under the Credit Agreement, including in the event of a change of control of PS BDC Funding

or if the Investment Advisor ceases to serve as investment adviser to the Company.

Fargo Credit Facility

December 18, 2020, the Company, through a special purpose wholly-owned subsidiary, Palmer Square BDC Funding II LLC (“PS BDC Funding

II” and together with the Company, the “WF Borrowers”) entered into a Loan and Security Agreement (the “Loan

Agreement”) with certain financial institutions as lenders (“WF Lenders”), WFB as the administrative agent and U.S.

Bank, as Collateral Agent and Custodian, pursuant to which the WF Lenders agreed to provide the Company with a line of credit (the “WF

Credit Facility”).

On December 18, 2023, the

Company, through a special purpose wholly-owned subsidiary, Palmer Square BDC Funding II LLC (“PS BDC Funding II” and together

with the Company, the “WF Borrowers”) entered into a Loan and Security Agreement (the “Loan Agreement”) with certain

financial institutions as lenders (“WF Lenders”), WFB as the administrative agent and U.S.

Bank, as Collateral Agent and Custodian,

pursuant to which the WF Lenders agreed to provide the Company with a line of credit (the “WF Credit Facility”).

Under the WF Credit Facility,

which matures on December 18, 2025, the WF Lenders have agreed to extend credit to PS BDC Funding II in an aggregate amount up to the

Facility Amount (as defined in the Loan Agreement).

The Facility Amount for the WF Credit Facility was $ 150.0 million as of the closing

date of the Loan Agreement.

The WF Borrowers’ ability to draw under the WF Credit Facility is scheduled to terminate on December

All amounts outstanding under the WF Credit Facility are required to be repaid by December 18, 2025.

Debt obligations under the

WF Credit Facility consisted of the following as of December 31, 2022:

Company entered into an amendment to the WF Credit Facility (the “WF Credit Facility Fourth Amendment”) that amends the WF

Credit Facility to, among other things:

(i) increase the amount available for borrowing under the WF Credit Facility from $ 150,000,000

to $ 175,000,000 , (ii) extend the facility maturity date from December 18, 2025 to December 18, 2028 and (iii) extend the reinvestment

period from December 18, 2023 to December 18, 2026 (subject to other provisions of the WF Credit Facility).

obligations under the WF Credit Facility consisted of the following as of December 31, 2023:

December 31, 2023

Aggregate Principal Committed

Available (1)

6 unchanged sentences

$ 136,411,448

(1) The amount available reflects any limitations related to the WF Credit Facility’s borrowing base.

(2) The carrying value of the WF Credit Facility is presented net of deferred financing costs of $1.047 million and accrued interest of $1.880 million.

Debt obligations under the

WF Credit Facility consisted of the following as of December 31, 2021:

amount available reflects any limitations related to the WF Credit Facility’s borrowing base.

carrying value of the WF Credit Facility is presented net of deferred financing costs of $ 2.472 million and accrued interest of $ 2.634

obligations under the WF Credit Facility consisted of the following as of December 31, 2022:

December 31, 2022

Aggregate Principal Committed

Available (1)

4 unchanged sentences

$ 150,000,000

(1) The amount available reflects any limitations related to the WF Credit Facility’s borrowing base.

(2) The carrying value of the WF Credit Facility is presented net of deferred financing costs of $ 1.4 million and accrued interest of $ 1.048 million.

Average debt outstanding under

the WF Credit Facility during the years ended December 31, 2022 and December 31, 2021, was $ 123.4 million and $ 13.9 million, respectively.

The loans under the WF Credit

Facility may be Broadly Syndicated Loans or Middle Market Loans and shall be eurocurrency rate loans unless such rate is unavailable,

in which case the loans shall be base rate loans until such rate is available.

Broadly Syndicated Loans will bear interest at the LIBOR

or base rate, as applicable, plus 1.85%, and Middle Market Loans will bear interest at LIBOR or base rate, as applicable, plus 2.35%.

$ 126,750,000

$ 127,583,253

amount available reflects any limitations related to the WF Credit Facility’s borrowing base.

carrying value of the WF Credit Facility is presented net of deferred financing costs of $ 1.047 million and accrued interest of $ 1.880

Average debt outstanding under the WF Credit Facility during the years

ended December 31, 2023, 2022, and 2021, was $ 131.4 million and $ 123.4 million and $ 13.9 million, respectively.

Prior to April 10, 2023 the loans under the WF Credit Facility may

have been Broadly Syndicated Loans or Middle Market loans and were eurocurrency rate loans unless

such rate was unavailable, in which case the loans were base rate loans until such rate was available.

Broadly Syndicated Loans bore interest

at the LIBOR or base rate, as applicable, plus 1.85%, and Middle Market Loans bore interest at LIBOR or base rate, as applicable, plus

The “base rate” was equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate.

10, 2023, the Company entered into an amendment to the WF Credit Facility that, among other things:

(i) transferred and assigned U.S.

Bank National Association’s rights and obligations as collateral agent and as a secured party to U.S.

Bank Trust Company, National

Association, (ii) referenced SOFR instead of LIBOR and (iii) removed LIBOR transition language.

of April 10, 2023, the loans under the WF Credit Facility may be Broadly Syndicated Loans or Middle Market Loans and will bear

interest at Daily Simple SOFR, or base rate (to the extent Daily Simple SOFR is unavailable), plus 2.50%, with an interest rate floor

The “base rate” will be equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate.

The Loan Agreement

includes fallback language in the event that LIBOR becomes unavailable.

Interest is payable quarterly, as determined by the WFB as the

administrative agent.

Following the Second Amendment of the WF Credit Facility, the Loan Agreement requires the payment of a non-usage

fee of (x) during the first thirteen months following the closing of the WF Credit Facility, 0.50% multiplied by daily unused Facility

Amounts, (y) between thirteen and sixteen months following the closing of the WF Credit Facility, 0.50% multiplied by the lesser of (1)

daily unused Facility Amounts and (2) 50% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the

daily unused Facility Amount and 50% of the Facility Amount and (ii) zero and, (z) thereafter, 0.50% multiplied by the lesser of (1) daily

unused Facility Amounts and (2) 20% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the daily

unused Facility Amount and 20% of the Facility Amount and (ii) zero.

Such fee is payable quarterly in arrears.

The WF Credit Facility

includes the option to downsize the facility by paying a Commitment Reduction Fee.

The Fee is equal to 2.00% of the facility reduction

amount prior to the one year anniversary of the closing of the WF Credit Facility, and 1.00% thereafter.

The applicable percentage for

PS BDC Funding II’s Eligible Loans ranges from 67.5% for Middle Market Loans to 70% for Broadly Syndicated Loans (as each such term

is defined in the Loan Agreement).

For the years ended

December 31, 2022 and December 31, 2021, the components of interest expense with respect to the WF Credit Facility were as follows:

For the Year Ended

Loan Agreement includes fallback language in the event that Daily Simple SOFR becomes unavailable.

Interest is payable quarterly, as

determined by the WFB as the administrative agent.

Following an amendment to the WF Credit Facility on October 13, 2021, the Loan Agreement

requires the payment of a non-usage fee of (x) during the first thirteen months following the closing of the WF Credit Facility, 0.50%

multiplied by daily unused Facility Amounts, (y) between thirteen and sixteen months following the closing of the WF Credit Facility,

0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 50% of the Facility Amount plus 2.00% multiplied by the greater

of (i) the difference between the daily unused Facility Amount and 50% of the Facility Amount and (ii) zero and, (z) thereafter, 0.50%

multiplied by the lesser of (1) daily unused Facility Amounts and (2) 20% of the Facility Amount plus 2.00% multiplied by the greater

of (i) the difference between the daily unused Facility Amount and 20% of the Facility Amount and (ii) zero.

Such fee is payable quarterly

The WF Credit Facility includes the option to downsize the facility by paying a Commitment Reduction Fee.

The Fee is equal

to 2.00% of the facility reduction amount prior to the one-year anniversary of the WF Credit Facility Fourth Amendment, and 1.00% thereafter.

The applicable percentage for the advance rate on PS BDC Funding II’s Eligible Loans ranges from 67.5% for Middle Market Loans

to 70% for Broadly Syndicated Loans (as each such term is defined in the Loan Agreement).

the years ended December 31, 2023, 2022, and 2021, the components of interest expense with respect to the WF Credit Facility were as

For the Year Ended December 31,

Interest expense

9 unchanged sentences

under the WF Credit Facility is subject to the leverage restrictions contained in the 1940 Act and PS BDC Funding II complies with 1940

Act provisions relating to affiliated transactions and custody.

The obligations under the Loan Agreement may be accelerated upon the occurrence

of an event of default under the Loan Agreement, including in the event of a change of control of PS BDC Funding II, if the Investment

Advisor ceases to serve as investment adviser to the Company, or if Palmer Square or its affiliates cease to directly or indirectly own

a majority of the membership interests of the Investment Advisor.

Act provisions relating to affiliated transactions and custody (Section 17, as modified by Section 57, of the 1940 Act).

The obligations

under the Loan Agreement may be accelerated upon the occurrence of an event of default under the Loan Agreement, including in the event

of a change of control of PS BDC Funding II, if the Investment Advisor ceases to serve as investment adviser to the Company, or if PSCM

or its affiliates cease to directly or indirectly own a majority of the membership interests of the Investment Advisor.

Senior Securities

Information about the Company’s senior securities is shown in

the following table for the fiscal years ended December 31, 2023, 2022, 2021, and 2020 (in thousands).

Class and Period Ended

Total Amount Outstanding Exclusive of Treasury Securities (1) ($ in Millions)

Asset Coverage per Unit (2)

Involuntary Liquidating Preference per Unit (3)

Average Market Value per Unit (4)

BoA Credit Facility

December 31, 2023

December 31, 2022

December 31, 2021

December 31, 2020

WF Credit Facility

December 31, 2023

December 31, 2022

December 31, 2021

December 31, 2020

(1) Total amount of each class of senior securities outstanding at the end of the period presented.

(2) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage per unit is expressed in terms of dollar amounts per $ 1,000 of indebtedness.

(3) The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.

The “—” in this column indicates that the SEC expressly does not require this information to be disclosed for certain types of senior securities.

(4) Not applicable because such senior securities are not registered for public trading.

Share Transactions

Offering Proceeds

During the years ended December

31, 2022 and December 31, 2021, the Company issued and sold 1,716,297 shares at an aggregate purchase price of $ 29.2 million and 10,007,526

shares at an aggregate purchase price of $ 206.6 million, respectively.

the years ended December 31, 2023, 2022, and 2021, the Company issued and sold 2,816,166 shares at an aggregate purchase price of $ 46.7

million, 1,716,297 shares at an aggregate purchase price of $ 29.2 million, and 10,007,526 shares at an aggregate purchase price of $ 206.6

million, respectively.

These amounts include shares issued in reinvestment.

Distribution Reinvestment Plan

The Company has adopted a

dividend reinvestment plan that will provide for reinvestment of its dividends and other distributions on behalf of the Company’s

stockholders, unless a stockholder elects to receive cash.

As a result, if the Company’s Board authorizes, and the Company declares,

a cash dividend or other distribution, then stockholders who do not “opt out” of the Company’s dividend reinvestment

plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock,

rather than receiving cash dividends and distributions.

Prior to a Listing, the Board

will use newly-issued shares of the Company’s common stock to implement the dividend reinvestment plan.

The number of shares of

common stock to be issued to a participant prior to a Listing would be equal to the quotient determined by dividing the cash value of

the dividend payable to such stockholder by the net asset value per share as of the date such dividend was declared.

After a Listing, the Board

intends to primarily use newly-issued shares to implement the dividend reinvestment plan, whether or not the shares are trading at a price

per share at, below or above net asset value.

However, the Board reserves the right to purchase shares in the open market in connection

with the implementation of the dividend reinvestment plan.

The Board will examine the full facts and circumstances of each such dividend

to determine the approach (i.e., to use newly issued shares or effectuate open market purchases to implement the dividend reinvestment

plan) that is in the best interests of stockholders taking into account the Board’s fiduciary duties to stockholders, including

by weighing the potential dilution in connection with such issuance to be incurred by the Company’s stockholders against the Company’s

need and usage of reinvested funds.

The number of newly issued shares to be issued to a participant would be determined by dividing the

total dollar amount of the dividend payable to such stockholder by the market price per share of the Company’s common stock at the

close of regular trading on a national securities exchange on the dividend payment date.

Shares purchased in open market transactions

by US Bank, the plan administrator and the Company’s transfer agent, registrar and dividend disbursing agent, will be allocated

to a participant based upon the average purchase price, excluding any brokerage charges or other charges, of all shares of the Company’s

common stock purchased with respect to the dividend.

A registered stockholder may

elect to receive an entire distribution in cash by notifying US Bank in writing so that such notice is received by the plan administrator

no later than the record date for distributions to stockholders.

The plan administrator will set up an account for shares acquired through

the plan for each stockholder who has not elected to receive dividends or other distributions in cash and hold such shares in noncertificated

There will be no brokerage

charges or other charges to stockholders who participate in the plan.

The plan administrator’s fees will be paid by the Company.

Stockholders who receive dividends

and other distributions in the form of stock are generally subject to the same U.S.

federal, state and local tax consequences as are stockholders

who elect to receive their distributions in cash.

However, since a participating stockholder’s cash dividends will be reinvested,

such stockholder will not receive cash with which to pay any applicable taxes on reinvested dividends.

A stockholder’s basis for

determining gain or loss upon the sale of stock received in a dividend or other distribution from the Company will generally be equal

to the total dollar amount of the distribution payable to the stockholder.

Any stock received in a dividend or other distribution will

have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S.

stockholder’s

Participants may terminate

their accounts under the plan by so notifying the plan administrator by submitting a letter of instruction terminating the participant’s

account under the plan to US Bank.

The plan may be terminated by the Company upon notice in writing mailed to each participant at least

30 days prior to any record date for the payment of any dividend by the Company.

If participants withdraw from

the plan or the plan is terminated, the plan administrator will cause the shares held for the participant under the plan to be delivered

to the participant.

If an investor holds common stock with a brokerage firm that does not participate in the plan, such investor will

not be able to participate in the plan and any dividend reinvestment may be affected on different terms than those described above.

Reinvestment Plan

Company has adopted a dividend reinvestment plan that will provide for reinvestment of its dividends and other distributions on behalf

of the Company’s stockholders, unless a stockholder elects to receive cash.

As a result, if the Company’s Board authorizes,

and the Company declares, a cash dividend or other distribution, then stockholders who do not “opt out” of the Company’s

dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s

common stock, rather than receiving cash dividends and distributions.

to the IPO, the Board primarily used newly-issued shares of the Company’s common stock

to implement the dividend reinvestment plan.

The number of shares of common stock to be issued

to a participant prior to the IPO would be equal to the quotient determined by dividing the

cash value of the dividend payable to such stockholder by the net asset value per share as

of the date such dividend was declared.

the IPO, the Board intends to primarily use newly-issued shares to implement the dividend

reinvestment plan, whether or not the shares are trading at a price per share at, below or

above net asset value.

However, the Board reserves the right to purchase shares in the open

market in connection with the implementation of the dividend reinvestment plan.

will examine the full facts and circumstances of each such dividend to determine the approach

(i.e., to use newly issued shares or effectuate open market purchases to implement the dividend

reinvestment plan) that is in the best interests of stockholders taking into account the

Board’s fiduciary duties to stockholders, including by weighing the potential dilution

in connection with such issuance to be incurred by the Company’s stockholders against

the Company’s need and usage of reinvested funds ,and, if the Company’s uses

newly issued shares to implement the dividend reinvestment plan at a time when the shares

are trading at a price below NAV, the stockholders’ receipt of fewer shares than they

would have if the Company had effectuated open market purchases.

The number of newly issued

shares to be issued to a participant would be determined by dividing the total dollar amount

of the dividend payable to such stockholder by the market price per share of the Company’s

common stock at the close of regular trading on a national securities exchange on the dividend

payment date.

Shares purchased in open market transactions by Equiniti, the plan administrator

and the Company’s transfer agent, registrar and dividend disbursing agent, will be

allocated to a participant based upon the average purchase price, excluding any brokerage

charges or other charges, of all shares of the Company’s common stock purchased with

respect to the dividend.

registered stockholder may elect to receive an entire distribution in cash by notifying Equiniti

in writing so that such notice is received by the plan administrator no later than the record

date for distributions to stockholders.

The plan administrator will set up an account for

shares acquired through the plan for each stockholder who has not elected to receive dividends

or other distributions in cash and hold such shares in noncertificated form.

will be no brokerage charges or other charges to stockholders who participate in the plan.

The plan administrator’s fees will be

paid by the Company.

who receive dividends and other distributions in the form of stock are generally subject to the same U.S.

federal, state and local tax

consequences as are stockholders who elect to receive their distributions in cash.

However, since a participating stockholder’s

cash dividends will be reinvested, such stockholder will not receive cash with which to pay any applicable taxes on reinvested dividends.

A stockholder’s basis for determining gain or loss upon the sale of stock received in a dividend or other distribution from the

Company will generally be equal to the total dollar amount of the distribution payable to the stockholder.

Any stock received in a dividend

or other distribution will have a new holding period for tax purposes commencing on the day following the day on which the shares are

credited to the U.S.

stockholder’s account.

may terminate their accounts under the plan by so notifying the plan administrator by submitting

a letter of instruction terminating the participant’s account under the plan to Equiniti.

The plan may be terminated by the Company upon notice in writing mailed to each participant

at least 30 days prior to any record date for the payment of any dividend by the Company.

participants withdraw from the plan or the plan is terminated, the plan administrator will cause the shares held for the participant

under the plan to be delivered to the participant.

If an investor holds common stock with a brokerage firm that does not participate

in the plan, such investor will not be able to participate in the plan and any dividend reinvestment may be affected on different terms

than those described above.

Market Share Repurchase Plan

Board authorized the Company to repurchase shares of its common stock through an open-market share repurchase program for up to $ 20 million

in the aggregate of shares of the Company’s common stock through 12 months from the date of the IPO.

Pursuant to such authorization

and concurrently with the closing of the IPO, the Company entered into a share repurchase plan (the “Company Rule 10b5-1 Stock

Repurchase Plan”) to acquire up to $ 15 million in the aggregate of shares of its common stock, in accordance with the guidelines

specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act.

Company Rule 10b5-1 Stock Repurchase Plan is intended to allow the Company to repurchase shares of its common stock at times when it

otherwise might be prevented from doing so under insider trading laws.

The Company Rule 10b5-1 Stock Repurchase Plan will require the

Company’s agent to repurchase shares of the Company’s common stock on the Company’s behalf when the market price per

share of the Company’s common stock is below the most recently reported NAV per share of common stock (including any updates, corrections

or adjustments publicly announced by the Company to any previously announced NAV per share).

Under the Company Rule 10b5-1 Stock Repurchase

Plan, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume

restrictions.

repurchase of shares pursuant to the Company Rule 10b5-1 Stock Repurchase Plan is intended to satisfy the conditions of Rule 10b5-1 and

Rule 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases

under certain circumstances.

Company Rule 10b5-1 Stock Repurchase Plan will commence beginning 60 calendar days following the end of the “restricted period”

under Regulation M and terminate upon the earliest to occur of (i) 12 months from the date of the Company Rule 10b5-1 Stock Repurchase

Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the Company Rule 10b5-1 Stock

Repurchase Plan equals $ 15 million and (iii) the occurrence of certain other events described in the Company Rule 10b5-1 Stock Repurchase

The “restricted period” under Regulation M will end upon the closing of the IPO and, therefore, the common stock repurchases/purchases

described above shall not begin prior to 60 days after the closing of the IPO.

Rule 10b5-1 Stock Purchase Plan

addition, PSCM will purchase up to $ 5 million in the aggregate of shares of the Company’s common stock in the open market within

one year of the date of the IPO if the shares of the Company’s common stock trade below a specific level of NAV per share following

the completion of the IPO.

In order to facilitate PSCM’s purchase commitment, concurrently with the closing of the IPO, PSCM entered

into a share purchase plan (the “PSCM Rule 10b5-1 Stock Purchase Plan”) to permit the purchase of up to $ 2.5 million of shares

of the Company’s common stock.

The purchases of shares pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan will be implemented

in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act.

PSCM Rule 10b5-1 Stock Purchase Plan is intended to allow PSCM to purchase shares of the Company’s common stock at times when it

otherwise might be prevented from doing so under insider trading laws.

The PSCM Rule 10b5-1 Stock Purchase Plan will require PSCM’s

agent to purchase shares of common stock on PSCM’s behalf when the market price per share of the Company’s common stock is

trading below the most recently reported NAV per share of common stock (including any updates, corrections or adjustments publicly announced

by the Company to any previously announced NAV per share).

Under the PSCM Rule 10b-1 Stock Purchase Plan, the agent will increase the

volume of purchases made as the price of the Company’s common stock declines, subject to volume restrictions.

purchase of shares pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan is intended to satisfy the conditions of Rule 10b5-1 and Rule

10b-18 under the Exchange Act, and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases

under certain circumstances.

PSCM Rule 10b5-1 Stock Purchase Plan will commence beginning 60 calendar days following the end of the “restricted period”

under Regulation M and terminate upon the earliest to occur of (i) 12 months from the date of the PSCM Rule 10b5-1 Stock Purchase Plan,

(ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the PSCM Rule 10b5-1 Stock Purchase

Plan equals $ 2.5 million and (iii) the occurrence of certain other events described in the PSCM Rule 10b5-1 Stock Purchase Plan.

“restricted period” under Regulation M will end upon the closing of the IPO and, therefore, the common stock repurchases/purchases

described above shall not begin prior to 60 days after the closing of the IPO.

Commitments and Contingencies

As of December 31, 2022 and

December 31, 2021, the Company had an aggregate of $ 2.6 million and $ 11.3 million, respectively, of unfunded commitments to provide debt

financing to its portfolio companies.

As of each of December 31, 2022 and December 31, 2021, there were no capital calls or draw requests

made by the portfolio companies to fund these commitments.

Such commitments are generally up to the Company’s discretion to approve

or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit

risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and are not reflected

in the Company’s consolidated statement of assets and liabilities.

A summary of the composition

of the unfunded commitments as of December 31, 2022 is shown in the table below:

ARC Falcon I Inc.

of December 31, 2023 and December 31, 2022, the Company had an aggregate of $ 20.1 million and $ 2.6 million, respectively, of unfunded

commitments to provide debt financing to its portfolio companies.

As of each of December 31, 2023 and December 31, 2022, there were no

capital calls or draw requests made by the portfolio companies to fund these commitments.

Such commitments are generally up to the Company’s

discretion to approve or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees,

elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and

are not reflected in the Company’s consolidated statement of assets and liabilities.

summary of the composition of the unfunded commitments as of December 31, 2023 is shown in the table below:

Accession Risk Management Group,

Aramsco, Inc.

B’Laster Holdings, LLC

Enverus Holdings, Inc.

ImageFirst Holdings, LLC

MRI Software LLC

OMNIA Partners, LLC

Patriot Growth Insurance Services, LLC

PT Intermediate Holdings III, LLC

Tank Holding Corp.

Total unfunded commitments

1 unchanged sentence

These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

A summary of the composition

of the unfunded commitments as of December 31, 2021 is shown in the table below:

summary of the composition of the unfunded commitments as of December 31, 2022 is shown in the table below:

ARC Falcon I Inc.

Aveanna Healthcare LLC

Culligan Water

Medical Solutions L.L.C.

National Mentor Holdings, Inc.

PT Intermediate Holdings III LLC

RSC Acquisition, Inc.

Sovos Compliance, LLC

Total unfunded commitments

Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.

These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

From time to time, the Company

may become a party to certain legal proceedings incidental to the normal course of its business.

As of December 31, 2022, management is

not aware of any pending or threatened litigation.

are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.

amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business.

As of December

31, 2023, management is not aware of any pending or threatened litigation.

Earnings Per Share

In accordance with the provisions

of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available

to common stockholders by the weighted average number of shares outstanding during the period.

Other potentially dilutive common shares,

and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

As of each of December 31,

2022 and as of December 31, 2021, there were no dilutive shares.

The following table sets forth

the computation of basic and diluted earnings per share of common stock for the years ended December 31, 2022 and December 31, 2021:

For the Year Ended

Net increase (decrease) in net assets resulting from operations

accordance with the provisions of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed

by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period.

Other potentially

dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

of each of December 31, 2023, 2022, and 2021, there were no dilutive shares.

following table sets forth the computation of basic and diluted earnings per share of common stock for the years ended December 31, 2023,

2022, and 2021:

the Year Ended December 31,

increase (decrease) in net assets resulting from operations

$ 107,835,651

$ ( 74,482,335 )

Weighted average shares of common stock outstanding - basic and diluted

Earnings (loss) per share of common stock - basic and diluted

The Company intends to elect

to be treated as a RIC under the Internal Revenue Code (“Code”) for its taxable year end December 31, 2022.

As a RIC, the

Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to its stockholders

as a dividend.

The Company anticipates distributing substantially all of its taxable income and gains, within the Subchapter M rules,

and thus the Company anticipates that it will not incur any federal or state income tax at the RIC level.

As a RIC, the Company is also

subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis (e.g., calendar year

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess

of current year distributions into the next tax year and pay a 4 % excise tax on such income, to the extent required.

The permanent differences

for tax purposes from distributable earnings to additional paid in capital were reclassified for tax purposes for the tax years ended

December 31, 2022 and December 31, 2021.

Company intends to elect to be treated as a RIC under the Internal Revenue Code (“Code”) for its taxable year end December

As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently

to its stockholders as a dividend.

The Company anticipates distributing substantially all of its taxable income and gains, within the

Subchapter M rules, and thus the Company anticipates that it will not incur any federal or state income tax at the RIC level.

the Company is also subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis

(e.g., calendar year 2023).

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable

income in excess of current year distributions into the next tax year and pay a 4 % excise tax on such income, to the extent required.

permanent differences for tax purposes from distributable earnings to additional paid in capital were reclassified for tax purposes for

the tax years ended December 31, 2023, 2022, and 2021.

These reclassifications have no impact on net assets.

Year Ended December 31,

Increase (decrease) in distributable earnings

Ended December 31,

Increase (decrease) in distributable

Increase (decrease) in capital in excess of par value

The following reconciles net

increase in net assets resulting from operations to taxable income for the years ended December 31, 2022 and December 31, 2021:

Year Ended December 31,

Net increase (decrease) in net assets resulting from operations

following reconciles net increase in net assets resulting from operations to taxable income for the years ended December 31, 2023, 2022,

Ended December 31,

Net increase (decrease) in net

assets resulting from operations

$ 107,835,651

Net change in unrealized appreciation (depreciation) from investments

$ ( 74,482,335 )

Net change in unrealized appreciation (depreciation)

from investments

( 52,563,544 )

Other book tax differences

Taxable income before deductions for distributions

Year Ended December 31,

Taxable income before

deductions for distributions

Ended December 31,

Distributions paid from:

2 unchanged sentences

Return of Capital

For the years ended December

31, 2022 and December 31, 2021, the components of accumulated earnings on a tax basis were as follows:

the years ended December 31, 2023, 2022, and 2021, the components of accumulated earnings on a tax basis were as follows:

Undistributed net investment income (loss)

Undistributed capital gains

Capital loss carryforward

( 9,042,947 )

Other accumulated gain (loss)

( 7,575,518 )

Net unrealized appreciation (depreciation)

1 unchanged sentence

( 102,926,664 )

Capital losses can be carried

forward indefinitely to offset future capital gains.

As of December 31, 2022 and December 31, 2021, the Company had no capital loss carryforwards.

As of December 31, 2022 and

December 31, 2021, the Company’s aggregate unrealized appreciation and depreciation on investments based on cost for U.S.

income tax purposes was as follows:

$ ( 58,734,816 )

$ ( 110,502,182 )

losses can be carried forward indefinitely to offset future capital gains.

As of December 31, 2023, the Company had $ 9,042,947 in capital

loss carryforwards.

As of December 31, 2022, and 2021, the Company had no capital loss carryforwards.

of December 31, 2023, 2022, and 2021, the Company’s aggregate unrealized appreciation and depreciation on investments based on

cost for U.S.

federal income tax purposes was as follows:

$ 1,158,548,300

$ 1,120,121,398

$ 1,188,452,438

Gross unrealized appreciation

1 unchanged sentence

( 59,138,207 )

( 103,934,928 )

( 3,542,964 )

Net unrealized appreciation/(depreciation) on investments

$ ( 49,754,535 )

The Company adopted FASB ASC

Topic 740, Accounting for Uncertainty in Income Taxes (“ASC 740”) as of January 23, 2020, commencement of operations.

ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated

financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s

tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be

sustained assuming examination by tax authorities.

As of December 31, 2022, management has analyzed the Company’s tax positions,

and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken in the Company’s

current year tax return.

The Company identifies its major tax jurisdiction as U.S.

The 2020-2022

tax years remain subject to examination by U.S.

$ ( 102,926,664 )

Company adopted FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes (“ASC 740”) as of January 23, 2020,

commencement of operations.

ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and

disclosed in the consolidated financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken in

the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable tax authority.

The Company recognizes the tax benefits of uncertain tax positions only where the

position is “more likely than not” to be sustained assuming examination by tax authorities.

As of December 31, 2023, management

has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded

related to uncertain tax positions taken in the Company’s current year tax return.

The Company identifies its major tax jurisdiction

The 2020-2023 tax years remain subject to examination by U.S.

federal, state and local authorities.

Management’s determinations regarding ASC

740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax

laws, regulations and interpretations thereof.

determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited

to, an ongoing analysis of tax laws, regulations and interpretations thereof.

Financial Highlights

The following per share of common

stock data has been derived from information provided in the consolidated financial statements.

The following is a schedule of financial

highlights for the years ended December 31, 2022 and December 31, 2021, and for the period January 23, 2020 (Commencement of Operations) through

December 31, 2020:

For the Year Ended

following per share of common stock data has been derived from information provided in the consolidated financial statements.

The following

is a schedule of financial highlights for the years ended December 31, 2023, 2022, and 2021, and for the period January 23, 2020 (Commencement

of Operations) through December 31, 2020:

For the Period

1 unchanged sentence

of Operations)

Per Common Share Operating Performance

Net Asset Value, Beginning of Period

the Year Ended December 31,

Share Operating Performance

Asset Value, Beginning of Period

Results of Operations:

Net Investment Income (1)

Net Realized and Unrealized Gain (Loss) on Investments (1)(4)

Net Increase (Decrease) in Net Assets Resulting from Operations

Distributions to Common Stockholders

Distributions from Net Investment Income

Distributions from Realized Gains

Net Decrease in Net Assets Resulting from Distributions

Net Asset Value, End of Period

Shares Outstanding, End of Period

Ratio/Supplemental Data

Net assets, end of period

Investment Income (1)

Realized and Unrealized Gain (Loss) on Investments (4)

Increase (Decrease) in Net Assets Resulting from Operations

Distributions

to Common Stockholders

Distributions

from Net Investment Income

Distributions

from Realized Gains

Decrease in Net Assets Resulting from Distributions

Asset Value, End of Period

Shares Outstanding,

End of Period

Ratio/Supplemental

Net assets, end

$ 461,955,393

1 unchanged sentence

$ 452,797,588

Weighted-average shares outstanding

Total Return (3)

Portfolio turnover

Ratio of operating expenses to average net assets without waiver (2)

Ratio of operating expenses to average net assets with waiver (2)

Ratio of net investment income (loss) to average net assets without waiver (2)

Ratio of net investment income (loss) to average net assets with waiver (2)

Weighted-average

shares outstanding

of operating expenses to average net assets without waiver (2)

of operating expenses to average net assets with waiver (2)

of net investment income (loss) to average net assets without waiver (2)

of net investment income (loss) to average net assets with waiver (2)

(1) The per common share data was derived by using weighted average shares outstanding.

4 unchanged sentences

(4) Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statements of Operations due to share transactions during the period.

Selected Quarterly Financial Data

The following are the quarterly

results of operations for the years ended December 31, 2022 and December 31, 2021.

The following information reflects all normal recurring

adjustments necessary for a fair presentation of the information for the periods presented.

The operating results for any quarter are

not necessarily indicative of results for any future period.

For the Three Months Ended

Selected Quarterly Financial Data (Unaudited)

following are the quarterly results of operations for the years ended December 31, 2023, 2022, and 2021.

The following information reflects

all normal recurring adjustments necessary for a fair presentation of the information for the periods presented.

The operating results

for any quarter are not necessarily indicative of results for any future period.

the Three Months Ended

September 30,

1 unchanged sentence

Net investment income (loss)

Net realized gain (loss) on investments, and foreign currency transactions

gain (loss) on investments, and foreign currency transactions

( 2,103,618 )

Net unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts

change in unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts

Increase (decrease) in

net assets resulting from operations

Net asset value per share as of the end

of the quarter

the Three Months Ended

September 30,

Investment income

Net investment income (loss)

gain (loss) on investments, and foreign currency transactions

( 6,776,866 )

change in unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts

( 11,731,503 )

1 unchanged sentence

( 16,711,415 )

Increase (decrease) in net assets resulting from operations

( 4,595,166 )

Increase (decrease) in

net assets resulting from operations

$ ( 3,430,800 )

$ ( 65,332,117 )

Net asset value per share as of the end of the quarter

For the Three Months Ended

$ ( 6,755,673 )

Net asset value per share as of the end

of the quarter

the Three Months Ended

September 30,

1 unchanged sentence

Net investment income (loss)

Net realized gain (loss) on investments, and foreign currency transactions

Net unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts

gain (loss) on investments, and foreign currency transactions

change in unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts

( 1,826,413 )

1 unchanged sentence

( 4,156,148 )

Increase (decrease) in net assets resulting from operations

Net asset value per share as of the end of the quarter

Increase (decrease) in

net assets resulting from operations

Net asset value per share as of the end

of the quarter

Subsequent Events

The Company’s management

has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein.

There have been

no subsequent events that require recognition or disclosure in these consolidated financial statements except for the following:

Issuance of Common Stock

On January 1, 2023, the Company issued and sold 86,898 shares of its

common stock at an aggregate purchase price of $ 1.3 million.

The issuance of the shares of common stock was exempt from the registration

requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof.

On February 1, 2023, the Company issued and sold 34,639 shares of its

common stock at an aggregate purchase price of $ 554.2 thousand.

The issuance of the shares of common stock was exempt from the registration

requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof.

As of March 1, 2023, the Company

sold approximately $ 9.25 million of shares of its common stock (with the final number of shares of common stock to be determined based

on the to-be-determined net asset value per share).

The offer and sale of the shares of common stock was exempt from the registration

requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and Rule 506(b) of Regulation D thereof.

Unfunded Capital Commitments

As of February 21, 2023, Vocus

Group was fully funded for $ 2.0 million.

Change in Interest Rate on the BoA Credit Facility

On February 3, 2023, the Company

entered into an omnibus amendment to the BoA Credit Facility that, among other things:

(i) removes LIBOR transition language, (ii) replaces

eurocurrency rate loans with SOFR loans for which the spread over the base rate increased from 1.30% to (a) with respect to any SOFR Loan

with a term of one month, 1.40%, and (b) with a term of three months, 1.45%, and (iv) with respect to any base rate loan, such base rate

Distributions

On December 30, 2022, the

Company declared a distribution of $ 0.64 per share, or $ 15,183,248 , of which a cash distribution of $ 6,941,066 was paid on January 13,

2023 and the remainder was paid in common stock through the Company’s dividend reinvestment plan.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included

There have been no subsequent events that require recognition or disclosure in these consolidated financial statements except

for the following:

Public Offering

On January 22, 2024, the Company completed its IPO, issuing 5,450,000

shares of common stock, par value $ 0.001 , at a public offering price of $ 16.45 per share.

Total net proceeds were $ 89,652,500 .

The Company’s

common stock began trading on the New York Stock Exchange under the symbol “PSBD” on January 18, 2024.

Proceeds from this

offering were primarily used to make investments in accordance with the Company’s investment objectives and strategies.

Capital Commitments

of January 24, 2024, OMNIA Partners, LLC was fully funded for $ 223,269 .

of January 31, 2024, $ 33,214 of the outstanding commitment to Accession Risk Management Group Inc.

The balance of the remaining

unfunded commitment is $ 2,424,643 .

of February 8, 2024, $ 41,439 of the outstanding commitment to Aptean Inc.

The balance of the remaining unfunded commitment

is $ 810,041 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data