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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-13 · 71 added, 26 removed, 86 unchanged (53% of the section changed)

27 unchanged sentences

PORTFOLIO AND INVESTMENT ACTIVITY

During the three months ended March 31, 2025, we made $3,366,196 of investment purchases and had $4,099 of redemptions and repayments, resulting in net investments at amortized cost of $17,079,421 as of March 31, 2025.

During the three months ended March 31, 2024, we made $73,438 of investment purchases and had $308,797 of redemptions and repayments, resulting in net investments at amortized cost of $18,366,616 as of March 31, 2024.

Our portfolio composition by major class, based on fair value at March 31, 2025, was as follows:

During the six months ended June 30, 2025, we made $4,428,530 of investment purchases and had $504,116 of redemptions and repayments, resulting in net investments at amortized cost of $17,641,707 as of June 30, 2025.

During the six months ended June 30, 2024, we made $973,438 of investment purchases and had $5,461,479 of redemptions and repayments, resulting in net investments at amortized cost of $14,460,679 as of June 30, 2024.

Our portfolio composition by major class, based on fair value at June 30, 2025, was as follows:

Investments at

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RESULTS OF OPERATIONS

Our operating results for the three months ended March 31, 2025 and March 31, 2024 were as follows:

For the Three Months Ended

Our operating results for the three and six months ended June 30, 2025 and June 30, 2024 were as follows:

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Investment Income:

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On occasion, we may also generate revenue from dividends and capital gains on equity investments we make, if any, or on warrants or other equity interests that we may acquire.

For the three months ended March 31, 2025 and 2024, our total investment income was $778,027 and $832,667, respectively.

For the three and six months ended June 30, 2025, our total investment income was $948,034 and $1,726,061, respectively.

For the three and six months ended June 30, 2024 our total investment income was $888,629 and $1,721,296, respectively.

Our loan portfolio generates interest income, with an average rate on the loans of 20%.

Professional Fees

For the three months ended March 31, 2025 and 2024, we had $142,656 and $138,371 of professional fees expense, respectively.

For the three and six months ended June 30, 2025, we had $98,764 and $241,420 professional fees expense, respectively.

For the three and six months ended June 30, 2024, we had $174,098 and $312,469 professional fees expense, respectively.

The decrease is due to the decrease in loan activity during the current year.

Payroll and Directors Fees

For the three months ended March 31, 2025 and 2024, we had $163,269 and $151,066 of payroll expense, respectively.

In addition, director fees were $30,000 and $30,000 for the three months ended March 31, 2025 and 2024, respectively.

For the three and six months ended June 30, 2025, we had $160,230 and $323,499 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

For the three and six months ended June 30, 2024, we had $145,859 and $296,925 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

Interest Expense

For the three months ended March 31, 2025 and 2024, we had $0 and $320 of interest expense, respectively.

For the three and six months ended June 30, 2025, we had $0 and $0 of interest expense, respectively.

For the three and six months ended June 30, 2024, we had $0 and $320 of interest expense, respectively.

The decrease is due to the termination of the line of credit agreement in January 2024.

Net Realized Gain (Loss) from Investments

For the three months ended March 31, 2025, we had $4,099 of proceeds from sale of investments, resulting in $236 of realized gains.

For the three months ended March 31, 2024, we had $308,797 of proceeds from sale of investments, resulting in $24,495 of realized gains.

For the three and six months ended June 30, 2025, we had $500,017 and $504,116, respectively, of sales of investments resulting in $31 of realized losses and $205 of realized gains, respectively.

For the three and six months ended June 30, 2024, we had $5,152,682 and $5,461,479, respectively, of sales of investments resulting in $346,745 and $371,240 of realized gains, respectively.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three months ended March 31, 2025, our investments included $162,266 of unrealized appreciation.

For the three months ended March 31, 2024, our investments included $51,751 of unrealized appreciation.

For the three and six months ended June 30, 2025, our investments had $314,515 and $476,781 of unrealized appreciation, respectively.

For the three and six months ended June 30, 2024, our investments had $289,641 and $237,890 of unrealized depreciation, respectively.

Changes in Net Assets from Operations

For the three months ended March 31, 2025, we recorded a net increase in net assets from operations of $451,746.

Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2025, our per-share net increase in net assets from operations was $0.07.

For the three months ended March 31, 2024, we recorded a net increase in net assets from operations of $382,103.

Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2024, our per-share net increase in net assets from operations was $0.06.

Cash Flows for the Three Months Ended March 31, 2025 and 2024

For the three and six months ended June 30, 2025, we recorded a net increase in net assets from operations of $677,035 and $1,128,781, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2025, our per-share net increase in net assets from operations was $0.11 and $0.18, respectively.

For the three and six months ended June 30, 2024, we recorded a net increase in net assets from operations of $412,936 and $795,039, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2024, our per-share net increase in net assets from operations was $0.06 and $0.12, respectively.

Cash Flows for the Six Months Ended June 30, 2025 and 2024

The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and repayments of portfolio investments, among other factors.

For the three months ended March 31, 2025, net cash used in operating activities was $3,646,585.

Cash flows used in operating activities for the three months ended March 31, 2025 were primarily related to purchasing of investments totaling $3,366,196.

For the three months ended March 31, 2024, net cash provided in operating activities was $128,701.

Cash flows provided in operating activities for the three months ended March 31, 2024 were primarily related to redemptions and repayments of investments totaling $308,797.

Cash flows used in our financing activities during the current period were due to the repurchase and retirement of 322,482 of our common shares for $630,436.

For the six months ended June 30, 2025, net cash used in operating activities was $3,898,665.

Cash flows used in operating activities for the six months ended June 30, 2025 were primarily related to purchasing of investments totaling $4,428,530.

Cash flows used in our financing activities for the six months ended June 30, 2025 were due to the repurchase and retirement of 322,482 of our common shares for $630,436.

For the six months ended June 30, 2024, net cash provided in operating activities was $5,048,587.

Cash flows provided in operating activities for the six months ended June 30, 2024 were primarily related to the funding of our short-term loans and purchases of investments aggregating $973,438, offset mostly by redemptions and repayments of short-term loans and investments totaling $5,461,479.

FINANCIAL CONDITION

As of March 31, 2025, we had cash of $1,749,089, a decrease of $4,277,021 from December 31, 2024.

As of June 30, 2025, we had cash of $1,497,009, a decrease of $4,529,101 from December 31, 2024.

The primary use of our existing funds and any funds raised in the future is expected to be for our investments in portfolio companies or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

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government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to collectively as “temporary investments.”

Private Placement of Securities and SUI Strategy

On July 31, 2025, we closed on a private placement offer and sale of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001.

On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P.

agreed to serve as our exclusive placement agent in connection with the private placement.

Pursuant to the Placement Agency Agreement, we paid A.G.P.

a cash placement agent fee of $18,000,000.

We also issued to A.G.P.

warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement).

The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $5.962 per share.

In addition, we agreed to reimburse A.G.P.

for accountable expenses in an amount of $200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P.

for up to $25,000 in connection with the private placement.

At the closing of the private placement, we also issued five-year warrants to purchase our common stock as follows:

warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,387 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share;

warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,388 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share;

warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows:

(i) 622,694 common shares at an exercise price of $5.42 per share;

(ii) 415,130 common shares at an exercise price of $6.504 per share;

and (iii) 207,564 common shares at an exercise price of $7.046 per share;

warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share.

All of the above-described warrants, other than that Advisor Warrants, will vest over a 24-month period starting six months from the issue date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date.

In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination.

The Advisor Warrants are fully exercisable beginning as of January 31, 2026.

On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P.

pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the registration rights agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.

Common Stock Purchase Agreement

On August 1, 2025, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with A.G.P./Alliance Global Partners (the “Investor”), pursuant to which we have the right, but not the obligation, to direct the Investor to purchase the lesser of (i) $500,000,000 or (ii) a number of shares not to exceed 19.99% of our shares of common stock outstanding on August 1, 2025, unless our shareholders shall have approved the issuance of common stock in excess of such percentage, upon satisfaction of certain terms and conditions contained in the Purchase Agreement, including but not limited to an effective resale registration statement filed with the SEC.

In this regard, we also entered into a Registration Rights Agreement with the Investor on August 1, 2025, pursuant to which we agreed to file a resale registration statement registering the resale of shares of common stock that may be purchased by the Investor pursuant to the Purchase Agreement.

Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.

Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.

CRITICAL ACCOUNTING ESTIMATES

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OFF-BALANCE-SHEET ARRANGEMENTS

During the three months ended March 31, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

During the six months ended June 30, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

FORWARD-LOOKING STATEMENTS

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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-Q

Item 2. Management’s Discussion and Analysis