UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the fiscal year ended December 31, 2021



☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission
File Number: 000-56126



Palmer
Square Capital BDC Inc.

(Exact
name of registrant as specified in its charter)



|Maryland                                                               |  | 84-3665200                                  
|---------------------------------------------------------------------- |  | --------------------------------------------
|(State
    or Other Jurisdiction of
    Incorporation or Organization) |  | (I.R.S.
    Employer
    Identification No.)



|1900
                                            Shawnee Mission Parkway, Suite 315,
    Mission
    Woods, KS |  | 66205         
|-------------------------------------------------------------------------------------------------------------- |  | --------------
|(Address
    of Principal Executive Offices)                                                                   |  | (Zip
    Code)



(816)
994-3200

(Registrant’s
telephone number, including area code)



Securities
registered pursuant to Section 12(b) of the Act:



|Title
    of each class |  | Trading
    Symbol(s) |  | Name
    of each exchange on which registered
|----------------------- |  | --------------------- |  | ---------------------------------------------
|None                    |  | None                  |  | None                                         



Securities
registered pursuant to Section 12(g) of the Act:

Common
Stock, par value $0.001 per share



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☒ No ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer | ☐ | Accelerated
    filer         | ☐
|--------------------------- | - | ----------------------------- | -
|Non-accelerated
    filer   | ☒ | Smaller
    reporting company | ☐
|Emerging
    growth company | ☒ |                              



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐











Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒



There
were 22,810,727 issued and outstanding shares of the issuer’s common stock, $.001 par value per share, on March 11, 2022.



Documents
Incorporated by Reference




















TABLE
OF CONTENTS



|             |                                                                                                              | Page
|------------ | ------------------------------------------------------------------------------------------------------------ | ----
|             | PART I                                                                                                       |     
|             |                                                                                                              |     
|Item
    1.  | Business                                                                                                     | 1   
|Item
    1A. | Risk Factors                                                                                                 | 28  
|Item
    1B. | Unresolved Staff Comments                                                                                    | 47  
|Item
    2.  | Properties                                                                                                   | 47  
|Item
    3.  | Legal Proceedings                                                                                            | 47  
|Item
    4.  | Mine Safety Disclosures                                                                                      | 47  
|             |                                                                                                              |     
|             | PART II                                                                                                      |     
|             |                                                                                                              |     
|Item
    5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 48  
|Item
    6.  | [Reserved]                                                                                                   | 49  
|Item
    7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 50  
|Item
    7A. | Quantitative and Qualitative Disclosures About Market Risk                                                   | 62  
|Item
    8.  | Consolidated Financial Statements and Supplementary Data                                                     | F-1 
|Item
    9.  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         | 63  
|Item
    9A. | Controls and Procedures                                                                                      | 63  
|Item
    9B. | Other Information                                                                                            | 63  
|             |                                                                                                              |     
|             | PART III                                                                                                     |     
|             |                                                                                                              |     
|Item
    10. | Directors, Executive Officers and Corporate Governance                                                       | 64  
|Item
    11. | Executive Compensation                                                                                       | 67  
|Item
    12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 67  
|Item
    13. | Certain Relationships and Related Transactions, and Director Independence                                    | 69  
|Item
    14. | Principal Accounting Fees and Services                                                                       | 71  
|             |                                                                                                              |     
|             | PART IV                                                                                                      |     
|             |                                                                                                              |     
|Item
    15. | Exhibits, Consolidated Financial Statements, and Schedules                                                   | 72  
|Item
    16. | Form 10-K Summary                                                                                            | 74  
|SIGNATURES   | 75                                                                                                          





i







PART
I



Unless
indicated otherwise in this Annual Report on Form 10-K or the context requires otherwise, the terms:



| | ● | “we,”
“us,” “our,” and the “Company” refer to Palmer Square Capital BDC Inc.;
| | - | -----------------------------------------------------------------------------



| | ● | “Palmer
Square” or “PSCM” refers collectively to Palmer Square Capital Management LLC and its subsidiaries and other affiliated
entities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | ● | “Investment
Advisor” refers to Palmer Square BDC Advisor LLC, a majority-owned subsidiary of Palmer Square and our investment adviser;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | ● | “Administrator”
refers to the Investment Advisor, in its capacity as our administrator; and
| | - | -------------------------------------------------------------------------------------------



| | ● | “stockholders”
refers to holders of our common stock, par value $0.001 per share.
| | - | ---------------------------------------------------------------------------------



Item
1. Business



Overview



We
are a financial services company that primarily lends to and invests in corporate debt securities of companies, including small to large
private U.S. companies. We were organized as a Maryland corporation on August 26, 2019 and are structured as an externally managed, non-diversified
closed-end management investment company. We have elected to be regulated as a business development company (“BDC”) under
the Investment Company Act of 1940, as amended (the “1940 Act”). Beginning with our taxable year ended December 31, 2020,
we have elected to be treated as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code
of 1986, as amended (the “Code”), and we expect to qualify as a RIC annually.



We
are externally managed by the Investment Advisor, an investment adviser that is registered with the Securities and Exchange Commission
(“SEC”) under the Investment Advisers Act of 1940 (the “Advisers Act”), pursuant to an investment advisory agreement
between us and the Investment Advisor (the “Advisory Agreement”). Subject to the supervision of our Board of Directors (the
“Board”), a majority of which is made up of directors that are not “interested persons” as defined in Section
2(a)(19) of the 1940 Act (“Independent Directors”), our Investment Advisor manages our day-to-day operations and provides
us with investment advisory and management services and certain administrative services. The Investment Advisor, in its capacity as Administrator,
provides the administrative services necessary for us to operate pursuant to an administration agreement between us and the Administrator
(the “Administration Agreement”). The Administrator has entered into a sub-administration agreement to delegate certain administrative
functions to U.S. Bancorp Fund Services, LLC (the “Sub-Administrator”). Our Investment Advisor is a majority-owned subsidiary
of Palmer Square, which is a privately-held firm specializing in corporate and structured credit.



Our
investment objective is to maximize total return, comprised of current income and capital appreciation. Our current investment focus
is guided by two strategies that facilitate our 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, we 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 our portfolio positions from changes in currency exchange rates and market
interest rates or to earn income and enhance our total returns. We may also receive or purchase warrants or rights to acquire equity
or other securities in connection with making a debt investment in a company. We will continue to evaluate other investment strategies
in the ordinary course of business with no specific top-down allocation to any single investment strategy.



We
have two wholly-owned subsidiaries (PS BDC Funding and PS BDC Funding II) that were established in connection with our obtaining credit
facilities from third party lenders. The accounts of these subsidiaries are consolidated in the Company’s financial statements.
We “look through” such subsidiaries to determine our compliance with the provisions of the 1940 Act, including provisions
governing capital structure and leverage.



Our
Portfolio



As of December 31, 2021, we
had 240 debt and private fund investments in 212 portfolio companies with an aggregate fair value of approximately $1.1 billion.





1







Listed
below are our top ten portfolio companies and industries represented as a percentage of total assets (excluding short-term investments)
as of December 31, 2021:



|Portfolio Company                         |  | 2021 |    
|----------------------------------------- |  | ---- | ---
|Vision Solutions, Inc.                    |  |      | 1.1
|Inmar, Inc.                               |  |      | 1.1
|Idera, Inc.                               |  |      | 1.1
|Peraton Corp.                             |  |      | 1.0
|Acrisure, LLC                             |  |      | 0.9
|Help/Systems Holdings, Inc.               |  |      | 0.9
|Quest Software US Holdings Inc            |  |      | 0.8
|Dotdash Meredith, Inc.                    |  |      | 0.8
|Micro Holding Corp.                       |  |      | 0.8
|Specialty Building Products Holdings, LLC |  |      | 0.8



|Industry                                              |  | 2021 |     
|----------------------------------------------------- |  | ---- | ----
|Healthcare Providers and Services                     |  |      | 10.5
|Software                                              |  |      | 10.0
|IT Services                                           |  |      | 9.2 
|Professional Services                                 |  |      | 6.3 
|Insurance                                             |  |      | 5.6 
|Media                                                 |  |      | 3.8 
|Hotels, Restaurants and Leisure                       |  |      | 3.4 
|Independent Power and Renewable Electricity Producers |  |      | 3.1 
|Oil, Gas and Consumable Fuels                         |  |      | 2.9 
|Building Products                                     |  |      | 2.9 



Listed
below are our top ten portfolio companies and industries represented as a percentage of total assets (excluding short-term investments)
as of December 31, 2020:



|Portfolio Company                        |  | 2020 |    
|---------------------------------------- |  | ---- | ---
|Playtika Holding Corp.                   |  |      | 1.3
|ICH US Intermediate Holdings II, Inc.    |  |      | 1.0
|Bass Pro Group, LLC                      |  |      | 0.9
|ECI Software Solutions, Inc.             |  |      | 0.9
|Amentum Government Services Holdings LLC |  |      | 0.9
|AssuredPartners, Inc.                    |  |      | 0.9
|OneDigital Borrower LLC                  |  |      | 0.8
|Hamilton Projects Acquiror LLC           |  |      | 0.8
|Ultimate Software Group, The             |  |      | 0.8
|Alera Group Intermediate Holdings, Inc.  |  |      | 0.8



|Industry                                                  |  | 2020 |     
|--------------------------------------------------------- |  | ---- | ----
|Software                                                  |  |      | 12.9
|Healthcare
    Providers and Services                     |  |      | 11.8
|Cash
    and cash equivalents                             |  |      | 8.0 
|Insurance                                                 |  |      | 7.6 
|Professional
    Services                                 |  |      | 4.4 
|Media                                                     |  |      | 4.3 
|Diversified
    Financial Services                        |  |      | 3.7 
|Hotels,
    Restaurants and Leisure                       |  |      | 3.6 
|Independent
    Power and Renewable Electricity Producers |  |      | 3.1 
|Diversified
    Consumer Services                         |  |      | 3.1 





2







The
Investment Advisor



The Investment Advisor serves as our investment adviser pursuant to the
Advisory Agreement and manages our day-to-day operations and provides us with investment advisory and management services and certain
administrative services. The investment team (the “Investment Team”) of our Investment Advisor is responsible for identifying
investment opportunities, conducting research and due diligence on prospective investments, structuring our investments and monitoring
and servicing our investments. As of December 31, 2021, the Investment Team was comprised of 23 investment professionals, all of whom
dedicate a substantial portion of their time to the Company. In addition, the team has five dedicated operations professionals. In addition,
the Investment Advisor believes that it has best-in-class support personnel, including expertise in risk management, legal, accounting,
tax, information technology and compliance, among others.



The
Investment Team employs a blend of top-down and bottom-up analysis. The senior members of the Investment Team have been actively involved
in the alternative credit investing market for an average of 20 years and have built strong relationships with private equity sponsors,
banks and financial intermediaries. The Investment Advisor has an investment committee (the “Investment Committee”) comprised
of four members that is responsible for approving all of our investments and is responsible for the day to day management of the portfolio.
See “Item 1. Business—Investment Committee” below for a discussion of the Investment Committee.



The
Investment Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Palmer Square, pursuant
to which Palmer Square provides the Investment Advisor with access to the resources of Palmer Square, including the Investment Team,
so as to enable the Investment Advisor to fulfill its obligations under the Advisory Agreement. Through the Resource Sharing Agreement,
the Investment Advisor capitalizes on the significant deal origination, credit underwriting, due diligence, investment structuring, execution,
portfolio management and monitoring experience of Palmer Square’s investment professionals.



Palmer
Square Capital Management



Palmer Square is a Delaware
limited liability company formed in 2009 and had approximately $20.6  billion in assets under management as of December 31, 2021.
Palmer Square manages portfolios of both corporate credit and structured credit as well as diverse strategies designed with the intent
to achieve high risk-adjusted returns over market cycles. We believe Palmer Square’s experience in analyzing companies and investment
structures provides a sustainable competitive advantage over other firms. Palmer Square is 100% management owned and led by Christopher
D. Long and Angie K. Long. The firm is an SEC registered investment adviser.





3







Investment
Advisory Agreement



Subject
to the overall supervision of our Board and in accordance with the 1940 Act, the Investment Advisor manages our day-to-day operations
and provides investment advisory services to us. Under the terms of the Advisory Agreement, our Investment Advisor:



| | ● | determines
    the composition of our portfolio, the nature and timing of the changes to our portfolio 	and the manner of implementing such changes;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | identifies,
    evaluates and negotiates the structure of the investments we make;
| | - | ----------------------------------------------------------------------------------



| | ● | performs
    due diligence on prospective portfolio companies;
| | - | --------------------------------------------------------------



| | ● | executes,
    closes, services and monitors the investments we make;
| | - | --------------------------------------------------------------------



| | ● | determines
    the securities and other assets that we purchase, retain or sell; and
| | - | ------------------------------------------------------------------------------------



| | ● | provides
    us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment
    of our funds.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pursuant
to the Advisory Agreement, we pay the Investment Advisor a fee for its investment advisory and management services consisting of two
components—a base management fee and, subsequent to the listing of the Company’s common stock on a national securities exchange
(a “Listing”), an incentive fee. The cost of both the base management fee and, subsequent to a Listing, the incentive fee,
is ultimately borne by our stockholders.



Base Management Fee



In
return for providing management services to the Company, the Company pays the Investment Advisor a base management fee, calculated and
paid quarterly 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) 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 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.





4







Incentive
Fee



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 fee net income used in the calculation of the Income Incentive Fee would be subject to a downward adjustment. The amount
of the adjustment would be equal to the amount by which such net realized losses exceed such net investment income. 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:



| | ● | 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”);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 100%
    of the Company’s “adjusted net investment income” with respect to that portion of such “adjusted net investment
    income,” if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Catch-Up Amount”)
    determined on a quarterly basis by multiplying 1.6875% by the Company’s total net asset value for the immediately preceding
    calendar quarter. The Catch-Up Amount is intended to provide the Investment Advisor with an incentive fee of 12.5% on all of the
    Company’s “adjusted net investment income” when the Company’s “adjusted net investment income”
    reaches the Catch-Up Amount in any calendar quarter; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | for
    any calendar quarter in which the Company’s “adjusted net investment income” exceeds the Catch-Up Amount, the Income
    Incentive Fee shall equal 12.5% of the amount of the Company’s “adjusted net investment income” for the calendar
    quarter.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



“Adjusted
net investment 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.





5







“Net realized losses”
in respect of a particular period means the difference, if positive, between (i) the aggregate realized capital losses on the Company’s
investments in such period and (ii) the aggregate realized capital gains on the Company’s investments in such period. “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.



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 is a graphical representation of the calculation of the Income Incentive Fee based on “adjusted net investment income”
that will be in place subsequent to a Listing:









6







Example
1—Income Incentive Fee:



Assumptions



| | ● | Hurdle
    rate(1) = 1.5%
| | - | -------------------------



| | ● | Base
    management fee(2) = 0.50%
| | - | ----------------------------------



| | ● | Other
    expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 0.20%
| | - | ----------------------------------------------------------------------------------



Alternative
1



Additional
Assumptions



| | ● | Investment
    income (including interest, dividends, fees, etc.) = 1.25%
| | - | -------------------------------------------------------------------------



| | ● | Pre-incentive
    fee net investment income (investment income - (base management fee + other expenses)) = 0.55%
| | - | ----------------------------------------------------------------------------------------------------------------



| | ● | Net
    realized losses (realized capital losses — realized capital gains) = 0.00%(4)
| | - | -------------------------------------------------------------------------------------



| | ● | Adjusted
    net investment income (pre-incentive fee net investment income — ([if positive] (net realized losses - net investment
    income))) = 0.55%(5)
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Adjusted
net investment income does not exceed the hurdle rate, therefore there is no Income Incentive Fee.



Alternative
2



Additional
Assumptions



| | ● | Investment
    income (including interest, dividends, fees, etc.) = 2.30%
| | - | -------------------------------------------------------------------------



| | ● | Pre-incentive
    fee net investment income (investment income - (base management fee + other expenses)) = 1.60%
| | - | ----------------------------------------------------------------------------------------------------------------



| | ● | Net
    realized losses (realized capital losses — realized capital gains) = 0.00%(4)
| | - | -------------------------------------------------------------------------------------



| | ● | Adjusted
    net investment income (pre-incentive fee net investment income — ([if positive] (net realized losses - net investment
    income))) = 1.60%(5)
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Adjusted
net investment income exceeds hurdle rate, therefore there is an Income Incentive Fee.



Income
Incentive Fee



=
100% × “Catch-Up” + the greater of 0% AND (12.5% × (adjusted net investment income
— 1.6875%)

=
(100% × (1.6000% - 1.5000%)) + 0%

=
100% × 0.1000%

=
0.1000%



| | (1) | Represents
    a quarter of the 6.0% annualized hurdle rate.
| | --- | ------------------------------------------------------------



| | (2) | Represents
    a quarter of the 2.0% annualized base management fee.
| | --- | --------------------------------------------------------------------



| | (3) | Excludes
    offering expenses.
| | --- | -------------------------------



| | (4) | The
    calculation of “realized capital losses” and “realized capital gains” are amounts over the four calendar
    quarters immediately preceding the payment date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | If
    the amount of net realized losses over the most recently completed and three calendar quarters preceding the payment date exceeds
    the amount of net investment income over the same period, excluding the most recently completed quarter, then the amount of adjusted
    net investment income is reduced by that amount. Otherwise, the amount of adjusted net investment income is not changed.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





7







Alternative
3



Additional
Assumptions



| | ● | Investment
    income (including interest, dividends, fees, etc.) = 2.70%
| | - | -------------------------------------------------------------------------



| | ● | Pre-incentive
    fee net investment income (investment income - (base management fee + other expenses)) = 2.00%
| | - | ----------------------------------------------------------------------------------------------------------------



| | ● | Net
    realized losses (realized capital losses — realized capital gains) = 0.00%(4)
| | - | -------------------------------------------------------------------------------------



| | ● | Adjusted
    net investment income (pre-incentive fee net investment income — ([if positive] (net realized losses - net investment
    income))) = 2.00%(5)
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Adjusted
net investment income exceeds hurdle rate, therefore there is an Income Incentive Fee.



Income
Incentive Fee



=
100% × “Catch-Up” + the greater of 0% AND (12.5% × (adjusted net investment income
- 1.6875%)

=
(100% × (1.6875% - 1.5000%)) + (12.5% × (2.0000% - 1.6875%))

=
0.1875% + (12.5% × 0.3125%)

=
0.1875% + 0.0039%

=
0.1914%



Alternative
4



Additional
Assumptions



| | ● | Investment
    income (including interest, dividends, fees, etc.) = 2.30%
| | - | -------------------------------------------------------------------------



| | ● | Pre-incentive
    fee net investment income (investment income - (base management fee + other expenses)) = 1.60%
| | - | ----------------------------------------------------------------------------------------------------------------



| | ● | Net
    realized losses (realized capital losses — realized capital gains) = 9.00%(4)
| | - | -------------------------------------------------------------------------------------



| | ● | Adjusted
    net investment income (pre-incentive fee net investment income — ([if positive] (net realized losses - net investment
    income)))(5) (6)
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



=
1.60% - (9.00% - 8.00%)

=
1.60% - 1.00%

=
0.60%



Adjusted
net investment income does not exceed the hurdle rate, therefore there is no Income Incentive Fee.



| | (4) | The
    calculation of “realized capital losses” and “realized capital gains” are amounts over the four calendar
    quarters immediately preceding the payment date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | If
    the amount of net realized losses over the most recently completed and three calendar quarters preceding the payment date exceeds
    the amount of net investment income over the same period, excluding the most recently completed quarter, then the amount of adjusted
    net investment income is reduced by that amount. Otherwise, the amount of adjusted net investment income is not changed.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | The
    example assumes 8.00% net investment income over the three calendar quarters preceding the most recently completed quarter.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------





8







Payment
of Our Expenses



All
professionals of the Investment Advisor, when and to the extent engaged in providing investment advisory and management services to us,
and the compensation and routine overhead expenses of personnel allocable to these services to us, are provided and paid for by the Investment
Advisor and not by us. We bear all other out-of-pocket costs and expenses of our operations and transactions.



Duration
and Termination



The Advisory Agreement was approved
by the Board on November 13, 2019 for an initial two-year term. Unless terminated earlier as described below, the Advisory Agreement will
remain in effect from year to year if approved annually by our Board or by the affirmative vote of the holders of a majority of our outstanding
voting securities, and, in either case, if also approved by a majority of our Independent Directors. Our Board most recently determined
to re-approve the Advisory Agreement for an additional one-year term ending January 13, 2023 at a meeting held on November 10, 2021. The
Advisory Agreement automatically terminates in the event of its assignment, as defined in the 1940 Act, by the Investment Advisor and
may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. The holders of a majority
of our outstanding voting securities may also terminate the Advisory Agreement without penalty upon 60 days’ written notice.



The
Advisory Agreement provides that, absent criminal conduct, willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of the reckless disregard of its duties and obligations under the Advisory Agreement, the Investment Advisor and
its professionals and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities,
costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering
of our Investment Advisor’s services under the Advisory Agreement or otherwise as our investment adviser.



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. 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.



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 Board. Our Board most recently determined to re-approve the Administration Agreement for an additional one-year term ending January
13, 2023 at a meeting held on November 10, 2021. 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 the Sub-Administration Agreement, engaged the Sub-Administrator 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.





9







Market
Opportunity



The
Investment Team believes that existing market conditions, including those set forth below, have combined to create an attractive investment
environment for us:



Risk
Adjusted Returns. Broadly-syndicated fixed and floating rate loans and corporate debt provides an opportunity set that the Investment
Team believes offers an attractive, risk-adjusted return. Specifically, the Investment Team believes it can mitigate risk and achieve
our investment objective by: (i) seeking the best relative value, which may equate to buying new loans or other corporate debt issuances
at a discount or purchasing in the secondary market, and (ii) seeking to buy loans or other corporate debt issuances that the Investment
Team believes have strong fundamentals and low default risk and are capable of withstanding significant downward pricing pressure.



Expansion
of Corporate Debt Market. The corporate debt market segment on which the Investment Team focuses is industry diverse and large, and
includes small to large U.S. companies. In addition, we believe that private equity sponsors have a large pool of uninvested private
equity capital. The Investment Team believes private equity firms are poised to deploy meaningful amounts of capital, thus creating ongoing
investment opportunities for private lenders such as us.



Regulatory
Environment and Opportunity for Alternative Lenders. Traditional banks have reduced their lending activities to smaller private companies
in recent years and bank stakeholders, including shareholders, lenders and regulators, continue to exert pressure to contain the amount
of these types of assets held on bank balance sheets. Examples of this include continued investor focus on the amount of assets whose
fair value cannot be determined by using observable measures, or “Level 3 assets,” held on bank balance sheets. As a result,
of decreased lending by banks to smaller private companies, the Investment Team believes there are increased opportunities for alternative
lenders such as us to fill the void.



CLO
Equity and Debt. The Investment Team believes that CLO equity and debt has been a tremendous source of returns for investors historically,
and has the potential to offer investors high cash on cash returns with low credit risk and low correlation to traditional assets classes.
Because CLO securities are floating rate instruments designed to mitigate interest rate sensitivity, investors may not directly suffer
the same adverse effects that other asset classes may experience due to rising interest rates. The Investment Team has a strong track
record of investing in CLO equity and debt, and believes that CLO investments continue to offer attractive relative value.



Financing
Arrangements



Bank
of America Credit Facility



On February 18, 2020, the
Company, through a special purpose wholly-owned subsidiary, Palmer Square BDC Funding I LLC (“PS BDC Funding” and together
with the Company, the “Borrowers”) entered into a Credit Agreement (the “Credit Agreement”) with certain financial
institutions as lenders (“Lenders”), Bank of America, N.A. as the administrative agent (“BofA N.A.”) 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.



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 the London Interbank Offered Rate (“LIBOR”) plus 1.30%. The “base rate”
will be equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the prime rate and (c) 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).



PS BDC Funding has pledged
all of its assets to BofA N.A., in its capacity as Administrative Agent, to secure its obligations under the BoA Credit Facility. Both
the Company and PS BDC Funding have made customary representations and warranties and are required to comply with various covenants, reporting
requirements, and other customary requirements for similar credit facilities. Borrowing under the BoA Credit Facility is subject to the
leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions
and custody. 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.





10







As of December 31, 2021, we
had approximately $552 million principal outstanding and $173 million of available Commitments under the BoA Credit Facility, and PS BDC
Funding was in compliance with the applicable covenants in the BoA Credit Facility on such date.



Wells
Fargo Credit Facility



On
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”), Wells Fargo Bank, National Association as
the administrative agent (“WFB”) and U.S. Bank National Association (“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 18, 2023. All amounts outstanding under the WF Credit Facility are required to be repaid by December 18, 2025.



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%.
The “base rate” will be equal to the highest of (a) the federal funds rate plus 1/2 of 1% 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).



PS
BDC Funding II has pledged all of its assets to U.S. Bank, in its capacity as Collateral Agent, to secure its obligations under the WF
Credit Facility and U.S. Bank acts as the custodian of such assets. Both the Company and PS BDC Funding II have made customary representations
and warranties and are required to comply with various covenants, reporting requirements, and other customary requirements for similar
credit facilities. Borrowing 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.



As of December 31, 2021, we
had $100 million principal outstanding and $50 million of available Commitments under the WF Credit Facility, and PS BDC Funding II was
in compliance with the applicable covenants in the WF Credit Facility on such date.



Investment
Criteria for Evaluating Investment Opportunities



The
Company’s investment objective is to maximize total return, comprised of current income and capital appreciation. However, no assurance
can be given that the Company’s investment objective will be achieved, and investment results may vary substantially on a monthly,
quarterly and annual basis. The Investment Advisor believes that the Company’s investment objective can be achieved by primarily
investing in first and second lien secured loans of small to large private U.S. companies, and to a lesser extent CLO structured credit
funds that typically own senior secured bank loans of public and private companies. First and second lien secured loans generally are
senior debt instruments that rank ahead of unsecured debt of a given portfolio company. These loans also have the benefit of security
interests on the assets of the portfolio company, which may rank ahead of or be junior to other security interests. A significant portion
of the loans in which the Company may invest or obtain exposure to through its investments in structured securities may be deemed “Covenant-Lite
Loans,” which means the loans contain fewer or no maintenance covenants than other loans and do not include terms which allow the
lender to monitor the performance of the borrower and declare a default if certain criteria are breached. See “Item 1A. Risk
Factors—Risks Related to our Investments—Covenant-Lite Loans” below.





11







We
seek to maximize returns and minimize risk for our investors by applying detailed, fundamental credit analysis to make and monitor our
portfolio investments. While the structure of our investments may vary, the Company can invest in senior secured debt, senior unsecured
debt, subordinated secured debt, subordinated unsecured debt, convertible debt, convertible preferred equity, preferred equity, common
equity, warrants and other instruments, many of which generate current yield. Structurally, CLOs are entities that are formed to hold
a portfolio of senior secured loans made to companies whose debt is generally rated below investment grade or, in limited circumstances,
unrated. The senior secured loans within a CLO are limited to senior secured loans which meet specified credit and diversity criteria
and are subject to concentration limitations in order to create an investment portfolio that is diverse by senior secured loan, borrower,
and industry, with limitations on the number of non-U.S. borrowers.



In
addition, to a lesser extent, portfolio investments may also include, but are not limited to, corporate structured credit, cash and synthetic
CLOs, collateralized debt obligations (each, a “CDO”), swaps, asset backed securities, corporate bonds of large U.S. and
non-U.S. companies, corporate bank loans, preferred stock, municipal bonds or loans and convertible securities. The Company seeks to
invest in credit and other assets that the Investment Advisor believes have strong structural protections, limited downside, and low
long-term beta to the broader credit and equity markets.



While
not our primary investment objective, our investments may include other equity investments, such as warrants, options to buy a minority
interest in a portfolio company, or contractual payment rights or rights to receive a proportional interest in the operating cash flow
or net income of such company. When determined by the Investment Advisor to be in our best interest, we may acquire a controlling interest
in a portfolio company. Any warrants we receive with our debt securities may require only a nominal cost to exercise, and thus, as a
portfolio company appreciates in value, we may achieve additional investment return from this equity interest.



Our
Investment Advisor may sell all or a portion of a position of the Company’s portfolio holdings when, in its opinion, one or more
of the following occurs, among other reasons: (1) the deterioration of an issuer’s fundamentals; (2) changes in business strategy
or key personnel; (3) rating agency downgrades or a decline in credit quality metrics; or (4) the Investment Advisor finds more attractive
investment opportunities for the Company.



The
Investment Advisor has the ability to invest in both illiquid and less liquid securities. The Investment Advisor may employ leverage,
including through borrowing funds or issuing senior securities, and use derivatives, both for hedging purposes and to earn income and
enhance total returns. The Investment Advisor may employ techniques to hedge investment risk, including without limitation, the use of
forward contracts, currency options and interest rate swaps, caps, collars and floors. The Investment Advisor may use derivatives to
earn income and enhance total returns by investing in derivatives securities and monitoring such investments to ensure that each holding
is maintaining its investment potential.



Investment
Approach



We
seek to achieve our investment objective by applying rigorous credit analysis and asset-based and cash-flow based lending techniques
to make and monitor our investments. We are routinely pursuing multiple investment opportunities, including primary and secondary purchases
of securities.



The
Investment Advisor employs a blend of top-down and bottom-up analysis. The top-down approach has three components: (1) macro analysis
whereby the Investment Team undertakes frequent dialogues among its team members regarding macro items including the economic outlook,
financial and credit markets, new and secondary issues, regulatory changes, M&A environment, and valuation levels; (2) cross-asset
relative value analysis which consists of the Investment Team analyzing various asset classes across the credit spectrum for strong relative
value opportunities (e.g., analysis of valuation metrics across loans, bonds, convertibles, CLOs and mortgage credits to identify and
monitor optimal risk / reward opportunities); and (3) active monitoring by the Investment Team of the major sectors within corporate
credit, such as software and technology, healthcare and business services. With regard to the bottom-up analysis, the Investment Team
undertakes frequent dialogue discussing key analyses including items such as determining an issuer’s ability to service debt, measuring
past performance and understanding the approach of the management team and their ability to meet goals, deal structure model analysis,
document analysis and other financial modeling and scenario testing. Finally, the bottom-up analysis includes specific analysis. For
example, within the credit spectrum, the team also seeks to evaluate many trade specifics including liquidity, position size, upside/downside,
and relative versus absolute value.





12







We
believe our vast experience in analyzing and investing in corporate and structured credit provides us with a strong competitive advantage
over other lenders with more limited experience investing in these markets. The Investment Advisor has deep expertise in evaluating,
underwriting, monitoring and trading senior secured first lien, second lien term loans and other corporate debt securities. In addition,
the Investment Advisor also has deep expertise in evaluating the investment merits and structural considerations of CLO debt and equity
investments.



Our
capital is generally used by our corporate borrowers to finance organic growth, acquisitions, recapitalizations and working capital.
Our investment decisions are based on extensive analysis of potential portfolio companies’ business operations supported by an
in-depth understanding of the quality of their recurring revenues and cash flow, variability of costs and the inherent value of their
assets, including proprietary intangible assets and intellectual property. In making our CLO investments, we consider the indenture structure
for that vehicle, its operating characteristics and compliance with its various indenture provisions, the collateral manager and its
experience managing CLOs, as well as its corporate loan-based collateral pool.



The
Investment Advisor believes it can mitigate risk by: (i) seeking the best relative value, which may equate to buying new loans and CLO
debt and equity in the primary market at a discount or purchasing in the secondary market, and (ii) seeking to buy loans and CLO debt
and equity that the Investment Advisor believes have strong fundamentals and low default risk capable of withstanding significant downward
pricing pressure.



Investment
Process – Senior Secured Loans



The
Investment Advisor’s senior secured loan investment strategy has been consistent throughout multiple credit environments and is
predicated on the view that a conservative approach to investing in first lien and second lien senior secured loans is the optimal strategy
over the course of a credit cycle. Given the idiosyncratic nature of secured loans, our Investment Team focuses on downside protection
and overall credit quality when evaluating each and every loan borrower.



The Investment Team evaluates
many factors during the due diligence phase, including: company-specific risk, industry risk, balance sheet risk, cash flow generation,
liquidity of the loan, in addition to other factors. The aggregate output of this information provides a building block for deeper financial
analysis, including base-case financial projections, and more importantly, downside-case financial projections. Once the initial research
process is completed, the Investment Team makes an informed decision on the quality of a particular loan and whether or not it meets our
strict criteria for investment.



Corporate
credit analysts at the Investment Advisor are each responsible for coverage of specific industries. Our Investment Advisor believes that
in order to appropriately analyze and underwrite senior secured loans, each analyst has to be an expert in their respective industry
verticals. As a result, the Investment Advisor’s corporate credit analysts average over 12 years of experience in broadly syndicated
and small to large company credit. As it relates to the due diligence process, each analyst draws not only on their personal analytical
skillset, but also utilize their networks within the industry. This can include calls and visits with existing company management teams,
former industry CEOs, industry experts, private equity sponsors and industry investment bankers. The aggregate of this initial information
gathering then lays the groundwork for fundamental financial analysis and detailed financial modeling, whereby the credit analyst constructs
a base case and downside case set of projections.



At
the conclusion of the due diligence process, the credit analyst presents a formal investment memorandum to the entire Investment Team,
which includes the Investment Committee (which averages over 20 years of credit investing experience) and all industry credit analysts.
Our Investment Advisor views this part of our process as unique across credit investment firms but believes that this more fulsome and
collaborative process leads to better investment decisions. Ultimately the Investment Committee needs to have a unanimous vote in order
to approve any of our investments, working in collaboration with our Chief Investment Officer and the Investment Advisor’s loan
portfolio manager to size the position appropriately for the risk.





13







Of
equal importance, the monitoring phase of each loan investment is critical to the ultimate success of the loan position. Detailed quarterly
writeups and model updates are done for each credit after they report earnings. However, the monitoring process is not just a quarterly
event as credit analysts are digesting daily information and news regarding our borrowers, their industries and their competitors.



Investment
Process – CLO Debt and Equity



The
Investment Advisor’s CLO debt and equity investment strategy has also been consistent throughout multiple credit environments and
is focused on three main areas: structure and documentation of the CLO, the underlying portfolio of the CLO, and the collateral manager
of the CLO.



The
structures of CLOs have become more robust since the pre-financial crisis era, with subordination of each rated tranche essentially improving
by one rating category (i.e., a current BBB-rated tranche may have similar credit support from a subordination perspective as a pre-financial
crisis A-rated tranche). CLO equity leverage is also lower from the pre-financial crisis era, with the equity tranche now representing
approximately 9-10% of current structures versus approximately 7% in pre-crisis structures. The Investment Advisor believes that no two
CLO structures are identical, thus it is critical to analyze the nuances of each structure and the underlying documentation. For example,
CLOs with higher overcollateralization cushions can help protect CLO equity from future cash diversion in a stressed scenario. From a
documentation standpoint, while post-financial crisis documents are more standardized, our Investment Team works to understand the nuances
of each CLO, such as optional redemption rights, collateral quality limitations, reinvestment language optionality, and the ability to
flush excess par to the equity holders.



A
second critical aspect of the CLO investment process is the Investment Advisor’s focus on the overall portfolio characteristics
and underlying loans within a CLO. From a top-down perspective we focus on the weighted-average rating factor (“WARF”), diversity,
spread, loan bid depth, facility size, rating distribution and price distribution of the entire portfolio. For example, two portfolios
with a weighted-average price of $98.00 may have very different overall portfolio characteristics, such as a higher concentration in
lower-rated loans, which could lead to issues during a downgrade cycle. In addition, given our strong corporate credit investment team,
we focus on the individual names of the underlying portfolio, with great focus on any loans we perceive to have heightened credit risk.



The
collateral manager of the CLO is the third aspect the Investment Advisor spends a significant amount of its due diligence effort analyzing.
The Investment Advisor tracks data compiled from third-party sources such as Intex, Moody’s Analytics and Bloomberg, as well as
proprietary internal systems to create a detailed analysis of the CLO collateral manager universe. This process leads to rankings of
collateral managers based on all of these criteria. In addition to the analytical and statistical process, the Investment Advisor also
performs due diligence on collateral managers via in-person meetings and via telephone calls. Our goal is to meet the collateral managers
we invest in at least twice per year.



Investment
Process – ESG Integration



We
believe that integrating environmental, social and corporate governance (“ESG”) criteria should be an important component
of our investment philosophy and process. Effective March 1, 2021, we have implemented policies and procedures to screen for ESG criteria
in our potential investments, and our Investment Committee is responsible for monitoring our investments to ensure that our ESG guidelines
are met.



Our
ESG guidelines state that we will not directly purchase any “Prohibited ESG Security.” We define a “Prohibited ESG
Security” as any debt obligation of, equity interest in, or credit default swap referencing a company where the consolidated group
is a group whose Primary Business Activity (as defined below) at the time of purchase is: (i) the speculative extraction of oil and gas
(commonly referred to as exploration and production); (ii) the speculative extraction of thermal coal or the generation of electricity
using coal; (iii) the production of or trade in Controversial Weapons (as defined below); (iv) the production of or trade in components
or services that have been specifically designed or designated for military purposes for the functioning of Controversial Weapons; or
(v) the trade in (a) hazardous chemicals, pesticides and wastes, ozone depleting substances, endangered or protected wildlife or wildlife
products, of which production or trade is banned by applicable global conventions and agreements; (b) pornography or prostitution; (c)
tobacco or tobacco-related products; (d) subprime lending or payday lending activities; or (e) weapons or firearms. We define “Controversial
Weapons” as any controversial weapons (such as cluster bombs, anti-personnel mines, chemical or biological weapons) which are prohibited
under applicable international treaties or conventions. We define “Primary Business Activity” as, in relation to a consolidated
group of companies, for the purposes of determining whether a security is a Prohibited ESG Security, where such group derives more than
50 percent of its revenues for the relevant business, trade or production (as applicable).



Following its effectiveness
on March 1, 2021, our ESG guidelines are followed by our Investment Committee on a go-forward basis, and certain of our investments held
prior to March 1, 2021, including as set forth in the schedule of investments herein or in our prior quarterly reports on Form 10-Q and
annual reports on Form 10-K, may not have satisfied our newly adopted ESG guidelines. Our Investment Committee is responsible for the
execution and continued progress of integration of ESG criteria into our investment strategy, and will support efforts to collaborate
with our investors and others in the investment industry to assess and prioritize the ESG topics that are most relevant to the Company
and our investors.





14







Investment
Committee



The
Investment Advisor’s Investment Committee is chaired by Angie K. Long, and the other members of the Investment Committee are Christopher
D. Long, Matthew L. Bloomfield and Jeffrey D. Fox. The members of the Investment Committee are jointly responsible for the day to day
management of the portfolio, and have equal rights with respect to the management of the portfolio. The extensive experience of the investment
professionals serving on our Investment Committee includes expertise in privately originated and publicly traded leveraged credit, stressed
and distressed debt, bankruptcy, mergers and acquisitions and private equity. This diverse skill set provides a range of perspectives
in the evaluation of each investment opportunity.



Competition



Our
primary competitors in investing in corporate debt and CLO securities include public and private funds, other business development companies,
commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private
equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing
resources than we do. For example, we believe some competitors may have access to funding sources that are not available to us. In addition,
some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety
of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions
that the 1940 Act imposes on us as a BDC or to the distribution and other requirements we must satisfy as a RIC.



We
use the expertise of the investment professionals of Palmer Square to which we have access pursuant to the Resource Sharing Agreement
to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we seek to use
the relationships of the Investment Advisor to enable us to learn about, and compete effectively for, financing opportunities with attractive
small to large private companies in the industries in which we seek to invest. For additional information concerning the competitive
risks we face, see “Item 1A. Risk Factors—Risks Relating to our Business and Structure—Operation in a Highly Competitive
Market for Investment Opportunities.”



Expenses



Our
primary operating expenses include the payment of fees to the Investment Advisor under the Advisory Agreement, our allocable portion
of overhead and rental expenses under the Administration Agreement and other operating costs described below. We bear all other out-of-pocket
costs and expenses of our operations and transactions, including:



| | ● | interest
    expense and other costs associated with our indebtedness;                                    
| | - | ----------------------------------------------------------------------------------------------------------
| |   |                                                                                                           
| | ● | the
    cost of calculating our net asset value, including the cost of any third-party valuation services;



| | ● | the
    cost of effecting sales and repurchases of shares of our common stock and other securities;
| | - | ---------------------------------------------------------------------------------------------------



| | ● | fees
    payable to third parties relating to making investments, including our Investment Advisor’s or its affiliates’ travel
    expenses, research costs and out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective
    investments;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | transfer
    agent and custodial fees;
| | - | --------------------------------------



| | ● | operating
    costs incurred prior to the commencement of our operations;
| | - | -------------------------------------------------------------------------



| | ● | out-of-pocket
    fees and expenses associated with marketing efforts;
| | - | ----------------------------------------------------------------------



| | ● | federal
    and state registration fees and any stock exchange listing fees;
| | - | ----------------------------------------------------------------------------



| | ● | U.S.
    federal, state and local taxes;
| | - | ----------------------------------------



| | ● | Independent
    Directors’ fees and expenses;
| | - | ---------------------------------------------





15







| | ● | brokerage
    commissions and markups;
| | - | --------------------------------------



| | ● | fidelity
    bond, directors’ and officers’ liability insurance and other insurance premiums;
| | - | ---------------------------------------------------------------------------------------------



| | ● | direct
    costs, such as printing, mailing, long distance telephone and staff;
| | - | -------------------------------------------------------------------------------



| | ● | fees
    and expenses associated with independent audits and outside legal costs;
| | - | ---------------------------------------------------------------------------------



| | ● | costs
    associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities
    laws; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | other
    expenses incurred by the Administrator or us in connection with administering our business, including payments under the Administration
    Agreement that will be based upon our allocable portion (subject to the review and approval of our Board) of overhead, including
    rental expenses.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employees



We
do not currently have any employees. Each officer of the Company is an employee of the Investment Advisor or its affiliates. See “Item
10. Directors, Executive Officers, and Corporate Governance.”



Our
day-to-day investment operations are managed by the Investment Advisor. Pursuant to its Resource Sharing Agreement with Palmer Square,
the Investment Advisor has access to the individuals who comprise our Investment Advisor’s Investment Committee and Investment
Team. The Investment Advisor may hire additional investment professionals to provide services to us, based upon its needs. See above
“Item 1. Business — The Investment Advisor.”



Regulation
as a Business Development Company



We
have elected to be regulated as a BDC under the 1940 Act. A BDC must be organized in the United States for the purpose of investing in
or lending to primarily private companies and making significant managerial assistance available to them.



We
may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of a majority
of the outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities of a company is defined
under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present at a meeting if more than 50%
of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting
securities of such company.



As
with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements. A majority of our directors
must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and
maintain a bond issued by a reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we are prohibited from protecting
any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such person’s office.



We
are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness
not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities.



We
may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior
approval of our directors who are not interested persons, as defined in Section 2(a)(19) of the 1940 Act, and, in some cases, prior approval
by the SEC. As a BDC, we are limited in our ability to invest in any portfolio company in which our Investment Advisor or any of its
affiliates currently has an investment or to make any co-investments with our Investment Advisor or its affiliates without an exemptive
order from the SEC, subject to certain exceptions.





16







We
do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these limits,
except for registered money market funds, we generally cannot acquire more than 3% of the voting stock of any investment company, invest
more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our
total assets in the securities of investment companies in the aggregate. The portion of our portfolio invested in securities issued by
investment companies ordinarily will subject our stockholders to additional expenses. Our investment portfolio is also subject to diversification
requirements by virtue of our qualification as a RIC for U.S. tax purposes and our intention to continue to operate in a manner so as
to qualify for the tax treatment applicable to RICs.



We
will generally not be able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common
stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock
if our Board determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve
such sale. We will comply with the conditions set forth in Section 63(2) of the 1940 Act when selling our common stock at a price below
net asset value. In addition, we may generally issue new shares of our common stock at a price below net asset value in rights offerings
to existing stockholders, in payment of dividends and in certain other limited circumstances.



We
will be periodically examined by the SEC for compliance with the 1940 Act.



Qualifying
Assets



Under
the 1940 Act, a BDC may not acquire any assets other than assets of the type listed in section 55(a) of the 1940 Act, which are referred
to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s
total assets. The principal categories of qualifying assets relevant to our business are the following:



| | ● | Securities
    purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain
    limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated
    person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible
    portfolio company is defined in the 1940 Act as any issuer which:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | is
    organized under the laws of, and has its principal place of business in, the United States;
| | - | --------------------------------------------------------------------------------------------------



| | ● | is
    not an investment company (other than a small business investment company wholly owned by the Company) or a company that would be
    an investment company but for certain exclusions under the 1940 Act; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | satisfies
    any of the following:
| | - | -----------------------------------



| | ● | does
    not have any class of securities that is traded on a national securities exchange;
| | - | -------------------------------------------------------------------------------------------



| | ● | has
    a class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-
    voting common equity of less than $250 million;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | is
    controlled by a business development company or a group of companies including a business development company and the business development
    company has an affiliated person who is a director of the eligible portfolio company; or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | is
    a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------





17







| | ● | Securities
    of any eligible portfolio company that we control.
| | - | -----------------------------------------------------------------



| | ● | Securities
    purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer,
    or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior
    to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional
    lending or financing arrangements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Securities
    of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities
    and we already own 60% of the outstanding equity of the eligible portfolio company.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Securities
    received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants
    or rights relating to such securities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Cash,
    cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



Limitations
on Leverage



We
are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness
not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities.



Managerial
Assistance to Portfolio Companies



A
BDC must be operated for the purpose of making investments in the types of securities described under “—Regulation as
a Business Development Company—Qualifying Assets,” above. However, in order to count portfolio securities as qualifying
assets for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the
issuer of the securities significant managerial assistance. Making available managerial assistance means, among other things, any arrangement
whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does in fact provide, significant
guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.



Temporary
Investments



Pending
investment in other types of “qualifying assets,” as described above, our investments may consist of cash, cash equivalents,
U.S. 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, such that at least 70% of our assets are qualifying assets.



Senior
Securities



We
are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock
if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. In addition, while
any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase
of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may
also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage.





18







Code
of Ethics



We
and our Investment Advisor have adopted codes of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers
Act, respectively, that establish procedures for personal investments and restrict certain transactions by our personnel. The codes of
ethics generally do not permit investments by our employees or employees of our Investment Advisor in securities that may be purchased
or held by us.



We
hereby undertake to provide a copy of the codes to any person, without charge, upon request. Requests for a copy of the codes may be
made in writing addressed to Palmer Square Capital BDC Inc., Attention: Secretary, 1900 Shawnee Mission Parkway, Suite 315, Mission Woods,
Kansas 66205, or by emailing us at: investorrelations@palmersquarecap.com.



Compliance
Policies and Procedures



We
and our Investment Advisor have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation
of the federal securities laws and are required to review these compliance policies and procedures annually for their adequacy and the
effectiveness of their implementation and designate a chief compliance officer to be responsible for administering the policies and procedures.



Exchange
Act and Sarbanes-Oxley Act Compliance



The
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) imposes a wide variety of regulatory requirements on certain publicly
held companies and their insiders. Assuming certain requirements are met, many of these requirements affect us. For example:



| | ● | pursuant
    to Rule 13a-14 of the Exchange Act, our chief executive officer and chief financial officer are required to certify the accuracy
    of the consolidated financial statements contained in our periodic reports;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | pursuant
    to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls
    and procedures;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | pursuant
    to Rule 13a-15 of the Exchange Act, subject to certain assumptions, our management is required to prepare an annual report regarding
    its assessment of our internal control over financial reporting and, depending on our accelerated filer status, this report may be
    required to be audited by our independent registered public accounting firm; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | pursuant
    to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were material
    changes in our internal control over financial reporting or in other factors that could significantly affect these controls subsequent
    to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act
and the regulations promulgated thereunder. We continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley
Act and will take actions necessary to ensure that we are in compliance therewith.



Proxy
Voting Policies and Procedures



We
have delegated our proxy voting responsibility to our Investment Advisor. The Proxy Voting Policies and Procedures of our Investment
Advisor are set forth below. The guidelines are reviewed periodically by our Investment Advisor and our Independent Directors, and, accordingly,
are subject to change.





19







An
investment adviser registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part
of this duty, our Investment Advisor recognizes that it must vote client securities in a timely manner free of conflicts of interest
and in the best interests of its clients. These policies and procedures for voting proxies for our Investment Advisor’s investment
advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.



Our
Investment Advisor intends to vote proxies relating to our securities in the best interest of the Company’s stockholders. It reviews
on a case-by-case basis each proposal submitted for a stockholder vote to determine its impact on the portfolio securities held by the
Company. Although our Investment Advisor will generally vote against proposals that may have a negative impact on the Company’s
portfolio securities, it may vote for such a proposal if there exists compelling long-term reasons to do so.



The
proxy voting decisions of our Investment Advisor are made by the senior officers who are responsible for monitoring each of the Company’s
investments. To ensure that its vote is not the product of a conflict of interest, it will require that: (a) anyone involved in the decision-making
process disclose to its chief compliance officer any potential conflict that he or she is aware of and any contact that he or she has
had with any interested party regarding a proxy vote; and (b) employees involved in the decision making process or vote administration
are prohibited from revealing how our Investment Advisor intends to vote on a proposal in order to reduce any attempted influence from
interested parties.



You
may obtain information without charge about how our Investment Advisor voted proxies by making a written request for proxy voting information
to: Palmer Square Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205, Attention: Investor Relations.



Privacy
Principles



The
Company looks to protect nonpublic personal data. The Company’s privacy policy summarized below is intended to be compliant with
the federal and state regulations as applied to the Company.



From
time to time nonpublic personal information of our stockholders may be collected as required for legitimate business purposes. The Company
may share all of the information that we collect with our Investment Advisor and its affiliates in order to service stockholder accounts
or provide stockholders with information about other products and services offered by the Company or the Investment Advisor or its affiliates
that may be of interest to them.



In
addition, the Company may disclose all of the information that it collects about stockholders to certain third parties who are not affiliated
with the Company or the Investment Advisor or its affiliates under one or more of the following circumstances:



| | 1. | As
    Authorized — if a stockholder requests or authorizes disclosure of the information.
| | -- | ------------------------------------------------------------------------------------------



| | 2. | As
    Required by Law — for example, to cooperate with regulators or law enforcement authorities.
| | -- | --------------------------------------------------------------------------------------------------



| | 3. | As
    Permitted by Law — for example, sharing information with companies that maintain, process or service Company or stockholder
    accounts or financial products and services or who effect, administer or enforce Company or stockholder transactions is permitted.
    Among other activities, the Company and its Investment Advisor and its affiliates may share information with persons acting in a
    representative or fiduciary capacity on the Company’s or a stockholder’s behalf. The Company believes that sharing of
    information for these purposes is essential to providing stockholders with necessary or useful services with respect to their accounts.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Company and the Investment Advisor and its affiliates restrict access to nonpublic personal information about stockholders internally
to those of their respective employees and agents who need to know the information to enable them to provide services to the stockholders.
The Company and the Investment Advisor and its affiliates maintain physical, electronic and procedural safeguards to guard stockholder’s
nonpublic personal information.





20







Reporting
Obligations



We
are a reporting company under the Exchange Act and are required to comply with all periodic reporting, proxy solicitation and other applicable
requirements under the Exchange Act.



We
will furnish our stockholders with annual reports containing audited consolidated financial statements, quarterly reports, and such other
periodic reports as we determine to be appropriate or as may be required by law. As a BDC, we are required to file quarterly reports
on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K with the SEC. The SEC maintains an Internet site that contains
reports, proxy and information statements and other information filed electronically by us with the SEC which is available on the SEC’s
Internet site at http://www.sec.gov.



Certain
U.S. Federal Income Tax Considerations



The
following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment
in our shares. This summary does not purport to be a complete description of the income tax considerations applicable to such an investment.
For example, we have not described tax consequences that may be relevant to certain types of holders subject to special treatment under
U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies,
dealers in securities, pension plans and trusts, financial institutions, partnerships and other pass- through entities, U.S. stockholders
(as defined below) whose functional currency is not the U.S. dollar, persons who mark-to-market our shares and persons who hold our shares
as part of a “straddle,” “hedge” or “conversion” transaction. This summary assumes that investors
hold our common stock as capital assets (within the meaning of the Code). The discussion is based upon the Code, Treasury regulations,
and administrative and judicial interpretations, each as of the date hereof and all of which are subject to change, possibly retroactively,
which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue
Service (the “IRS”) regarding any matter discussed herein. Tax counsel has not rendered any legal opinion regarding any tax
consequences relating to us or our stockholders. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state
or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt
securities or certain other investment assets.



For
purposes of this discussion, a “U.S. stockholder” generally is a beneficial owner of shares of our common stock who is for
U.S. federal income tax purposes:



| | ● | a
    citizen or individual resident of the United States;
| | - | ----------------------------------------------------------



| | ● | a
    corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the
    laws of the United States or any political subdivision thereof;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | a
    trust if (a) a court in the United States has primary supervision over its administration and one or more U.S. persons have the authority
    to control all substantial decisions of the trust, or (b) the trust has a valid election in effect under applicable U.S. Treasury
    regulations to be treated as a U.S. person for federal income tax purposes; or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | an
    estate, the income of which is subject to U.S. federal income taxation regardless of its source.
| | - | -------------------------------------------------------------------------------------------------------



A
“Non-U.S. stockholder” generally is a beneficial owner of shares of our common stock that is not a U.S. stockholder.



If
a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the
tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.
A prospective stockholder that is a partner in a partnership holding shares of our common stock should consult his, her or its tax advisers
with respect to the purchase, ownership and disposition of shares of our common stock.





21







Tax
matters are complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of the investor’s
particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such an investment,
including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, including the potential application
of U.S. withholding taxes, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax
laws.



Election
to be Taxed as a RIC



As
a BDC, we have elected, and intend to qualify annually, as a RIC under Subchapter M of the Code, beginning with our initial taxable year
ending December 31, 2020. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we
distribute to our stockholders from our earnings and profits. To qualify for and maintain our qualification as a RIC, we must, among
other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, to obtain RIC tax
treatment, we must timely distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable
income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized
net long-term capital losses (the “Annual Distribution Requirement”).



Taxation
as a RIC



If
we:



| | ● | qualify
    as a RIC; and
| | - | -------------------------



| | ● | satisfy
    the Annual Distribution Requirement,
| | - | ------------------------------------------------



then
we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (generally
defined as net long-term capital gains in excess of short-term capital losses) we distribute (or are deemed to distribute) to stockholders.
We will be subject to U.S. federal income tax at regular corporate rates on any net income or net capital gain not distributed (or deemed
distributed) to our stockholders.



We
will be subject to a nondeductible U.S. federal excise tax of 4% on certain undistributed income unless we distribute in a timely manner
an amount at least equal to the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income
for the one-year period ending October 31 of that calendar year and (3) any income realized, but not distributed, in preceding years
and on which we paid no federal income tax (“Excise Tax Distribution Requirement”).



To
qualify as a RIC for federal income tax purposes, we must, among other things:



| | ● | continue
    to qualify to be treated as a BDC under the 1940 Act at all times during each taxable year;
| | - | --------------------------------------------------------------------------------------------------------



| | ● | derive
    in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities, loans,
    gains from the sale of stock or other securities, net income from certain “qualified publicly-traded partnerships,” or
    other income derived with respect to our business of investing in such stock or securities the (“90% Income Test”); and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | diversify
    our holdings so that at the end of each quarter of the taxable year:
| | - | ----------------------------------------------------------------------------------



| | (i) | at
    least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and
    other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than
    10% of the outstanding voting securities of such issuer; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | no
    more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other
    RICs, of one issuer, of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged
    in the same or similar or related trades or businesses or in the securities of one or more “qualified publicly-traded partnerships,”
    (the “Diversification Tests”).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





22







To
the extent that we invest in entities treated as partnerships for U.S. federal income tax purposes (other than a “qualified publicly
traded partnership”), we generally must include the items of gross income derived by the partnerships for purposes of the 90% Income
Test, and the income that is derived from a partnership (other than a “qualified publicly traded partnership”) will be treated
as qualifying income for purposes of the 90% Income Test only to the extent that such income is attributable to items of income of the
partnership which would be qualifying income if realized by us directly. In addition, we generally must take into account our proportionate
share of the assets held by partnerships in which we are a partner (other than a “qualified publicly traded partnership”)
for purposes of the Diversification Tests.



For
federal income tax purposes, we may be required to recognize taxable income in circumstances in which we do not receive a corresponding
payment in cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount
(such as debt instruments with PIK interest or, in certain cases, increasing interest rates or debt instruments that were issued with
warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation,
regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income
other amounts that we have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan
or are paid in non-cash compensation such as warrants or stock. We anticipate that a portion of our income may constitute original issue
discount or other income required to be included in taxable income prior to receipt of cash. Further, we may elect to amortize market
discount and include such amounts in our taxable income in the current year, instead of upon disposition, as an election not to do so
may limit our ability to deduct interest expenses for tax purposes, which is subject to other limitations under U.S. federal income tax
law.



We
intend to invest a portion of our net assets in below investment grade instruments (rated lower than “Baa3” by Moody’s
Investors Service or lower than “BBB-” by Standard & Poor’s Corporation), which are often referred to as “junk”
bonds. Investments in these types of instruments may present special tax issues for us. U.S. federal income tax rules are not entirely
clear about issues such as when we may cease to accrue interest, original issue discount or market discount, when and to what extent
deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default should be allocated between
principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable. We will address these
and other issues to the extent necessary to seek to ensure that we distribute sufficient income so that we do not become subject to U.S.
federal income or excise tax.



Because
any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual,
we may be required to make a distribution to our stockholders to satisfy the Annual Distribution Requirement, even though we will not
have received any corresponding cash amount. As a result, we may have difficulty meeting the Annual Distribution Requirement necessary
to qualify for and maintain RIC tax treatment under Subchapter M of the Code. We may have to sell some of our investments at times and/or
at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this
purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to
corporate-level income tax.



Although
we do not presently expect to do so, we are authorized to borrow funds and to sell assets to satisfy distribution requirements. However,
under the 1940 Act, we are not permitted to make distributions to our stockholders while our debt obligations and other senior securities
are outstanding unless certain “asset coverage” tests are met. See “Regulation as a Business Development Company
— Senior Securities.”Moreover, our ability to dispose of assets to meet our distribution requirements may be limited
by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification
Tests. If we dispose of assets to meet the Annual Distribution Requirement or the Excise Tax Distribution Requirement, we may make such
dispositions at times that, from an investment standpoint, are not advantageous.





23







Failure
to Qualify as a RIC



If
we were unable to qualify for treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates,
regardless of whether we make any distributions to our stockholders. Distributions would not be required, and any distributions would
be taxable to our stockholders as ordinary dividend income to the extent of our current and accumulated earnings and profits. Subject
to certain limitations in the Code, such distributions may be eligible for the preferential maximum rate applicable to qualified dividend
income of individual stockholders to the extent of our current and accumulated earnings and profits. Subject to certain limitations under
the Code, corporate distributees may be eligible for a dividends-received deduction. Distributions in excess of our current and accumulated
earnings and profits would be treated first as a return of capital to the extent of the stockholder’s tax basis, and any remaining
distributions would be treated as a capital gain.



To
requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and
dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to
RICs that qualified as such under the Code for at least one year prior to disqualification and that requalify as a RIC no later than
the second year following the nonqualifying year, we would be subject to tax on any unrealized net built-in gains in the assets held
by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special
election to pay corporate-level U.S. federal income tax on such built-in gains at the time of our requalification as a RIC.



The
remainder of this discussion assumes that we qualify as a RIC and satisfy the Annual Distribution Requirement.



Taxation
of U.S. Stockholders



Distributions
by us generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our “investment company
taxable income” (which is, generally, our net ordinary income plus realized net short-term capital gains in excess of realized
net long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings
and profits, whether paid in cash or reinvested in additional common stock. To the extent such distributions paid by us to non-corporate
stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations,
such distributions (“Qualifying Dividends”) may be eligible for a maximum tax rate of 20%, provided that we properly report
such distribution as “qualifying dividend income” in a written statement furnished to our stockholders and certain holding
period and other requirements are satisfied. In this regard, it is not anticipated that a significant portion of distributions paid by
us will be attributable to qualifying dividends; therefore, our distributions generally will not qualify for the preferential maximum
rate applicable to Qualifying Dividends. Distributions of our net capital gain (which is generally our realized net long-term capital
gains in excess of realized net short-term capital losses) properly designated by us as “capital gain dividends” will be
taxable to a U.S. stockholder as long-term capital gains that are currently generally taxable at a maximum rate of 20% in the case of
individuals, trusts or estates, regardless of the U.S. stockholder’s holding period for his, her or its common stock and regardless
of whether paid in cash or reinvested in additional common stock. Distributions in excess of our earnings and profits first will reduce
a U.S. stockholder’s adjusted tax basis in such stockholder’s common stock and, after the adjusted basis is reduced to zero,
will constitute capital gains to such U.S. stockholder.



Although
we currently intend to distribute any long-term capital gain at least annually, we may in the future decide to retain some or all of
our long-term capital gain, but designate the retained amount as a “deemed distribution.” In that case, among other consequences,
we will pay tax on the retained amount, each U.S. stockholder will be required to include his, her or its proportionate share of the
deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled
to claim a credit equal to his, her or its allocable share of the tax paid thereon by us. The amount of the deemed distribution net of
such tax will be added to the U.S. stockholder’s tax basis for his, her or its common stock. Since we expect to pay tax on any
retained capital gain at our regular corporate tax rate, and since that rate is in excess of the maximum rate currently payable by individuals
on net capital gain, the amount of tax that individual stockholders will be treated as having paid and for which they will receive a
credit will exceed the tax they owe on the retained net capital gain. Such excess generally may be claimed as a credit against the U.S.
stockholder’s other U.S. federal income tax obligations or may be refunded to the extent it exceeds a stockholder’s liability
for U.S. federal income tax. A stockholder that is not subject to U.S. federal income tax or otherwise required to file a U.S. federal
income tax return would be required to file a U.S. federal income tax return on the appropriate form to claim a refund for the taxes
we paid. To utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60
days after the close of the relevant taxable year. We cannot treat any of our investment company taxable income as a “deemed distribution.”





24







For
purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of distributions
paid for that year, we may, under certain circumstances, elect to treat a distribution that is paid during the following taxable year
as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated as
receiving the distribution in the taxable year in which the distribution is made. However, any distribution declared by us in October,
November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during
January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which
the distribution was declared.



If
an investor purchases shares of our common stock shortly before the record date of a distribution, the price of the shares will include
the value of the distribution and the investor will be subject to tax on the distribution even though economically it may represent a
return of his, her or its investment.



A
stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise disposes of his, her or its shares of
our common stock. The amount of gain or loss will be measured by the difference between such stockholder’s adjusted tax basis in
the common stock sold and the amount of the proceeds received in exchange. Any gain arising from such sale or disposition generally will
be treated as long-term capital gain or loss if the stockholder has held the shares for more than one year. Otherwise, it will be classified
as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our common stock held
for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed
capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of
shares of our common stock may be disallowed if other shares of our common stock or substantially identical position are purchased or
acquired (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.



In
general, individual U.S. stockholders currently are subject to a maximum federal income tax rate of 20% on their net capital gain (i.e.,
the excess of realized net long-term capital gains over realized net short-term capital losses), including any long-term capital gain
derived from an investment in our shares. Such rate is lower than the maximum rate on ordinary income currently payable by individuals.
In addition, an additional 3.8% Medicare tax will be imposed on certain net investment income (including ordinary dividends and capital
gain distributions received from us and net gains from redemptions or other taxable dispositions of our common stock) of U.S. high-income
individuals, and certain estates and trusts. Corporate U.S. stockholders currently are subject to federal income tax on net capital gain
at the maximum 21% corporate income tax rate also applied to ordinary income. Non-corporate stockholders with net capital losses for
a year (i.e., capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income
each year; any net capital losses of a non-corporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent
years as provided in the Code. Corporate stockholders generally may not deduct any net capital losses for a year, but may carry back
such losses for three years or carry forward such losses for five years.



We
(or if a U.S. stockholder holds shares through an intermediary, such intermediary) will send to each of our U.S. stockholders, as promptly
as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible
in such U.S. stockholder’s taxable income for such year as ordinary income and as long-term capital gain. In addition, the federal
tax status of each year’s distributions generally will be reported to the IRS (including the amount of distributions, if any, eligible
for the preferential maximum rate). Distributions paid by us generally will not be eligible for the dividends-received deduction. Distributions
may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder’s particular situation.



We
are required to report adjusted cost basis information for covered securities which generally include shares of a RIC acquired after
January 1, 2012 to the IRS and to taxpayers. The tax regulations require that we elect a default tax identification methodology to perform
the required reporting. We have chosen the first-in-first-out (“FIFO”) method as the default tax lot identification method
for our stockholders. This is the method we will use to determine which specific shares are deemed to be sold when a stockholder’s
entire position is not sold in a single transaction and is the method in which “covered” share sales will be reported on
a stockholder’s Form 1099. However, at the time of purchase or upon the sale of “covered” shares, stockholders may
generally choose a different tax lot identification method. Stockholders should consult a tax advisor with regard to their personal circumstances
as the Company and its service providers do not provide tax advice. Stockholders should contact their financial intermediaries with respect
to reporting of cost basis and available elections for their accounts.





25







Backup
Withholding. We may be required to withhold federal income tax (“backup withholding”), currently at a rate of 24%, from
all distributions to any non-corporate U.S. stockholder (1) who fails to furnish us with a correct taxpayer identification number or
a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder
has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual’s
taxpayer identification number generally is his or her social security number. Any amount withheld under backup withholding is allowed
as a credit against the U.S. stockholder’s federal income tax liability, provided that proper information is provided to the IRS.



Reportable
Transactions Reporting. If a U.S. stockholder recognizes a loss with respect to shares of our common stock of $2 million or more
for an individual stockholder or $10 million or more for a corporate stockholder, the stockholder must file with the IRS a disclosure
statement on Form 8886. The fact that a loss is reportable under these regulations does not affect the legal determination of whether
the taxpayer’s treatment of the loss is proper. U.S. stockholders should consult their tax advisors to determine the applicability
of these regulations in light of their specific circumstances.



U.S.
Taxation of Tax-Exempt U.S. Stockholders



A
U.S. stockholder that is a tax-exempt organization for U.S. federal income tax purposes and therefore generally exempt from U.S. federal
income taxation may nevertheless be subject to taxation to the extent that it is considered to derive unrelated business taxable income
(“UBTI”). The direct conduct by a tax-exempt U.S. stockholder of the activities we propose to conduct could give rise to
UBTI. However, a BDC is a corporation for U.S. federal income tax purposes and its business activities generally will not be attributed
to its stockholders for purposes of determining their treatment under current law.



Therefore,
a tax-exempt U.S. stockholder generally should not be subject to U.S. taxation solely as a result of the stockholder’s ownership
of our stock and receipt of dividends with respect to such stock. Moreover, under current law, if we incur indebtedness, such indebtedness
generally will not be attributed to a tax-exempt U.S. stockholder. Therefore, a tax-exempt U.S. stockholder should not be treated as
earning income from “debt- financed property” and dividends we pay should not be treated as “unrelated debt-financed
income” solely as a result of indebtedness that we incur. Proposals periodically are made to change the treatment of “blocker”
investment vehicles interposed between tax-exempt investors and non- qualifying investments. In the event that any such proposals were
to be adopted and applied to BDCs, the treatment of dividends payable to tax- exempt investors could be adversely affected.



Taxation
of Non-U.S. Stockholders



The
following discussion applies only to Non-U.S. stockholders. Whether an investment in our shares is appropriate for a Non-U.S. stockholder
will depend upon that person’s particular circumstances. An investment in our shares by a Non-U.S. stockholder may have adverse
tax consequences. Non-U.S. stockholders should consult their tax advisers before investing in our common stock.



Distributions
of our investment company taxable income to Non-U.S. stockholders (including interest income and realized net short-term capital gains
in excess of realized long-term capital losses, which generally would be free of withholding if paid to Non-U.S. stockholders directly)
will be subject to withholding of federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current
and accumulated earnings and profits unless an applicable exception applies. If the distributions are effectively connected with a U.S.
trade or business of the Non-U.S. stockholder, we will not be required to withhold federal tax if the Non-U.S. stockholder complies with
applicable certification and disclosure requirements, although the distributions will be subject to federal income tax at the rates applicable
to U.S. persons. (Special certification requirements apply to a Non-U.S. stockholder that is a foreign partnership or a foreign trust,
and such entities are urged to consult their own tax advisers.)





26







In
addition, with respect to certain distributions made by RICs to Non-U.S. stockholders, no withholding will be required and the distributions
generally will not be subject to federal income tax if (i) the distributions are properly designated in a notice timely delivered to
our stockholders as “interest-related dividends” or “short-term capital gain dividends,” (ii) the distributions
are derived from sources specified in the Code for such dividends and (iii) certain other requirements are satisfied. No assurance can
be given as to whether any of our distributions will be reported as eligible for this exemption from withholding tax.



Actual
or deemed distributions of our net capital gains to a Non-U.S. stockholder, and gains recognized by a Non-U.S. stockholder upon the sale
of our common stock, generally will not be subject to federal withholding tax and will not be subject to U.S. federal income tax unless
(i) the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the Non-U.S. stockholder
and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the Non-U.S. stockholder in the United
States, or such Non-U.S. stockholder in the United States or (ii) in the case of an individual stockholder, the stockholder is present
in the United States for a period or periods aggregating 183 days or more during the year of the sale or the receipt of the distributions
or gains and certain other conditions are met.



If
we distribute our net capital gains in the form of deemed rather than actual distributions, a Non-U.S. stockholder will be entitled to
a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the tax we pay on the capital gains
deemed to have been distributed. To obtain the refund, the Non-U.S. stockholder must obtain a U.S. taxpayer identification number and
file a U.S. federal income tax return even if the Non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification
number or file a U.S. federal income tax return. For a corporate Non-U.S. stockholder, distributions (both actual and deemed), and gains
realized upon the sale of our common stock that are effectively connected to a U.S. trade or business may, under certain circumstances,
be subject to an additional “branch profits tax” at a 30% rate (or at a lower rate if provided for by an applicable treaty).
Accordingly, investment in the shares may not be appropriate for a Non-U.S. stockholder.



Backup
Withholding.A Non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to U.S. federal withholding
tax, may be subject to information reporting and backup withholding of federal income tax on dividends unless the Non-U.S. stockholder
provides us or the dividend paying agent with an IRS Form W-8BEN (or an acceptable substitute form) or otherwise meets documentary evidence
requirements for establishing that it is a Non-U.S. stockholder or otherwise establishes an exemption from backup withholding.



Non-U.S.
stockholders may also be subject to U.S. estate tax with respect to their investment in our common stock.



Foreign
Account Tax Compliance Act



Legislation
commonly referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” generally imposes a 30% withholding
tax on payments of certain types of income to foreign financial institutions (“FFIs”) unless such FFIs either (i) enter into
an agreement with the U.S. Treasury to report certain required information with respect to accounts held by U.S. persons (or held by
foreign entities that have U.S. persons as substantial owners) or (ii) reside in a jurisdiction that has entered into an intergovernmental
agreement (“IGA”) with the United States to collect and share such information and are in compliance with the terms of such
IGA and any enabling legislation or regulations. The types of income subject to the tax include U.S. source interest and dividends. The
information required to be reported includes the identity and taxpayer identification number of each account holder that is a U.S. person
and transaction activity within the holder’s account. Depending on the status of a Non-U.S. stockholder and the status of the intermediaries
through which they hold their shares, Non-U.S. stockholders could be subject to this 30% withholding tax with respect to distributions
on their shares and proceeds from the sale of their shares. Stockholders may be requested to provide additional information to us to
enable us to determine whether withholding is required, such as W-8BEN, W-8BEN-E or other applicable series W-8.



Non-U.S.
persons should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign
tax consequences of an investment in the shares.





27







Legislative
or Other Actions Affecting RICs



The
foregoing discussion is only a summary and is based upon existing federal income tax law. You should recognize that the federal income
tax treatment of an investment in us may be modified at any time by legislative, judicial or administrative action. Any such changes
may have a retroactive effect with respect to existing transactions and investments and may modify the statements made above. You are
urged to consult with your own tax advisor with respect to the impact of recent legislation, including the Tax Act, on your investment
in our shares.



THE
FOREGOING DISCUSSION SHOULD NOT BE CONSIDERED TO DESCRIBE FULLY THE FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN US. YOU ARE STRONGLY
ADVISED TO CONSULT WITH YOUR TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX CONSEQUENCES OF AN INVESTMENT
IN US.



Item
1A. Risk Factors



Investing
in our common stock involves a number of significant risks. The investor should be aware of various risks, including those described
below. The investor should carefully consider these risk factors, together with all of the other information included in this Annual
Report. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently
deemed material by us may also materially and adversely affect our business, financial condition and/or operating results. If any of
the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely
affected. In such case, the net asset value of our common stock could decline, and an investor may lose all or part of his or her investment.



The
following is a summary of the principal risks that you should carefully consider before investing in our securities. Further details
regarding each risk included in the below summary list can be found further below.



| | ● | Dependence
    Upon Key Personnel of Palmer Square and the Investment Advisor —The success of the Company is highly dependent on
    the financial and managerial expertise of the Investment Advisor and, in turn, Palmer Square.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Operation
    in a Highly Competitive Market for Investment Opportunities —The business of investing in assets meeting our investment
    objective is highly competitive.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Financing
    Investments With Borrowed Money — The use of leverage magnifies the potential for gain or loss on amounts invested.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | ● | Changes
    in Interest Rates May Affect Our Cost of Capital and Net Investment Income — Because we borrow money to make investments,
    our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which
    we invest those funds.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Regulations
    Governing Our Operation as a BDC —Regulations governing our operation as a BDC affect our ability to raise, and the
    way in which we raise, additional capital or borrow for investment purposes, which may have a negative impact on our growth.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Investments
    in Leveraged Portfolio Companies —Leveraged companies in which we invest may have limited financial resources and
    may be unable to meet their obligations under their loans and debt securities that we hold.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Investments
    in Secured Loans —We cannot guarantee the adequacy of the protection of our interests in secured loans, including
    the validity or enforceability of the loan and the maintenance of the anticipated priority, and in the event of any default under
    a secured loan, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and
    the principal and accrued interest of the secured loan.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Investments
    in Mezzanine Debt and Other Junior Securities —Our investments in mezzanine debt and other junior securities are subordinate
    to senior indebtedness of the applicable company and are subject to greater risk.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Investments
    in CLOs —CLO vehicles that we invest in are typically very highly levered, and therefore, the junior debt and equity
    tranches that we invest in are subject to a higher degree of risk of total loss.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Investments
    in Covenant-Lite Loans — Our investments may include Covenant-Lite Loans, which may give us fewer rights and subject
    us to greater risk of loss than loans with financial maintenance covenants.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Risks
    Regarding Distributions —We cannot assure you that we will achieve investment results that will allow us to make a
    specified level of cash distributions or year-to-year increases in cash distributions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Risks
    Relating to Economic Recessions or Downturns —Economic slowdowns or recessions could lead to financial losses in our
    portfolio and a decrease in our revenues, net income and assets.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





28







Risks Related to our Business and Structure



We have a limited operating history.



We began operations on January 23,
2020 and have limited operating history. As a result, we are subject to all of the business risks and uncertainties associated with any
new business, including the risk that it will not achieve its investment objectives and that the value of your investment could decline
substantially or that the investor will suffer a complete loss of its investment in us.

In addition, neither Palmer
Square nor the Investment Advisor has previously managed a BDC. The 1940 Act imposes numerous constraints on the operations of BDCs
that generally do not apply to other investment vehicles managed by Palmer Square. BDCs are required, for example, to invest at least
70% of their total assets primarily in securities of U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government
securities and other high-quality debt instruments that mature in one year or less from the date of investment. We, the Investment Advisor
and Palmer Square have limited experience operating or advising under these constraints, which may hinder our ability to take advantage
of attractive investment opportunities and to achieve our investment objective.



We are dependent upon key personnel of Palmer
Square and the Investment Advisor.



Our success is highly dependent
on the financial and managerial expertise of the Investment Advisor and, in turn, Palmer Square. The individuals may not necessarily continue
to remain employed by Palmer Square. Although we have attempted to foster a team approach to investing, the loss of key individuals employed
by Palmer Square or our Investment Advisor could have a material adverse effect on our financial condition, performance and ability to
achieve our investment objectives.



The Investment Advisor’s
and Palmer Square’s investment professionals expect to devote such time and attention to the conduct of our business as such business
shall reasonably require. However, there can be no assurance, for example, that the members of the Investment Advisor or such investment
professionals will devote any minimum number of hours each week to our affairs or that they will continue to be employed by Palmer
Square. In the event that certain employees of the Investment Advisor cease to be actively involved with us, we will be required to rely
on the ability of Palmer Square to identify and retain other investment professionals to conduct our business.



We are dependent on strong referral relationships.



We depend upon our Investment
Advisor and its affiliates to maintain their relationships with private equity sponsors, placement agents, investment banks, management
groups and other financial institutions, and we expect to rely to a significant extent upon these relationships to provide us with potential
investment opportunities. If our Investment Advisor and its affiliates fail to maintain such relationships, or to develop new relationships
with other sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom
our Investment Advisor and its affiliates have relationships are not obligated to provide us with investment opportunities, and we can
offer no assurance that these relationships will generate investment opportunities for us in the future.



Our investment decisions may be expedited.



Investment analyses and decisions
by the Investment Advisor may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities.
In these cases, the information available to the Investment Advisor at the time of making an investment decision may be limited. Therefore,
no assurance can be given that the Investment Advisor will have knowledge of all circumstances that may adversely affect an investment.



Our financial condition, results of operations
and cash flows depend on our ability to manage our business effectively.



Our ability to achieve our
investment objective will depend on our ability to manage our business and to grow our investments and earnings. This will depend, in
turn, on our Investment Advisor’s ability to identify, invest in and monitor portfolio companies that meet our investment criteria.
The achievement of our investment objectives on a cost-effective basis will depend upon our Investment Advisor’s execution of our
investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our access to financing
on acceptable terms. Any failure to manage our business and our future growth effectively could have a material adverse effect on our
business, financial condition, results of operations and cash flows.





29







Our executive officers and directors, our
Investment Advisor, Palmer Square and their affiliates, officers, directors and employees may face certain conflicts of interest.



The employees of Palmer Square
and our Investment Advisor serve, or may serve, as officers, directors, members, or principals of entities that operate in the same or
a related line of business as we do, or of investment funds, accounts, or investment vehicles managed by it and/or its affiliates. Similarly,
Palmer Square, the Investment Advisor and their affiliates may have other clients with similar, different or competing investment objectives.



In serving in these multiple
capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best
interests of us or our stockholders. There is a potential that we will compete with these clients, and other entities managed by the Investment
Advisor and its affiliates, for capital and investment opportunities. As a result, the Investment Advisor and, as applicable, the members
of the Investment Committee may face conflicts in the allocation of investment opportunities among us and the investment funds, accounts
and investment vehicles managed by the Investment Advisor and its affiliates. Our Investment Advisor intends to allocate investment opportunities
among eligible investment funds, accounts and investment vehicles in a manner that is fair and equitable over time and consistent with
its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term
or over time.



Our Investment Advisor or its affiliates
may, from time to time, possess material non-public information, limiting our investment discretion.



Principals and other employees
of our Investment Advisor, including members of the Investment Advisor’s Investment Committee, may serve as directors of, or in
a similar capacity with, portfolio companies in which we invest, the securities of which are purchased or sold on our behalf. In the event
that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions under the
internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time
from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.



Our management and incentive fee structure
with our Advisor may create incentives for our Investment Advisor that are not fully aligned with the interests of our stockholders and
may induce our Advisor to make speculative investments.



In the course of our investing
activities, we will pay management and, subsequent to a Listing, incentive fees to the Investment Advisor. We have entered into an Advisory
Agreement with the Investment Advisor. Under the incentive fee structure which will be in place subsequent to a Listing, our adjusted
net investment income for purposes thereof will be computed and paid on income that may include interest income that has been accrued
but not yet received in cash. This fee structure may give rise to a conflict of interest for the Investment Advisor to the extent that
it encourages the Investment Advisor to favor debt financings that provide for deferred interest, rather than current cash payments of
interest. The Investment Advisor may have an incentive to invest in deferred interest securities in circumstances where it would not have
done so but for the opportunity to continue to earn the incentive fee even when the issuers of the deferred interest securities would
not be able to make actual cash payments to us on such securities. This risk could be increased because, under our Advisory Agreement,
the Investment Advisor is not obligated to reimburse us for incentive fees it receives even if we subsequently incur losses or never receive
in cash the deferred income that was previously accrued.



The valuation process for certain of our
portfolio holdings may create a conflict of interest.



We may make many of our portfolio
investments in the form of loans and securities that are not publicly traded and for which no market based price quotation is available.
As a result, our Board will determine the fair value of these loans and securities in good faith as described elsewhere in this Annual
Report. In connection with that determination, investment professionals from our Investment Advisor may provide our Board with valuations
based upon the most recent portfolio company consolidated financial statements available and projected financial results of each portfolio
company. The participation of the Investment Advisor’s investment professionals in our valuation process could result in a conflict
of interest as the Investment Advisor’s base management fee is based, in part, on the value of our total net assets.





30







We operate in a highly competitive market
for investment opportunities, which could reduce returns and result in losses.



The business of investing in
assets meeting our investment objective is highly competitive. Competition for investment opportunities includes a growing number of nontraditional
participants, such as hedge funds, senior private debt funds, including BDCs, and other private investors, as well as more traditional
lending institutions and competitors. Some of these competitors may have access to greater amounts of capital and to capital that may
be committed for longer periods of time or may have different return thresholds than us, and thus these competitors may have advantages
not shared by us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us
as a BDC or the source-of-income, asset diversification and distribution requirements we must satisfy to qualify and maintain our RIC
status. Increased competition for, or a diminishment in the available supply of, investments suitable for us could result in lower returns
on such investments. Moreover, the identification of attractive investment opportunities is difficult and involves a high degree of uncertainty.
We may incur significant expenses in connection with identifying investment opportunities and investigating other potential investments
which are ultimately not consummated, including expenses relating to due diligence, transportation, legal expenses and the fees of other
third party advisors.



With respect to the investments
we make, we will not seek to compete based primarily on the interest rates we will offer, and we believe that some of our competitors
may make loans with interest rates that will be lower than the rates we offer. In the secondary market for acquiring existing loans, we
expect to compete generally on the basis of pricing terms. With respect to all investments, we may lose some investment opportunities
if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and
structure, we may experience decreased net interest income, lower yields and increased risk of credit loss.



We may need to raise additional capital.



We may need additional capital
to fund new investments and grow our portfolio of investments. We intend to access the capital markets periodically to issue debt or equity
securities or borrow from financial institutions in order to obtain such additional capital. Unfavorable economic conditions could increase
our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction
in the availability of new capital could limit our ability to grow. In addition, we are required to distribute dividends for U.S. federal
income tax purposes of an amount generally at least equally to 90% of the sum of our net ordinary income and net short-term capital gains
in excess of net long-term capital losses, if any, to our stockholders to qualify and maintain our RIC status. As a result, these earnings
will not be available to fund new investments. An inability on our part to access the capital markets successfully could limit our ability
to grow our business and execute our business strategy fully and could decrease our earnings, if any, which would have an adverse effect
on the value of our securities.



Our investments in PIK interest income may
expose us to risks.



Certain of our debt investments
may contain provisions providing for the payment of PIK interest. Because PIK interest results in an increase in the size of the loan
balance of the underlying loan, the receipt by us of PIK interest will have the effect of increasing our total net assets. As a result,
because the base management fee that we pay to the Investment Advisor is based on the value of our total net assets, the receipt by us
of PIK interest will result in an increase in the amount of the base management fee payable by us. In addition, any such increase in a
loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result
in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable by us to
the Investment Advisor after a Listing.



Our strategy involves a high degree of leverage.
We intend to continue to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested
and may increase the risk of investing in us.



The use of leverage magnifies
the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and
increases the risks associated with investing in our securities. We have borrowed and intend to continue to borrow from, and may in the
future issue debt securities to, banks, insurance companies and other lenders. Lenders of these funds will have fixed dollar claims on
our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets
in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms
of any debt instruments we may enter into with lenders. If the value of our assets decreases, leveraging would cause net asset value to
decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or eliminating our stake in a leveraged
investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had
we not borrowed. Such a decline would also negatively affect our ability to make dividend payments on our common stock. Our ability to
service any debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive
pressures. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage,
including interest expenses.





31







As a BDC, we generally are
required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings
and any preferred stock that we may issue in the future, of at least 150%. If this ratio declines below 150%, we will not be able to incur
additional debt when it is otherwise advantageous or necessary for us to do so. The amount of leverage that we employ will depend on the
Investment Advisor’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot
assure you that we will be able to obtain credit at all or on terms acceptable to us.





We are subject to various covenants under
our credit facilities which, if not complied with, could result in reduced availability and/or mandatory prepayments under our credit
facilities.



We are subject to various covenants
under our credit facilities which, if not complied with, could result in reduced availability and/or mandatory prepayments under our credit
facilities. In the event we default under our credit facilities or any other future borrowing facility, our business could be adversely
affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous prices to us
in order to meet our outstanding payment obligations and/or support working capital requirements under our credit facilities, or such
future borrowing facility, any of which would have a material adverse effect on our business, financial condition, results of operations
and cash flows. In addition, following any such default, the agent for the lenders under our credit facilities, or such future borrowing
facility could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and
the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations
and cash flows.



In addition to asset coverage
ratio requirements, our credit facilities contain various covenants which, if not complied with, could accelerate repayment of the indebtedness
under our credit facilities. This could have a material adverse effect on our business, financial condition and results of operations.
Our borrowings under the BoA Credit Facility are collateralized by the assets in PS BDC Funding. The agreements governing the BoA Credit
Facility require us to comply with certain financial and operational covenants. These covenants include a requirement to maintain a first-prior
security interest in the collateral for the benefit of the lenders under the BoA Credit Facility, maintain various policies and procedures,
and maintain a minimum borrowing base under the BoA Credit Facility. Our borrowings under the WF Credit Facility are collateralized by
the assets in PS BDC Funding II. The agreements governing the WF Credit Facility require us to comply with certain financial
and operational covenants. These covenants include a requirement to maintain a first-prior security interest in the collateral for the
benefit of the lenders under the WF Credit Facility, maintain various policies and procedures, and maintain a minimum borrowing base under
the WF Credit Facility. Our continued compliance with the covenants under our credit facilities depends on many factors, some of which
are beyond our control.





32







Changes in interest rates may affect our
cost of capital and net investment income



Because we borrow money to
make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the
rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates would not
have a material adverse effect on our net investment income given that we use debt to finance our investments. In periods of rising interest
rates, our cost of funds would increase, which could reduce our net investment income. In addition, in a prolonged low interest rate environment,
the difference between investment income earned on interest earning assets and the interest expense incurred on interest bearing liabilities
may be compressed, reducing our net investment income and potentially adversely affecting our operating results. We may use interest rate
risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest
rate hedging activities to the extent permitted by the 1940 Act.



The expected discontinuation of LIBOR could
have significant impact on our business.



In July 2017, the head
of the United Kingdom Financial Conduct Authority (the “FCA”) announced that it intends to phase out of the use of LIBOR by
the end of 2021, and in December 2020, the ICE Benchmark Administration Limited, a wholly-owned subsidiary of Intercontinental Exchange,
Inc. and the administrator of LIBOR, announced that it will extend the LIBOR transition deadline for most LIBOR settings to the end of
June 2023. To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”),
a U.S. based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed. Similarly, financial
regulators in the UK, the European Union, Japan, and Switzerland formed working groups with the aim of recommending alternatives to LIBOR
denominated in their local currencies. The ARRC is comprised of a diverse set of private-sector entities and a wide array of official-sector
entities, banking regulators, and other financial sector regulators. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”)
as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury
securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. Although SOFR appears to be the preferred
replacement rate for U.S. dollar LIBOR, it is unclear if other benchmarks may emerge or if other rates will be adopted outside of
the U.S.



The expected discontinuation
of LIBOR could have a material impact on our business. We expect that the dollar amount of our debt investments and borrowings that will
be linked to LIBOR with maturity dates after the anticipated discontinuation of LIBOR will be material. We anticipate operational challenges
in connection with the transition away from LIBOR including, but not limited to, amending loan agreements with borrowers on investments
that may have not included fallback language and adding effective fallback language to new agreements in the event that LIBOR is discontinued
before maturity. Beyond these challenges, we anticipate there may be additional risks to our processes and information systems that will
need to be identified and evaluated by us. Due to the uncertainty of the replacement for LIBOR, the potential effect of any such event
on our business and results of operations cannot yet be determined. In addition, any further changes or reforms to the determination or
supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on
the market value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit we may hold or may be
due to us and could have a material adverse effect on our business, financial condition and results of operations.



We may have uncertainty as to the value
of certain portfolio investments.



We expect that certain of our
portfolio investments may take the form of securities that are not publicly traded. The fair value of loans, securities and other investments
that are not publicly traded may not be readily determinable and we will value these investments at fair value as determined in good faith
by the Board. Certain of our investments (other than cash and cash equivalents) may be classified as Level 3 assets under Topic 820
of the U.S. Financial Accounting Standards Board’s Accounting Standards Codification, as amended, Fair Value Measurements and
Disclosures (“ASC 820”). This means that our portfolio valuations will be based on unobservable inputs and our own assumptions
about how market participants would price the asset or liability in question. We expect that inputs into the determination of fair value
of our portfolio investments will require significant management judgment or estimation. Even if observable market data are available,
such information may be the result of consensus 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 disclaimers
materially reduces the reliability of such information. The types of factors that the Board may take into account in determining the fair
value of our investments generally include, as appropriate, comparison to publicly-traded securities including such factors as yield,
maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral,
the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company
does business and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies,
are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may
differ materially from the values that would have been used if a ready market for these loans and securities existed. Our net asset value
could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that
we ultimately realize upon the disposal of such loans and securities. In addition, the method of calculating the base management fee may
result in conflicts of interest between the Investment Advisor, on the one hand, and our stockholders on the other hand, with respect
to valuation of investments.





33







We will adjust on a quarterly
basis the valuation of our portfolio to reflect the Board’s determination of the fair value of each investment in our portfolio
for which market quotes are not readily available. Any changes in fair value are recorded in our statements of operations as net change
in unrealized appreciation or depreciation on investments.



We may experience fluctuations in our quarterly
operating results.



We could experience fluctuations
in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we
acquire, the default rate on such loans and securities, the level of our expenses, variations in and the timing of the recognition of
realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.
In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.



The Board may change our investment objectives,
operating policies and strategies without prior notice or stockholder approval.



The Board has the authority,
except as otherwise provided in the 1940 Act, to modify or waive certain of our operating policies and strategies without prior notice
and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to
be, or withdraw our election as, a BDC. We cannot predict the effect any changes to our current operating policies and strategies
would have on our business, operating results and the market price of our common stock. Nevertheless, any such changes could adversely
affect our business and impair our ability to make distributions to our stockholders.



Our Advisor and Administrator each have
the ability to resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting
in a disruption in our operations that could adversely affect our financial condition, business and results of operations.



The Investment Advisor has
the right under the Advisory Agreement to resign as our Investment Advisor at any time upon not less than 60 days’ written
notice, whether we have found a replacement or not. Similarly, our Administrator has the right under the Administration Agreement to resign
at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If the Investment Advisor
or Administrator were to resign, we may not be able to find a new investment adviser or administrator, as applicable, or hire internal
management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at
all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results
of operations as well as our ability to pay distributions to our stockholders are likely to be adversely affected.



We are highly dependent on information systems,
and systems failures or cyber-attacks could significantly disrupt our business, which may, in turn, negatively affect the value of shares
of our common stock and our ability to pay distributions.



Our business relies on secure
information technology systems. These systems are exposed to operational and information security risks resulting from cyberattacks that
threaten the confidentiality, integrity or availability of our information resources (i.e., cyber incidents). Cyber incidents can result
from unintentional events (such as an inadvertent release of confidential information) or deliberate attacks by insiders or third parties.
These attacks could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing and
unauthorized release of confidential information, corrupting data, denial of service attacks on our websites, “ransomware”
that renders systems inoperable until ransom is paid, or various other forms of cybersecurity breaches. Such cyber incidents could result
in disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection
and insurance costs, litigation and damage to our business relationships, any of which could have a material adverse effect on our business,
financial condition and results of operations. As our reliance on technology has increased, so have the risks posed to our information
systems, both internal and those provided by the Investment Advisor and third-party service providers. Cyber incidents affecting us, our
Investment Advisor, or third-party service providers may adversely impact us or the companies in which we invest, causing our investments
to lose value. We, along with our Investment Advisor, have implemented processes, procedures and internal controls to help mitigate cybersecurity
risks and cyber intrusions. However, these measures may not be effective, and there can be no assurance that a cyber incident will not
occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident. In addition,
the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Furthermore,
cybersecurity has become a top priority for regulators around the world, and some jurisdictions have enacted laws requiring companies
to notify individuals of data security breaches involving certain types of personal data. If we fail to comply with the relevant laws
and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or
reputational damage.





34







Failure to maintain our status as a business
development company would reduce our operating flexibility.



If we do not maintain our status
as a business development company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us
to substantially more regulatory restrictions and correspondingly decrease our operating flexibility.



Our charter includes an exclusive forum
selection provision, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our
directors, officers, or other agents.



Our charter provides that,
unless we consent in writing to the selection of a different forum, and except for any claims made under the federal U.S. securities laws,
the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the
District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on
behalf of the Company, (b) any action asserting a claim of breach of any duty owed by a director or officer or other employee of the Company
to the Company or to the stockholders of the Company or asserting a claim of breach of any standard of conduct set forth in the Maryland
General Corporation Law (the “MGCL”), (c) any action asserting a claim against the Company or any director or officer or other
employee of the Company arising pursuant to any provision of the MGCL, the charter or our bylaws, or (d) any action asserting a claim
against the Company or any director or officer or other employee of the Company that is governed by the internal affairs doctrine. There
is uncertainty as to whether a court would enforce such a provision, and investors cannot waive compliance with the federal securities
laws and the rules and regulations thereunder. In addition, this provision may increase costs for shareholders in bringing a claim against
us or our directors, officers or other agents. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital
stock will be deemed, to the fullest extent permitted by law, to have notice of and consented to these exclusive forum provisions. The
exclusive forum selection provision in our charter may limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with us or our directors, officers or other agents, which may discourage lawsuits against us and such persons. It is also possible
that, notwithstanding such exclusive forum selection provision, a court could rule that such provision is inapplicable or unenforceable.
If this occurred, we may incur additional costs associated with resolving such action in another forum, which could materially adversely
affect our business, financial condition and results of operations.



Risks Related to the 1940 Act



Our ability to enter into transactions with
our affiliates is restricted.



The 1940 Act prohibits or restricts
our ability to engage in certain principal transactions and joint transactions with certain “First Tier” affiliates and “Second
Tier” affiliates. For example, we are prohibited from buying or selling any security from or to any person who owns more than 25%
of our voting securities or certain of that person’s affiliates (each is a “First Tier” affiliate), or entering into
prohibited joint transactions with such persons, absent the prior approval of the SEC. We consider the Investment Advisor and its
affiliates, including Palmer Square, to be “First Tier” affiliates for such purposes. We are prohibited under the 1940 Act
from participating in certain principal transactions and joint transactions with a “Second Tier” affiliate without the prior
approval of our Independent Directors. Any person that owns, directly or indirectly, 5% or more of our outstanding voting securities will
be a “Second Tier” affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security
from or to such affiliate without the prior approval of our Independent Directors.



We may, however, invest alongside
Palmer Square’s investment funds, accounts and investment vehicles in certain circumstances where doing so is consistent with our
investment strategy as well as applicable law and SEC staff interpretations. For example, we may invest alongside such investment funds,
accounts and investment vehicles consistent with guidance promulgated by the SEC staff to purchase interests in a single class of privately
placed securities so long as certain conditions are met, including that the Investment Advisor and Palmer Square, acting on our behalf
and on behalf of such investment funds, accounts and investment vehicles, negotiate no term other than price.



In situations where co-investment
with investment funds, accounts and investment vehicles managed by the Investment Advisor and its affiliates, including Palmer Square,
is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the
different investments could be expected to result in a conflict between our interests and those of these other clients, the Investment
Advisor and Palmer Square will need to decide which client will proceed with the investment. These restrictions will limit the scope of
investment opportunities that would otherwise be available to us.





35







We, the Investment Advisor
and Palmer Square have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments
if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed
by Palmer Square in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory
requirements and other pertinent factors. We believe that co-investment by us and investment funds, accounts and investment vehicles managed
by the Investment Advisor and its affiliates, including Palmer Square, may afford us additional investment opportunities and an ability
to achieve greater diversification. Accordingly, our exemptive order permits us to invest with these investment funds, accounts and investment
vehicles managed in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the
1940 Act. Our exemptive relief permitting co-investments applies only if our Independent Directors review and approve each co-investment.
The exemptive order imposes other constraints on co-investments that limit the number of instances when we may rely on its protections.



Regulations governing our operation as a
BDC affect our ability to, and the way in which we, raise additional capital.



Regulations governing our operation
as a BDC affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have
a negative impact on our growth. We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions,
which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. We are generally
able to issue senior securities such that our asset coverage, as defined in the 1940 Act, equals at least 150% of gross assets less all
liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets
decline, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments at a time when
such sales may be disadvantageous to use in order to repay a portion of our indebtedness.



Risks Related to our Investments



Economic recessions or downturns could impair
our portfolio companies, and defaults by our portfolio companies will harm our operating results.



Many of the portfolio companies
in which we have invested or expect to make investments are likely to be susceptible to economic slowdowns or recessions and may be unable
to repay our loans during such periods. Therefore, the number of our non-performing assets is likely to increase, and the value of our
portfolio is likely to decrease during such periods. Adverse economic conditions may decrease the value of collateral securing some of
our loans and debt securities and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses
in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs,
limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from
increasing our investments and harm our operating results.



A portfolio company’s
failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination
of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s
ability to meet its obligations under the loans and debt securities that we hold. We may incur expenses to the extent necessary to seek
recovery upon default or to negotiate new terms with a defaulting portfolio company.



We may hold the debt securities of leveraged
portfolio companies.



Portfolio companies may issue
certain types of debt, such as senior loans, mezzanine or high yield in connection with leveraged acquisitions or recapitalizations in
which the portfolio company incurs a substantially higher amount of indebtedness than the level at which it had previously operated. Leverage
may have important consequences to these portfolio companies and us as an investor. For example, the substantial indebtedness of a portfolio
company could (i) limit its ability to borrow money for its working capital, capital expenditures, debt service requirements, strategic
initiatives or other purposes; (ii) require it to dedicate a substantial portion of its cash flow from operations to the repayment
of its indebtedness, thereby reducing funds available to it for other purposes; (iii) make it more highly leveraged than some of
its competitors, which may place it at a competitive disadvantage; or (iv) subject it to restrictive financial and operating covenants,
which may preclude it from favorable business activities or the financing of future operations or other capital needs.





36







A leveraged portfolio company’s
income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used. In addition, a portfolio
company with a leveraged capital structure will be subject to increased exposure to adverse economic factors, such as a significant rise
in interest rates, a severe downturn in the economy or deterioration in the condition of that portfolio company or its industry. If a
portfolio company is unable to generate sufficient cash flow to meet all of its obligations, it may take alternative measures (e.g., reduce
or delay capital expenditures, sell assets, seek additional capital, or seek to restructure, extend or refinance indebtedness). These
actions may negatively affect our investment in such a portfolio company.



Investment in leveraged companies
involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable
to meet their obligations under their loans and debt securities that we hold. Such developments may be accompanied by a deterioration
in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection
with our investment. Smaller leveraged companies also may have less predictable operating results and may require substantial additional
capital to support their operations, finance their expansion or maintain their competitive position.



The lack of liquidity in our investments
may adversely affect our businesses.



We may acquire a significant
percentage of our portfolio company investments from privately held companies in directly negotiated transactions. The lack of an established,
liquid secondary market for some of our investments may have an adverse effect on the market value of our investments and on our ability
to dispose of them. Additionally, our investments may be subject to certain transfer restrictions that may also contribute to illiquidity.
Further, our assets that are typically traded in a liquid market may become illiquid due to events relating to the issuer, market events,
economic conditions or investor perceptions. Therefore, no assurance can be given that, if we are determined to dispose of a particular
investment held by us, it could dispose of such investment at the prevailing market price.



Our investments in secured loans may nonetheless
expose us to losses from default and foreclosure.



While we may invest in secured
loans, they may nonetheless be exposed to losses resulting from default and foreclosure. Therefore, the value of the underlying collateral,
the creditworthiness of the borrower and the priority of the lien are each of great importance. We cannot guarantee the adequacy of the
protection of our interests, including the validity or enforceability of the loan and the maintenance of the anticipated priority and
perfection of the applicable security interests. Furthermore, we cannot assure you that claims may not be asserted that might interfere
with enforcement of our rights. In addition, in the event of any default under a secured loan held directly by us, we will bear a risk
of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the
secured loan, which could have a material adverse effect on our cash flow from operations.



In the event of a foreclosure,
we may assume direct ownership of the underlying asset. The liquidation proceeds upon sale of such asset may not satisfy the entire outstanding
balance of principal and interest on the loan, resulting in a loss to us. Any costs or delays involved in the effectuation of a foreclosure
of the loan or a liquidation of the underlying property will further reduce the proceeds and thus increase the loss.



Our investments in mezzanine debt and other
junior securities are subordinate to senior indebtedness of the applicable company and are subject to greater risk.



The mezzanine debt and other
junior investments in which we may invest are typically contractually or structurally subordinate to senior indebtedness of the applicable
company, or effectively subordinated as a result of being unsecured debt and therefore subject to the prior repayment of secured indebtedness
to the extent of the value of the assets pledged as security. In some cases, the subordinated debt held by us may be subject to the prior
repayment of different classes of senior debt that may be in priority ahead of the debt held by us. In the event of financial difficulty
on the part of a portfolio company, such class or classes of senior indebtedness ranking prior to the debt held by us, and interest thereon
and related expenses, must first be repaid in full before any recovery may be had on our mezzanine debt or other subordinated investments.
Subordinated investments are characterized by greater credit risks than those associated with the senior or senior secured obligations
of the same issuer. In addition, under certain circumstances the holders of the senior indebtedness will have the right to block the payment
of interest and principal on our mezzanine debt or other junior investment and to prevent us from pursuing its remedies on account of
such non-payment against the issuer. Further, in the event of any debt restructuring or workout of the indebtedness of any issuer, the
holders of the senior indebtedness will likely control the creditor side of such negotiations.





37







Many issuers of mezzanine debt or other junior
securities are highly leveraged, and their relatively high debt-to-equity ratios create increased risks that their operations might not
generate sufficient cash flow to service their debt obligations. In addition, many issuers of mezzanine debt or other junior securities
may be in poor financial condition, experiencing poor operating results, having substantial capital needs or negative net worth or be
facing special competitive or product obsolescence problems, and may include companies involved in bankruptcy or other reorganizations
or liquidation proceedings. Adverse changes in the financial condition of an issuer, general economic conditions, or both, may impair
the ability of such issuer to make payments on the subordinated securities and result in defaults on such securities more quickly than
in the case of the senior obligations of such issuer. Mezzanine debt and other junior securities may not be publicly traded, and therefore
it may be difficult to obtain information as to the true condition of the issuers. Finally, the market values of certain of mezzanine
debt and other junior securities may reflect individual corporate developments.



Our investments may include Covenant-Lite
Loans, which may give us fewer rights and subject us to greater risk of loss than loans with financial maintenance covenants.



A significant number of high
yield loans in the market, in particular the broadly syndicated loan market, may consist of Covenant-Lite Loans. A significant portion
of the loans in which we may invest or get exposure to through its investments in CDOs or other types of structured securities may be
deemed to be Covenant-Lite Loans and it is possible that such loans may comprise a majority of our portfolio. Such loans do not require
the borrower to maintain debt service or other financial ratios and do not include terms which allow the lender to monitor the performance
of the borrower and declare a default if certain criteria are breached. Ownership of Covenant-Lite Loans may expose us to different risks,
including with respect to liquidity, price volatility, ability to restructure loans, credit risks and less protective loan documentation,
than is the case with loans that contain financial maintenance covenants. In addition, a significant portion of the loans in which we
may invest may be Covenant-Lite Loans. Generally, Covenant-Lite Loans provide borrower companies more freedom to negatively impact lenders
because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action
of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in Covenant-Lite
Loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments
in or exposure to loans with financial maintenance covenants.



Our prospective portfolio companies may
prepay loans, which may reduce our yields if capital returned cannot be invested in transactions with equal or greater expected yields.



The terms of loans we acquire
or originate may be subject to early prepayment options or similar provisions which, in each case, could result in us realizing repayments
of such loans earlier than expected, sometimes with no or a nominal prepayment premium. This may happen when there is a decline in interest
rates, when the portfolio company’s improved credit or operating or financial performance allows the refinancing of certain classes
of debt with lower cost debt or when the general credit market conditions improve. Additionally, prepayments could negatively impact our
ability to pay, or the amount of, distributions on our common stock, which could result in a decline in the market price of our shares.
Our inability to reinvest such proceeds may materially affect the overall performance.



We may invest in high yield debt, which
has greater credit and liquidity risk than more highly rated debt obligations.



We may invest in high yield
debt, a substantial portion of which may be rated below investment-grade by one or more nationally recognized statistical rating organizations
or is unrated but of comparable credit quality to obligations rated below investment-grade, and has greater credit and liquidity risk
than more highly rated debt obligations. High yield debt is generally unsecured and may be subordinate to other obligations of the obligor.
The lower rating of high yield debt reflect a greater possibility that adverse changes in the financial condition of the obligor or in
general economic conditions (including, for example, a substantial period of rising interest rates or declining earnings) or both may
impair the ability of the obligor to make payment of principal and interest. Many issuers of high yield debt are highly leveraged, and
their relatively high debt-to-equity ratios create increased risks that their operations might not generate sufficient cash flow to service
their debt obligations. In addition, many issuers of high yield debt may be in poor financial condition, experiencing poor operating results,
having substantial capital needs or negative net worth or be facing special competitive or product obsolescence problems, and may include
companies involved in bankruptcy or other reorganizations or liquidation proceedings. Certain of these securities may not be publicly
traded, and therefore it may be difficult to obtain information as to the true condition of the issuers. Overall declines in the below
investment-grade bond and other markets may adversely affect such issuers by inhibiting their ability to refinance their debt at maturity.
High yield debt is often less liquid than higher rated securities, and the market for high yield debt has recently experienced periods
of volatility. The market values of certain of this high yield debt may reflect individual corporate developments.





38







Our investments in bank loans and financial
institutions may be less liquid than our other investments and we may incur greater risk with respect to investments we acquire through
assignments or participations of interests.



We may invest a portion of
our investments in loans originated by banks and other financial institutions. The loans invested in by us may include term loans and
revolving loans, may pay interest at a fixed or floating rate and may be senior or subordinated. Purchasers of bank loans are predominantly
commercial banks, investment funds and investment banks. As secondary market trading volumes for bank loans increase, new bank loans are
frequently adopting standardized documentation to facilitate loan trading, which should improve market liquidity. There can be no assurance,
however, that future levels of supply and demand in bank loan trading will provide an adequate degree of liquidity, that the current period
of illiquidity will not persist or worsen and that the market will not experience periods of significant illiquidity in the future. In
addition, we may make investments in stressed or distressed bank loans, which are often less liquid than performing bank loans.



Compared to securities and
to certain other types of financial assets, purchases and sales of loans take relatively longer to settle. This extended settlement process
can (i) increase the counterparty credit risk borne by us; (ii) leave us unable to timely vote, or otherwise act with respect
to, loans it has agreed to purchase; (iii) delay us from realizing the proceeds of a sale of a loan; (iv) inhibit our ability
to re-sell a loan that it has agreed to purchase if conditions change (leaving us more exposed to price fluctuations); (v) prevent
us from timely collecting principal and interest payments; and (vi) expose us to adverse tax or regulatory consequences. To the extent
the extended loan settlement process gives rise to short-term liquidity needs, we may hold cash, sell investments or temporarily borrow
from banks or other lenders.



In certain circumstances, loans
may not be deemed to be securities, and in the event of fraud or misrepresentation by a borrower or an arranger, lenders will not have
the protection of the anti-fraud provisions of the federal securities laws, as would be the case for bonds or stocks. Instead, in such
cases, lenders generally rely on the contractual provisions in the loan agreement itself, and common-law fraud protections under applicable
state law.



We may acquire interests in
bank loans either directly (by way of sale or assignment) or indirectly (by way of participation). The purchaser of an assignment typically
succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with respect to
the debt obligation; however, its rights can be more restricted than those of the assigning institution. Participation interests in a
portion of a debt obligation typically result in a contractual relationship only with the institution participating out the interest,
and not with the borrower. In purchasing participations, we generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement, nor any rights of set-off against the borrower, and we may not directly benefit from the collateral supporting
the debt obligation in which it has purchased the participation. As a result, we will assume the credit risk of both the borrower and
the institution selling the participation. The bank loans acquired by us are likely to be below investment-grade.



We may invest in structured products and
such investments may involve significant risks.



We may also invest, to a limited
extent, in structured products, which may include CDOs, CLOs (including the equity tranches thereof), structured notes, and credit-linked
notes. These investment entities may be structured as trusts or other types of pooled investment vehicles. They may also involve the deposit
with or purchase by an entity of the underlying investments and the issuance by that entity of one or more classes of securities backed
by, or representing interests in, the underlying investments or referencing an indicator related to such investments. CDOs and CLOs are
types of asset-backed securities issued by special purpose vehicles created to reapportion the risk and return characteristics of a pool
of assets. The underlying pool for a CLO, for example, may include domestic and foreign senior loans, senior unsecured loans, and subordinate
corporate loans. Generally, these are not qualified as eligible portfolio companies. Investments in the equity tranche or any similarly
situated tranche of a structured product involve a greater degree of risk than investments in other tranches, and such investments will
be the first to bear losses incurred by a structured product.





39







Our CLO investments are typically highly
levered and subject to a higher degree of risk of total loss.



CLO vehicles that we invest
in are typically very highly levered, and therefore, the junior debt and equity tranches that we invest in are subject to a higher degree
of risk of total loss. We will generally have the right to receive payments only from the CLO vehicles, and will generally not have direct
rights against the underlying borrowers or the entity that sponsored the CLO vehicle. The failure by a CLO vehicle in which we invest
to satisfy certain financial covenants, specifically those with respect to adequate collateralization and/or interest coverage tests,
could lead to a reduction in its payments to us. In the event that a CLO vehicle failed those tests, holders of debt senior to us may
be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. If any of these
occur, it could materially and adversely affect our operating results and cash flows.



In addition to the general
risks associated with investing in debt securities, CLO vehicles carry additional risks, including, but not limited to: (i) the possibility
that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral
may decline in value or default; (iii) the fact that our investments in CLO tranches will likely be subordinate to other senior classes
of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and
may produce disputes with the CLO vehicle or unexpected investment results. Our net asset value may also decline over time if our principal
recovery with respect to CLO equity investments is less than the price we paid for those investments.



Investments in structured vehicles,
including equity and junior debt instruments issued by CLO vehicles, involve risks, including credit risk and market risk. Changes in
interest rates and credit quality may cause significant price fluctuations. Additionally, changes in the underlying leveraged corporate
loans held by a CLO vehicle may cause payments on the instruments we hold to be reduced, either temporarily or permanently. Structured
investments, particularly the subordinated interests in which we intend to invest, may be less liquid than many other types of securities
and may be more volatile than the leveraged corporate loans underlying the CLO vehicles we intend to target. Fluctuations in interest
rates may also cause payments on the tranches of CLO vehicles that we hold to be reduced, either temporarily or permanently.



The accounting and tax implications
of such investments are complicated. In particular, reported earnings from the equity tranche investments of these CLO vehicles are recorded
under generally accepted accounting principles based upon an effective yield calculation. Current taxable earnings on these investments,
however, will generally not be determinable until after the end of the fiscal year of each individual CLO vehicle that ends within our
fiscal year, even though the investments are generating cash flow. In general, the tax treatment of these investments may result in higher
distributable earnings in the early years and a capital loss at maturity, while for reporting purposes the totality of cash flows
are reflected in a constant yield to maturity.



Any interests we acquire in
CLO vehicles will likely be thinly traded or have only a limited trading market and may be subject to restrictions on resale. Securities
issued by CLO vehicles are generally not listed on any U.S. national securities exchange and no active trading market may exist for
the securities of CLO vehicles in which we may invest. Although a secondary market may exist for our investments in CLO vehicles, the
market for our investments in CLO vehicles may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement
periods. As a result, these types of investments may be more difficult to value.

We may be subject to lender liability and
equitable subordination.



In recent years, a number
of judicial decisions in the United States have upheld the right of borrowers to sue lending institutions on the basis of various
evolving legal theories (collectively termed “lender liability”). Generally, lender liability is founded upon the premise
that an institutional lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower
or has assumed a degree of control over the borrower resulting in creation of a fiduciary duty owed to the borrower or its other creditors
or stockholders. Because of the nature of certain of our investments, we could be subject to allegations of lender liability.



In addition, under common law
principles that in some cases form the basis for lender liability claims, if a lending institution (i) intentionally takes an action
that results in the undercapitalization of a borrower to the detriment of other creditors of such borrower, (ii) engages in other
inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations
to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower to the detriment of the other
creditors of such borrower, a court may elect to subordinate the claim of the offending lending institution to the claims of the disadvantaged
creditor or creditors, a remedy called “equitable subordination.” Because of the nature of certain of our investments, we
could be subject to claims from creditors of an obligor that our investments issued by such obligor should be equitably subordinated.
A significant number of our investments will involve investments in which we will not be the lead creditor. It is, accordingly, possible
that lender liability or equitable subordination claims affecting our investments could arise without our direct involvement.





40







If we purchase debt securities
of an affiliate of a portfolio company in the secondary market at a discount, (i) a court might require us to disgorge profit it
realizes if the opportunity to purchase such securities at a discount should have been made available to the issuer of such securities
or (ii) we might be prevented from enforcing such securities at their full face value if the issuer of such securities becomes bankrupt.



Our failure to make follow-on investments
in our portfolio companies could impair the value of our portfolio.



Following an initial investment
in a portfolio company, we may decide to provide additional funds to such portfolio company, in order to:



| | ● | increase or maintain in whole or in part our position as a creditor or equity ownership percentage in a portfolio company;
| | - | --------------------------------------------------------------------------------------------------------------------------



| | ● | exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or
| | - | -------------------------------------------------------------------------------------------------------------------



| | ● | attempt to preserve or enhance the value of our investment.
| | - | -----------------------------------------------------------



There is no assurance that
we will make follow-on investments or that we will have sufficient funds to make all or any of such investments. Even if we have sufficient
capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our
concentration of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940
Act or the desire to maintain our qualification as a RIC. Any decision by us not to make follow-on investments or our inability to
make such investments may have a substantial adverse effect on a portfolio company in need of such an investment. Additionally, a failure
to make such investments may result in a lost opportunity for us to increase our participation in a successful portfolio company or the
dilution of our ownership in a portfolio company if a third party invests in the portfolio company.



Our portfolio may include equity investments,
which are subordinated to debt investments and are subject to additional risks.



We expect to make select equity
investments in the common or preferred stock of a company, all of which are subordinated to debt investments. In addition, when we invest
in first lien secured debt, second lien secured debt or subordinated debt, we may acquire warrants to purchase equity investments from
time to time. Our goal is ultimately to dispose of these equity investments and realize gains upon our disposition of such interests.
However, the equity investments we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be
able to realize gains from our equity investments, and any gains that we do realize on the disposition of any equity investments may not
be sufficient to offset any other losses we experience. In addition, many of the equity securities in which we invest may not pay dividends
on a regular basis, if at all.



Because we generally do not hold controlling
equity interests in our portfolio companies, we generally will not be able to exercise control over our portfolio companies or to prevent
decisions by management of our portfolio companies that could decrease the value of our investments.



We do not generally intend
to hold controlling equity positions in our portfolio companies. As a result, we will be subject to the risk that a portfolio company
may make business decisions with which we disagree, and that the management and/or stockholders of a portfolio company may take risks
or otherwise act in ways that are adverse to our interests. Due to the potential lack of liquidity of the debt and equity investments
that we expect to hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the
actions of a portfolio company and may therefore suffer a decrease in the value of our investments.



In addition, we may not be
in a position to control any portfolio company by investing in its debt securities. As a result, we are subject to the risk that a portfolio
company in which we invest may make business decisions with which we disagree and the management of such company, as representatives of
the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.





41







Our portfolio companies could incur debt
that ranks equally with, or senior to, our investments in such companies and such portfolio companies could fail to generate sufficient
cash flow to service their debt obligations to us.



The characterization of certain
of our investments as senior debt or senior secured debt does not mean that such debt will necessarily be repaid in priority to all other
obligations of the businesses in which we invest. Furthermore, debt and other liabilities incurred by non-guarantor subsidiaries of the
borrowers of senior secured loans made by us may be structurally senior to the debt held by us. In the event of insolvency, liquidation,
dissolution, reorganization or bankruptcy of a portfolio company, the debt and other liabilities of such subsidiaries could be repaid
in full before any distribution can be made to an obligor of the senior secured loans held by us. Finally, portfolio companies will typically
incur trade credit and other liabilities or indebtedness, which by their terms may provide that their holders are entitled to receive
principal payments on or before the dates payments are due in respect of the senior secured loans held by us.



Where we hold a first lien
to secure senior indebtedness, the portfolio companies may be permitted to issue other senior loans with liens that rank junior to the
first liens granted to us. The intercreditor rights of the holders of such other junior lien debt may, in any liquidation, reorganization,
insolvency, dissolution or bankruptcy of such a portfolio company, affect the recovery that we would have been able to achieve in the
absence of such other debt.



Additionally, certain loans
that we may make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt
of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding
senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements
governing the loans. The holders of obligations secured by first priority liens on the collateral will generally control the liquidation
of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us. In addition,
the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and
other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy
the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens
on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second
priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against
the portfolio company’s remaining assets, if any.



Even where the senior loans
held by us are secured by a perfected lien over a substantial portion of the assets of a portfolio company and its subsidiaries, the portfolio
company and its subsidiaries will often be able to incur a substantial amount of additional indebtedness, which may have an exclusive
lien over particular assets. For example, debt and other liabilities incurred by non-guarantor subsidiaries of portfolio companies will
be structurally senior to the debt held by us. Accordingly, any such debt and other liabilities of such subsidiaries would, in the event
of liquidation, dissolution, insolvency, reorganization or bankruptcy of such subsidiary, be repaid in full before any distributions to
an obligor of the loans held by us. Furthermore, these other assets over which other lenders have a lien may be substantially more liquid
or valuable than the assets over which we have a lien.



The rights we may have with
respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant
to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor
agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions
that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority
liens:



| | ● | the ability to cause the commencement of enforcement proceedings against the collateral;
| | - | ----------------------------------------------------------------------------------------



| | ● | the ability to control the conduct of such proceedings;
| | - | -------------------------------------------------------



| | ● | the approval of amendments to collateral documents;
| | - | ---------------------------------------------------



| | ● | releases of liens on the collateral; and
| | - | ----------------------------------------



| | ● | waivers of past defaults under collateral documents.
| | - | ----------------------------------------------------



We may not have the ability
to control or direct such actions, even if our rights are adversely affected.



We may also make unsecured
debt investments in portfolio companies, meaning that such investments will not benefit from any interest in collateral of such companies.
Liens on any such portfolio company’s collateral, if any, will secure the portfolio company’s obligations under its outstanding
secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured debt agreements.
The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from,
any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event
of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance
that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured debt obligations after payment in
full of all secured debt obligations. If such proceeds were not sufficient to repay the outstanding secured debt obligations, then our
unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s
remaining assets, if any.





42







We may be subject to risk if we invest in
non-U.S. securities.



Our portfolio may include debt
securities of non-U.S. companies, including emerging market issuers, to the limited extent such transactions and investments would
not cause us to violate the 1940 Act. Investing in loans and securities of non-U.S. issuers involves many risks including economic,
social, political, financial, tax and security conditions in the non-U.S. market, potential inflationary economic environments, less
liquid markets and regulation by foreign governments. There may be less information publicly available about a non-U.S. issuer than
about a U.S. issuer, and non-U.S. issuers may not be subject to accounting, auditing and financial reporting standards and practices
comparable to those in the United States. In addition, with respect to certain countries, there is a possibility of expropriation,
imposition of non-U.S. withholding or other taxes on distributions, interest, capital gains or other income, limitations on the removal
of funds or other of our assets, political or social instability or diplomatic developments that could affect investments in those countries.
An issuer of securities may be domiciled in a country other than the country in whose currency the instrument is denominated. The values
and relative yields of investments in the securities markets of different countries, and their associated risks, are expected to change
independently of each other.



Bankruptcy law and process
in non-U.S. jurisdictions may differ substantially from that in the United States, which may result in greater uncertainty as
to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of
claims. In certain developing countries, although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain,
while other developing countries may have no bankruptcy laws enacted, adding further uncertainty to the process for reorganization.



We may be subject to risks if we engage
in hedging transactions.



We are authorized to use various
investment strategies to hedge interest rate or currency exchange risks. These strategies are generally accepted as portfolio management
techniques and are regularly used by many investment funds and other institutional investors. Techniques and instruments may change over
time as new instruments and strategies are developed or regulatory changes occur. We may use any or all such types of interest rate hedging
transactions and currency hedging transactions at any time and no particular strategy will dictate the use of one transaction rather than
another. The choice of any particular interest rate hedging transactions and currency hedging transactions will be a function of numerous
variables, including market conditions. Investments or liabilities of ours may be denominated in currencies other than the U.S. dollar,
and hence the value of such investments, or the amount of such liabilities, will depend in part on the relative strength of the U.S. dollar.
We may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between foreign currencies
and the U.S. dollar. Changes in foreign currency exchange rates may also affect the value of dividends and interest earned as well
as the level of gains and losses realized on the sale of securities. The rates of exchange between the U.S. dollar and other currencies
are affected by many factors, including forces of supply and demand in the foreign exchange markets. These rates are also affected by
the international balance of payments and other economic and financial conditions, government intervention, speculation and other factors.
We are not obligated to engage in any currency hedging operations, and there can be no assurance as to the success of any hedging operations
that we may implement.



Although we intend to engage
in any interest rate hedging transactions and currency hedging transactions primarily for hedging purposes and not for income or enhancing
total returns, use of interest rate hedging transactions and currency hedging transactions involves certain inherent risks. These risks
include (i) the possibility that the market will move in a manner or direction that would have resulted in gain for us had an interest
rate hedging transaction or currency hedging transaction not been utilized, in which case it would have been better had we not engaged
in the interest rate hedging transaction or currency hedging transaction, (ii) the risk of imperfect correlation between the risk
sought to be hedged and the interest rate hedging transaction or currency hedging transaction utilized, (iii) potential illiquidity
for the hedging instrument utilized, which may make it difficult for us to close-out or unwind an interest rate hedging transaction or
currency hedging transaction and (iv) credit risk with respect to the counterparty to the interest rate hedging transaction or currency
hedging transaction. In addition, it might not be possible for us to hedge fully or perfectly against currency fluctuations affecting
the value of securities denominated in non-U.S. currencies because the value of those loans and securities would likely fluctuate
as a result of factors not related to currency fluctuations.



We may also enter into certain
hedging and short sale transactions for the purpose of protecting the market value of an investment of ours for a period of time without
having to currently dispose of such investment. Such defensive hedge transactions may be entered into when we are legally restricted from
selling an investment or when we otherwise determine that it is advisable to decrease our exposure to the risk of a decline in the market
value of an investment. Such defensive hedging transactions may expose us to the counterparty’s credit risk. There also can be no
assurance that we will accurately assess the risk of a market value decline with respect to an investment or enter into an appropriate
defensive hedge transaction to protect against such risk. Furthermore, we are in no event obligated to enter into any defensive hedge
transaction. We may from time to time employ various investment programs, including the use of derivatives, short sales, swap transactions,
currency hedging transactions, securities lending agreements and repurchase agreements. There can be no assurance that any such investment
program will be undertaken successfully.





43







Our investments in OID and PIK interest
income may expose us to risks associated with such income being required to be included in accounting income and taxable income prior
to receipt of cash.



Our investments may include
OID and PIK instruments. To the extent OID and PIK interest income constitute a portion of our income, we will be exposed to risks associated
with such income being required to be included in an accounting income and taxable income prior to receipt of cash, including the following:



| | ● | OID instruments and PIK securities may have unreliable valuations because the accretion of OID as interest income and the continuing accruals of PIK securities require judgments about their collectability and the collectability of deferred payments and the value of any associated collateral.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | OID instruments may create heightened credit risks because the inducement to the borrower to accept higher interest rates in exchange for the deferral of cash payments typically represents, to some extent, speculation on the part of the borrower.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | For accounting purposes, cash distributions to stockholders that include a component of accreted OID income do not come from paid-in capital, although they may be paid from the offering proceeds. Thus, although a distribution of accreted OID income may come from the cash invested by the stockholders, the 1940 Act does not require that stockholders be given notice of this fact.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The higher interest rates on PIK securities reflects the payment deferral and increased credit risk associated with such instruments and PIK securities generally represent a significantly higher credit risk than coupon loans.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The presence of accreted OID income and PIK interest income create the risk of non-refundable cash payments to the Investment Advisor in the form of incentive fees on income that will be payable subsequent to a Listing based on non-cash accreted OID income and PIK interest income accruals that may never be realized.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Even if accounting conditions are met, borrowers on such securities could still default when our actual collection is expected to occur at the maturity of the obligation.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | PIK interest has the effect of generating investment income and increasing the incentive fees that will be payable subsequent to a Listing at a compounding rate. In addition, the deferral of PIK interest also reduces the loan-to-value ratio at a compounding rate.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Market prices of OID instruments are more volatile because they are affected to a greater extent by interest rate changes than instruments that pay interest periodically in cash.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The required recognition of OID, including PIK, interest for U.S. federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of our taxable income that must, nevertheless, be distributed in cash to investors to avoid us being subject to corporate level taxation.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Federal Income Tax and Other Tax Risks



We will be subject to corporate-level income
tax if we are unable to qualify as a RIC.



In order to qualify and be
subject to tax as a RIC under the Code, we must be a BDC at all times during each taxable year and meet certain source-of-income, asset
diversification and distribution requirements. If we do not maintain our status as a BDC, we may fail to qualify as a RIC and, thus, may
be subject to corporate-level income tax. The distribution requirement for a RIC is satisfied if we distribute dividends in respect of
each taxable year of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to
any deduction for dividends paid, to our stockholders. We will be subject, to the extent we use debt financing, to certain asset coverage
ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances,
restrict us from making distributions necessary to enable us to be subject to tax as a RIC. If we are unable to obtain cash from
other sources, we may fail to be subject to tax as a RIC and, thus, may be subject to corporate-level income tax. To qualify to be subject
to tax as a RIC, we must also meet certain asset diversification requirements at the end of each quarter of our taxable year. Failure
to meet these tests may result in our having to dispose of certain investments quickly in order to satisfy these requirements. Because
most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices
and may result in substantial losses. If we fail to qualify to be subject to tax as a RIC for any reason and become subject to corporate
income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distributions
to our stockholders and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and
our stockholders.





44







We may have difficulty paying our required
distributions if we recognize income before, or without, receiving cash representing such income.



For U.S. federal income
tax purposes, we will include in income certain amounts that we have not yet received in cash, such as the accretion of OID. This
may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest,
which represents contractual interest added to the loan balance and due at the end of the loan term. Such OID, which could be significant
relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included
in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we
will not receive in cash.



Since in certain cases we may
recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement in a given
taxable year to distribute at least 90% of our investment company taxable income, determined without regard to any deduction for dividends
paid, as dividends to our stockholders in order to be subject to tax as a RIC. In such a case, we may have to sell some of our investments
at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these
distribution requirements. If we are not able to obtain such cash from other sources, we may fail to be subject to tax as a RIC and thus
be subject to corporate-level income tax.



If we are not treated as a “publicly
offered regulated investment company,” as defined in the Code, U.S. stockholders that are individuals, trusts or estates could be
subject to tax as though they received a distribution of some of our expenses.



We cannot assure you that we
will be treated as a publicly offered regulated investment company for all years. Unless and until we are treated as a “publicly
offered regulated investment company” (within the meaning of Section 67 of the Code) by reason of either (i) shares of our common
stock and our preferred stock (if any) collectively are held by at least 500 persons at all times during a taxable year, (ii) shares of
our common stock are treated as regularly traded on an established securities market or (iii) shares of our common stock are continuously
offered pursuant to a public offering (within the meaning of Section 4 of the Securities Act). For a calendar year, each U.S. stockholder
that is an individual, trust or estate will be treated as having received a dividend from us in the amount of such U.S. stockholder’s
allocable share of the management fees paid to our Investment Advisor and certain of our other expenses for the calendar year, and these
fees and expenses will be treated as miscellaneous itemized deductions of such U.S. stockholder. For taxable years beginning before 2026,
miscellaneous itemized deductions generally are not deductible by a U.S. stockholder that is an individual, trust or estate. For taxable
years beginning in 2026 or later, miscellaneous itemized deductions generally are deductible by a U.S. stockholder that is an individual,
trust or estate only to the extent that the aggregate of such U.S. stockholder’s miscellaneous itemized deductions exceeds 2% of
such U.S. stockholder’s adjusted gross income for U.S. federal income tax purposes, are not deductible for purposes of the alternative
minimum tax and are subject to the overall limitation on itemized deductions under Section 68 of the Code.



We may be subject to withholding of U.S. federal
income tax on distributions for non-U.S. stockholders.



Distributions by a BDC generally
are treated as dividends for U.S. tax purposes, and will be subject to U.S. income or withholding tax unless the stockholder
receiving the dividend qualifies for an exemption from U.S. tax, or the distribution is subject to one of the special look-through
rules described below. Distributions paid out of net capital gains can qualify for a reduced rate of taxation in the hands of an individual
U.S. stockholder, and an exemption from U.S. tax in the hands of a non-U.S. stockholder.



However, if reported by a RIC,
dividend distributions by the RIC derived from certain interest income (such distributions, “interest-related dividends”)
and certain net short-term capital gains (such distributions, “short-term capital gain dividends”) generally are exempt from
U.S. withholding tax otherwise imposed on non-U.S. stockholders. Interest-related dividends are dividends that are attributable
to “qualified net interest income” (i.e., “qualified interest income,” which generally consists of certain interest
and OID on obligations “in registered form” as well as interest on bank deposits earned by a RIC, less allocable deductions)
from sources within the United States. Short-term capital gain dividends are dividends that are attributable to net short-term capital
gains, other than short-term capital gains recognized on the disposition of U.S. real property interests, earned by a RIC. However,
no assurance can be given as to whether any of our distributions will be eligible for this exemption from U.S. withholding tax or,
if eligible, will be reported as such by us. Furthermore, in the case of shares of our stock held through an intermediary, the intermediary
may have withheld U.S. federal income tax even if we reported the payment as an interest-related dividend or short-term capital gain
dividend. Since our common stock will be subject to significant transfer restrictions, and an investment in our common stock will generally
be illiquid, non-U.S. stockholders whose distributions on our common stock are subject to U.S. withholding tax may not be able
to transfer their shares of our common stock easily or quickly or at all.





45







A failure of any portion of
our distributions to qualify for the exemption for interest-related dividends or short-term capital gain dividends would not affect the
treatment of non-U.S. stockholders that qualify for an exemption from U.S. withholding tax on dividends by reason of their special
status (for example, foreign government-related entities and certain pension funds resident in favorable treaty jurisdictions).



Our business may be adversely affected if
we fail to maintain our qualification as a RIC.



To maintain RIC tax treatment
under the Code, we must be a BDC at all times during each taxable year and meet the following minimum annual distribution, income source
and asset diversification requirements. The minimum annual distribution requirement for a RIC will be satisfied if we distribute dividends
to our stockholders in respect of each taxable year of an amount generally at least equal to 90% of our investment company taxable income,
determined without regard to any deduction for dividends paid. In this regard, a RIC may, in certain cases, satisfy the 90% distribution
requirement by distributing dividends relating to a taxable year after the close of such taxable year under the “spillback dividend”
provisions of Subchapter M of the Code. We would be taxed, at regular corporate rates, on any retained income and/or gains, including
any short-term capital gains or long-term capital gains. We must also satisfy an additional annual distribution requirement with respect
to each calendar year in order to avoid a 4% excise tax on the amount of any under-distribution. Because we may use debt financing, we
are subject to (i) an asset coverage ratio requirement under the 1940 Act and may, in the future, be subject to (ii) certain
financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary
to satisfy the distribution requirements. If we are unable to obtain cash from other sources, or chose or be required to retain a portion
of our taxable income or gains, we could (1) be required to pay excise tax and (2) fail to qualify for RIC tax treatment, and
thus become subject to corporate-level income tax on our taxable income (including gains).



The income source requirement
will be satisfied if we obtain at least 90% of our gross income each taxable year from dividends, interest, gains from the sale of stock
or securities, or other income derived from the business of investing in stock or securities. The asset diversification requirement will
be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement,
at least 50% of the value of our assets at the close of each quarter of each taxable year must consist of cash, cash equivalents (including
receivables), U.S. Government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the
value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, of one
issuer, of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same
or similar or related trades or businesses or of certain “qualified publicly traded partnerships.” Failure to meet these requirements
may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because a significant portion
of our investments will be in private companies, and therefore may be relatively illiquid, any such dispositions could be made at disadvantageous
prices and could result in substantial losses.



We may invest in certain debt
and equity investments through taxable subsidiaries and the net taxable income of these taxable subsidiaries will be subject to federal
and state corporate income taxes. We also may invest in certain foreign debt and equity investments which could be subject to foreign
taxes (such as income tax, withholding, and value added taxes). If we fail to qualify for or maintain RIC tax treatment for any reason
and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income
available for distribution, and the amount of our distributions.



There is a risk that you may not receive
distributions or that our distributions may not grow over time and a portion of our distributions may be a return of capital.



We intend to make distributions
on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment
results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability
to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this Annual Report. Due
to the asset coverage test applicable to us under the 1940 Act as a BDC and certain limitations under Maryland law, we may be limited
in our ability to make distributions. In addition, if we violate certain covenants under our credit facilities, or any future credit or
other borrowing facility, our ability to pay distributions to our stockholders could be limited because we may be required by its terms
to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale
of our current investments to repay amounts outstanding thereunder.





46







Furthermore, the tax treatment
and characterization of our distributions may vary significantly from time to time due to the nature of our investments. The ultimate
tax characterization of our distributions made during a taxable year may not finally be determined until after the end of that taxable
year. We may make distributions during a taxable year that exceed our investment company taxable income and net capital gains for that
taxable year. In such a situation, the amount by which our total distributions exceed investment company taxable income and net capital
gains generally would be treated as a return of capital up to the amount of a stockholder’s tax basis in the shares, with any amounts
exceeding such tax basis treated as a gain from the sale or exchange of such shares. A return of capital generally is a return of a stockholder’s
investment rather than a return of earnings or gains derived from our investment activities. Moreover, we may pay all or a substantial
portion of our distributions from the proceeds of the sale of shares of our common stock or from borrowings in anticipation of future
cash flow, which could constitute a return of stockholders’ capital and will lower such stockholders’ tax basis in our shares,
which may result in increased tax liability to stockholders when they sell such shares.



General Risk Factors



Global capital markets could enter a period
of severe disruption and instability. These conditions have historically affected and could again materially and adversely affect debt
and equity capital markets in the United States and around the world and our business.



Periods of market volatility
have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have
adversely affected and could continue to adversely affect operating results for us and our portfolio companies. For example, in February
2022, Russia invaded Ukraine, which disrupted financial markets. Such war, any expansion of such war or any sanctions imposed on Russia,
including exclusion from SWIFT, could lead to further disruptions in financial markets, which could adversely affect operating results
for us and our portfolio companies. Furthermore, in December 2019, COVID-19, a novel strain of coronavirus, surfaced in China and
has since spread to other countries, including the United States. This pandemic has led, and for an unknown period of time will continue
to lead, to disruptions in local, regional, national and global markets and economies affected thereby, including the United States.
With respect to U.S. credit markets, this outbreak has resulted in, and until fully resolved is likely to continue to result in,
the following (among other things): (i) restrictions on travel and the temporary closure of many corporate offices, retail stores,
and manufacturing facilities and factories, resulting in significant disruption to the business of many companies, including supply chains
and demand, as well as layoffs of employees; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased
requests by borrowers for amendments or waivers of their credit agreements to avoid default, increased defaults by borrowers and/or increased
difficulty in obtaining refinancing; (iv) volatility in credit markets including greater volatility in pricing and spreads; and (v) rapidly
evolving proposals and actions by state and federal governments to address the problems being experienced by markets, businesses and the
economy in general, which may not adequately address these problems. The pandemic is having, and any future continuation of the pandemic
could have, an adverse impact on the markets and the economy in general.



We continue to assess the impact
of COVID-19 on portfolio companies. Although it is impossible to predict the precise nature and consequences of these events, or of any
political or policy decisions and regulatory changes caused by emerging events or uncertainty on applicable laws or regulations that impact
us, and our portfolio companies and investments, it is clear that these types of events are impacting and will, for at least some time,
continue to impact us and our portfolio companies and investments and in many instances the impact may be adverse and profound.



New or modified laws or regulations governing
our operations could adversely affect our business.



We and our portfolio companies
will be subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation,
may change from time to time, and new laws, regulations and interpretations may also come into effect. Any such new or changed laws or
regulations could have a material adverse effect on our business.







ITEM 1B. UNRESOLVED STAFF COMMENTS



None.



ITEM 2. PROPERTIES



Our headquarters are located
at 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205. We believe that our office facilities are suitable and adequate
for our business.



ITEM 3. LEGAL PROCEEDINGS



We are not currently subject
to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time,
we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement
of our rights under loans to or other contracts with our portfolio companies.



ITEM 4. MINE SAFETY DISCLOSURES



None.





47







PART II



ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Market Information



There is currently no public
market for our common stock, nor can we give any assurance that one will develop. As of the date hereof, none of our shares of common
stock are subject to outstanding options or warrants, nor do we have any outstanding equity that is convertible into shares of our common
stock. In addition, as of the date hereof, we have not granted any registration rights to any of our stockholders. No stock has been
authorized for issuance under any equity compensation plans.



Holders



As of March 11, 2022, we had
210 record holders of our common stock.



Distributions



The following table reflects
the distributions declared on shares during the fiscal year ended December 31, 2021:



|Declaration Date |  | Record Date |  | Per Share |      |  | Payment Date |            | Total Distributions Declared |  
|---------------- |  | ----------- |  | --------- | ---- |  | ------------ | ---------- | ---------------------------- | -
|5/13/2021        |  | 5/18/2021   |  | $         | 0.31 |  |              | 5/19/2021  |                              | $
|8/12/2021        |  | 8/17/2021   |  |           | 0.25 |  |              | 8/18/2021  |                              |  
|11/12/2021       |  | 11/16/2021  |  |           | 0.17 |  |              | 11/17/2021 |                              |  
|12/30/2021       |  | 12/31/2021  |  |           | 0.65 |  |              | 1/19/2022  |                              |  
|                 |  |             |  |           |      |  |              |            |                              | $



The following table reflects
the distributions declared on shares during the fiscal year ended December 31, 2020:



|Declaration Date |  | Record Date |  | Per Share |       |  | Payment Date |            | Total Distributions Declared |  
|---------------- |  | ----------- |  | --------- | ----- |  | ------------ | ---------- | ---------------------------- | -
|5/12/2020        |  | 5/12/2020   |  | $         | 0.040 |  |              | 5/14/2020  |                              | $
|8/17/2020        |  | 8/17/2020   |  |           | 0.270 |  |              | 8/18/2020  |                              |  
|11/16/2020       |  | 11/16/2020  |  |           | 0.360 |  |              | 11/17/2020 |                              |  
|12/29/2020       |  | 12/31/2020  |  |           | 0.310 |  |              | 1/19/2021  |                              |  
|                 |  |             |  |           |       |  |              |            |                              | $



Distribution Reinvestment Plan



The Company has adopted a
dividend reinvestment plan that provides 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.





48







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
form.



There will be no brokerage
charges or other charges to stockholders who participate in the plan. The plan administrator’s fees are 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 account.



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.



Stockholders can obtain additional information about the dividend reinvestment
plan by contacting US Bank via telephone at 1-866-775-9668 or by mailing a request to U.S. Bank National Association, One Federal Street,
3rd Floor, Boston, Massachusetts 02110.



Recent sales of Unregistered Securities



During the year ended December
31, 2021, the Company issued and sold 10,007,526 shares of its common stock at an aggregate purchase price of approximately $206.6 million.
The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2)
and Rule 506(b) of Regulation D thereof.



ITEM 6. [Reserved]





Not applicable.







49







ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion
and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information
appearing elsewhere in this Annual Report on Form 10-K.



Forward Looking Statements



This annual report on Form
10-K contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance
should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations,
estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions.
Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,”
“continue,” “believes,” “seeks,” “estimates,” “would,” “could,”
“should,” “targets,” “projects,” and variations of these words and similar expressions are intended
to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties
and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements, including:



| | ● | our future operating results;
| | - | -----------------------------



| | ● | our business prospects and the prospects of our portfolio companies;
| | - | --------------------------------------------------------------------



| | ● | changes in political, economic or industry conditions, the interest
    rate environment or conditions affecting the financial and capital markets, including changes from the impact of the novel coronavirus
    (SARS-CoV-2) and related respiratory disease (“COVID-19”) pandemic;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the ability of the Investment Advisor to locate suitable investments
    for us and to monitor and administer our investments;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | ● | the ability of the Investment Advisor and its affiliates to attract
    and retain highly talented professionals;
| | - | -----------------------------------------------------------------------------------------------------------------



| | ● | risk associated with possible disruptions in our operations or the
    economy generally;
| | - | -----------------------------------------------------------------------------------------



| | ● | the timing of cash flows, if any, from the operations of the companies
    in which we invest;
| | - | ----------------------------------------------------------------------------------------------



| | ● | the ability of the companies in which we invest to achieve their objectives,
    including as a result of the current COVID-19 pandemic;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | ● | our ability to continue to effectively manage our business due to the
    disruptions caused by the current COVID-19 pandemic;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | ● | the dependence of our future success on the general economy and its
    effect on the industries in which we invest;
| | - | --------------------------------------------------------------------------------------------------------------------



| | ● | our ability to maintain our qualification as a BDC and as a RIC under
    the Code;
| | - | -----------------------------------------------------------------------------------



| | ● | the use of borrowed money to finance a portion of our investments;
| | - | ------------------------------------------------------------------



| | ● | the adequacy, availability and pricing of our financing sources and
    working capital;
| | - | ----------------------------------------------------------------------------------------



| | ● | actual or potential conflicts of interest with the Investment Advisor
    and its affiliates;
| | - | ---------------------------------------------------------------------------------------------



| | ● | our contractual arrangements and relationships with third parties;
| | - | ------------------------------------------------------------------



| | ● | the current economic downturn, interest rate volatility, loss of key
    personnel, and the illiquid nature of our investments; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | ● | the risks, uncertainties and other factors we identify under “Item
    1A. Risk Factors” and elsewhere in this annual report on Form 10-K.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



Although we believe that
the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate,
and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties,
the inclusion of a projection or forward-looking statement in this annual report on Form 10-K should not be regarded as a representation
by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section
entitled “Item 1A. Risk Factors” and elsewhere in this annual report on Form 10-K. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this annual report on Form 10-K. Moreover, we assume no duty and
do not undertake to update the forward-looking statements.





50









Overview



We are a financial services
company that primarily lends to and invests in corporate debt securities of companies, including small to large private U.S. companies.
We were organized as a Maryland corporation on August 26, 2019 and are structured as an externally managed, non-diversified closed-end
management investment company. We have elected to be regulated as a BDC under the 1940 Act and, beginning with our taxable year ending
December 31, 2020, we have elected to be treated as a RIC under Subchapter M of the Code, and we expect to qualify as a RIC annually
thereafter.



We are externally managed
by the Investment Advisor, an investment adviser that is registered with the SEC under the Advisers Act, pursuant to the Advisory Agreement.
Subject to the supervision of our Board, a majority of which is made up of Independent Directors, our Investment Advisor manages our
day-to-day operations and provides us with investment advisory and management services and certain administrative services. The Investment
Advisor, in its capacity as Administrator, provides the administrative services necessary for us to operate pursuant to the Administration
Agreement. The Administrator has entered into the Sub-Administration Agreement to delegate certain administrative functions to the Sub-Administrator.
Our Investment Advisor is a majority-owned subsidiary of Palmer Square, which is a privately-held firm specializing in global alternative
(non-traditional) investments with a total return orientation.



Our 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 our investment opportunities and core competencies: (1) investing in corporate debt securities and,
to a lesser extent, (2) investing in CLO structured credit that typically owns corporate debt securities, including the equity and junior
debt tranches of CLOs. To a limited extent, we 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 our portfolio positions from changes in currency exchange rates and market interest rates or to earn income and enhance our total
returns. We may also receive or purchase warrants or rights to acquire equity or other securities in connection with making a debt investment
in a company. We may also invest in other strategies and opportunities from time to time that we view as attractive. We will continue
to evaluate other investment strategies in the ordinary course of business with no specific top-down allocation to any single investment
strategy.



Revenues



We generate revenue primarily
in the form of interest and fee income on debt investments we hold and capital gains, if any, on investments. Our debt investments generally
bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR. Interest on debt securities is generally
payable quarterly or semi-annually. In some instances, we receive payments on our debt investments based on scheduled amortization of
the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date.
The frequency or volume of these repayments is expected to fluctuate significantly from period to period. Our portfolio activity also
reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring
or due diligence fees, fees for providing managerial assistance and consulting fees.



Expenses



Our primary operating expenses
include the payment of fees to the Investment Advisor under the Advisory Agreement, our allocable portion of overhead and rental expenses
under the Administration Agreement and other operating costs described below. We bear all other out-of-pocket costs and expenses of our
operations and transactions, including:



| | ● | interest expense and other costs associated with our indebtedness;
| | - | ------------------------------------------------------------------



| | ● | the cost of calculating our net asset value, including the cost of
    any third-party valuation services;
| | - | ----------------------------------------------------------------------------------------------------------



| | ● | the cost of effecting sales and repurchases of shares of our common
    stock and other securities;
| | - | ---------------------------------------------------------------------------------------------------



| | ● | fees payable to third parties relating to making investments, including
    our Investment Advisor’s or its affiliates’ travel expenses, research costs and out-of-pocket fees and expenses associated
    with performing due diligence and reviews of prospective investments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | transfer agent and custodial fees;
| | - | ----------------------------------



| | ● | operating costs incurred prior to the commencement of our operations;
| | - | ---------------------------------------------------------------------



| | ● | out-of-pocket fees and expenses associated with marketing efforts;
| | - | ------------------------------------------------------------------





| | ● | federal and state registration fees and any stock exchange listing
    fees;
| | - | ----------------------------------------------------------------------------



| | ● | U.S. federal, state and local taxes;
| | - | ------------------------------------





51









| | ● | Independent Directors’ fees and expenses;
| | - | -----------------------------------------



| | ● | brokerage commissions and markups;
| | - | ----------------------------------



| | ● | fidelity bond, directors’ and officers’ liability insurance
    and other insurance premiums;
| | - | ---------------------------------------------------------------------------------------------



| | ● | direct costs, such as printing, mailing, long distance telephone and
    staff;
| | - | -------------------------------------------------------------------------------



| | ● | fees and expenses associated with independent audits and outside legal
    costs;
| | - | ---------------------------------------------------------------------------------



| | ● | costs associated with our reporting and compliance obligations under
    the 1940 Act and other applicable U.S. federal and state securities laws; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | other expenses incurred by the Administrator or us in connection with
    administering our business, including payments under the Administration Agreement that will be based upon our allocable portion (subject
    to the review and approval of our Board) of overhead, including rental expenses.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Portfolio and Investment Activity



As of December 31, 2021, our weighted average total yield to maturity
of debt and income producing securities at fair value was 5.77%, and our weighted average total yield to maturity of debt and income producing
securities at amortized cost was 5.91%.



As of December 31, 2020,
our weighted average total yield to maturity of debt and income producing securities at fair value was 4.96%, and our weighted average
total yield to maturity of debt and income producing securities at amortized cost was 5.49%.



As of December 31, 2021, we
had 240 debt and equity investments in 212 portfolio companies with an aggregate fair value of approximately $1.1 billion.



As of December 31, 2020,
we had 202 debt and private investments in 181 portfolio companies with an aggregate fair value of approximately $600.1 million.



Our investment activity for
the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020 is presented
below (information presented herein is at amortized cost unless otherwise indicated).



|                                                           |  | For the  Year Ended  December 31,  2021 |              |   | For the Period  January 23, 2020 (Commencement of Operations) through  December 31, 2020 |  
|---------------------------------------------------------- |  | --------------------------------------- | ------------ | - | ---------------------------------------------------------------------------------------- | -
|                                                           |  |                                         |              |   |                                                                                          |  
|New investments:                                           |  |                                         |              |   |                                                                                          |  
|Gross investments                                          |  | $                                       | 926,351,937  |   |                                                                                          | $
|Less: sold investments                                     |  |                                         | (401,760,802 | ) |                                                                                          |  
|Total new investments                                      |  |                                         | 524,591,135  |   |                                                                                          |  
|                                                           |  |                                         |              |   |                                                                                          |  
|Principal amount of investments funded:                    |  |                                         |              |   |                                                                                          |  
|First-lien senior secured debt investments                 |  | $                                       | 829,591,637  |   |                                                                                          | $
|Second-lien senior secured debt investments                |  |                                         | 57,492,916   |   |                                                                                          |  
|Corporate bonds                                            |  |                                         | 2,883,300    |   |                                                                                          |  
|Convertible bonds                                          |  |                                         | 1,025,000    |   |                                                                                          |  
|Collateralized securities and structured products - debt   |  |                                         | 14,757,907   |   |                                                                                          |  
|Collateralized securities and structured products - equity |  |                                         | 20,101,177   |   |                                                                                          |  
|Common stock                                               |  |                                         | 500,000      |   |                                                                                          |  
|Total principal amount of investments funded               |  |                                         | 926,351,937  |   |                                                                                          |  
|                                                           |  |                                         |              |   |                                                                                          |  
|Principal amount of investments sold or repaid:            |  |                                         |              |   |                                                                                          |  
|First-lien senior secured debt investments                 |  |                                         | 380,386,061  |   |                                                                                          |  
|Second-lien senior secured debt investments                |  |                                         | 12,583,308   |   |                                                                                          |  
|Convertible bonds                                          |  |                                         | 3,026        |   |                                                                                          |  
|Collateralized securities and structured products - debt   |  |                                         | 8,788,407    |   |                                                                                          |  
|Total principal amount of investments sold or repaid       |  |                                         | 401,760,802  |   |                                                                                          |  





52







Our investment activity for
the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020 is presented below
(information presented herein is at Par unless otherwise indicated). New investment commitment refers to funded commitments in new securities
made during the year that remained outstanding as of December 31, 2021 and December 31, 2020 respectively.



|                                                                                  |  | For the  Year Ended  December 31,  2021 |            |   | For the Period  January 23, 2020 (Commencement of Operations) through  December 31, 2020 |  
|--------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | - | ---------------------------------------------------------------------------------------- | -
|Number of new investment commitments                                              |  |                                         | 155        |   |                                                                                          |  
|Average new investment commitment amount                                          |  | $                                       | 4,521,355  |   |                                                                                          | $
|Weighted average maturity for new investment commitments                          |  |                                         | 5.85 years |   |                                                                                          |  
|Percentage of new debt investment commitments at floating rates                   |  |                                         | 99.42      | % |                                                                                          |  
|Percentage of new debt investment commitments at fixed rates                      |  |                                         | 0.58       | % |                                                                                          |  
|Weighted average interest rate of new investment commitments(1)                   |  |                                         | 4.80       | % |                                                                                          |  
|Weighted average spread over LIBOR of new floating rate investment commitments(2) |  |                                         | 4.39       | % |                                                                                          |  
|Weighted average interest rate on investment sold or paid down                    |  |                                         | 4.40       | % |                                                                                          |  



| | (1) | New CLO equity investments do not have an ascribed interest rate
| | --- | ----------------------------------------------------------------

|(2) | Weighted Average Spread over SOFR as of December 31, 2021 is included in this calculation for three of the Company’s new floating rate investment commitments in the year ended December 31, 2021
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2021 and
December 31, 2020, our investments consisted of the following:



|                                |  | December 31, 2021 |               |  | December 31, 2020 |  
|------------------------------- |  | ----------------- | ------------- |  | ----------------- | -
|                                |  | Amortized         |               |  | Fair              |  
|Investments:                    |  | Cost              |               |  | Value             |  
|First-lien senior secured debt  |  | $                 | 1,003,839,402 |  |                   | $
|Second-lien senior secured debt |  |                   | 64,317,453    |  |                   |  
|Corporate Bonds                 |  |                   | 2,883,596     |  |                   |  
|Convertible Bond                |  |                   | 1,021,974     |  |                   |  
|CLO Mezzanine                   |  |                   | 18,907,287    |  |                   |  
|CLO Equity                      |  |                   | 20,101,177    |  |                   |  
|Equity                          |  |                   | 500,000       |  |                   |  
|Short-term investments          |  |                   | 78,142,764    |  |                   |  
|Total Investments               |  | $                 | 1,189,713,653 |  |                   | $



53







The table below describes
investments by industry composition based on fair value as of December 31, 2021 and December 31, 2020:



|                                                      |  | December 31, 2021 |       |   | December 31, 2020 | 
|----------------------------------------------------- |  | ----------------- | ----- | - | ----------------- | 
|                                                      |  |                   |       |   |                   | 
|Healthcare Providers and Services                     |  |                   | 10.8  | % |                   | 
|Software                                              |  |                   | 10.2  | % |                   | 
|IT Services                                           |  |                   | 9.4   | % |                   | 
|Cash and cash equivalents                             |  |                   | 6.5   | % |                   | 
|Professional Services                                 |  |                   | 6.4   | % |                   | 
|Insurance                                             |  |                   | 5.7   | % |                   | 
|Media                                                 |  |                   | 3.9   | % |                   | 
|Hotels, Restaurants and Leisure                       |  |                   | 3.5   | % |                   | 
|Independent Power and Renewable Electricity Producers |  |                   | 3.1   | % |                   | 
|Building Products                                     |  |                   | 3.0   | % |                   | 
|Oil, Gas and Consumable Fuels                         |  |                   | 3.0   | % |                   | 
|Chemicals                                             |  |                   | 2.2   | % |                   | 
|Healthcare Technology                                 |  |                   | 2.1   | % |                   | 
|Healthcare Equipment and Supplies                     |  |                   | 2.0   | % |                   | 
|Containers and Packaging                              |  |                   | 1.8   | % |                   | 
|Diversified Financial Services                        |  |                   | 1.8   | % |                   | 
|Construction and Engineering                          |  |                   | 1.7   | % |                   | 
|Structured Subordinated Note                          |  |                   | 1.7   | % |                   | 
|Structured Note                                       |  |                   | 1.6   | % |                   | 
|Metals and Mining                                     |  |                   | 1.5   | % |                   | 
|Commercial Services and Supplies                      |  |                   | 1.5   | % |                   | 
|Auto Components                                       |  |                   | 1.5   | % |                   | 
|Diversified Telecommunication Services                |  |                   | 1.4   | % |                   | 
|Internet Software and Services                        |  |                   | 1.3   | % |                   | 
|Airlines                                              |  |                   | 1.3   | % |                   | 
|Specialty Retail                                      |  |                   | 1.2   | % |                   | 
|Food Products                                         |  |                   | 1.1   | % |                   | 
|Electronic Equipment, Instruments and Components      |  |                   | 1.1   | % |                   | 
|Aerospace and Defense                                 |  |                   | 0.9   | % |                   | 
|Diversified Consumer Services                         |  |                   | 0.8   | % |                   | 
|Pharmaceuticals                                       |  |                   | 0.8   | % |                   | 
|Industrial Conglomerates                              |  |                   | 0.8   | % |                   | 
|Electrical Equipment                                  |  |                   | 0.6   | % |                   | 
|Real Estate Management and Development                |  |                   | 0.6   | % |                   | 
|Road and Rail                                         |  |                   | 0.6   | % |                   | 
|Wireless Telecommunication Services                   |  |                   | 0.6   | % |                   | 
|Technology Hardware, Storage and Peripherals          |  |                   | 0.5   | % |                   | 
|Household Durables                                    |  |                   | 0.4   | % |                   | 
|Leisure Products                                      |  |                   | 0.4   | % |                   | 
|Machinery                                             |  |                   | 0.3   | % |                   | 
|Electric Utilities                                    |  |                   | 0.3   | % |                   | 
|Textiles, Apparel and Luxury Goods                    |  |                   | 0.1   | % |                   | 
|Interactive Media and Services                        |  |                   | -     | % |                   | 
|Construction Materials                                |  |                   | -     | % |                   | 
|Internet and Direct Marketing Retail                  |  |                   | -     | % |                   | 
|Capital Markets                                       |  |                   | -     | % |                   | 
|Energy Equipment and Services                         |  |                   | -     | % |                   | 
|Real Estate Investment Trusts (REITs)                 |  |                   | -     | % |                   | 
|Transportation Infrastructure                         |  |                   | -     | % |                   | 
|                                                      |  |                   |       |   |                   | 
|Total                                                 |  |                   | 100.0 | % |                   | 



54







The table below shows the
weighted average yields and interest rate of our debt investments at fair value as of December 31, 2021 and December 31, 2020:



|                                                                           |  | December 31, 2021 |      |   | December 31,  2020 | 
|-------------------------------------------------------------------------- |  | ----------------- | ---- | - | ------------------ | 
|Weighted average total yield of debt and income producing securities       |  |                   | 5.77 | % |                    | 
|Weighted average interest rate  of debt and income producing securities(1) |  |                   | 4.80 | % |                    | 
|Weighted average spread over LIBOR of all floating rate investments(2)     |  |                   | 4.31 | % |                    | 



| | (1) | CLO equity securities are considered income producing securities but do not have an ascribed interest rate, and therefore are excluded from the calculation
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Weighted Average Spread over SOFR as of December 31, 2021 is included in this calculation for three of the Company’s new floating rate investment commitments in the year ended December 31, 2021
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Results of Operations



The following table represents
the operating results for the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December
31, 2020:



|                                                                    |  | For the
 Year Ended |            |   | For the Period
    January 23, 2020 (Commencement of Operations) through |  
|------------------------------------------------------------------- |  | ------------------- | ---------- | - | ------------------------------------------------------------------------ | -
|                                                                    |  | December 31,
 2021  |            |   | December 31,
 2020                                                       |  
|Total investment income                                             |  | $                   | 39,685,653 |   |                                                                          | $
|Less: Net expenses                                                  |  |                     | 16,851,412 |   |                                                                          |  
|Net investment income                                               |  |                     | 22,834,241 |   |                                                                          |  
|Net realized gains (losses) on investments                          |  |                     | 4,753,263  |   |                                                                          |  
|Net change in unrealized gains (losses) on investments              |  |                     | (8,527,786 | ) |                                                                          |  
|                                                                    |  |                     |            |   |                                                                          |  
|Net increase (decrease) in net assets resulting from
    operations |  | $                   | 19,059,718 |   |                                                                          | $



Investment Income



Investment income for the
year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, was as follows:



|                          |  | For the
 Year Ended |            |  | For the Period
    January 23, 2020 (Commencement of Operations) through |  
|------------------------- |  | ------------------- | ---------- |  | ------------------------------------------------------------------------ | -
|                          |  | December 31,
 2021  |            |  | December 31,
 2020                                                       |  
|Interest from investments |  | $                   | 38,897,216 |  |                                                                          | $
|Dividend income           |  |                     | 9,597      |  |                                                                          |  
|Other income              |  |                     | 778,840    |  |                                                                          |  
|Total investment income   |  | $                   | 39,685,653 |  |                                                                          | $





55







For the year ended December
31, 2021, total investment income was driven by interest income from our investments. For the period January 23, 2020 (Commencement of
Operations) through December 31, 2020, total investment income was driven by our deployment of capital and interest income from our investments.
The size of our investment portfolio at fair value increased from $0.00 as of January 23, 2020 to $600.1 million as of December 31, 2020.
The size of our investment portfolio at fair value increased from $600.1 million as of December 31, 2020 to $1.1 billion  as of December
31, 2021. All debt and short-term investments were income producing, and there were no loans on non-accrual status as of December 31,
2021.



Expenses



Operating expenses for the
year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, was as follows:



|                                     |  | For the
 Year Ended |            |   | For the Period
    January 23, 2020 (Commencement of
 Operations) through |  
|------------------------------------ |  | ------------------- | ---------- | - | ------------------------------------------------------------------------- | -
|                                     |  | December 31,
 2021  |            |   | December 31,
 2020                                                        |  
|Interest and debt financing expenses |  | $                   | 8,616,661  |   |                                                                           | $
|Management fees                      |  |                     | 6,369,583  |   |                                                                           |  
|Other operating expenses             |  |                     | 2,586,366  |   |                                                                           |  
|Initial organization                 |  |                     | -          |   |                                                                           |  
|Directors fees                       |  |                     | 75,000     |   |                                                                           |  
|Management fee waiver                |  |                     | (796,198   | ) |                                                                           |  
|Net expenses                         |  | $                   | 16,851,412 |   |                                                                           | $



Net expenses for the year
ended December 31, 2021 were $16.9 million, which consisted of $8.6 million in interest and debt financing, $6.4 million in management
fees, $2.6 million in other operating expenses, and $75 thousand in directors fees offset by $796 thousand in management fee waiver from
the Investment Advisor.



Interest expense increased
during the year ended December 31, 2021 as a result of an increase in outstanding debt. Average debt outstanding increased from $247.5
million to $447.0 million for the period January 23, 2020 (Commencement of Operations) through December 31, 2020 and the year ended December
31, 2021, respectively. Management fees increased due to a higher value of total net assets during the period. Total net assets increased
from $253.1 million to $452.8 million as of December 31, 2020 and December 31, 2021, respectively.



Net expenses for the period
from January 23, 2020 (Commencement of Operations) through December 31, 2020 were $10.8 million, which consisted of $4.7 million in interest
and debt financing, $3.9 million in management fees, $122 thousand in initial organization expenses, $2.4 million in other operating expense,
and $80 thousand in directors fees offset by $493 thousand in management fee waiver from the Investment Advisor.



Net Change in Unrealized Gains (Losses) on
Investments



We fair value our portfolio investments quarterly and any changes in
fair value are recorded as unrealized gains or losses. During the year ended December 31, 2021 and the period January 23, 2020 (Commencement
of Operations) through December 31, 2020, net unrealized gains (losses) on our investment portfolio were comprised of the following:



|                                                       |  | For the 
Year Ended |             |   | For the Period
 January 23, 2020
 (Commencement of
 Operations) through |  
|------------------------------------------------------ |  | ------------------- | ----------- | - | ----------------------------------------------------------------------- | -
|                                                       |  | December 31,
 2021  |             |   | December 31,
 2020                                                      |  
|Unrealized gains on investments                        |  | $                   | 6,224,196   |   |                                                                         | $
|Unrealized (losses) on investments                     |  |                     | (14,751,982 | ) |                                                                         |  
|Net change in unrealized gains (losses) on investments |  | $                   | (8,527,786  | ) |                                                                         | $





56







The change in unrealized appreciation (depreciation) for the year ended
December 31, 2021 totaled $(8.5) million and the change in unrealized appreciation  (depreciation) for the period from January 23,
2020 (Commencement of Operations) through December 31, 2020 totaled $13.1 million. For the year ended December 31, 2021, this consisted
of net unrealized depreciation of $864 thousand related to existing portfolio investments and unrealized appreciation of $2.7 million
related to new portfolio investments, and net unrealized depreciation of $10.4 million related to exited portfolio investments (a portion
of which has been reclassified to realized gains). The change in net unrealized appreciation for the period from January 23, 2020 (Commencement
of Operations) through December 31, 2020 was related to the appreciation of our investments in Boxer Parent Company, Inc., CHG Healthcare
Services, Inc, and Traverse Midstream Partners, LLC among other existing portfolio investments.



Financial Condition, Liquidity and Capital
Resources



We anticipate cash to be generated
from the private offering of our common stock and other future offerings of securities (including an initial public offering), and cash
flows from operations, including interest earned from the temporary investment of cash in cash equivalents, U.S. government securities
and other high-quality debt investments that mature in one year or less. Additionally, we are permitted, under specified conditions, to
issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940
Act, is at least equal to 150% immediately after each such issuance. If we are unable to obtain leverage or raise equity capital on terms
that are acceptable to us, our ability to grow our portfolio could be substantially impacted. Furthermore, while any indebtedness and
senior securities remain outstanding, we may be required to prohibit any distribution to our stockholders or the repurchase of shares
unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. In connection with borrowings, our
lenders, including under the BoA Credit Facility and the WF Credit Facility, may require us to pledge assets, investor commitments to
fund capital calls and/or the proceeds of those capital calls. In addition, such lenders may ask us to comply with positive or negative
covenants that could have an effect on our operations.



During the year ended December
31, 2021, we experienced a net increase in cash and cash equivalents of $411 thousand. During the period, net cash used in operating activities
was $438 million, primarily as a result of fundings of portfolio investments (excluding investments in short-term money market funds)
of $926.4 million, partially offset by proceeds received from sale of investments of $406.8 million. We invested in short-term money market
funds during the period, and as of the end of the period we held $78.1 million in fair value of short-term money market funds. During
the same period, net cash provided by financing activities was $438.4 million, primarily consisting of $256.6 million of net borrowing
under the BoA Credit Facility and WF Credit Facility and proceeds from the issuance of common stock of $188.9 million, partially offset
by distributions paid in cash of $6.3 million.



During the period January 23, 2020 (Commencement of Operations) through
December 31, 2020, we experienced a net increase in cash and cash equivalents of $681 thousand. During the period, net cash used in operating
activities was $623.2 million, primarily as a result of fundings of portfolio investments (excluding investments in short-term money market
funds) of $854.5 million, partially offset by proceeds received from sale of investments of $268.3 million. We invested in short-term
money market funds during the period, and as of the end of the period we held $53.1 million in fair value of short-term money market funds.
During the same period, net cash  provided by financing activities was $623.9 million, primarily consisting of $395.3 million of
net borrowing under the BoA Credit Facility and proceeds from the issuance of common stock of $233.7 million



As of December 31, 2021 and
December 31, 2020, we had cash and cash equivalents of $1.1 million and $683 thousand, respectively. As of December 31, 2021, we had $552
million principal outstanding under the BoA Credit Facility and $100 million principal outstanding under the WF Credit Facility. As of
December 31, 2020, we had approximately $395 million principal outstanding under the BoA Credit Facility and no principal outstanding
under the WF Credit Facility.



During the year ended December
31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, we had aggregate capital commitments
and undrawn capital commitments from investors as follows:



|             |  | December 31, 2021    |             |  | December 31, 2020                 |  
|------------ |  | -------------------- | ----------- |  | --------------------------------- | -
|             |  | Capital
 Commitments |             |  | Unfunded Capital
 Commitments (1) |  
|Common stock |  | $                    | 193,511,571 |  |                                   | $



|(1) | 100% of the unfunded commitments were drawn down in January 2022.
|--- | -----------------------------------------------------------------



|(2) | 100% of the unfunded commitments were drawn down in January 2021.
|--- | -----------------------------------------------------------------



As a BDC, we are required
to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any
preferred stock that we may issue in the future, of at least 150%. If this ratio declines below 150%, we cannot incur additional debt
and could be required to sell a portion of our investments to repay some debt when it is disadvantageous to do so. As of December 31,
2021, our asset coverage ratio was 170%.



Capital Contributions



During the year ended December
31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, the Company issued and sold 10,007,526
shares at an aggregate purchase price of $206.6 million and 12,562,805 shares at an aggregate purchase price of $238.6 million, respectively.
These amounts include shares issued in reinvestment.





57







Financing Arrangements



Bank of America Credit Facility



On February 18, 2020, the
Company, through a special purpose wholly-owned subsidiary, PS BDC Funding, entered into the Credit Agreement with the Lenders, BofA
N.A. as the administrative agent and 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.



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.



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
LIBOR plus 1.30%. The “base rate” will be equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the prime
rate and (c) 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).



PS BDC Funding has pledged
all of its assets to BofA N.A., in its capacity as Administrative Agent, to secure its obligations under the BoA Credit Facility. Both
the Company and PS BDC Funding have made customary representations and warranties and are required to comply with various covenants, reporting
requirements, and other customary requirements for similar credit facilities. Borrowing under the BoA Credit Facility is subject to the
leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions
and custody. 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.



As of December 31, 2021, we
had approximately $552 million principal outstanding and $173 million of available Commitments under the BoA Credit Facility, and PS BDC
Funding was in compliance with the applicable covenants in the BoA Credit Facility on such date.



Wells Fargo Credit Facility



On December 18, 2020, the
Company, through a special purpose wholly-owned subsidiary, PS BDC Funding II, entered into the Loan Agreement with the 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.



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
18, 2023. All amounts outstanding under the WF Credit Facility are required to be repaid by December 18, 2025.



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%. The “base rate” will be equal
to the highest of (a) the federal funds rate plus 1/2 of 1% 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).





58







PS BDC Funding II has pledged
all of its assets to U.S. Bank, in its capacity as Collateral Agent, to secure its obligations under the WF Credit Facility and U.S.
Bank acts as the custodian of such assets. Both the Company and PS BDC Funding II have made customary representations and warranties
and are required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities.
Borrowing 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.



As of December 31, 2021, we
had approximately $100 million outstanding and $50 million of available Commitments under the WF Credit Facility, and PS BDC Funding II
was in compliance with the applicable covenants in the WF Credit Facility on such date.



Distribution Policy



To the extent that we have
income available, we intend to distribute quarterly dividends to our stockholders. Our quarterly dividends, if any, will be determined
by our Board. Any dividends to our stockholders will be declared out of assets legally available for distribution.



We have elected to be treated,
and intend to operate in a manner so as to continuously qualify, as a RIC under the Code. To obtain and maintain RIC tax treatment, among
other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount at least equal to 90% of
the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses (“investment
company taxable income”), determined without regard to any deduction for dividends paid. In order to avoid certain excise taxes
imposed on RICs, we currently intend to distribute dividends to our stockholders in respect of each calendar year of an amount at least
equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year;
(2) 98.2% of our capital gains in excess of capital losses (“capital gain net income”), adjusted for certain ordinary losses,
generally for the one-year period ending on October 31 of such calendar year; and (3) any net ordinary income and capital gain net income
for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax. Under certain
applicable provisions of the Code and U.S. Treasury regulations, distributions payable in cash or in shares of stock at the election
of the stockholders are treated as taxable dividends. The Internal Revenue Service has published guidance indicating that this rule will
apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under this
guidance, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated
among the stockholders electing to receive cash (with the balance of the distribution paid in stock). If we decide to make any distributions
consistent with this guidance that are payable in part in stock, taxable stockholders receiving such dividends will be required to include
the full amount of the dividend (whether received in cash, shares of our stock, or a combination thereof) as ordinary income (or as long-term
capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated
earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to
such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales
proceeds may be less than the amount included in income with respect to the dividend, depending on the value of our stock at the time
of the sale. Furthermore, with respect to non-U.S. stockholders, the Company may be required to withhold U.S. tax with respect to such
dividends, including in respect of all or a portion of such dividend that is payable in stock.



For these excise tax purposes,
we will be deemed to have distributed any net ordinary taxable income or capital gain net income on which we have paid U.S. federal income
tax. Depending on the level of taxable income earned in a calendar year, we may choose to carry forward taxable income for distribution
in the following calendar year, and pay any applicable U.S. federal excise tax. We may not be able to achieve results that will permit
the payment of cash distributions.



We currently intend to distribute
net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the
assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment, incur
a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to our stockholders. If this
happens, our stockholders will be treated for U.S. federal income tax purposes as if they had received an actual distribution of the
capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, our stockholders would be eligible to
claim a tax credit equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. We may not be able
to achieve operating results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited
from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such
distributions are limited by the terms of any of our borrowings.



We have adopted a dividend
reinvestment plan that will provide for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a
stockholder elects to receive cash. As a result, if our Board authorizes, and we declare, 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 our 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.





59







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 our 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 our 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 our 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
form.



Critical Accounting Policies



Our consolidated financial
statements are prepared in conformity with accounting principles generally accepted in the United States of America, which requires us
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting periods.



Critical accounting policies
are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need
to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. The preparation
of these financial statements will require management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates
could cause actual results to differ. In addition to the discussion below, we have described our critical accounting policies in the
notes to our consolidated financial statements.



Valuation of Portfolio Investments



Under procedures established
by our Board, we value investments for which market quotations are readily available at such market quotations. Assets listed on an exchange
will be valued at their last sales prices as reported to the consolidated quotation service at 4:00 P.M. eastern time on the date of
determination. If no such sales of such securities occurred, such securities will be valued at the mean between the last available bid
and ask prices as reported by an independent, third party pricing service on the date of determination. Debt and equity securities that
are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight
and approval of our Board. Such determination of fair values may involve subjective judgments and estimates, although we will also engage
independent valuation providers to review the valuation of each portfolio investment that constitutes a material portion of our portfolio
and that does not have a readily available market quotation at least once annually. With respect to unquoted securities, our Investment
Advisor, together with our independent valuation advisors, and subject at all times to the oversight and approval of our Board, will
value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies
that are public and other factors. With respect to Level 3 assets, we intend to retain one or more independent providers of financial
advisory services to assist the Investment Advisor and the Board by performing certain limited third-party valuation services. We may
appoint additional or different third-party valuation firms in the future.





60







When an external event such
as a purchase transaction, public offering or subsequent equity sale occurs with respect to a fair-valued portfolio company or comparable
company, our Board will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Because we
expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our
portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied
valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available
market value, the fair value of our investments may differ significantly from the values that would have been used had readily available
market quotations existed for such investments, and the differences could be material.



With respect to investments
for which market quotations are not readily available, our Investment Advisor will undertake a multi-step valuation process each quarter,
as described below:



| | ● | Securities for which no such market prices are available or reliable
    will be preliminarily valued at such value as the Investment Advisor may reasonably determine, which may include third party valuations;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The audit committee of our Board (the “Audit Committee”)
    will then review these preliminary valuations;
| | - | -----------------------------------------------------------------------------------------------------------



| | ● | At least once annually, the valuation for each portfolio investment
    that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed
    by an independent valuation firm; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Our Board will then discuss valuations and determine the fair value
    of each investment in our portfolio in good faith, based on the input of our Investment Advisor, the respective independent valuation
    firms and the Audit Committee.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All values assigned to securities
and other assets by the Board will be binding on all stockholders.



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



We measure 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. Realized gains
and losses from securities transactions and unrealized appreciation and depreciation of securities are determined using the identified
cost basis method for financial reporting.



Related Party Transactions



We have entered into the
Advisory Agreement with the Investment Advisor and the Administration Agreement with the Investment Advisor (in such capacity, the Administrator).
Mr. Christopher D. Long and Jeffrey D. Fox, each an interested member of our Board, have an indirect pecuniary interest in the Investment
Advisor. The Investment Advisor is a registered investment adviser under the Advisers Act that is majority-owned by Palmer Square. See
“Note 3. Agreements and Related Party Transactions – Administration Agreement” and “– Investment
Advisory Agreement” in the notes to the accompanying consolidated financial statements.



Contractual Obligations



We have certain contracts
under which we have material future commitments. We have entered into the Advisory Agreement with the Investment Advisor in accordance
with the 1940 Act. Payments for investment advisory services under the Advisory Agreement are equal to (a) a base management fee calculated
at an annual rate of 2.0% of the average value of the weighted average of our total net assets at the end of the two most recently completed
quarters and (b) an incentive fee based on our performance. The Investment Advisor 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 a Listing. We have entered into an Administration Agreement
with the Administrator to serve as our administrator. Pursuant to the Administration Agreement, the Administrator furnishes us with office
facilities and equipment, provides us with clerical, bookkeeping and recordkeeping services at such facilities, and provides us with
other services necessary for us to operate or has engaged a third-party firm to perform some or all of these functions.



A summary of our significant
contractual payment obligations related to the repayment of our outstanding indebtedness at December 31, 2021 is as follows:



|                              |  | Payments Due by Period |            
|----------------------------- |  | ---------------------- | -----------
|                              |  | Total                  |            
|BoA Credit Facility, Net      |  | $                      | 550,262,297
|WF Credit Facility, Net       |  | $                      | 99,648,200 
|Total contractual obligations |  | $                      | 649,910,497





61







Off-Balance Sheet Arrangements



Unfunded commitments to provide
funds to portfolio companies are not recorded on our consolidated statements of assets and liabilities. Our unfunded commitments may
be significant from time to time. Unfunded commitments may expire without being drawn upon and the total commitment amount does not necessarily
represent future cash requirements. As of December 31, 2021 and December 31, 2020, we had nine unfunded commitments totaling $11.3 million,
and three unfunded commitments totaling $1.3 million, respectively. See “Note 8. Commitments and Contingencies” in
the notes to the accompanying consolidated financial statements for specific identification of the unfunded commitments. We believe we
maintain sufficient liquidity in the form of cash (including restricted cash, if any), receivables and borrowing capacity to fund these
unfunded commitments should the need arise. See Financial Condition, Liquidity and Capital Resources above.



Other than contractual commitments
and other legal contingencies incurred in the normal course of our business, we do not have any off- balance sheet financings or liabilities.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



We are subject to financial
market risks, including changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from
changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income will
be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance
that a significant change in market interest rates will not have a material adverse effect on our net investment income.



Assuming that the consolidated
statement of assets and liabilities as of December 31, 2021 were to remain constant and that we took no actions to alter our existing
interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rate.



|Change in Interest Rates |  | Increase (Decrease) in Interest Income |            |   | Increase (Decrease) in Interest Expense |   |            | Net Increase (Decrease) in Net Investment Income | 
|------------------------ |  | -------------------------------------- | ---------- | - | --------------------------------------- | - | ---------- | ------------------------------------------------ | 
|Down 25 basis points     |  | $                                      | (8,852     | ) |                                         | $ | (1,630,000 | )                                                | 
|Up 100 basis points      |  |                                        | 6,235,032  |   |                                         |   | 6,520,000  |                                                  | 
|Up 200 basis points      |  |                                        | 17,322,137 |   |                                         |   | 13,040,000 |                                                  | 
|Up 300 basis points      |  |                                        | 28,358,909 |   |                                         |   | 19,560,000 |                                                  | 



The data in the table is based
on the Company’s current statement of assets and liabilities. As of December 31, 2021, the Company had $86.9 million in net purchases
that had not yet settled and $11.3 million in unfunded commitments. After settlement of these purchases, the change in interest expense
will be larger as a result of the increase in the amount borrowed under the BoA Credit Facility or WF Credit Facility, as applicable.
The table does not include any change in dividend income from the Company’s money market investments.



In addition, any investments
we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These
risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign
exchange controls, and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies
involved.



We measure exposure to interest
rate and currency exchange rate fluctuations on an ongoing basis and may hedge against interest rate and currency exchange rate fluctuations
by using standard hedging instruments such as futures, options, swaps and forward contracts and credit hedging contracts, such as credit
default swaps, in each case, subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes
in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of
investments with fixed interest rates.





62







ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Consolidated Financial Statements



|                                                                                                                                                                            |  | Page       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|Report of Independent Registered Public Accounting Firm                                                                                                                     |  | F-2        
|Consolidated Statement of Assets and Liabilities as of December 31, 2021 and December 31, 2020                                                                              |  | F-3        
|Consolidated Statement of Operations for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020            |  | F-4        
|Consolidated Statement of Changes in Net Assets for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020 |  | F-5        
|Consolidated Statement of Cash Flows for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020            |  | F-6        
|Consolidated Schedule of Investments as of December 31, 2021 and 2020                                                                                                       |  | F-7 – F-22 
|Notes to Consolidated Financial Statements                                                                                                                                  |  | F-23 – F-39





F-1







Report
of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of
Palmer Square Capital BDC Inc.



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, 2021 and 2020, and the related consolidated statements of operations, changes in net assets and cash flows for the
year ended December 31, 2021 and for the period from January 23, 2020 (commencement of operations) to December 31, 2020, 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, 2021 and 2020, and the results
of its operations, changes in its net assets and its cash flows for the year ended December 31, 2021 and for the period from January 23,
2020 (commencement of operations) to December 31, 2020 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. 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 audit 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. 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, 2021 and 2020 by correspondence with the custodian, brokers and agent banks; when replies were not received from brokers
or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP

Kansas City, Missouri

March 11, 2022



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



F-2







Palmer Square Capital BDC Inc.

Consolidated Statement of Assets and Liabilities





|                                                                                                                                                                             |  | December 31, 
2021 |               |  | December 31, 
2020 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------------- |  | ------------------ | -
|Assets:                                                                                                                                                                      |  |                    |               |  |                    |  
|Non-controlled, non-affiliated investments, at fair value (amortized cost of $1,189,713,653 and $640,100,635, respectively)                                                  |  | $                  | 1,194,257,584 |  |                    | $
|Cash and cash equivalents                                                                                                                                                    |  |                    | 1,093,503     |  |                    |  
|Receivables:                                                                                                                                                                 |  |                    |               |  |                    |  
|Receivable for sales of investments                                                                                                                                          |  |                    | 17,393,877    |  |                    |  
|Receivable for paydowns of investments                                                                                                                                       |  |                    | 227,548       |  |                    |  
|Due from investment adviser                                                                                                                                                  |  |                    | 280,740       |  |                    |  
|Dividend receivable                                                                                                                                                          |  |                    | 833           |  |                    |  
|Interest receivable                                                                                                                                                          |  |                    | 3,836,068     |  |                    |  
|Prepaid expenses and other assets                                                                                                                                            |  |                    | 195,996       |  |                    |  
|Total Assets                                                                                                                                                                 |  | $                  | 1,217,286,149 |  |                    | $
|                                                                                                                                                                             |  |                    |               |  |                    |  
|Liabilities:                                                                                                                                                                 |  |                    |               |  |                    |  
|Credit facilities, net (Note 6)                                                                                                                                              |  | $                  | 649,910,497   |  |                    | $
|Payables:                                                                                                                                                                    |  |                    |               |  |                    |  
|Payable for investments purchased                                                                                                                                            |  |                    | 104,278,958   |  |                    |  
|Distributions payable                                                                                                                                                        |  |                    | 5,874,681     |  |                    |  
|Management fee payable                                                                                                                                                       |  |                    | 2,245,918     |  |                    |  
|Directors fee payable                                                                                                                                                        |  |                    | 5,000         |  |                    |  
|Accrued other general and administrative expenses                                                                                                                            |  |                    | 2,173,507     |  |                    |  
|Total Liabilities                                                                                                                                                            |  | $                  | 764,488,561   |  |                    | $
|                                                                                                                                                                             |  |                    |               |  |                    |  
|Commitments and contingencies (Note 8)                                                                                                                                       |  |                    |               |  |                    |  
|                                                                                                                                                                             |  |                    |               |  |                    |  
|Net Assets:                                                                                                                                                                  |  |                    |               |  |                    |  
|Common Shares, $0.001 par value; 450,000,000 shares authorized; 22,570,331 and 12,562,805 as of December 31, 2021 and December 31, 2020, respectively issued and outstanding |  | $                  | 22,570        |  |                    |  
|Additional paid-in capital                                                                                                                                                   |  |                    | 444,739,748   |  |                    |  
|Total distributable earnings (accumulated deficit)                                                                                                                           |  |                    | 8,035,270     |  |                    |  
|Total Net Assets                                                                                                                                                             |  | $                  | 452,797,588   |  |                    | $
|Total Liabilities and Net Assets                                                                                                                                             |  | $                  | 1,217,286,149 |  |                    | $
|Net Asset Value Per Common Share                                                                                                                                             |  | $                  | 20.06         |  |                    | $



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



F-3







Palmer Square Capital BDC Inc.

Consolidated Statement of Operations



|                                                                                        |  | For the  Year Ended  December 31, 2021 |            |   | For the Period January 23, 2020 (Commencement of Operations) through December 31, 2020 |  
|--------------------------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | -------------------------------------------------------------------------------------- | -
|Income:                                                                                 |  |                                        |            |   |                                                                                        |  
|Investment income from non-controlled, non-affiliated investments:                      |  |                                        |            |   |                                                                                        |  
|Interest income                                                                         |  | $                                      | 38,897,216 |   |                                                                                        | $
|Dividend income                                                                         |  |                                        | 9,597      |   |                                                                                        |  
|Other income                                                                            |  |                                        | 778,840    |   |                                                                                        |  
|Total investment income from non-controlled, non-affiliated investments                 |  |                                        | 39,685,653 |   |                                                                                        |  
|Total Investment Income                                                                 |  |                                        | 39,685,653 |   |                                                                                        |  
|                                                                                        |  |                                        |            |   |                                                                                        |  
|Expenses:                                                                               |  |                                        |            |   |                                                                                        |  
|Interest expense                                                                        |  |                                        | 8,616,661  |   |                                                                                        |  
|Management fees                                                                         |  |                                        | 6,369,583  |   |                                                                                        |  
|Professional fees                                                                       |  |                                        | 758,435    |   |                                                                                        |  
|Directors fees                                                                          |  |                                        | 75,000     |   |                                                                                        |  
|Offering costs                                                                          |  |                                        | -          |   |                                                                                        |  
|Initial organization                                                                    |  |                                        | -          |   |                                                                                        |  
|Other general and administrative expenses                                               |  |                                        | 1,827,931  |   |                                                                                        |  
|Total Expenses                                                                          |  |                                        | 17,647,610 |   |                                                                                        |  
|Less: Management fee waiver (Note 3)                                                    |  |                                        | (796,198   | ) |                                                                                        |  
|Net expenses                                                                            |  |                                        | 16,851,412 |   |                                                                                        |  
|Net Investment Income (Loss)                                                            |  |                                        | 22,834,241 |   |                                                                                        |  
|                                                                                        |  |                                        |            |   |                                                                                        |  
|Realized and unrealized gains (losses) on investments and foreign currency transactions |  |                                        |            |   |                                                                                        |  
|Net realized gains (losses):                                                            |  |                                        |            |   |                                                                                        |  
|Non-controlled, non-affiliated investments                                              |  |                                        | 4,753,263  |   |                                                                                        |  
|Total net realized gains (losses)                                                       |  |                                        | 4,753,263  |   |                                                                                        |  
|Net change in unrealized gains (losses):                                                |  |                                        |            |   |                                                                                        |  
|Non-controlled, non-affiliated investments                                              |  |                                        | (8,527,786 | ) |                                                                                        |  
|Total net change in unrealized gains (losses)                                           |  |                                        | (8,527,786 | ) |                                                                                        |  
|Total realized and unrealized gains (losses)                                            |  |                                        | (3,774,523 | ) |                                                                                        |  
|                                                                                        |  |                                        |            |   |                                                                                        |  
|Net Increase (Decrease) in Net Assets Resulting from Operations                         |  | $                                      | 19,059,718 |   |                                                                                        |  
|                                                                                        |  |                                        |            |   |                                                                                        |  
|Per Common Share Data:                                                                  |  |                                        |            |   |                                                                                        |  
|Basic and diluted net investment income per common share                                |  | $                                      | 1.47       |   |                                                                                        |  
|Basic and diluted net increase in net assets resulting from operations                  |  | $                                      | 1.23       |   |                                                                                        |  
|Weighted Average Common Shares Outstanding – Basic and Diluted                          |  |                                        | 15,494,614 |   |                                                                                        |  



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





F-4







Palmer Square Capital BDC Inc.

Consolidated Statement of Changes in Net Assets



|                                                                                                                               |  | For the Year Ended December 31, 2021 |             |   | For the Period January 23, 2020 (Commencement of Operations) through  December 31, 2020 |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------ | ----------- | - | --------------------------------------------------------------------------------------- | -
|Increase (Decrease) in Net Assets Resulting from Operations:                                                                   |  |                                      |             |   |                                                                                         |  
|Net investment income (loss)                                                                                                   |  | $                                    | 22,834,241  |   |                                                                                         | $
|Net realized gains (losses) on investments and foreign currency transactions                                                   |  |                                      | 4,753,263   |   |                                                                                         |  
|Net change in unrealized gains (losses) on investments, foreign currency translations, and foreign currency exchange contracts |  |                                      | (8,527,786  | ) |                                                                                         |  
|Net Increase (Decrease) in Net Assets Resulting from Operations                                                                |  |                                      | 19,059,718  |   |                                                                                         |  
|                                                                                                                               |  |                                      |             |   |                                                                                         |  
|Decrease in Net Assets Resulting from Stockholder Distributions                                                                |  |                                      |             |   |                                                                                         |  
|Dividends and distributions to stockholders                                                                                    |  |                                      | (17,845,775 | ) |                                                                                         |  
|Distributions declared from realized gains                                                                                     |  |                                      | (8,106,718  | ) |                                                                                         |  
|Net Decrease in Net Assets Resulting from Stockholder Distributions                                                            |  |                                      | (25,952,493 | ) |                                                                                         |  
|                                                                                                                               |  |                                      |             |   |                                                                                         |  
|Increase in Net Assets Resulting from Capital Share Transactions                                                               |  |                                      |             |   |                                                                                         |  
|Issuance of common shares                                                                                                      |  |                                      | 188,861,571 |   |                                                                                         |  
|Reinvestment of distributions                                                                                                  |  |                                      | 17,683,821  |   |                                                                                         |  
|Net Increase in Net Assets Resulting from Capital Share Transactions                                                           |  |                                      | 206,545,392 |   |                                                                                         |  
|Total Increase (Decrease) in Net Assets                                                                                        |  |                                      | 199,652,617 |   |                                                                                         |  
|Net Assets, Beginning of Period                                                                                                |  |                                      | 253,144,971 |   |                                                                                         |  
|Net Assets, End of Period                                                                                                      |  | $                                    | 452,797,588 |   |                                                                                         | $



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



F-5







Palmer Square Capital BDC Inc.
Consolidated Statement of Cash Flows





|                                                                                                                                       |  | For the Year Ended |              |   | For the Period January 23, 2020 (Commencement of Operations) through |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------------ | - | -------------------------------------------------------------------- | -
|                                                                                                                                       |  | December 31, 
2021 |              |   | December 31, 
2020                                                   |  
|                                                                                                                                       |  |                    |              |   |                                                                      |  
|Cash Flows from Operating Activities:                                                                                                  |  |                    |              |   |                                                                      |  
|Net increase (decrease) in net assets resulting from operations                                                                        |  | $                  | 19,059,718   |   |                                                                      | $
|Adjustments to reconcile net increase (decrease) in net assets
    resulting from operations to net cash used in operating activities: |  |                    |              |   |                                                                      |  
|Net realized (gains)/losses on investments                                                                                             |  |                    | (4,753,263   | ) |                                                                      |  
|Net change in unrealized (gains)/losses on investments                                                                                 |  |                    | 8,527,786    |   |                                                                      |  
|Net accretion of discount on investments                                                                                               |  |                    | (286,282     | ) |                                                                      |  
|Purchases of short-term investments                                                                                                    |  |                    | (662,604,311 | ) |                                                                      |  
|Purchases of portfolio investments                                                                                                     |  |                    | (926,351,937 | ) |                                                                      |  
|Proceeds from sale of short-term investments                                                                                           |  |                    | 637,566,416  |   |                                                                      |  
|Proceeds from sale of portfolio investments                                                                                            |  |                    | 406,800,208  |   |                                                                      |  
|Amortization of deferred financing cost                                                                                                |  |                    | 909,269      |   |                                                                      |  
|Increase/(decrease) in operating assets and liabilities:                                                                               |  |                    |              |   |                                                                      |  
|(Increase)/decrease in receivable for sales of investments                                                                             |  |                    | (5,631,875   | ) |                                                                      |  
|(Increase)/decrease in interest and dividends receivable                                                                               |  |                    | (2,224,325   | ) |                                                                      |  
|(Increase)/decrease in due from investment adviser                                                                                     |  |                    | (125,387     | ) |                                                                      |  
|(Increase)/decrease in receivable for paydowns of investments                                                                          |  |                    | (106,157     | ) |                                                                      |  
|(Increase)/decrease in prepaid expenses and other assets                                                                               |  |                    | (195,996     | ) |                                                                      |  
|Increase/(decrease) in payable for investments purchased                                                                               |  |                    | 88,725,508   |   |                                                                      |  
|Increase/(decrease) in management fees payable                                                                                         |  |                    | 1,003,097    |   |                                                                      |  
|Increase/(decrease) in directors fee payable                                                                                           |  |                    | -            |   |                                                                      |  
|Increase/(decrease) in accrued other general and administrative expenses                                                               |  |                    | 1,676,221    |   |                                                                      |  
|Net cash used in operating activities                                                                                                  |  |                    | (438,011,310 | ) |                                                                      |  
|Cash Flows from Financing Activities:                                                                                                  |  |                    |              |   |                                                                      |  
|Borrowings on credit facility                                                                                                          |  |                    | 256,629,745  |   |                                                                      |  
|Payments on credit facility                                                                                                            |  |                    | -            |   |                                                                      |  
|Payments of debt issuance costs                                                                                                        |  |                    | (780,621     | ) |                                                                      |  
|Distributions paid in cash                                                                                                             |  |                    | (6,288,461   | ) |                                                                      |  
|Proceeds from issuance of common shares, net of change in subscriptions  receivable of $ -                                             |  |                    | 188,861,571  |   |                                                                      |  
|Net cash provided by financing activities                                                                                              |  |                    | 438,422,234  |   |                                                                      |  
|Net increase in cash and cash equivalents                                                                                              |  |                    | 410,924      |   |                                                                      |  
|Cash and cash equivalents, beginning of period                                                                                         |  |                    | 682,579      |   |                                                                      |  
|Cash and cash equivalents, end of period                                                                                               |  | $                  | 1,093,503    |   |                                                                      | $
|                                                                                                                                       |  |                    |              |   |                                                                      |  
|Supplemental and Non-Cash Information:                                                                                                 |  |                    |              |   |                                                                      |  
|Interest paid during the period                                                                                                        |  | $                  | 7,313,093    |   |                                                                      | $
|Distributions declared during the period                                                                                               |  | $                  | 25,952,493   |   |                                                                      | $
|Reinvestment of distributions during the period                                                                                        |  | $                  | 17,683,821   |   |                                                                      | $
|Distributions payable                                                                                                                  |  | $                  | 5,874,681    |   |                                                                      | $



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





F-6







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                                              |  |                                        |  |               |                   | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |           |  | Fair  |   |           | Percentage    | 
|--------------------------------------------- |  | -------------------------------------- |  | ------------- | ----------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | --------- |  | ----- | - | --------- | ------------- | 
|Portfolio Company(3)                          |  | Industry                               |  | Interest Rate |                   | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |           |  | Value |   |           | of Net Assets | 
|Debt Investments                              |  |                                        |  |               |                   |             |  |            |          |  |  |             |  |  |            |           |  |       |   |           |               | 
|First Lien Senior Secured(2)                  |  |                                        |  |               |                   |             |  |            |          |  |  |             |  |  |            |           |  |       |   |           |               | 
|AAdvantage Loyalty IP Ltd. (4)(7)             |  | Airlines                               |  |               | 5.50% (L + 4.75%) |             |  | 3/10/2021  |          |  |  | 4/20/2028   |  |  | $          | 3,500,000 |  |       | $ | 3,466,993 |               | 
|AccentCare, Inc. (7)                          |  | Healthcare Providers and Services      |  |               | 4.18% (L + 4.00%) |             |  | 9/14/2021  |          |  |  | 6/22/2026   |  |  |            | 6,030,750 |  |       |   | 6,033,232 |               | 
|Acrisure, LLC (7)                             |  | Insurance                              |  |               | 3.63% (L + 3.50%) |             |  | 1/31/2020  |          |  |  | 2/12/2027   |  |  |            | 5,902,424 |  |       |   | 5,887,108 |               | 
|Acrisure, LLC (7)                             |  | Insurance                              |  |               | 4.75% (L + 4.25%) |             |  | 11/9/2021  |          |  |  | 2/15/2027   |  |  |            | 5,050,000 |  |       |   | 5,012,608 |               | 
|AHP Health Partners, Inc. (7)                 |  | Healthcare Equipment and Supplies      |  |               | 4.00% (L + 3.50%) |             |  | 8/5/2021   |          |  |  | 8/4/2028    |  |  |            | 2,992,500 |  |       |   | 2,978,139 |               | 
|AI Aqua Merger Sub, Inc., (5)(7)(8)           |  | Food Products                          |  |               | 4.50% (L + 4.00%) |             |  | 6/17/2021  |          |  |  | 6/16/2028   |  |  |            | 6,993,333 |  |       |   | 6,996,036 |               | 
|Aimbridge Acquisition Co., Inc. (7)           |  | Hotels, Restaurants and Leisure        |  |               | 3.84% (L + 3.75%) |             |  | 10/13/2021 |          |  |  | 2/2/2026    |  |  |            | 4,987,245 |  |       |   | 4,873,305 |               | 
|Air Methods Corporation (7)                   |  | Aerospace and Defense                  |  |               | 4.50% (L + 3.50%) |             |  | 9/2/2021   |          |  |  | 4/12/2024   |  |  |            | 4,973,958 |  |       |   | 4,912,811 |               | 
|Alliant Holdings Intermediate LLC (7)         |  | Insurance                              |  |               | 4.00% (L + 3.50%) |             |  | 10/20/2021 |          |  |  | 11/5/2027   |  |  |            | 5,985,000 |  |       |   | 5,977,585 |               | 
|Allied Universal Holdco LLC (7)               |  | Professional Services                  |  |               | 4.25% (L + 3.75%) |             |  | 5/5/2021   |          |  |  | 4/7/2028    |  |  |            | 6,982,500 |  |       |   | 6,976,936 |               | 
|Alterra Mountain Company (7)                  |  | Hotels, Restaurants and Leisure        |  |               | 4.00% (L + 3.50%) |             |  | 5/13/2020  |          |  |  | 8/31/2028   |  |  |            | 1,992,263 |  |       |   | 1,979,085 |               | 
|Amentum Government Services Holdings LLC (7)  |  | Aerospace and Defense                  |  |               | 3.60% (L + 3.50%) |             |  | 3/19/2020  |          |  |  | 2/26/2027   |  |  |            | 4,432,500 |  |       |   | 4,208,252 |               | 
|Amentum Government Services Holdings LLC (7)  |  | Aerospace and Defense                  |  |               | 5.50% (L + 4.75%) |             |  | 10/29/2020 |          |  |  | 1/29/2027   |  |  |            | 1,488,750 |  |       |   | 1,463,719 |               | 
|American Airlines, Inc. (4)(7)                |  | Airlines                               |  |               | 2.11% (L + 2.00%) |             |  | 7/14/2021  |          |  |  | 12/15/2023  |  |  |            | 1,979,167 |  |       |   | 1,934,458 |               | 
|American Airlines, Inc. (4)(7)                |  | Airlines                               |  |               | 1.85% (L + 1.75%) |             |  | 7/14/2021  |          |  |  | 6/27/2025   |  |  |            | 2,000,000 |  |       |   | 1,900,671 |               | 
|American Rock Salt Company LLC (7)            |  | Metals and Mining                      |  |               | 4.75% (L + 4.00%) |             |  | 6/4/2021   |          |  |  | 6/9/2028    |  |  |            | 4,975,000 |  |       |   | 4,963,324 |               | 
|Amynta Agency Borrower, Inc. (7)              |  | Insurance                              |  |               | 4.60% (L + 4.50%) |             |  | 2/13/2020  |          |  |  | 2/28/2025   |  |  |            | 8,929,545 |  |       |   | 8,774,227 |               | 
|AP Gaming I, LLC (7)                          |  | Hotels, Restaurants and Leisure        |  |               | 4.50% (L + 3.50%) |             |  | 9/14/2021  |          |  |  | 2/15/2024   |  |  |            | 6,831,409 |  |       |   | 6,817,784 |               | 
|Applovin Corporation (4)(7)                   |  | Software                               |  |               | 3.50% (L + 3.00%) |             |  | 10/21/2021 |          |  |  | 10/20/2028  |  |  |            | 2,493,750 |  |       |   | 2,487,556 |               | 
|Aptean Inc (5)(7)(8)                          |  | Software                               |  |               | 4.35% (L + 4.25%) |             |  | 5/17/2021  |          |  |  | 4/23/2026   |  |  |            | 7,886,443 |  |       |   | 7,889,119 |               | 
|AQA Acquisition Holding, Inc. (7)             |  | Software                               |  |               | 4.75% (L + 4.25%) |             |  | 11/20/2020 |          |  |  | 11/19/2027  |  |  |            | 2,985,000 |  |       |   | 2,971,382 |               | 
|ARC Falcon I Inc. (7)                         |  | Chemicals                              |  |               | 4.25% (L + 3.75%) |             |  | 9/22/2021  |          |  |  | 8/31/2028   |  |  |            | 4,363,057 |  |       |   | 4,338,582 |               | 
|Arches Buyer Inc. (7)                         |  | Leisure Products                       |  |               | 3.75% (L + 3.25%) |             |  | 2/25/2021  |          |  |  | 12/6/2027   |  |  |            | 4,950,000 |  |       |   | 4,906,378 |               | 
|Aristocrat International PTY Ltd (4)(5)(7)(8) |  | Hotels, Restaurants and Leisure        |  |               | 4.75% (L + 3.75%) |             |  | 5/14/2020  |          |  |  | 10/31/2024  |  |  |            | 4,949,874 |  |       |   | 4,923,279 |               | 
|Aruba Investments Holdings, LLC (7)           |  | Chemicals                              |  |               | 4.75% (L + 4.00%) |             |  | 10/28/2020 |          |  |  | 10/28/2027  |  |  |            | 1,488,769 |  |       |   | 1,476,015 |               | 
|Ascend Learning, LLC (5)(7)                   |  | Professional Services                  |  |               | 4.00% (L + 3.50%) |             |  | 11/18/2021 |          |  |  | 11/18/2028  |  |  |            | 7,500,000 |  |       |   | 7,462,500 |               | 
|AssuredPartners, Inc. (7)                     |  | Insurance                              |  |               | 4.00% (L + 3.50%) |             |  | 5/29/2020  |          |  |  | 2/12/2027   |  |  |            | 6,461,337 |  |       |   | 6,451,803 |               | 
|Athenahealth, Inc. (7)                        |  | Healthcare Equipment and Supplies      |  |               | 4.40% (L + 4.25%) |             |  | 2/20/2020  |          |  |  | 2/11/2026   |  |  |            | 5,272,356 |  |       |   | 5,244,158 |               | 
|Autokiniton US Holdings, Inc. (7)(8)          |  | Auto Components                        |  |               | 5.00% (L + 4.50%) |             |  | 3/26/2021  |          |  |  | 3/27/2028   |  |  |            | 8,216,855 |  |       |   | 8,226,508 |               | 
|Avaya Inc. (4)(7)                             |  | Diversified Telecommunication Services |  |               | 4.11% (L + 4.00%) |             |  | 2/17/2021  |          |  |  | 12/15/2027  |  |  |            | 1,600,000 |  |       |   | 1,600,000 |               | 
|Avaya Inc. (4)(5)(7)                          |  | Diversified Telecommunication Services |  |               | 4.36% (L + 4.25%) |             |  | 4/20/2020  |          |  |  | 12/15/2027  |  |  |            | 4,939,059 |  |       |   | 4,800,270 |               | 
|Aveanna Healthcare LLC (4)(7)                 |  | Healthcare Providers and Services      |  |               | 4.25% (L + 3.75%) |             |  | 6/30/2021  |          |  |  | 6/30/2028   |  |  |            | 3,237,170 |  |       |   | 3,232,811 |               | 
|Azalea TopCo, Inc. (7)                        |  | Healthcare Technology                  |  |               | 3.63% (L + 3.50%) |             |  | 2/26/2020  |          |  |  | 7/23/2026   |  |  |            | 3,922,262 |  |       |   | 3,885,223 |               | 
|Barracuda Networks, Inc. (7)                  |  | IT Services                            |  |               | 4.50% (L + 3.75%) |             |  | 3/2/2020   |          |  |  | 1/10/2025   |  |  |            | 3,979,022 |  |       |   | 3,978,706 |               | 





F-7







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                                         |  |                                                       |  |               |                         | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |            |  | Fair  |  |           | Percentage    | 
|---------------------------------------- |  | ----------------------------------------------------- |  | ------------- | ----------------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ---------- |  | ----- |  | --------- | ------------- | 
|Portfolio Company(3)                     |  | Industry                                              |  | Interest Rate |                         | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |            |  | Value |  |           | of Net Assets | 
|BCP Raptor, LLC (5)(7)                   |  | Oil, Gas and Consumable Fuels                         |  |               | 5.25% (L + 4.25%)       |             |  | 7/21/2021  |          |  |  | 6/7/2024    |  |  |            | 5,968,265  |  |       |  | 5,915,310 |               | 
|BCP Renaissance Parent L.L.C. (5)(7)     |  | Oil, Gas and Consumable Fuels                         |  |               | 4.50% (L + 3.50%)       |             |  | 10/5/2021  |          |  |  | 10/31/2024  |  |  |            | 7,648,566  |  |       |  | 7,629,890 |               | 
|Belfor Holdings Inc. (7)                 |  | Commercial Services and Supplies                      |  |               | 3.85% (L + 3.75%)       |             |  | 3/18/2020  |          |  |  | 3/31/2026   |  |  |            | 2,945,882  |  |       |  | 2,837,141 |               | 
|Boxer Parent Company, Inc. (7)           |  | Software                                              |  |               | 3.88% (L + 3.75%)       |             |  | 2/24/2021  |          |  |  | 10/2/2025   |  |  |            | 2,992,266  |  |       |  | 2,713,403 |               | 
|Caesars Resort Collection, LLC (4)(7)    |  | Hotels, Restaurants and Leisure                       |  |               | 3.60% (L + 3.50%)       |             |  | 6/19/2020  |          |  |  | 7/31/2025   |  |  |            | 2,962,500  |  |       |  | 2,895,715 |               | 
|Castle US Holding Corporation (8)        |  | Professional Services                                 |  |               | 3.88% (L + 3.75%)       |             |  | 9/17/2021  |          |  |  | 1/27/2027   |  |  |            | 1,991,579  |  |       |  | 1,981,844 |               | 
|Castle US Holding Corporation (8)        |  | Professional Services                                 |  |               | 4.75% (L + 4.00%)       |             |  | 4/16/2021  |          |  |  | 1/31/2027   |  |  |            | 2,981,250  |  |       |  | 2,926,408 |               | 
|CCI Buyer, Inc. (5)(7)(8)                |  | Wireless Telecommunication Services                   |  |               | 4.50% (L + 3.75%)       |             |  | 12/16/2020 |          |  |  | 12/31/2027  |  |  |            | 6,864,444  |  |       |  | 6,856,831 |               | 
|CCS-CMGC Holdings, Inc. (7)              |  | Healthcare Providers and Services                     |  |               | 5.63% (L + 5.50%)       |             |  | 1/24/2020  |          |  |  | 10/1/2025   |  |  |            | 5,411,500  |  |       |  | 5,342,101 |               | 
|CHG Healthcare Services, Inc (7)         |  | Healthcare Providers and Services                     |  |               | 4.00% (L + 3.50%)       |             |  | 9/22/2021  |          |  |  | 9/22/2028   |  |  |            | 7,980,000  |  |       |  | 7,941,694 |               | 
|Connectwise LLC (7)                      |  | IT Services                                           |  |               | 4.00% (L + 3.50%)       |             |  | 9/24/2021  |          |  |  | 9/29/2028   |  |  |            | 8,000,000  |  |       |  | 7,986,895 |               | 
|Consolidated Communications, Inc. (4)(7) |  | Diversified Telecommunication Services                |  |               | 4.25% (L + 3.50%)       |             |  | 9/18/2020  |          |  |  | 10/2/2027   |  |  |            | 1,428,009  |  |       |  | 1,409,815 |               | 
|ConvergeOne Holdings Corp. (7)(8)        |  | IT Services                                           |  |               | 5.10% (L + 5.00%)       |             |  | 2/11/2021  |          |  |  | 3/31/2026   |  |  |            | 9,941,326  |  |       |  | 9,736,805 |               | 
|Corelogic, Inc. (7)                      |  | Internet Software and Services                        |  |               | 4.00% (L + 3.50%)       |             |  | 4/14/2021  |          |  |  | 4/14/2028   |  |  |            | 7,980,000  |  |       |  | 7,973,450 |               | 
|CP Atlas Buyer, Inc (7)                  |  | Building Products                                     |  |               | 4.25% (L + 3.75%)       |             |  | 2/4/2021   |          |  |  | 11/23/2027  |  |  |            | 4,962,827  |  |       |  | 4,921,475 |               | 
|Creation Technologies, Inc. (8)          |  | Electronic Equipment, Instruments and Components      |  |               | 6.00% (L + 5.50%)       |             |  | 9/24/2021  |          |  |  | 9/14/2028   |  |  |            | 5,000,000  |  |       |  | 4,927,276 |               | 
|Curia Global, Inc. (7)                   |  | Healthcare Providers and Services                     |  |               | 4.50% (L + 3.75%)       |             |  | 2/20/2020  |          |  |  | 8/30/2026   |  |  |            | 4,899,295  |  |       |  | 4,880,965 |               | 
|DCert Buyer, Inc. (7)                    |  | IT Services                                           |  |               | 4.10% (L + 4.00%)       |             |  | 1/28/2020  |          |  |  | 8/7/2026    |  |  |            | 7,916,022  |  |       |  | 7,916,047 |               | 
|Deerfield Dakota Holding, LLC (7)        |  | Diversified Financial Services                        |  |               | 4.75% (L + 3.75%)       |             |  | 3/6/2020   |          |  |  | 2/25/2027   |  |  |            | 4,925,000  |  |       |  | 4,862,889 |               | 
|Delek US Holdings, Inc. (4)(7)           |  | Oil, Gas and Consumable Fuels                         |  |               | 6.50% (L + 5.50%)       |             |  | 5/18/2020  |          |  |  | 3/31/2025   |  |  |            | 2,358,000  |  |       |  | 2,239,637 |               | 
|Delta Topco, Inc. (7)                    |  | IT Services                                           |  |               | 4.50% (L + 3.75%)       |             |  | 10/7/2020  |          |  |  | 10/29/2027  |  |  |            | 6,972,481  |  |       |  | 6,966,632 |               | 
|Digi International Inc. (5)(8)           |  | Technology Hardware, Storage and Peripherals          |  |               | 5.50% (L + 5.00%)       |             |  | 12/16/2021 |          |  |  | 12/22/2028  |  |  |            | 6,250,000  |  |       |  | 6,125,000 |               | 
|DIRECTV Financing, LLC (7)               |  | Media                                                 |  |               | 5.75% (L + 5.00%)       |             |  | 7/22/2021  |          |  |  | 8/2/2027    |  |  |            | 5,865,000  |  |       |  | 5,816,327 |               | 
|Dotdash Meredith, Inc. (7)               |  | Media                                                 |  |               | 4.50% (C + SCA + 4.00%) |             |  | 11/23/2021 |          |  |  | 11/23/2028  |  |  |            | 10,000,000 |  |       |  | 9,991,795 |               | 
|EAB Global, Inc. (7)                     |  | Professional Services                                 |  |               | 4.00% (L + 3.50%)       |             |  | 6/28/2021  |          |  |  | 6/28/2028   |  |  |            | 5,000,000  |  |       |  | 4,975,872 |               | 
|ECI Software Solutions, Inc. (7)         |  | Software                                              |  |               | 4.50% (L + 3.75%)       |             |  | 9/17/2020  |          |  |  | 9/30/2027   |  |  |            | 6,934,975  |  |       |  | 6,907,467 |               | 
|ECL Entertainment, LLC (8)               |  | Hotels, Restaurants and Leisure                       |  |               | 8.25% (L + 7.50%)       |             |  | 9/3/2021   |          |  |  | 3/31/2028   |  |  |            | 1,990,000  |  |       |  | 2,033,092 |               | 
|EFS Cogen Holdings I LLC (5)(7)(8)       |  | Independent Power and Renewable Electricity Producers |  |               | 4.50% (L + 3.50%)       |             |  | 9/24/2020  |          |  |  | 10/29/2027  |  |  |            | 7,700,229  |  |       |  | 7,708,062 |               | 
|Endurance International Group, Inc. (7)  |  | Professional Services                                 |  |               | 4.25% (L + 3.50%)       |             |  | 1/27/2021  |          |  |  | 2/10/2028   |  |  |            | 3,233,750  |  |       |  | 3,219,247 |               | 
|Ensemble RCM, LLC (7)                    |  | Healthcare Technology                                 |  |               | 3.88% (L + 3.75%)       |             |  | 4/14/2020  |          |  |  | 7/24/2026   |  |  |            | 5,748,280  |  |       |  | 5,659,044 |               | 
|Enterprise Development Authority (8)     |  | Hotels, Restaurants and Leisure                       |  |               | 5.00% (L + 4.25%)       |             |  | 12/1/2021  |          |  |  | 2/18/2028   |  |  |            | 1,974,359  |  |       |  | 1,974,359 |               | 
|Epicor Software Corporation (7)          |  | Software                                              |  |               | 4.00% (L + 3.25%)       |             |  | 7/23/2020  |          |  |  | 6/1/2022    |  |  |            | 3,950,000  |  |       |  | 3,930,702 |               | 
|Excelitas Technologies Corp. (7)         |  | Industrial Conglomerates                              |  |               | 4.50% (L + 3.50%)       |             |  | 7/21/2021  |          |  |  | 12/2/2024   |  |  |            | 1,989,637  |  |       |  | 1,989,637 |               | 
|Filtration Group Corporation (7)         |  | Industrial Conglomerates                              |  |               | 4.00% (L + 3.50%)       |             |  | 10/19/2021 |          |  |  | 10/20/2028  |  |  |            | 3,990,000  |  |       |  | 3,980,185 |               | 
|Flexera Software LLC (7)(8)              |  | Software                                              |  |               | 4.50% (L + 3.75%)       |             |  | 2/28/2020  |          |  |  | 1/26/2028   |  |  |            | 8,959,368  |  |       |  | 8,935,714 |               | 



F-8







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                                          |  |                                                       |  |               |                     | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |           |  | Fair  |  |           | Percentage    | 
|----------------------------------------- |  | ----------------------------------------------------- |  | ------------- | ------------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | --------- |  | ----- |  | --------- | ------------- | 
|Portfolio Company(3)                      |  | Industry                                              |  | Interest Rate |                     | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |           |  | Value |  |           | of Net Assets | 
|Generation Bridge Acquisition, LLC (5)(8) |  | Electric Utilities                                    |  |               | 5.75% (L + 5.00%)   |             |  | 8/23/2021  |          |  |  | 8/6/2028    |  |  |            | 196,262   |  |       |  | 196,262   |               | 
|Generation Bridge Acquisition, LLC (5)(8) |  | Electric Utilities                                    |  |               | 5.75% (L + 5.00%)   |             |  | 8/23/2021  |          |  |  | 8/6/2028    |  |  |            | 2,803,738 |  |       |  | 2,803,738 |               | 
|Getty Images, Inc. (7)(8)                 |  | Media                                                 |  |               | 4.63% (L + 4.50%)   |             |  | 6/10/2021  |          |  |  | 2/13/2026   |  |  |            | 7,961,137 |  |       |  | 7,984,386 |               | 
|GFL Environmental Inc. (4)(7)             |  | Commercial Services and Supplies                      |  |               | 3.50% (L + 3.00%)   |             |  | 2/20/2020  |          |  |  | 5/30/2025   |  |  |            | 2,596,036 |  |       |  | 2,521,808 |               | 
|Global Medical Response, Inc. (7)         |  | Healthcare Providers and Services                     |  |               | 5.25% (L + 4.25%)   |             |  | 9/24/2020  |          |  |  | 9/24/2025   |  |  |            | 8,938,653 |  |       |  | 8,882,000 |               | 
|Grab Holdings Inc (4)(5)(7)               |  | IT Services                                           |  |               | 5.50% (L + 4.50%)   |             |  | 1/20/2021  |          |  |  | 2/27/2026   |  |  |            | 4,962,488 |  |       |  | 5,027,425 |               | 
|Great Outdoors Group, LLC (7)             |  | Specialty Retail                                      |  |               | 4.50% (L + 3.75%)   |             |  | 2/26/2021  |          |  |  | 3/6/2028    |  |  |            | 7,078,634 |  |       |  | 7,045,910 |               | 
|Grinding Media Inc. (8)                   |  | Metals and Mining                                     |  |               | 4.75% (L + 4.00%)   |             |  | 9/22/2021  |          |  |  | 9/21/2028   |  |  |            | 4,987,500 |  |       |  | 4,963,517 |               | 
|HAH Group Holding Company LLC (7)         |  | Healthcare Providers and Services                     |  |               | 6.00% (L + 5.00%)   |             |  | 10/22/2020 |          |  |  | 10/20/2027  |  |  |            | 3,525,086 |  |       |  | 3,479,561 |               | 
|HAH Group Holding Company LLC (7)         |  | Healthcare Providers and Services                     |  |               | 6.00% (L + 5.00%)   |             |  | 10/22/2020 |          |  |  | 10/22/2027  |  |  |            | 446,034   |  |       |  | 440,286   |               | 
|Hamilton Projects Acquiror LLC (7)(8)     |  | Independent Power and Renewable Electricity Producers |  |               | 5.50% (L + 4.50%)   |             |  | 6/11/2020  |          |  |  | 6/11/2027   |  |  |            | 9,794,600 |  |       |  | 9,741,768 |               | 
|Harbor Freight Tools USA, Inc. (7)        |  | Specialty Retail                                      |  |               | 3.25% (L + 2.75%)   |             |  | 10/14/2020 |          |  |  | 10/19/2027  |  |  |            | 3,465,000 |  |       |  | 3,435,680 |               | 
|Help/Systems Holdings, Inc. (7)           |  | Software                                              |  |               | 4.75% (L + 4.00%)   |             |  | 9/16/2020  |          |  |  | 11/19/2026  |  |  |            | 6,919,736 |  |       |  | 6,874,074 |               | 
|HUB International Limited (7)             |  | Insurance                                             |  |               | 4.00% (L + 3.25%)   |             |  | 4/22/2020  |          |  |  | 4/25/2025   |  |  |            | 3,940,125 |  |       |  | 3,892,565 |               | 
|Hyland Software, Inc. (7)                 |  | Software                                              |  |               | 4.25% (L + 3.50%)   |             |  | 9/25/2020  |          |  |  | 7/1/2024    |  |  |            | 4,956,580 |  |       |  | 4,955,729 |               | 
|Hyperion Refinance S.a.r.l. (4)(7)        |  | Insurance                                             |  |               | 4.00% (L + 3.25%)   |             |  | 1/27/2021  |          |  |  | 11/12/2027  |  |  |            | 6,162,429 |  |       |  | 6,103,569 |               | 
|Idera, Inc. (7)                           |  | IT Services                                           |  |               | 4.50% (L + 3.75%)   |             |  | 2/14/2020  |          |  |  | 6/28/2028   |  |  |            | 9,899,189 |  |       |  | 9,852,953 |               | 
|IMA Financial Group, Inc. (8)             |  | Insurance                                             |  |               | 4.25% (L + 3.75%)   |             |  | 10/14/2021 |          |  |  | 10/16/2028  |  |  |            | 5,000,000 |  |       |  | 4,975,043 |               | 
|Infinite Bidco LLC (7)                    |  | Electronic Equipment, Instruments and Components      |  |               | 4.25% (L + 3.75%)   |             |  | 2/24/2021  |          |  |  | 3/2/2028    |  |  |            | 4,975,000 |  |       |  | 4,956,124 |               | 
|Inmar, Inc. (7)(8)                        |  | Professional Services                                 |  |               | 5.00% (L + 4.00%)   |             |  | 1/24/2020  |          |  |  | 5/1/2024    |  |  |            | 7,925,407 |  |       |  | 7,891,920 |               | 
|IRB Holding Corporation (7)               |  | Hotels, Restaurants and Leisure                       |  |               | 4.25% (L + 3.25%)   |             |  | 11/19/2020 |          |  |  | 11/19/2027  |  |  |            | 6,952,443 |  |       |  | 6,947,309 |               | 
|Ivanti Software, Inc. (7)                 |  | Software                                              |  |               | 4.75% (L + 4.00%)   |             |  | 2/17/2021  |          |  |  | 12/1/2027   |  |  |            | 992,500   |  |       |  | 990,203   |               | 
|Ivanti Software, Inc. (5)(7)              |  | Software                                              |  |               | 5.00% (L + 4.25%)   |             |  | 11/20/2020 |          |  |  | 12/1/2027   |  |  |            | 6,975,000 |  |       |  | 6,921,420 |               | 
|Jack Ohio Finance LLC (8)                 |  | Hotels, Restaurants and Leisure                       |  |               | 5.50% (L + 4.75%)   |             |  | 9/30/2021  |          |  |  | 10/31/2028  |  |  |            | 5,000,000 |  |       |  | 5,002,417 |               | 
|Kestrel Acquisition LLC (7)               |  | Independent Power and Renewable Electricity Producers |  |               | 5.25% (L + 4.25%)   |             |  | 2/25/2020  |          |  |  | 5/2/2025    |  |  |            | 6,914,055 |  |       |  | 6,212,084 |               | 
|Kleopatra Finco S.a.r.l (4)(7)            |  | Containers and Packaging                              |  |               | 5.25% (L + 4.75%)   |             |  | 2/4/2021   |          |  |  | 2/4/2026    |  |  |            | 1,985,000 |  |       |  | 1,976,611 |               | 
|Landry’s Finance Acquisition Co           |  | Hotels, Restaurants and Leisure                       |  |               | 13.00% (L + 12.00%) |             |  | 6/12/2020  |          |  |  | 10/4/2023   |  |  |            | 18,875    |  |       |  | 18,450    |               | 
|LBM Acquisition LLC (5)(7)(8)             |  | Building Products                                     |  |               | 4.50% (L + 3.75%)   |             |  | 12/9/2020  |          |  |  | 12/31/2027  |  |  |            | 5,472,028 |  |       |  | 5,436,335 |               | 
|Life Time, Inc. (4)(7)                    |  | Hotels, Restaurants and Leisure                       |  |               | 5.75% (L + 4.75%)   |             |  | 1/28/2021  |          |  |  | 12/10/2024  |  |  |            | 1,451,838 |  |       |  | 1,451,195 |               | 
|Lifescan Global Corporation (5)(7)        |  | Healthcare Equipment and Supplies                     |  |               | 6.13% (L + 6.00%)   |             |  | 8/20/2021  |          |  |  | 10/1/2024   |  |  |            | 6,744,535 |  |       |  | 6,702,882 |               | 
|Lightstone Holdco, LLC                    |  | Independent Power and Renewable Electricity Producers |  |               | 4.75% (L + 3.75%)   |             |  | 4/7/2020   |          |  |  | 1/30/2024   |  |  |            | 1,609,237 |  |       |  | 1,379,571 |               | 
|Lightstone Holdco, LLC                    |  | Independent Power and Renewable Electricity Producers |  |               | 4.75% (L + 3.75%)   |             |  | 4/7/2020   |          |  |  | 1/30/2024   |  |  |            | 90,763    |  |       |  | 77,809    |               | 





F-9







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021



|                                                     |  |                                                       |  |               |                         | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |            |  | Fair  |  |           | Percentage    | 
|---------------------------------------------------- |  | ----------------------------------------------------- |  | ------------- | ----------------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ---------- |  | ----- |  | --------- | ------------- | 
|Portfolio Company(3)                                 |  | Industry                                              |  | Interest Rate |                         | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |            |  | Value |  |           | of Net Assets | 
|Lions Gate Capital Holdings LLC (4)(7)               |  | Media                                                 |  |               | 2.35% (L + 2.25%)       |             |  | 4/1/2020   |          |  |  | 3/19/2025   |  |  |            | 976,423    |  |       |  | 951,495   |               | 
|LogMeIn, Inc. (7)                                    |  | IT Services                                           |  |               | 4.86% (L + 4.75%)       |             |  | 8/14/2020  |          |  |  | 8/31/2027   |  |  |            | 6,444,950  |  |       |  | 6,365,479 |               | 
|Lucid Energy Group II Borrower, LLC (7)              |  | Oil, Gas and Consumable Fuels                         |  |               | 5.00% (L + 4.25%)       |             |  | 11/22/2021 |          |  |  | 11/22/2028  |  |  |            | 7,000,000  |  |       |  | 6,930,663 |               | 
|Magenta Buyer LLC (7)                                |  | Software                                              |  |               | 5.75% (L + 5.00%)       |             |  | 5/3/2021   |          |  |  | 5/3/2028    |  |  |            | 5,486,250  |  |       |  | 5,436,630 |               | 
|McAfee, LLC (4)(7)                                   |  | Software                                              |  |               | 3.84% (L + 3.75%)       |             |  | 2/26/2020  |          |  |  | 9/30/2024   |  |  |            | 3,040,646  |  |       |  | 3,031,471 |               | 
|Medical Solutions L.L.C. (8)                         |  | Healthcare Providers and Services                     |  |               | 4.00% (L + 3.50%)       |             |  | 10/7/2021  |          |  |  | 10/6/2028   |  |  |            | 4,200,000  |  |       |  | 4,175,369 |               | 
|MetroNet Systems Holdings, LLC (7)(8)                |  | Diversified Telecommunication Services                |  |               | 4.50% (L + 3.75%)       |             |  | 5/26/2021  |          |  |  | 5/26/2028   |  |  |            | 4,975,031  |  |       |  | 4,969,084 |               | 
|Michael Baker International, LLC (8)                 |  | Construction and Engineering                          |  |               | 5.75% (L + 5.00%)       |             |  | 11/2/2021  |          |  |  | 11/2/2028   |  |  |            | 6,250,000  |  |       |  | 6,187,892 |               | 
|Micro Holding Corp. (7)                              |  | IT Services                                           |  |               | 4.75% (L + 3.75%)       |             |  | 6/11/2020  |          |  |  | 9/13/2024   |  |  |            | 9,962,265  |  |       |  | 9,905,089 |               | 
|Midwest Veterinary Partners, LLC (5)(7)              |  | Healthcare Providers and Services                     |  |               | 4.75% (L + 4.00%)       |             |  | 10/29/2021 |          |  |  | 4/27/2028   |  |  |            | 9,987,500  |  |       |  | 9,888,421 |               | 
|Milano Acquisition Corporation (7)                   |  | Healthcare Providers and Services                     |  |               | 4.75% (L + 4.00%)       |             |  | 8/17/2020  |          |  |  | 8/31/2027   |  |  |            | 4,953,722  |  |       |  | 4,905,503 |               | 
|Minotaur Acquisition, Inc. (7)(8)                    |  | Diversified Financial Services                        |  |               | 4.84% (L + 4.75%)       |             |  | 1/24/2020  |          |  |  | 3/27/2026   |  |  |            | 9,060,468  |  |       |  | 9,048,923 |               | 
|Mitchell International, Inc. (7)                     |  | Professional Services                                 |  |               | 4.25% (L + 3.75%)       |             |  | 10/1/2021  |          |  |  | 10/16/2028  |  |  |            | 10,000,000 |  |       |  | 9,926,431 |               | 
|MLN US HoldCo LLC (7)                                |  | Diversified Telecommunication Services                |  |               | 4.60% (L + 4.50%)       |             |  | 11/15/2021 |          |  |  | 12/31/2025  |  |  |            | 4,069,042  |  |       |  | 3,993,846 |               | 
|Moneygram International, Inc. (4)(7)                 |  | Diversified Consumer Services                         |  |               | 5.00% (L + 4.50%)       |             |  | 7/19/2021  |          |  |  | 7/21/2026   |  |  |            | 7,200,000  |  |       |  | 7,175,766 |               | 
|National Mentor Holdings, Inc. (7)                   |  | Healthcare Providers and Services                     |  |               | 4.50% (L + 3.75%)       |             |  | 2/18/2021  |          |  |  | 2/18/2028   |  |  |            | 9,227,133  |  |       |  | 9,201,152 |               | 
|National Mentor Holdings, Inc. (7)                   |  | Healthcare Providers and Services                     |  |               | 4.50% (L + 3.75%)       |             |  | 2/18/2021  |          |  |  | 2/18/2028   |  |  |            | 291,993    |  |       |  | 291,126   |               | 
|Navicure, Inc. (7)                                   |  | Healthcare Technology                                 |  |               | 4.10% (L + 4.00%)       |             |  | 9/15/2020  |          |  |  | 10/22/2026  |  |  |            | 4,673,381  |  |       |  | 4,675,564 |               | 
|Nexus Buyer LLC (7)                                  |  | Professional Services                                 |  |               | 3.85% (L + 3.75%)       |             |  | 3/10/2020  |          |  |  | 10/30/2026  |  |  |            | 6,996,379  |  |       |  | 6,924,176 |               | 
|NMSC Holdings, Inc. (7)                              |  | Healthcare Providers and Services                     |  |               | 6.00% (L + 5.00%)       |             |  | 5/14/2021  |          |  |  | 4/19/2023   |  |  |            | 8,442,209  |  |       |  | 8,421,850 |               | 
|NorthStar Group Services, Inc. (5)(7)(8)             |  | Commercial Services and Supplies                      |  |               | 6.50% (L + 5.50%)       |             |  | 11/9/2020  |          |  |  | 11/9/2026   |  |  |            | 8,879,759  |  |       |  | 8,843,367 |               | 
|NSM Top Holdings Corp. (7)                           |  | Healthcare Equipment and Supplies                     |  |               | 5.35% (L + 5.25%)       |             |  | 10/18/2021 |          |  |  | 11/12/2026  |  |  |            | 4,987,277  |  |       |  | 4,962,950 |               | 
|OneDigital Borrower LLC (7)                          |  | Insurance                                             |  |               | 4.75% (C + SCA + 4.25%) |             |  | 10/30/2020 |          |  |  | 11/16/2027  |  |  |            | 9,970,938  |  |       |  | 9,852,427 |               | 
|Orchid Merger Sub II, LLC (5)(7)                     |  | Software                                              |  |               | 5.25% (L + 4.75%)       |             |  | 11/12/2021 |          |  |  | 5/12/2027   |  |  |            | 3,500,000  |  |       |  | 3,290,000 |               | 
|Oregon Clean Energy, LLC (7)                         |  | Independent Power and Renewable Electricity Producers |  |               | 4.75% (L + 3.75%)       |             |  | 2/25/2020  |          |  |  | 3/2/2026    |  |  |            | 4,887,891  |  |       |  | 4,779,206 |               | 
|Pactiv Evergreen Group Holdings Inc. (4)(7)          |  | Containers and Packaging                              |  |               | 4.00% (L + 3.50%)       |             |  | 9/17/2021  |          |  |  | 9/22/2028   |  |  |            | 2,992,500  |  |       |  | 2,978,041 |               | 
|Padagis LLC (7)                                      |  | Pharmaceuticals                                       |  |               | 5.25% (L + 4.75%)       |             |  | 6/30/2021  |          |  |  | 7/31/2028   |  |  |            | 6,588,235  |  |       |  | 6,550,008 |               | 
|Pathway Vet Alliance LLC (7)                         |  | Healthcare Providers and Services                     |  |               | 3.85% (L + 3.75%)       |             |  | 1/29/2021  |          |  |  | 3/31/2027   |  |  |            | 4,941,089  |  |       |  | 4,876,527 |               | 
|PECF USS Intermediate Holding III Corporation (5)(8) |  | Professional Services                                 |  |               | 4.75% (L + 4.25%)       |             |  | 11/4/2021  |          |  |  | 11/6/2028   |  |  |            | 5,000,000  |  |       |  | 4,987,500 |               | 
|Peraton Corp. (7)(8)                                 |  | IT Services                                           |  |               | 4.50% (L + 3.75%)       |             |  | 2/23/2021  |          |  |  | 2/1/2028    |  |  |            | 8,952,437  |  |       |  | 8,951,088 |               | 



F-10







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                                                     |  |                                        |  |               |                   | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |            |  | Fair  |  |            | Percentage    | 
|---------------------------------------------------- |  | -------------------------------------- |  | ------------- | ----------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ---------- |  | ----- |  | ---------- | ------------- | 
|Portfolio Company(3)                                 |  | Industry                               |  | Interest Rate |                   | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |            |  | Value |  |            | of Net Assets | 
|PetVet Care Centers, LLC (7)                         |  | Healthcare Providers and Services      |  |               | 4.25% (L + 3.50%) |             |  | 2/18/2021  |          |  |  | 2/14/2025   |  |  |            | 6,938,175  |  |       |  | 6,923,597  |               | 
|Phoenix Guarantor Inc. (7)                           |  | Healthcare Providers and Services      |  |               | 3.60% (L + 3.50%) |             |  | 10/2/2020  |          |  |  | 3/5/2026    |  |  |            | 4,950,094  |  |       |  | 4,910,625  |               | 
|PODS, LLC (7)                                        |  | Road and Rail                          |  |               | 3.75% (L + 3.00%) |             |  | 3/19/2021  |          |  |  | 3/31/2028   |  |  |            | 1,985,025  |  |       |  | 1,975,873  |               | 
|PQ Performance Chemicals (7)                         |  | Chemicals                              |  |               | 4.25% (L + 3.50%) |             |  | 4/30/2021  |          |  |  | 4/28/2028   |  |  |            | 5,000,000  |  |       |  | 4,997,651  |               | 
|Prairie ECI Acquiror LP (7)                          |  | Oil, Gas and Consumable Fuels          |  |               | 4.85% (L + 4.75%) |             |  | 11/12/2021 |          |  |  | 3/11/2026   |  |  |            | 7,182,326  |  |       |  | 6,969,074  |               | 
|Presidio Holdings, Inc. (7)                          |  | Professional Services                  |  |               | 3.61% (L + 3.50%) |             |  | 2/28/2020  |          |  |  | 1/31/2027   |  |  |            | 2,364,000  |  |       |  | 2,334,043  |               | 
|Pretium PKG Holdings, Inc. (8)                       |  | Containers and Packaging               |  |               | 4.50% (L + 4.00%) |             |  | 9/22/2021  |          |  |  | 9/22/2028   |  |  |            | 5,000,000  |  |       |  | 4,976,019  |               | 
|Prime Security Services Borrower, LLC (4)(7)         |  | Diversified Consumer Services          |  |               | 3.50% (L + 2.75%) |             |  | 4/20/2020  |          |  |  | 5/2/2022    |  |  |            | 1,782,584  |  |       |  | 1,771,416  |               | 
|Project Alpha Intermediate Holding, Inc. (7)         |  | Software                               |  |               | 4.11% (L + 4.00%) |             |  | 2/10/2021  |          |  |  | 4/26/2024   |  |  |            | 5,916,866  |  |       |  | 5,897,864  |               | 
|Project Boost Purchaser, LLC (7)                     |  | Professional Services                  |  |               | 4.00% (L + 3.50%) |             |  | 6/21/2021  |          |  |  | 6/1/2026    |  |  |            | 5,970,000  |  |       |  | 5,955,902  |               | 
|Proofpoint, Inc. (7)                                 |  | IT Services                            |  |               | 3.75% (L + 3.25%) |             |  | 6/10/2021  |          |  |  | 6/9/2028    |  |  |            | 5,000,000  |  |       |  | 4,976,654  |               | 
|PS Holdco, LLC (8)                                   |  | Road and Rail                          |  |               | 5.00% (L + 4.25%) |             |  | 9/23/2021  |          |  |  | 10/31/2028  |  |  |            | 4,987,500  |  |       |  | 4,963,067  |               | 
|PT Intermediate Holdings III LLC (8)                 |  | Machinery                              |  |               | 6.25% (L + 5.50%) |             |  | 11/10/2021 |          |  |  | 10/15/2025  |  |  |            | 2,320,000  |  |       |  | 2,296,800  |               | 
|PT Intermediate Holdings III LLC (8)                 |  | Machinery                              |  |               | 6.25% (L + 5.50%) |             |  | 11/10/2021 |          |  |  | 11/1/2028   |  |  |            | 1,536,150  |  |       |  | 1,520,799  |               | 
|Quest Software US Holdings Inc (7)                   |  | Software                               |  |               | 4.38% (L + 4.25%) |             |  | 2/5/2020   |          |  |  | 5/16/2025   |  |  |            | 6,934,002  |  |       |  | 6,926,135  |               | 
|Radiate Holdco, LLC (7)                              |  | Media                                  |  |               | 4.00% (L + 3.25%) |             |  | 10/22/2021 |          |  |  | 9/25/2026   |  |  |            | 3,000,000  |  |       |  | 2,992,599  |               | 
|Radiology Partners, Inc. (7)                         |  | Healthcare Providers and Services      |  |               | 4.35% (L + 4.25%) |             |  | 2/26/2020  |          |  |  | 7/9/2025    |  |  |            | 6,000,000  |  |       |  | 5,991,169  |               | 
|RC Buyer, Inc. (7)                                   |  | Auto Components                        |  |               | 4.25% (L + 3.50%) |             |  | 7/26/2021  |          |  |  | 7/28/2028   |  |  |            | 2,094,750  |  |       |  | 2,089,576  |               | 
|RealPage, Inc. (5)(7)                                |  | Real Estate Management and Development |  |               | 3.75% (L + 3.25%) |             |  | 2/18/2021  |          |  |  | 2/18/2028   |  |  |            | 6,982,500  |  |       |  | 6,971,036  |               | 
|Red Planet Borrower, LLC (7)                         |  | Internet Software and Services         |  |               | 4.25% (L + 3.75%) |             |  | 9/23/2021  |          |  |  | 10/2/2028   |  |  |            | 7,980,000  |  |       |  | 7,940,911  |               | 
|Redstone Holdco 2 LP (7)(8)                          |  | IT Services                            |  |               | 5.50% (L + 4.75%) |             |  | 4/16/2021  |          |  |  | 4/14/2028   |  |  |            | 7,980,000  |  |       |  | 7,924,198  |               | 
|RegionalCare Hospital Partners Holdings, Inc. (5)(7) |  | Healthcare Providers and Services      |  |               | 3.85% (L + 3.75%) |             |  | 2/11/2020  |          |  |  | 11/14/2025  |  |  |            | 5,028,873  |  |       |  | 5,019,995  |               | 
|Rocket Software, Inc. (7)                            |  | Software                               |  |               | 4.75% (L + 4.25%) |             |  | 9/2/2021   |          |  |  | 11/28/2025  |  |  |            | 4,982,481  |  |       |  | 4,956,315  |               | 
|Rodan & Fields, LLC (7)                              |  | Textiles, Apparel and Luxury Goods     |  |               | 4.11% (L + 4.00%) |             |  | 3/4/2021   |          |  |  | 6/16/2025   |  |  |            | 1,732,051  |  |       |  | 1,524,775  |               | 
|Rohm Holding GMBH (4)(7)(8)                          |  | Chemicals                              |  |               | 4.90% (L + 4.75%) |             |  | 2/2/2021   |          |  |  | 7/31/2026   |  |  |            | 8,936,606  |  |       |  | 8,917,170  |               | 
|RSC Acquisition, Inc. (8)                            |  | Insurance                              |  |               | 6.25% (L + 5.50%) |             |  | 11/1/2021  |          |  |  | 10/30/2026  |  |  |            | 1,731,928  |  |       |  | 1,714,630  |               | 
|RSC Acquisition, Inc. (8)(10)                        |  | Insurance                              |  |               | 6.25% (L + 5.50%) |             |  | 11/1/2021  |          |  |  | 10/30/2026  |  |  |            | 527,108    |  |       |  | 489,464    |               | 
|RSC Acquisition, Inc. (8)                            |  | Insurance                              |  |               | 6.25% (L + 5.50%) |             |  | 11/1/2021  |          |  |  | 9/30/2026   |  |  |            | 753,012    |  |       |  | 745,646    |               | 
|Runner Buyer Inc. (8)                                |  | Household Durables                     |  |               | 6.25% (L + 5.50%) |             |  | 10/13/2021 |          |  |  | 10/20/2028  |  |  |            | 5,000,000  |  |       |  | 4,950,645  |               | 
|Ryan Specialty Group LLC (4)(7)                      |  | Insurance                              |  |               | 3.75% (L + 3.00%) |             |  | 7/23/2020  |          |  |  | 9/1/2027    |  |  |            | 1,975,000  |  |       |  | 1,962,730  |               | 
|Sabert Corporation (7)(8)                            |  | Containers and Packaging               |  |               | 5.50% (L + 4.50%) |             |  | 2/26/2020  |          |  |  | 11/26/2026  |  |  |            | 7,122,923  |  |       |  | 7,125,462  |               | 
|Severin Acquisition, LLC (7)                         |  | Diversified Consumer Services          |  |               | 3.10% (L + 3.00%) |             |  | 2/26/2020  |          |  |  | 8/31/2025   |  |  |            | 3,721      |  |       |  | 3,599      |               | 
|Shearer’s Foods, LLC (7)                             |  | Food Products                          |  |               | 4.25% (L + 3.50%) |             |  | 9/15/2020  |          |  |  | 9/23/2027   |  |  |            | 1,691,137  |  |       |  | 1,680,722  |               | 
|Sophia, L.P. (7)                                     |  | Software                               |  |               | 4.25% (L + 3.50%) |             |  | 9/23/2020  |          |  |  | 10/7/2027   |  |  |            | 4,950,094  |  |       |  | 4,918,451  |               | 
|Sotera Health Holdings, LLC (7)                      |  | Healthcare Equipment and Supplies      |  |               | 3.25% (L + 2.75%) |             |  | 1/15/2021  |          |  |  | 12/11/2026  |  |  |            | 4,000,000  |  |       |  | 4,000,000  |               | 
|Sovos Compliance, LLC (8)                            |  | Software                               |  |               | 5.00% (L + 4.50%) |             |  | 7/29/2021  |          |  |  | 7/28/2028   |  |  |            | 3,410,959  |  |       |  | 3,402,432  |               | 
|Specialty Building Products Holdings, LLC (5)(7)(8)  |  | Building Products                      |  |               | 4.25% (L + 3.75%) |             |  | 10/5/2021  |          |  |  | 10/5/2028   |  |  |            | 10,000,000 |  |       |  | 10,016,507 |               | 
|Springer Nature Deutschland GmbH (4)(7)              |  | Media                                  |  |               | 3.75% (L + 3.00%) |             |  | 2/26/2021  |          |  |  | 8/14/2026   |  |  |            | 2,086,931  |  |       |  | 2,082,809  |               | 



F-11







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                                              |  |                                                       |  |               |                         | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |               |  | Fair  |   |               | Percentage    | 
|--------------------------------------------- |  | ----------------------------------------------------- |  | ------------- | ----------------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ------------- |  | ----- | - | ------------- | ------------- | 
|Portfolio Company(3)                          |  | Industry                                              |  | Interest Rate |                         | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |               |  | Value |   |               | of Net Assets | 
|Summer BC Holdco B LLC (4)(8)                 |  | Media                                                 |  |               | 5.25% (L + 4.50%)       |             |  | 9/2/2021   |          |  |  | 12/4/2026   |  |  |            | 4,987,500     |  |       |   | 4,993,734     |               | 
|Surf Holdings, LLC (7)                        |  | IT Services                                           |  |               | 3.69% (L + 3.50%)       |             |  | 4/16/2020  |          |  |  | 1/15/2027   |  |  |            | 1,970,012     |  |       |   | 1,881,892     |               | 
|Surgery Center Holdings, Inc. (7)             |  | Healthcare Providers and Services                     |  |               | 4.50% (L + 3.75%)       |             |  | 4/30/2021  |          |  |  | 9/3/2026    |  |  |            | 4,714,375     |  |       |   | 4,692,584     |               | 
|Talen Energy Supply, LLC (7)                  |  | Independent Power and Renewable Electricity Producers |  |               | 3.85% (L + 3.75%)       |             |  | 4/9/2020   |          |  |  | 6/26/2026   |  |  |            | 3,866,834     |  |       |   | 3,675,471     |               | 
|Tecta America Corp. (7)(8)                    |  | Construction and Engineering                          |  |               | 5.00% (L + 4.25%)       |             |  | 4/20/2021  |          |  |  | 4/6/2028    |  |  |            | 6,172,249     |  |       |   | 6,180,294     |               | 
|The Edelman Financial Engines Centre, LLC (7) |  | Diversified Financial Services                        |  |               | 4.25% (L + 3.50%)       |             |  | 4/13/2020  |          |  |  | 4/7/2028    |  |  |            | 7,939,714     |  |       |   | 7,850,378     |               | 
|Thryv, Inc. (4)(7)                            |  | Professional Services                                 |  |               | 9.50% (L + 8.50%)       |             |  | 2/18/2021  |          |  |  | 2/18/2026   |  |  |            | 6,011,096     |  |       |   | 6,022,690     |               | 
|TIBCO Software Inc (7)                        |  | Software                                              |  |               | 3.85% (L + 3.75%)       |             |  | 2/13/2020  |          |  |  | 6/30/2026   |  |  |            | 2,955,000     |  |       |   | 2,948,675     |               | 
|Tidal Power Holdings, LLC (4)(7)              |  | Independent Power and Renewable Electricity Producers |  |               | 4.75% (L + 3.75%)       |             |  | 4/1/2021   |          |  |  | 4/1/2027    |  |  |            | 4,252,248     |  |       |   | 4,229,645     |               | 
|Tiger Acquisition, LLC (7)                    |  | Industrial Conglomerates                              |  |               | 3.75% (L + 3.25%)       |             |  | 10/12/2021 |          |  |  | 5/19/2028   |  |  |            | 2,992,500     |  |       |   | 2,981,347     |               | 
|Titan US Finco, LLC (4)(8)                    |  | Media                                                 |  |               | 4.50% (L + 4.00%)       |             |  | 10/7/2021  |          |  |  | 10/6/2028   |  |  |            | 6,000,000     |  |       |   | 5,985,062     |               | 
|Torrid, LLC (4)(8)                            |  | Specialty Retail                                      |  |               | 6.25% (L + 5.50%)       |             |  | 10/12/2021 |          |  |  | 5/19/2028   |  |  |            | 2,000,000     |  |       |   | 2,022,001     |               | 
|Tory Burch LLC (7)                            |  | Specialty Retail                                      |  |               | 3.50% (L + 3.00%)       |             |  | 4/15/2021  |          |  |  | 4/14/2028   |  |  |            | 1,990,000     |  |       |   | 1,971,658     |               | 
|Tosca Services, LLC (7)                       |  | Containers and Packaging                              |  |               | 4.25% (L + 3.50%)       |             |  | 2/19/2021  |          |  |  | 8/18/2027   |  |  |            | 2,970,000     |  |       |   | 2,957,856     |               | 
|Traverse Midstream Partners LLC (7)           |  | Oil, Gas and Consumable Fuels                         |  |               | 5.25% (C + SCA + 4.25%) |             |  | 8/20/2020  |          |  |  | 9/27/2024   |  |  |            | 5,673,975     |  |       |   | 5,385,313     |               | 
|Triton Water Holdings, Inc. (7)               |  | Food Products                                         |  |               | 4.00% (L + 3.50%)       |             |  | 3/17/2021  |          |  |  | 3/31/2028   |  |  |            | 4,975,001     |  |       |   | 4,958,709     |               | 
|Truck Hero, Inc. (7)                          |  | Auto Components                                       |  |               | 4.00% (L + 3.25%)       |             |  | 1/20/2021  |          |  |  | 1/20/2028   |  |  |            | 7,051,725     |  |       |   | 7,041,693     |               | 
|U.S. Renal Care, Inc. (7)(8)                  |  | Healthcare Providers and Services                     |  |               | 5.13% (L + 5.00%)       |             |  | 4/8/2020   |          |  |  | 6/26/2026   |  |  |            | 8,911,817     |  |       |   | 8,759,285     |               | 
|U.S. Renal Care, Inc. (7)                     |  | Healthcare Providers and Services                     |  |               | 6.50% (L + 5.50%)       |             |  | 4/23/2021  |          |  |  | 6/26/2026   |  |  |            | 498,750       |  |       |   | 492,009       |               | 
|U.S. Silica Company (4)(7)                    |  | Metals and Mining                                     |  |               | 5.00% (L + 4.00%)       |             |  | 3/9/2021   |          |  |  | 4/25/2025   |  |  |            | 7,945,544     |  |       |   | 7,762,054     |               | 
|Ultimate Software Group, The (7)              |  | Software                                              |  |               | 3.85% (L + 3.75%)       |             |  | 2/28/2020  |          |  |  | 4/8/2026    |  |  |            | 4,411,006     |  |       |   | 4,392,996     |               | 
|United Airlines, Inc. (4)(7)                  |  | Airlines                                              |  |               | 4.50% (L + 3.75%)       |             |  | 9/2/2021   |          |  |  | 4/21/2028   |  |  |            | 7,967,400     |  |       |   | 8,034,531     |               | 
|Univision Communications Inc. (7)             |  | Media                                                 |  |               | 4.00% (L + 3.25%)       |             |  | 6/15/2020  |          |  |  | 3/13/2026   |  |  |            | 4,121,311     |  |       |   | 4,008,960     |               | 
|US Radiology Specialists, Inc. (5)(7)         |  | Healthcare Providers and Services                     |  |               | 6.00% (L + 5.25%)       |             |  | 12/11/2020 |          |  |  | 12/10/2027  |  |  |            | 8,970,000     |  |       |   | 8,862,961     |               | 
|VeriFone Systems, Inc. (7)                    |  | Commercial Services and Supplies                      |  |               | 4.18% (L + 4.00%)       |             |  | 3/4/2020   |          |  |  | 8/20/2025   |  |  |            | 2,976,982     |  |       |   | 2,936,772     |               | 
|Verscend Holding Corp. (7)                    |  | Healthcare Technology                                 |  |               | 4.10% (L + 4.00%)       |             |  | 3/6/2020   |          |  |  | 8/27/2025   |  |  |            | 6,126,073     |  |       |   | 6,110,295     |               | 
|Vision Solutions, Inc. (7)                    |  | IT Services                                           |  |               | 4.75% (L + 4.00%)       |             |  | 3/19/2021  |          |  |  | 4/24/2028   |  |  |            | 9,975,000     |  |       |   | 9,944,077     |               | 
|Watlow Electric Manufacturing Company (5)(7)  |  | Electrical Equipment                                  |  |               | 4.25% (L + 3.75%)       |             |  | 4/19/2021  |          |  |  | 3/2/2028    |  |  |            | 5,101,525     |  |       |   | 5,115,092     |               | 
|Whatabrands LLC (7)                           |  | Hotels, Restaurants and Leisure                       |  |               | 3.75% (L + 3.25%)       |             |  | 7/21/2021  |          |  |  | 7/21/2028   |  |  |            | 2,400,000     |  |       |   | 2,388,461     |               | 
|White Cap Buyer LLC (5)(7)(8)                 |  | Building Products                                     |  |               | 4.50% (L + 4.00%)       |             |  | 10/8/2020  |          |  |  | 10/8/2027   |  |  |            | 6,959,924     |  |       |   | 6,949,443     |               | 
|Wilsonart LLC (7)(8)                          |  | Building Products                                     |  |               | 4.50% (L + 3.50%)       |             |  | 3/19/2021  |          |  |  | 12/18/2026  |  |  |            | 7,949,623     |  |       |   | 7,945,181     |               | 
|Zelis Cost Management Buyer, Inc. (7)         |  | Healthcare Technology                                 |  |               | 3.60% (L + 3.50%)       |             |  | 2/1/2021   |          |  |  | 9/30/2026   |  |  |            | 4,792,714     |  |       |   | 4,784,986     |               | 
|Total First Lien Senior Secured               |  |                                                       |  |               |                         |             |  |            |          |  |  |             |  |  |            | 1,012,130,228 |  |       | $ | 1,003,839,402 |               | 
|                                              |  |                                                       |  |               |                         |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Second Lien Senior Secured(2)                 |  |                                                       |  |               |                         |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Almonde, Inc. (5)                             |  | Software                                              |  |               | 8.25% (L + 7.25%)       |             |  | 11/4/2021  |          |  |  | 4/28/2025   |  |  |            | 3,000,000     |  |       |   | 3,003,750     |               | 
|ARC Falcon I Inc. (7)                         |  | Chemicals                                             |  |               | 7.50% (L + 7.00%)       |             |  | 9/22/2021  |          |  |  | 9/24/2029   |  |  |            | 2,000,000     |  |       |   | 1,980,393     |               | 
|Artera Services, LLC (7)                      |  | Construction and Engineering                          |  |               | 8.25% (L + 7.25%)       |             |  | 5/12/2020  |          |  |  | 3/6/2026    |  |  |            | 7,810,000     |  |       |   | 7,423,359     |               | 
|Aruba Investments, Inc. (7)                   |  | Chemicals                                             |  |               | 8.50% (L + 7.75%)       |             |  | 10/28/2020 |          |  |  | 10/27/2028  |  |  |            | 2,350,000     |  |       |   | 2,316,709     |               | 





F-12







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021



|                                           |  |                                                  |  |               |                   | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |               |  | Fair  |   |               | Percentage    | 
|------------------------------------------ |  | ------------------------------------------------ |  | ------------- | ----------------- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ------------- |  | ----- | - | ------------- | ------------- | 
|Portfolio Company(3)                       |  | Industry                                         |  | Interest Rate |                   | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |               |  | Value |   |               | of Net Assets | 
|Asurion, LLC (5)(7)                        |  | Insurance                                        |  |               | 5.35% (L + 5.25%) |             |  | 7/15/2021  |          |  |  | 1/19/2029   |  |  |            | 6,000,000     |  |       |   | 5,960,590     |               | 
|Curium BidCo S.a r.l. (4)(5)               |  | Pharmaceuticals                                  |  |               | 8.50% (L + 7.75%) |             |  | 11/9/2021  |          |  |  | 10/27/2028  |  |  |            | 3,000,000     |  |       |   | 3,052,500     |               | 
|DCert Buyer, Inc. (7)                      |  | IT Services                                      |  |               | 7.10% (L + 7.00%) |             |  | 2/16/2021  |          |  |  | 2/19/2029   |  |  |            | 1,500,000     |  |       |   | 1,496,858     |               | 
|Energy Acquisition LP (5)                  |  | Electrical Equipment                             |  |               | 8.50% (L + 8.50%) |             |  | 11/16/2021 |          |  |  | 6/25/2026   |  |  |            | 2,812,400     |  |       |   | 2,720,196     |               | 
|Epicor Software Corporation (5)(7)         |  | Software                                         |  |               | 8.75% (L + 7.75%) |             |  | 7/23/2020  |          |  |  | 7/31/2028   |  |  |            | 3,000,000     |  |       |   | 3,041,862     |               | 
|Help/Systems Holdings, Inc.                |  | Software                                         |  |               | 7.50% (L + 6.75%) |             |  | 11/16/2021 |          |  |  | 11/19/2027  |  |  |            | 3,656,217     |  |       |   | 3,665,199     |               | 
|Idera, Inc.                                |  | IT Services                                      |  |               | 7.50% (L + 6.75%) |             |  | 11/4/2021  |          |  |  | 2/5/2029    |  |  |            | 3,000,000     |  |       |   | 3,029,512     |               | 
|Infinite Bidco LLC (5)(7)                  |  | Electronic Equipment, Instruments and Components |  |               | 7.50% (L + 7.00%) |             |  | 2/24/2021  |          |  |  | 2/24/2029   |  |  |            | 2,743,333     |  |       |   | 2,738,086     |               | 
|Inmar, Inc. (7)                            |  | Professional Services                            |  |               | 9.00% (L + 8.00%) |             |  | 7/15/2021  |          |  |  | 5/1/2025    |  |  |            | 5,000,000     |  |       |   | 5,007,347     |               | 
|Ivanti Software, Inc. (5)                  |  | Software                                         |  |               | 7.75% (L + 7.25%) |             |  | 12/1/2021  |          |  |  | 12/1/2028   |  |  |            | 2,000,000     |  |       |   | 2,000,000     |               | 
|Magenta Buyer LLC                          |  | Software                                         |  |               | 9.00% (L + 8.25%) |             |  | 11/4/2021  |          |  |  | 5/3/2029    |  |  |            | 3,000,000     |  |       |   | 2,985,021     |               | 
|Peraton Corp.                              |  | IT Services                                      |  |               | 8.50% (L + 7.75%) |             |  | 11/1/2021  |          |  |  | 2/26/2029   |  |  |            | 3,000,000     |  |       |   | 3,066,820     |               | 
|Pretium PKG Holdings, Inc. (7)             |  | Containers and Packaging                         |  |               | 7.25% (L + 6.75%) |             |  | 9/22/2021  |          |  |  | 9/21/2029   |  |  |            | 2,000,000     |  |       |   | 1,980,887     |               | 
|Quest Software US Holdings Inc (7)         |  | Software                                         |  |               | 8.38% (L + 8.25%) |             |  | 2/11/2020  |          |  |  | 5/18/2026   |  |  |            | 3,347,000     |  |       |   | 3,331,490     |               | 
|TIBCO Software Inc (5)                     |  | Software                                         |  |               | 7.35% (L + 7.25%) |             |  | 11/2/2021  |          |  |  | 2/28/2028   |  |  |            | 2,500,000     |  |       |   | 2,509,375     |               | 
|Vision Solutions, Inc.                     |  | IT Services                                      |  |               | 8.00% (L + 7.25%) |             |  | 11/4/2021  |          |  |  | 4/23/2029   |  |  |            | 3,000,000     |  |       |   | 3,007,499     |               | 
|Total Second Lien Senior Secured           |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            | 64,718,950    |  |       |   | 64,317,453    |               | 
|                                           |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Corporate Bonds                            |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Diebold Inc (4)                            |  | Diversified Consumer Services                    |  |               | 8.50%             |             |  | 11/5/2021  |          |  |  | 4/15/2024   |  |  |            | 1,000,000     |  |       |   | 1,002,202     |               | 
|KOBE US Midco 2 Inc                        |  | Chemicals                                        |  |               | 9.25%             |             |  | 11/8/2021  |          |  |  | 11/1/2026   |  |  |            | 1,900,000     |  |       |   | 1,881,394     |               | 
|Total Corporate Bonds                      |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            | 2,900,000     |  |       |   | 2,883,596     |               | 
|                                           |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Convertible Bonds                          |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|Dish Network Corp (4)                      |  | Media                                            |  |               | 3.38%             |             |  | 4/21/2021  |          |  |  | 8/15/2026   |  |  |            | 1,000,000     |  |       |   | 1,021,974     |               | 
|Total Convertible Bonds                    |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            | 1,000,000     |  |       |   | 1,021,974     |               | 
|Total Debt Investments                     |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            | 1,080,749,178 |  |       | $ | 1,072,062,425 |               | 
|                                           |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|CLO Mezzanine(2)                           |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            |               |  |       |   |               |               | 
|522 Funding CLO 2020-6, Ltd. (4)           |  | Structured Note                                  |  |               | 8.17% (L + 8.04%) |             |  | 11/9/2021  |          |  |  | 10/23/2034  |  |  |            | 2,800,000     |  |       |   | 2,717,549     |               | 
|Barings CLO Ltd (4)                        |  | Structured Note                                  |  |               | 6.88% (L + 6.75%) |             |  | 1/24/2020  |          |  |  | 1/20/2028   |  |  |            | 2,000,000     |  |       |   | 1,922,263     |               | 
|Carlyle US CLO 2020-2, Ltd (4)             |  | Structured Note                                  |  |               | 8.66% (L + 8.53%) |             |  | 11/5/2021  |          |  |  | 1/25/2035   |  |  |            | 4,000,000     |  |       |   | 3,880,576     |               | 
|Elmwood CLO III Ltd. (4)                   |  | Structured Note                                  |  |               | 7.86% (L + 7.74%) |             |  | 10/28/2021 |          |  |  | 10/20/2034  |  |  |            | 2,000,000     |  |       |   | 1,921,030     |               | 
|GoldenTree Loan Management US 2020-7A (4)  |  | Structured Note                                  |  |               | 7.88% (L + 7.50%) |             |  | 11/17/2021 |          |  |  | 4/20/2034   |  |  |            | 2,000,000     |  |       |   | 1,886,090     |               | 
|GoldenTree Loan Management US 2021-10A (4) |  | Structured Note                                  |  |               | 7.92% (L + 7.79%) |             |  | 6/28/2021  |          |  |  | 7/20/2034   |  |  |            | 1,250,000     |  |       |   | 1,213,704     |               | 
|GoldenTree Loan Management US 2021-9A (4)  |  | Structured Note                                  |  |               | 6.88% (L + 6.75%) |             |  | 11/4/2021  |          |  |  | 1/20/2033   |  |  |            | 2,000,000     |  |       |   | 1,886,518     |               | 
|HPS Loan Management Series 15A-19 (4)      |  | Structured Note                                  |  |               | 6.73% (L + 6.60%) |             |  | 8/26/2020  |          |  |  | 7/22/2032   |  |  |            | 1,500,000     |  |       |   | 1,409,524     |               | 
|Magnetite CLO Ltd 2015-16A (4)             |  | Structured Note                                  |  |               | 6.62% (L + 6.50%) |             |  | 8/11/2020  |          |  |  | 1/18/2028   |  |  |            | 1,000,000     |  |       |   | 810,847       |               | 
|Thayer Park CLO, Ltd. (4)                  |  | Structured Note                                  |  |               | 9.00% (L + 8.87%) |             |  | 12/15/2021 |          |  |  | 4/20/2034   |  |  |            | 1,300,000     |  |       |   | 1,259,186     |               | 
|Total CLO Mezzanine                        |  |                                                  |  |               |                   |             |  |            |          |  |  |             |  |  |            | 19,850,000    |  |       |   | 18,907,287    |               | 



F-13







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2021





|                               |  |                              |  |               |    | Acquisition |  |            | Maturity |  |  | Principal / |  |  | Amortized  |            |  | Fair  |  |            | Percentage    | 
|------------------------------ |  | ---------------------------- |  | ------------- | -- | ----------- |  | ---------- | -------- |  |  | ----------- |  |  | ---------- | ---------- |  | ----- |  | ---------- | ------------- | 
|Portfolio Company(3)           |  | Industry                     |  | Interest Rate |    | Date        |  |            | Date     |  |  | Par         |  |  | Cost(1)(6) |            |  | Value |  |            | of Net Assets | 
|CLO Equity                     |  |                              |  |               |    |             |  |            |          |  |  |             |  |  |            |            |  |       |  |            |               | 
|Ares CLO LTD 2021-62A (4)      |  | Structured Subordinated Note |  |               | NA |             |  | 11/18/2021 |          |  |  | 1/25/2034   |  |  |            | 5,000,000  |  |       |  | 4,620,000  |               | 
|Dryden 86 CLO, Ltd. (4)        |  | Structured Subordinated Note |  |               | NA |             |  | 11/16/2021 |          |  |  | 7/17/2030   |  |  |            | 6,000,000  |  |       |  | 4,695,000  |               | 
|Long Point Park CLO, Ltd. (4)  |  | Structured Subordinated Note |  |               | NA |             |  | 11/17/2021 |          |  |  | 1/17/2030   |  |  |            | 6,358,000  |  |       |  | 4,332,977  |               | 
|Regatta XII Funding Ltd. (4)   |  | Structured Subordinated Note |  |               | NA |             |  | 11/17/2021 |          |  |  | 10/15/2032  |  |  |            | 6,000,000  |  |       |  | 4,710,000  |               | 
|Stratus CLO Series 2021-1A (4) |  | Structured Subordinated Note |  |               | NA |             |  | 11/15/2021 |          |  |  | 12/29/2029  |  |  |            | 2,000,000  |  |       |  | 1,743,200  |               | 
|Total CLO Equity               |  |                              |  |               |    |             |  |            |          |  |  |             |  |  |            | 25,358,000 |  |       |  | 20,101,177 |               | 



|                                   |  |                                  |  |  |    |  |  |          |  |  |  | Number of |  |  |      |            |  | Fair  |  |            | Percentage    | 
|---------------------------------- |  | -------------------------------- |  |  | -- |  |  | -------- |  |  |  | --------- |  |  | ---- | ---------- |  | ----- |  | ---------- | ------------- | 
|                                   |  |                                  |  |  |    |  |  |          |  |  |  | Shares    |  |  | Cost |            |  | Value |  |            | of Net Assets | 
|Equity Investments                 |  |                                  |  |  |    |  |  |          |  |  |  |           |  |  |      |            |  |       |  |            |               | 
|Custom Truck One Source Inc (4)    |  | Commercial Services and Supplies |  |  | NA |  |  | 4/1/2021 |  |  |  | NA        |  |  |      | 100,000    |  |       |  | 500,000    |               | 
|Total Equity Investments           |  |                                  |  |  |    |  |  |          |  |  |  |           |  |  |      | 100,000    |  |       |  | 500,000    |               | 
|Total Equity and Other Investments |  |                                  |  |  |    |  |  |          |  |  |  |           |  |  |      | 45,308,000 |  |       |  | 39,508,464 |               | 



|                                                                                        |  | Number of |            |  |      |   |               | Fair  |  |   | Percentage    |  
|--------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ------------- | ----- |  | - | ------------- | -
|                                                                                        |  | Shares    |            |  | Cost |   |               | Value |  |   | of Net Assets |  
|Short-Term Investments                                                                  |  |           |            |  |      |   |               |       |  |   |               |  
|Fidelity Investments Money Market Government Portfolio - Institutional Class, 0.01% (9) |  |           | 78,142,764 |  |      |   | 78,142,764    |       |  |   | 78,142,764    |  
|Total Short-Term Investments                                                            |  |           | 78,142,764 |  |      | $ | 78,142,764    |       |  | $ | 78,142,764    |  
|                                                                                        |  |           |            |  |      |   |               |       |  |   |               |  
|Total Investments                                                                       |  |           |            |  |      | $ | 1,189,713,653 |       |  | $ | 1,194,257,584 |  
|Liabilities in Excess of Other Assets                                                   |  |           |            |  |      |   |               |       |  |   | (741,459,996  | )
|Net Assets                                                                              |  |           |            |  |      |   |               |       |  | $ | 452,797,588   |  









|(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 a) the London Interbank Offered Rate (“LIBOR”
or “L”) (which can include one-, two-, three- or six-month LIBOR) or b) the CME Term Secured Overnight Financing Rate (“SOFR”
or “S”) (which can include one-, three-, or six-month SOFR), which resets periodically based on the terms of the loan agreement.
At the borrower’s option, loans may instead reference an alternate base rate (which can include the Federal Funds Effective Rate or the
Prime Rate), which also resets periodically based on the terms of the loan agreements. Loans that reference SOFR may include a Credit
Spread Adjustment (“CSA”), where the CSA is a defined additional spread amount based on the tenor of SOFR the borrower selects
(making the reference rate S+CSA). 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. For the avoidance of doubt, loan floors apply to S+CSA, not S.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | As of December 31, 2021, 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, 2021, 13.3% 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. (“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).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | 7-day effective yield as of December 31, 2021.
|--- | ----------------------------------------------

|(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 statements.



F-14







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020



|                                                 |  |                                                       |  | Interest          |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |           |  | Percentage of |  
|------------------------------------------------ |  | ----------------------------------------------------- |  | ----------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | --------- |  | ------------- | -
|Portfolio
    Company(3)                         |  | Industry                                              |  | Rate              |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |           |  | Net Assets    |  
|Debt
    Investments                             |  |                                                       |  |                   |  |             |            |  |          |  |            |             |  |  |            |  |  |       |           |  |               |  
|First
    Lien Senior Secured(2)                 |  |                                                       |  |                   |  |             |            |  |          |  |            |             |  |  |            |  |  |       |           |  |               |  
|Academy,
    Ltd. (4)(7)                         |  | Specialty Retail                                      |  | 5.75% (L + 5.00%) |  |             | 10/28/2020 |  |          |  | 10/28/2027 |             |  |  | 2,500,000  |  |  | $     | 2,475,456 |  |               | $
|Acrisure, LLC
    (7)                            |  | Insurance                                             |  | 3.65% (L + 3.50%) |  |             | 1/31/2020  |  |          |  | 2/12/2027  |             |  |  | 4,962,500  |  |  |       | 4,952,070 |  |               |  
|AI Convoy (Luxembourg)
    S.a.r.l. (7)          |  | Aerospace and Defense                                 |  | 4.50% (L + 3.50%) |  |             | 4/14/2020  |  |          |  | 1/29/2027  |             |  |  | 4,367,000  |  |  |       | 4,228,081 |  |               |  
|Albany Molecular
    Research, Inc. (7)          |  | Healthcare Providers and Services                     |  | 4.25% (L + 3.25%) |  |             | 2/20/2020  |  |          |  | 8/28/2024  |             |  |  | 4,949,493  |  |  |       | 4,925,181 |  |               |  
|Alera Group
    Intermediate Holdings, Inc. (7)  |  | Insurance                                             |  | 4.50% (L + 4.00%) |  |             | 2/3/2020   |  |          |  | 8/1/2025   |             |  |  | 5,453,360  |  |  |       | 5,396,423 |  |               |  
|AlixPartners,
    LLP (7)                        |  | Diversified Financial Services                        |  | 2.65% (L + 2.50%) |  |             | 4/13/2020  |  |          |  | 4/30/2024  |             |  |  | 2,475,542  |  |  |       | 2,415,423 |  |               |  
|Alliant Holdings
    Intermediate LLC (7)        |  | Insurance                                             |  | 3.40% (L + 3.25%) |  |             | 1/27/2020  |  |          |  | 5/9/2025   |             |  |  | 3,703,695  |  |  |       | 3,430,767 |  |               |  
|Alliant Holdings
    Intermediate LLC (7)        |  | Insurance                                             |  | 4.25% (L + 3.75%) |  |             | 10/8/2020  |  |          |  | 10/8/2027  |             |  |  | 996,731    |  |  |       | 989,410   |  |               |  
|Alphabet Holding
    Company, Inc. (7)           |  | Food Products                                         |  | 3.65% (L + 3.50%) |  |             | 1/24/2020  |  |          |  | 9/26/2024  |             |  |  | 2,971,847  |  |  |       | 2,841,691 |  |               |  
|Alterra Mountain
    Company (7)                 |  | Hotels, Restaurants and Leisure                       |  | 5.50% (L + 4.50%) |  |             | 5/13/2020  |  |          |  | 8/31/2026  |             |  |  | 2,007,369  |  |  |       | 1,990,823 |  |               |  
|Alterra Mountain
    Company (7)                 |  | Hotels, Restaurants and Leisure                       |  | 2.90% (L + 2.75%) |  |             | 4/13/2020  |  |          |  | 6/28/2024  |             |  |  | 2,976,982  |  |  |       | 2,825,365 |  |               |  
|Amentum Government
    Services Holdings LLC (7) |  | Construction and Engineering                          |  | 3.65% (L + 3.50%) |  |             | 3/19/2020  |  |          |  | 2/26/2027  |             |  |  | 4,477,500  |  |  |       | 4,213,933 |  |               |  
|Amentum Government
    Services Holdings LLC (7) |  | Construction and Engineering                          |  | 5.50% (L + 4.75%) |  |             | 10/29/2020 |  |          |  | 1/29/2027  |             |  |  | 1,500,000  |  |  |       | 1,470,381 |  |               |  
|American Rock
    Salt Company LLC (7)           |  | Metals and Mining                                     |  | 4.50% (L + 3.50%) |  |             | 2/28/2020  |  |          |  | 3/21/2025  |             |  |  | 4,766,715  |  |  |       | 4,744,813 |  |               |  
|AmWINS Group,
    Inc. (7)                       |  | Insurance                                             |  | 3.75% (L + 2.75%) |  |             | 3/2/2020   |  |          |  | 2/28/2024  |             |  |  | 4,458,648  |  |  |       | 4,410,908 |  |               |  
|Amynta Agency
    Borrower, Inc. (7)             |  | Insurance                                             |  | 4.65% (L + 4.50%) |  |             | 2/13/2020  |  |          |  | 2/28/2025  |             |  |  | 4,996,250  |  |  |       | 4,795,887 |  |               |  
|APLP Holdings
    Limited Partnership (4)(7)     |  | Independent Power and Renewable Electricity Producers |  | 3.50% (L + 2.50%) |  |             | 3/25/2020  |  |          |  | 4/13/2023  |             |  |  | 1,336,736  |  |  |       | 1,251,155 |  |               |  
|Applovin Corporation
    (7)                     |  | Software                                              |  | 3.65% (L + 3.50%) |  |             | 3/2/2020   |  |          |  | 8/15/2025  |             |  |  | 4,957,013  |  |  |       | 4,889,288 |  |               |  
|Arches Buyer
    Inc. (7)                        |  | Interactive Media and Services                        |  | 4.50% (L + 4.00%) |  |             | 11/24/2020 |  |          |  | 11/24/2027 |             |  |  | 5,000,000  |  |  |       | 4,950,488 |  |               |  
|Aristocrat International
    PTY Ltd (4)(7)      |  | Hotels, Restaurants and Leisure                       |  | 4.75% (L + 3.75%) |  |             | 5/14/2020  |  |          |  | 10/31/2024 |             |  |  | 2,487,500  |  |  |       | 2,443,638 |  |               |  
|Aruba Investments,
    Inc. (7)                  |  | Chemicals                                             |  | 4.75% (L + 4.00%) |  |             | 10/28/2020 |  |          |  | 10/28/2027 |             |  |  | 1,500,000  |  |  |       | 1,485,176 |  |               |  
|Ascend Learning,
    LLC (7)                     |  | Diversified Consumer Services                         |  | 4.00% (L + 3.00%) |  |             | 4/16/2020  |  |          |  | 7/29/2024  |             |  |  | 3,919,615  |  |  |       | 3,756,423 |  |               |  
|AssuredPartners,
    Inc. (7)                    |  | Insurance                                             |  | 5.50% (L + 4.50%) |  |             | 5/29/2020  |  |          |  | 2/12/2027  |             |  |  | 992,500    |  |  |       | 973,932   |  |               |  
|AssuredPartners,
    Inc. (7)                    |  | Insurance                                             |  | 3.65% (L + 3.50%) |  |             | 2/11/2020  |  |          |  | 2/12/2027  |             |  |  | 4,950,000  |  |  |       | 4,938,511 |  |               |  
|Asurion, LLC
    (7)                             |  | Diversified Consumer Services                         |  | 3.40% (L + 3.25%) |  |             | 12/23/2020 |  |          |  | 1/29/2027  |             |  |  | 1,987,249  |  |  |       | 1,958,010 |  |               |  
|Athenahealth,
    Inc. (7)                       |  | Healthcare Providers and Services                     |  | 4.65% (L + 4.50%) |  |             | 2/20/2020  |  |          |  | 2/11/2026  |             |  |  | 3,962,198  |  |  |       | 3,927,936 |  |               |  
|Avaya Inc. (4)(7)                                |  | Diversified Telecommunication Services                |  | 4.41% (L + 4.25%) |  |             | 4/20/2020  |  |          |  | 12/15/2024 |             |  |  | 1,560,941  |  |  |       | 1,490,031 |  |               |  
|Avaya Inc. (4)(7)                                |  | Diversified Telecommunication Services                |  | 4.39% (L + 4.25%) |  |             | 4/20/2020  |  |          |  | 12/15/2027 |             |  |  | 1,939,059  |  |  |       | 1,764,355 |  |               |  
|Azalea TopCo,
    Inc. (7)                       |  | Healthcare Providers and Services                     |  | 3.71% (L + 3.50%) |  |             | 2/26/2020  |  |          |  | 7/23/2026  |             |  |  | 3,962,387  |  |  |       | 3,917,453 |  |               |  
|Barracuda Networks,
    Inc. (7)                 |  | IT Services                                           |  | 4.50% (L + 3.75%) |  |             | 3/2/2020   |  |          |  | 1/10/2025  |             |  |  | 4,019,316  |  |  |       | 4,015,168 |  |               |  
|Bass Pro Group,
    LLC (7)                      |  | Specialty Retail                                      |  | 5.75% (L + 5.00%) |  |             | 7/28/2020  |  |          |  | 9/25/2024  |             |  |  | 6,071,202  |  |  |       | 6,066,031 |  |               |  
|Bausch Health
    Companies Inc. (4)             |  | Pharmaceuticals                                       |  | 3.15% (L + 3.00%) |  |             | 3/18/2020  |  |          |  | 6/30/2025  |             |  |  | 3,905,458  |  |  |       | 3,738,642 |  |               |  
|Belfor Holdings
    Inc. (7)                     |  | Commercial Services and Supplies                      |  | 4.15% (L + 4.00%) |  |             | 3/18/2020  |  |          |  | 3/31/2026  |             |  |  | 2,976,096  |  |  |       | 2,844,878 |  |               |  
|Bioscrip, Inc.
    (4)(7)                        |  | Healthcare Providers and Services                     |  | 4.40% (L + 4.25%) |  |             | 3/5/2020   |  |          |  | 5/29/2026  |             |  |  | 5,089,512  |  |  |       | 4,901,157 |  |               |  





F-15







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020





|                                             |  |                                        |  | Interest          |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |           |  | Percentage of | 
|-------------------------------------------- |  | -------------------------------------- |  | ----------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | --------- |  | ------------- | 
|Portfolio Company(3)                         |  | Industry                               |  | Rate              |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |           |  | Net Assets    | 
|Blackstone
    CQP Holdco LP (7)             |  | Energy Equipment and Services          |  | 3.74% (L + 3.50%) |  |             | 2/28/2020  |  |          |  | 6/7/2024   |             |  |  | 1,979,900  |  |  |       | 1,942,728 |  |               | 
|Boxer Parent
    Company, Inc. (7)           |  | Software                               |  | 4.40% (L + 4.25%) |  |             | 4/7/2020   |  |          |  | 9/1/2025   |             |  |  | 3,394,243  |  |  |       | 3,006,431 |  |               | 
|Brookfield Property
    REIT Inc. (7)        |  | Real Estate Investment Trusts (REITs)  |  | 2.65% (L + 2.50%) |  |             | 4/17/2020  |  |          |  | 5/4/2025   |             |  |  | 2,144,701  |  |  |       | 1,777,242 |  |               | 
|Brookfield WEC
    Holdings Inc. (7)         |  | Commercial Services and Supplies       |  | 3.75% (L + 3.00%) |  |             | 2/25/2020  |  |          |  | 8/1/2025   |             |  |  | 4,455,798  |  |  |       | 4,390,350 |  |               | 
|Buzz Merger
    Sub Ltd. (7)                 |  | Leisure Products                       |  | 2.90% (L + 2.75%) |  |             | 1/24/2020  |  |          |  | 1/22/2027  |             |  |  | 3,473,750  |  |  |       | 3,387,888 |  |               | 
|Caesars Resort
    Collection, LLC (4)(7)    |  | Hotels, Restaurants and Leisure        |  | 4.65% (L + 4.50%) |  |             | 6/19/2020  |  |          |  | 7/31/2025  |             |  |  | 2,992,500  |  |  |       | 2,908,415 |  |               | 
|Camelot U.S.
    Acquisition 1 Co. (4)(7)    |  | Professional Services                  |  | 3.15% (L + 3.00%) |  |             | 4/14/2020  |  |          |  | 10/28/2026 |             |  |  | 3,969,925  |  |  |       | 3,901,437 |  |               | 
|CCI Buyer, Inc.
    (5)(7)                   |  | Wireless Telecommunication Services    |  | 4.75% (L + 4.00%) |  |             | 12/16/2020 |  |          |  | 12/31/2027 |             |  |  | 2,400,000  |  |  |       | 2,376,000 |  |               | 
|CCS-CMGC Holdings,
    Inc. (7)              |  | Healthcare Providers and Services      |  | 5.71% (L + 5.50%) |  |             | 1/24/2020  |  |          |  | 10/1/2025  |             |  |  | 3,959,596  |  |  |       | 3,899,353 |  |               | 
|Change Healthcare
    Holdings, Inc. (4)(7)  |  | Healthcare Providers and Services      |  | 3.50% (L + 2.50%) |  |             | 4/1/2020   |  |          |  | 3/1/2024   |             |  |  | 2,326,036  |  |  |       | 2,225,791 |  |               | 
|CHG Healthcare
    Services, Inc (7)         |  | Healthcare Providers and Services      |  | 4.00% (L + 3.00%) |  |             | 3/19/2020  |  |          |  | 6/7/2023   |             |  |  | 2,967,965  |  |  |       | 2,650,461 |  |               | 
|Cincinnati Bell
    Inc. (4)(7)              |  | Media                                  |  | 4.25% (L + 3.25%) |  |             | 3/19/2020  |  |          |  | 10/2/2024  |             |  |  | 3,965,775  |  |  |       | 3,814,313 |  |               | 
|Citadel Securities
    LP (7)                |  | Diversified Financial Services         |  | 2.90% (L + 2.75%) |  |             | 3/20/2020  |  |          |  | 2/6/2026   |             |  |  | 4,054,286  |  |  |       | 3,758,583 |  |               | 
|Consolidated
    Communications, Inc. (4)(7) |  | Diversified Telecommunication Services |  | 5.75% (L + 4.75%) |  |             | 9/18/2020  |  |          |  | 10/31/2027 |             |  |  | 1,995,000  |  |  |       | 1,965,667 |  |               | 
|CP Atlas Buyer,
    Inc (7)                  |  | Building Products                      |  | 5.25% (L + 4.50%) |  |             | 11/20/2020 |  |          |  | 12/31/2027 |             |  |  | 3,750,000  |  |  |       | 3,712,996 |  |               | 
|CP Atlas Buyer,
    Inc (7)                  |  | Building Products                      |  | 5.25% (L + 4.50%) |  |             | 11/20/2020 |  |          |  | 11/19/2027 |             |  |  | 1,250,000  |  |  |       | 1,237,610 |  |               | 
|Creative Artists
    Agency, LLC (7)         |  | Media                                  |  | 3.90% (L + 3.75%) |  |             | 3/2/2020   |  |          |  | 11/20/2026 |             |  |  | 1,980,000  |  |  |       | 1,980,000 |  |               | 
|Crestwood Holdings
    LLC                   |  | Oil, Gas and Consumable Fuels          |  | 7.66% (L + 7.50%) |  |             | 6/5/2020   |  |          |  | 2/28/2023  |             |  |  | 488,751    |  |  |       | 346,400   |  |               | 





F-16





Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020



|                                                                |  |                                                           |  | Interest            |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |           |  | Percentage of | 
|--------------------------------------------------------------- |  | --------------------------------------------------------- |  | ------------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | --------- |  | ------------- | 
|Portfolio Company(3)                                            |  | Industry                                                  |  | Rate                |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |           |  | Net Assets    | 
|Dcert
    Buyer, Inc. (5)(7)                                    |  | Software                                                  |  | 4.15% (L + 4.00%)   |  |             | 1/28/2020  |  |          |  | 8/7/2026   |             |  |  | 4,962,500  |  |  |       | 4,953,855 |  |               | 
|Deerfield
    Dakota Holding, LLC (7)                           |  | Diversified
    Financial Services                        |  | 4.75% (L + 3.75%)   |  |             | 3/6/2020   |  |          |  | 2/25/2027  |             |  |  | 4,975,000  |  |  |       | 4,901,828 |  |               | 
|Delek
    US Holdings, Inc. (4)(7)                              |  | Oil, Gas
    and Consumable Fuels                         |  | 6.50% (L + 5.50%)   |  |             | 5/18/2020  |  |          |  | 3/31/2025  |             |  |  | 2,382,000  |  |  |       | 2,231,776 |  |               | 
|Delta
    Topco, Inc. (7)                                       |  | IT Services                                               |  | 4.50% (L + 3.75%)   |  |             | 10/7/2020  |  |          |  | 10/29/2027 |             |  |  | 4,000,000  |  |  |       | 3,980,258 |  |               | 
|The
    Dun & Bradstreet Corporation (4)(7)                     |  | Professional
    Services                                 |  | 3.90% (L + 3.75%)   |  |             | 1/24/2020  |  |          |  | 3/31/2026  |             |  |  | 4,962,500  |  |  |       | 4,896,041 |  |               | 
|EAB
    Global, Inc. (7)                                        |  | Professional
    Services                                 |  | 4.75% (L + 3.75%)   |  |             | 2/21/2020  |  |          |  | 9/27/2024  |             |  |  | 2,974,516  |  |  |       | 2,893,045 |  |               | 
|ECI
    Software Solutions, Inc. (7)                            |  | Software                                                  |  | 4.50% (L + 3.75%)   |  |             | 9/17/2020  |  |          |  | 9/30/2027  |             |  |  | 6,000,000  |  |  |       | 5,970,754 |  |               | 
|EFS
    Cogen Holdings I LLC (7)                                |  | Independent
    Power and Renewable Electricity Producers |  | 4.50% (L + 3.50%)   |  |             | 9/24/2020  |  |          |  | 10/29/2027 |             |  |  | 2,963,385  |  |  |       | 2,948,910 |  |               | 
|Elanco
    Animal Health Incorporated (4)(7)                    |  | Healthcare
    Providers and Services                     |  | 1.90% (L + 1.75%)   |  |             | 3/20/2020  |  |          |  | 2/26/2027  |             |  |  | 45,572     |  |  |       | 40,158    |  |               | 
|Endo
    Luxembourg Finance Company I S.a.r.l. (4)(7)           |  | Pharmaceuticals                                           |  | 5.00% (L + 4.25%)   |  |             | 4/13/2020  |  |          |  | 4/29/2024  |             |  |  | 2,480,720  |  |  |       | 2,325,276 |  |               | 
|Ensemble
    RCM, LLC (7)                                       |  | Healthcare
    Providers and Services                     |  | 3.96% (L + 3.75%)   |  |             | 4/14/2020  |  |          |  | 7/24/2026  |             |  |  | 3,807,085  |  |  |       | 3,704,542 |  |               | 
|Epicor
    Software Corporation (7)                             |  | Software                                                  |  | 5.25% (L + 4.25%)   |  |             | 7/23/2020  |  |          |  | 6/1/2022   |             |  |  | 3,990,000  |  |  |       | 3,926,731 |  |               | 
|Everi
    Payments Inc. (4)                                     |  | Professional
    Services                                 |  | 11.50% (L + 10.50%) |  |             | 4/14/2020  |  |          |  | 5/9/2024   |             |  |  | 348,250    |  |  |       | 342,071   |  |               | 
|Everi
    Payments Inc. (4)(7)                                  |  | Professional
    Services                                 |  | 3.75% (L + 2.75%)   |  |             | 4/9/2020   |  |          |  | 5/1/2024   |             |  |  | 1,000,000  |  |  |       | 879,949   |  |               | 
|Evertec
    Group LLC (4)(7)                                    |  | Professional
    Services                                 |  | 3.65% (L + 3.50%)   |  |             | 4/14/2020  |  |          |  | 12/31/2024 |             |  |  | 2,430,502  |  |  |       | 2,341,762 |  |               | 
|Flexera
    Software LLC (5)(7)                                 |  | Software                                                  |  | 4.50% (L + 3.75%)   |  |             | 12/16/2020 |  |          |  | 1/16/2028  |             |  |  | 2,500,000  |  |  |       | 2,496,250 |  |               | 
|Flexera
    Software LLC (5)(7)                                 |  | Software                                                  |  | 4.25% (L + 3.25%)   |  |             | 2/28/2020  |  |          |  | 2/26/2025  |             |  |  | 1,519,710  |  |  |       | 1,480,336 |  |               | 
|Garda
    World Security Corporation (7)                        |  | Diversified
    Consumer Services                         |  | 4.99% (L + 4.75%)   |  |             | 3/13/2020  |  |          |  | 10/23/2026 |             |  |  | 5,000,000  |  |  |       | 4,848,904 |  |               | 
|GFL
    Environmental Inc. (4)(7)                               |  | Commercial
    Services and Supplies                      |  | 3.50% (L + 3.00%)   |  |             | 2/20/2020  |  |          |  | 5/9/2025   |             |  |  | 2,622,258  |  |  |       | 2,528,578 |  |               | 
|Global
    Medical Response, Inc. (7)                           |  | Healthcare
    Providers and Services                     |  | 5.75% (L + 4.75%)   |  |             | 9/24/2020  |  |          |  | 9/24/2025  |             |  |  | 4,500,000  |  |  |       | 4,413,785 |  |               | 
|Guggenheim
    Partners Investment Management Holdings, LLC (7) |  | Diversified
    Financial Services                        |  | 3.50% (L + 2.75%)   |  |             | 2/28/2020  |  |          |  | 7/21/2023  |             |  |  | 1,482,852  |  |  |       | 1,475,112 |  |               | 
|Guidehouse
    LLP (7)                                          |  | Professional
    Services                                 |  | 4.65% (L + 4.50%)   |  |             | 4/14/2020  |  |          |  | 3/14/2025  |             |  |  | 4,024,967  |  |  |       | 3,953,955 |  |               | 
|HAH
    Group Holding Company LLC (7)                           |  | Healthcare
    Providers and Services                     |  | 6.00% (L + 5.00%)   |  |             | 10/22/2020 |  |          |  | 10/20/2027 |             |  |  | 3,551,724  |  |  |       | 3,492,899 |  |               | 
|Hamilton
    Projects Acquiror LLC (7)                          |  | Electric
    Utilities                                    |  | 5.75% (L + 4.75%)   |  |             | 6/11/2020  |  |          |  | 6/11/2027  |             |  |  | 5,457,587  |  |  |       | 5,389,828 |  |               | 
|Harbor
    Freight Tools USA, Inc. (7)                          |  | Specialty
    Retail                                      |  | 4.00% (L + 3.25%)   |  |             | 10/14/2020 |  |          |  | 11/30/2027 |             |  |  | 3,500,000  |  |  |       | 3,465,751 |  |               | 
|Helix
    Gen Funding, LLC (7)                                  |  | Independent
    Power and Renewable Electricity Producers |  | 4.75% (L + 3.75%)   |  |             | 1/31/2020  |  |          |  | 3/8/2024   |             |  |  | 4,419,559  |  |  |       | 4,366,931 |  |               | 
|Help/Systems
    Holdings, Inc. (7)                             |  | Software                                                  |  | 5.75% (L + 4.75%)   |  |             | 9/16/2020  |  |          |  | 11/13/2026 |             |  |  | 4,974,937  |  |  |       | 4,926,250 |  |               | 
|Hostess
    Brands, LLC (4)(7)                                  |  | Food Products                                             |  | 3.00% (L + 2.25%)   |  |             | 3/18/2020  |  |          |  | 8/1/2025   |             |  |  | 1,438,207  |  |  |       | 1,326,162 |  |               | 
|HUB
    International Limited (7)                               |  | Insurance                                                 |  | 5.00% (L + 4.00%)   |  |             | 4/22/2020  |  |          |  | 4/25/2025  |             |  |  | 3,979,925  |  |  |       | 3,918,865 |  |               | 
|Hyland
    Software, Inc. (7)                                   |  | Software                                                  |  | 4.25% (L + 3.50%)   |  |             | 9/25/2020  |  |          |  | 7/1/2024   |             |  |  | 2,992,347  |  |  |       | 2,981,598 |  |               | 
|Hyperion
    Refinance S.a.r.l. (7)                             |  | Insurance                                                 |  | 4.50% (L + 3.50%)   |  |             | 3/2/2020   |  |          |  | 12/13/2024 |             |  |  | 3,962,981  |  |  |       | 3,911,850 |  |               | 
|ICH
    US Intermediate Holdings II, Inc. (7)                   |  | Healthcare
    Providers and Services                     |  | 6.75% (L + 5.75%)   |  |             | 2/28/2020  |  |          |  | 12/24/2026 |             |  |  | 6,748,077  |  |  |       | 6,617,263 |  |               | 
|Idera,
    Inc. (7)                                             |  | Software                                                  |  | 5.00% (L + 4.00%)   |  |             | 2/14/2020  |  |          |  | 6/28/2024  |             |  |  | 4,456,406  |  |  |       | 4,417,886 |  |               | 
|Informatica
    LLC (7)                                         |  | Software                                                  |  | 3.40% (L + 3.25%)   |  |             | 2/14/2020  |  |          |  | 2/15/2027  |             |  |  | 1,975,025  |  |  |       | 1,942,614 |  |               | 
|Inmar,
    Inc. (7)                                             |  | Professional
    Services                                 |  | 5.00% (L + 4.00%)   |  |             | 1/24/2020  |  |          |  | 5/1/2024   |             |  |  | 2,969,231  |  |  |       | 2,938,868 |  |               | 
|IRB
    Holding Corporation (5)(7)                              |  | Hotels, Restaurants
    and Leisure                       |  | 4.25% (L + 3.25%)   |  |             | 11/19/2020 |  |          |  | 11/19/2027 |             |  |  | 1,850,000  |  |  |       | 1,831,500 |  |               | 
|Iridium
    Satellite LLC (4)(7)                                |  | Diversified
    Telecommunication Services                |  | 4.75% (L + 3.75%)   |  |             | 3/6/2020   |  |          |  | 10/18/2026 |             |  |  | 4,716,862  |  |  |       | 4,690,701 |  |               | 
|Ivanti
    Software, Inc. (7)                                   |  | IT Services                                               |  | 5.75% (L + 4.75%)   |  |             | 11/20/2020 |  |          |  | 11/22/2027 |             |  |  | 5,000,000  |  |  |       | 4,925,621 |  |               | 
|Jane
    Street Group, LLC (7)                                  |  | Diversified
    Financial Services                        |  | 3.23% (L + 3.00%)   |  |             | 1/31/2020  |  |          |  | 1/31/2025  |             |  |  | 1,470,069  |  |  |       | 1,447,558 |  |               | 
|Kestrel
    Acquisition LLC (7)                                 |  | Independent
    Power and Renewable Electricity Producers |  | 5.25% (L + 4.25%)   |  |             | 2/25/2020  |  |          |  | 5/2/2025   |             |  |  | 1,979,695  |  |  |       | 1,790,719 |  |               | 





F-17







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020





|                                                   |  |                                                       |  | Interest            |  | Acquisition |           |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |           |  | Percentage of | 
|-------------------------------------------------- |  | ----------------------------------------------------- |  | ------------------- |  | ----------- | --------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | --------- |  | ------------- | 
|Portfolio
    Company(3)                           |  | Industry                                              |  | Rate                |  | Date        |           |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |           |  | Net Assets    | 
|Klockner-Pentaplast
    of America, Inc. (4)(7)    |  | Containers and Packaging                              |  | 5.25% (L + 4.25%)   |  |             | 9/10/2020 |  |          |  | 6/29/2022  |             |  |  | 3,730,720  |  |  |       | 3,689,267 |  |               | 
|Landry’s
    Finance Acquisition Co                |  | Hotels, Restaurants and Leisure                       |  | 13.00% (L + 12.00%) |  |             | 6/12/2020 |  |          |  | 10/4/2023  |             |  |  | 18,875     |  |  |       | 18,252    |  |               | 
|LBM Acquisition
    LLC (5)(7)                     |  | Construction Materials                                |  | 4.50% (L + 3.75%)   |  |             | 12/9/2020 |  |          |  | 12/31/2027 |             |  |  | 1,227,273  |  |  |       | 1,212,273 |  |               | 
|LCPR Loan Financing
    LLC (7)                    |  | Diversified Telecommunication Services                |  | 5.16% (L + 5.00%)   |  |             | 3/13/2020 |  |          |  | 10/22/2026 |             |  |  | 4,000,000  |  |  |       | 3,941,122 |  |               | 
|Lightstone Holdco
    LLC                          |  | Independent Power and Renewable Electricity Producers |  | 4.75% (L + 3.75%)   |  |             | 4/7/2020  |  |          |  | 1/30/2024  |             |  |  | 1,609,237  |  |  |       | 1,288,637 |  |               | 
|Lightstone Holdco
    LLC                          |  | Independent Power and Renewable Electricity Producers |  | 4.75% (L + 3.75%)   |  |             | 4/7/2020  |  |          |  | 1/30/2024  |             |  |  | 90,763     |  |  |       | 72,681    |  |               | 
|Limetree Bay
    Terminals, LLC (5)(7)             |  | Oil, Gas and Consumable Fuels                         |  | 5.00% (L + 4.00%)   |  |             | 4/22/2020 |  |          |  | 2/15/2024  |             |  |  | 2,284,783  |  |  |       | 2,023,325 |  |               | 
|Lions Gate Capital
    Holdings LLC (4)(7)         |  | Media                                                 |  | 2.40% (L + 2.25%)   |  |             | 4/1/2020  |  |          |  | 3/19/2025  |             |  |  | 1,980,572  |  |  |       | 1,869,480 |  |               | 
|LogMeIn, Inc.
    (7)                              |  | IT Services                                           |  | 4.90% (L + 4.75%)   |  |             | 8/14/2020 |  |          |  | 8/31/2027  |             |  |  | 3,500,000  |  |  |       | 3,415,896 |  |               | 
|Mauser Packaging
    Solutions Holding Company (7) |  | Containers and Packaging                              |  | 3.48% (L + 3.25%)   |  |             | 4/13/2020 |  |          |  | 4/3/2024   |             |  |  | 1,488,432  |  |  |       | 1,366,428 |  |               | 
|McAfee, LLC
    (4)(7)                             |  | IT Services                                           |  | 3.90% (L + 3.75%)   |  |             | 2/26/2020 |  |          |  | 9/30/2024  |             |  |  | 3,570,079  |  |  |       | 3,556,203 |  |               | 
|Meredith Corporation
    (4)(7)                    |  | Media                                                 |  | 5.25% (L + 4.25%)   |  |             | 6/25/2020 |  |          |  | 1/31/2025  |             |  |  | 3,482,500  |  |  |       | 3,355,696 |  |               | 
|Michaels Stores,
    Inc. (4)(7)                   |  | Specialty Retail                                      |  | 4.25% (L + 3.50%)   |  |             | 9/2/2020  |  |          |  | 10/1/2027  |             |  |  | 1,995,000  |  |  |       | 1,953,730 |  |               | 
|Milano Acquisition
    Corporation (7)             |  | Health Care Technology                                |  | 4.75% (L + 4.00%)   |  |             | 8/17/2020 |  |          |  | 8/31/2027  |             |  |  | 3,500,000  |  |  |       | 3,466,538 |  |               | 
|Minotaur Acquisition,
    Inc. (7)                 |  | Diversified Financial Services                        |  | 5.15% (L + 5.00%)   |  |             | 1/24/2020 |  |          |  | 3/27/2026  |             |  |  | 5,125,443  |  |  |       | 5,123,960 |  |               | 
|Mitchell International,
    Inc. (7)               |  | Software                                              |  | 4.75% (L + 4.25%)   |  |             | 7/6/2020  |  |          |  | 11/29/2024 |             |  |  | 3,241,875  |  |  |       | 3,128,166 |  |               | 
|MPH Acquisition
    Holdings LLC (7)               |  | Healthcare Providers and Services                     |  | 3.75% (L + 2.75%)   |  |             | 4/13/2020 |  |          |  | 5/25/2023  |             |  |  | 2,591,513  |  |  |       | 2,463,356 |  |               | 
|National Mentor
    Holdings, Inc. (7)             |  | Healthcare Providers and Services                     |  | 4.40% (L + 4.25%)   |  |             | 2/7/2020  |  |          |  | 2/5/2026   |             |  |  | 3,794,103  |  |  |       | 3,761,808 |  |               | 
|National Mentor
    Holdings, Inc. (7)             |  | Healthcare Providers and Services                     |  | 4.40% (L + 4.25%)   |  |             | 2/7/2020  |  |          |  | 2/5/2026   |             |  |  | 169,724    |  |  |       | 168,243   |  |               | 
|Navicure, Inc.
    (7)                             |  | Health Care Technology                                |  | 4.75% (L + 4.00%)   |  |             | 9/15/2020 |  |          |  | 10/22/2026 |             |  |  | 2,705,719  |  |  |       | 2,699,303 |  |               | 
|New Arclin US
    Holding Corp. (7)                |  | Chemicals                                             |  | 4.50% (L + 3.50%)   |  |             | 8/25/2020 |  |          |  | 2/14/2024  |             |  |  | 1,989,525  |  |  |       | 1,966,566 |  |               | 
|Newport Group
    Holdings II, Inc. (7)            |  | Diversified Financial Services                        |  | 3.72% (L + 3.50%)   |  |             | 8/25/2020 |  |          |  | 9/12/2025  |             |  |  | 2,984,733  |  |  |       | 2,900,441 |  |               | 
|Nexus Buyer
    LLC (7)                            |  | Professional Services                                 |  | 3.90% (L + 3.75%)   |  |             | 3/10/2020 |  |          |  | 10/30/2026 |             |  |  | 4,048,687  |  |  |       | 3,955,471 |  |               | 
|Nielsen Finance
    LLC (4)(7)                     |  | Media                                                 |  | 4.75% (L + 3.75%)   |  |             | 5/7/2020  |  |          |  | 6/6/2025   |             |  |  | 1,492,500  |  |  |       | 1,477,234 |  |               | 
|NorthStar Group
    Services, Inc. (7)             |  | Commercial Services and Supplies                      |  | 6.50% (L + 5.50%)   |  |             | 11/9/2020 |  |          |  | 11/9/2026  |             |  |  | 3,000,000  |  |  |       | 2,941,128 |  |               | 
|Numericable
    U.S. LLC (7)                       |  | Media                                                 |  | 4.24% (L + 4.00%)   |  |             | 3/31/2020 |  |          |  | 8/14/2026  |             |  |  | 3,972,139  |  |  |       | 3,814,159 |  |               | 





F-18







Palmer Square Capital BDC Inc.

Consolidated Schedule
of Investments

As of December 31, 2020



|                                                      |  |                                                       |  | Interest          |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |           |  | Percentage of | 
|----------------------------------------------------- |  | ----------------------------------------------------- |  | ----------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | --------- |  | ------------- | 
|Portfolio
    Company(3)                              |  | Industry                                              |  | Rate              |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |           |  | Net Assets    | 
|OneDigital
    Borrower LLC (7)                       |  | Insurance                                             |  | 5.25% (L + 4.50%) |  |             | 10/30/2020 |  |          |  | 10/29/2027 |             |  |  | 5,460,938  |  |  |       | 5,336,244 |  |               | 
|Oregon Clean
    Energy, LLC (7)                      |  | Independent Power and Renewable Electricity Producers |  | 4.75% (L + 3.75%) |  |             | 2/25/2020  |  |          |  | 3/2/2026   |             |  |  | 5,078,751  |  |  |       | 4,943,404 |  |               | 
|Pathway Vet
    Alliance LLC (7)                      |  | Healthcare Providers and Services                     |  | 4.15%             |  |             | 6/23/2020  |  |          |  | 3/31/2027  |             |  |  | 262,760    |  |  |       | 257,672   |  |               | 
|Pathway Vet
    Alliance LLC (7)                      |  | Healthcare Providers and Services                     |  | 4.15% (L + 4.00%) |  |             | 6/23/2020  |  |          |  | 3/31/2027  |             |  |  | 3,216,904  |  |  |       | 3,154,690 |  |               | 
|PCI Gaming Authority
    (7)                          |  | Hotels, Restaurants and Leisure                       |  | 2.65% (L + 2.50%) |  |             | 4/21/2020  |  |          |  | 5/15/2026  |             |  |  | 2,756,538  |  |  |       | 2,615,321 |  |               | 
|Petco Animal
    Supplies, Inc.                       |  | Specialty Retail                                      |  | 4.25% (L + 3.25%) |  |             | 6/17/2020  |  |          |  | 1/26/2023  |             |  |  | 1,492,167  |  |  |       | 1,236,450 |  |               | 
|PetVet Care
    Centers, LLC (7)                      |  | Healthcare Providers and Services                     |  | 5.25% (L + 4.25%) |  |             | 8/14/2020  |  |          |  | 2/15/2025  |             |  |  | 3,482,368  |  |  |       | 3,474,303 |  |               | 
|Phoenix Guarantor
    Inc. (7)                        |  | Healthcare Providers and Services                     |  | 4.25% (L + 3.75%) |  |             | 10/2/2020  |  |          |  | 3/31/2026  |             |  |  | 5,000,000  |  |  |       | 4,951,532 |  |               | 
|Pike Corporation
    (7)                              |  | Construction and Engineering                          |  | 4.12% (L + 3.97%) |  |             | 8/19/2020  |  |          |  | 7/24/2026  |             |  |  | 1,875,952  |  |  |       | 1,867,058 |  |               | 
|Playtika Holding
    Corp. (7)                        |  | Hotels, Restaurants and Leisure                       |  | 7.00% (L + 6.00%) |  |             | 2/28/2020  |  |          |  | 12/31/2024 |             |  |  | 8,659,461  |  |  |       | 8,717,061 |  |               | 
|PODS, LLC (7)                                         |  | Building Products                                     |  | 3.75% (L + 2.75%) |  |             | 2/26/2020  |  |          |  | 12/6/2024  |             |  |  | 1,956,928  |  |  |       | 1,952,700 |  |               | 
|Pre-Paid Legal
    Services, Inc. (7)                 |  | Diversified Consumer Services                         |  | 4.75% (L + 4.00%) |  |             | 9/11/2020  |  |          |  | 5/1/2025   |             |  |  | 1,496,250  |  |  |       | 1,474,767 |  |               | 
|Pre-Paid Legal
    Services, Inc. (7)                 |  | Diversified Consumer Services                         |  | 3.40% (L + 3.25%) |  |             | 2/26/2020  |  |          |  | 5/1/2025   |             |  |  | 1,638,513  |  |  |       | 1,592,272 |  |               | 
|Presidio Holdings,
    Inc. (7)                       |  | Professional Services                                 |  | 3.72% (L + 3.50%) |  |             | 2/28/2020  |  |          |  | 1/31/2027  |             |  |  | 2,388,000  |  |  |       | 2,352,280 |  |               | 
|Pretium PKG
    Holdings, Inc. (7)                    |  | Containers and Packaging                              |  | 4.75% (L + 4.00%) |  |             | 10/29/2020 |  |          |  | 11/30/2027 |             |  |  | 2,500,000  |  |  |       | 2,463,389 |  |               | 
|Prime Security
    Services Borrower, LLC (4)(7)      |  | Diversified Consumer Services                         |  | 4.25% (L + 3.25%) |  |             | 4/20/2020  |  |          |  | 9/14/2026  |             |  |  | 1,796,054  |  |  |       | 1,754,890 |  |               | 
|Project Alpha
    Intermediate Holding, Inc. (7)      |  | Software                                              |  | 4.50% (L + 3.50%) |  |             | 1/30/2020  |  |          |  | 4/19/2024  |             |  |  | 3,961,519  |  |  |       | 3,928,048 |  |               | 
|ProQuest LLC
    (7)                                  |  | Internet and Direct Marketing Retail                  |  | 3.65% (L + 3.50%) |  |             | 4/17/2020  |  |          |  | 10/16/2026 |             |  |  | 3,310,911  |  |  |       | 3,256,718 |  |               | 
|Quest Software
    US Holdings Inc (7)                |  | Software                                              |  | 4.46% (L + 4.25%) |  |             | 2/5/2020   |  |          |  | 5/16/2025  |             |  |  | 2,977,215  |  |  |       | 2,977,215 |  |               | 
|Rackspace Hosting,
    Inc. (7)                       |  | Technology Hardware, Storage and Peripherals          |  | 4.00% (L + 3.00%) |  |             | 4/17/2020  |  |          |  | 11/3/2023  |             |  |  | 2,976,864  |  |  |       | 2,867,228 |  |               | 
|Radiate Holdco,
    LLC (7)                           |  | Media                                                 |  | 4.25% (L + 3.50%) |  |             | 2/25/2020  |  |          |  | 9/11/2026  |             |  |  | 5,121,868  |  |  |       | 5,069,220 |  |               | 
|Radiology Partners,
    Inc. (7)                      |  | Healthcare Providers and Services                     |  | 4.40% (L + 4.25%) |  |             | 2/26/2020  |  |          |  | 7/9/2025   |             |  |  | 3,500,000  |  |  |       | 3,488,400 |  |               | 
|Redstone Buyer,
    LLC (7)                           |  | Software                                              |  | 6.00% (L + 5.00%) |  |             | 7/1/2020   |  |          |  | 9/1/2027   |             |  |  | 4,999,000  |  |  |       | 4,969,348 |  |               | 
|RegionalCare
    Hospital Partners Holdings, Inc. (7) |  | Healthcare Providers and Services                     |  | 3.90% (L + 3.75%) |  |             | 2/11/2020  |  |          |  | 11/14/2025 |             |  |  | 3,028,873  |  |  |       | 3,015,138 |  |               | 
|Renaissance
    Holding Corp (7)                      |  | Diversified Consumer Services                         |  | 3.40% (L + 3.25%) |  |             | 3/4/2020   |  |          |  | 7/31/2025  |             |  |  | 1,979,695  |  |  |       | 1,944,213 |  |               | 
|Ryan Specialty
    Group LLC (7)                      |  | Insurance                                             |  | 4.00% (L + 3.25%) |  |             | 7/23/2020  |  |          |  | 9/1/2027   |             |  |  | 1,995,000  |  |  |       | 1,980,621 |  |               | 
|Sabert Corporation
    (7)                            |  | Containers and Packaging                              |  | 5.50% (L + 4.50%) |  |             | 2/26/2020  |  |          |  | 11/26/2026 |             |  |  | 4,830,392  |  |  |       | 4,819,800 |  |               | 





F-19







Palmer Square Capital BDC Inc.

Consolidated Schedule
of Investments

As of December 31, 2020





|                                                |  |                                                       |  | Interest          |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized   |  |  | Fair  |             |  | Percentage of |  
|----------------------------------------------- |  | ----------------------------------------------------- |  | ----------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ----------- |  |  | ----- | ----------- |  | ------------- | -
|Portfolio
    Company(3)                        |  | Industry                                              |  | Rate              |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6)  |  |  | Value |             |  | Net Assets    |  
|Samsonite
    International S.A. (4)(7)         |  | Textiles, Apparel and Luxury Goods                    |  | 5.50% (L + 4.50%) |  |             | 4/30/2020  |  |          |  | 4/25/2025  |             |  |  | 1,791,000   |  |  |       | 1,743,626   |  |               |  
|Scientific Games
    International, Inc. (4)(7) |  | Leisure Products                                      |  | 2.90% (L + 2.75%) |  |             | 4/9/2020   |  |          |  | 8/14/2024  |             |  |  | 1,984,694   |  |  |       | 1,758,771   |  |               |  
|SCIH Salt Holdings
    Inc. (7)                 |  | Metals and Mining                                     |  | 5.50% (L + 4.50%) |  |             | 4/13/2020  |  |          |  | 3/3/2027   |             |  |  | 3,980,000   |  |  |       | 3,915,034   |  |               |  
|Shearer’s
    Foods, LLC (7)                    |  | Food Products                                         |  | 4.75% (L + 4.00%) |  |             | 9/15/2020  |  |          |  | 9/14/2027  |             |  |  | 1,708,219   |  |  |       | 1,695,921   |  |               |  
|SmartBear Software
    Inc. (5)(7)              |  | Software                                              |  | 4.46% (L + 4.25%) |  |             | 11/20/2020 |  |          |  | 11/19/2027 |             |  |  | 3,000,000   |  |  |       | 2,970,000   |  |               |  
|Sophia, L.P.
    (7)                            |  | Software                                              |  | 4.50% (L + 3.75%) |  |             | 9/23/2020  |  |          |  | 10/31/2027 |             |  |  | 5,000,000   |  |  |       | 4,963,358   |  |               |  
|Sotera Health
    Holdings LLC (4)(7)           |  | Healthcare Equipment and Supplies                     |  | 5.50% (L + 4.50%) |  |             | 3/2/2020   |  |          |  | 11/20/2026 |             |  |  | 4,163,466   |  |  |       | 4,148,686   |  |               |  
|Springer Nature
    Deutschland GmbH (5)(7)     |  | Media                                                 |  | 4.50% (L + 3.50%) |  |             | 11/17/2020 |  |          |  | 8/14/2024  |             |  |  | 2,279,964   |  |  |       | 2,274,264   |  |               |  
|Surf Holdings,
    LLC (7)                      |  | Software                                              |  | 3.73% (L + 3.50%) |  |             | 4/16/2020  |  |          |  | 1/15/2027  |             |  |  | 1,990,000   |  |  |       | 1,885,497   |  |               |  
|Syncsort Incorporated
    (7)                   |  | Software                                              |  | 7.00% (L + 6.00%) |  |             | 4/13/2020  |  |          |  | 8/16/2024  |             |  |  | 4,262,440   |  |  |       | 4,109,093   |  |               |  
|Talen Energy
    Supply, LLC (7)                |  | Independent Power and Renewable Electricity Producers |  | 3.90% (L + 3.75%) |  |             | 4/9/2020   |  |          |  | 6/26/2026  |             |  |  | 3,866,834   |  |  |       | 3,638,489   |  |               |  
|TecoStar Holdings,
    Inc. (7)                 |  | Healthcare Equipment and Supplies                     |  | 4.50% (L + 3.50%) |  |             | 2/25/2020  |  |          |  | 5/1/2024   |             |  |  | 2,969,109   |  |  |       | 2,956,997   |  |               |  
|The Edelman
    Financial Center, LLC (7)       |  | Diversified Financial Services                        |  | 3.15% (L + 3.00%) |  |             | 4/13/2020  |  |          |  | 6/26/2025  |             |  |  | 1,984,810   |  |  |       | 1,880,143   |  |               |  
|TIBCO Software
    Inc (7)                      |  | Software                                              |  | 3.90% (L + 3.75%) |  |             | 2/13/2020  |  |          |  | 6/30/2026  |             |  |  | 2,985,000   |  |  |       | 2,977,336   |  |               |  
|Tosca Services,
    LLC (7)                     |  | Containers and Packaging                              |  | 5.25% (L + 4.25%) |  |             | 7/28/2020  |  |          |  | 8/31/2027  |             |  |  | 3,000,000   |  |  |       | 2,985,819   |  |               |  
|Traverse Midstream
    Partners LLC (7)         |  | Oil, Gas and Consumable Fuels                         |  | 6.50% (L + 5.50%) |  |             | 8/20/2020  |  |          |  | 9/27/2024  |             |  |  | 5,342,482   |  |  |       | 4,954,097   |  |               |  
|Tronox Finance
    LLC (4)(7)                   |  | Chemicals                                             |  | 3.15% (L + 3.00%) |  |             | 4/17/2020  |  |          |  | 9/14/2024  |             |  |  | 1,779,361   |  |  |       | 1,748,333   |  |               |  
|UGI Energy Services,
    LLC (7)                |  | Oil, Gas and Consumable Fuels                         |  | 3.90% (L + 3.75%) |  |             | 4/27/2020  |  |          |  | 8/7/2026   |             |  |  | 992,443     |  |  |       | 918,793     |  |               |  
|Ultimate Software
    Group, The (7)            |  | Software                                              |  | 4.75% (L + 4.00%) |  |             | 6/18/2020  |  |          |  | 5/31/2026  |             |  |  | 997,500     |  |  |       | 983,667     |  |               |  
|Ultimate Software
    Group, The (7)            |  | Software                                              |  | 3.90% (L + 3.75%) |  |             | 2/28/2020  |  |          |  | 4/8/2026   |             |  |  | 4,456,131   |  |  |       | 4,433,707   |  |               |  
|Univision Communications
    Inc. (7)           |  | Media                                                 |  | 4.75% (L + 3.75%) |  |             | 6/15/2020  |  |          |  | 3/13/2026  |             |  |  | 4,197,268   |  |  |       | 4,059,519   |  |               |  
|UOS, LLC (7)                                    |  | Commercial Services and Supplies                      |  | 4.40% (L + 4.25%) |  |             | 2/19/2020  |  |          |  | 4/18/2025  |             |  |  | 4,593,053   |  |  |       | 4,584,727   |  |               |  
|US Radiology
    Specialists, Inc., (7)         |  | Healthcare Providers and Services                     |  | 6.25% (L + 5.50%) |  |             | 12/11/2020 |  |          |  | 12/10/2027 |             |  |  | 4,000,000   |  |  |       | 3,920,333   |  |               |  
|U.S. Renal Care,
    Inc. (7)                   |  | Healthcare Providers and Services                     |  | 5.15% (L + 5.00%) |  |             | 4/8/2020   |  |          |  | 6/26/2026  |             |  |  | 3,969,849   |  |  |       | 3,776,648   |  |               |  
|U.S.I., Inc.
    (7)                            |  | Insurance                                             |  | 4.25% (L + 4.00%) |  |             | 4/23/2020  |  |          |  | 12/2/2026  |             |  |  | 4,972,381   |  |  |       | 4,903,442   |  |               |  
|USIC Holdings,
    Inc. (7)                     |  | Construction and Engineering                          |  | 4.00% (L + 3.00%) |  |             | 2/26/2020  |  |          |  | 12/8/2023  |             |  |  | 1,980,066   |  |  |       | 1,972,057   |  |               |  
|Venator Materials
    LLC (4)(7)                |  | Chemicals                                             |  | 3.15% (L + 3.00%) |  |             | 4/17/2020  |  |          |  | 6/28/2024  |             |  |  | 1,984,615   |  |  |       | 1,814,166   |  |               |  
|VeriFone Systems,
    Inc. (7)                  |  | Commercial Services and Supplies                      |  | 4.22% (L + 4.00%) |  |             | 3/4/2020   |  |          |  | 8/20/2025  |             |  |  | 496,203     |  |  |       | 474,275     |  |               |  
|Verscend Holding
    Corp. (7)                  |  | Health Care Technology                                |  | 4.65% (L + 4.50%) |  |             | 3/6/2020   |  |          |  | 8/27/2025  |             |  |  | 4,162,491   |  |  |       | 4,133,385   |  |               |  
|VFH Parent LLC
    (4)(7)                       |  | Capital Markets                                       |  | 3.15% (L + 3.00%) |  |             | 3/20/2020  |  |          |  | 6/1/2026   |             |  |  | 2,532,966   |  |  |       | 2,363,333   |  |               |  
|VM Consolidated
    Inc. (4)(7)                 |  | Transportation Infrastructure                         |  | 3.40% (L + 3.25%) |  |             | 2/28/2020  |  |          |  | 2/28/2025  |             |  |  | 967,824     |  |  |       | 961,310     |  |               |  
|WebMD Health
    Corp. (7)                      |  | Interactive Media and Services                        |  | 4.75% (L + 3.75%) |  |             | 6/11/2020  |  |          |  | 9/13/2024  |             |  |  | 4,979,987   |  |  |       | 4,917,305   |  |               |  
|White Cap Buyer
    LLC (7)                     |  | Construction Materials                                |  | 4.50% (L + 4.00%) |  |             | 10/8/2020  |  |          |  | 10/8/2027  |             |  |  | 3,000,000   |  |  |       | 2,970,582   |  |               |  
|Xplornet Communications
    Inc (7)             |  | Wireless Telecommunication Services                   |  | 4.90% (L + 4.75%) |  |             | 5/29/2020  |  |          |  | 5/31/2027  |             |  |  | 3,482,500   |  |  |       | 3,319,234   |  |               |  
|Zelis
    Cost Management Buyer, Inc. (7)       |  | Health Care Technology                                |  | 4.90% (L + 4.75%) |  |             | 3/2/2020   |  |          |  | 10/30/2026 |             |  |  | 4,841,125   |  |  |       | 4,831,550   |  |               |  
|Total
    First Lien Senior Secured             |  |                                                       |  |                   |  |             |            |  |          |  |            |             |  |  | 568,173,986 |  |  | $     | 554,650,131 |  |               | $





F-20







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020



|                                             |  |                                   |  |                       |  | Acquisition |            |  | Maturity |  |            | Principal / |  |  | Amortized  |  |  | Fair  |            |  | Percentage of | 
|-------------------------------------------- |  | --------------------------------- |  | --------------------- |  | ----------- | ---------- |  | -------- |  | ---------- | ----------- |  |  | ---------- |  |  | ----- | ---------- |  | ------------- | 
|Portfolio
    Company(3)                     |  | Industry                          |  | Interest
    Rate     |  | Date        |            |  | Date     |  |            | Par         |  |  | Cost(1)(6) |  |  | Value |            |  | Net Assets    | 
|Second
    Lien Senior Secured(2)            |  |                                   |  |                       |  |             |            |  |          |  |            |             |  |  |            |  |  |       |            |  |               | 
|Alphabet
    Holding Company, Inc. (7)       |  | Food
    Products                 |  | 7.90%
    (L + 7.75%) |  |             | 5/14/2020  |  |          |  | 9/26/2025  |             |  |  | 2,050,000  |  |  |       | 1,920,126  |  |               | 
|Aptean
    Inc                               |  | Software                          |  | 8.65%
    (L + 8.50%) |  |             | 7/23/2020  |  |          |  | 4/23/2027  |             |  |  | 1,400,000  |  |  |       | 1,334,785  |  |               | 
|Aruba
    Investments, Inc. (7)              |  | Chemicals                         |  | 8.50%
    (L + 7.75%) |  |             | 10/29/2020 |  |          |  | 10/27/2028 |             |  |  | 2,350,000  |  |  |       | 2,315,519  |  |               | 
|Asurion,
    LLC (7)                         |  | Diversified
    Consumer Services |  | 6.65%
    (L + 6.50%) |  |             | 3/31/2020  |  |          |  | 7/14/2025  |             |  |  | 2,939,394  |  |  |       | 2,895,326  |  |               | 
|Epicor
    Software Corporation (7)          |  | Software                          |  | 8.75%
    (L + 7.75%) |  |             | 7/23/2020  |  |          |  | 7/31/2028  |             |  |  | 1,000,000  |  |  |       | 985,486    |  |               | 
|Informatica
    LLC (7)                      |  | Software                          |  | 7.13%                 |  |             | 2/14/2020  |  |          |  | 2/14/2025  |             |  |  | 1,000,000  |  |  |       | 995,486    |  |               | 
|Mitchell
    International, Inc.             |  | Software                          |  | 7.40%
    (L + 7.25%) |  |             | 7/1/2020   |  |          |  | 11/20/2025 |             |  |  | 447,667    |  |  |       | 415,895    |  |               | 
|New
    Arclin US Holding Corp.              |  | Chemicals                         |  | 9.75%
    (L + 8.75%) |  |             | 9/14/2020  |  |          |  | 2/14/2025  |             |  |  | 1,928,999  |  |  |       | 1,835,183  |  |               | 
|PowerTeam
    Services, LLC (5)              |  | Construction
    and Engineering  |  | 8.25%
    (L + 7.25%) |  |             | 5/12/2020  |  |          |  | 3/6/2026   |             |  |  | 4,810,000  |  |  |       | 4,351,841  |  |               | 
|Quest
    Software US Holdings Inc           |  | Software                          |  | 8.46%
    (L + 8.25%) |  |             | 2/11/2020  |  |          |  | 5/18/2026  |             |  |  | 1,597,000  |  |  |       | 1,578,688  |  |               | 
|SK
    Invictus Intermediate II S.a.r.l. (7) |  | Software                          |  | 6.90%
    (L + 6.75%) |  |             | 8/27/2020  |  |          |  | 2/13/2026  |             |  |  | 911,765    |  |  |       | 779,512    |  |               | 
|Total
    Second Lien Senior Secured         |  |                                   |  |                       |  |             |            |  |          |  |            |             |  |  | 20,434,825 |  |  |       | 19,407,847 |  |               | 









|Collateralized
    Securities and Structured Products - Debt(2)    |  |                     |  |                       |  |  |           |  |  |  |            |  |  |  |             |  |  |   |             |  |  |   |             | 
|------------------------------------------------------------------ |  | ------------------- |  | --------------------- |  |  | --------- |  |  |  | ---------- |  |  |  | ----------- |  |  | - | ----------- |  |  | - | ----------- | 
|Barings
    CLO Ltd (4)                                            |  | Structured
    Note |  | 6.97%
    (L + 6.75%) |  |  | 1/24/2020 |  |  |  | 1/20/2028  |  |  |  | 2,000,000   |  |  |   | 1,909,424   |  |  |   | 1,722,977   | 
|Babson
    CLO Ltd 2019-3A (4)                                     |  | Structured
    Note |  | 7.92%
    (L + 6.78%) |  |  | 8/11/2020 |  |  |  | 4/20/2031  |  |  |  | 1,500,000   |  |  |   | 1,373,460   |  |  |   | 1,491,304   | 
|Beechwood
    Park CLO, Ltd (4)                                    |  | Structured
    Note |  | 7.72%
    (L + 7.50%) |  |  | 7/27/2020 |  |  |  | 1/17/2033  |  |  |  | 1,750,000   |  |  |   | 1,699,298   |  |  |   | 1,767,605   | 
|Eaton
    Vance CLO 2019-1, Ltd. (4)                               |  | Structured
    Note |  | 6.99%
    (L + 6.75%) |  |  | 9/1/2020  |  |  |  | 4/15/2031  |  |  |  | 1,500,000   |  |  |   | 1,470,929   |  |  |   | 1,502,993   | 
|HPS
    Loan Management Series 15A-19 (4)                          |  | Structured
    Note |  | 7.07%
    (L + 6.86%) |  |  | 8/26/2020 |  |  |  | 7/22/2032  |  |  |  | 1,500,000   |  |  |   | 1,400,957   |  |  |   | 1,433,815   | 
|Magnetite
    XIV-R, Limited (4)                                   |  | Structured
    Note |  | 8.15%
    (L + 7.93%) |  |  | 1/24/2020 |  |  |  | 10/18/2031 |  |  |  | 1,500,000   |  |  |   | 1,448,204   |  |  |   | 1,333,180   | 
|Magnetite
    Clo LTD (4)                                          |  | Structured
    Note |  | 2.37%
    (L + 2.15%) |  |  | 4/2/2020  |  |  |  | 1/18/2028  |  |  |  | 1,000,000   |  |  |   | 832,569     |  |  |   | 972,288     | 
|Magnetite
    CLO Ltd 2015-16A (4)                                 |  | Structured
    Note |  | 6.72%
    (L + 6.50%) |  |  | 8/11/2020 |  |  |  | 1/18/2028  |  |  |  | 1,000,000   |  |  |   | 779,579     |  |  |   | 890,000     | 
|Newark
    BSL CLO 1 Ltd (4)                                       |  | Structured
    Note |  | 3.22%
    (L + 3.00%) |  |  | 4/6/2020  |  |  |  | 12/21/2029 |  |  |  | 500,000     |  |  |   | 382,142     |  |  |   | 498,394     | 
|Riserva
    CLO, LTD. (4)                                          |  | Structured
    Note |  | 5.85%
    (L + 3.45%) |  |  | 4/2/2020  |  |  |  | 10/18/2028 |  |  |  | 1,000,000   |  |  |   | 829,883     |  |  |   | 997,964     | 
|TCI-Flatiron
    CLO Ltd (4)                                       |  | Structured
    Note |  | 3.91%
    (L + 3.70%) |  |  | 4/2/2020  |  |  |  | 1/29/2032  |  |  |  | 1,000,000   |  |  |   | 811,343     |  |  |   | 1,004,981   | 
|Total
    Collateralized Securities and Structured Products - Debt |  |                     |  |                       |  |  |           |  |  |  |            |  |  |  | 14,250,000  |  |  |   | 12,937,788  |  |  |   | 13,615,501  | 
|Total
    Debt Investments                                         |  |                     |  |                       |  |  |           |  |  |  |            |  |  |  | 602,858,811 |  |  | $ | 586,995,766 |  |  | $ | 600,051,331 | 





F-21







Palmer Square Capital BDC Inc.

Consolidated Schedule of Investments

As of December 31, 2020



|                                                                                            |  | Number of |            |  |      |   |             | Fair  |  |   | Percentage of |  
|------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ----------- | ----- |  | - | ------------- | -
|                                                                                            |  | Shares    |            |  | Cost |   |             | Value |  |   | Net Assets    |  
|Short-Term Investments                                                                      |  |           |            |  |      |   |             |       |  |   |               |  
|Fidelity
    Investments Money Market Government Portfolio - Institutional Class, 0.01% (8) |  |           | 53,104,869 |  |      |   | 53,104,869  |       |  |   | 53,104,869    |  
|Total
    Short-Term Investments                                                            |  |           | 53,104,869 |  |      | $ | 53,104,869  |       |  | $ | 53,104,869    |  
|                                                                                            |  |           |            |  |      |   |             |       |  |   |               |  
|Total
    Investments                                                                       |  |           |            |  |      | $ | 640,100,635 |       |  | $ | 653,156,200   |  
|                                                                                            |  |           |            |  |      |   |             |       |  |   |               |  
|Liabilities
    in Excess of Other Assets                                                   |  |           |            |  |      |   |             |       |  |   | (400,011,229  | )
|                                                                                            |  |           |            |  |      |   |             |       |  |   |               |  
|Net
    Assets                                                                              |  |           |            |  |      |   |             |       |  | $ | 253,144,971   |  



| | (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) 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.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | As of December 31, 2020, 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, 2020, 15.5% of the Company’s total assets were in non-qualifying
    investments.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Investments or a portion of investments are unsettled as of December
    31, 2020.
| | --- | ----------------------------------------------------------------------------------



| | (6) | As of December 31, 2020, 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) | 7-day effective yield as of December 31, 2020.
| | --- | ----------------------------------------------



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





F-22







Palmer Square Capital BDC Inc.

Notes to Consolidated Financial Statements



Note 1. Organization



Organization



Palmer 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. companies. 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 1985, as amended (the “Code”) and expects to qualify as a RIC 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 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.



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 year ended
December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, 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 Wells Fargo, National Association. These subsidiaries are consolidated in the financial statements of the Company.



Note 2. 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. 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.





F-23









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



Debt Issuance Costs



The Company records origination
and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life
of the related debt instrument. Debt issuance costs are presented on the consolidated statement of assets and liabilities as a direct
deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated
financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the consolidated statement
of assets and liabilities as an asset until the debt liability is recorded. As of December 31, 2020, the balance of deferred financing
costs was $2.1 million, included in BoA Credit Facility (as defined below), net of $393.2 million on the consolidated statement of assets
and liabilities. As of December 31, 2021, the balance of debt issuance costs was $2.1 million, representing deferred financing costs of
$3.4 million less accrued interest of $1.3 million, included in BoA Credit Facility and WF Credit Facility (each as defined below), net
of $649.9 million on the consolidated statement of assets and liabilities.



Income Taxes



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
U.S. 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. 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 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
thereof.





F-24









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.



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 to not place a loan on non-accrual status if the loan has sufficient collateral value
and is in the process of collection.



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.



Other Income



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



Offering costs in connection
with the offering of common stock of the Company are capitalized as a deferred charge and amortized to expense on a straight-line basis
over 12 months from the commencement of operations, January 23, 2020. 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
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.



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 is effective for all entities as of March 12, 2020 through December
31, 2022. The Company is currently evaluating the impact of adopting ASU 2020-04 on its consolidated financial statements.



F-25









Note 3. 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. 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.



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
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 U.S. Bank, National Association or its affiliates
(“US Bank”) directly to serve as custodian, transfer agent, distribution paying agent and registrar.



Investment Advisory Agreement



The Investment Advisor serves
as the investment adviser of the Company and is registered as an investment adviser with the SEC. The Investment Advisor’s primary
business is to provide a variety of investment management services, including an investment program for the Company. The Investment Advisor
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)
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.





F-26









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 fee net income used in the calculation of the Income Incentive Fee would be subject to a downward adjustment. The amount
of the adjustment would be equal to the amount by which such net realized losses exceed such net investment income. 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:



| | ● | 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”);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 100% of the Company’s “adjusted net investment
    income” with respect to that portion of such “adjusted net investment income,” if any, that exceeds the Hurdle
    Amount but is less than or equal to an amount (the “Catch-Up Amount”) determined on a quarterly basis by multiplying
    1.6875% by the Company’s total net asset value for the immediately preceding calendar quarter. The Catch-Up Amount is intended
    to provide the Investment Advisor with an incentive fee of 12.5% on all of the Company’s “adjusted net investment income”
    when the Company’s “adjusted net investment income” reaches the Catch-Up Amount in any calendar quarter; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | for any calendar quarter in which the Company’s
    “adjusted net investment income” exceeds the Catch-Up Amount, the Income Incentive Fee shall equal 12.5% of the amount
    of the Company’s “adjusted net investment income” for the calendar quarter.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



“Adjusted net investment
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.





F-27







“Net realized losses”
in respect of a particular period means the difference, if positive, between (i) the aggregate realized capital losses on the Company’s
investments in such period and (ii) the aggregate realized capital gains on the Company’s investments in such period. “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.



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.



Note 4. Investments



The following table presents
the composition of the Company’s investment portfolio at amortized cost and fair value as of December 31, 2021 and December 31,
2020:





|                                |  | December 31, 2021 |               |  | December 31, 2020 |  
|------------------------------- |  | ----------------- | ------------- |  | ----------------- | -
|                                |  | Amortized         |               |  | Fair              |  
|                                |  | Cost              |               |  | Value             |  
|First-lien senior secured debt  |  |                   | 1,003,839,402 |  |                   | $
|Second-lien senior secured debt |  |                   | 64,317,453    |  |                   |  
|Corporate Bonds                 |  |                   | 2,883,596     |  |                   |  
|Convertible Bond                |  |                   | 1,021,974     |  |                   |  
|CLO Mezzanine                   |  |                   | 18,907,287    |  |                   |  
|CLO Equity                      |  |                   | 20,101,177    |  |                   |  
|Equity                          |  |                   | 500,000       |  |                   |  
|Short-term investments          |  |                   | 78,142,764    |  |                   |  
|Total Investments               |  | $                 | 1,189,713,653 |  |                   | $



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 portfolio companies with foreign domiciles or non-controlled investment companies. As of December 31, 2020,
approximately 17.0% of the investment portfolio at amortized cost and 17.2% of the investment portfolio measured at fair value, respectively,
were invested in portfolio companies with foreign domiciles or non-controlled investment companies. With respect to the Company’s
total assets, 13.3% and 15.5% 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, 2021 and December 31, 2020, respectively.





F-28







The industry composition of
investments based on fair value, as a percentage of total investments at fair value, as of December 31, 2021 and December 31, 2020 was
as follows:



|                                                      |  | December 31,
2021 |       |   | December 31,
2020 | 
|----------------------------------------------------- |  | ----------------- | ----- | - | ----------------- | 
|                                                      |  |                   |       |   |                   | 
|Healthcare Providers and Services                     |  |                   | 10.8  | % |                   | 
|Software                                              |  |                   | 10.2  | % |                   | 
|IT Services                                           |  |                   | 9.4   | % |                   | 
|Cash and cash equivalents                             |  |                   | 6.5   | % |                   | 
|Professional Services                                 |  |                   | 6.4   | % |                   | 
|Insurance                                             |  |                   | 5.7   | % |                   | 
|Media                                                 |  |                   | 3.9   | % |                   | 
|Hotels, Restaurants and Leisure                       |  |                   | 3.5   | % |                   | 
|Independent Power and Renewable Electricity Producers |  |                   | 3.1   | % |                   | 
|Building Products                                     |  |                   | 3.0   | % |                   | 
|Oil, Gas and Consumable Fuels                         |  |                   | 3.0   | % |                   | 
|Chemicals                                             |  |                   | 2.2   | % |                   | 
|Healthcare Technology                                 |  |                   | 2.1   | % |                   | 
|Healthcare Equipment and Supplies                     |  |                   | 2.0   | % |                   | 
|Containers and Packaging                              |  |                   | 1.8   | % |                   | 
|Diversified Financial Services                        |  |                   | 1.8   | % |                   | 
|Construction and Engineering                          |  |                   | 1.7   | % |                   | 
|Structured Subordinated Note                          |  |                   | 1.7   | % |                   | 
|Structured Note                                       |  |                   | 1.6   | % |                   | 
|Metals and Mining                                     |  |                   | 1.5   | % |                   | 
|Commercial Services and Supplies                      |  |                   | 1.5   | % |                   | 
|Auto Components                                       |  |                   | 1.5   | % |                   | 
|Diversified Telecommunication Services                |  |                   | 1.4   | % |                   | 
|Internet Software and Services                        |  |                   | 1.3   | % |                   | 
|Airlines                                              |  |                   | 1.3   | % |                   | 
|Specialty Retail                                      |  |                   | 1.2   | % |                   | 
|Food Products                                         |  |                   | 1.1   | % |                   | 
|Electronic Equipment, Instruments and Components      |  |                   | 1.1   | % |                   | 
|Aerospace and Defense                                 |  |                   | 0.9   | % |                   | 
|Diversified Consumer Services                         |  |                   | 0.8   | % |                   | 
|Pharmaceuticals                                       |  |                   | 0.8   | % |                   | 
|Industrial Conglomerates                              |  |                   | 0.8   | % |                   | 
|Electrical Equipment                                  |  |                   | 0.6   | % |                   | 
|Real Estate Management and Development                |  |                   | 0.6   | % |                   | 
|Road and Rail                                         |  |                   | 0.6   | % |                   | 
|Wireless Telecommunication Services                   |  |                   | 0.6   | % |                   | 
|Technology Hardware, Storage and Peripherals          |  |                   | 0.5   | % |                   | 
|Household Durables                                    |  |                   | 0.4   | % |                   | 
|Leisure Products                                      |  |                   | 0.4   | % |                   | 
|Machinery                                             |  |                   | 0.3   | % |                   | 
|Electric Utilities                                    |  |                   | 0.3   | % |                   | 
|Textiles, Apparel and Luxury Goods                    |  |                   | 0.1   | % |                   | 
|Interactive Media and Services                        |  |                   | -     | % |                   | 
|Construction Materials                                |  |                   | -     | % |                   | 
|Internet and Direct Marketing Retail                  |  |                   | -     | % |                   | 
|Capital Markets                                       |  |                   | -     | % |                   | 
|Energy Equipment and Services                         |  |                   | -     | % |                   | 
|Real Estate Investment Trusts (REITs)                 |  |                   | -     | % |                   | 
|Transportation Infrastructure                         |  |                   | -     | % |                   | 
|                                                      |  |                   |       |   |                   | 
|Total                                                 |  |                   | 100.0 | % |                   | 





F-29







Note 5. 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
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
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.



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, 2021 and as of December 31, 2020, there were no investments accounted for using the practical
expedient.



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, 2021:





|                                |  | Fair Value Hierarchy as of December 31, 2021 |           
|------------------------------- |  | -------------------------------------------- | ----------
|Investments:                    |  | Level 1                                      |           
|First-lien senior secured debt  |  | $                                            | -         
|Second-lien senior secured debt |  |                                              | -         
|Corporate Bonds                 |  |                                              | -         
|Convertible Bond                |  |                                              | -         
|CLO Mezzanine                   |  |                                              | -         
|CLO Equity                      |  |                                              | -         
|Equity                          |  |                                              | 800,000   
|Short Term Investments          |  |                                              | 78,142,764
|Total Investments               |  | $                                            | 78,942,764





F-30







The following table presents
the fair value hierarchy of investments as of December 31, 2020:



|                                                         |  | Fair Value Hierarchy as of December 31, 2020 |           
|-------------------------------------------------------- |  | -------------------------------------------- | ----------
|Investments:                                             |  | Level 1                                      |           
|First-lien senior secured debt                           |  | $                                            | -         
|Second-lien senior secured debt                          |  |                                              | -         
|Collateralized securities and structured products - debt |  |                                              | -         
|Short Term Investments                                   |  |                                              | 53,104,869
|Total Investments                                        |  | $                                            | 53,104,869



For the year ended December
31, 2021 and the period from January 23, 2020 (Commencement of Operations) to December 31, 2020, 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, 2021, approximates their respective carrying values
because the BoA Credit Facility and WF Credit Facility each have variable interest based on selected short term rates.



Note 6. Borrowings



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. As of December 31, 2021, the Company’s asset coverage ratio was 170%.



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
N.A. 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
capacity.



Debt obligations consisted
of the following as of December 31, 2021:





|                    |  | December 31, 2021             |            
|------------------- |  | ----------------------------- | -----------
|                    |  | Aggregate Principal Committed |            
|BoA Credit Facility |  | $                             | 725,000,000
|Total debt          |  | $                             | 725,000,000



| | (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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------



Debt obligations consisted
of the following as of December 31, 2020:



|                    |  | December 31, 2020             |            
|------------------- |  | ----------------------------- | -----------
|                    |  | Aggregate Principal Committed |            
|BoA Credit Facility |  | $                             | 475,000,000
|Total debt          |  | $                             | 475,000,000



| | (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 $2.122 million.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-31









Average debt outstanding under
the BoA Credit Facility during the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December
31, 2020, was $433.1 million and $247.5 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 1⁄2
of 1%, (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 year ended December
31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, the components of interest expense with
respect to the BoA Credit Facility were as follows:



|                                    |  | For the Year Ended |           |   | For the Period January 23, 2020 (Commencement of Operations) through |  
|----------------------------------- |  | ------------------ | --------- | - | -------------------------------------------------------------------- | -
|                                    |  | December 31, 
2021 |           |   | December 31, 
2020                                                   |  
|Interest expense                    |  | $                  | 6,711,315 |   |                                                                      | $
|Amortization of debt issuance costs |  |                    | 550,610   |   |                                                                      |  
|Total interest expense              |  | $                  | 7,261,925 |   |                                                                      | $
|Average interest rate               |  |                    | 1.40      | % |                                                                      |  



PS BDC Funding has pledged
all of its assets to BofA N.A., in its capacity as Administrative Agent, to secure its obligations under the BoA Credit Facility. Both
the Company and PS BDC Funding have made customary representations and warranties and are required to comply with various covenants, reporting
requirements and other customary requirements for similar credit facilities. Borrowing under the BoA Credit Facility is subject to the
leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions
and custody. 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



On 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”), Wells Fargo Bank, National Association as the administrative agent
(“WFB”) and U.S. Bank National Association (“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 18, 2023. All amounts outstanding under the WF Credit
Facility are required to be repaid by December 18, 2025.



F-32









Debt obligations consisted
of the following as of December 31, 2021:



|                   |  | December 31, 2021             |            
|------------------ |  | ----------------------------- | -----------
|                   |  | Aggregate Principal Committed |            
|WF Credit Facility |  | $                             | 150,000,000
|Total debt         |  | $                             | 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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2020, we
had no principal outstanding and $150 million of available Commitments under the WF Credit Facility.



Average debt outstanding under
the WF Credit Facility during the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December
31, 2020, was $13.9 million and $0, 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%. The “base rate” will be equal
to the highest of (a) the federal funds rate plus 1/2 of 1% 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 year ended December
31, 2021, the components of interest expense with respect to the WF Credit Facility were as follows:



|                                    |  | For the Year Ended |          
|----------------------------------- |  | ------------------ | ---------
|                                    |  | December 31, 2021  |          
|Interest expense                    |  | $                  | 996,077  
|Amortization of debt issuance costs |  |                    | 358,659  
|Total interest expense              |  | $                  | 1,354,736
|Average interest rate               |  |                    | 2.18     



PS BDC Funding II has pledged
all of its assets to U.S. Bank, in its capacity as Collateral Agent, to secure its obligations under the WF Credit Facility and U.S.
Bank acts as the custodian of such assets. Both the Company and PS BDC Funding II have made customary representations and warranties
and are required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities.
Borrowing 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.



F-33











Note 7. Share Transactions



Offering Proceeds



During the year ended December
31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, the Company issued and sold 10,007,526
shares at an aggregate purchase price of $206.6 million and 12,562,805 shares at an aggregate purchase price of $238.6 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
form.



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 account.



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.



Note 8. Commitments and Contingencies



As of December 31, 2021 and
December 31, 2020, the Company had an aggregate of $11.3 million and $1.3 million, respectively, of unfunded commitments to provide debt
financing to its portfolio companies. As of each of December 31, 2021 and December 31, 2020, 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 statement of assets and liabilities and are not reflected
in the Company’s consolidated statement of assets and liabilities.



F-34









A summary of the composition
of the unfunded commitments as of December 31, 2021 is shown in the table below:



|                                 |  | Expiration
Date (1) |  | As of December 31, 2021 |           
|-------------------------------- |  | ------------------- |  | ----------------------- | ----------
|ARC Falcon I Inc.                |  | 9/22/2028           |  | $                       | 636,943   
|Aveanna Healthcare LLC           |  | 6/30/2028           |  |                         | 754,717   
|Culligan Water                   |  | 6/16/2028           |  |                         | 706,667   
|Medical Solutions L.L.C.         |  | 10/6/2028           |  |                         | 800,000   
|National Mentor Holdings, Inc.   |  | 2/18/2028           |  |                         | 430,398   
|PT Intermediate Holdings III LLC |  | 11/1/2028           |  |                         | 2,140,000 
|RSC Acquisition, Inc.            |  | 10/30/2026          |  |                         | 3,237,952 
|Sovos Compliance, LLC            |  | 8/11/2028           |  |                         | 589,041   
|Vocus Group                      |  | 5/26/2028           |  |                         | 2,000,000 
|Total unfunded commitments       |  |                     |  | $                       | 11,295,718



|(1) | 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A summary of the composition
of the unfunded commitments as of December 31, 2020 is shown in the table below:



|                              |  | Expiration Date(1) |            |  | As of December 31, 2020 |  
|----------------------------- |  | ------------------ | ---------- |  | ----------------------- | -
|HAH Group Holding Company LLC |  |                    | 10/28/2027 |  |                         | $
|LBM Acquisition LLC           |  |                    | 12/18/2027 |  |                         |  
|OneDigital Borrower LLC       |  |                    | 11/16/2027 |  |                         |  
|Total unfunded commitments    |  |                    |            |  |                         | $



| | (1) | 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, 2021, management
is not aware of any pending or threatened litigation.



Note 9. 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,
2021 and as of December 31, 2020, there were no dilutive shares.



The following table sets forth
the computation of basic and diluted earnings per share of common stock for the year ended December 31, 2021 and the period January 23,
2020 (Commencement of Operations) through December 31, 2020:





|                                                                         |  | For the
 Year Ended |            |  | For the Period
 January 23, 2020
 (Commencement of
 Operations) through |  
|------------------------------------------------------------------------ |  | ------------------- | ---------- |  | ----------------------------------------------------------------------- | -
|                                                                         |  | December 31,
 2021  |            |  | December 31,
 2020                                                      |  
|                                                                         |  |                     |            |  |                                                                         |  
|Net increase (decrease) in net assets resulting from operations          |  | $                   | 19,059,718 |  |                                                                         | $
|Weighted average shares of common stock  outstanding - basic and diluted |  |                     | 15,494,614 |  |                                                                         |  
|Earnings (loss) per share of common stock - basic and diluted            |  | $                   | 1.23       |  |                                                                         | $



Note 10. Income Taxes



The Company intends to elect to be treated as a RIC under the Internal
Revenue Code (“Code”) for its taxable year end December 31, 2021. 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 2021). 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.





F-35









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, 2021 and December 31, 2020. These reclassifications have no impact on net assets.



|                                                      |  | Year Ended
 December 31, |   |  | For the 
Period 
January 23, 2020 (Commencement
 of Operations)
 through
 December 31, |  
|----------------------------------------------------- |  | ------------------------ | - |  | -------------------------------------------------------------------------------------- | -
|                                                      |  | 2021                     |   |  | 2020                                                                                   |  
|Increase (decrease) in distributable earnings         |  | $                        | - |  |                                                                                        | $
|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 year ended December 31, 2021 and the period January 23, 2020
(Commencement of Operations) through December 31, 2020:



|                                                                      |  | Year Ended 
December 31, |            |   | For the 
Period 
January 23,
 2020
 (Commencement
 of Operations)
 through
 December 31, |  
|--------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---------------------------------------------------------------------------------------- | -
|                                                                      |  | 2021                     |            |   | 2020                                                                                     |  
|Net increase (decrease) in net assets resulting from operations       |  | $                        | 19,059,718 |   |                                                                                          | $
|Net change in unrealized appreciation (depreciation) from investments |  |                          | 8,527,786  |   |                                                                                          |  
|Other book tax differences                                            |  |                          | (897,245   | ) |                                                                                          |  
|Taxable income before deductions for distributions                    |  | $                        | 26,690,259 |   |                                                                                          | $



|                             |  | Year
Ended
December 31, |            |  | For
    the 
    Period 
    January 23,
    2020
    (Commencement
    of Operations)
    through
    December 31, |  
|---------------------------- |  | ----------------------- | ---------- |  | ------------------------------------------------------------------------------------------------------------------- | -
|                             |  | 2021                    |            |  | 2020                                                                                                                |  
|Distributions
    paid from: |  |                         |            |  |                                                                                                                     |  
|Ordinary
    income          |  | $                       | 22,163,852 |  |                                                                                                                     | $
|Capital
    gains            |  |                         | 3,788,641  |  |                                                                                                                     |  
|Return
    of Capital        |  |                         | -          |  |                                                                                                                     |  
|Total                        |  | $                       | 25,952,493 |  |                                                                                                                     | $





F-36









For the year ended December
31, 2021 and the period January 23, 2020 (Commencement of Operations) through December 31, 2020, the components of accumulated earnings
on a tax basis were as follows:



|                                           |  | Year Ended  December 31,  2021 |           |   | For the Period  January 23,  2020  (Commencement  of Operations)  through  December 31,  2020 |  
|------------------------------------------ |  | ------------------------------ | --------- | - | --------------------------------------------------------------------------------------------- | -
|Undistributed net investment income (loss) |  | $                              | 1,834,053 |   |                                                                                               | $
|Undistributed capital gains                |  |                                | 513,796   |   |                                                                                               |  
|Capital loss carryforward                  |  |                                | -         |   |                                                                                               |  
|Other accumulated gain (loss)              |  |                                | (101,573  | ) |                                                                                               |  
|Net unrealized appreciation (depreciation) |  |                                | 5,788,994 |   |                                                                                               |  
|Total                                      |  | $                              | 8,035,270 |   |                                                                                               | $



Capital losses can be carried
forward indefinitely to offset future capital gains. As of December 31, 2021 and December 31, 2020, the Company had no capital loss
carryforwards.



As of December 31, 2021 and
December 31, 2020, the Company’s aggregate unrealized appreciation and depreciation on investments based on cost for U.S.
federal income tax purposes was as follows:



|                                                          |  | December 31, |               |   | December 31, |  
|--------------------------------------------------------- |  | ------------ | ------------- | - | ------------ | -
|                                                          |  | 2021         |               |   | 2020         |  
|Tax cost                                                  |  |              | 1,188,452,438 |   |              |  
|Gross unrealized appreciation                             |  |              | 9,331,858     |   |              |  
|Gross unrealized depreciation                             |  |              | (3,542,964    | ) |              |  
|Net unrealized appreciation/(depreciation) on investments |  | $            | 5,788,994     |   |              | $



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, 2021, 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 jurisdictions as U.S. Federal, New York State, and New York City. The 2020
and 2021 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.





F-37









Note 11. 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 year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December
31, 2020:



|                                                                              |  | For the
Year Ended
December 31,
2021 |             |   | For the Period January 23,
2020 (Commencement of Operations) through
December 31,
2020 |  
|----------------------------------------------------------------------------- |  | ------------------------------------ | ----------- | - | -------------------------------------------------------------------------------------- | -
|Per Common Share Operating Performance                                        |  |                                      |             |   |                                                                                        |  
|Net Asset Value, Beginning of Period                                          |  | $                                    | 20.15       |   |                                                                                        | $
|                                                                              |  |                                      |             |   |                                                                                        |  
|Results of Operations:                                                        |  |                                      |             |   |                                                                                        |  
|Net Investment Income(1)                                                      |  |                                      | 1.47        |   |                                                                                        |  
|Net Realized and Unrealized Gain (Loss) on Investments(4)                     |  |                                      | (0.18       | ) |                                                                                        |  
|Net Increase (Decrease) in Net Assets Resulting from Operations               |  |                                      | 1.29        |   |                                                                                        |  
|                                                                              |  |                                      |             |   |                                                                                        |  
|Distributions to Common Stockholders                                          |  |                                      |             |   |                                                                                        |  
|Distributions from Net Investment Income                                      |  |                                      | (1.01       | ) |                                                                                        |  
|Distributions from Realized Gains                                             |  |                                      | (0.37       | ) |                                                                                        |  
|Net Decrease in Net Assets Resulting from Distributions                       |  |                                      | (1.38       | ) |                                                                                        |  
|                                                                              |  |                                      |             |   |                                                                                        |  
|Net Asset Value, End of Period                                                |  | $                                    | 20.06       |   |                                                                                        | $
|                                                                              |  |                                      |             |   |                                                                                        |  
|Shares Outstanding, End of Period                                             |  |                                      | 22,570,331  |   |                                                                                        |  
|                                                                              |  |                                      |             |   |                                                                                        |  
|Ratio/Supplemental Data                                                       |  |                                      |             |   |                                                                                        |  
|Net assets, end of period                                                     |  | $                                    | 452,797,588 |   |                                                                                        | $
|Weighted-average shares outstanding                                           |  |                                      | 15,494,614  |   |                                                                                        |  
|Total Return(3)                                                               |  |                                      | 8.10        | % |                                                                                        |  
|Portfolio turnover                                                            |  |                                      | 53          | % |                                                                                        |  
|Ratio of operating expenses to average net assets without waiver(2)           |  |                                      | 5.54        | % |                                                                                        |  
|Ratio of operating expenses to average net assets with waiver(2)              |  |                                      | 5.29        | % |                                                                                        |  
|Ratio of net investment income (loss) to average net assets without waiver(2) |  |                                      | 6.92        | % |                                                                                        |  
|Ratio of net investment income (loss) to average net assets with waiver(2)    |  |                                      | 7.17        | % |                                                                                        |  



|(1) | The per common share data was derived by using weighted average shares outstanding.                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Ratios have been annualized for periods less than one year.                                                                                                                                                                                                                                                               
|(3) | Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized. Assumes reinvestment of distributions.                                                                    
|(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 Statement of Operations due to share transactions during the period.





F-38









Note 12. Selected Quarterly Financial Data
(Unaudited)



The following are the quarterly
results of operations for the year ended December 31, 2021 and the period January 23, 2020 (Commencement of Operations) through December
31, 2020. 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 |           
|-------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------
|                                                                                                         |  | March 31,  2021            |           
|Investment income                                                                                        |  | $                          | 9,674,876 
|Net expenses                                                                                             |  |                            | 3,637,128 
|Net investment income (loss)                                                                             |  |                            | 6,037,748 
|Net realized gain (loss) on investments, and foreign currency transactions                               |  |                            | 1,132,657 
|Net unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts |  |                            | (1,826,413
|Increase (decrease) in net assets resulting from operations                                              |  | $                          | 5,343,992 
|Net asset value per share as of the end of the quarter                                                   |  | $                          | 20.57     



|                                                                                                         |  | For the Three Months Ended                                                                 |            
|-------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------ | -----------
|                                                                                                         |  | For the Period  January 23,  2020  (Commencement  of Operations)  through  March 31,  2020 |            
|Investment income                                                                                        |  | $                                                                                          | 1,453,148  
|Net expenses                                                                                             |  |                                                                                            | 1,202,558  
|Net investment income (loss)                                                                             |  |                                                                                            | 250,590    
|Net realized gain (loss) on investments, and foreign currency transactions                               |  |                                                                                            | 218,390    
|Net unrealized gain (loss) on investments, foreign currency translations, and foreign currency contracts |  |                                                                                            | (33,997,916
|Increase (decrease) in net assets resulting from operations                                              |  | $                                                                                          | (33,528,936
|Net asset value per share as of the end of the quarter                                                   |  | $                                                                                          | 16.16      



Note 13. 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 3, 2022, the Company
issued and sold 231,805 shares of its common stock at an aggregate purchase price of $4.65 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, 2022, the Company
issued and sold 8,591 shares of its common stock at an aggregate purchase price of $174 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.



Unfunded Capital Commitments



As of January 11, 2022, PT Intermediate
Holdings III LLC was fully funded for $2.14 million. Additionally, RSC Acquisition Inc. was partially funded on January 19, 2022 for $196
thousand.



Draws on Credit Facilities



As of March 11, 2022, the Company
incrementally drew an additional $14,000,000 on the BoA Credit Facility, and $16,000,000 on the WF Credit Facility.



Distributions



On December 30, 2021, the
Company declared a distribution of $0.65 per share, or $14,449,980, of which a cash distribution of $5,874,681 was payable on January
19, 2022 and the remainder was paid in common stock through the Company’s dividend reinvestment plan.





F-39









ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



Not Applicable.



ITEM 9A. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures



Our management, with the
participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act),
as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance
level.



Internal Control Over Financial Reporting



Our management, including
our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of our financial statements for external reporting purposes in accordance with GAAP. Internal control over financial reporting includes
those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.



Management (with the participation
of our Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control — Integrated Framework issued in 2013 by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial
reporting was effective as of December 31, 2021.



Changes in Internal Control over Financial
Reporting



There have been no changes
in our internal control over financial reporting during our fiscal quarter ended December 31, 2021 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



ITEM 9B. OTHER INFORMATION



None.





63







PART III



ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE



Certain information with
respect to the directors of the Company is set forth below, including their names, ages, a brief description of their recent business
experience, including present occupations and employment, certain directorships that each person holds, and the year in which each person
became a director.



For purposes of this presentation,
our directors have been divided into two groups – independent directors and interested directors. Interested directors are “interested
persons” as defined in the 1940 Act. Christopher D. Long and Jeffrey D. Fox are interested directors of the Company because they
are officers of the Company and/or the Investment Advisor.



Directors



|Name, Address and Age
    (1) |  | Position(s) 
    held with
 Company                  |  | Term of Office and
    Length
 of Time Served                 |  | Principal Occupation(s)

    During the Past 5 Years                                                                                                                                                             |  | Other Public

    Directorships Held
 During the Past 5 years (2)                                                                                                                                                            
|----------------------------- |  | ---------------------------------------------------- |  | ------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Independent Director          |  |                                                      |  |                                                               |  |                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                              
|Christopher C. Nelson – 47    |  | Director                                             |  | Class II Director since
    November 2019; Term Expires 2023  |  | Wealth Advisor at SeaCrest Wealth
    Management, a financial advisory firm, since May 2018. Vice President at Enterprise Trust Company, an investment management firm,
    from February 2013 to February 2018. |  | None                                                                                                                                                                                                                         
|Megan L. Webber – 47          |  | Director                                             |  | Class I Director since
    November 2019; Term Expires 2022   |  | Financial Reporting Manager
    at The Anschutz Corporation, a private holding company.                                                                                                                          |  | Member of the Board of Trustees
    of Palmer Square Opportunistic Income Fund since August 2014. Member of the Board of Trustees of Montage Managers Trust, a registered
    investment company (ceased operations in 2017).
|James W. Neville Jr. – 57     |  | Director                                             |  | Class III Director since
    November 2019; Term Expires 2024 |  | Proprietary trader and investor.
    Portfolio Manager at Great Plains Principal Trading, an asset management firm, from January 2012 through June 2019.                                                         |  | Member of the Board of Trustees
    of Palmer Square Opportunistic Income Fund since August 2014. Member of the Board of Trustees of Montage Managers Trust, a registered
    investment company (ceased operations in 2017).
|Interested Director           |  |                                                      |  |                                                               |  |                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                              
|Christopher D. Long – 46      |  | Chief Executive Officer, 
    President and Chairman |  | Class I Director since November 2019; Term Expires
    2022   |  | Chief Executive Officer of Palmer Square Capital
    Management LLC.                                                                                                                                             |  | Member of the Board of Trustees of Palmer Square
    Opportunistic Income Fund from August 2014 to October 2018.                                                                                                             
|Jeffrey D. Fox – 46           |  | Chief Financial Officer, 
    Treasurer and Director |  | Class III Director since November 2019; Term
    Expires 2024 |  | President of Palmer Square Capital Management LLC
    since March 2020. Managing Director of Palmer Square Capital Management LLC from April 2013 to March 2020.                                                 |  | None                                                                                                                                                                                                                         



| | (1) | The business address of each of our directors is c/o Palmer Square
    Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | No director otherwise serves as a director of an investment company
    subject to the 1940 Act.
| | --- | ------------------------------------------------------------------------------------------------





64







Executive Officers Who Are Not Directors



Information regarding our
executive officers who do not serve on the Board is as follows:



|Name,
    Address and Age(1) |  | Positions held with
    Company |  | Principal
    Occupation(s) During the Past 5 Years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---------------------------- |  | ------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Angie K. Long – 47           |  | Chief Investment Officer        |  | Ms. Long
    was appointed as our Chief Investment Officer in 2019. Ms. Long also serves as Chief Investment Officer of PSCM and has key responsibilities
    for all investment-related activities at PSCM. Prior to joining PSCM in 2011, Ms. Long worked for JPMorgan Chase & Co. in New
    York for 13 years. Ms. Long held many senior roles including Deputy Head of North American Credit Trading, Head of High Yield Trading,
    and Head of Credit Derivatives Trading. Ms. Long has been a trader of many products including high yield bonds, high yield credit
    derivatives, distressed debt, capital structure arbitrage, and structured credit. In addition, she worked with the Global Head of
    Credit Trading to help oversee risk management for the High Yield and High Grade credit trading books. Ms. Long is married to Christopher
    D. Long, our Chairman, Chief Executive Officer and President. Ms. Long received an AB degree in Economics from Princeton University
    and is also a CFA® charterholder.
|                             |  |                                
|Scott A. Betz – 44           |  | Chief Compliance Officer        |  | Mr. Betz was appointed as our Chief Compliance Officer in 2019. Prior
to joining in 2019, Mr. Betz worked for over 14 years at Scout Investments, most recently as Chief Operating Officer, Chief Compliance
Officer and Treasurer. Prior to joining Scout Investments, Mr. Betz worked for over six years at UMB Bank as a Performance Measurement
Specialist and subsequently as Investment Technology Officer. Mr. Betz received an MBA degree and a BA degree in Political Science from
the University of Missouri-Kansas City.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



| | (1) | The business address of each of
our officers is c/o Palmer Square Capital BDC Inc., 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Information About Each Director’s Experience, Qualifications,
Attributes or Skills



The Board believes that,
collectively, the directors have balanced and diverse experience, qualifications, attributes and skills, which allow the Board to operate
effectively in governing the Company and protecting the interests of its stockholders. Below is a description of the various experiences,
qualifications, attributes and/or skills with respect to each director considered by the Board.



Interested Directors



Christopher D. Long



Mr. Long was appointed as
our Chairman, Chief Executive Officer and President in 2019 and has served on our Board since November 2019. Mr. Long has also served
as Chief Executive Officer of our Investment Advisor since 2019 and Chief Executive Officer of PSCM since 2009 and is responsible for
managing our Investment Advisor’s and PSCM’s overall business. Mr. Long also served as President of PSCM from 2009 to March
2020. Since PSCM’s inception, Mr. Long has been successful in not only building a highly-experienced investment team, but also
an integrated credit investment platform that manages mutual fund offerings, private funds and separately managed accounts. PSCM has
a client list that spans not only institutions and family offices, but also registered investment advisers, banks/trusts, and broker-dealers.
Mr. Long’s previous work experience includes key investment roles at Prairie Capital and Sandell Asset Management as well as working
at Morgan Stanley in the Credit Derivatives and Distressed Securities Group focused on the firm’s proprietary investments. Before
Morgan Stanley, he worked at TH Lee Putnam Ventures, a private equity fund sponsored by Thomas H Lee Partners and Putnam Investments.
In that role, he also served on the Board of Directors of Avero, Inc. and was a Board Observer for Parago, Inc. He started his career
at JPMorgan & Co. in Leveraged Finance and Mergers & Acquisitions (FIG Group) advising corporations and private equity firms
on investment banking and capital markets. Mr. Long previously served on the board of trustees of Palmer Square Opportunistic Income
Fund (Nasdaq) from August 2014 to October 2018. Mr. Long is married to Angie K. Long, our Chief Investment Officer. He received an MBA
degree from the Harvard Business School and an AB degree in Economics cum laude from Princeton University. The Board believes that Mr.
Long’s strong investment and operating leadership experience qualifies him to serve on the Board.





65







Jeffrey D. Fox



Mr. Fox was appointed as
our Chief Financial Officer and Treasurer in 2019 and has served on our board since November 2019. Mr. Fox has also served as Chief Financial
Officer of our Investment Advisor since 2019 and as President of PSCM since March 2020. Mr. Fox previously served as Managing Director
of PSCM from April 2013 to March 2020. Prior to joining Palmer Square in April 2013, Mr. Fox worked for Sandler O’Neill and Partners
from September 2011 to March 2013 where he was a Managing Director within Fixed Income where he was involved in the structuring and sales
of many products including Collateralized Loan Obligations. Before Sandler O’Neill, Mr. Fox worked for Société Générale
as a Director within Global Markets Advisory where he was instrumental in the US CDO/CLO and RMBS Credit Advisory effort. His work included
the restructuring of various structured credit legacy positions for European institutions as well as the modeling behind the corporate
rating and pricing for various structured products. Prior to Société Générale, Mr. Fox was employed by JPMorgan
Chase & Co/Bear Stearns, where he was an Associate Director in the FAST organization focusing on the structuring of Trust Preferred
CDOs and CLOs. Also while at Bear Stearns, Mr. Fox managed the global CDO analytics desk which included intensive credit modeling of
various asset classes. Mr. Fox received a MS degree in Computer Information Systems from Arizona State University and a BS degree in
Mathematics and Geology from Northern Arizona University. Mr. Fox holds the Series 7 and 63 licenses. The Board believes that Mr. Fox’s
strong operational and financial experience qualifies him to serve on the Board.



Independent Directors



Megan L. Webber



Ms. Webber has served on
our Board since November 2019. Ms. Webber is a Financial Reporting Manager at The Anschutz Corporation, where she has worked for over
19 years. Prior to Anschutz Corporation, she was a Supervising Audit Senior at KPMG, LLP from 1997 to 2000. Ms. Webber has served on
the board of trustees of Palmer Square Opportunistic Income Fund (Nasdaq) since 2014, and previously served on the board of trustees
of Montage Managers Trust from July 2015 to March 2017. Ms. Webber received a BS in Accounting from Indiana University and received her
CPA license in 1997. The Board believes that Ms. Webber’s strong financial and audit experience qualifies her to serve on the Board.



James W. Neville Jr.



Mr. Neville has served on
our Board since November 2019. Mr. Neville is an active proprietary trader and investor. He was a Portfolio Manager at Great Plains Principal
Trading from January 2012 through June 2019. Prior to Great Plains Principal Trading, Mr. Neville served as a proprietary trader for
over 23 years, focusing on agriculture futures and options as well as stock index futures and energy. Mr. Neville has served on the board
of directors of Palmer Square Opportunistic Income Fund (Nasdaq) since 2014. The Board believes that Mr. Neville’s strong investment
management and trading experience qualifies him to serve on the Board.



Christopher C. Nelson



Mr. Nelson has served on
our Board since November 2019. Mr. Nelson is a Wealth Advisor at SeaCrest Wealth Management, where he has worked since May 2018. Prior
to SeaCrest Wealth Management, Mr. Nelson was a Vice President at Enterprise Trust Company from February 2013 to February 2018, where
he led the Kansas City team. Prior to that, Mr. Nelson held investment management roles at The Private Bank, Kornitzer Capital Management,
and The Bank of New York. Mr. Nelson received a Bachelor of Arts in English from Gettysburg College in Gettysburg, Pennsylvania. The
Board believes that Mr. Nelson’s strong investment management experience qualifies him to serve on the Board.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the
Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of our Common Stock, to file reports
of securities ownership and changes in such ownership with the SEC. Officers, directors, and greater than 10% stockholders also are required
by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.



Based solely on the Company’s
review of Forms 3, 4 and 5 filed by such persons and information provided by the Company’s directors and officers, the Company
believes that during the year ended December 31, 2021, all Section 16(a) filing requirements applicable to such persons were
met in a timely manner, with the following inadvertent exception: Mr. Martin C. Bicknell, beneficial owner of greater than 10% of our
Common Stock, filed late one Form 3 with respect to one transaction in shares of Common Stock during the reporting period.



Code of Conduct, Code of Ethics and Insider Trading Policy



We expect each of our officers
and directors, as well as any person affiliated with our operations, to act in accordance with the highest standards of personal and
professional integrity at all times and to comply with the Company’s policies and procedures and all laws, rules and regulations
of any applicable international, federal, provincial, state or local government. To this effect, the Board has adopted a Code of Ethics.
The Code of Ethics applies to all of the Company’s directors and officers.



As required by the 1940 Act
and the Advisers Act, we and our Investment Advisor have each adopted a Code of Ethics that establishes procedures that apply to our
directors, executive officers, officers, their respective staffs and the employees of our Investment Advisor with respect to their personal
investments and investment transactions. Our Code of Ethics generally does not permit investments by our directors, officers or any other
covered person in securities that may be purchased or held by us.



Nomination of Directors



There have been no material
changes to the procedures by which stockholders may recommend nominees to our Board since the filing of our Proxy Statement for our 2021
Annual Meeting of Stockholders.





66







Audit Committee



The members of our Audit
Committee are Megan L. Webber, James W. Neville and Christopher C. Nelson, each of whom meets the independence standards established
by the SEC for audit committees and is independent for purposes of the 1940 Act. Ms. Webber serves as Chair of our Audit Committee. Our
Board has determined that Ms. Webber is an “audit committee financial expert” under SEC rules. Our Audit Committee’s
responsibilities include establishing guidelines and making recommendations to our Board regarding the valuation of our loans and investments;
selecting our independent registered public accounting firm; reviewing with such independent registered public accounting firm the planning,
scope and results of their audit of our financial statements; pre-approving the fees for services performed; reviewing, in consultation
with the independent registered public accounting firm, the adequacy of internal control systems; reviewing our annual financial statements;
overseeing internal audit staff, if any, and periodic filings; and receiving our audit reports and financial statements.



ITEM 11. EXECUTIVE COMPENSATION



None of our officers receives
direct compensation from us. However, Messrs. Long and Fox, through their indirect financial interests in our Investment Advisor,
have an indirect pecuniary interest in the investment advisory fees paid by us under the Advisory Agreement. In addition, the Company
is responsible for expenses incurred by the Administrator in connection with administering the Company’s business, including making
payments to the Administrator based upon the Company’s allocable portion of the Administrator’s overhead and other expenses
associated with performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with
performing compliance functions and the allocable portion of the costs of compensation and related expenses of the Company’s Chief
Compliance Officer and Chief Financial Officer and their respective administrative support staffs.



Compensation of Directors



The Independent Directors
receive an annual fee of $25,000. They also receive reimbursement of reasonable out-of-pocket expenses incurred in connection
with attending each regular Board meeting, each special meeting and each committee meeting attended. We have obtained directors’
and officers’ liability insurance on behalf of our directors and officers. No compensation is paid to directors who are “interested
persons.” The Board reviews and determines the compensation of Independent Directors.



The following table shows
information regarding the compensation earned by our directors for the year ended December 31, 2021. No compensation is paid by
us to any interested director or executive officer of the Company.



|Name                  |  | Aggregate Compensation from Palmer Square Capital BDC Inc. (1) |        |  | Pension or Retirement Benefits Accrued as Part of Our Expenses (2) |  |   | Total Compensation from Palmer Square Capital BDC Inc. Paid to Director (1) | 
|--------------------- |  | -------------------------------------------------------------- | ------ |  | ------------------------------------------------------------------ |  | - | --------------------------------------------------------------------------- | 
|Independent Directors |  |                                                                |        |  |                                                                    |  |   |                                                                             | 
|Megan L. Webber       |  | $                                                              | 25,000 |  |                                                                    |  | — |                                                                             | 
|James W. Neville Jr.  |  | $                                                              | 25,000 |  |                                                                    |  | — |                                                                             | 
|Christopher C. Nelson |  | $                                                              | 25,000 |  |                                                                    |  | — |                                                                             | 
|Interested Directors  |  |                                                                |        |  |                                                                    |  |   |                                                                             | 
|Christopher D. Long   |  | $                                                              | —      |  |                                                                    |  | — |                                                                             | 
|Jeffrey D. Fox        |  | $                                                              | —      |  |                                                                    |  | — |                                                                             | 



| | (1) | For a description of the Independent Directors’ compensation,
    see above.
| | --- | ----------------------------------------------------------------------------



| | (2) | We do not have a profit-sharing or retirement plan, and directors do
    not receive any pension or retirement benefits.
| | --- | ------------------------------------------------------------------------------------------------------------------------



Compensation Committee



The Company does not have
a compensation committee because its executive officers do not receive compensation from us. The Board, as a whole, is responsible for
reviewing the reimbursement by the Company to the Administrator of the allocable portion of the cost of the Company’s Chief Financial
Officer and Chief Compliance Officer and their respective staffs on an annual basis and also participates in the consideration of director
compensation. Decisions on director compensation are based on a review of data of comparable BDCs.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table shows
information as of the March 11, 2022, unless otherwise indicated, regarding the beneficial ownership of our Common Stock by: (i) each
person that the Company believes beneficially holds more than 5% of the outstanding shares of Common Stock based solely on the Company’s
review of filings with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and Section 16 of the Exchange Act; (ii) each director and nominee; (iii) each executive officer of the Company;
and (iv) all directors and executive officers as a group.





67







The percentage ownership is
based on 22,810,727 shares of our Common Stock issued and outstanding as of March 11, 2022. Unless otherwise indicated, all persons named
as beneficial owners of our Common Stock have sole voting power and sole investment power with respect to the shares indicated as beneficially
owned. In addition, unless otherwise indicated, the address for each person named below is c/o Palmer Square Capital BDC Inc., Attention:
Secretary, 1900 Shawnee Mission Parkway, Suite 315, Mission Woods, Kansas 66205.



|Name
    and Address                                            |  | Shares
    Owned (1) |           |     | Percentage of
    Common Stock Outstanding(2) | 
|--------------------------------------------------------------- |  | -------------------- | --------- | --- | --------------------------------------------- | 
|Christopher D.
    Long                                         |  |                      | 29,305    | (3) |                                               | 
|Jeffrey D. Fox                                                  |  |                      | 8,656     |     |                                               | 
|Megan L. Webber                                                 |  |                      | —         |     |                                               | 
|James W. Neville Jr.                                            |  |                      | —         |     |                                               | 
|Christopher C. Nelson                                           |  |                      | —         |     |                                               | 
|Angie K. Long                                                   |  |                      | 29,305    | (3) |                                               | 
|Scott A. Betz                                                   |  |                      | 4,406     |     |                                               | 
|All directors
    and executive officers as a group (7 persons) |  |                      | 42,367    |     |                                               | 
|Excelsior Holdings D2 LLC (4)                                   |  |                      | 2,937,224 |     |                                               | 
|Alaris Master Fund, LP (5)                                      |  |                      | 2,919,358 |     |                                               | 
|Caravel Holdings LLC (6)                                        |  |                      | 3,983,290 |     |                                               | 
|Martin C. Bicknell (7)                                          |  |                      | 2,318,325 |     |                                               | 
|Chinquapin Trust Company (8)                                    |  |                      | 1,257,240 |     |                                               | 



| | * | Represents less than 1.0% of the issued and outstanding shares of our
    Common Stock as of the Record Date.
| | - | -------------------------------------------------------------------------------------------------------------



|(1) | Beneficial ownership has been determined in accordance with Rule 13d-3
    under the Exchange Act. Assumes no other purchases or sales of our common stock since the most recently available SEC filings. This
    assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with regard to
    the present intent of the beneficial owners of our common stock listed in this table.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Based on a total of 22,810,727 shares of Common Stock issued and outstanding as of March 11, 2022.
|--- | --------------------------------------------------------------------------------------------------





|(3) | Includes 26,131 shares of Common Stock indirectly held by the Christopher
    D. Long Revocable Trust, for which Mr. Long and Ms. Long disclaim beneficial ownership except to the extent of his or her pecuniary
    interests therein.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Based on information provided in a Schedule 13D filed on March 27, 2020, Excelsior Holdings D2 LLC (“Excelsior”) reported shared voting and dispositive power with respect to 2,613,051 shares of our Common Stock. As of December 31, 2021, Excelsior owned 2,937,224 shares of our Common Stock. Excelsior Holdings D LLC, a Delaware limited liability company (“Holdings LLC”) is the managing member of Excelsior. As managing member of Excelsior, Holdings LLC exercises dispositive and voting power over the shares beneficially owned by Excelsior. The principal business address of each of Excelsior and Holdings LLC is 6000 France Ave. S., Suite 550, Minneapolis, Minnesota, 55435.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Based on information provided in a Schedule 13G/A filed on October 18, 2021 and a Form 4 filed on October 18, 2021, Alaris Master Fund LP reported shared voting and dispositive power with respect to 2,804,393 shares of our Common Stock. As of December 31, 2021, Alaris Master Fund LP owned 2,919,358 shares of our Common Stock. Alaris Capital, LLC is the general partner of Alaris Master Fund LP and may be deemed to be an indirect beneficial owner of the shares. The principal business address of each of Alaris Master Fund LP and Alaris Capital, LLC is 4900 Main Street, Suite 600, Kansas City, Missouri 64112.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Based on information provided in a Schedule 13G/A filed on October
    18, 2021 and a Form 4 filed on October 18, 2021, Caravel Holdings LLC reported shared voting and dispositive power with respect to
    3,983,290 shares of our Common Stock. The shares are owned directly by Caravel Holdings LLC, which is a wholly owned subsidiary of
    Seaboard Foods LLC, which is a wholly owned subsidiary of Seaboard Corporation. Seaboard Foods LLC and Seaboard Corporation may each
    be deemed to be an indirect beneficial owner of the shares. The principal business address of each of Caravel Holdings LLC, Seaboard
    Foods LLC and Seaboard Corporation is 9000 West 67th Street, Merriam, Kansas 66202.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Based on
    information provided in a Schedule 13G/A filed on November 8, 2021 and a Form 3 filed on November 8, 2021, Martin Christopher
    Bicknell reported shared voting and dispositive power with respect to 2,240,226 shares of our Common Stock. 1,456,311 shares are
    owned directly by 1248 Holdings, LLC and 783,915 shares are owned directly by BFFV19, LLC. As of December 31, 2021, Martin
    Christopher Bicknell beneficially owned 2,318,325 shares of our Common Stock. 1,534,410 shares are owned directly by 1248 Holdings,
    LLC and 783,915 shares are owned directly by BFFV19, LLC. Mr. Bicknell is the Elected Manager of each of the entities that
    collectively own all of the outstanding membership interests of BFFV19, LLC, and has sole voting and dispositive power over the
    shares owned by 1248 Holdings, LLC, and thus, Mr. Bicknell may be deemed to be an indirect beneficial owner of the shares owned by
    each of BFFV19, LLC and 1248 Holdings, LLC. The principal business address of each of BFFV19, LLC, 1248 Holdings, LLC and Mr.
    Bicknell is 5700 W 112th Street, Suite 500, Overland Park, Kansas 66211.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | Based on information provided in a Schedule 13G filed on October 1,
    2021. The shares are held of record by Limit & Co., which serves as nominee for Chinquapin Trust Company. Chinquapin Trust Company
    has sole voting and dispositive power over the shares and is deemed to be the beneficial owner of the shares. The principal business
    address for Chinquapin Trust Company is 2480 Pershing Rd, Suite 600, Kansas City, Missouri 64108.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





68







ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE



Transactions with Related Persons



Investment Advisory Agreement



We have entered into the Advisory
Agreement with our Investment Advisor pursuant to which we pay the Investment Advisor a base management fee and incentive fee (which incentive
fee is only payable following a listing of the Company’s Common Stock on a national securities exchange) in exchange for the Investment
Advisor’s services sourcing, reviewing and structuring investment opportunities for us, underwriting and performing diligence on
our investments and monitoring our investment portfolio on an ongoing basis. Our Board initially approved the Advisory Agreement at an
in-person meeting in November 2019, and the Company entered into the Advisory Agreement in January 2020. Our Board most recently determined
to re-approve the Advisory Agreement for an additional one-year term at a meeting held in November 2021. Messrs. Long and Fox and Ms.
Long, through their indirect financial interests in our Investment Advisor, have an indirect pecuniary interest in the investment advisory
fees paid by us under the Advisory Agreement. Under the incentive fee structure, our adjusted net investment income for purposes thereof
will be computed and paid on income that may include interest income that has been accrued but not yet received in cash. This fee structure
may give rise to a conflict of interest for our Investment Advisor to the extent that it encourages the Investment Advisor to favor debt
financings that provide for deferred interest, rather than current cash payments of interest. Additionally, we rely on investment professionals
from the Investment Advisor to assist our Board with the valuation of our portfolio investments. While the valuation for each portfolio
investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation will be reviewed
by an independent valuation firm at least once annually, the ultimate determination of fair value will be made by our Board and not by
such third-party valuation firm. The participation of the Investment Advisor’s investment professionals in our valuation process
could result in a conflict of interest as the Investment Advisor’s management fee is based, in part, on the value of our total net
assets. For the year ended December 31, 2021, the Investment Advisor earned a base management fee of $6.4 million, offset by $796 thousand
in management fee waiver from the Investment Advisor, and did not earn an incentive fee, as our Common Stock was not listed on a national
securities exchange.



Administration Agreement



We have entered into the
Administration Agreement with the Administrator pursuant to which the Administrator furnishes us with office facilities and equipment
and provides us with clerical, bookkeeping, recordkeeping and other administrative services. Our Board approved the Administration Agreement
in November 2019, and the Company entered into the Administration Agreement in January 2020. Our Board most recently determined to re-approve
the Administration Agreement for an additional one-year term at a meeting held in November 2021. Under the Administration Agreement,
the Administrator performs, or oversees the performance of, our required administrative services, which include, among other things,
being responsible for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed
with the SEC.



Resource Sharing Agreement



The Investment Advisor is
an affiliate of PSCM, with whom it has entered into a resource sharing agreement (the “Resource Sharing Agreement”). Under
this agreement, PSCM provides the Investment Advisor experienced investment professionals and access to the senior investment personnel
and other resources of PSCM and its affiliates. The Resource Sharing Agreement provides the Investment Advisor with access to deal flow
generated by the professionals of PSCM and its affiliates and commits the members of the Investment Advisor’s investment committee
to serve in that capacity. The Investment Advisor seeks to capitalize on what we believe to be the significant deal origination, credit
underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of PSCM’s investment
professionals. The Resource Sharing Agreement may be terminated by either party on 60 days’ notice.



License Agreement



We have also entered into
a license agreement (the “License Agreement”) with Palmer Square under which Palmer Square has granted us a non-exclusive,
royalty-free license to use the name “Palmer Square” for specified purposes in our business. Under the License Agreement,
we have a right to use the “Palmer Square” name, subject to certain conditions, for so long as our Investment Advisor or
one of its affiliates remains our investment adviser. Other than with respect to this limited license, we will have no legal right to
the “Palmer Square” name.





69







Policies and Procedures for Managing Conflicts; Co-investment Opportunities



We have procedures in place
for the review, approval and monitoring of transactions involving the Company and certain persons related to the Company. As a BDC, the
1940 Act restricts us from participating in certain transactions with certain persons affiliated with the Company, including our officers,
directors, and employees and any person controlling or under common control with us. In addition, each of our directors and executive
officers is required to complete questionnaire on an annual basis designed to elicit information about any potential related-party transactions.
In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with the Company, our officers screen
each of our transactions for any possible affiliations, close or remote, between the proposed portfolio investment, the Company, companies
controlled by us and our employees and directors. We will not enter into any transactions unless and until we are satisfied that the
transaction is not prohibited by the 1940 Act or, if such prohibitions exist, we have taken appropriate actions to seek Board review
and approval or exemptive relief from the SEC for such transaction.



The Investment Advisor, Palmer
Square, and their affiliates, partners and employees (collectively, “PSCM Affiliates”) may engage in any other business and
furnish investment management and advisory services and other types of services to others which may include, without limitation, serving
as investment manager or sponsor of other collective investment vehicles or managed accounts that acquire interests in, provide financing
to or otherwise deal in securities or other investments that would be suitable investments for us. PSCM Affiliates furnish investment
management or advisory services to other persons with investment policies similar or different to those of us. Such persons may own securities
or other instruments of the same class or type or which may be senior to those held by us, and they have incentives, financial or otherwise,
to favor certain accounts or vehicles over others. There is no assurance that accounts with similar strategies or investment objectives
will hold the same investments or perform in a similar manner. This and other future activities of PSCM Affiliates may give rise to additional
conflicts of interest.



Subject to certain 1940 Act
restrictions on co-investments with affiliates or in accordance with the conditions of the co-investment exemptive relief provided by
the SEC (as discussed below), the Investment Advisor offers us the right to participate in all investment opportunities that it determines
are appropriate for us in view of our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements
and other relevant factors. Such offers are subject to the exception that, in accordance with the Investment Advisor’s code of
ethics and allocation policies, we might not participate in each individual opportunity but, on an overall basis, the Investment Advisor
will seek to allocate investments across applicable client accounts in a manner that is fair and equitable on an overall basis.



We, the Investment Advisor
and Palmer Square have been granted exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments
if our Board determines that it would be advantageous for us to co-invest with investment funds, accounts and investment vehicles managed
by Palmer Square in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory
requirements and other pertinent factors. We believe that co-investment by us and investment funds, accounts and investment vehicles
managed by the Investment Advisor and its affiliates, including Palmer Square, may afford us additional investment opportunities and
an ability to achieve greater diversification. Accordingly, our exemptive order permits us to invest with these investment funds, accounts
and investment vehicles managed in the same portfolio companies under circumstances in which such investments would otherwise not be
permitted by the 1940 Act. Our exemptive relief permitting co-investments applies only if our independent directors review and approve
each co-investment. The exemptive relief imposes other constraints on co-investments that limit the number of instances when the Company
may rely on its protections.





70







The Investment Advisor and
its affiliates have both subjective and objective policies and procedures in place that are designed to manage the potential conflicts
of interest between the Investment Advisor’s fiduciary obligations to us and its similar fiduciary obligations to other clients.
To the extent that we compete with entities sponsored or managed by the Investment Advisor or its affiliates for a particular investment
opportunity, the Investment Advisor will allocate investment opportunities across the entities for which such opportunities are appropriate,
consistent with (1) its internal conflict of interest and allocation policies, (2) the requirements of the Advisers Act, and (3) certain
restrictions under the 1940 Act regarding co-investments with affiliates. The Investment Advisor’s allocation policies are intended
to ensure that, over time, we may generally share equitably with other accounts sponsored or managed by the Investment Advisor or its
affiliates in investment opportunities, particularly those involving a security with limited supply or involving differing classes of
securities of the same issuer which may be suitable for us and such other accounts. There can be no assurance that the Investment Advisor’s
or its affiliates’ efforts to allocate any particular investment opportunity fairly among all clients for whom such opportunity
is appropriate will result in an allocation of all or part of such opportunity to us. Not all conflicts of interest can be expected to
be resolved in our favor.



Director Independence



The 1940 Act requires that
at least a majority of the Company’s directors not be “interested persons” (as defined in the 1940 Act) of the Company.
On an annual basis, each member of our Board is required to complete an independence questionnaire designed to provide information to
assist the Board in determining whether the director is independent under the 1940 Act and our corporate governance guidelines. Our Board
has determined that each of our directors, other than Mr. Christopher D. Long and Mr. Jeffrey D. Fox, is independent under the 1940 Act.
Our governance guidelines require any director who has previously been determined to be independent to inform the Chairman of the Board
and our Secretary of any change in circumstance that may cause his or her status as an Independent Director to change. The Board limits
membership on the Audit Committee to Independent Directors.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The following aggregate fees
by Pricewaterhouse Coopers LLP, the Company’s independent registered accounting firm for the fiscal years ended December 31,
2021 and December 31, 2020, were billed to the Company for work attributable to audit, tax and other services provided to the Company
for such fiscal year.



|                   |  | Fiscal Year Ended December 31, 2021 |         |  | Fiscal Year Ended December 31, 2020 |  
|------------------ |  | ----------------------------------- | ------- |  | ----------------------------------- | -
|Audit Fees         |  | $                                   | 301,970 |  |                                     | $
|Audit-Related Fees |  |                                     | 40,000  |  |                                     |  
|Tax Fees           |  |                                     | 40,000  |  |                                     |  
|All Other Fees     |  |                                     | 900     |  |                                     |  
|Total              |  | $                                   | 382,870 |  |                                     | $



Audit Fees



Audit fees consist of fees
billed for professional services rendered for the audit of our year-end financial statements and services that were provided by PwC for
the fiscal years ended December 31, 2021 and December 31, 2020 in connection with statutory and regulatory filings.



Audit-Related Fees



Audit-related services consist
of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial
statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute
or regulation and consultations concerning financial accounting and reporting standards.



Tax Fees



Tax fees consist of fees
billed for professional services for tax compliance and filings. These services include assistance regarding federal, state, and local
tax compliance and filings.



All Other Fees



Other fees would include
fees billed for products and services other than the services reported above.



The Audit Committee has established
a pre-approval policy that describes the permitted audit, audit-related, tax and other services to be provided by PwC, the Company’s
independent auditor. The policy requires that the Audit Committee pre-approve the audit and permissible non-audit services performed
by the independent auditor in order to assure that the provision of such service does not impair the auditor’s independence.



Any requests for audit, audit-related,
tax and other services that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval,
and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit
Committee. However, the Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom
such authority is delegated must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee
does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.





71







PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES



(a) DOCUMENTS FILED AS PART OF THIS REPORT



The following is a list of
our consolidated financial statements included in this Annual Report on Form 10-K under Item 8 of Part II hereof:



1. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
DATA



Index to Consolidated Financial Statements



|                                                                                                                                                                            |  | Page          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Report of Independent Registered Public Accounting Firm                                                                                                                     |  | F-2           
|Consolidated Statement of Assets and Liabilities as of December 31, 2021 and December 31, 2020                                                                              |  | F-3           
|Consolidated Statement of Operations for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020            |  | F-4           
|Consolidated Statement of Changes in Net Assets for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020 |  | F-5           
|Consolidated Statement of Cash Flows for the year ended December 31, 2021 and the Period January 23, 2020 (Commencement of Operations) through December 31, 2020            |  | F-6           
|Consolidated Schedule of Investments as of December 31, 2021 and December 31, 2020                                                                                          |  | F-7
    – F-22
|Notes to Consolidated Financial Statements                                                                                                                                  |  | F-23 - F-39   





72







(b) EXHIBITS





|3.1  |  | Form of Articles of Amendment and Restatement (Incorporated by reference to Exhibit 3.1 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)                                                                      
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.2  |  | Bylaws (Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form 10 (File No. 000-56126) filed on November 27, 2019)                                                                                                                               
|4.1  |  | Description of securities (Incorporated by reference to Exhibit 4.1 to Registrant’s Annual Report on Form 10-K (File No. 000-56126) filed on March 12, 2021)                                                                                                                      
|10.1 |  | Investment Advisory Agreement, dated as of January 14, 2020, by and between the Registrant and Palmer Square BDC Advisor LLC (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 000-56126) filed on May 15, 2020)                 
|10.2 |  | Form of Administration Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s Registration Statement on Form 10 (File No. 000-56126) filed on November 27, 2019)                                                                                                    
|10.3 |  | Form of Advisory Agreement Waiver Letter (Incorporated by reference to Exhibit 10.3 to Registrant’s Registration Statement on Form 10 (File No. 000-56126) filed on November 27, 2019)                                                                                            
|10.4 |  | Custody Agreement, dated as of December 17, 2019, by and between the Registrant and U.S. Bank National Association (Incorporated by reference to Exhibit 10.4 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)
|10.5 |  | Form of Indemnification Agreement for Directors and Officers (Incorporated by reference to Exhibit 10.5 to Registrant’s Registration Statement on Form 10 (File No. 000-56126) filed on November 27, 2019)                                                                        
|10.6 |  | Form of Trademark Licensing Agreement (Incorporated by reference to Exhibit 10.6 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)                                                                             





73









|10.7   |  | Form of Subscription Agreement (Incorporated by reference to Exhibit 10.7 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)                                                                                                                                                                                                                                                                                 
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8   |  | Dividend Reinvestment Plan (Incorporated by reference to Exhibit 10.8 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)                                                                                                                                                                                                                                                                                     
|10.9   |  | Credit Agreement, dated February 18, 2020, by and among Palmer Square BDC Funding I LLC, as the borrower, Bank of America, N.A., as administrative agent and as lender, and BofA Securities, Inc., as sole lead arranger and sole book manager (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No. 814-01334) filed on February 20, 2020)                                                                                          
|10.10  |  | Sale and Contribution Agreement, dated February 18, 2020, by and between the Registrant, as the seller, and Palmer Square BDC Funding I LLC, as the purchaser (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K (File No. 814-01334) filed on February 20, 2020)                                                                                                                                                                           
|10.11  |  | Loan and Security Agreement, dated December 18, 2020, by and among the Registrant, as the collateral manager, Palmer Square BDC Funding II LLC, as the borrower, Wells Fargo Bank, National Association, as the administrative agent, U.S. Bank National Association, as the collateral agent and custodian, and the lenders party thereto (Incorporated by reference to Exhibit 10.11 to Registrant’s Annual Report on Form 10-K (File No. 000-56126) filed on March 12, 2021)
|10.12  |  | Loan Sale Agreement, dated December 18, 2020, by and between the Registrant, as the seller, and Palmer Square BDC Funding II LLC, as the purchaser (Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K (File No. 000-56126) filed on March 12, 2021)                                                                                                                                                                                        
|10.13* |  | First Amendment to Credit Agreement, dated October 12, 2020, by and among Palmer Square BDC Funding I LLC, as the borrower, and Bank of America, N.A., as administrative agent and as lender                                                                                                                                                                                                                                                                                   
|10.14  |  | Second Amendment to Credit Agreement, dated September 29, 2021, by and among Palmer Square BDC Funding I LLC, as the borrower, and Bank of America, N.A., as administrative agent and as lender (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 814-01334) filed on November 15, 2021)                                                                                                                                      
|21.1*  |  | Subsidiaries of Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|31.1*  |  | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                              
|31.2*  |  | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                              
|32.1*  |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                              
|32.2*  |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                              



|* | Filed herewith
|- | --------------



ITEM 16. FORM 10-K SUMMARY



The Registrant has elected not to provide summary
information.





74







SIGNATURES



Pursuant to the requirements
of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.



|                      | Palmer Square Capital BDC Inc.
|--------------------- | ------------------------------
|                      |                               
|Dated: March 11, 2022 | By:                           
|                      |                               
|                      |                               
|                      |                               



Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.



|Signature                 |  | Title                                                                                                           |  | Date          
|------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | --------------
|                          |  |                                                                                                                 |  |               
|/s/ Christopher D. Long   |  | Chief Executive Officer, President and
    Chairman of the Board of Directors
    (Principal Executive Officer) |  | March 11, 2022
|Christopher D. Long       |  |                                                                                                                 | 
|                          |  |                                                                                                                 |  |               
|/s/ Jeffrey D. Fox        |  | Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)                          |  | March 11, 2022
|Jeffrey D. Fox            |  |                                                                                                                 | 
|                          |  |                                                                                                                 |  |               
|/s/ Megan L. Webber       |  | Director                                                                                                        |  | March 11, 2022
|Megan L. Webber           |  |                                                                                                                
|                          |  |                                                                                                                 |  |               
|/s/ James W. Neville Jr.  |  | Director                                                                                                        |  | March 11, 2022
|James W. Neville Jr.      |  |                                                                                                                
|                          |  |                                                                                                                 |  |               
|/s/ Christopher C. Nelson |  | Director                                                                                                        |  | March 11, 2022
|Christopher C. Nelson     |  |                                                                                                                





75