Note 1. Organization

LAGO Evergreen Credit (the “Company”) is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, the Company intends to elect to be taxed as a regulated investment company (“RIC”) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Company was formed as a Delaware statutory trust on October 30, 2024, and filed its initial registration statement on Form 10 on March 3, 2025 as subsequently amended on April 17, 2025 and May 2, 2025.

The Company is managed by LAGO Asset Management, LLC (the “Investment Adviser”), a Delaware limited liability company and a registered investment adviser under the Investment Advisers Act of 1940, as amended. The Company entered into an investment advisory agreement (the “Investment Advisory Agreement”) with the Investment Adviser in which the Investment Adviser, subject to the overall supervision of the Company’s Board, manages the day-to-day operations of, and provides investment advisory services to the Company. The Investment Adviser oversees the Company and is responsible for making investment decisions with respect to the Company’s portfolio.

The Company’s investment objective is to maximize the total return generated from its portfolio, which the Company expects to include current income from its debt investments as well as capital appreciation from equity and equity-related investments such as warrants. The Company’s focus will be primarily on floating rate senior secured term loan investments and, to a lesser extent, other types of junior loans and equity-related securities, such as convertible notes, warrants, and preferred or common stock. The Company’s secured loans are expected to be collateralized with security interests in the assets of the borrowers, which the Company expects will typically take the form of first-priority liens on some or all of the assets of the borrower. To the extent that another lender to the portfolio company retains the first-priority lien on some or all of the assets of the borrower, such as when another lender provides a revolving credit facility, the Company may structure its loan as a second-priority lien on any such encumbered assets and seek the opportunity to structure a first-lien on any unencumbered assets, such as intellectual property. The Company’s position as a secured lender and, in particular in the case where the Company is the sole, first lien lender, enables it to exert influence over the borrower with respect to access to management, monitoring performance, and increasing the likelihood of positive outcomes in the event that the borrower underperforms or becomes distressed. In connection with the Company’s lending activities, the Company expects to frequently receive “equity kickers” in the form of warrants and rights-to-invest equity in its borrowers, which have the potential to enhance returns above that typically generated from portfolios consisting solely of credit positions. The Company expects a majority of its warrants to be structured with a “cashless exercise” feature which does not require additional capital investment to benefit from any upside appreciation. The Company has adopted a policy to invest at least 80% of its assets in “credit,” which the Company defines as debt investments made in exchange for regular interest payments, under Section 59 and Rule 35d-1 under the 1940 Act.

Subject to the approval of the Company’s Board of Trustees (the “Board”), the Company is conducting a continuous and perpetual private offering (the “Private Offering”) of its shares of common beneficial interests, par value of $0.01 per share (the “Shares”), in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Shares are being offered solely to investors that are “accredited investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. At each closing, an investor purchases Shares pursuant to a subscription agreement entered into with the Company. See Note 8 - Net Assets for additional information on the Company’s share activity.

The Company was initially capitalized on December 31, 2024 when the Investment Adviser purchased 1,000 Shares of the Company, at an offering price of $25.00 per share for an aggregate purchase price of $25,000. Other than the sale of Shares to the Investment Adviser, the Company had not commenced operations as of December 31, 2024.

On March 3, 2025, simultaneously with the Company’s election to be regulated as a BDC under the 1940 Act, the Company completed a series of transactions pursuant to which LAGO Evergreen Credit, LLC (the “Legacy Fund”) merged with and into the Company with the Company continuing as the surviving entity (the “Formation Transaction”). As a result of the Formation Transaction, the equity interests of the Legacy Fund held by LAGO Evergreen Credit-QP, LP and LAGO Evergreen Credit-AI, LP (the “Legacy Fund Members”) were converted into Shares. Immediately thereafter, such Shares were distributed to the limited partners of the Legacy Fund Members as part of the dissolution and liquidation of the Legacy Fund Members.

The Company commenced operations and investment activity on March 3, 2025 (“Commencement of Operations”) in connection with the Formation Transaction and its election to be regulated as a BDC under the 1940 Act.