X1 CAPITAL INC. - Form 10-Q SEC filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the period ended December 31, 2025

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

Commission File Number: 814-01672

X1 CAPITAL INC.

(Exact Name of Registrant as Specified in Charter)

Maryland

(State or other jurisdiction of

incorporation or registration)

6637 S Winding Brook Dr.

Fairhope, AL

(Address of principal executive office)

93-2414793

(I.R.S. Employer

Identification No.)

36532

(Zip Code)

(713) 614-7755

(Registrant’s telephone number, including area code)

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

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 preceding 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 þ No o

Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). Yes þ No o

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 definition 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	☐ (do not check if a smaller reporting company)	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO þ

As of January 30, 2026, the registrant had 240 shares of common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. 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 opinions, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" 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, without limitation:

·An economic downturn could impair our portfolio companies' ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies.

·Such an economic downturn could disproportionately impact the companies that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies.

· A contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities

·Interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy.

·To the extent we invest in foreign companies or invest in companies that have significant foreign exposure, factors such as currency fluctuations and geopolitical events could adversely affect the results of our investments, including risks related to payments denominated in foreign currency rather than U.S. dollars.

·Our future operating results.

·Our business prospects and the prospects of our portfolio companies.

·Our contractual arrangements and relationships with third parties.

·The ability of our portfolio companies to achieve their objectives.

·Competition with other entities and affiliates for investment opportunities.

·The speculative and illiquid nature of our investments.

·The use of borrowed money to finance a portion of our investments.

·The adequacy of our financing sources and working capital.

·The loss of key personnel.

·The timing of cash flows, if any, from the operations of our portfolio companies.

·The ability to locate suitable investments for us and to monitor and administer our investments.

·The ability to attract and retain highly talented professionals.

·Our ability to qualify and maintain our qualification as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and as a BDC.

·The effect of legal, tax, and regulatory changes.

·The other risks, uncertainties, and other factors we identify under "Item 1A. Risk Factors" and elsewhere in this Registration Statement and recent 10K filing.

For further information, please see Risk Factors” of Part II of this quarterly report and Item 1A, "Risk Factors" of Part I of our Annual Report on Form 10-K, and our Form 10 filing.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could also be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Statement should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this Quarterly Statement. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this Quarterly Statement are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.

PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Financial Statements

X1 CAPITAL INC.

Statements of Assets and Liabilities

	September 30, 2025 (unaudited)	December 31, 2024 (FY End)

Assets
Cash & Cash Equivalents	`$638,167`	`$6,005`
Accounts Receivable	`1,949,122`	`0`
Total Current Assets	`2,587,290`	`6,005`

Other Assets	`169,688`	`0`
Investments	`49,103,746`	`0`

Total Assets	`$51,860,724`	`$6,005`

Liabilities & Equity
Accounts Payable	`$23,019`	`$5`
Other Current Liabilities	`463,744`	`0`
Total Current Liabilities	`486,763`	`5`

Bank Facility	`14,677,000`	`0`
Total Liabilities	`15,163,763`	`5`

Equity	`6000`	`6,000`
Participation Capital	`34,630,218`
Net Income and retained earnings	`2,160,743`	`0`
Total Equity	`36,696,961`	`6,000`

Total Liabilities & Equity	`$51,860,724`	`$6,005`

Comments and Contingencies
Net Assets
Common stock, $0.01 par value, 240 shares issued and outstanding	`$2`	`$2`
Additional paid-in capital	`5,998`	`5,998`
Total distributable earnings (loss)	`(275,555)`	`0`
Total Net Assets	`2,166,743`	`6,000`
Net Asset Value per Share	`9028.09`	`25`

	Three Months Ending		Six Months Ending
	Dec 31 2025	Mar 30 2025	Dec 31 2025	Mar 30 2025
Income
Investment income	$1,160,463	$0	$2,125,568	$0
Total investment income	1,160,463	0	2,125,568	0

Expenses
Income sharing	882,572	0	1,603,142	0
Interest expense & bank fees	246,925	0	355,839	0
Professional & legal fees	97,775	0	424,538	0
Other	10,186	0	17,604	0
Total expenses	1,237,458	0	2,401,123	0

Net investment income	(76,995)	0	(275,555)	0

Unrealized gain on investment	0	0	2,436,298	0

Net Increase in Net Assets Resulting from Operations	(76,995)	0	2,160,743	0


Net investment income per common share (basic and diluted)	(321)	0	(1148)	0

Net increase in net assets resulting from operations per common share	(321)	0	9003.09	0

Weighted average shares outstanding (basic and diluted)	240	240	240	240

		Three Months Ending		Six Months Ending
		Dec 31 2025	Mar 30 2025	Dec 31 2025	Mar 30 2025
Operations
	Net investment income	($76,995)	$0	$2,160,743	$0
	Net unrealized gain	0	0	0	0
	Net change in net assets from operations	(76,995)	0	2,160,743	0

Stockholder distributions
	Stockholder distributions	0	0	0	0
	Net change in net assets from stockholder distributions	0	0	0	0

Capital transactions
	Issuance of common stock	0	0	0	0
	Net change in net assets from capital transactions	0	0	0	0

Total change in net assets		(76,995)	0	2,160,743	0
Net assets at the beginning of the period		2,243,738	6000	6000	6000
Net assets at the end of the period		2,166,743	6000	2,166,743	6000


Net asset value per share of common stock		(321)	0	(1148)	0

Common stock outstanding at end of period		240	240	240	240

			For the	For the
			Six Months Ending	Six Months Ending
			31-Dec-25	30-Mar-25
Cash flows from operating activities
	Net increase in net assets from operations		$ 2,160,743	$ 5

	Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities:
		Change in investments	(49,103,746)
		Change in other assets	(169,688)
		Change in accounts receivable	(1,949,122)
		Change in accounts payable	23,014
		Change in other current liabilities	463,744
	Net cash from operating activities		(48,575,056)	0

Cash flows from financing activities
		Change in equity	0
		Change in participation capital	34,530,218
		Change in bank financing	14,677,000
	Net cash from financing activities		49,207,218	0

Net change in cash & cash equivalents			632,162
	Cash & cash equivalents, beginning of period		6,005	6,000
	Cash & cash equivalents, end of period		638,167	6,005

Supplemental cash flow disclosures
	Interest paid		246,260	0

	Taxes paid		0	0

Date Funded	Portfolio Company	Investment Type		Loan Maturity	Investment Description	Principal	Cost	Fair Value	Notes
12/29/25	Accessory House Motorsports LLC	Senior Secured	09/26/2035		WSJ Prime + 3%	$310,643	$310,643	$313,396	1,2
12/29/25	JAJ Legacy Enterprises LLC	Senior Secured	11/17/2050		WSJ Prime + 2.5%	758,055	758,055	764,711	1,2
12/30/25	Geek Powered Studios, LLC	Senior Secured	04/12/35		WSJ Prime + 2.75%	683,850	683,850	689,686	1,2
12/30/25	R & A Bird House Inc dba Country House Restaurant	Senior Secured	08/12/35		WSJ Prime + 2.75%	374,663	374,663	377,860	1,2
12/30/25	Shreya 21 LLC	Senior Secured	11/12/40		WSJ Prime + 2%	534,713	534,713	539,254	1,2
10/23/25	Casacade Kitchens	Senior Secured	08/09/48		WSJ Prime + 2.25%	3,303,211	3,303,211	3,381,526	1,2
10/23/25	Candeland	Senior Secured	11/03/36		WSJ Prime + 2.5%	806,785	806,785	818,196	1,2
10/23/25	Ruff House DVPT	Senior Secured	04/15/2051		WSJ Prime + 2.75%	1,069,779	1,069,779	1,082,552	1,2
10/23/25	Baby Steps daycare	Senior Secured	05/15/2050		WSJ Prime + 3%	360,804	360,804	365,632	1,2
10/23/25	Cassava Breads	Senior Secured	10/15/2035		WSJ Prime + 2.5%	1,428,269	1,428,269	1,446,646	1,2
10/23/25	Davenport Wellness	Senior Secured	10/16/2035		WSJ Prime + 2.75%	458,621	458,621	464,796	1,2
10/23/25	EA2 Ventures	Senior Secured	10/17/2036		WSJ Prime + 3%	388,906	388,906	394,064	1,2
10/23/25	23 Red Ventures	Senior Secured	08/15/2045		WSJ Prime + 3%	2,827,473	2,827,473	2,862,920	1,2
10/31/25	Binty	Senior Secured	05/31/2051		WSJ Prime + 2.25%	971,227	971,227	983,250	1,2

Date Funded	Portfolio Company	Investment Type	Loan Maturity	Investment Description	Principal	Cost	Fair Value	Notes
11/14/25	Chadol Columbia	Senior Secured	06/10/55	WSJ Prime + 2.75%	452,935	452,935	458,098	1,2
12/05/25	Paris Skylar - T1	Senior Secured	05/06/26	WSJ Prime + 2.5%	577,444	577,444	583,015	1,2
12/19/25	Shree Mahavir School LLC	Senior Secured	06/23/2036	WSJ Prime + 3%	1,103,000	1,103,000	1,108,222	1,2
12/19/25	Arkansas Trails Brewing Co. LLC	Senior Secured	12/20/2050	WSJ Prime + 3%	700,216	700,216	703,531	1,2
10/30/25	Agricultural Scientific LLC_750661591	Senior Secured	10/06/55	WSJ Prime + 1.75%	1,266,774	1,266,774	1,284,566	1,2
11/25/25	Agricultural Scientific LLC - T2750661591 - Note 02 10005270	Senior Secured	10/06/55	WSJ Prime + 1.75%	557,764	557,764	564,225	1,2
11/26/25	Agricultural Scientific LLC - T1_750661591-Note 02 - 10005312	Senior Secured	10/06/55	WSJ Prime + 1.75%	1,225,110	1,225,110	1,239,504	1,2
11/26/25	Agricultural Scientific LLC - T1_750661591 – Note 03 - 10005361	Senior Secured	10/29/2055	WSJ Prime + 1.75%	547,400	547,400	554,106	1,2
12/19/25	Agricultural Scientific LLC - T2_46-025-750661591- Note 10005312	Senior Secured	10/06/55	WSJ Prime + 1.75%	343,154	343,154	344,640	1,2
12/19/25	Agricultural Scientific LLC - T1_46-025-750661591; Note:10005288	Senior Secured	10/29/2055	WSJ Prime + 1.75%	1,041,994	1,041,994	1,046,510	1,2

Date Funded	Portfolio Company	Investment Type	Loan Maturity	Investment Description		Principal	Cost	Fair Value	Notes
12/19/25	Agricultural Scientific LLC - T2_46-025-750661591- Note 10005361	Senior Secured	10/29/2055	WSJ Prime + 1.75%		432,012	432,012	433,923	1,2
12/05/25	Thomas Concrete	Senior Secured	10/29/2055	WSJ Prime		3,637,500	3,637,500	3,686,781	1,2
09/24/25	Ballpark National LLC	Senior Secured	06/18/54	WSJ Prime + 3%		7,744,763	7,744,763	7,896,414	1,2
7/14/2025	Freedom Firm LLC	Senior Secured	07/10/30	Fixed 30% p.a; 1.5x MOIC		4,268,555	4,268,555	4,453,708
9/5/2025	Titusville Mall	Senior Secured	Month-to-Month	Initial: 6M SOFR + 9%; Extension: 6M SOFR + 9.5%, Default: 6M SOFR + 10.5%, Late Fee: 5% p.a		3,239,794	3,239,794	3,638,737	3
9/5/2025	BDEP Cats Paw LLC	Senior Secured	Month-to-Month	Initial: 3M SOFR + 9.5%; Extension: 3M SOFR + 10%, Default: 3M SOFR + 11%, Late Fee: 5% p.a; Extension Fee: 1.5%; Default Fee: 1%		529,081	529,081	602,188	3
9/5/2025	Americus Fresh LLC	Senior Secured	Month-to-Month	Initial: 6M SOFR + 9%; Extension: 6M SOFR + 9.5%, Default: 6M SOFR + 10.5%, Late Fee: 5% p.a; Extension: 1%		1,113,587	1,113,587	1,201,772	3

Date Funded	Portfolio Company	Investment Type	Loan Maturity	Investment Description	Principal		Cost	Fair Value	Notes
9/5/2025	Pennsylvania Social Equity Land Trust, Inc.	Senior Secured	Month-to-Month	Initial: 6M SOFR + 8.5%; Extension: 6M SOFR + 9%, Default: 6M SOFR + 10%, Late Fee: 5% p.a; Extension Fee: 1%	2,596,939		2,596,939	2,281,106	3
10/23/2025	Wander Hotel	Senior Secured	06/13/2030	Fixed 8% p.a	2,500,000		2,500,000	2,538,213	3
Grand Total					$48,155,020		$48,155,020	$49,103,746

X1 CAPITAL INC.

Notes to Financial Statements (Unaudited)

Item 1. Notes to Consolidated Financials

1.Organization

X1 Capital Inc. (“X1” or “X1 Capital” or the “Company”) was formed on July 25, 2023, as a corporation under the laws of the State of Maryland. The Company is structured as a 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”). For tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is internally managed.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). We will remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of a future IPO, or until the earliest of (i) the last day of the first fiscal year in which we have total annual gross revenue of $1.235 billion or more, (ii) December 31 of the fiscal year in which we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), (which would occur if the market value of our common stock held by non-affiliates exceeds $700.0 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months), or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period. For so long as we remain an emerging growth company under the JOBS Act, we will be subject to reduced public company reporting requirements.

The Company primarily invests in private US companies. The Company focuses on three strategies. First, the Company provides bridge loans to private companies that have been conditionally approved for government-guaranteed loans by an approved lender under U.S. government agency programs, but are waiting for funding and final sign-off from the federal agency.

Second, the Company focuses on acquiring qualified loans to warehouse for resale. This is done by both acquiring loans directly and by investing in firms that acquire and hold loans for resale. The primary loan-type focus is government-guaranteed loans or participating interests in government-guaranteed loans.

Finally, the Company may provide debt or equity to private companies to fund growth or acquisitions.

The Company anticipates most of its debt investments will not be rated, and that, if rated, most investments (except for loans guaranteed by the US Government or US Government Agencies) would be classified as “junk bonds / high yield bonds” as compared to “investment grade.” The Company believes its investments that are guaranteed 100% by the US Government should be treated as government securities.

Investment-grade bonds are bonds rated at a level that signifies a relatively low risk of default. Credit rating agencies like Moody's, Standard & Poor's, and Fitch assign ratings to these bonds. Bonds rated at or above 'BBB-' (or its equivalent, depending on the rating agency) are considered investment grade. Junk bonds (high-yield bonds) are bonds rated below 'BBB-'. These ratings indicate a higher risk of default or financial instability of the issuing entity. The term "junk" does not denote the quality of the bond per se but rather signifies a higher risk and, consequently, a higher potential return. The higher yield serves as compensation for investors willing to take on greater risk. Junk bonds are often utilized by companies with less established credit histories or those undergoing financial restructuring, providing them with necessary capital at the cost of higher interest rates.

2.Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements have been included.

The Company is an investment company for the purposes of accounting and financial reporting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, Financial Services— Investment Companies ("ASC 946").

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period presented, have been included. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year.

The Company shareholders elected to adopt 150% asset coverage on November 3, 2025. The Company is treating the participation capital as equity.

In 2025, the Company changed its fiscal year-end to June 30th from September 30th.

Principles of Consolidation.

Under ASC 946, the Company is precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolio company is another investment company that is substantially wholly owned by it. That being said, the Company will generally consolidate a subsidiary when the design and purpose of the subsidiary is to act as an extension of the Company’s investment operations and to facilitate the execution of the Company’s investment strategy. The Company holds some of its investments at a subsidiary level (CBT SF LLC) and has elected to consolidate the subsidiary and treat it as an investment company. The Company has received participation capital from an investor at the CBT SF LLC level and has treated this investment as equity.

Use of Estimates

The preparation of the financial statements in conformity with US GAAP requires the Company 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 financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates, and such differences could be material.

Cash and Cash Equivalents

Cash consists solely of funds deposited with financial institutions, while cash equivalents consist of short-term liquid investments in money market funds. Cash and cash equivalents are carried at cost, which approximates fair value.

Investment Income

The Company’s investment portfolio generates interest, dividends, loan fees, and profit upon sale. The Company records these on an accrual basis, recognizing income as earned in accordance with the contractual terms of the loan agreement, to the extent that such amounts are expected to be collected.

Realized gains or losses from the repayment or sale of investments are calculated using the trade date. The Company reports changes in fair value of investments from the prior period as a component of "Net change in unrealized gain (loss) on investments" on the Consolidated Statements of Operations.

Fee Sharing

These are profit-sharing payments to the Participation Capital investor.

Professional & Legal Fees

These include payments to Growth Lending LLC under the Administration Agreement, payments to James Hickey, and third parties, including accountants and lawyers.

Other Assets

Other Assets are primarily legal expenses from the bank line of credit and are amortized over the life of the facility.

Other Current Payables

This is amounts owed under Fee Sharing.

Valuation of Portfolio Investments

The Company shall value the investments owned by the Company, subject at all times to the oversight of the Company's Board of Directors (the “Board”). The Company shall follow its own written valuation policies and procedures as approved by the Board when determining valuations. A short summary of the valuation policies is below.

Investments for which market quotations are readily available are typically valued at such market quotations. Pursuant to Rule 2a-5 under the 1940 Act, the Board designated James Hickey as Valuation Designee to perform fair value determinations for the Company for investments that do not have readily available market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available will be valued at a price that reflects such securities’ fair value.

With respect to unquoted portfolio investments, the Company will value each investment considering, among other measures, discounted cash flow models, comparable company multiple models, comparisons of financial ratios of peer companies that are public, and other factors. When an external event, such as a purchase transaction, public offering, or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in its valuation. 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 a readily available market value existed for such investments, and the differences could be material.

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with US GAAP and required disclosures of fair value measurements. The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date. The Company determines the fair value of investments consistent with its valuation policy. The Company discloses the fair value of its investments in a hierarchy that prioritizes and ranks the level of market observability used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:

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

·Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

·Level 3 — Valuations based on inputs that are unobservable and significant to the fair value measurement.

As a generalization, for debt, investments purchased at par will be valued par plus any accrued interest, fees, and dividend unless there is reason to believe the portfolio company is impaired or at risk of being impaired and unable to pay the contractually required payments. In cases where the Company has a preset sale price and the sale is anticipated in the near future, the investment is valued at the preset sale price.

The fair value assigned to these investments is based upon available information and may fluctuate from period to period. In addition, it does not necessarily represent the amount that might ultimately be realized upon sale. Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.

Expenses

X1 Capital is an internally managed BDC. On August 21, 2025, 100% of shareholders approved the Company to start directly paying its expenses and approved the Company entering into an Administration Agreement with Growth Lending LLC. The Company has one employee, James Hickey, who serves as CEO, CFO, and CCO.

Income Taxes

The Company has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended. The Company intends to elect to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended. As a RIC, the Company generally will not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that is distributed timely to our shareholders as dividends. Therefore, no provision for federal income taxes is recorded in the financial statements. To the extent the Company is temporarily not in compliance with applicable regulations, there is a risk that the Company could be required to recognize income taxes.

Per Share Information

Basic and diluted earnings (loss) per common share are calculated using the weighted-average number of common shares outstanding for the period presented. There are currently no outstanding warrants, and no shares were issued during this reporting period. There are currently 240 shares outstanding.

New Accounting Standards

Management does not believe any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

1.Investments

The Company primarily invests in private US companies. The Company focuses on three strategies. First, the Company provides bridge loans to private companies that have been conditionally approved for government-guaranteed loans by an approved lender under Agency programs, but are waiting for formal approval from the government agency.

Second, the Company focuses on acquiring BDC-qualified loans to warehouse for resale. This is done by both acquiring loans directly and by investing in firms that acquire and hold loans for resale. The primary loan-type focus is government-guaranteed loans or participating interests in government-guaranteed loans.

Finally, the Company may provide debt or equity to private companies to fund growth or acquisitions.

Strategy	Number of Investments	Fair Value
Participating Interest Loan – Government Guaranteed	27	$34,388,023
Bridge Loan	5	10,262,015
Traditional Private Loan	1	4,453,708
Total	33	$49,103,746

All the participating interest loans are 100% guaranteed by the US Government. As such, these participating interest loans are typically priced and traded similarly to US Government Agency paper. All these loans are held by the subsidiary CBT SF LLC.

For the bridge loans, we expect to be refinanced out of the position once the US Government approves the permanent loan application submitted by third-party, unrelated banks.

Finally, we have made one traditional private loan to fund a recapitalization.

Currently, all investments are to U.S.-domiciled companies.

The Company anticipates most of its debt investments will not be rated, and that, if rated, most investments (except for loans guaranteed by the US Government) would be classified as “junk bonds / high yield bonds” as compared to “investment grade.” That being said, the Company believes its investments that are guaranteed 100% by the US Government should be treated as government securities.

2.Debt

The Company and its subsidiary CBT SF LLC have a $15,000,000 debt facility. The weighted average interest rate for the period was approximately 7.4%. As of December 31, 2025, $14,677,000 was outstanding. The debt is pegged to 30-day SOFR + 3%, and there is a 0.25% commitment fee. If interest rates were to increase by 1%, it would increase interest expense by 14%. If interest rates were to decrease by 1%, it would reduce interest expense by 14%.

3.Affiliate Transactions

The Company has signed an Administration Agreement with Growth Lending LLC. Growth Lending LLC currently owns 100% of the outstanding shares. James Hickey, CEO, CFO, and CCO of the Company, is compensated through a consulting agreement between Alternative Risk Strategies LLC and the Company.

4.Commitments and Contingencies

In the normal course of business, the Company may enter into certain contracts that provide a variety of indemnities. The Company's maximum exposure under these indemnities is unknown, as it would involve future claims that may be made against the Company. Currently, the Company is not aware of any such claims, and no such claims are expected to occur. As such, the Company does not consider it necessary to record a liability in this regard.

5.Subsequent Events

Management has evaluated subsequent events through January 27, 2026. Since the end of the quarter, we have added the following loans:

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. The discussion and analysis contained in this section refer to our financial condition, results of operations, and cash flows. The information contained in this section should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Please see "Forward-Looking Statements" for a discussion of the uncertainties, risks, and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under "Forward-Looking Statements" appearing elsewhere in this report.

Overview

We were incorporated under the laws of the State of Maryland on July 25, 2023. We have elected to be treated as a business development company (a "BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have to elect to be treated, and intend to qualify annually thereafter, as a regulated investment company (a "RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") for U.S. federal income tax purposes. As a BDC, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in "qualifying" assets, source of income limitations, asset diversification requirements and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

The Company invests in private US companies. For more information on our investment strategy and organizational structure, please see “Item 1 of Notes to Consolidated Financial Statements”. The Company began investing this quarter.

There are 240 outstanding shares in the Company. These are owned by Growth Lending LLC. Growth Lending also has an Administration Agreement with the Company. James Hickey is currently the sole employee and serves as CEO, CCO, and COO.

Critical Accounting Estimates and Policies

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us 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 materially. Our critical accounting estimates, including those relating to the valuation of investments and income recognition, are described below. Please refer to “Item 1. Notes to the Consolidated Financial Statements.. Note 2. Significant Accounting Policies” in the notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of our significant accounting policies.

Investments

Please see “Item 1. Notes to the Consolidated Financial Statements. Note 3 Investments” for a discussion of the current holdings.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available, the level of merger and acquisition activity for such companies, the general economic environment, and the competitive environment for the types of investments we make. In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.

As a BDC, we may not acquire any assets other than "qualifying assets" specified in the 1940 Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in "eligible portfolio companies." Pursuant to rules adopted by the SEC, "eligible portfolio companies" include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

As a BDC, we may also invest up to 30% of our portfolio opportunistically in "non-qualifying" portfolio investments, such as investments in non-U.S. companies.

We may invest in debt securities that are either rated below investment grade or not rated by any rating agency, but if they were rated, they would be rated below investment grade. Below investment grade securities, which are often referred to as "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. They may also be illiquid and difficult to value.

Revenue & Expenses

Please see “Item 1. Notes to the Consolidated Financial Statements. Note 2 Significant Accounting Policies” for an overview.

For the past quarter, the Company made $1,160,463 in realized investment income. This was primarily interest and profit from the sale of the loans and loan-related fees.

The Company incurred $1,237,458 in expenses. The largest expense was $882,572 in income sharing with the participation capital at the CBT SF LLC. The interest expense and bank fees were $246,260. Professional fees include both Growth Lending through the Administration Agreement and James Hickey through the agreement with Alternative Risk Strategies LLC.

Net investment income was ($76,995).

Bank Facility

Please see “Item 1. Notes to the Consolidated Financial Statements. Note 4 Debt” for a discussion of the current debt.

The Company has a $15,000,000 bank facility.

Equity

The Company has issued and sold 240 shares at an offering price of $25.00 per share since inception. The Company did not sell or issue any security in the most recent quarter. Growth Lending LLC owns 100% of the shares.

Asset Coverage Requirements

In accordance with the 1940 Act, with certain limited exceptions, the Company is allowed to incur borrowings, issue debt securities, or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock is at least 150%. On November 3, 2025, 100% of the shareholders approved the application to us of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. We are currently in compliance, as we have consolidated CBT SF LLC and treat the participation capital as equity.

Material Contracts, Obligations, & Related Party Transactions

The Company has four material contracts: the Bank Facility with Woodforest; the Custody Agreement with UMB; the Administration Agreement with Growth Lending LLC, and the consulting agreement with Alternative Risk Strategies LLC. Both Growth Lending LLC and Alternative Risk Strategies LLC are related parties. Growth Lending LLC owns 100% of the shares of the Company. James Hickey, CEO, CCO, & CFO of the Company, controls Alternative Risk Strategies LLC.

Government Shutdown

The federal government shutdown has impacted the Company’s business because the participating interest loans cannot be sold until the US Government re-opens. Additionally, the bridge loans may not be paid off, as the portfolio companies are waiting on permanent financing guaranteed under US Government programs.

Liquidity & Capital Reserves

The Company does not believe it has any material liquidity or capital reserve risk, as almost all of its loans are short-term. This should meet any obligations under the bank facility and operating expenses of the Company.

Income Taxes, Including Excise Taxes

We elected to be treated as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our investment company taxable income, determined without regard to any deduction for dividends paid.

If we fail to distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our capital gain net income (both long-term and short-term) for the one-year period ending June 30 in that calendar year and (3) any income realized, but not distributed, in the preceding year (to the extent that income tax was not imposed on such amounts) less certain over-distributions in prior years (together, the "Excise Tax Distribution Requirements"), we will be liable for a 4% nondeductible excise tax on the portion of the undistributed amounts of such income that are less than the amounts required to be distributed based on the Excise Tax Distribution Requirements. For this purpose, however, any ordinary income or capital gain net income retained by us that is subject to corporate income tax for the tax year ending in that calendar year will be considered to have been distributed by year-end (or earlier if estimated taxes are paid). We currently intend to make sufficient distributions each taxable year to satisfy the Excise Tax Distribution Requirements.

We did not incur any excise tax expense for any of the periods presented.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including valuation risk and interest rate risk. Uncertainty with respect to the economic effects of the overall market conditions has introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below.

Valuation Risk

Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5), and those investments that do not have readily available market quotations are valued at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. 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 fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.

In accordance with Rule 2a-5, our Board periodically assesses and manages material risks associated with the determination of the fair value of our investments.

Interest Rate Risk

Interest rate sensitivity and risk refer to the change in earnings that may result from changes in the level of interest rates. To the extent that we borrow money to make investments, including under the Bank Facility or any future financing arrangement, our net investment income will be affected by the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of borrowing funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates, including as a result of inflation, will not have a material adverse effect on our net investment income. Inflation is likely to continue in the near to medium-term, particularly in the United States and Europe, with the possibility that monetary policy may tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins.

Currency & Tariff/Regulatory Risk

Any portfolio company not domiciled in the United States will be subject to risks associated with changes in currency exchange rates. Any portfolio company that does significant international trade could be subject to both currency risk and tariff/regulatory risk. These risks will vary depending on the currency and the specific country's tariff/regulatory situation. As of the latest quarter, there were no foreign-domiciled portfolio companies, and the Company is not aware of any specific currency or tariff/regulatory risk related to the operations of its portfolio companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. 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 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in "ITEM 1A. RISK FACTORS" of our Registration Statement on Form 10, filed with the SEC on December 28, 2023, the 10K filed for the fiscal year ending September 30, 2024, the 10K filed for the fiscal year ending June 30, 2025, and the 10Q filed for the quarter ending September 30, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any securities during the period covered by this Quarterly Report that were not registered under the 1933 Act.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

(a) List separately all financial statements filed

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC.

(b) Exhibits


`·`Accessory House Motorsports LLC	$310,643
`·`JAJ Legacy Enterprises LLC	758,055
`·`Shreya 21 LLC	534,713
`·`Geek Powered Studios, LLC; et al.	683,850
`·`R & A Bird House Inc	374,663
`·`Candeeland AZ LLC	130,730
`·`Davenport Wellness, LLC	183,034
`·`Education First Inc	672,938
`·`Ryzeo LLC	3,609,855
`·`ALT Propco LLC et al.	1,145,348
`·`Precision Carrier Logistics, Inc.	1,437,395
`·`Straight Shooters Automotive, LLC	302,640
`·`West LLC et al.	831,678
`·`Largo Restaurant Group LLC	437,955
`·`French Concepts LLC	434,424
`·`23 Red Ventures LLC	742,215

3.1	Articles of Incorporation
3.2	By-Laws
10.1	Administration Agreement
10.2	Custodian Agreement
10.3	Credit Agreement
10.4	Form 10K for the fiscal year ending 6-30-25
10.5	Form 10K for the fiscal year ending 9-30-24
10.6	Form 10Q for the quarter ending 9-30-25
10.7	Form 10-12G/A Filed on December 28, 2023
10.8	Shareholder approval to increase leverage
31.1	Certificate of the CEO & CFO Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1	C ertification of CEO & CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File

PART I. CONSOLIDATED FINANCIAL INFORMATION	6
Item 1. Financial Statements	6
Statements of Assets and Liabilities	6
Statement of Operations	7
Consolidated Statement of Changes in Net Assets	8
Statements of Cash Flow	9
Consolidated Schedule of Investments	10
Notes to Financial Statements (Unaudited)	14
Item 1. Notes to Consolidated Financials	14
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	24
PART II: OTHER INFORMATION	25
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3. Defaults Upon Senior Securities	26
Item 4. Mine Safety Disclosures	26
Item 5. Other Information	26
Item 6. Exhibits	27
SIGNATURES	28

1	This is held at the CBT SF LLC level.
2	This is a participating interest in a US government-guaranteed loan, which the Company has funded.
3	This is a bridge loan, which will be replaced by permanent loans.


`·`Accessory House Motorsports LLC
`·`Geek Powered Studios, LLC
`·`R & A Bird House Inc