X1 Capital's Assets Soar to $39.5M on New Investments, Unrealized Gains

TL;DR

**X1 Capital is making big bets on private credit, and while unrealized gains look good now, the high-yield, leveraged strategy is a ticking time bomb if the economy sours.**

AI Summary

X1 Capital Inc. reported a significant increase in total assets to $39,554,385 as of September 30, 2025, up from $6,005 at December 31, 2024, driven primarily by new investments totaling $39,409,460. The company generated $965,105 in investment income for the three months ended September 30, 2025. Despite total expenses of $1,147,074, including $720,570 for income sharing and $267,192 for professional fees, X1 Capital recorded a net investment loss of $181,969. However, a substantial unrealized gain on investments of $2,436,298 led to a net increase in net assets from operations of $2,254,329. The company's strategic outlook involves providing bridge loans, acquiring BDC-qualified loans, and offering debt or equity to private companies, with a significant portion of its investments being senior secured loans to various private US companies. Key risks include economic downturns impacting portfolio companies and interest rate volatility, especially given its use of leverage with a bank facility of $11,981,000.

Why It Matters

X1 Capital's rapid asset growth and significant unrealized gains signal aggressive expansion in private credit, particularly in government-guaranteed and bridge loans. This could offer investors exposure to high-yield, albeit higher-risk, private debt markets, potentially outperforming traditional fixed income. For employees and customers of X1's portfolio companies, this capital infusion means continued growth and operational stability. However, the reliance on 'junk bond' equivalent investments and a substantial bank facility introduces leverage risk, making X1's performance sensitive to economic shifts and interest rate changes, potentially impacting its competitive standing against more established BDCs.

Risk Assessment

Risk Level: high — The company's investments, except for government-guaranteed loans, are classified as 'junk bonds / high yield bonds,' indicating a higher risk of default. Furthermore, X1 Capital utilizes significant leverage, with a bank facility of $11,981,000, which amplifies both potential gains and losses, making it highly susceptible to interest rate volatility and economic downturns as explicitly stated in the forward-looking statements.

Analyst Insight

Investors should approach X1 Capital with extreme caution, recognizing its high-risk, high-reward profile. A deep dive into the specific credit quality of its non-government-guaranteed portfolio companies is essential. Consider this a speculative play, and allocate only a small portion of a diversified portfolio, if at all, given the significant leverage and 'junk bond' nature of its core investments.

Financial Highlights

debt To Equity

0.45

revenue

$965,105

operating Margin

N/A

total Assets

$39,554,385

total Debt

$12,306,589

net Income

$2,254,329

eps

$9,393

gross Margin

N/A

cash Position

$24,846

revenue Growth

N/A

Key Numbers

• $39,554,385 — Total Assets (Increased from $6,005 at December 31, 2024, indicating significant growth.)
• $39,409,460 — Investments (Represents the bulk of total assets, showing the company's primary activity.)
• $965,105 — Investment Income (Generated for the three months ended September 30, 2025.)
• $1,147,074 — Total Expenses (Incurred for the three months ended September 30, 2025, exceeding investment income.)
• $(181,969) — Net Investment Income (A loss for the three months ended September 30, 2025, before unrealized gains.)
• $2,436,298 — Unrealized Gain on Investments (Significantly boosted net assets from operations for the period.)
• $2,254,329 — Net Increase in Net Assets Resulting from Operations (The final profit for the three months ended September 30, 2025.)
• $11,981,000 — Bank Facility (Represents significant leverage used by the company.)
• $9,418 — Net Asset Value per Share (Increased substantially from $25 at December 31, 2024, reflecting asset growth.)
• 240 — Shares of Common Stock Outstanding (A very low number, indicating high per-share values and potentially limited liquidity.)

Key Players & Entities

• X1 Capital Inc. (company) — Registrant and investment company
• James Hickey (person) — Valuation Designee and recipient of professional fees
• CBT SF LLC (company) — Subsidiary where some investments are held and consolidated
• Growth Lending LLC (company) — Recipient of payments under Administration Agreement
• PRC Asphalt Maintenance (company) — Portfolio company with a Senior Secured loan
• Smartsite Construction (company) — Portfolio company with a Senior Secured loan
• Freedom Firm LLC (company) — Portfolio company with a Senior Secured loan
• Ballpark National LLC (company) — Portfolio company with the largest Senior Secured loan of $7,752,240
• Titusville Mall (company) — Portfolio company with a bridge loan at 15.8% current rate
• Pennsylvania Social Equity Land Trust, Inc. (company) — Portfolio company with a bridge loan at 15.3% current rate

FAQ

Risk Factors

• Significant Investment Growth and Leverage [high — financial]: Total assets surged from $6,005 to $39,554,385, driven by $39,409,460 in new investments. This rapid expansion is financed partly by a $11,981,000 bank facility, indicating substantial leverage. A net investment loss of $181,969 was incurred despite $965,105 in investment income, highlighting the sensitivity of operations to investment performance and expenses.
• Economic Downturns and Portfolio Company Performance [high — market]: The company's strategy involves providing loans to private US companies. An economic downturn could negatively impact the ability of these portfolio companies to repay their loans, leading to potential losses for X1 Capital. The reliance on private companies, which may be less resilient than public ones, exacerbates this risk.
• Interest Rate Volatility [medium — market]: X1 Capital utilizes a bank facility for leverage, making it susceptible to interest rate fluctuations. Rising interest rates would increase the cost of borrowing, potentially squeezing profit margins, especially if investment income does not keep pace. This is a critical risk given the $11,981,000 bank facility.
• High Operating Expenses [medium — operational]: Total expenses of $1,147,074 for the three months ended September 30, 2025, significantly exceeded investment income of $965,105, resulting in a net investment loss. Key expense categories include income sharing ($720,570) and professional fees ($267,192), which are substantial relative to the company's scale.
• BDC and RIC Regulatory Compliance [medium — regulatory]: X1 Capital is regulated as a Business Development Company (BDC) and has elected to be treated as a Regulated Investment Company (RIC). Failure to comply with the complex requirements of the Investment Company Act of 1940 and the Internal Revenue Code could result in penalties or loss of favorable tax status.
• Limited Liquidity and Concentration Risk [low — operational]: With only 240 shares of common stock outstanding, the company may face liquidity challenges for its shares. Furthermore, the significant concentration of assets in investments ($39,409,460 out of $39,554,385 total assets) implies a high concentration risk if any single investment or sector performs poorly.

Industry Context

X1 Capital operates within the financial services sector, specifically as a Business Development Company (BDC) and Regulated Investment Company (RIC). The company focuses on providing debt and equity to private US companies, including bridge loans for government-guaranteed funding and acquiring BDC-qualified loans. This niche involves navigating the complexities of private credit markets and regulatory frameworks.

Regulatory Implications

As a BDC and RIC, X1 Capital must adhere to stringent regulations under the Investment Company Act of 1940 and U.S. tax laws. Compliance with these rules is crucial for maintaining its operational structure, tax status, and investor confidence. The company's status as an 'emerging growth company' under the JOBS Act provides some relief from public reporting requirements.

What Investors Should Do

1. Monitor Expense Ratios
2. Assess Leverage Strategy
3. Analyze Unrealized Gains
4. Evaluate Portfolio Company Performance

Key Dates

• 2025-09-30: Quarterly Financial Reporting — Reported significant asset growth, substantial new investments, and a net increase in net assets driven by unrealized gains, despite a net investment loss.
• 2025-09-30: Bank Facility Utilization — The company utilized $11,981,000 of its bank facility, indicating a leveraged growth strategy.
• 2024-12-31: Prior Period Financials — Established a baseline with total assets of $6,005 and net assets of $6,000, highlighting the dramatic growth in the subsequent period.
• 2023-07-25: Company Formation — X1 Capital Inc. was incorporated, marking the beginning of its operations and strategic development.

Glossary

Business Development Company (BDC)

A type of closed-end investment company that invests in small and medium-sized U.S. businesses, often providing capital and strategic support. (X1 Capital is structured and regulated as a BDC, which dictates its investment strategies and regulatory compliance requirements.)

Regulated Investment Company (RIC)

A U.S. tax term for a company that qualifies to pay no corporate income tax by distributing at least 90% of its investment income to shareholders. (X1 Capital's election to be treated as a RIC impacts its tax obligations and requires specific distribution policies.)

Unrealized Gain on Investments

The increase in the market value of an investment that has not yet been sold. It represents potential profit but is not realized until the asset is sold. (A significant unrealized gain of $2,436,298 was the primary driver of the net increase in net assets for the period.)

Net Investment Income

The income generated from a company's investments (interest, dividends) minus its operating expenses, excluding any changes in unrealized gains or losses. (X1 Capital reported a net investment loss of $181,969, indicating that its operating expenses exceeded its investment income before accounting for market value changes.)

Bank Facility

A line of credit or loan provided by a bank, often used by companies to finance operations or investments. (X1 Capital has a $11,981,000 bank facility, representing a significant source of leverage for its investment activities.)

Emerging Growth Company (EGC)

A company that has total annual gross revenues of less than $1.235 billion during its first fiscal year following the fifth anniversary of its IPO, or earlier under certain conditions. (X1 Capital qualifies as an EGC, allowing it to benefit from reduced regulatory and reporting requirements under the JOBS Act.)

Year-Over-Year Comparison

Compared to December 31, 2024, X1 Capital Inc. has experienced explosive growth in total assets, increasing from $6,005 to $39,554,385 as of September 30, 2025. This growth is primarily fueled by new investments totaling $39,409,460 and significant leverage through a $11,981,000 bank facility. While the prior period showed minimal activity, the current period reveals substantial investment income of $965,105, but also a net investment loss of $181,969 due to high expenses. The net increase in net assets of $2,254,329 is largely attributable to a significant unrealized gain on investments of $2,436,298, a factor not present in the prior period's limited financial data.

Key Financial Figures

• $1.235 billion — h we have total annual gross revenue of $1.235 billion or more, (ii) December 31 of the fiscal
• $700.0 m — on stock held by non-affiliates exceeds $700.0 million, measured as of the last business
• $1.0 billion — date on which we have issued more than $1.0 billion in non-convertible debt during the prec

Filing Documents

• xcap-20250930_10q.htm (10-Q) — 274KB
• xc_ex31z1.htm (EX-31.1) — 7KB
• xc_ex32z1.htm (EX-32.1) — 3KB
• 0001376474-25-000952.txt ( ) — 1295KB
• xcap-20250930_cal.xml (EX-101.CAL) — 3KB
• xcap-20250930_def.xml (EX-101.DEF) — 11KB
• xcap-20250930_lab.xml (EX-101.LAB) — 78KB
• xcap-20250930_pre.xml (EX-101.PRE) — 67KB
• xcap-20250930.xsd (EX-101.SCH) — 14KB
• xcap-20250930_10q_htm.xml (XML) — 79KB

CONSOLIDATED FINANCIAL INFORMATION

PART I. CONSOLIDATED FINANCIAL INFORMATION 6

Financial Statements

Item 1. Financial Statements 6 6 7 8 9 Consolidated Schedule of Investments (Unaudited) 10

Notes to Financial Statements (Unaudited)

Notes to Financial Statements (Unaudited) 12

Notes to Consolidated Financials

Item 1. Notes to Consolidated Financials 12

Management Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations 17

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 20

Controls and Procedures

Item 4. Controls and Procedures 21

: Other Information

Part II: Other Information 22

Legal Proceedings

Item 1. Legal Proceedings 22

Risk Factors

Item 1A. Risk Factors 22

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 24

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 24

Other Information

Item 5. Other Information 24

Exhibits

Item 6. Exhibits 25

FORWARD-LOOKING STATEMENTS

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

CONSOLIDATED FINANCIAL INFORMATION

PART I. CONSOLIDATED FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements X1 CAPITAL INC. September 30, 2025 (unaudited) December 31, 2024 (FY End) Assets Cash & Cash Equivalents $ 24,846 $ 6,005 Accounts Receivable 4,013 - Total Current Assets 28,859 6,005 Other Assets 116,066 - Investments 39,409,460 - Total Assets $ 39,554,385 $ 6,005 Liabilities & Equity Accounts Payable $ 25,169 $ 5 Other Current Liabilities 300,419 - Total Current Liabilities 325,588 5 Bank Facility 11,981,000 - Total Liabilities 12,306,589 5 Equity 6,000 6,000 Participation Capital 24,987,467 - Net Income 2,254,329 - Total Equity 27,247,796 6,000 Total Liabilities & Equity 39,554,385 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) 2,254,329 - Total Net Assets $ 2,260,329 $ 6,000 Net Asset Value per Share $ 9,418 $ 25 The accompanying notes are an integral part of these consolidated financial statements. 6 X1 CAPITAL INC. Three Months Ending Three Months Ending Sep 30, 2025 Dec 31, 2024 Income Investment Income $ 965,105 $ - Total Investment Income 965,105 - Expenses Income sharing 720,570 - Interest expense & bank fees 92,324 - Professional fees 267,192 - Legal fees 59,570 - Custodian fees 6,250 - Other 1,168 - Total Expenses 1,147,074 - Net Investment Income ( 181,969 ) - Unrealized Gain on Investments 2,436,298 - Net Increase in Net Assets Resulting from Operations $ 2,254,329 $ - Net investment income per common share (basic and diluted) $ ( 758 ) $ - Net increase in net assets resulting from operations per common share $ 9,393 $ - Weighted average shares outstanding (basic and diluted) 240 240 Th

Notes to Financial Statements (Unaudited)

Notes to Financial Statements (Unaudited)

Notes to Consolidated Financials

Item 1. Notes to Consolidated Financials 1. Organization X1 Capital Inc. ("X1" or "X1 Capital" or the "Company") 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 f

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