What changed in this filing

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Item 1. Financial Statements

2020-08-04 compared with 2020-05-07 · 728 added, 631 removed, 1712 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share amounts)

March 31, 2020

June 30, 2020

Investments at fair value:

32 unchanged sentences

Three months ended

March 31, 2020

March 31, 2019

Six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

INVESTMENT INCOME:

33 unchanged sentences

Three months ended

March 31, 2020

March 31, 2019

Increase (decrease) in net assets resulting from operations:

Six months ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Increase in net assets resulting from operations:

Net investment income

15 unchanged sentences

(in thousands)

Three months ended

March 31, 2020

March 31, 2019

Six months ended

June 30, 2020

June 30, 2019

Cash Flows from Operating Activities:

2 unchanged sentences

cash provided by (used in) operating activities:

Net realized (gain) loss on investments and cash equivalents

Net realized loss on investments and cash equivalents

Net change in unrealized (gain) loss on investments

32 unchanged sentences

Cash paid for interest

See notes to consolidated financial

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

March 31, 2020

June 30, 2020

thousands, except share/unit amounts)

2 unchanged sentences

Aegis Toxicology Sciences Corporation

Providers & Services

Health Care Providers & Services

Alteon Health, LLC

Providers & Services

Health Care Providers & Services

Altern Marketing, LLC

Household & Personal

Household & Personal Products

American Teleconferencing Services, Ltd.

Communications

Communications Equipment

Atria Wealth Solutions, Inc.

Diversified Financial

Diversified Financial Services

AviatorCap SII, LLC (2)

7 unchanged sentences

KORE Wireless Group, Inc.

Telecommunication

Wireless Telecommunication Services

Legility, LLC

Commercial Services &

Commercial Services & Supplies

Logix Holding Company, LLC

Communications

Communications Equipment

One Touch Direct, LLC

Commercial Services & Supplies

Pet Holdings ULC & Pet Supermarket, Inc.

1 unchanged sentence

PhyNet Dermatology LLC

Providers & Services

Health Care Providers & Services

Pinnacle Treatment Centers, Inc.

Providers & Services

Health Care Providers & Services

PPT Management Holdings, LLC

Providers & Services

Health Care Providers & Services

Solara Medical Supplies, Inc.

Providers & Services

Health Care Providers & Services

Soleo Health Holdings, Inc

Providers & Services

Health Care Providers & Services

USR Parent, Inc.

Specialty Retail

Total First Lien Bank Debt/Senior Secured Loans

1 unchanged sentence

Greystone Select Holdings LLC & Greystone & Co., Inc.

Thrifts & Mortgage

Thrifts & Mortgage Finance

Varilease Finance, Inc.

1 unchanged sentence

Total Second Lien Asset-Based Senior Secured Loans

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

thousands, except share/unit amounts)

Second Lien Bank Debt/Senior Secured Loans

Bishop Lifting Products, Inc.

Trading Companies &

IHS Intermediate, Inc.**

Providers & Services

Trading Companies & Distributors

PhyMed Management LLC

Providers & Services

Health Care Providers & Services

Rug Doctor LLC (2)

Diversified Consumer

Diversified Consumer Services

Total Second Lien Bank Debt/Senior Secured Loans

3 unchanged sentences

Apollo Endosurgery, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

Ardelyx, Inc.

5 unchanged sentences

Cardiva Medical, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

Centrexion Therapeutics, Inc.

1 unchanged sentence

Cerapedics, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

Delphinus Medical Technologies, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

GenMark Diagnostics, Inc.

Providers & Services

Health Care Providers & Services

Kindred Biosciences, Inc.

1 unchanged sentence

Neuronetics, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

OmniGuide Holdings, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

PQ Bypass, Inc.

Equipment & Supplies

Health Care Equipment & Supplies

Rubius Therapeutics, Inc.

2 unchanged sentences

Pharmaceuticals

SI-BONE, Inc.

Health Care Equipment & Supplies

Total First Lien Life Science Senior Secured Loans

Total Senior Secured Loans

consolidated financial statements.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

June 30, 2020

thousands, except share/unit amounts)

Equipment Financing 35.5%

Althoff Crane Service, Inc.(14)

Commercial Services & Supplies

AmeraMex International, Inc.

3 unchanged sentences

3/1/2022-11/1/2022

Boart Longyear Company (10)

Metals & Mining

C&H Paving, Inc.

28 unchanged sentences

12/1/2023-4/1/2024

Hypro, Inc.(10)

Interstate NDT, Inc.

14 unchanged sentences

4/30/2022-2/28/2025

Rango, Inc.(10)(14)

Rane Light Metal Castings Inc.

Commercial Services & Supplies

8 unchanged sentences

8/1/2022-10/1/2022

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

thousands, except share/unit amounts)

South Texas Oilfield Solutions, LLC (14)

44 unchanged sentences

Total Preferred Equity

consolidated financial statements.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

June 30, 2020

thousands, except share/unit amounts)

48 unchanged sentences

For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of

March 31, 2020.

June 30, 2020.

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies

of a company, as defined in the Investment Company Act of 1940 (1940 Act), due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment.

Transactions during the six months ended June 30, 2020 in these controlled investments are as follows:

consolidated financial statements.

1 unchanged sentence

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies

Transactions during the three months ended March 31, 2020 in these controlled investments are as follows:

June 30, 2020

thousands, except share/unit amounts)

Name of Issuer

14 unchanged sentences

Rug Doctor LLC

SOINT, LLC (preferred equity)

Indicates assets that the Company believes may not represent qualifying assets under

2 unchanged sentences

follow-on investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act.

As of March 31, 2020, on a fair value

As of June 30, 2020, on a fair value

basis, non-qualifying assets in the portfolio represented 23.6% of the total assets of the Company.

22 unchanged sentences

Hawkeye Contracting Company, LLC, Eagle Creek Mining, LLC & Falcon Ridge Leasing, LLC are co-borrowers.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

June 30, 2020

Denotes a subsidiary of NEF Holdings, LLC.

6 unchanged sentences

any, of the Company.

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

March 31, 2020

Spread is 6.00% Cash / 0.75% PIK.

3 unchanged sentences

Non-income producing security.

Investment is on non-accrual status.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

June 30, 2020

Industry Classification

1 unchanged sentence

Investments (at fair value) as

of March 31, 2020

of June 30, 2020

Diversified Financial Services (Crystal Financial LLC)

8 unchanged sentences

Diversified Consumer Services

Household & Personal Products

Trading Companies & Distributors

Household & Personal Products

Thrifts & Mortgage Finance

3 unchanged sentences

Energy Equipment & Services

Metals & Mining

Construction & Engineering

4 unchanged sentences

Total Investments

See notes to consolidated financial

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

1 unchanged sentence

December 31, 2019

(in thousands, except share/unit amounts)

thousands, except share/unit amounts)

Senior Secured Loans 94.1%

1 unchanged sentence

Aegis Toxicology Sciences Corporation

Health Care Providers &

Health Care Providers & Services

Alteon Health, LLC

Health Care Providers &

Health Care Providers & Services

Altern Marketing, LLC

Household & Personal

Household & Personal Products

American Teleconferencing Services, Ltd.

Communications

Communications Equipment

Atria Wealth Solutions, Inc

Diversified Financial

Diversified Financial Services

AviatorCap SII, LLC (2)

3 unchanged sentences

Bishop Lifting Products, Inc.

Trading Companies &

Trading Companies & Distributors

Enhanced Capital Group, LLC

2 unchanged sentences

Greystone Select Holdings LLC & Greystone & Co., Inc.

Thrifts & Mortgage

Thrifts & Mortgage Finance

IHS Intermediate, Inc.** .

Health Care Providers &

Health Care Providers & Services

Kingsbridge Holdings, LLC

1 unchanged sentence

KORE Wireless Group, Inc.

Telecommunication

Wireless Telecommunication Services

Logix Holding Company, LLC

Communications

Communications Equipment

MRI Software LLC

3 unchanged sentences

PhyMed Management LLC

Health Care Providers &

Health Care Providers & Services

PhyNet Dermatology LLC

Health Care Providers &

Health Care Providers & Services

PPT Management Holdings, LLC

Health Care Providers &

Health Care Providers & Services

PSKW, LLC & PDR, LLC

Health Care Providers &

Health Care Providers & Services

PSKW, LLC & PDR, LLC

Health Care Providers &

Health Care Providers & Services

RS Energy Group U.S., Inc.

Rug Doctor LLC (2)

Diversified Consumer

Diversified Consumer Services

Solara Medical Supplies, Inc

Health Care Providers &

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands, except share/unit amounts)

Health Care Providers & Services

The Octave Music Group, Inc.

7 unchanged sentences

Apollo Endosurgery, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

Ardelyx, Inc.

5 unchanged sentences

Cardiva Medical, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

Centrexion Therapeutics, Inc.

1 unchanged sentence

Cerapedics, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

Delphinus Medical Technologies, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

GenMark Diagnostics, Inc.

Health Care Providers &

Health Care Providers & Services

Kindred Biosciences, Inc.

1 unchanged sentence

OmniGuide Holdings, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

PQ Bypass, Inc.

Health Care Equipment &

Health Care Equipment & Supplies

Rubius Therapeutics, Inc.

3 unchanged sentences

Senseonics Holdings, Inc

Health Care Equipment &

Health Care Equipment & Supplies

Total Life Science Senior Secured Loans

Total Senior Secured Loans

consolidated financial statements.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

4 unchanged sentences

Althoff Crane Service, Inc.

Commercial Services &

Commercial Services & Supplies

AmeraMex International, Inc.

Commercial Services &

Commercial Services & Supplies

Blackhawk Mining, LLC (14)

Consumable Fuels

Oil, Gas & Consumable Fuels

3/1/2022-11/1/2022

C&H Paving, Inc.

Construction &

Construction & Engineering

1/1/2024-11/1/2024

3 unchanged sentences

Easton Sales and Rentals, LLC (10)

Commercial Services &

Commercial Services & Supplies

Equipment Operating Leases, LLC (2)(12)

5 unchanged sentences

Garda CL Technical Services, Inc.

Commercial Services &

Commercial Services & Supplies

7/13/2023-10/5/2023

1 unchanged sentence

Globecomm Systems Inc.

Telecommunication

Wireless Telecommunication Services

GMT Corporation (14)

2 unchanged sentences

Hawkeye Contracting Company, LLC (10)(11)

Consumable Fuels

Oil, Gas & Consumable Fuels

HTI Logistics Corporation (10)

Commercial Services &

Commercial Services & Supplies

12/1/2023-4/1/2024

Hypro, Inc.(10)

Interstate NDT, Inc.

1 unchanged sentence

ISR Holdings, LLC (10)

Commercial Services &

Commercial Services & Supplies

JP Motorsports, Inc.

1 unchanged sentence

Lineal Industries, Inc.

Construction &

Construction & Engineering

Loyer Capital LLC (2)(12)

2 unchanged sentences

Meridian Consulting I Corp, Inc.

Hotels, Restaurants &

Hotels, Restaurants & Leisure

Mountain Air Helicopters, Inc.

Commercial Services &

Rango, Inc.(10)(14)

Commercial Services &

Commercial Services & Supplies

4/1/2023-11/1/2024

Rossco Crane & Rigging, Inc.

Commercial Services &

Commercial Services & Supplies

4/1/2021-9/1/2022

2 unchanged sentences

Sidelines Tree Service LLC (14)

Diversified Consumer

Diversified Consumer Services

8/1/2022-10/1/2022

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands, except share/unit amounts)

South Texas Oilfield Solutions, LLC (14)

Energy Equipment &

Energy Equipment & Services

9/1/2022-7/1/2023

Southern Nevada Oral & Maxillofacial Surgery, LLC (10)

Providers & Services

Health Care Providers & Services

Southwest Traders, Inc.

Spartan Education, LLC (10)

Diversified Consumer

Diversified Consumer Services

7/31/2020-12/27/2023

2 unchanged sentences

Stafford Logistics, Inc.

Commercial Services &

Commercial Services & Supplies

10/1/2024-10/1/2025

1 unchanged sentence

Sturgeon Services International Inc.

Energy Equipment &

Energy Equipment & Services

Sun-Tech Leasing of Texas, L.P.

10 unchanged sentences

Trinity Equipment Rentals, Inc.

Commercial Services &

Commercial Services & Supplies

Trolleys, Inc.

2 unchanged sentences

Warrior Crane Services, LLC (10)

Commercial Services &

Commercial Services & Supplies

7/11/2024-8/1/2026

Wind River Environmental, LLC (10)

Diversified Consumer

Diversified Consumer Services

Womble Company, Inc.

Energy Equipment &

W.P.M., Inc., WPM-Southern, LLC, WPM Construction Services,

Construction &

Energy Equipment & Services

W.P.M., Inc., WPM-Southern, LLC, WPM Construction Services, Inc.(10).

Construction & Engineering

NEF Holdings, LLC Equity Interests (2)(9)

7 unchanged sentences

Total Preferred Equity

consolidated financial statements.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

37 unchanged sentences

Tetraphase Pharmaceuticals, Inc.

Warrants (3)*

Pharmaceuticals

14 unchanged sentences

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies

of a company, as defined in the Investment Company Act of 1940 (1940 Act), due to beneficially owning, either directly or through one or more

Transactions during the year ended December 31, 2019 in these controlled investments are as follows:

consolidated financial statements.

2 unchanged sentences

December 31, 2019

(in thousands)

controlled companies, more than 25% of the outstanding voting securities of the investment.

Transactions during the year ended December 31, 2019 in these controlled investments are as follows:

(in thousands, except share/unit amounts)

Name of Issuer

Fair Value at

Ark Real Estate Partners LP

41 unchanged sentences

wholly-owned consolidated subsidiary.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

Indicates an investment that is wholly held by Solar Capital Ltd.

10 unchanged sentences

Spread is 6.00% Cash / 0.75% PIK.

consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

Kindred Biosciences, Inc., KindredBio Equine, Inc.

3 unchanged sentences

Investment is on non-accrual status.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

Industry Classification

25 unchanged sentences

Total Investments

See notes to consolidated financial

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

March 31, 2020

June 30, 2020

thousands, except share amounts)

42 unchanged sentences

accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate.

Accordingly, they

may not include all of the information and notes required by GAAP for annual consolidated

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

Accordingly, they may not include all of the information and notes required by GAAP for annual consolidated financial statements.

GAAP requires management to make estimates and assumptions that

affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods.

Changes in the economic environment, financial markets and any other parameters

used in determining these estimates could cause actual results to differ materially.

The current periods results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on

December 31, 2020.

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for

the fair presentation of financial statements, have been included.

The significant accounting policies consistently followed by the

financial statements.

GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported

amounts of income and expenses during the reported periods.

Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

periods results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2020.

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of

financial statements, have been included.

The significant accounting policies consistently followed by the Company are:

Investment transactions are accounted for on the trade date;

21 unchanged sentences

Advisers preliminary valuations and make their own independent assessment for all material assets;

the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the

independent valuation firm and responds to the valuation recommendation of the independent valuation firm, if any, to reflect any comments;

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the

independent valuation firm and responds to the valuation recommendation of the independent valuation firm, if any, to reflect any comments;

the Board discusses valuations and determines the fair value of each investment in our portfolio in good faith

14 unchanged sentences

input in the valuation process.

For the three months ended March 31, 2020, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

For the six months ended June 30, 2020, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

ASC Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:

Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the

measurement date.

Quoted prices for similar assets or liabilities in active markets, or quoted prices

for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Unobservable inputs for the asset or liability.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the

lowest level of input that is significant to the fair value measurement.

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.

exercise of judgment is based in part on our knowledge of the asset class and our prior experience.

Quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.

Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets

or liabilities in markets that are not active, or other observable inputs other than quoted prices.

inputs for the asset or liability.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its

entirety falls is determined based on the lowest level of input that is significant to the fair value measurement.

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers

factors specific to each investment.

The exercise of judgment is based in part on our knowledge of the asset class and our prior experience.

Gains or losses on investments are calculated by using the specific identification method.

3 unchanged sentences

Upon the prepayment of a loan, any unamortized loan

origination fees are recorded as interest

origination fees are recorded as interest income.

We record call premiums received on loans repaid as interest income when we receive such amounts.

Capital structuring fees, amendment fees, consent fees, and any other

non-recurring fee income as well as management fee and other fee income for services rendered, if any, are recorded as other income when earned.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

We record call premiums received on loans repaid as interest income when we receive such amounts.

Capital structuring fees, amendment fees, consent fees, and any other non-recurring fee income as well as management fee and other fee income for services rendered, if any, are recorded as other income when earned.

The Company intends to comply with the applicable provisions of the Code pertaining to regulated investment

37 unchanged sentences

Realized gains or losses are recognized when contracts are settled.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

March 31, 2020

thousands, except share amounts)

The Company records expenses related to shelf registration statements and applicable equity offering costs as

1 unchanged sentence

These expenses are typically charged as a reduction of capital upon utilization or expensed, in accordance with ASC 946-20-25.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

June 30, 2020

thousands, except share amounts)

Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when principal or interest cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest cash payments will

10 unchanged sentences

Recent Accounting Pronouncements

2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in ASU 2018-13 modify and eliminate certain disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement.

ASU 2018-13 is effective for all entities for

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework

Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in ASU 2018-13 modify and eliminate certain disclosure requirements on fair value measurements in Topic 820, Fair Value

ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted.

The Company has adopted ASU 2018-13 and determined that the adoption has not

had a material impact on its consolidated financial statements and disclosures.

The Company has

adopted ASU 2018-13 and determined that the adoption has not had a material impact on its consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and

other transactions affected by reference rate reform if certain criteria are met.

The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

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 and disclosures.

Solar Capital has an Advisory Agreement with the Investment Adviser, under which the Investment Adviser will manage

the day-to-day operations of, and provide investment advisory services to, Solar Capital.

For providing these services, the Investment Adviser receives a fee from Solar

Capital, consisting of two componentsa base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of Solar Capitals gross assets at the end of the two most recently

completed calendar quarters calculated at an annual rate of 1.75% on gross assets up to 200% of the Companys total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Companys total

net assets as of the immediately preceding quarter end.

For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next

fiscal quarter.

The Company is currently evaluating the impact of adopting ASU 2020-04 on its

consolidated financial statements and disclosures.

Solar Capital has an Advisory Agreement with the Investment Adviser, under which the Investment Adviser will manage the day-to-day operations of, and provide investment advisory services to, Solar Capital.

For providing these services, the Investment Adviser receives a fee from Solar Capital,

consisting of two componentsa base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of Solar Capitals gross assets at the end of the two most recently completed

calendar quarters calculated at an annual rate of 1.75% on gross assets up to 200% of the Companys total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Companys total net assets

as of the immediately preceding quarter end.

For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next fiscal

Temporary assets include, but are not limited to, U.S.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

March 31, 2020

thousands, except share amounts)

treasury bills, other short-term U.S.

2 unchanged sentences

one part is calculated and payable quarterly in arrears based on Solar

Capitals pre-incentive fee net investment income for the immediately preceding calendar quarter.

For this purpose, pre-incentive fee net investment income means

interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from

portfolio companies) accrued during the calendar quarter, minus Solar Capitals operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and

distributions paid on any issued and outstanding preferred stock, but excluding the performance-based incentive fee).

Pre-incentive fee net investment income does not include any realized capital gains or

losses, or unrealized capital appreciation or depreciation.

Pre-incentive fee net investment income, expressed as a rate of return on the value of Solar Capitals net assets at the end of the immediately

preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized).

Solar Capital pays the Investment Adviser a performance-based incentive fee with respect to Solar Capitals

pre-incentive fee net investment income in each calendar quarter as follows:

(1) no performance-based incentive fee in any calendar quarter in which Solar Capitals

pre-incentive fee net investment income does not exceed the hurdle rate;

(2) 100% of Solar Capitals pre-incentive fee net investment income with respect to

that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter;

and (3) 20% of the amount of Solar Capitals pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter.

These calculations are appropriately pro-rated for any period of less than three

The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year

(or upon termination of the Advisory Agreement, as of the termination date), and will equal 20% of Solar Capitals cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized

depreciation on a gross investment-by-investment basis at the end of each calendar year) and all net capital gains upon which prior performance-based capital gains

incentive fee payments were previously made to the Investment Adviser.

For financial statement purposes, the second part of the performance-based incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital

appreciation.

No accrual was required for the three months ended March 31, 2020 and 2019.

For the three months ended March 31,

2020 and 2019, the Company recognized $6,269 and $6,562, respectively, in base management fees and $1,480 and $4,616, respectively, in performance-based incentive fees.

Solar Capital has also entered into an Administration Agreement with Solar Capital Management, LLC (the Administrator) under which

the Administrator provides administrative services to Solar Capital.

For providing these services, facilities and personnel, Solar Capital reimburses the Administrator for Solar Capitals allocable portion of overhead and other expenses

incurred by the Administrator in performing its obligations under the Administration Agreement, including rent.

The Administrator will also provide, on Solar Capitals behalf, managerial assistance to those portfolio companies to which Solar

Capital is required to provide such assistance.

Capitals pre-incentive fee net investment income for the immediately preceding

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

June 30, 2020

thousands, except share amounts)

calendar quarter.

For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any

other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus Solar

Capitals operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred stock, but

excluding the performance-based incentive fee).

Pre-incentive fee net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation.

Pre-incentive fee net investment income, expressed as a rate of return on the value of Solar Capitals net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of

1.75% per quarter (7% annualized).

Solar Capital pays the Investment Adviser a performance-based incentive fee with respect to Solar Capitals pre-incentive fee net investment income in each calendar

quarter as follows:

(1) no performance-based incentive fee in any calendar quarter in which Solar Capitals pre-incentive fee net investment income does not exceed the hurdle rate;

Solar Capitals pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the

hurdle rate but is less than 2.1875% in any calendar quarter;

and (3) 20% of the amount of Solar Capitals pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar

These calculations are appropriately pro-rated for any period of less than three months.

The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon

termination of the Advisory Agreement, as of the termination date), and will equal 20% of Solar Capitals cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a

gross investment-by-investment basis at the end of each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments

were previously made to the Investment Adviser.

For financial statement purposes, the second part of the performance-based incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital appreciation.

was required for the three and six months ended June 30, 2020 and 2019.

For the three and six months ended June 30, 2020, the

Company recognized $5,971 and $12,240, respectively, in base management fees and $0 and $1,480, respectively, in performance-based incentive fees.

For the three and six months ended June 30, 2019, the Company recognized $6,727 and $13,289,

respectively, in base management fees and $4,608 and $9,224, respectively, in performance-based incentive fees.

Solar Capital has also

entered into an Administration Agreement with Solar Capital Management, LLC (the Administrator) under which the Administrator provides administrative services to Solar Capital.

For providing these services, facilities and personnel,

Solar Capital reimburses the Administrator for Solar Capitals allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent.

The Administrator

will also provide, on Solar Capitals behalf, managerial assistance to those portfolio companies to which Solar Capital is required to provide such assistance.

The Company typically reimburses the Administrator on a quarterly basis.

For the three

months ended March 31, 2020 and 2019, the Company recognized expenses under the Administration Agreement of $1,147 and $1,368, respectively.

No managerial assistance fees were accrued or collected for the three months ended March 31, 2020

For the three and six months ended June 30, 2020, the Company recognized expenses under the Administration Agreement of $1,148 and

$2,295, respectively.

For the three and six months ended June 30, 2019, the Company recognized expenses under the Administration Agreement of $1,293 and $2,661, respectively.

No managerial assistance fees were accrued or collected for the three

and six months ended June 30, 2020 and 2019.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

Net Asset Value Per Share

At March 31, 2020, the Companys total net assets and net asset value per share were $813,084 and $19.24, respectively.

At June 30, 2020, the Companys total net assets and net asset value per share were $849,803 and $20.11, respectively.

This compares

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The following table sets forth the computation of basic and diluted net increase (decrease) in net assets per share resulting

from operations, pursuant to ASC 260-10, for the three months ended March 31, 2020 and 2019:

Three months ended March 31,

from operations, pursuant to ASC 260-10, for the three and six months ended June 30, 2020 and 2019:

Three months ended June 30,

Six months ended June 30,

Earnings (loss) per share (basic & diluted)

26 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

11 unchanged sentences

Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as Level 1.

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of March 31, 2020 and

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of June 30, 2020 and

December 31, 2019:

Fair Value Measurements

As of March 31, 2020

As of June 30, 2020

Senior Secured Loans

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2022 Unsecured Notes

Unfunded Commitments

Total Fair Valued Liabilities

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

March 31, 2020

thousands, except share amounts)

Fair Value Measurements

6 unchanged sentences

2022 Unsecured Notes

The following tables provide a summary of the changes in fair value of Level 3 assets and liabilities for

the three months ended March 31, 2020 and the year ended December 31, 2019 as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at

March 31, 2020 and December 31, 2019:

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

June 30, 2020

thousands, except share amounts)

The following tables provide a summary of the changes in fair value of Level 3 assets

and liabilities for the three and six months ended June 30, 2020, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at June 30, 2020:

Fair Value Measurements Using Level 3 Inputs

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Common Equity/

Fair value, December 31, 2019

Fair value, March 31, 2020

Total gains or losses included in earnings:

Net realized gain (loss)

Net change in unrealized loss

Net realized loss

Net change in unrealized gain

Purchase of investment securities

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Transfers in/out of Level 3

Fair value, March 31, 2020

Unrealized losses for the period relating to those Level 3 assets that were still held by the

Fair value, June 30, 2020

Unrealized gains for the period relating to those Level 3 assets that were still held by the

Company at the end of the period:

Net change in unrealized loss

Net change in unrealized gain

Senior Secured

Preferred Equity

Common Equity/

Fair value, December 31, 2019

Total gains or losses included in earnings:

Net realized loss

Net change in unrealized gain (loss)

Purchase of investment securities

Proceeds from dispositions of investment securities.

Transfers in/out of Level 3

Fair value, June 30, 2020

Unrealized gains (losses) for the period relating to those Level 3 assets that were still

held by the Company at the end of the period:

Net change in unrealized gain (loss)

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

The following table shows a reconciliation of the beginning and ending balances for fair

valued liabilities measured using significant unobservable inputs (Level 3) for the three months ended March 31, 2020:

valued liabilities measured using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2020:

2022 Unsecured Notes and Unfunded Commitments

For the three months ended

March 31, 2020

June 30, 2020

Beginning fair value

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Ending fair value

2022 Unsecured Notes and Unfunded Commitments

For the six months ended

June 30, 2020

Beginning fair value

Net realized (gain) loss

Net change in unrealized (gain) loss

Transfers in/out of Level 3

Ending fair value

The Company made an election to apply the fair value option of accounting to the 2022 Unsecured Notes, in

accordance with ASC 825-10.

On March 31, 2020, there were borrowings of $150,000 on the 2022 Unsecured Notes.

On June 30, 2020, there were borrowings of $150,000 on the 2022 Unsecured Notes.

The following table provides a summary of the changes in fair value of Level 3 assets and liabilities for the year ended December 31, 2019, as well

as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at December 31, 2019:

Fair Value Measurements Using Level 3 Inputs

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Fair value, December 31, 2019

Unrealized gains (losses) for the period relating to those Level 3 assets that were still

held by the Company at the end of the period:

Net change in unrealized gain (loss)

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

The following table shows a reconciliation of the beginning and ending balances for fair

valued liabilities measured using significant unobservable inputs (Level 3) for the year ended December 31, 2019:

Senior Secured

Preferred Equity

Common Equity/

Unrealized gains (losses) for the period relating to those Level 3 assets that were still

held by the Company at the end of the period:

Net change in unrealized gain (loss)

The following table shows a reconciliation of the beginning and ending balances for fair valued liabilities

measured using significant unobservable inputs (Level 3) for the year ended December 31, 2019:

Credit Facility, 2022 Unsecured Notes and SSLP Facility

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the Companys Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as

enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (EBITDA) multiples of similar companies, and comparable market transactions for equity securities.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

Quantitative information about the Companys Level 3 asset and liability fair value

measurements as of March 31, 2020 is summarized in the table below:

Fair Value at

enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (EBITDA) multiples of similar companies, and comparable market transactions for

equity securities.

Quantitative information about the Companys Level 3 asset and liability fair value measurements as of

June 30, 2020 is summarized in the table below:

Principal Valuation

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2.5% 5.5% (5.4%)

Unfunded Commitments

Income Approach

6.8% 8.9% (8.6%)

Quantitative information about the Companys Level 3 asset and liability fair value measurements as

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7.2% 19.7% (10.0%)

7.8% 7.8% (7.8%)

Preferred Equity

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

Our debt obligations consisted of the following as of March 31, 2020 and December 31, 2019:

March 31, 2020

Our debt obligations consisted of the following as of June 30, 2020 and December 31, 2019:

June 30, 2020

December 31, 2019

Carrying Value

Credit Facility

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Carrying Value equals the Face Amount net of unamortized debt issuance costs of $2,542 and $2,683,

respectively, as of March 31, 2020 and December 31, 2019.

respectively, as of June 30, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $737 and $851, respectively, as

of March 31, 2020 and December 31, 2019.

of June 30, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $80 and $95, respectively, as

of March 31, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $1,038 and $1,124,

respectively, as of March 31, 2020 and December 31, 2019.

of June 30, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $952 and $1,124, respectively,

as of June 30, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $1,178 and $1,268,

respectively, as of March 31, 2020 and December 31, 2019.

respectively, as of June 30, 2020 and December 31, 2019.

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $731 and $762, respectively as

of March 31, 2020 and December 31, 2019.

of June 30, 2020 and December 31, 2019.

Unsecured Notes

15 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

12 unchanged sentences

secured credit agreement (the Credit Facility).

The Credit Facility is composed of $470,000 of revolving credit and $75,000 of term loans.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 2.00-2.25% or the alternate base rate plus 1.00%-1.25%.

The Credit Facility was originally composed of $470,000 of revolving credit and $75,000 of term loans.

On February 12, 2020, a new lender to the Company executed a commitment increase to

our Credit Facility providing for an additional $75,000 of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545,000.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range

of 2.00-2.25% or the alternate base rate plus 1.00%-1.25%.

The Credit Facility has no LIBOR floor requirement.

The Credit Facility matures in August 2024 and includes ratable

amortization in the final year.

The Credit Facility matures in August 2024 and includes

ratable amortization in the final year.

The Credit Facility may be increased up to $800,000 with additional new lenders or an increase in commitments from current lenders.

The Credit Facility contains certain customary affirmative and negative covenants and

events of default.

The Credit Facility contains certain customary affirmative and negative

covenants and events of default.

In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholders equity and a minimum asset coverage ratio.

At March 31, 2020,

2020, outstanding USD equivalent borrowings under the Credit Facility totaled $75,000, composed of $0 of revolving credit and $75,000 of term loans.

8 unchanged sentences

There were no borrowings outstanding

as of March 31, 2020.

as of June 30, 2020.

Certain covenants on our issued debt may restrict our business activities, including limitations that could

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

The average annualized interest cost for all borrowings for the three months ended

March 31, 2020 and the year ended December 31, 2019 was 4.32% and 4.52%, respectively.

The average annualized interest cost for all borrowings for the six months ended

June 30, 2020 and the year ended December 31, 2019 was 4.29% and 4.52%, respectively.

These costs are exclusive of other credit facility expenses such as unused fees, agency fees and other prepaid expenses related to establishing and/or

amending the Credit Facility, the 2022 Unsecured Notes, the 2022 Tranche C Notes, the NEFPASS Facility, the 2023 Unsecured Notes, the 2024 Unsecured Notes, and the 2026 Unsecured Notes (collectively the Credit Facilities), if any.

maximum amounts borrowed on the Credit Facilities during the three months ended March 31, 2020 and the year ended December 31, 2019 were $601,000 and $616,186, respectively.

Financial Highlights

following is a schedule of financial highlights for the three months ended March 31, 2020 and 2019:

Three months ended

March 31, 2020

Three months ended

March 31, 2019

Per Share Data:(a)

maximum amounts borrowed on the Credit Facilities during the six months ended June 30, 2020 and the year ended December 31, 2019 were $601,000 and $616,186, respectively.

Financial Highlights and Senior Securities Table

The following is a schedule of financial highlights for the six months ended June 30, 2020 and 2019:

Six months ended

June 30, 2020

Six months ended

June 30, 2019

Per Share Data:

Net asset value, beginning of year

24 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

13 unchanged sentences

December 20, 2018, the revolving credit facility was expanded to $330,000.

As of March 31, 2020 Crystal Financial LLC had 35

As of June 30, 2020 Crystal Financial LLC had 30

funded commitments to 26 different issuers with a total par value of approximately $425,986 on total assets of $449,749.

1 unchanged sentence

approximately $496,833 on total assets of $518,024.

As of March 31, 2020 and December 31, 2019, the largest loan outstanding totaled $45,000 and $45,000, respectively.

As of June 30, 2020 and December 31, 2019, the largest loan outstanding totaled $45,000 and $45,000, respectively.

For the same periods, the average exposure per issuer was $16,384 and

$17,744, respectively.

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $245,589 and $275,954 of borrowings outstanding at March 31, 2020 and

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $205,950 and $275,954 of borrowings outstanding at June 30, 2020 and

December 31, 2019, respectively.

For the three months ended March 31, 2020 and 2019, Crystal Financial LLC had net income of $1,901 and $5,448, respectively, on gross income of $11,505 and $13,360, respectively.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

For the three months ended June 30, 2020 and 2019, Crystal Financial LLC had net income of $8,350 and $10,197, respectively, on gross income of $12,137 and $21,631, respectively.

For the six months

ended June 30, 2020 and 2019, Crystal Financial LLC had net income of $10,250 and $15,646, respectively, on gross income of $23,642 and $34,990, respectively.

Due to timing and non-cash items, there

may be material differences between GAAP net income and cash available for distributions.

Commitments and Contingencies

The Company had unfunded debt and equity commitments to various revolving and delayed draw loans as

well as to Crystal Financial LLC.

The total amount of these unfunded commitments as of March 31, 2020 and December 31, 2019 is $118,513 and $124,529, respectively, comprised of the following:

The Company had unfunded debt and equity commitments to various revolving and delayed draw loans as well as to Crystal Financial LLC.

amount of these unfunded commitments as of June 30, 2020 and December 31, 2019 is $108,154 and $124,529, respectively, comprised of the following:

June 30, 2020

Crystal Financial LLC*

Kindred Biosciences, Inc

Rubius Therapeutics, Inc

Altern Marketing, LLC

Cardiva Medical, Inc

Neuronetics, Inc

Cerapedics, Inc

One Touch Direct, LLC

PQ Bypass, Inc

Phynet Dermatology LLC

Varilease Finance, Inc

Altern Marketing, LLC

Cerapedics, Inc

Atria Wealth Solutions, Inc

Soleo Health Holdings, Inc

Enhanced Capital Group, LLC

Pinnacle Treatment Centers, Inc

Solara Medical Supplies, Inc

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

Atria Wealth Solutions, Inc

Soleo Health Holdings, Inc.

June 30, 2020

Solara Medical Supplies, Inc

Rubius Therapeutics, Inc

Centrexion Therapeutics, Inc

Varilease Finance, Inc

MRI Software LLC

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Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.

March 31, 2020 and December 31, 2019, the Company had sufficient cash available and/or liquid securities available to fund its commitments.

June 30, 2020 and December 31, 2019, the Company had sufficient cash available and/or liquid securities available to fund its commitments.

NEF Holdings, LLC

10 unchanged sentences

At July 31, 2017, NEF also had two securitizations outstanding, with an issued note balance of $94,587, which were later redeemed in 2018.

As of March 31, 2020, NEF had 158 funded equipment-backed leases and loans to 69 different customers with a total net investment in

leases and loans of approximately $217,437 on total assets of $294,761.

As of June 30, 2020, NEF had 147 funded equipment-backed leases and loans to 65 different customers with a total net investment in leases

and loans of approximately $209,591 on total assets of $282,214.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to 78 different customers with a total net investment in leases and loans of approximately $244,996

on total assets of $304,203.

As of March 31, 2020 and December 31, 2019, the largest position outstanding totaled $26,565 and $26,948, respectively.

As of June 30, 2020 and December 31, 2019, the largest position outstanding totaled $26,088 and $26,948, respectively.

For the same periods, the average exposure per customer was $3,224 and $3,141,

respectively.

NEFs credit facility, which is non-recourse to Solar Capital, had approximately $121,432 and $128,150 of borrowings outstanding at March 31, 2020 and December 31, 2019,

NEFs credit facility, which is non-recourse to Solar Capital, had approximately $111,722 and $128,150 of borrowings outstanding at June 30, 2020 and December 31, 2019,

respectively.

For the three months ended March 31, 2020 and March 31, 2019, NEF had net income of $427 and $440, respectively, on gross income of $5,914 and $7,148, respectively.

Due to timing and

non-cash items, there may be material differences between GAAP net income and cash available for distributions.

For the three months ended June 30, 2020 and June 30, 2019, NEF had net income (loss) of ($2,354) and $61, respectively, on gross income of $5,419 and $8,407,

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

March 31, 2020

June 30, 2020

thousands, except share amounts)

respectively.

For the six months ended June 30, 2020 and June 30, 2019, NEF had net income (loss) of ($1,927) and $501, respectively, on gross income of $11,333 and $15,556,

respectively.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

Capital Share Transactions

As of March 31, 2020 and March 31, 2019, 200,000,000 shares of $0.01 par value capital stock were authorized.

There were no transactions in capital stock during the three months ended March 31, 2020 and March 31, 2019.

of June 30, 2020 and June 30, 2019, 200,000,000 shares of $0.01 par value capital stock were authorized.

There were no

transactions in capital stock during the three and six months ended June 30, 2020 and June 30, 2019.

Subsequent Events

has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.

On May 7, 2020, our Board declared a quarterly distribution of $0.41 per share payable on July 2, 2020 to holders of record as of

June 18, 2020.

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated

financial statements were issued.

On August 4, 2020, our Board declared a quarterly distribution of $0.41 per share payable on

October 2, 2020 to holders of record as of September 17, 2020.

Subsequent to June 30, 2020, the global outbreak of the COVID-19 pandemic, and the related effect on the U.S.

and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies and, as a result,

has had adverse effects on the Companys operations.

The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, remain uncertain.

The operational and financial performance

of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments

and negatively impact the Companys performance.

Report of Independent Registered Public Accounting Firm

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(and subsidiaries) (the Company), including the consolidated

schedule of investments, as of March 31, 2020, the related consolidated statements of operations, changes in net assets, and cash flows for the three-month periods ended March 31, 2020 and 2019, and the related notes (collectively, the

consolidated interim financial information).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S.

generally accepted

accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2019, and the related consolidated statements of operations, changes in net assets, and cash

flows for the year then ended (not presented herein);

schedule of investments, as of June 30, 2020, the related consolidated statements of operations and changes in net assets, for the three-month and six-month periods ended June 30, 2020 and 2019, the

related consolidated statements of cash flows for the six-month periods ended June 30, 2020 and 2019, and the related notes (collectively, the consolidated interim financial information).

reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S.

generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated

statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2019, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then

ended (not presented herein);

and in our report dated February 20, 2020, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying

consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities,

including the consolidated schedule of investments, from which it has been derived.

In our opinion, the information set forth in the accompanying consolidated statement of

assets and liabilities, including the consolidated schedule of investments, as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated

schedule of investments, from which it has been derived.

Basis for Review Results

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New York, New York

Managements Discussion and Analysis of Financial Condition and Results of Operations

August 4, 2020

Managements Discussion and Analysis of Financial Condition and

Results of Operations

The information contained in this section should be read in conjunction with our consolidated financial

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not our primary focus but are intended to enhance our overall returns.

These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select

countries outside of the United States.

As of March 31, 2020, the Investment Adviser has directly invested approximately

$9.3 billion in more than 400 different portfolio companies since 2006.

investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the

United States.

As of June 30, 2020, the Investment Adviser has directly invested approximately $9.4 billion in more than 400

different portfolio companies since 2006.

Over the same period, the Investment Adviser completed transactions with approximately 200 different financial sponsors.

Recent Developments

On May 7, 2020,

our Board declared a quarterly distribution of $0.41 per share payable on July 2, 2020 to holders of record as of June 18, 2020.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount

of debt and equity capital available to middle market companies, 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.

must 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. The definition of eligible portfolio company includes certain public companies that do not have any securities listed on a national securities exchange and companies whose

securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment

securities that we may sell.

Our debt investments generally have a stated term of three to seven years and typically bear interest at a floating rate usually determined on the basis of a benchmark London interbank offered rate (LIBOR),

commercial paper rate, or the prime rate.

2020, our Board declared a quarterly distribution of $0.41 per share payable on October 2, 2020 to holders of record as of September 17, 2020.

Subsequent to June 30, 2020, the global outbreak of the COVID-19 pandemic, and the related effect

and global economies, has continued to have adverse consequences for the business operations of some of the Companys portfolio companies and, as a result, has had adverse effects on the Companys operations.

economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, remain uncertain.

The operational and financial performance of the issuers of securities in which the Company invests depends on

future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Companys investments and negatively impact the Companys performance.

Our level of investment

activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, 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.

As a BDC, we must 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. The definition of eligible portfolio company includes

certain public companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

We generate revenue primarily in

the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may sell.

Our debt investments generally have a stated term of three to seven years and typically bear interest at a

floating rate usually determined on the basis of a benchmark London interbank offered rate (LIBOR), commercial paper rate, or the prime rate.

Interest on our debt investments is generally payable monthly or quarterly but may be bi-monthly or semi-annually.

In addition, our investments may provide payment-in-kind (PIK) interest.

Such amounts of accrued PIK interest are added to the cost of the investment on the respective capitalization dates and generally

become due at maturity of the investment or upon the investment being called by the issuer.

We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable,

consulting fees, etc.

investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable

to such services, are provided and paid for by Solar Capital Partners.

We bear all other costs and expenses of our operations and transactions, including (without limitation):

Such amounts of

accrued PIK interest are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer.

We may also generate revenue in the form of

commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.

All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment

advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by Solar Capital Partners.

We bear all other costs and expenses of our operations and

transactions, including (without limitation):

the cost of our organization and public offerings;

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Portfolio and Investment Activity

During the three months ended March 31, 2020, we invested approximately $79.6 million across 15 portfolio companies.

During the three months ended June 30, 2020, we invested approximately $61.2 million across 14 portfolio companies.

This compares to

investing approximately $108.1 million in 19 portfolio companies for the three months ended March 31, 2019.

Investments sold, prepaid or repaid during the three months ended March 31, 2020 totaled approximately $200.3 million

versus approximately $73.5 million for the three months ended March 31, 2019.

At March 31, 2020, our portfolio consisted

of 105 portfolio companies and was invested 23.3% in cash flow senior secured loans, 31.8% in asset-based senior secured loans / Crystal, 22.5% in equipment senior secured financings / NEF, and 22.4% in life science senior secured loans, in each

case, measured at fair value, versus 120 portfolio companies invested 29.2% in cash flow senior secured loans, 29.8% in asset-based senior secured loans / Crystal, 21.4% in equipment senior secure financings / NEF, and 19.6% in life

science senior secured loans, in each case, measured at fair value, at March 31, 2019.

At March 31, 2020, 76.5% or

$969.7 million of our income producing investment portfolio* is floating rate and 23.5% or $298.1 million is fixed rate, measured at fair value.

At March 31, 2019, 75.7% or $1.12 billion of our income producing investment

investing approximately $81.8 million in 18 portfolio companies for the three

months ended June 30, 2019.

Investments sold, prepaid or repaid during the three months ended June 30, 2020 totaled approximately $28.9 million versus approximately

$90.8 million for the three months ended June 30, 2019.

At June 30, 2020, our portfolio consisted of 108 portfolio

companies and was invested 23.0% in cash flow senior secured loans, 31.4% in asset-based senior secured loans / Crystal, 22.2% in equipment senior secured financings / NEF, and 23.4% in life science senior secured loans, in each case, measured at

fair value, versus 109 portfolio companies invested 27.9% in cash flow senior secured loans, 30.0% in asset-based senior secured loans / Crystal, 20.6% in equipment senior secure financings / NEF, and 21.5% in life science senior secured loans, in

each case, measured at fair value, at June 30, 2019.

At June 30, 2020, 76.7% or $1.04 billion of our income producing

investment portfolio * is floating rate and 23.3% or $314.6 million is fixed rate, measured at fair value.

At June 30, 2019, 77.8% or $1.15 billion of our income producing investment

portfolio * is floating rate and 22.2% or $328.3 million is fixed rate, measured at fair value.

As of March 31, 2020 and 2019, we had one and zero issuers, respectively, on non-accrual status.

We have included Crystal Financial LLC and NEF Holdings LLC within our income producing investment portfolio.

Since inception through March 31, 2020, Solar Capital and its predecessor companies

have invested approximately $6.4 billion in more than 285 portfolio companies.

As of June 30, 2020 and 2019, we had zero issuers on

non-accrual status.

Since inception through June 30, 2020, Solar Capital and its predecessor

companies have invested approximately $6.4 billion in more than 290 portfolio companies.

Over the same period, Solar Capital has completed transactions with more than 150 different financial sponsors.

We have included Crystal Financial LLC and NEF Holdings LLC within our income producing investment portfolio.

Crystal Financial LLC

December 28, 2012, we completed the acquisition of Crystal Capital Financial Holdings LLC (Crystal Financial), a commercial finance company focused on providing asset-based and other secured financing solutions (the Crystal

Acquisition).

On December 28, 2012, we completed the acquisition of Crystal Capital Financial Holdings LLC (Crystal Financial), a commercial

finance company focused on providing asset-based and other secured financing solutions (the Crystal Acquisition).

We invested $275 million in cash to effect the Crystal Acquisition.

Crystal Financial owned approximately 98% of the outstanding ownership interest in Crystal Financial LLC.

The remaining financial interest was held by

various employees of Crystal Financial LLC, through their investment in Crystal Management LP.

Crystal Financial LLC had a diversified portfolio of 23 loans having a total par value of approximately $400 million at November 30, 2012 and a

$275 million committed revolving credit facility.

On July 28, 2016, the Company purchased Crystal Management LPs approximately 2% equity interest in Crystal Financial LLC for approximately $5.7 million.

Upon the closing of this

transaction, the Company holds 100% of the equity interest in Crystal Financial LLC.

On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved.

On December 20, 2018, the revolving credit facility was expanded to

$330 million.

As of March 31, 2020, Crystal Financial LLC had 35 funded commitments to 27 different issuers with a total par

value of approximately $464.7 million on total assets of $483.0 million.

As of December 31, 2019, Crystal Financial LLC had 35 funded commitments to 28 different issuers with total funded loans of approximately $496.8 million on

total assets of $518.0 million.

As of March 31, 2020 and December 31, 2019, the largest loan outstanding totaled $45.0 million and $45.0 million, respectively.

For the same periods, the average exposure per issuer was

Crystal Financial owned approximately 98% of the

outstanding ownership interest in Crystal Financial LLC.

The remaining financial interest was held by various employees of Crystal Financial LLC, through their investment in Crystal Management LP.

Crystal Financial LLC had a diversified portfolio of

23 loans having a total par value of approximately $400 million at November 30, 2012 and a $275 million committed revolving credit facility.

On July 28, 2016, the Company purchased Crystal Management LPs approximately 2%

equity interest in Crystal Financial LLC for approximately $5.7 million.

Upon the closing of this transaction, the Company holds 100% of the equity interest in Crystal Financial LLC.

On September 30, 2016, Crystal Capital Financial

Holdings LLC was dissolved.

On December 20, 2018, the revolving credit facility was expanded to $330 million.

June 30, 2020, Crystal Financial LLC had 30 funded commitments to 26 different issuers with a total par value of approximately $426.0 million on total assets of $449.7 million.

As of December 31, 2019, Crystal Financial LLC had

35 funded commitments to 28 different issuers with total funded loans of approximately $496.8 million on total assets of $518.0 million.

As of June 30, 2020 and December 31, 2019, the largest loan outstanding totaled

$45.0 million and $45.0 million, respectively.

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $245.6 million and $276.0 million

of borrowings outstanding at March 31, 2020 and December 31, 2019, respectively.

For the three months ended March 31, 2020 and 2019, Crystal Financial LLC had net income of $1.9 million and $5.4 million, respectively, on

gross income of $11.5 million and $13.4 million, respectively.

For the same periods, the average exposure per issuer was $16.4 million and $17.7 million, respectively.

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $206.0 million and $276.0 million of borrowings outstanding at June 30, 2020 and December 31, 2019, respectively.

For the three months ended

June 30, 2020 and June 30, 2019, Crystal Financial LLC had net income of $8.4 million and $10.2 million, respectively, on gross income of $12.1 million and $21.6 million, respectively.

For the six months ended

June 30, 2020 and June 30, 2019, Crystal Financial LLC had net income of $10.3 million and $15.6 million, respectively, on gross income of $23.6 million and $35.0 million, respectively.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

As such, and subject to fluctuations in Crystal Financial LLCs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that Crystal Financial LLC will be able to maintain consistent

dividend payments to us.

As such, and subject to fluctuations in Crystal Financial LLCs funded commitments, the timing of

originations, and the repayments of financings, the Company cannot guarantee that Crystal Financial LLC will be able to maintain consistent dividend payments to us.

NEF Holdings, LLC

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At July 31, 2017, NEF also had two securitizations outstanding, with an issued note balance of $94.6 million, which were later redeemed in 2018.

As of March 31, 2020, NEF had 158 funded equipment-backed leases and loans to 69 different customers with a total net investment in

leases and loans of approximately $217.4 million on total assets of $294.8 million.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to 78 different customers with a total net investment in leases and

loans of approximately $245.0 million on total assets of $304.2 million.

As of March 31, 2020 and December 31, 2019, the largest position outstanding totaled $26.6 million and $26.9 million, respectively.

For the same periods, the average exposure

per customer was $3.2 million and $3.1 million, respectively.

NEFs credit facility, which is non-recourse to Solar Capital, had approximately $121.4 million and $128.2 million of

borrowings outstanding at March 31, 2020 and December 31, 2019, respectively.

For the three months ended March 31, 2020 and 2019, NEF had net income of $0.4 million and $0.4 million, respectively, on gross income of

$5.9 million and $7.1 million, respectively.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

subject to fluctuations in NEFs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that NEF will be able to maintain consistent dividend payments to us.

As of June 30, 2020, NEF had 147 funded equipment-backed leases and loans to 65 different customers with a total net investment in leases

and loans of approximately $209.6 million on total assets of $282.2 million.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to 78 different customers with a total net investment in leases and loans of

approximately $245.0 million on total assets of $304.2 million.

As of June 30, 2020 and December 31, 2019, the largest position outstanding totaled $26.1 million and $26.9 million, respectively.

For the same periods,

the average exposure per customer was $3.2 million and $3.1 million, respectively.

NEFs credit facility, which is non-recourse to Solar Capital, had approximately $111.7 million and

$128.2 million of borrowings outstanding at June 30, 2020 and December 31, 2019, respectively.

For the three months ended June 30, 2020 and June 30, 2019, NEF had net income (loss) of ($2.4) million and

$0.1 million, respectively, on gross income of $5.4 million and $8.4 million, respectively.

For the six months ended June 30, 2020 and June 30, 2019, NEF had net income (loss) of ($1.9) million and

$0.5 million, respectively, on gross income of $11.3 million and $15.6 million, respectively.

Due to timing and non-cash items, there may be material differences between GAAP net income and cash

available for distributions.

As such, and subject to fluctuations in NEFs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that NEF will be able to maintain consistent dividend

payments to us.

Critical Accounting Policies

preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and

liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported.

Actual results could materially differ from those estimates.

We have identified the following items as critical accounting

Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely events or circumstances that would result in materially different amounts being

Valuation of Portfolio Investments

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940

The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported.

Actual results could

materially differ from those estimates.

We have identified the following items as critical accounting policies.

Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other

reasonably likely events or circumstances that would result in materially different amounts being reported.

Valuation of Portfolio

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent

with GAAP, and the 1940 Act.

Our valuation procedures are set forth in more detail below:

Under procedures established by our board of directors (the

Board), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless

they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service).

utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative.

If and when market quotations are deemed not to represent fair value, we may

utilize independent third-party valuation firms to assist us in determining the fair value of material assets.

Under procedures established by our board of

directors (the Board), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market

quotations (unless they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent

pricing service).

We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative.

If and when market quotations are deemed not to

represent fair value, we may utilize independent

third-party valuation firms to assist us in determining the fair value of material assets.

Accordingly, such investments go through our multi-step valuation process as described below.

In each case, independent valuation firms

consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus

amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith

by or under the direction of our Board.

Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our Board.

Such determination of

fair values involves subjective judgments and estimates.

With respect to investments for which market quotations are not readily

available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation process each quarter, as described below:

case, independent valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus

accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value

as determined in good faith by or under the direction of our Board.

Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our

Such determination of fair values involves subjective judgments and estimates.

With respect to investments for which market

quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation process each quarter, as described below:

our quarterly valuation process begins with each portfolio company or investment being initially valued by the

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input in the valuation process.

For the three months ended March 31, 2020, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

Accounting Standards Codification (ASC) Topic 820 classifies the inputs used to measure these fair values into the following

Quoted prices in active markets for identical assets or liabilities, accessible by the

Company at the measurement date.

Quoted prices for similar assets or liabilities in active markets, or

quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

For the six months ended June 30, 2020, there has been no change to the Companys valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

Accounting Standards Codification (ASC) Topic 820 classifies the inputs used to

measure these fair values into the following hierarchy:

Quoted prices in active markets for identical

assets or liabilities, accessible by the Company at the measurement date.

Quoted prices for similar

assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Unobservable inputs for the asset or liability.

11 unchanged sentences

records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis.

Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual

status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected.

Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in managements judgment, are likely to continue timely payment of their remaining

interest or dividend obligations.

Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend

cash payments will be collected.

Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in managements judgment, are likely to

continue timely payment of their remaining interest or dividend obligations.

Interest or dividend cash payments received on investments may be recognized as income or applied to principal depending upon managements judgment.

Some of our investments may have contractual PIK interest or

investments may have contractual PIK interest or dividends.

PIK interest and dividends computed at the contractual rate are accrued into income and reflected as receivable up to the capitalization date.

PIK investments offer issuers the option at each payment date of making payments in cash or in

additional securities.

PIK investments offer issuers the option at

each payment date of making payments in cash or in additional securities.

When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued.

On these payment dates, the Company capitalizes the accrued interest

or dividends receivable (reflecting such amounts as the basis in the additional securities received).

PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer.

At the point the Company believes

PIK is not expected to be realized, the PIK investment will be placed on non-accrual status.

When a PIK investment is placed on non-accrual status, the accrued,

uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively.

The Company does not reverse previously capitalized PIK interest or dividends.

Upon capitalization, PIK is subject to the

fair value estimates associated with their related investments.

PIK investments on non-accrual status are restored to accrual status if the Company again believes that PIK is expected to be realized.

origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method.

Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income.

record prepayment premiums on loans and other investments as interest income when we receive such amounts.

Capital structuring fees are recorded as other income when earned.

The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment deferral and increased

credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans.

PIK securities may have unreliable valuations because their continuing accruals require continuing judgments

about the collectability of the deferred payments and the value of any associated collateral.

PIK interest has the effect of generating investment income and increasing the incentive fees payable at a compounding rate.

In addition, the deferral of

PIK interest also increases the loan-to-value ratio at a compounding rate.

PIK securities create the risk that incentive fees will be paid to the Investment Adviser

based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees.

For the three months ended March 31, 2020

and 2019, capitalized PIK income totaled $0.2 million and $0.2 million, respectively.

Net Realized Gain or Loss and Net Change in

Unrealized Gain or Loss

We generally measure realized gain or loss 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 origination or commitment fees and prepayment penalties.

The net change in

unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized.

Gains or losses on investments are

calculated by using the specific identification method.

Solar Capital, a U.S.

On these payment

dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received).

PIK generally becomes due at the maturity of the investment or upon the investment being called

by the issuer.

At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status.

When a PIK investment is placed on

non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively.

The Company does not reverse previously

capitalized PIK interest or dividends.

Upon capitalization, PIK is subject to the fair value estimates associated with their related investments.

PIK investments on non-accrual status are restored to accrual

status if the Company again believes that PIK is expected to be realized.

Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method.

Upon the prepayment of a

loan, any unamortized loan origination fees are recorded as interest income.

We record prepayment premiums on loans and other investments as interest income when we receive such amounts.

Capital structuring fees are recorded as other income when

The typically higher yields and interest rates on PIK securities, to the extent we invested,

reflects the payment deferral and increased credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans.

PIK securities may have unreliable valuations because their

continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral.

PIK interest has the effect of generating investment income and increasing the incentive fees payable at a

compounding rate.

In addition, the deferral of PIK interest also increases the loan-to-value ratio at a compounding rate.

PIK securities create the risk that incentive

fees will be paid to the Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees.

the three and six months ended June 30, 2020, capitalized PIK income totaled $1.3 million and $1.4 million, respectively.

For the three and six months ended June 30, 2019, capitalized PIK income totaled $0.4 million and

$0.7 million, respectively.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

We generally measure realized gain or loss 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 origination or commitment fees and prepayment penalties.

The net change in unrealized gain or loss reflects the change in

portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized.

Gains or losses on investments are calculated by using the specific identification

Capital, a U.S.

corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code.

order to qualify for U.S.

federal income taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year.

the level of taxable income earned in a given tax year, we 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, as required.

To the extent that the Company

determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.

In order to qualify for U.S.

federal income taxation as a RIC, the Company is required, among other things, to timely

distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year.

Depending on the level of taxable income earned in a given tax year, we 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, as required.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year

distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.

Recent Accounting Pronouncements

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurement.

The amendments in ASU 2018-13 modify and eliminate certain disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement.

ASU 2018-13 is effective for all entities for

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework

Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in ASU 2018-13 modify and eliminate certain disclosure requirements on fair value measurements in Topic 820, Fair Value

ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted.

The Company has adopted ASU 2018-13 and determined that the adoption has not

had a material impact on its consolidated financial statements and disclosures.

The Company has

adopted ASU 2018-13 and determined that the adoption has not had a material impact on its consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and

other transactions affected by reference rate reform if certain criteria are met.

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 and disclosures.

The Company is currently evaluating the impact of adopting ASU 2020-04 on its

consolidated financial statements and disclosures.

RESULTS OF OPERATIONS

comparisons are for the three months ended March 31, 2020 and March 31, 2019:

Results comparisons are for the three and six months ended June 30, 2020 and 2019:

Investment Income

For the three months ended March 31, 2020 and 2019, gross investment income totaled $32.9 million and $39.3 million,

respectively.

The decrease in gross investment income for the year over year three month periods was primarily due to a reduction in portfolio yield, mainly as a result of the decrease in LIBOR.

Expenses totaled

$17.1 million and $20.8 million, respectively, for the three months ended March 31, 2020 and 2019, of which $7.8 million and $11.2 million, respectively, were base management fees and performance-based incentive fees and

$7.0 million and $7.3 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $2.3 million and $2.3 million, respectively, for the

three months ended March 31, 2020 and 2019.

Expenses generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees,

directors fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses, and other general and administrative expenses.

Interest and other credit facility expenses generally consist of interest, unused fees, agency

fees and loan origination fees, if any, among others.

The decrease in expenses for the three months ended March 31, 2020 versus the three months ended March 31, 2019 was primarily due to lower management and incentive fees resulting from a

reduction in portfolio yield on a smaller income producing investment portfolio on average.

For the three and six

months ended June 30, 2020, gross investment income totaled $28.6 million and $61.5 million, respectively.

For the three and six months ended June 30, 2019, gross investment income totaled $38.7 million and

$77.9 million, respectively.

The decrease in gross investment income for the year over year three and six month periods was primarily due to a reduction in portfolio yield, mainly as a result of the over 200 basis point decrease in LIBOR year

over year, on a smaller income producing investment portfolio on average.

Expenses totaled $14.4 million and $31.5 million, respectively, for the three and six months ended June 30, 2020, of which

$6.0 million and $13.7 million, respectively, were base management fees and performance-based incentive fees and $6.6 million and $13.7 million, respectively, were interest and other credit facility expenses.

Administrative

services and other general and administrative expenses totaled $1.8 million and $4.1 million, respectively, for the three and six months ended June 30, 2020.

Expenses totaled $20.3 million and $41.0 million, respectively,

for the three and six months ended June 30, 2019, of which $11.3 million and $22.5 million, respectively, were base management fees and performance-based incentive fees and $7.1 million and $14.4 million, respectively, were

interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $1.8 million and $4.1 million, respectively, for the three and six months ended June 30, 2019.

generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors fees, transfer agency fees, printing and proxy expenses,

audit and tax services expenses, and other general and administrative expenses.

Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others.

The decrease in

expenses for the three and six months ended June 30, 2020 versus the three and six months ended June 30, 2019 was primarily due to lower management and incentive fees resulting from a reduction in portfolio yield on a smaller income

producing investment portfolio on average as well as lower interest expense due to reductions in LIBOR.

Net Investment Income

The Companys net investment income totaled $14.2 million and $30.1 million, or $0.34 and $0.71, per average share,

respectively, for the three months ended March 31, 2020 and 2019.

respectively, for the three and six months ended June 30, 2020.

The Companys net investment income totaled $18.4 million and $36.9 million, or $0.44 and $0.87, per average share, respectively, for the three and six months ended

June 30, 2019.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $200 million and $74 million, respectively, for the three

months ended March 31, 2020 and 2019.

The Company had investment sales and prepayments totaling approximately $29 million and $229 million, respectively, for the three and

six months ended June 30, 2020.

Net realized losses over the same periods were $24.8 million and $24.7 million, respectively.

The Company had investment sales and prepayments totaling approximately $91 million and

$164 million, respectively, for the three and six months ended June 30, 2019.

Net realized gains (losses) over the same periods were $0.1 million and ($0.4) million, respectively.

Net realized gains for the three months ended March 31, 2020 were immaterial.

losses for the three months ended March 31, 2019 were primarily related to the exit of our investments in ARK Real Estate Partners.

Net Change in Unrealized Gain (Loss)

the three months ended March 31, 2020 and 2019, net change in unrealized gain (loss) on the Companys assets and liabilities totaled ($91.4) million and $6.9 million, respectively.

Net unrealized loss for the three months ended

March 31, 2020 is primarily due to depreciation in the value of our investments in Crystal Financial LLC, NEF Holdings, IHS Intermediate, Inc.

and Rug Doctor, among others, partially offset by depreciation on our 2022 Unsecured Notes.

unrealized gain for the three months ended March 31, 2019 is primarily due to appreciation in the value of our investments in Crystal Financial LLC, NEF Holdings and SOAGG LLC, among others, partially offset by depreciation on our investments

in IHS Intermediate, Inc.

and Rug Doctor, among others.

The year over year net change in unrealized loss is impacted by uncertainty due to the COVID-19 pandemic and its effect on market yields and fundamental

portfolio company performance.

Net Increase (Decrease) in Net Assets From Operations

For the three months ended March 31, 2020 and 2019, the Company had a net increase (decrease) in net assets resulting from operations of

($75.5) million and $24.8 million, respectively.

Net realized losses for the three and six month

periods ended June 30, 2020 were primarily related to the exit of our investment in IHS Intermediate, Inc.

Net realized gains for the three months ended June 30, 2019 were primarily related to sales of select assets.

Net realized losses

for the six months ended June 30, 2019 were primarily related to the exit of our investments in ARK Real Estate Partners.

Net Change in

Unrealized Gain (Loss)

For the three and six months ended June 30, 2020, net change in unrealized gain (loss) on the

Companys assets and liabilities totaled $64.6 million and ($26.7) million, respectively.

For the three and six months ended

June 30, 2019, net change in unrealized gain on the Companys assets and liabilities totaled $1.1 million and $8.0 million, respectively.

Net unrealized gain for the three

months ended June 30, 2020 is primarily due to the reversal of previously recognized unrealized depreciation in the value of our investment in IHS Intermediate, Inc., as well as appreciation in the value of our investments in Crystal Financial

LLC, NEF Holdings LLC, Bishop Lifting Products, Inc.

and Kore Wireless Group, Inc., among others, partially offset by appreciation on our 2022 Unsecured Notes.

Net unrealized loss for the six months ended June 30, 2020 is primarily due to

depreciation in the value of our investments in NEF Holdings LLC, Crystal Financial LLC, Rug Doctor and PhyMed Management LLC, among others, partially offset by the reversal of previously recognized unrealized depreciation in the value of our

investment in IHS Intermediate, Inc.

as well as depreciation on our 2022 Unsecured Notes.

Net unrealized gain for the three months ended June 30, 2019 is primarily due to appreciation in the value of our investments in Crystal Financial LLC,

SOAGG LLC and NEF Holdings LLC, among others, partially offset by depreciation on our investments in American Teleconferencing Services, Ltd.

and Aegis Toxicology Sciences Corporation, among others.

Net unrealized gain for the six months ended

June 30, 2019 is primarily due to appreciation in the value of our investments in Crystal Financial LLC, NEF Holdings LLC and SOAGG LLC, among others, partially offset by depreciation on our investments in American Teleconferencing Services,

Ltd., IHS Intermediate, Inc.

and Aegis Toxicology Sciences Corporation, among others.

The year over year net change in unrealized loss for the six month period ended June 30, 2020 is impacted by uncertainty due to the COVID-19 pandemic and its effect on market yields and fundamental portfolio company performance.

(Decrease) in Net Assets From Operations

For the three and six months ended June 30, 2020, the Company had a net increase

(decrease) in net assets resulting from operations of $54.0 million and ($21.4) million, respectively.

For the same periods, earnings (loss) per average share were $1.28 and ($0.51), respectively.

For the three and six months ended

June 30, 2019, the Company had a net increase in net assets resulting from operations of $19.6 million and $44.5 million, respectively.

For the same periods, earnings per average share were $0.46 and $1.05, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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2026 Unsecured Notes (collectively the Credit Facilities), through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on equity and/or debt offerings.

As of March 31, 2020, we had a total of $595.0 million of unused borrowing capacity under the Credit Facilities, subject to borrowing base limits.

As of June 30, 2020, we had a total of $595.0 million of unused borrowing capacity under the Credit Facilities, subject to borrowing base limits.

We may from time to time issue equity and/or debt securities in either public or private offerings.

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We held approximately $550 million in cash equivalents as of

March 31, 2020.

June 30, 2020.

Unsecured Notes

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In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholders equity and a minimum asset coverage ratio.

March 31, 2020, outstanding USD equivalent borrowings under the Credit Facility totaled $75.0 million, composed of $0 of revolving credit and $75.0 million of term loans.

2020, outstanding USD equivalent borrowings under the Credit Facility totaled $75.0 million, composed of $0 of revolving credit and $75.0 million of term loans.

On September 26, 2018, NEFPASS SPV LLC, a newly formed wholly-owned subsidiary of NEFPASS LLC, as borrower entered into the NEFPASS

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default for credit facilities of this nature.

There were no borrowings outstanding as of March 31, 2020.

There were no borrowings outstanding as of June 30, 2020.

Certain covenants on our

issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code.

At March 31, 2020, the Company was in compliance with all financial and operational covenants required by our Credit Facilities.

At June 30, 2020, the Company was in compliance with all financial and operational covenants required by our Credit Facilities.

Contractual Obligations

A summary of our significant contractual payment obligations is as follows as of March 31, 2020:

A summary of our significant contractual payment obligations is as follows as of June 30, 2020:

Payments Due by Period (in millions)

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Unsecured senior notes

As of March 31, 2020, we had a total of $595.0 million of unused borrowing capacity under our

As of June 30, 2020, we had a total of $595.0 million of unused borrowing capacity under our

revolving credit facilities, subject to borrowing base limits.

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Senior Securities

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended March 31, 2020 and each

year ended December 31 for the past ten years, unless otherwise noted.

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended June 30, 2020

and each year ended December 31 for the past ten years, unless otherwise noted.

The indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.

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Revolving Credit Facility

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

Class and Year

Outstanding(1)

2022 Unsecured Notes

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

2022 Tranche C Notes

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

2023 Unsecured Notes

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

2024 Unsecured Notes

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

2026 Unsecured Notes

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

2042 Unsecured Notes

Senior Secured Notes

Fiscal 2020 (through June 30, 2020)

Class and Year

Outstanding(1)

Senior Secured Notes

Fiscal 2020 (through March 31, 2020)

NEFPASS Facility

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

SSLP Facility

Total Senior Securities

Fiscal 2020 (through March 31, 2020)

Fiscal 2020 (through June 30, 2020)

Total amount of each class of senior securities outstanding (in thousands) at the end of the period presented.

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In order to determine the specific Asset Coverage Per Unit for each class of debt, the total Asset Coverage Per Unit is allocated based on the amount outstanding in each class of debt at the end of the period.

As of March 31,

As of June 30,

2020, asset coverage was 263.1%.

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upon our allocable portion of the Administrators overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial

officer and chief compliance officer and their respective staffs.

Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days written notice to the other.

See note 3 to our

Consolidated Financial Statements.

On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement.

and chief compliance officer and their respective staffs.

Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days written

notice to the other.

See note 3 to our Consolidated Financial Statements.

On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC

entered into a servicing agreement.

NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans and capital leases held by NEFPASS LLC.

NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.

NEFPASS LLC may terminate this agreement upon 30 days written notice

to NEFCORP LLC.

Off-Balance Sheet Arrangements

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Accordingly, the Company had the following unfunded capital commitments at

March 31, 2020 and December 31, 2019, respectively:

June 30, 2020 and December 31, 2019, respectively:

June 30, 2020

(in millions)

1 unchanged sentence

Kindred Biosciences, Inc

Rubius Therapeutics, Inc

Altern Marketing, LLC

Cardiva Medical, Inc

Neuronetics, Inc

Cerapedics, Inc

One Touch Direct, LLC

PQ Bypass, Inc

Phynet Dermatology LLC

Varilease Finance, Inc

Altern Marketing, LLC

Cerapedics, Inc

Atria Wealth Solutions, Inc

Soleo Health Holdings, Inc

Enhanced Capital Group, LLC

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Solara Medical Supplies, Inc

Atria Wealth Solutions, Inc

Rubius Therapeutics, Inc

Soleo Health Holdings, Inc

Centrexion Therapeutics, Inc

Varilease Finance, Inc

MRI Software LLC

4 unchanged sentences

The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the

portfolio companys achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the

financial condition or business outlook for the company.

Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.

March 31, 2020 and December 31, 2019, the Company had sufficient cash available and/or liquid securities available to fund its commitments.

portfolio companys achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences

materially adverse events that affect the financial condition or business outlook for the company.

Since these commitments may expire without being drawn upon, unfunded commitments do not

necessarily represent future cash requirements or future earning assets for the Company.

As of June 30, 2020 and December 31, 2019, the Company had sufficient cash available and/or liquid securities available to fund its commitments.

In the normal course of its business, we invest or trade in various financial instruments and may enter into various investment activities

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Date Declared

August 4, 2020

September 17, 2020

October 2, 2020

June 18, 2020

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April 3, 2020

Tax characteristics of all distributions will be reported to stockholders on Form 1099 after

the end of the calendar year.

August 2, 2018

September 20, 2018

October 2, 2018

June 21, 2018

February 22, 2018

March 22, 2018

April 3, 2018

Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the

calendar year.

Future quarterly distributions, if any, will be determined by our Board.

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In addition, although we currently intend to distribute realized net capital gains ( i.e.

, net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally

available for such distributions, we may in the future decide to retain such capital gains for investment.

We maintain an opt

out dividend reinvestment plan for our common stockholders.

As a result, if we declare a distribution, then stockholders cash distributions will be automatically reinvested in additional shares of our common stock, unless they

specifically opt out of the dividend reinvestment plan so as to receive cash distributions.

We may not be able to achieve

operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time.

In addition, due to the asset coverage test applicable to us as a business development company, we may

in the future be limited in our ability to make distributions.

Also, our revolving credit facility may limit our ability to declare distributions if we default under certain provisions.

If we do not distribute a certain percentage of our income

annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a regulated investment company.

In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we

have not yet received in cash, such as contractual payment-in-kind interest, which represents contractual interest added to the loan balance that becomes due at the end

of the loan term, or the accrual of original issue or market discount.

Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our

investment company taxable income to obtain tax benefits as a regulated investment company.

With respect to the distributions to

stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders.

, net long-term capital gains in excess of

short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We maintain an opt out dividend reinvestment plan for our common stockholders.

As a result, if we declare a distribution, then

stockholders cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically opt out of the dividend reinvestment plan so as to receive cash distributions.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of

these distributions from time to time.

In addition, due to the asset coverage test applicable to us as a business development company, we may in the future be limited in our ability to make distributions.

Also, our revolving credit facility may

limit our ability to declare distributions if we default under certain provisions.

If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to

us as a regulated investment company.

In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual payment-in-kind interest, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount.

recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a regulated investment company.

With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees

associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders.

Related Parties

We have entered into a

number of business relationships with affiliated or related parties, including the following:

We have entered into a number of business relationships with affiliated or related parties, including the following:

We have entered into the Advisory Agreement with Solar Capital Partners.

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For example, the Investment Adviser presently serves as investment adviser to Solar Senior Capital Ltd., a publicly traded BDC, which focuses on investing in senior secured loans, including first lien and second lien debt instruments, as

well as SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans.

well as SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based

loans and first lien loans.

In addition, Michael S.

Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, and Richard L.

Chief Financial Officer, serve in similar capacities for Solar Senior Capital Ltd.

Peteka, our Chief Financial Officer, serve in similar capacities for Solar Senior Capital Ltd.

and SCP Private Credit Income BDC LLC.

The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and

for one or more of those other funds.

In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds.

Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the

Investment Advisers allocation procedures.

On June 13, 2017, the Adviser received an exemptive order that permits the Company to participate in negotiated co-investment transactions with

certain affiliates, in a manner consistent with the Companys investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the

If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second,

if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis.

Although the Advisers investment professionals will endeavor to allocate investment opportunities in a fair and

equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors

and members of the Adviser.

Related party transactions may occur among Solar Capital Ltd., Crystal Financial LLC, Equipment Operating

Leases LLC, Loyer Capital LLC and NEF Holdings LLC.

Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds.

In such event, depending on the availability of such investment and other appropriate

factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds.

Any such investments will be made only

to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Advisers allocation procedures.

On June 13, 2017, the Adviser received an exemptive order that permits the

Company to participate in negotiated co-investment transactions with certain affiliates, in a manner consistent with the Companys investment objective, positions, policies, strategies and

restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the Order).

If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated

first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entitys investment strategy, on an alternating basis.

Although the Advisers investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated

among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Adviser.

Related party transactions may occur among Solar Capital Ltd., Crystal Financial LLC, Equipment Operating Leases LLC, Loyer Capital LLC and

NEF Holdings LLC.

These transactions may occur in the normal course of business.

No administrative fees are paid to Solar Capital Partners by Crystal Financial LLC, Equipment Operating Leases LLC, Loyer Capital LLC

or NEF Holdings LLC.

No administrative fees are paid to Solar Capital Partners by Crystal Financial LLC, Equipment Operating Leases LLC, Loyer Capital LLC or NEF Holdings LLC.

In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors.

officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

Our officers and directors also

remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements