What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-01 compared with 2021-02-24 · 490 added, 473 removed, 459 unchanged (68% of the section changed)

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DISTRIBUTIONS

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.

We expect that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable

return of capital, if any, as applicable.

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 the Companys board of directors (the Board).

We expect that our

distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable.

We have elected to be taxed as a RIC under Subchapter M of the Code.

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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.

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 income, which represents contractual income added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market

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

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caution you that some of the percentages indicated in the table below are estimates and may vary.

Except where the context suggests otherwise, whenever this report contains a reference to fees or expenses paid by us or Solar

Capital, or that we will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in Solar Capital Ltd.

Except where the context suggests otherwise, whenever this report contains a reference to fees or expenses paid by us or SLRC,

or that we will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in SLR Investment Corp..

Stockholder transaction expenses:

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Our 1.75% base management fee under the Investment Advisory and Management Agreement is based on our gross

assets, which is defined as all the assets of Solar Capital, excluding temporary assets, including those acquired using borrowings for investment purposes, and assumes our gross assets remain consistent with gross assets for the fiscal year ended

assets, which is defined as all the assets of SLRC, excluding temporary assets, including those acquired using borrowings for investment purposes, and assumes our gross assets remain consistent with gross assets for the fiscal year ended

December 31, 2021.

The base management fee is reduced to 1.00% on gross assets that execeed 200% of total net assets as of the immediately preceding quarter.

Assumes that annual incentive fees earned by our investment adviser, Solar Capital Partners, remain consistent

with the incentive fees earned by Solar Capital Partners for the fiscal year ended December 31, 2020.

Assumes that annual incentive fees earned by our investment adviser, SLR Capital Partners, remain consistent

with the incentive fees earned by SLR Capital Partners for the fiscal year ended December 31, 2021.

The incentive fee consists of two parts:

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We used the London Interbank Offered Rate (LIBOR) rate or similar base rate on December 31, 2021 and the interest rate on the Credit Facility,

the NEFPASS Facility, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes and the 2022 Tranche C Notes on December 31, 2020.

We have also included, as applicable, the estimated amortization of

fees incurred in establishing the Credit Facility, the NEFPASS Facility, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes and the 2022 Tranche C Notes as of December 31, 2020.

Additionally, we included the estimated cost of commitment fees for unused balances on the Credit Facility and the NEFPASS Facility.

As of December 31, 2020, we had $201.0 million outstanding under the Credit Facility, $30 million

outstanding under our NEFPASS Facility, and $75 million, $125 million, $75 million, $150 million and $21 million outstanding under the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022

Unsecured Notes and the 2022 Tranche C Notes, respectively.

the 2027 Unsecured Notes, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes and the 2022 Tranche C Notes on December 31, 2021.

We have also included, as applicable, the estimated amortization

of fees incurred in establishing the Credit Facility, the 2027 Unsecured Notes, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes and the 2022 Tranche C Notes as of December 31, 2021.

Additionally, we included the estimated cost of commitment fees for unused balances on the Credit Facility.

As of December 31, 2021, we had $322.5 million outstanding under the Credit Facility and $50 million, $75 million,

$125 million, $75 million, $150 million and $21 million outstanding under the 2027 Unsecured Notes, the 2026 Unsecured Notes, the 2024 Unsecured Notes, the 2023 Unsecured Notes, the 2022 Unsecured Notes and the 2022 Tranche C

Notes, respectively.

We may also issue preferred stock, subject to our compliance with applicable requirements under the 1940 Act, although we have no immediate intention to do so.

Other expenses are based on estimated amounts for the current fiscal year, which considers the

amounts incurred for the fiscal year ended December 31, 2020 and include our overhead expenses, including payments under our Administration Agreement based on our allocable portion of overhead and other expenses incurred by Solar Capital

amounts incurred for the fiscal year ended December 31, 2021 and include our overhead expenses, including payments under our Administration Agreement based on our allocable portion of overhead and other expenses incurred by SLR Capital

Management in performing its obligations under the Administration Agreement.

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As such, the below example is based on an annual expense ratio of 8.09%.

See Note 7 above for

additional information regarding certain

assumptions regarding our level of leverage.

In the event that shares are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

See Note 7 above for additional information regarding certain assumptions regarding our level of leverage.

In the event that shares are sold to or through

underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return

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expenses, and actual expenses may be greater or less than those shown.

While the example assumes,

as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

The incentive fee under the Investment Advisory and Management Agreement,

which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example.

This illustration assumes that we will not realize any capital gains (computed

net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods.

If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a

material amount, our expenses and returns to our investors would be higher.

For example, if we assumed that we received our 5% annual return completely in the form of net realized capital gains on our investments, computed net of all cumulative

unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

The incentive fee under

the Investment Advisory and Management Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example.

This illustration assumes

that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods.

If we achieve sufficient returns on our investments, including through the realization

of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher.

For example, if we assumed that we received our 5% annual return completely in the form of net realized capital gains on

our investments, computed net of all cumulative unrealized depreciation on our investments, the projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:

You would pay the following expenses on a $1,000 investment, assuming a 5% annual return

In addition, the example assumes no sales load.

Also, while the example assumes reinvestment of all

distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the distribution payable to a participant by the market price per

share of our common stock at the close of trading on the distribution payment date, which may be at, above or below net asset value unless the company makes open market purchases and the shares received will be determined based on the average price

paid by our agent, plus commissions.

Selected Financial Data

The selected financial and other data below should be read in conjunction with our Managements Discussion and Analysis of Financial

Condition and Results of Operations and the consolidated financial statements and notes thereto.

Financial information is presented for the fiscal years ended December 31, 2020, 2019, 2018, 2017 and 2016.

Financial information for the

periods ending December 31, 2020, 2019, 2018, 2017 and 2016 has been derived from our consolidated financial statements that were audited by KPMG LLP (KPMG), an independent registered public accounting firm.

($ in thousands, except per share data)

Income statement data:

Total investment income

Total expenses

Net investment income

Net realized gain (loss)

Net change in unrealized gain (loss).

Net increase in net assets resulting from operations

Per share data:

Net investment income (1)

Net realized and unrealized gain (loss)(1)

Dividends and distributions declared

Balance sheet data:

Total investment portfolio

Cash and cash equivalents

Per share data:

Net asset value per share

Other data (unaudited):

Total return(2)

Number of portfolio companies at period end

The per-share calculations are based on weighted average shares of

42,260,826, 42,260,826, 42,260,826, 42,257,692 and 42,258,143 for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

Total return is based on the change in market price per share during the year and takes into account dividends,

if any, reinvested in accordance with the dividend reinvestment plan.

Total return does not include a sales load.

Also, while the example assumes reinvestment

of all distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the distribution payable to a participant by the market

price per share of our common stock at the close of trading on the distribution payment date, which may be at, above or below net asset value unless the company makes open market purchases and the shares received will be determined based on the

average price paid by our agent, plus commissions.

Managements Discussion and Analysis of Financial Condition and Results of Operations

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investments and the impacts of the COVID-19 pandemic thereon.

These statements

are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted

in the forward-looking statements, including without limitation:

changes in the political conditions and relations between the United States, Russia, Ukraine and other nations.

These statements are not guarantees of future performance and are subject to risks,

uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

an economic downturn, including as a result of the current COVID-19

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the extent that we receive payments denominated in foreign currency rather than U.S.

the ability of the parties to consummate the Mergers on the expected timeline, or at all;

the ability to realize the anticipated benefits of the Mergers;

the effects of disruption on our business from the proposed Mergers;

the combined companys plans, expectations, objectives and intentions as a result of the Mergers;

any potential termination of the Merger Agreement;

the actions of our stockholders or the stockholders of SLRC with respect to the proposals submitted for their

approval in connection with the Mergers;

the risks, uncertainties and other factors we identify in Item 1A.

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initial capital of $1.2 billion of which 47.04% was funded by affiliated parties.

Solar Capital Ltd.

(Solar Capital, the

Company, we or our), a Maryland corporation formed in November 2007, is a closed-end, externally managed, non-diversified

management investment company that has elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act).

Furthermore, as the Company is an investment company,

it continues to apply the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946.

In addition, for U.S federal income tax purposes, the Company has elected to be treated

as a regulated investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).

SLR Investment Corp.

(the Company,

SLRC, we or our) f/k/a Solar Capital, Ltd., a Maryland corporation formed in November 2007, is a closed-end, externally managed,

non-diversified management investment company that has elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940

Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946.

In addition, for U.S

federal income tax purposes, the Company has elected to be treated as a regulated investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).

On February 9, 2010, we priced our initial public offering, selling 5.68 million

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Concurrent with our initial public offering, Michael S.

Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our

Co-Chief Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under

the Securities Act.

Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief

Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under the Securities Act.

We invest primarily in privately held U.S.

middle-market companies, where we believe the supply of primary capital is

limited and the investment opportunities are most attractive.

middle-market companies, where we believe the supply of primary capital is limited and the

investment opportunities are most attractive.

Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

We invest primarily in leveraged middle-market companies in the

form of senior secured loans, stretch-senior loans, financing leases and to a lesser extent, unsecured loans and equity securities.

We invest primarily in leveraged middle-market companies in the form of senior

secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.

From time to time, we may also invest in public companies that are thinly traded.

Our business is focused primarily

on the direct origination of investments through portfolio companies or their financial sponsors.

Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary

proportionately with the size of our capital base and/or with strategic initiatives.

Our investment activities are managed by Solar Capital Partners, LLC (the Investment Adviser) and supervised by our board of directors, a majority of

whom are non-interested, as such term is defined in the 1940 Act.

Solar Capital Management, LLC (the Administrator) provides the administrative services necessary for us to operate.

Our business is focused primarily on the direct origination of

investments through portfolio companies or their financial sponsors.

Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our

capital base and/or with strategic initiatives.

Our investment activities are managed by SLR Capital Partners, LLC (the Investment Adviser) and supervised by the Board, a majority of whom are

non-interested, as such term is defined in the 1940 Act.

SLR Capital Management, LLC (the Administrator) provides the administrative services necessary for us to operate.

In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are

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

Merger Agreement

On December 1,

2021, we entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS continuing as the surviving company and as our wholly-owned subsidiary

and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company.

Both the Board and SUNSs board of directors, including all of the respective independent directors, in each case, on the recommendation

of a special committee comprised solely of the independent directors of us and SUNS, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.

At the effective time of the Merger (Effective Time), each share of our common stock issued and outstanding immediately prior to

the Effective Time (other than shares owned by us or any of our controlled subsidiaries (the Cancelled Shares)) will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio (as defined

below) (cash may be paid in lieu of fractional shares).

As of a mutually agreed date no earlier than 48 hours (excluding Sundays and

holidays) prior to the Effective Time (such date, the Determination Date), each of us and SUNS will deliver to the other a calculation of its NAV as of such date, in each case using a pre-agreed

set of assumptions, methodologies and adjustments.

We refer to such calculation with respect to us as the Closing SLRC Net Asset Value and with respect to SUNS as the Closing SUNS Net Asset Value.

Based on such calculations,

the parties will calculate the SLRC Per Share NAV, which will be equal to (i) the Closing SLRC Net Asset Value divided by (ii) the number of shares of our common stock issued and outstanding as of the Determination Date

(excluding any Cancelled Shares), and the SUNS Per Share NAV, which will be equal to (A) the Closing SUNS Net Asset Value divided by (B) the number of shares of SUNS Common Stock issued and outstanding as of the Determination

The Exchange Ratio will be equal to the quotient (rounded to four decimal places) of (i) the SUNS Per Share NAV divided by (ii) the SLRC Per Share NAV.

We and SUNS will update and redeliver the Closing SLRC Net Asset Value or the Closing SUNS

Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and

holidays) prior to the Effective Time.

The Merger Agreement contains customary representations and warranties by each of us, SUNS and SLR

Capital Partners.

The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of our and SUNSs businesses during the period prior to the closing of the Mergers.

Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2022, is subject to certain

closing conditions, including requisite approvals of our and SUNSs stockholders and certain other closing conditions.

Agreement also contains certain termination rights in favor of us and SUNS, including if the Mergers are not completed on or before December 1, 2022 or if the requisite approvals of our or SUNSs stockholders are not obtained.

Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring SUNS may be required to pay us a termination fee of approximately $7.6 million.

The Merger Agreement provides that, upon

the termination of the Merger Agreement under certain circumstances, a third party acquiring us may be required to pay to SUNS a termination fee of approximately $25.6 million.

Effective upon the closing of the Mergers, SLR Capital Partners has voluntarily agreed to a permanent reduction of the annual base management

fee rate by 25 basis points, resulting in an annual base management fee rate payable by us to SLR Capital Partners of 1.50% on gross assets up to 200% of our total net assets as of the immediately preceding quarter end.

We will retain the

contractual annual base management fee rate payable by us to SLR Capital Partners of 1.00% on gross assets that exceed 200% of our total net assets as of the immediately preceding quarter end.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full

text of the Merger Agreement, which is incorporated by reference as Exhibit 2.1 to this Annual Report on Form 10-K and incorporated by reference herein.

The representations, warranties, covenants and

agreements contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates;

were solely for the benefit of the parties to the Merger Agreement (except as may be expressly set forth in the Merger

may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing

these matters as facts;

and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.

Investors and security holders should not rely on such representations, warranties,

covenants or agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates.

Moreover, information

concerning the subject matter of the representations, warranties, covenants and agreements may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by the parties to the

Merger Agreement.

Recent Developments

On February 24,

2021, our Board declared a quarterly distribution of $0.41 per share payable on April 2, 2021 to holders of record as of March 18, 2021.

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, including the Company, 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.

On January 6, 2022, the Company closed a private offering of $135 million of the 2027 Series F Unsecured Notes with a fixed interest

rate of 3.33% and a maturity date of January 6, 2027.

Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6.

The 2027 Series F Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

On March 1, 2022, the Board declared a quarterly distribution of $0.41 per share

payable on April 1, 2022 to holders of record as of March 18, 2022.

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, including the Company, remain uncertain.

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

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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

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

Such amounts of accrued PIK income 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.

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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.

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

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

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state securities laws;

all other expenses incurred by either Solar Capital Management or us in connection with administering our

business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by Solar Capital Management in performing its obligations under the Administration Agreement,

including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective

We expect our general and administrative operating expenses related to our ongoing

operations to increase moderately in dollar terms.

all other expenses incurred by either SLR Capital Management or us in connection with administering our business,

including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent,

the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs.

We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in

dollar terms.

During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines.

Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities

relative to comparative periods, among other factors.

Incentive fees, interest expense and

costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among

other factors.

Portfolio and Investment Activity

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This compares to

investing approximately $404 million in over 50 portfolio companies for the year ended December 31, 2019.

investing approximately $427 million in 40 portfolio companies for the year ended December 31, 2020.

Investments sold, prepaid or repaid during the year ended December 31, 2021 totaled approximately $468 million versus

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At December 31, 2021, our portfolio consisted of 106

portfolio companies and was invested 18.8% in cash flow senior secured loans, 27.0% in asset-based senior secured loans / Crystal Financial LLC (Crystal), 14.2% in Kingsbridge Holdings LLC (KBH), 18.6% in equipment senior

secured financings / NEF Holdings, LLC (NEF), and 21.4% in life science senior secured loans, in each case, measured at fair value, versus 108 portfolio companies invested 31.0% in cash flow senior secured loans, 28.2% in asset-based

senior secured loans / Crystal, 21.5% in equipment senior secured financings / NEF, and 19.3% in life science senior secured loans, in each case, measured at fair value, at December 31, 2019.

portfolio companies and was invested 26.7% in cash flow senior secured loans, 27.0% in asset-based senior secured loans / SLR Credit Solutions (SLR Credit), 13.5% in Kingsbridge Holdings LLC (KBH), 16.4% in equipment senior

secured financings / SLR Equipment Finance (SLR Equipment), and 16.4% in life science senior secured loans, in each case, measured at fair value, versus 105 portfolio companies invested 18.8% in cash flow senior secured loans, 27.0% in

asset-based senior secured loans / SLR Credit, 14.2% in KBH, 18.6% in equipment senior secured financings / SLR Equipment, and 21.4% in life science senior secured loans, in each case, measured at fair value, at December 31, 2020.

At December 31, 2021, 79.4% or $1.20 billion of our income producing investment portfolio * is floating rate and 20.6% or $313.4 million is fixed rate, measured at fair value.

At December 31, 2020, 72.1% or $1.10 billion of our income producing investment portfolio * is floating rate and 27.9% or $425.4 million is fixed rate, measured at fair value.

As of December 31, 2020 and 2019, we had zero issuers and one issuer on

As of December 31, 2021 and 2020, we had one and zero issuers on

non-accrual status, respectively.

Since inception through December 31, 2020, Solar Capital

and its predecessor companies have invested approximately $6.7 billion in more than 295 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

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.

December 31, 2020, Crystal Financial LLC had 30 funded commitments to 24 different issuers with total funded loans of approximately $404.1 million on total assets of $433.9 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 December 31, 2020 and December 31, 2019, the largest loan outstanding totaled $45.0 million and

Since inception through December 31, 2021, SLRC and its predecessor companies have

invested approximately $7.3 billion in more than 320 portfolio companies.

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

* We have included SLR Credit Solutions, SLR Equipment Finance and Kingsbridge Holdings,

LLC within our income producing investment portfolio.

SLR Credit Solutions

On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (Crystal Financial) for

$275 million in cash.

Crystal Financial owned approximately 98% of the outstanding ownership interest in SLR Credit Solutions (SLR Credit), f/k/a Crystal Financial LLC.

The remaining financial interest was held by various employees

of SLR Credit, through their investment in Crystal Management LP.

SLR Credit 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 SLR Credit for approximately $5.7 million.

Upon the closing of this transaction, the Company holds 100% of the equity

interest in SLR Credit.

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

As of December 31, 2021, total commitments to the revolving credit facility are $200 million.

As of December 31, 2021, SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately

$287.4 million on total assets of $347.8 million.

As of December 31, 2020, SLR Credit had 30 funded commitments to 24 different issuers with total funded loans of approximately $404.1 million on total assets of

$433.9 million.

As of December 31, 2021 and December 31, 2020, the largest loan outstanding totaled $35.0 million and $45.0 million, respectively.

For the same periods, the average exposure per issuer was $15.1 million

and $16.8 million, respectively.

SLR Credits credit facility, which is non-recourse to the Company, had approximately $100.7 million and $183.9 million of borrowings outstanding at

December 31, 2021 and December 31, 2020, respectively.

For the years ended December 31, 2021 and 2020, SLR Credit had net income of $14.2 million and $23.3 million, respectively, on gross income of $34.0 million and

$45.3 million, respectively.

For the same periods, the average exposure per issuer was $16.8 million and $17.7 million, respectively.

Crystal Financial LLCs credit facility, which is

non-recourse to Solar Capital, had approximately $183.9 million and $276.0 million of borrowings outstanding at December 31, 2020 and December 31, 2019, respectively.

For the years ended

December 31, 2020 and 2019, Crystal Financial LLC had net income of $23.3 million and $8.0 million, respectively, on gross income of $45.3 million and $61.2 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.

Crystal Financial LLCs consolidated financial statements for the fiscal years

ended December 31, 2020 and December 31, 2019 are attached as an exhibit to this annual report on Form 10-K.

NEF Holdings, LLC

On July 31, 2017,

we completed the acquisition of NEF Holdings, LLC (NEF), which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC.

NEF is an independent equipment finance company that provides senior secured loans

and leases primarily to U.S.

As such, and subject to fluctuations in

SLR Credits funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Credit will be able to maintain consistent dividend payments to us.

SLR Credits consolidated financial

statements for the fiscal years ended December 31, 2021 and December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.

SLR Equipment Finance

2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC.

Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies

is doing business as SLR Equipment Finance (SLR Equipment).

SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S.

based companies.

We invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in the equity of NEF through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and

our wholly-owned consolidated subsidiary NEFPASS LLC and $64.9 million was used to purchase certain leases and loans held by NEF through NEFPASS LLC.

Concurrent with the transaction, NEF refinanced its existing senior secured credit facility

into a $150.0 million non-recourse facility with an accordion feature to expand up to $250.0 million.

In September 2019, NEF amended the facility, increasing commitments to $214.0 million with an

accordion feature to expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

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 December 31, 2020, NEF had 138 funded equipment-backed leases and loans to 61 different customers

with a total net investment in leases and loans of approximately $188.4 million on total assets of $263.4 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 December 31, 2020 and December 31, 2019, the largest position outstanding totaled $25.1 million and

$26.9 million, respectively.

For the same periods, the average exposure per customer was $3.1 million and $3.1 million, respectively.

NEFs credit facility, which is non-recourse to

Solar Capital, had approximately $100.6 million and $128.2 million of borrowings outstanding at December 31, 2020 and December 31, 2019, respectively.

For the years ended December 31, 2020 and 2019, NEF had net income (loss)

of ($8.9) million and ($6.0) million, respectively, on gross income of $24.5 million and $31.9 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

We invested $209.9 million in

cash to effect the transaction, of which $145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and

$64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC.

Concurrent with the transaction, SLR Equipment refinanced its existing senior secured credit facility into a $150.0 million non-recourse facility with an accordion feature to expand up to $250.0 million.

In September 2019, SLR Equipment amended the facility, increasing commitments to $214.0 million with an accordion feature to

expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

As of December 31, 2021, SLR

Equipment had 135 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of approximately $211.0 million on total assets

of $264.0 million.

As of December 31, 2020, SLR Equipment had 138 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of

approximately $188.4 million on total assets of $263.4 million.

As of December 31, 2021 and December 31, 2020, the largest position outstanding totaled $19.2 million and $25.1 million, respectively.

periods, the average exposure per customer was $3.5 million and $3.1 million, respectively.

SLR Equipments credit facility, which is non-recourse to the Company, had approximately

$118.0 million and $100.6 million of borrowings outstanding at December 31, 2021 and December 31, 2020, respectively.

For the years ended December 31, 2021 and 2020, SLR Equipment had net losses of $9.7 million and

$8.9 million, respectively, on gross income of $22.9 million and $24.5 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 SLR Equipments funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Equipment will be able to maintain

consistent dividend payments to us.

NEFs consolidated financial statements for the fiscal years ended December 31, 2020 and December 31, 2019 are attached as an exhibit to this annual report on Form

SLR Equipments consolidated financial statements for the fiscal years ended December 31, 2021 and December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.

Kingsbridge Holdings, LLC

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Post the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHTs equity.

As of December 31, 2020, KBHT had total assets of $744.7 million.

KBHT also had

recourse debt outstanding of $219.0 million as well as non-recourse debt outstanding of $335.9 million.

For the period November 3, 2020 through December 31, 2020, KBHT had net income

of $2.2 million, on gross income of $43.6 million.

As of December 31, 2021 and 2020, KBHT had total assets of $738.4 million and $744.7 million, respectively.

periods, debt recourse to KBHT totaled $216.9 million and $219.0 million, respectively, and non-recourse debt totaled $323.8 million and $335.9 million, respectively.

ended December 31, 2021 and the period November 3, 2020 through December 31, 2020, KBHT had net income of $12.2 million and $2.2 million, respectively, on gross income of $245.9 million and $43.6 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 KBHTs funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.

KBHTs consolidated

financial statements for the period November 3, 2020 through December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.

As such, and subject to fluctuations in KBHTs funded

commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.

KBHTs consolidated financial statements for the year ended

December 31, 2021 and the period November 3, 2020 to December 31, 2020 are attached as an exhibit to this annual report on Form 10-K.

Critical Accounting Policies

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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

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.

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:

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

investment professionals of the Investment Adviser responsible for the portfolio investment;

preliminary valuation conclusions are then documented and discussed with senior management of the Investment

independent valuation firms engaged by our Board conduct independent appraisals and review the Investment

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

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

based on the input of the Investment Adviser, the respective independent valuation firm, if any, and the audit committee.

Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate.

accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946, may be valued using net asset value as a practical expedient for fair value.

The market approach

uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business).

The income approach uses valuation approaches to convert future amounts (for example, cash

flows or earnings) to a single present amount (discounted).

The measurement is based on the value indicated by current market expectations about those future amounts.

In following these approaches, the types of factors that we may take into account

in fair value pricing our investments include, as relevant:

available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection

provisions, the nature and realizable value of any collateral, the portfolio companys ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios

of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors.

When available, broker quotations and/or quotations provided by pricing services are considered as an

input in the valuation process.

For the fiscal year ended December 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.

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.

Determination of fair value involves

subjective judgments and estimates.

Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial

Our valuation procedures are set forth in more detail in Note 2(b) to the Companys Consolidated Financial Statements.

Determination of fair value involves subjective judgments and estimates.

Accordingly, the

notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.

Valuation of 2022 Unsecured Notes

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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

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.

investments may have contractual PIK income.

PIK income computed at the contractual rate, as applicable, is accrued and reflected as a 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.

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).

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.

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 income.

Upon capitalization, PIK is subject to the

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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 fiscal years ended December 31, 2020

and 2019, capitalized PIK income totaled $5.4 million and $1.1 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.

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

In addition, the deferral of PIK

income 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 fiscal years ended December 31, 2021 and 2020,

capitalized PIK income totaled $7.6 million and $5.4 million, respectively.

Net Realized Gain or Loss and Net Change in Unrealized Gain

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.

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 nondeductible 4% U.S.

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 nondeductible 4% U.S.

federal excise tax on such income, as required.

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.

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

March 2020, the FASB issued Accounting Standards Update No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The

guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be

discontinued because of the reference rate reform.

ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is evaluating the potential impact that the

adoption of this guidance will have on the Companys financial statements.

In March 2020, the FASB issued Accounting Standards Update No.

2020-04, Reference

Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other

transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform.

ASU 2020-04 is effective for all entities as

of March 12, 2020 through December 31, 2022.

The Company is evaluating the potential impact that the adoption of this guidance will have on the Companys financial statements.

RESULTS OF OPERATIONS

Results comparisons are for the fiscal years ended December 31, 2020 and December 31, 2019.

Results for the fiscal year ended

December 31, 2018 can be found in Item 7 of the Companys report on Form 10-K filed on February 20, 2020, which is incorporated by reference herein.

comparisons are for the fiscal years ended December 31, 2021 and December 31, 2020.

Results for the fiscal year ended December 31, 2019 can be found in Item 7 of the Companys report on Form

10-K filed on February 24, 2021, which is incorporated by reference herein.

Investment Income

For the fiscal years

ended December 31, 2020 and 2019, gross investment income totaled $121.7 million and $154.7 million, respectively.

The decrease in gross investment income for the year over year periods was primarily due to a reduction in portfolio

yield, mainly as a result of the approximately 160 basis point decrease in average LIBOR year over year, on a smaller income producing investment portfolio on average.

Additionally, the volatility and disruption to the global economy and capital

markets from the COVID-19 pandemic reduced the volume of our investment activity during much of the year, particularly in the second and third quarters, thus negatively impacting investment income for the

For the fiscal years ended December 31, 2021 and 2020, gross investment income totaled $139.4 million and $121.7 million,

respectively.

The increase in gross investment income for the year over year periods was primarily due to growth in the size of the income producing portfolio.

Expenses totaled

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

The decrease in expenses from 2019 to 2020 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

The increase in expenses from 2020 to 2021 was primarily driven by a larger income producing investment portfolio, which resulted in higher management and incentive fees as well as higher

interest costs.

Additionally, higher general and administrative expenses resulted from expenses related to the potential merger with SLR Senior Investment Corp.

Net Investment Income

Companys net investment income totaled $59.2 million and $72.4 million, or $1.40 and $1.71, per average share, respectively, for the fiscal years ended December 31, 2020 and 2019.

Net Realized Loss

The Company had

investment sales and prepayments totaling approximately $363 million and $362 million, respectively, for the fiscal years ended December 31, 2020 and 2019.

Net realized losses over the same periods were $26.6 million and

$1.8 million, respectively.

Net realized loss for fiscal year 2020 was primarily related to the exit of our investment IHS Intermediate, Inc.

Net realized loss for fiscal year 2019 was primarily related to the extinguishment of debt.

The Companys net investment income totaled $60.9 million and $59.2 million, or $1.44 and $1.40, per average share,

respectively, for the fiscal years ended December 31, 2021 and 2020.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $468 million and $363 million, respectively, for the fiscal

years ended December 31, 2021 and 2020.

Net realized gain (loss) over the same periods were $0.03 million and ($26.6) million, respectively.

Net realized gain for fiscal year 2021 was de minimis.

Net realized loss for fiscal year 2020 was

primarily related to the exit of our investment in IHS Intermediate, Inc.

Net Change in Unrealized Loss

fiscal years ended December 31, 2020 and 2019, net change in unrealized loss on the Companys assets and liabilities totaled $17.1 million and $14.7 million, respectively.

Net unrealized loss for the fiscal year ended

December 31, 2020 is primarily due to depreciation in the value of our investments in NEF Holdings LLC, Rug Doctor, PhyMed Management LLC, SOINT, LLC and SOAGG LLC, among others, partially offset by the reversal of previously recognized

unrealized depreciation in the value of our investment in IHS Intermediate, Inc.

For the fiscal years ended December 31, 2021 and 2020, net change in unrealized loss on the Companys assets and liabilities totaled

$1.4 million and $17.1 million, respectively.

Net unrealized loss for the fiscal year ended December 31, 2021 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., Rug Doctor and

SOAGG LLC, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC, SLR Credit Solutions and PhyMed Management LLC, among others.

Net unrealized loss for the fiscal year ended December 31, 2020 is

primarily due to depreciation in the value of our investments in NEF Holdings LLC, Rug Doctor, PhyMed Management LLC, SOINT, LLC and SOAGG LLC, among others, partially offset by the reversal of previously recognized unrealized depreciation in the

value of our investment in IHS Intermediate, Inc.

and unrealized appreciation in the value of our investments in Crystal Financial LLC and B.

Riley Financial Inc., among others.

The year over year net change in

unrealized loss for the fiscal year ended December 31, 2020 was impacted by uncertainty due to the COVID-19 pandemic and its effect on market yields and fundamental portfolio company performance.

unrealized loss for the fiscal year ended December 31, 2019 is primarily due to unrealized depreciation in the value of our investments in IHS Intermediate, Inc., SOAGG LLC and American Teleconferencing Services, Ltd., among others, partially

offset by unrealized appreciation in the value of our investments in Crystal Financial LLC, PPT Management Holdings, LLC and Alteon Health, LLC, among others.

Net Increase in Net Assets From Operations

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LIQUIDITY AND CAPITAL RESOURCES

Companys liquidity and capital resources are generated and generally available through its 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), 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 December 31, 2020, we had a total of $439.0 million of unused borrowing capacity under the Credit Facilities, subject to borrowing base limits.

Companys liquidity and capital resources are generated and generally available through its Credit Facility (as defined below), the 2022 Unsecured Notes, the 2022 Tranche C Notes, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2026

Unsecured Notes and the 2027 Unsecured Notes, 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 December 31, 2021, we had a total of $377.5 million of unused borrowing capacity under the Credit Facility, 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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investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, or for other general corporate purposes.

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

Credit Facility providing for an additional $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

On December 28, 2021, the Company closed on Amendment No.

1 to its August 28, 2019 senior secured credit agreement (the

Credit Facility).

Post amendment, the Credit Facility is composed of $600 million of revolving credit and $100 million of term loans.

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

1.75%-2.00% or the alternate base rate plus 0.75%-1.00%.

The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final

On December 28, 2021, the Company prepaid and terminated the NEFPASS SPV LLC credit

facility, dated September 26, 2018.

On September 14, 2021, the Company closed a private offering of $50,000 of the 2027

Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027.

Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14.

The 2027 Unsecured Notes were issued in a private placement

only to qualified institutional buyers.

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

Credit Facility providing for an additional $75.0 million of revolving credit, bringing the Credit Facilitys total revolving credit capacity to $545.0 million.

On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate

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The 2026 Unsecured Notes were issued in a private placement only to qualified institutional

On August 28, 2019, the Company repaid its existing senior secured credit agreement due September 2021 and entered into the

new senior secured credit agreement (the Credit Facility).

The Credit Facility was originally composed of $470 million of revolving credit and $75 million of term loans, but was expanded to $545 million of revolving credit

and $75 million of term loans in February 2020.

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.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of

4.50% and a maturity date of December 28, 2022.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed

interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net

proceeds of $73.8 million.

The 2022 Tranche C Notes were issued in a private placement only to qualified

institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023

Unsecured Notes for net proceeds of $73.8 million.

Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018.

The 2023 Unsecured Notes mature on

January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

The 2023 Unsecured Notes

mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022

Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

The 2022 Unsecured Notes were issued in a private placement

only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022

Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

On January 11, 2013, the Company closed its most recent follow-on

public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio companies, reductions in revolving debt outstanding

and for other general corporate purposes.

The 2022 Unsecured Notes were issued in a private placement

only to qualified institutional buyers.

On January 11, 2013, the Company closed its most recent

follow-on public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio

companies, reductions in revolving debt outstanding and for other general corporate purposes.

Cash Equivalents

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on a net cash basis subsequent to quarter end.

We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on our credit facilities, as deemed appropriate.

We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on the Credit Facility, as deemed appropriate.

The amount of these transactions or such drawn cash

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Unsecured Notes

On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate of

4.20% and a maturity date of December 15, 2024.

Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15.

On September 14, 2021, the Company closed a private offering of $50,000 of the 2027 Unsecured Notes with a fixed interest rate of 2.95%

and a maturity date of March 14, 2027.

Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14.

The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of

4.375% and a maturity date of December 15, 2026.

On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate

of 4.20% and a maturity date of December 15, 2024.

Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15.

The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of

4.50% and a maturity date of December 28, 2022.

On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest

rate of 4.375% and a maturity date of December 15, 2026.

Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15.

The 2026 Unsecured Notes were issued in a private placement only to qualified institutional

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed

interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net

proceeds of $73.8 million.

The 2022 Tranche C Notes were issued in a private placement only to qualified

institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023

Unsecured Notes for net proceeds of $73.8 million.

Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018.

The 2023 Unsecured Notes mature on

January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

The 2023 Unsecured Notes

mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022

Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes

with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

The 2022 Unsecured Notes were issued in a private placement

only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022

Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8.

The 2022 Unsecured Notes were issued in a private placement only to qualified

institutional buyers.

The 2022 Unsecured Notes were issued in a private placement

only to qualified institutional buyers.

Revolving & Term Loan Facilities

On August 28, 2019, the Company repaid its existing senior secured credit agreement due September 2021 and entered into the new Credit

The Credit Facility was originally composed of $470 million of revolving credit and $75 million 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 $75.0 million of revolving credit, bringing our Credit Facilitys total revolving credit capacity to $545.0 million.

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%.

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 may be increased up to

$800 million with additional new lenders or an increase in commitments from current lenders.

On December 28, 2021, the Company closed on Amendment No.

1 to its August 28, 2019 senior secured credit agreement.

amendment, the Credit Facility is composed of $600 million of revolving credit and

$100 million of term loans.

Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate

base rate plus 0.75%-1.00%.

The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year.

The Credit Facility may be increased up to $800 million

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.

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 December 31, 2020, outstanding USD equivalent borrowings under the Credit Facility

totaled $201.0 million, composed of $126.0 million of revolving credit and $75.0 million of term loans.

September 26, 2018, NEFPASS SPV LLC, a newly formed wholly-owned subsidiary of NEFPASS LLC, as borrower entered into the NEFPASS Facility with Keybank acting as administrative agent.

The Company acts as servicer under the NEFPASS Facility.

NEFPASS Facility is scheduled to mature on September 26, 2023.

The NEFPASS Facility generally bears interest at a rate of LIBOR plus 2.15%.

NEFPASS and NEFPASS SPV LLC, as applicable, have made certain customary representations and warranties,

and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

The NEFPASS Facility also includes usual and customary events of default for

credit facilities of this nature.There were $30.0 million of borrowings outstanding as of December 31, 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

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 December 31, 2021, outstanding USD equivalent borrowings under the Credit Facility totaled

$322.5 million, composed of $222.5 million of revolving credit and $100.0 million of term loans.

On December 28,

2021, the Company prepaid and terminated the NEFPASS SPV LLC credit facility, dated September 26, 2018.

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 December 31, 2021, the Company was in compliance with all financial and operational covenants required by our credit facilities.

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Payments Due by Period (in millions)

Revolving credit facilities(1)

Credit Facility (1)

Unsecured senior notes

As of December 31, 2020, we had a total of $439.0 million of unused borrowing capacity under our

revolving credit facilities, subject to borrowing base limits.

Under the provisions of the 1940 Act, we are permitted,

as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of

senior securities.

As of December 31, 2021, we had a total of $377.5 million of unused borrowing capacity under the

Credit Facility, subject to borrowing base limits.

Under the provisions of the 1940 Act, we are permitted, as a BDC, to

issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior

If the value of our assets declines, we may be unable to satisfy the asset coverage test.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of

our indebtedness at a time when such sales may be disadvantageous.

If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our

indebtedness at a time when such sales may be disadvantageous.

Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders.

Furthermore, as a result of issuing senior securities,

we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

Furthermore, as a result of issuing senior securities, we

would also be exposed to typical risks associated with leverage, including an increased risk of loss.

We have also entered into two

contracts under which we have future commitments:

the Advisory Agreement, pursuant to which SLR Capital Partners, LLC has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to

furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those

portfolio companies to which we are required to provide such assistance.

Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a

two-part incentive fee.

Payments under the Administration Agreement are equal to an amount based 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

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.

Senior Securities

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2026 Unsecured Notes

2042 Unsecured Notes

Senior Secured Notes

Class and Year

Outstanding(1)

2027 Unsecured Notes

2042 Unsecured Notes

Senior Secured Notes

NEFPASS Facility

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The average market value for the fiscal 2016, 2015, 2014, 2013 and 2012 periods was $100,175, $98,196, $94,301, $93,392, and $92,302, respectively.

We have also entered into two contracts under which we have future commitments:

Agreement, pursuant to which Solar Capital Partners, LLC has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services

necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such

Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee.

Payments under the Administration Agreement

are equal to an amount based 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

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

The following is a schedule of financial highlights for the respective years:

Per Share Data:

Net asset value, beginning of year

Net investment income

Net realized and unrealized gain (loss)

Net increase in net assets resulting from operations

Distributions to stockholders (see note 8a):

From net investment income

From net realized gains

From return of capital

Anti-dilution

Net asset value, end of year

Per share market value, end of year

Total Return(b)

Net assets, end of year

Shares outstanding, end of year

Ratios to average net assets:

Net investment income

Operating expenses

Interest and other credit facility expenses**

Total expenses

Average debt outstanding

Portfolio turnover ratio

Calculated using the average shares outstanding method.

Total return is based on the change in market price per share during the year and takes into account

distributions, if any, reinvested in accordance with the dividend reinvestment plan.

Total return does not include a sales load.

The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is

shown net of a voluntary incentive fee waiver (see note 3).

For the year ended December 31, 2015, the ratios of operating expenses to average net assets and total

expenses to average net assets would be 4.02% and 5.70%, respectively, without the voluntary incentive fee waiver.

Ratios shown without the non-recurring costs associated with the

amendments and establishment of the Credit Facility and 2022 Unsecured Notes would be 2.39%, 1.68%, 1.50%, 1.74% and 1.41%, respectively for the years shown.

Off-Balance Sheet Arrangements

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(in millions)

Crystal Financial LLC*

SLR Credit Solutions*

Arcutis Biotherapeutics, Inc.

BridgeBio Pharma, Inc.

CC SAG Holdings Corp.

(Spectrum Automotive)

Inszone Mid, LLC

One Touch Direct, LLC

Rezolute, Inc.

Maurices, Incorporated

SLR Equipment Finance

NAC Holdings Corporation

Ivy Fertility Services, LLC

SOC Telemed, Inc.

Atria Wealth Solutions, Inc.

Kid Distro Holdings, LLC

Foundation Consumer Brands, LLC

Neuronetics, Inc.

MMIT Holdings, LLC

Basic Fun, Inc.

Pinnacle Treatment Centers, Inc.

SunMed Group Holdings, LLC

Ultimate Baked Goods Midco LLC

American Teleconferencing Services, Ltd.

Smile Doctors LLC

Soleo Health Holdings, Inc.

(in millions)

Cardiva Medical, Inc.

Kindred Biosciences, Inc.

Neuronetics, Inc.

One Touch Direct, LLC

PQ Bypass, Inc.

NEF Holdings, Inc.

Centrexion Therapeutics, Inc.

Atria Wealth Solutions, Inc.

Sentry Data Systems, Inc.

Pinnacle Treatment Centers, Inc.

Delphinus Medical Technologies, Inc.

Basic Fun, Inc.

Rubius Therapeutics, Inc.

Cerapedics, Inc.

Phynet Dermatology LLC

Altern Marketing, LLC

Varilease Finance, Inc.

MRI Software LLC

Enhanced Capital Group, LLC

Solara Medical Supplies, Inc.

RS Energy Group U.S., Inc.

Alimera Sciences, Inc.

Total Commitments

The Company controls the funding of the Crystal Financial LLC commitment and may cancel it at its discretion.

The Company controls the funding of the SLR Credit Solutions commitment and may cancel it at its discretion.

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

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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.

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

December 31, 2021 and December 31, 2020, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.

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

with off-balance sheet risk, which may include forward foreign currency contracts.

Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates.

These financial instruments contain varying

degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities.

Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at

specific terms at future dates.

These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount

recognized in our Consolidated Statements of Assets and Liabilities.

Distributions

The following table

reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date:

The following table reflects the cash distributions per

share on our common stock for the two most recent fiscal years and the current fiscal year to date:

Date Declared

February 24, 2021

March 1, 2022

March 18, 2022

April 1, 2022

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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.

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 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

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.

Also, the 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 income, which represents contractual income 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.

Related Parties

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.

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 SLR Capital Partners.

Gross, our Chairman, Co-Chief Executive Officer and President and Mr.

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In addition, Mr.

Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for Solar Capital

Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for SLR Capital Partners.

The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement.

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We have entered into a license agreement with the Investment Adviser, pursuant to which the Investment Adviser

has granted us a non-exclusive, royalty-free license to use the name Solar Capital.

has granted us a non-exclusive, royalty-free license to use the licensed marks SOLAR and SLR.

The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part,

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 and SLR HC BDC LLC, an

unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry.

For example, the Investment Adviser presently serves as investment adviser to SLR Senior Investment Corp., 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 and SLR HC BDC LLC,

an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry.

In addition, Michael S.

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Peteka, our Chief Financial Officer, serve

in similar capacities for Solar Senior Capital Ltd., SCP Private Credit Income BDC LLC and SLR HC BDC LLC.

in similar capacities for SLR Senior Investment Corp., SCP Private Credit Income BDC LLC and SLR HC BDC LLC.

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

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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

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, Kingsbridge Holdings,

LLC, Loyer Capital LLC, North Mill Holdco LLC, Gemino Healthcare Finance, LLC and NEF Holdings LLC.

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 SLR Investment Corp., SLR Credit Solutions, Equipment Operating

Leases LLC, Kingsbridge Holdings, LLC, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL and SLR Equipment Finance.

These transactions may occur in the normal course of business.

No administrative or other fees are paid to Solar Capital Partners by Crystal

Financial LLC, Equipment Operating Leases LLC, Kingsbridge Holdings, LLC, Loyer Capital LLC, North Mill Holdco LLC, Gemino Healthcare Finance, LLC or NEF Holdings LLC.

No administrative or other fees are

paid to SLR Capital Partners by SLR Credit Solutions, Equipment Operating Leases LLC, Kingsbridge Holdings, LLC, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL or SLR Equipment Finance.

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

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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-K

Item 5. Market for Registrant’s Common Equity