What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-02-24 · 701 added, 639 removed, 1158 unchanged (54% of the section changed)

11 unchanged sentences

31, 2021, 2020 and 2019

Consolidated Schedules of Investments as of December 31, 2020 and

Consolidated Schedules of Investments as of December

31, 2021 and December 31, 2020

Notes to Consolidated Financial Statements

18 unchanged sentences

To the Stockholders and Board of Directors

Solar Capital Ltd.:

SLR Investment Corp.

(formerly, Solar Capital Ltd.):

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Solar Capital Ltd.

(and subsidiaries) (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the three-year period ended December 31, 2020, and the

related notes (collectively, the consolidated financial statements).

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of SLR Investment

(and subsidiaries) (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the three-year period ended December 31, 2021, and

the related notes (collectively, the consolidated financial statements).

We also have audited the Companys internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control

52 unchanged sentences

irrevocable election to apply the fair value option of accounting to certain financial liabilities.

Investments and certain financial liabilities in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as

In determining the fair value of investments and financial liabilities that are not publicly traded and whose market quotations are not readily available, the Company makes subjective judgments and estimates using unobservable inputs.

As of December 31, 2020, the fair value of such investments and financial liabilities was $1.5 billion and $150 million, respectively.

We identified the assessment of fair value of investments and financial liabilities with no readily determinable market value and whose market

quotations are not readily available as a critical audit matter.

A high degree of auditor judgment was required to assess the Companys fair value methods and assumptions.

Specifically, assessing the market yields used in the income approach

analyses and the selection of comparable companies and the financial performance multiples of such comparable companies used in the market approach analyses required subjective auditor judgment.

Additionally, the involvement of valuation

professionals with specialized skills and knowledge was required to assist in evaluating the Companys fair value estimates.

following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Companys process to measure fair value of investments

and financial liabilities.

These included controls related to the development of market yields, credit risk, and financial performance multiples assumptions.

For a selection of investments and certain financial liabilities, we compared the inputs

and assumptions used by the Company to underlying documentation.

We evaluated the Companys ability to estimate fair value by

comparing market transaction prices to the Companys most recent fair value estimate prior to the market transaction.

We involved valuation professionals with specialized skills and

knowledge, who assisted in evaluating the Companys fair value estimate for a selection of investments and financial liabilities by:

developing an independent market yield for investments and financial liabilities fair valued using an income

approach, by assessing available market information, such as market yields of comparable companies of similar credit risk

developing an independent liquidation timeline for an investment fair valued using a recovery analysis, by

assessing available market information, such as asset type or comparable companies of similar credit risk

developing an independent market multiple for investments fair valued using a market approach, by assessing

market information from third-party sources, including financial performance multiples of independently selected comparable companies

developing independent estimates of fair value, for the selected investments and financial liabilities, based

upon the independently developed market yields and financial performance multiples and compared the results of our estimates to the Companys fair value estimates.

Investments and certain financial liabilities are valued using a market approach, an income approach, or both approaches, as applicable.

determining the fair value of investments and financial liabilities whose market quotations are not readily available, the Company makes subjective judgments and estimates using unobservable inputs.

As of December 31, 2021, the fair value of

such investments and financial liabilities was $1.7 billion and $150 million, respectively.

We identified the assessment of the

fair value of investments and certain financial liabilities with no readily determinable market value as a critical audit matter.

A high degree of auditor judgment was required to assess the Companys fair value assumptions.

Specifically,

subjective auditor judgment was required to assess the (1) credit risk associated with the borrower and its ability to make interest and principal payments for debt investments, (2) selection of comparable companies and the financial

performance multiples of such comparable companies used in the market approach for equity investments and (3) market yields of comparable companies of similar credit risk used in the income approach for financial liabilities.

Additionally, the

involvement of valuation professionals with specialized skills and knowledge was required to assist in evaluating the Companys fair value estimates.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating

effectiveness of certain internal controls over the Companys process to measure the fair value of investments and certain financial liabilities, including controls related to the development of the above assumptions.

For recently purchased

investments we evaluated changes in the borrowers assessed credit risk and market yields from the purchase date to year end.

We evaluated the Companys ability to estimate fair value by comparing dispositions to the Companys most recent

estimate prior to the disposition.

We also involved valuation professionals with specialized skills and knowledge, who for a selection of investments and financial liabilities developed estimates

of fair value by assessing available market information using market yields of comparable companies of similar credit risk, for debt investments and financial liabilities fair valued using an income approach, and financial performance multiples of

comparable companies, for equity investments fair valued using a market approach, and compared the results to the Companys fair value estimates.

We have served as the

1 unchanged sentence

New York, New York

February 24, 2021

SOLAR CAPITAL LTD.

March 1, 2022

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

30 unchanged sentences

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

20 unchanged sentences

Companies less than 5% owned

Companies 5% to 25% owned

Companies more than 25% owned

10 unchanged sentences

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

1 unchanged sentence

Year ended December 31,

Increase in net assets resulting from operations:

Increase (decrease) in net assets resulting from operations:

Net investment income

14 unchanged sentences

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

3 unchanged sentences

Net increase in net assets resulting from operations

Adjustments to reconcile net increase in net assets resulting from operations to net cash

provided by (used in) operating activities:

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided

by (used in) operating activities:

Net realized (gain) loss on investments and cash equivalents

Net realized loss on extinguishment of debt

Net change in unrealized loss on investments and cash equivalents

Net change in unrealized loss on investments

(Increase) decrease in operating assets:

3 unchanged sentences

Capitalization of

payment-in-kind interest

payment-in-kind income

Collections of

payment-in-kind interest

payment-in-kind income

Receivable for investments sold

10 unchanged sentences

Other liabilities and accrued expenses

Deferred financing costs

Net Cash Provided by (Used in) Operating Activities

2 unchanged sentences

Proceeds from issuance of unsecured debt

Deferred financing costs

Consolidation of SSLP Facility and SSLP II Facility

Proceeds from secured borrowings

Repayments of secured borrowings

Net Cash Provided by (Used in) Financing Activities

Net Cash Provided by Financing Activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

4 unchanged sentences

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

9 unchanged sentences

Communications Equipment

American Teleconferencing Services, Ltd.**

Communications Equipment

AmeriMark Intermediate Holdings, LLC(14)

Internet & Catalog Retail

Atria Wealth Solutions, Inc

Diversified Financial Services

AviatorCap SII, LLC (2)

Aerospace & Defense

Basic Fun, Inc.

Specialty Retail

CC SAG Holdings Corp.

(Spectrum Automotive)

Diversified Consumer Services

Community Brands ParentCo, LLC (f/k/a Ministry Brands)

Enhanced Permanent Capital, LLC(3)

Capital Markets

Foundation Consumer Brands, LLC

Personal Products

Inszone Mid, LLC

Ivy Fertility Services, LLC

Health Care Providers & Services

Kid Distro Holdings, LLC (Distro Kid)

Kingsbridge Holdings, LLC(2)

2 unchanged sentences

Wireless Telecommunication Services

Legility, LLC

Commercial Services & Supplies

Logix Holding Company, LLC

Communications Equipment

Maurices, Incorporated

Specialty Retail

MMIT Holdings, LLC

NAC Holdings Corporation (Jaguar)

One Touch Direct, LLC

Commercial Services & Supplies

Pet Holdings ULC & Pet Supermarket, Inc.

Specialty Retail

PhyNet Dermatology LLC

4 unchanged sentences

Health Care Providers & Services

Sentry Data Systems, Inc.

Smile Doctors LLC

Personal Products

Soleo Health Holdings, Inc.

Health Care Providers & Services

The Childrens Place, Inc.(3)

Specialty Retail

Life Sciences Tools & Services

Stryten Energy LLC

Auto Parts & Equipment

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)

SunMed Group Holdings, LLC

Health Care Equipment & Supplies

Ultimate Baked Goods Midco LLC (Rise Baking)

Packaged Foods & Meats

USR Parent, Inc.

2 unchanged sentences

Second Lien Asset-Based Senior Secured Loans

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

Thrifts & Mortgage Finance

ACRES Commercial Mortgage, LLC

Diversified Financial Services

Varilease Finance, Inc.

10 unchanged sentences

Pharmaceuticals

Apollo Endosurgery, Inc.

Health Care Equipment & Supplies

Arcutis Biotherapeutics, Inc.(3)

Pharamceuticals

Ardelyx, Inc.

2 unchanged sentences

Pharmaceuticals

Cardiva Medical, Inc.

Health Care Equipment & Supplies

BridgeBio Pharma, Inc.(3)

Biotechnology

Centrexion Therapeutics, Inc.

4 unchanged sentences

Health Care Equipment & Supplies

GenMark Diagnostics, Inc.

Health Care Providers & Services

Kindred Biosciences, Inc.

Pharmaceuticals

Health Care Technology

Neuronetics, Inc.

2 unchanged sentences

Health Care Equipment & Supplies

PQ Bypass, Inc.

Health Care Equipment & Supplies

Rezolute, Inc

Biotechnology

Rubius Therapeutics, Inc.

2 unchanged sentences

Pharmaceuticals

SI-BONE, Inc.

Health Care Equipment & Supplies

SOC Telemed, Inc.

Health Care Providers & Services

Total First Lien Life Science Senior Secured Loans

1 unchanged sentence

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

3 unchanged sentences

Equipment Financing 32.5%

Aero Operating LLC (10)

Commercial Services & Supplies

3/1/2025-12/1/2026

Air Methods Corporation (10)

11/3/2026-11/23/2026

AmeraMex International, Inc.

5 unchanged sentences

Metals & Mining

C&H Paving, Inc.

Construction & Engineering

7/1/2024-1/1/2026

1 unchanged sentence

10/4/2023-6/22/26

Central Freight Lines, Inc.

Champion Air, LLC (10)

Easton Sales and Rentals, LLC (10)

Commercial Services & Supplies

Clubcorp Holdings, Inc.

Hotels, Restaurants & Leisure

6/1/2025-1/1/2027

Dongwon Autopart Technology Inc.

Auto Components

EasyPak, LLC (10)

Containers & Packaging

Environmental Protection & Improvement Company, LLC (10)

2 unchanged sentences

8/1/2022-4/27/2025

EquipmentShare.com, Inc.

Commercial Services & Supplies

Family First Freight, LLC (10)

2/1/2022-5/1/2023

First American Commercial Bancorp, Inc.

Diversified Financial Services

First National Capital, LLC (10)

Diversified Financial Services

Freightsol LLC (10)

3 unchanged sentences

Georgia Jet, Inc.

Globecomm Systems Inc.

Wireless Telecommunication Services

GMT Corporation (10)

Haljoe Coaches USA, LLC (10)

7/1/2022-7/1/2024

Hawkeye Contracting Company, LLC (10)

Construction & Engineering

HTI Logistics Corporation (10)

1 unchanged sentence

5/1/2024-9/1/2025

Interstate NDT, Inc.

7/1/2023-10/25/2023

ISR Holdings, LLC (10)

Commercial Services & Supplies

JP Motorsports, Inc.

International Automotive Components Group, North America, Inc.

Auto Components

Kool Pak, LLC (10)

Lineal Industries, Inc.

Construction & Engineering

Loyer Capital LLC (2)(12)

1 unchanged sentence

5/16/24-9/25/24

Mountain Air Helicopters, Inc.

Commercial Services & Supplies

Lux Credit Consultants,

12/1/2024-12/1/2025

NEF Holdings, LLC (2)

Multi-Sector Holdings

Lux Vending, LLC (10)

Consumer Finance

8/20/2024-10/1/2024

Mountain Air Helicopters,

Commercial Services & Supplies

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)

Interest Rate (1)

Rane Light Metal Castings Inc.

3 unchanged sentences

Commercial Services & Supplies

4/1/2021-9/1/2022

Royal Coach Lines, Inc.(10)

7 unchanged sentences

10/1/2022-1/25/2025

Stafford Logistics, Inc.

Stafford Logistics,

Commercial Services & Supplies

10/1/2024-10/1/2025

Star Coaches Inc.

1 unchanged sentence

Energy Equipment & Services

Sun-Tech Leasing of Texas, L.P.

Superior Transportation, Inc.

4/1/2022-8/1/2024

Tailwinds, LLC (10)

1 unchanged sentence

8/1/2024-10/16/2025

The Smedley Company & Smedley Services, Inc.

The Smedley Company & Smedley Services,

Commercial Services & Supplies

10/29/2023-2/10/2024

Thora Capital, LLC (10)

Trinity Equipment Rentals, Inc.

Commercial Services & Supplies

Trolleys, Inc.

Up Trucking Services, LLC (14)

11/1/2024-12/1/2026

Trolleys, Inc.

Up Trucking Services,

Warrior Crane Services, LLC (10)

6 unchanged sentences

Energy Equipment & Services

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

SLR Equipment Finance Equity Interests (2)(9)*

Multi-Sector Holdings

7 unchanged sentences

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

4 unchanged sentences

Pharmaceuticals

B Riley Financial Inc.

Research & Consulting Services

CardioFocus, Inc.

4 unchanged sentences

Health Care Equipment & Supplies

Crystal Financial LLC (2)(3)

Diversified Financial Services

Delphinus Medical Technologies, Inc.

4 unchanged sentences

Multi-Sector Holdings

PQ Bypass, Inc.

Health Care Equipment & Supplies

RD Holdco Inc.

2 unchanged sentences

RD Holdco Inc.

(Rug Doctor) Class B (2)*

Diversified Consumer Services

RD Holdco Inc.

(Rug Doctor) Warrants (2)*

Warrants (2)*

Diversified Consumer Services

Scynexis, Inc.

Pharmaceuticals

Senseonics Holdings, Inc.

Health Care Equipment & Supplies

Sunesis Pharmaceuticals, Inc.

Pharmaceuticals

SLR Credit Solutions (2)(3)

Diversified Financial Services

Venus Concept Ltd.

Warrants* (fka Restoration Robotics)

Warrants* (f/k/a Restoration Robotics)

Health Care Equipment & Supplies

6 unchanged sentences

Net Assets 100.0%

Floating rate debt investments typically bear interest at a rate determined by reference to the London

Interbank Offered Rate (LIBOR), and which typically reset monthly, quarterly or semi-annually.

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

December 31, 2020.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank

Offered Rate (LIBOR), and which typically reset monthly, quarterly or semi-annually.

For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of December 31,

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

1 unchanged sentence

Transactions during the year ended December 31, 2021 in these controlled investments are as follows:

consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)

Name of Issuer

Fair Value at

December 31, 2020

Interest/Dividend

Fair Value at

AviatorCap SII, LLC

December 31, 2021

AviatorCap SII, LLC

Crystal Financial LLC

Equipment Operating Leases, LLC

Kingsbridge Holdings, LLC (debt)

Kingsbridge Holdings, LLC (equity)

Kingsbridge Holdings, LLC

KBH Topco, LLC (Kingsbridge)

Loyer Capital LLC

NEF Holdings, LLC (equity)

NEF Holdings, LLC (debt)

RD Holdco Inc.

5 unchanged sentences

Rug Doctor LLC

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands)

SLR Credit Solutions

SLR Equipment Finance (equity)

SLR Equipment Finance (debt)

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

4 unchanged sentences

basis, non-qualifying assets in the portfolio represented 23.1% of the total assets of the Company.

Solar Capital Ltd.s investments in SOAGG, LLC and SOINT, LLC include a two and one dollar investment in

common shares, respectively.

The Companys investments in SOAGG, LLC and SOINT, LLC include a two and one dollar investment in common

shares, respectively.

Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.

9 unchanged sentences

All investments are Level 3 unless otherwise indicated.

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)

Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR

2 unchanged sentences

Denotes a Level 1 investment.

NEF Holdings, LLC is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC,

a wholly-owned consolidated subsidiary.

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

through NEFPASS LLC.

SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS

LLC, a wholly-owned consolidated subsidiary.

Indicates an investment that is wholly held by the Company through NEFPASS LLC.

Interest is paid in kind (PIK).

Denotes a subsidiary of NEF Holdings, LLC.

Denotes a subsidiary of SLR Equipment Finance.

OmniGuide Holdings, Inc., Domain Surgical, Inc.

1 unchanged sentence

co-borrowers.

Indicates an investment that is held by the Company through its wholly-owned consolidated financing subsidiary

NEFPASS SPV, LLC (the NEFPASS SPV).

Such investments are pledged as collateral under the NEFPASS SPV, LLC Revolving Credit Facility (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if

any, of the Company.

AmeriMark Interactive, LLC, AmeriMark Direct LLC, AmeriMark Intermediate Sub, Inc., L.T.D.

Commodities LLC,

Leonards Healthcare Corp.

and Amerimark Intermediate Holdings, LLC are each co-Borrowers.

Spread is 6.00% Cash / 2.00% PIK.

Kindred Biosciences, Inc., KindredBio Equine, Inc.

and Centaur Biopharmaceutical Services, Inc.

are co-borrowers.

Spread is 2.50% Cash / 12.50% PIK.

Spread is 5.50% Cash / 0.50% PIK.

Non-income producing security.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands)

Investment is on non-accrual status.

Industry Classification

2 unchanged sentences

of December 31, 2021

Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, NEF Holdings, LLC, Equipment Operating

Leases, LLC and Loyer Capital LLC)

Diversified Financial Services (includes Crystal Financial LLC)

Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment

Operating Leases, LLC and Loyer Capital LLC)

Diversified Financial Services (includes SLR Credit Solutions)

Health Care Providers & Services

1 unchanged sentence

Health Care Equipment & Supplies

Commercial Services & Supplies

Specialty Retail

Biotechnology

Wireless Telecommunication Services

Communications Equipment

Thrifts & Mortgage Finance

Personal Products

Diversified Consumer Services

Commercial Services & Supplies

Capital Markets

Auto Parts & Equipment

Internet & Catalog Retail

Packaged Foods & Meats

Life Sciences Tools & Services

Communications Equipment

Specialty Retail

Auto Components

Health Care Technology

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)

Industry Classification

Percentage of Total

Investments (at fair value) as

of December 31, 2021

Aerospace & Defense

Energy Equipment & Services.

Metals & Mining

Construction & Engineering

Oil, Gas & Consumable Fuels

Personal Products

Hotels, Restaurants & Leisure

Consumer Finance

Air Freight & Logistics

Research & Consulting Services

Health Care Technology.

Energy Equipment & Services

Oil, Gas & Consumable Fuels

Construction & Engineering

Containers & Packaging

Total Investments

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

2 unchanged sentences

Senior Secured Loans 93.7%

Bank Debt/Senior Secured Loans

First Lien Bank Debt/Senior Secured Loans

Aegis Toxicology Sciences Corporation

2 unchanged sentences

Health Care Providers & Services

Altern Marketing, LLC

Household & Personal Products

American Teleconferencing Services, Ltd.

2 unchanged sentences

Diversified Financial Services

AviatorCap SII, LLC (2)

Aerospace & Defense

AviatorCap SII, LLC (2)

AviatorCap SII,

Aerospace & Defense

Bishop Lifting Products, Inc.

Trading Companies & Distributors

Enhanced Capital Group, LLC

Basic Fun, Inc

Specialty Retail

Enhanced Permanent Capital, LLC(3)

Capital Markets

Falmouth Group Holdings Corp.

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

Thrifts & Mortgage Finance

IHS Intermediate, Inc.**

Health Care Providers & Services

Kingsbridge Holdings, LLC(2)

2 unchanged sentences

Wireless Telecommunication Services

Legility, LLC

Commercial Services & Supplies

Logix Holding Company, LLC

Communications Equipment

MRI Software LLC

On Location Events, LLC & PrimeSport Holdings Inc.

One Touch Direct, LLC

Commercial Services & Supplies

Pet Holdings ULC & Pet Supermarket, Inc.

Specialty Retail

PhyMed Management LLC

Health Care Providers & Services

PhyNet Dermatology LLC

Health Care Providers & Services

Pinnacle Treatment Centers, Inc.

PPT Management Holdings, LLC

Health Care Providers & Services

PSKW, LLC & PDR, LLC

Sentry Data Systems, Inc

Smile Doctors LLC

Personal Products

Soleo Health Holdings, Inc

Health Care Providers & Services

PSKW, LLC & PDR, LLC

The Childrens Place, Inc.(3)

Specialty Retail

USR Parent, Inc.

Specialty Retail

Total First Lien Bank Debt/Senior Secured Loans

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands, except share/unit amounts)

Second Lien Asset-Based Senior Secured Loans

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

Thrifts & Mortgage Finance

Varilease Finance, Inc.

Multi-Sector Holdings

Total Second Lien Asset-Based Senior Secured Loans

Second Lien Bank Debt/Senior Secured Loans

PhyMed Management LLC

Health Care Providers & Services

RS Energy Group U.S., Inc.

Rug Doctor LLC (2)

Diversified Consumer Services

Solara Medical Supplies, Inc.

Health Care Providers & Services

The Octave Music Group, Inc.

(fka TouchTunes)

Varilease Finance, Inc.

Multi-Sector Holdings

Total Bank Debt/Senior Secured Loans

Life Science Senior Secured Loans

Total Second Lien Bank Debt/Senior Secured Loans

First Lien Life Science Senior Secured Loans

Alimera Sciences, Inc.

4 unchanged sentences

Pharmaceuticals

aTyr Pharma, Inc.

Pharmaceuticals

Axcella Health Inc.

12 unchanged sentences

Pharmaceuticals

Neuronetics, Inc.

Health Care Equipment & Supplies

OmniGuide Holdings, Inc.

6 unchanged sentences

Pharmaceuticals

Senseonics Holdings, Inc

SI-BONE, Inc.

Health Care Equipment & Supplies

Total Life Science Senior Secured Loans

Total First Lien Life Science Senior Secured Loans

Total Senior Secured Loans

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

1 unchanged sentence

(in thousands, except share/unit amounts)

Interest Rate (1)

Equipment Financing 33.4%

Althoff Crane Service, Inc.

Commercial Services & Supplies

AmeraMex International, Inc.

AmeraMex International,

Commercial Services & Supplies

2 unchanged sentences

3/1/2022-11/1/2022

Boart Longyear Company (14)

Metals & Mining

C&H Paving, Inc.

2 unchanged sentences

Capital City Jet Center, Inc.

10/4/2023-6/22/26

Central Freight Lines, Inc.

Champion Air, LLC (10)

Easton Sales and Rentals, LLC (10)

Easton Sales and Rentals,

Commercial Services & Supplies

Environmental Protection & Improvement Company,

Equipment Operating Leases, LLC (2)(12)

1 unchanged sentence

8/1/2022-4/27/2025

EquipmentShare.com, Inc.

Commercial Services & Supplies

Family First Freight, LLC (10)

10 unchanged sentences

7/1/2022-7/1/2024

Hawkeye Contracting Company, LLC (10)(11)

Oil, Gas & Consumable Fuels

HTI Logistics Corporation (10)

12 unchanged sentences

5/16/24-9/25/24

Meridian Consulting I Corp, Inc.

Hotels, Restaurants & Leisure

Mountain Air Helicopters, Inc.

Mountain Air Helicopters,

Commercial Services & Supplies

4/30/2022-2/28/2025

NEF Holdings, LLC (2)

Multi-Sector Holdings

Rane Light Metal Castings

Commercial Services & Supplies

4/1/2023-11/1/2024

Rossco Crane & Rigging, Inc.

Rossco Crane & Rigging,

Commercial Services & Supplies

4/1/2021-9/1/2022

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands, except share/unit amounts)

Interest Rate (1)

Royal Coach Lines, Inc.(14)

Royal Express Inc.

Sidelines Tree Service LLC (14)

Sidelines Tree Service

Diversified Consumer Services

8/1/2022-10/1/2022

South Texas Oilfield Solutions, LLC (14)

1 unchanged sentence

9/1/2022-7/1/2023

Southern Nevada Oral & Maxillofacial Surgery, LLC (10)

Health Care Providers & Services

Southwest Traders, Inc.

Spartan Education, LLC (10)

Diversified Consumer Services

7/31/2020-12/27/2023

ST Coaches, LLC (14)

7 unchanged sentences

Sun-Tech Leasing of Texas, L.P.

6/25/2020-7/25/2021

Superior Transportation, Inc.

2 unchanged sentences

Air Freight & Logistics

8/1/2024-10/16/2025

The Smedley Company & Smedley Services, Inc.

2 unchanged sentences

Thora Capital, LLC (10)

Tornado Bus Company (14)

Trinity Equipment Rentals, Inc.

1 unchanged sentence

Trolleys, Inc.

Up Trucking Services, LLC (14)

Up Trucking Services,

4/1/2022-8/1/2024

4 unchanged sentences

Diversified Consumer Services

8/1/2024-10/5/25

Womble Company, Inc.

Energy Equipment & Services

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

Construction & Engineering

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

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See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

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Health Care Technology

KBH Topco LLC

(Kingsbridge) (2)(5)

Multi-Sector Holdings

PQ Bypass, Inc.

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RD Holdco Inc.

(Rug Doctor) (2)*

Diversified Consumer Services

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Pharmaceuticals

Tetraphase Pharmaceuticals, Inc.

Warrants (3)*

Pharmaceuticals

Venus Concept Ltd.

Warrants* (fka Restoration Robotics)

Warrants* (f/k/a Restoration Robotics)

Health Care Equipment & Supplies

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Net Assets 100.0%

Floating rate debt investments typically bear interest at a rate determined by reference to the London

Interbank Offered Rate (LIBOR), and which typically reset monthly, quarterly or semi-annually.

Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank

Offered Rate (LIBOR), and which typically reset monthly, quarterly or semi-annually.

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

December 31, 2020.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

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

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Transactions during the year ended December 31, 2020 in these controlled investments are as follows:

consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands, except share/unit amounts)

Name of Issuer

Fair Value at

December 31, 2019

Interest/Dividend

/Other Income

Fair Value at

Ark Real Estate Partners LP

Ark Real Estate Partners II LP

December 31, 2020

AviatorCap SII, LLC

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Equipment Operating Leases, LLC

Kingsbridge Holdings, LLC (debt)

Kingsbridge Holdings, LLC (equity)

Loyer Capital LLC

NEF Holdings, LLC

NEF Holdings, LLC (equity)

NEF Holdings, LLC (debt)

RD Holdco Inc.

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Rug Doctor LLC

SOINT, LLC (preferred equity)

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

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

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basis, non-qualifying assets in the portfolio represented 25.9% of the total assets of the Company.

Solar Capital Ltd.s investments in SOAGG, LLC and SOINT, LLC include a two and one dollar investment in

common shares, respectively.

Bishop Lifting Products, Inc., SEI Holding I Corporation, Singer Equities, Inc.

& Hampton Rubber Company

are co-borrowers.

The Companys investments in SOAGG, LLC and SOINT, LLC include a two and one dollar investment in common

shares, respectively.

Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.

Aggregate net unrealized appreciation for U.S.

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borrowings outstanding on the senior secured credit facility.

The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the Securities Act).

investments are generally subject to certain limitations on resale, and may be deemed to be restricted securities under the Securities Act.

All investments are Level 3 unless otherwise indicated.

The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the Securities

These investments are generally subject to certain limitations on resale, and may be deemed to be restricted securities under the Securities Act.

All investments are Level 3 unless otherwise

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands, except share/unit amounts)

Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR

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a wholly-owned consolidated subsidiary.

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

through NEFPASS LLC.

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

Indicates an investment that is wholly held by the Company through NEFPASS LLC.

Interest is paid in kind (PIK).

Denotes a subsidiary of NEF Holdings, LLC.

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are co-borrowers.

Spread is 2.50% Cash / 8.50% PIK.

Non-income producing security.

Investment is on non-accrual status.

See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2019

(in thousands)

Industry Classification

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of December 31, 2020

Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, NEF Holdings, LLC, Equipment Operating

Leases, LLC and Loyer Capital LLC)

Diversified Financial Services (includes Crystal Financial LLC)

Multi-Sector Holdings (includes NEF Holdings, LLC, Equipment Operating Leases, LLC and Loyer

Health Care Providers & Services

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Commercial Services & Supplies

Specialty Retail

Wireless Telecommunication Services

Communications Equipment

Thrifts & Mortgage Finance

Diversified Consumer Services

Specialty Retail

Household & Personal Products

Trading Companies & Distributors

Capital Markets

Thrifts & Mortgage Finance

Aerospace & Defense

Oil, Gas & Consumable Fuels

Construction & Engineering

Energy Equipment & Services

Hotels, Restaurants & Leisure.

Metals & Mining

Construction & Engineering

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2020

(in thousands, except share/unit amounts)

Industry Classification

Percentage of Total

Investments (at fair value) as

of December 31, 2020

Oil, Gas & Consumable Fuels

Personal Products

Air Freight & Logistics

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See notes to consolidated financial statements.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

a Maryland limited liability company, was formed in February 2007 and commenced operations on March 13, 2007 with initial capital of $1,200,000 of which 47.04% was funded by affiliated parties.

Immediately prior to our initial public offering, through a series of transactions, Solar Capital Ltd.

merged with Solar Capital LLC, leaving

Solar Capital Ltd.

Immediately prior to our initial public offering, through a series of transactions, SLR Investment Corp.

(f/k/a Solar Capital Ltd.) (the

Company, we, us or our), merged with Solar Capital LLC, leaving SLR Investment Corp.

as the surviving entity (the Merger).

Solar Capital Ltd.

issued an aggregate of approximately 26.65 million shares of common stock and $125,000 in senior unsecured notes to the existing Solar Capital LLC unit

holders in connection with the Merger.

Solar Capital Ltd.

had no assets or operations prior to completion of the Merger and as a result, the historical books and records of Solar Capital LLC have become the books and records of the surviving entity.

The number of shares used to calculate weighted average shares for use in computations on a per share basis have been decreased retroactively by a factor of approximately 0.4022 for all periods prior to February 9, 2010.

This factor represents

the effective impact of the reduction in shares resulting from the Merger.

Solar Capital Ltd.

(Solar Capital, the

Company, we, us 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

SLR Investment Corp.

issued an aggregate of approximately

26.65 million shares of common stock and $125,000 in senior unsecured notes to the existing Solar Capital LLC unit holders in connection with the Merger.

SLR Investment Corp.

had no assets or operations prior to completion of the Merger and as

a result, the historical books and records of Solar Capital LLC have become the books and records of the surviving entity.

The number of shares used to calculate weighted average shares for use in computations on a per share basis have been

decreased retroactively by a factor of approximately 0.4022 for all periods prior to February 9, 2010.

This factor represents the effective impact of the reduction in shares resulting from the Merger.

SLR Investment Corp., 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 FASB Accounting Standards Codification (ASC) Topic 946.

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be treated, and intends to qualify annually, as a regulated investment company (RIC) under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).

On February 9, 2010, Solar Capital priced its initial public offering, selling 5.68 million shares of common stock, including the

On February 9, 2010, the Company priced its initial public offering, selling 5.68 million shares of common stock, including the

underwriters over-allotment, at a price of $18.50 per share.

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The Companys investment objective is to maximize both current income and capital appreciation through debt and equity investments.

Company directly and indirectly invests 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.

From time to time, we

may also invest in public companies that are thinly traded.

Company directly and indirectly invests 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.

On December 1, 2021, we entered into an Agreement and Plan of Merger, or the Merger

Agreement, with SLR Senior Investment Corp., a Maryland corporation (SUNS), Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (Merger Sub), and, solely for the limited purposes set forth

therein, SLR Capital Partners, LLC (f/k/a Solar Capital Partners, LLC) (the Investment Adviser).

The Merger Agreement 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 SUNSs wholly-owned subsidiary (the Merger,) and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company (together with the Merger,

the Mergers).

See Note 15 for additional information.

Significant Accounting Policies

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S.

accepted accounting principles (GAAP), and include the accounts of the Company and certain wholly-owned subsidiaries.

The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of

management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented.

All significant intercompany balances and transactions have been eliminated.

Certain prior period amounts may

have been reclassified to conform to the current period presentation.

The preparation of consolidated financial statements in conformity

with GAAP and pursuant to the requirements for reporting on Form 10-K and Regulation S-X, as appropriate, also requires management to make estimates and assumptions that

affect the reported amount of assets and liabilities at the date of the financial

SOLAR CAPITAL LTD.

accepted accounting principles (GAAP), and include the accounts of the

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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(in thousands, except share amounts)

statements and the reported amounts of income and expenses during the reported periods.

Changes in the economic environment, financial markets and any other

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

In the opinion of management, all

adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included.

The significant accounting policies consistently followed by the Company are:

Company and certain wholly-owned subsidiaries.

The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair

presentation of the results of the operations and financial condition for the periods presented.

All significant intercompany balances and transactions have been eliminated.

Certain prior period amounts may have been reclassified to conform to the

current period presentation.

The preparation of consolidated financial statements in conformity with GAAP and pursuant to the

requirements for reporting on Form 10-K and Regulation S-X, as appropriate, also requires management to make estimates and assumptions that affect the reported amount of

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

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

estimates could cause actual results to differ materially.

In the opinion of management, all adjustments, which are of a normal recurring

nature, considered necessary for the fair presentation of financial statements have been included.

The significant accounting policies

consistently followed by the Company are:

Investment transactions are accounted for on the trade date;

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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 Solar Capital Partners, LLC (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:

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

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

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

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

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

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

(in thousands, except share amounts)

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

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

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

measurement date.

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

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

Unadjusted 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.

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discount, on an accrual basis.

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

Upon the prepayment of a loan, any unamortized loan

origination fees are recorded as interest income.

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

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

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

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

companies to make distributions of taxable income sufficient to relieve it of substantially all

SOLAR CAPITAL LTD.

Loan origination fees, original issue discount, and market

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

(in thousands, except share amounts)

discounts are capitalized and we amortize such amounts into income using the effective interest method.

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

interest income.

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

Capital structuring fees, amendment fees, consent fees, and any other non-recurring fee income

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

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

companies to make distributions of taxable income sufficient to relieve it of substantially all U.S.

federal income taxes.

The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income.

The Company will accrue excise tax on such

estimated excess taxable income as appropriate.

The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise

tax on this income.

The Company will accrue excise tax on such estimated excess taxable income as appropriate.

Book and tax basis differences relating to stockholder distributions and other permanent book and tax

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The straight-line method may be used on revolving facilities and/or when it approximates the effective yield method.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

The Company may enter into forward exchange contracts in order to hedge against foreign currency risk.

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prepaid assets.

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

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

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

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

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Recent Accounting Pronouncements

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.

Solar Capital has an

investment advisory and management agreement (the Advisory Agreement) with the Investment Adviser, under which the Investment Adviser will manage the

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

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

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

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

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

net assets as of the immediately preceding quarter end.

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

fiscal quarter.

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.

The Company has an investment advisory and management agreement (the Advisory Agreement) with the Investment Adviser, under which

the Investment Adviser will manage the day-to-day operations of, and provide investment advisory services to the Company.

For providing these services, the Investment

Adviser receives a fee from the Company, consisting of two componentsa base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of the Companys gross assets at the end

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

of the Companys total net assets as of the immediately preceding quarter end.

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

investment flexibility in the next fiscal quarter.

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

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The performance-based incentive fee has two parts, as follows:

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

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

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

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

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

distributions paid on any issued and outstanding preferred stock, but excluding the

SOLAR CAPITAL LTD.

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

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

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

performance-based incentive fee).

(in thousands, except share amounts)

calendar quarter.

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

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

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

excluding the performance-based incentive fee).

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

Pre-incentive fee net

investment income, expressed as a rate of return on the value of Solar Capitals net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized).

Solar Capital pays

the Investment Adviser a performance-based incentive fee with respect to Solar Capitals pre-incentive fee net investment income in each calendar quarter as follows:

(1) no performance-based

incentive fee in any calendar quarter in which Solar Capitals pre-incentive fee net investment income does not exceed the hurdle rate;

(2) 100% of Solar Capitals

pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less

than 2.1875% in any calendar quarter;

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

These calculations

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

The second part of the

performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and will equal 20% of Solar Capitals cumulative realized

capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of

each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser.

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

1.75% per quarter (7% annualized).

The Company pays the Investment Adviser a performance-based incentive fee with respect to the Companys pre-incentive fee net investment income in each calendar

quarter as follows:

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

(2) 100% of the

Companys pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate

but is less than 2.1875% in any calendar quarter;

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

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

part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and will equal 20% of the Companys cumulative

realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the

end of each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser.

For financial statement purposes, the second part of the performance-based

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management fees and $10,309, $2,272 and $18,111, respectively, in performance-based incentive fees.

Solar Capital has also entered into

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

For providing these services, facilities and personnel, Solar Capital

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

The Administrator will also

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

The Company has also entered into an

Administration Agreement with SLR Capital Management, LLC (f/k/a Solar Capital Management, LLC) (the Administrator) under which the Administrator provides administrative services to the Company.

For providing these services, facilities

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

Administrator will also provide, on the Companys behalf, managerial assistance to those portfolio companies to which the Company is required to provide such assistance.

The Company typically reimburses the Administrator on a quarterly basis.

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No managerial assistance fees were accrued or collected for the fiscal years ended December 31, 2021, 2020 and 2019.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

Net Asset Value Per Share

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compares to total net assets and net asset value per share at December 31, 2020 of $852,023 and $20.16, respectively.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

Earnings Per Share

The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from operations, pursuant to

ASC 260-10, for the years ended December 31, 2020, 2019 and 2018:

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

operations, pursuant to ASC 260-10, for the years ended December 31, 2021, 2020 and 2019:

December 31, 2021

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applicable, an independent third-party valuation firms own assumptions about the assumptions a market participant would use in pricing the asset or liability.

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is

categorized is based on the lowest level input that is significant to the fair value measurement in its entirety.

For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

Gains and losses for assets

and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

(in thousands, except share amounts)

When the inputs used to measure fair value fall within different levels of the hierarchy, the

level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety.

For example, a Level 3 fair value measurement may include inputs that are

observable (Levels 1 and 2) and unobservable (Level 3).

Gains and losses for assets and liabilities categorized within the

Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

A review of fair value hierarchy classifications is conducted on a quarterly basis.

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The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of December 31, 2021

and December 31, 2020:

Fair Value Measurements

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2022 Unsecured Notes

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

The following table provides a

summary of the changes in fair value of Level 3 assets for the year ended December 31, 2020, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at

December 31, 2020:

(in thousands, except share amounts)

The following table provides a summary of the changes in fair value of Level 3 assets

for the year ended December 31, 2021, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2021:

Fair Value Measurements Using Level 3 Inputs

4 unchanged sentences

Total gains or losses included in earnings:

Net realized loss

Net realized gain (loss)

Net change in unrealized gain (loss)

5 unchanged sentences

held by the Company at the end of the period:

Net change in unrealized loss

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

measured using significant unobservable inputs (Level 3) for the year ended December 31, 2020:

Net change in unrealized gain (loss)

On February 17, 2021, the Company exercised its warrants in Senseonics Holdings, Inc., receiving shares in

the common stock of Senseonics Holdings, Inc.

The common stock of Senseonics Holdings, Inc.

is publicly traded, so this position is considered to be a Level 1 asset.

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

unobservable inputs (Level 3) for the year ended December 31, 2021:

2022 Unsecured Notes

6 unchanged sentences

Ending fair value

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

accordance with ASC 825-10.

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

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

The following table provides a summary of the

changes in fair value of Level 3 assets and liabilities for the year ended December 31, 2019, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities

still held at December 31, 2019:

(in thousands, except share amounts)

The Company made elections to apply the fair value option of accounting to the 2022 Unsecured

Notes, in accordance with ASC 825-10.

On December 31, 2021, there were borrowings of $150,000 on the 2022 Unsecured Notes.

The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2020, as well

as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2020:

Fair Value Measurements Using Level 3 Inputs

4 unchanged sentences

Total gains or losses included in earnings:

Net realized gain (loss)

Net realized loss

Net change in unrealized gain (loss)

5 unchanged sentences

held by the Company at the end of the period:

Net change in unrealized gain (loss)

Net change in unrealized loss

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

measured using significant unobservable inputs (Level 3) for the year ended December 31, 2020:

Credit Facility, 2022 Unsecured Notes and SSLP Facility

2022 Unsecured Notes

For the year ended

3 unchanged sentences

Net change in unrealized (gain) loss

Transfers into Level 3

Transfers out of Level 3

Transfers in/out of Level 3

Ending fair value

2 unchanged sentences

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

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

The Company did not elect to

apply the fair value option of accounting to the SSLP Facility, which was refinanced by way of amendment on May 31, 2019.

As this refinancing was deemed to be a significant modification of debt, per ASC 825-10-25, a new election was triggered.

As such the SSLP Facility is shown as a transfer out of Level 3.

(in thousands, except share amounts)

Quantitative Information about Level 3 Fair Value Measurements

14 unchanged sentences

Principal Valuation

Technique/Methodology

Unobservable Input

Range (Weighted

1 unchanged sentence

Income Approach

Market Multiple (1)

Comparable Multiple

4.0% 19.6% (8.7%)

2.0x-3.0x(2.5x)/

2.0x-3.0x(2.5x)

Equipment Financing

Income Approach

6.6% 20.3% (10.3%)

Market Approach

Return on Equity

7.1% 20.3% (9.8%)

3 unchanged sentences

Common Equity/Equity Interests/Warrants

Market Multiple (1)

5.8x 6.3x (6.3x)

Market Approach

Comparable Multiple

Return on Equity

5.8x 10.5x (9.5x)

6.1% 18.5% (8.6%)

2 unchanged sentences

2.2% 4.6% (4.5%)

Includes $675 of investments valued using a weighted valuation approach, $492 of investments valued using a

Black-Scholes model, $6,442 of investments valued using an EBITDA multiple and $136,596 of investments which, due to the proximity of the transaction relative to the measurement date, were valued using the cost of the investments.

SOLAR CAPITAL LTD.

Investments are valued using a

sum-of-the parts analysis, using expected EBITDA multiples (2x-3x) for certain segments of the business and expected revenue

multiples (2x-3x) for certain segments of the business.

Includes $403 of investments valued using a Black-Scholes model and $151,212 of investments valued using an

EBITDA multiple

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

Quantitative information about

the Companys Level 3 asset and liability fair value measurements as of December 31, 2019 is summarized in the table below:

(in thousands, except share amounts)

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

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

Fair Value at

1 unchanged sentence

Principal Valuation

Technique/Methodology

Unobservable Input

3 unchanged sentences

5.8% 16.4% (8.9%)

Market Approach

EBITDA Multiple

7.8x - 8.0x (7.9x)

Equipment Financing

Income Approach

7.2% 19.7% (10.0%)

Market Approach

6 unchanged sentences

Market Approach

EBITDA Multiple

5.8x 6.3x (6.0x)

Market Approach

Comparable Multiple

Return on Equity

5.8x 6.3x (6.3x)

(10.3%) 13.7% (0.5%)

2 unchanged sentences

1.5% 4.6% (4.5%)

Significant increases or decreases in any of the above unobservable inputs in isolation, including

unobservable inputs used in deriving bid-ask spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities.

Generally, an increase in market

yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Companys investments.

Includes $675 of investments valued using a weighted valuation approach, $492 of investments valued using a

Significant increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs

used in deriving bid-ask spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities.

Generally, an increase in market yields or decrease in

EBITDA multiples may result in a decrease in the fair value of certain of the Companys investments.

Our debt obligations consisted of the following as of December 31, 2021 and December 31, 2020:

10 unchanged sentences

2026 Unsecured Notes

2027 Unsecured Notes

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $4,485 and $2,234 as of

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

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $0 and $623 as of

8 unchanged sentences

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

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

Carrying Value equals the Face Amount net of unamortized debt issuance costs of $60 as of December 31,

Unsecured Notes

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 $125,000 of the 2024 Unsecured Notes with a fixed interest rate of 4.20%

17 unchanged sentences

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 $50,000 of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and

a maturity date of May 8, 2022.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

On November 8, 2016, the Company closed a private offering of $50,000 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 and Term Loan Facilities

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 $470,000 of revolving credit and $75,000 of term loans.

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

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

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

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

The Credit Facility has no LIBOR floor requirement.

The Credit Facility matures in August 2024 and

includes ratable amortization in the final year.

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 $600,000 of revolving credit and $100,000 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 $800,000 with additional new lenders or an increase in commitments from current lenders.

The Credit Facility contains certain customary affirmative and

negative covenants and events of default.

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.

December 31, 2020, outstanding USD equivalent borrowings under the Credit Facility totaled $201,000, composed of $126,000 of revolving credit and $75,000 of term loans.

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

On September 26, 2018,

NEFPASS SPV LLC, a newly formed wholly-owned subsidiary of NEFPASS LLC, as borrower entered into a $50,000 senior secured revolving credit facility (the NEFPASS Facility) with Keybank acting as administrative agent.

The Company acts as

servicer under the NEFPASS Facility.

The 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 $30,000 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 Code.

The Credit Facility contains certain customary affirmative and negative covenants and events of default.

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 $322,500, composed of $222,500 of revolving credit and $100,000 of term loans.

December 28, 2021, the Company prepaid and terminated the NEFPASS SPV LLC September 26, 2018 credit facility.

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

The Company has made an election to apply the fair value option of accounting to the 2022 Unsecured Notes, in accordance with ASC 825-10.

5 unchanged sentences

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

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

and/or amending the Credit Facility, the 2022 Unsecured Notes, the 2022 Tranche C Notes, the NEFPASS Facility, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2026 Unsecured Notes and the 2027 Unsecured Notes (collectively the Credit

Facilities), if any.

The maximum amounts borrowed on the Credit Facilities during the year ended December 31, 2021 and the year ended December 31, 2020 were $902,550 and $677,000, respectively.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

Income Tax Information and Distributions to Stockholders

4 unchanged sentences

Total distributions

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

As of December 31, 2020,

2019 and 2018 the total accumulated earnings (loss) on a tax basis were as follows (1):

As of December 31, 2021, 2020 and 2019 the total accumulated earnings (loss) on a tax basis were as

Undistributed ordinary income

16 unchanged sentences

Other Tax Information (unaudited)

For the fiscal years ended December 31, 2020, 2019 and 2018, 0.1%, 0.0% and 0.0%, respectively, of the dividends paid during the year were

eligible for qualified dividend income treatment and the dividends received deduction for corporate stockholders.

For the fiscal years ended December 31, 2021, 2020 and 2019, 0.32%, 0.10% and 0.00%, respectively, of the dividends paid during the year

were eligible for qualified dividend income treatment and the dividends received deduction for corporate stockholders.

For the fiscal years ended December 31, 2021, 2020, and 2019, 93.05%, 92.05% and 83.81%, respectively, of each of the

1 unchanged sentence

For the fiscal years ended December 31, 2021, 2020 and 2019, none of the distributions represent short-term capital gains dividends.

SOLAR CAPITAL LTD.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

(in thousands, except share amounts)

Financial Highlights

8 unchanged sentences

From return of capital

Anti-dilution

Net asset value, end of year

16 unchanged sentences

expensed in the period associated with the amendment and establishment of the Credit Facility and 2022 Unsecured Notes.

Ratios excluding those non-recurring upfront costs would be 2.29% and 2.39% for the

fiscal year ended December 31, 2017 and December 31, 2016, respectively.

SOLAR CAPITAL LTD.

Ratios excluding those non-recurring upfront costs would be 2.29% for the fiscal year

ended December 31, 2017.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

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 $275,000 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 $400,000 at November 30, 2012 and a $275,000 committed revolving credit facility.

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

Crystal Financial LLC for approximately $5,737.

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

(in thousands, except share amounts)

SLR Credit Solutions

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

$275,000 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 $400,000 at November 30, 2012 and a $275,000 committed revolving credit facility.

July 28, 2016, the Company purchased Crystal Management LPs approximately 2% equity interest in SLR Credit for approximately $5,737.

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.

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

As of December 31, 2020 Crystal Financial LLC had 30

funded commitments to 24 different issuers with a total par value of approximately $404,115 on total assets of $433,914.

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

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

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

For the same periods, the average exposure per issuer was $16,838

and $17,744, respectively.

Crystal Financial LLCs credit facility, which is non-recourse to Solar Capital, had approximately $183,896 and $275,954 of borrowings outstanding at December 31, 2020

and December 31, 2019, respectively.

For the years ended December 31, 2020, 2019 and 2018 Crystal Financial LLC had net income of $23,293, $8,021 and $33,026, respectively, on gross income of $45,315, $61,177 and $58,758,

respectively.

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

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.

Selected Quarterly Financial Data (unaudited)

Quarter Ended

Net Investment

Net Realized And

Unrealized Gain

(Loss) on Assets

Net Increase (Decrease) In

Net Assets From

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

September 30, 2019

June 30, 2019

March 31, 2019

SOLAR CAPITAL LTD.

As of December 31, 2021, total commitments to the revolving credit facility are $200,000.

As of December 31, 2021 SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately $287,375 on

total assets of $347,821.

As of December 31, 2020, SLR Credit had 30 funded commitments to 24 different issuers with total funded loans of approximately $404,115 on total assets of $433,914.

As of December 31, 2021 and December 31,

2020, the largest loan outstanding totaled $35,000 and $45,000, respectively.

For the same periods, the average exposure per issuer was $15,125 and $16,838, respectively.

SLR Credits credit facility, which is non-recourse to the Company, had approximately $100,742 and $183,896 of borrowings outstanding at December 31, 2021 and December 31, 2020, respectively.

For the years ended December 31, 2021, 2020 and

2019 SLR Credit had net income of $14,164, $23,293 and $8,021, respectively, on gross income of $33,993, $45,315 and $61,177, respectively.

Due to timing and non-cash items, there may be material

differences between GAAP net income and cash available for distributions.

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.

Commitments and Contingencies

The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Credit.

amount of these unfunded commitments as of December 31, 2021 and December 31, 2020 is $226,733 and $126,180, respectively, comprised of the following:

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

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

Commitments and Contingencies

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

The total amount of these unfunded commitments as of December 31, 2020 and December 31, 2019 is $126,180 and $124,529, respectively, comprised of the following:

Crystal Financial LLC*

(in thousands, except share amounts)

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

2 unchanged sentences

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

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

financial condition or business outlook for the company.

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

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

SOLAR CAPITAL LTD.

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

The credit agreements of the above loan commitments contain customary lending

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

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

Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future

earning assets for the Company.

As of 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

SLR Equipment Finance

On July 31, 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 $209,866 in cash to effect the transaction, of which $145,000 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 $64,866 was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC.

Concurrent with the

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

thousands, except share amounts)

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.

based companies.

We invested $209,866 in cash to effect the transaction, of which

$145,000 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 $64,866 was used to purchase certain leases and loans held by NEF through

Concurrent with the transaction, NEF refinanced its existing senior secured credit facility into a $150,000 non-recourse facility with an accordion feature to expand up to $250,000.

2019, NEF amended the facility, increasing commitments to $213,957 with an accordion feature to expand up to $313,957 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 $94,587, 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 $188,448 on total assets of $263,443.

As of December 31, 2019, NEF had 168 funded equipment-backed leases and loans to

78 different customers with a total net investment in leases and loans of approximately $244,996 on total assets of $304,203.

As of December 31, 2020 and December 31, 2019, the largest position outstanding totaled $25,103 and $26,948,

respectively.

For the same periods, the average exposure per customer was $3,089 and $3,141, respectively.

NEFs credit facility, which is non-recourse to Solar Capital, had approximately $100,569

and $128,150 of borrowings outstanding at December 31, 2020 and December 31, 2019, respectively.

For the years ended December 31, 2020, 2019 and 2018, NEF had net income (loss) of ($8,883), ($6,023) and $3,426, respectively on gross

income of $24,512, $31,928 and $30,044, respectively.

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

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 10-K.

(in thousands, except share amounts)

transaction, SLR Equipment refinanced its existing senior secured credit facility into a $150,000 non-recourse facility with an accordion feature to expand

up to $250,000.

In September 2019, SLR Equipment amended the facility, increasing commitments to $213,957 with an accordion feature to expand up to $313,957 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 $210,986 on total assets of $264,007.

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 $188,448 on total assets of $263,443.

As of December 31, 2021 and December 31, 2020, the largest position outstanding totaled $19,207 and $25,103, respectively.

For the same periods, the average exposure per customer was

$3,459 and $3,089, respectively.

SLR Equipments credit facility, which is non-recourse to the Company, had approximately $118,002 and $100,569 of borrowings outstanding at December 31, 2021 and

December 31, 2020, respectively.

For the years ended December 31, 2021, 2020 and 2019, SLR Equipment had net losses of $9,729, $8,883 and $6,023, respectively on gross income of $22,931, $24,512 and $31,928, respectively.

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

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.

Capital Share Transactions

of December 31, 2021 and December 30, 2020, 200,000,000 shares of $0.01 par value capital stock were authorized.

in capital stock were as follows:

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Shares issued in reinvestment of distributions

Net increase (decrease)

SOLAR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2020

thousands, except share amounts)

There were no

transactions in capital stock during the years ended December 31, 2021 and December 30, 2020.

Kingsbridge Holdings, LLC

On November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (KBH) through KBH Topco LLC (KBHT), a

newly formed Delaware corporation.

On November 3, 2020, the Company acquired an 87.5% equity interest in Kingsbridge Holdings, LLC (KBH) through KBH Topco LLC

(KBHT), a newly formed Delaware corporation.

KBH is a residual focused independent mid-ticket lessor of equipment primarily to U.S.

investment grade companies.

The Company invested $216,596 to effect the

transaction, of which $136,596 was invested to acquire 87.5% of KBHTs equity and $80,000 in KBHs debt.

The Company invested

$216,596 to effect the transaction, of which $136,596 was invested to acquire 87.5% of KBHTs equity and $80,000 in KBHs debt.

The existing management team of KBH committed to continue to lead KBH after the transaction.

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 $744,684.

KBHT also had recourse debt outstanding of $219,044 as well as non-recourse debt outstanding of $335,899.

For the period November 3, 2020 through

December 31, 2020, KBHT had net income of $2,170, on gross income of $43,618.

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 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.

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

December 31, 2021 and 2020, KBHT had total assets of $738,425 and $744,684, respectively.

For the same periods, debt recourse to KBHT totaled $216,881 and $219,044, respectively, and non-recourse debt

totaled $323,844 and $335,899, respectively.

For the year ended December 31, 2021 and the period November 3, 2020 through December 31, 2020, KBHT had net income of $12,151 and $2,170, respectively, on gross income of $245,889 and

$43,618, 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 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.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

Pending Merger with SUNS

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.

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 or 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 SUNSs common stock equal to the Exchange Ratio (as defined below) (cash may be paid in lieu of fractional shares).

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 Date.

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 $7,600.

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 $25,600.

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2021

(in thousands, except share amounts)

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.

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 Agreement);

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.

Subsequent Events

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

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

financial statements were issued.

On January 6, 2022, the Company closed a private offering of $135,000 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.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data