What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-02 compared with 2022-08-02 · 141 added, 116 removed, 586 unchanged (30% of the section changed)

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by the Company in accordance with the asset acquisition method of accounting as detailed in ASC 805-50,

Business Combinations – Related Issues, with the fair value of total

consideration paid in conjunction with the Merger allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Merger.

Business Combinations – Related Issues, with the fair value of total consideration paid in conjunction with the Merger allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Merger.

Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group.

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Recent Developments

On July 6, 2022, our Board declared a monthly distribution of $0.136667 per share payable on August 2, 2022 to holders of record as of July 21, 2022.

On August 2, 2022, our Board declared a monthly distribution of $0.136667 per share payable on September 1, 2022 to holders of record as of August 18, 2022.

On October 5, 2022, our Board declared a monthly distribution of $0.136667 per share payable on November 2, 2022 to holders of record as of October 20, 2022.

On October 12, 2022, the Company entered into a joint venture agreement with SunStone Senior Credit L.P.

(the “Investor”) to create SLR Senior Lending Program LLC (“SSLP”).

The joint venture is expected to invest primarily in senior secured cash flow loans.

The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity commitment of $100 million.

SSLP intends to seek third party financing to allow the joint venture to utilize leverage.

The Company and the Investor expect to begin funding SSLP with investments prior to the end of 2022.

Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.

On November 2, 2022, our Board declared a monthly distribution of $0.136667 per share payable on December 1, 2022 to holders of record as of November 17, 2022.

The global outbreak of the COVID-19

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

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

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

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

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

such services, are provided and paid for by the Investment Adviser.

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

We bear all other costs and expenses of our operations and

transactions, including (without limitation):

the cost of our organization and public offerings;

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Portfolio and Investment Activity

During the three months ended June 30, 2022, exclusive of the assets acquired through the Merger, we invested approximately $94.7 million across 29 portfolio companies.

This compares to investing approximately $69.0 million in 12 portfolio companies for the three months ended June 30, 2021.

Investments sold, prepaid or repaid during the three months ended June 30, 2022 totaled approximately $78.5 million versus approximately $149.7 million for the three months ended June 30, 2021.

At June 30, 2022, our portfolio consisted of 127 portfolio companies and was invested 30.0% in cash flow senior secured loans, 30.9% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 14.1% in Kingsbridge Holdings, LLC (“KBH”), 24.3% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 14.8% in life science senior secured loans, in each case, measured at fair value, versus 101 portfolio companies and was invested 23.0% in cash flow senior secured loans, 25.5% in asset-based senior secured loans / SLR Credit, 33.3% in equipment senior secured financings / SLR Equipment / KBH, and 18.2% in life science senior secured loans, in each case, measured at fair value, at June 30, 2021.

At June 30, 2022, 77.1% or $1.53 billion of our income producing investment portfolio *

During the three months ended September 30, 2022, we invested approximately $245.4 million across 44 portfolio companies.

This compares to investing approximately $230.7 million in 23 portfolio companies for the three months ended September 30, 2021.

Investments sold, prepaid or repaid during the three months ended September 30, 2022 totaled approximately $81.1 million versus approximately $105.9 million for the three months ended September 30, 2021.

At September 30, 2022, our portfolio consisted of 135 portfolio companies and was invested 30.2% in cash flow senior secured loans, 31.9% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 21.6% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 16.3% in life science senior secured loans, in each case, measured at fair value, versus 106 portfolio companies and was invested 28.4% in cash flow senior secured loans, 26.5% in asset-based senior secured loans / SLR Credit, 30.4% in equipment senior secured financings / SLR Equipment / KBH, and 14.7% in life science senior secured loans, in each case, measured at fair value, at September 30, 2021.

At September 30, 2022, 79.7% or $1.71 billion of our income producing investment portfolio *

is floating rate and 20.3% or $434.9 million is fixed rate, measured at fair value.

At June 30, 2021, 71.6% or $1.07 billion of our income producing investment portfolio *

At September 30, 2021, 74.1% or $1.20 billion of our income producing investment portfolio *

is floating rate and 25.9% or $418.4 million is fixed rate, measured at fair value.

As of June 30, 2022 and 2021, we had two and zero issuers, respectively, on non-accrual

As of September 30, 2022 and 2021, we had three and one issuers, respectively, on non-accrual

We have included SLR Credit Solutions, SLR Equipment Finance, SLR Healthcare ABL, SLR Business Credit and Kingsbridge Holdings, LLC within our income producing investment portfolio.

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

As of June 30, 2022, total commitments to the revolving credit facility are $250 million.

As of June 30, 2022, SLR Credit had 25 funded commitments to 20 different issuers with total funded loans of approximately $326.7 million on total assets of $357.1 million.

As of September 30, 2022, total commitments to the revolving credit facility are $250 million.

As of September 30, 2022, SLR Credit had 27 funded commitments to 21 different issuers with total funded loans of approximately $354.9 million on total assets of $375.6 million.

As of December 31, 2021, SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately $287.4 million on total assets of $347.8 million.

As of June 30, 2022 and December 31, 2021, the largest loan outstanding totaled $34.6 million and $35.0 million, respectively.

As of September 30, 2022 and December 31, 2021, the largest loan outstanding totaled $34.2 million and $35.0 million, respectively.

For the same periods, the average exposure per issuer was $16.9 million and $15.1 million, respectively.

SLR Credit’s credit facility, which is non-recourse

to the Company, had approximately $125.6 million and $100.7 million of borrowings outstanding at June 30, 2022 and December 31, 2021, respectively.

For the three months ended June 30, 2022 and 2021, SLR Credit had net income of $1.9 million and $2.1 million, respectively, on gross income of $6.9 million and $8.1 million, respectively.

For the six months ended June 30, 2022 and 2021, SLR Credit had net income of $4.7 million and $7.1 million, respectively, on gross income of $13.6 million and $17.7 million, respectively.

to the Company, had approximately $139.5 million and $100.7 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Credit had net income of $3.9 million and $5.4 million, respectively, on gross income of $8.6 million and $9.5 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Credit had net income of $8.6 million and $12.5 million, respectively, on gross income of $22.2 million and $27.2 million, respectively.

Due to timing and non-cash

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In September 2019, SLR Equipment amended the facility, increasing commitments to $214.0 million with an accordion feature to expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

As of June 30, 2022, SLR Equipment had 130 funded equipment-backed leases and loans to 56 different customers with a total net investment in leases and loans of approximately $187.5 million on total assets of $242.0 million.

As of September 30, 2022, SLR Equipment had 129 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $189.3 million on total assets of $241.2 million.

As of December 31, 2021, SLR Equipment had 135 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of approximately $211.0 million on total assets of $264.0 million.

As of June 30, 2022 and December 31, 2021, the largest position outstanding totaled $19.3 million and $19.2 million, respectively.

As of September 30, 2022 and December 31, 2021, the largest position outstanding totaled $19.3 million and $19.2 million, respectively.

For the same periods, the average exposure per customer was $3.2 million and $3.5 million, respectively.

SLR Equipment’s credit facility, which is non-recourse

to the Company, had approximately $102.2 million and $118.0 million of borrowings outstanding at June 30, 2022 and December 31, 2021, respectively.

For the three months ended June 30, 2022 and 2021, SLR Equipment had net loss of $1.8 million and $1.7 million, respectively, on gross income of $4.0 million and $5.7 million, respectively.

For the six months ended June 30, 2022 and 2021, SLR Equipment had net loss of $1.2 million and $2.0 million, respectively, on gross income of $9.2 million and $10.6 million, respectively.

to the Company, had approximately $111.0 million and $118.0 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Equipment had net income (loss) of $1.0 million and ($0.3) million, respectively, on gross income of $6.5 million and $5.8 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Equipment had net loss of $0.1 million and $2.3 million, respectively, on gross income of $15.7 million and $16.4 million, respectively.

Due to timing and non-cash

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

As of June 30, 2022 and December 31, 2021, KBHT had total assets of $754.8 million and $738.4 million, respectively.

As of September 30, 2022 and December 31, 2021, KBHT had total assets of $774.6 million and $738.4 million, respectively.

For the same periods, debt recourse to KBHT totaled $246.2 million and $216.9 million, respectively, and non-recourse

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None of the debt is recourse to the Company.

For the three months ended June 30, 2022 and 2021, KBHT had net income of $3.7 million and $2.3 million, respectively, on gross income of $77.3 million and $58.1 million, respectively.

For the six months ended June 30, 2022 and 2021, KBHT had net income of $7.1 million and $6.0 million, respectively, on gross income of $143.7 million and $119.6 million, respectively.

For the three months ended September 30, 2022 and 2021, KBHT had net income of $3.3 million and $3.2 million, respectively, on gross income of $71.3 million and $60.5 million, respectively.

For the nine months ended September 30, 2022 and 2021, KBHT had net income of $10.4 million and $10.3 million, respectively, on gross income of $215.1 million and $180.1 million, respectively.

Due to timing and non-cash

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in the transaction and continues to lead SLR Healthcare.

As of June 30, 2022, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity in SLR Healthcare, respectively.

As of September 30, 2022, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity in SLR Healthcare, respectively.

SLRC acquired SLR Healthcare in connection with the Merger on April 1, 2022.

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SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments.

As of June 30, 2022, the portfolio totaled approximately $179.8 million of commitments with a total net investment in loans of $77.5 million on total assets of $89.7 million.

As of September 30, 2022, the portfolio totaled approximately $179.6 million of commitments with a total net investment in loans of $81.4 million on total assets of $93.0 million.

As of December 31, 2021, the portfolio totaled approximately $183.5 million of commitments with a total net investment in loans of $81.6 million on total assets of $91.3 million.

At June 30, 2022, the portfolio consisted of 38 issuers with an average balance of approximately $2.0 million versus 36 issuers with an average balance of approximately $2.3 million at December 31, 2021.

At September 30, 2022, the portfolio consisted of 37 issuers with an average balance of approximately $2.2 million versus 36 issuers with an average balance of approximately $2.3 million at December 31, 2021.

All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured, cash-pay

SLR Healthcare’s credit facility, which is non-recourse

to us, had approximately $59 million and $60 million of borrowings outstanding at June 30, 2022 and December 31, 2021, respectively.

For the three months ended June 30, 2022 and 2021, SLR Healthcare had net income (loss) of $0.8 million and ($0.1) million, respectively, on gross income of $2.5 million and $2.0 million, respectively.

For the six months ended June 30, 2022 and 2021, SLR Healthcare had net income of $1.7 million and $0.5 million, respectively, on gross income of $4.9 million and $4.4 million, respectively.

to us, had approximately $62 million and $60 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Healthcare had net income (loss) of $0.8 million and ($0.04) million, respectively, on gross income of $3.0 million and $2.6 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Healthcare had net income of $2.5 million and $0.5 million, respectively, on gross income of $7.9 million and $7.0 million, respectively.

Due to timing and non-cash

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SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments.

As of June 30, 2022, the portfolio totaled approximately $566.0 million of commitments, of which $278.2 million were funded, on total assets of $318.7 million.

As of September 30, 2022, the portfolio totaled approximately $554.2 million of commitments, of which $296.0 million were funded, on total assets of $346.3 million.

As of December 31, 2021, the portfolio totaled approximately $513.9 million of commitments, of which $248.7 million were funded, on total assets of $290.8 million.

At June 30, 2022, the portfolio consisted of 116 issuers with an average balance of approximately $2.4 million versus 125 issuers with an average balance of approximately $2.0 million at December 31, 2021.

At September 30, 2022, the portfolio consisted of 109 issuers with an average balance of approximately $2.7 million versus 125 issuers with an average balance of approximately $2.0 million at December 31, 2021.

NMC has a senior credit facility with a bank lending group for $240 million which expires on November 13, 2025.

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NMC’s credit facility, which is non-recourse

to us, had approximately $210.9 million and $183.3 million of borrowings outstanding at June 30, 2022 and December 31, 2021, respectively.

For the three months ended June 30, 2022 and 2021, SLR Business Credit had net income of $1.9 million and $1.3 million, respectively, on gross income of $6.6 million and $5.5 million, respectively.

For the six months ended June 30, 2022 and 2021, SLR Business Credit had net income of $3.7 million and $2.2 million, respectively, on gross income of $12.8 million and $9.8 million, respectively.

to us, had approximately $237.5 million and $183.3 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, SLR Business Credit had net income of $2.0 million and $2.6 million, respectively, on gross income of $7.6 million and $6.9 million, respectively.

For the nine months ended September 30, 2022 and 2021, SLR Business Credit had net income of $5.7 million and $4.7 million, respectively, on gross income of $20.4 million and $16.7 million, respectively.

Due to timing and non-cash

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There are no assurances that we will engage in any repurchases.

As of June 30, 2022 no repurchases have taken place.

As of September 30, 2022, no repurchases have taken place.

Critical Accounting Policies

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

For the three and six months ended June 30, 2022, capitalized PIK income totaled $0.7 million and $1.0 million, respectively.

For the three and six months ended June 30, 2021, capitalized PIK income totaled $1.6 million and $3.3 million, respectively.

For the three and nine months ended September 30, 2022, capitalized PIK income totaled $0.7 million and $1.7 million, respectively.

For the three and nine months ended September 30, 2021, capitalized PIK income totaled $1.7 million and $5.0 million, respectively.

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

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RESULTS OF OPERATIONS

Results comparisons are for the three and six months ended June 30, 2022 and June 30, 2021:

Results comparisons are for the three and nine months ended September 30, 2022 and September 30, 2021:

Investment Income

For the three and six months ended June 30, 2022, gross investment income totaled $42.8 million and $75.8 million, respectively.

For the three and six months ended June 30, 2021, gross investment income totaled $35.6 million and $71.5 million, respectively.

The increase in gross investment income for the year over year three and six month periods was primarily due to a larger portfolio size as a result of the Merger, as well as due to an increase in LIBOR and SOFR.

Net expenses totaled $22.5 million and $42.0 million, respectively, for the three and six months ended June 30, 2022, of which $11.6 million and $18.9 million, respectively, were base management fees and gross performance-based incentive fees and $10.4 million and $18.7 million, respectively, were interest and other credit facility expenses.

For the three and nine months ended September 30, 2022, gross investment income totaled $47.6 million and $123.4 million, respectively.

For the three and nine months ended September 30, 2021, gross investment income totaled $32.2 million and $103.6 million, respectively.

The increase in gross investment income for the year over year three and nine month periods was primarily due to a larger portfolio size as a result of the Merger coupled with organic growth, as well as due to an increase in LIBOR and SOFR.

Net expenses totaled $27.5 million and $69.5 million, respectively, for the three and nine months ended September 30, 2022, of which $12.9 million and $31.7 million, respectively, were base management fees and gross performance-based incentive fees and $12.8 million and $31.5 million, respectively, were interest and other credit facility expenses.

Over the same periods, $0.2 million and $1.6 million, respectively, of performance-based incentive fees were waived.

Administrative services and other general and administrative expenses totaled $1.9 million and $5.8 million, respectively, for the three and six months ended June 30, 2022.

Expenses totaled $20.1 million and $40.5 million, respectively, for the three and six months ended June 30, 2021, of which $10.8 million and $21.4 million, respectively, were base management fees and performance-based incentive fees and $7.2 million and $14.4 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $2.1 million and $4.7 million, respectively, for the three and six months ended June 30, 2021.

Administrative services and other general and administrative expenses totaled $2.1 million and $7.9 million, respectively, for the three and nine months ended September 30, 2022.

Expenses totaled $17.2 million and $57.6 million, respectively, for the three and nine months ended September 30, 2021, of which $7.8 million and $29.3 million, respectively, were base management fees and performance-based incentive fees and $7.1 million and $21.5 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $2.2 million and $6.8 million, respectively, for the three and nine months ended September 30, 2021.

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

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

The increase in expenses for the year over year three and six month periods was primarily due to higher interest expense associated with the increase in LIBOR and SOFR.

The increase in expenses for the year over year three and nine month periods was primarily due to higher interest expense associated with an increase in borrowings to fund new investments as well as the increase in LIBOR and SOFR.

Net Investment Income

The Company’s net investment income totaled $20.3 million and $33.8 million, or $0.37 and $0.70, per average share, respectively, for the three and six months ended June 30, 2022.

The Company’s net investment income totaled $15.5 million and $31.0 million, or $0.37 and $0.73, per average share, respectively, for the three and six months ended June 30, 2021.

The Company’s net investment income totaled $20.1 million and $53.8 million, or $0.37 and $1.06, per average share, respectively, for the three and nine months ended September 30, 2022.

The Company’s net investment income totaled $15.0 million and $46.0 million, or $0.36 and $1.09, per average share, respectively, for the three and nine months ended September 30, 2021.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $79 million and $180 million, respectively, for the three and six months ended June 30, 2022.

The Company had investment sales and prepayments totaling approximately $81 million and $261 million, respectively, for the three and nine months ended September 30, 2022.

Net realized losses over the same periods were $37.3 million and $37.4 million, respectively.

The Company had investment sales and prepayments totaling approximately $150 million and $214 million, respectively, for the three and six months ended June 30, 2021.

Net realized gains over the same periods were $0.6 million and $0.2 million, respectively.

Net realized losses for the three and six months ended June 30, 2022 were de minimis.

Net realized gains for the three months ended June 30, 2021 were generally related to the exit of our warrant position in PQ Bypass, Inc.

Net realized gains for the six months ended June 30, 2021 were generally related to the exit of our warrant position in PQ Bypass, Inc., partially offset by losses from the sale of our legacy investment in B.

Riley Financial, Inc.

Net realized losses for the three and nine months ended September 30, 2022 were primarily related to the exit of our investment in PhyMed Management, LLC.

The Company had investment sales and prepayments totaling approximately $106 million and $320 million, respectively, for the three and nine months ended September 30, 2021.

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

Net realized losses for the three months ended September 30, 2021 were generally related to the exit of our warrant position in Scynexis, Inc.

Net realized gains for the nine months ended September 30, 2021 were generally related to the exit of our warrant position in PQ Bypass, Inc., partially offset by losses from the sale of our legacy investment in B.

Riley Financial, Inc and exit of our warrant position in Scynexis, Inc.

Net Change in Unrealized Gain (Loss)

For the three and six months ended June 30, 2022, net change in unrealized loss on the Company’s assets and liabilities totaled $35.8 million and $47.9 million, respectively.

For the three and six months ended June 30, 2021, net change in unrealized gain on the Company’s assets and liabilities totaled $2.5 million and $8.9 million, respectively.

Net unrealized loss for the three and six months ended June 30, 2022 is primarily due to depreciation in the value of our investments in PhyMed Management LLC, Rug Doctor LLC, American Teleconferencing Services, Ltd., SLR Credit Solutions and SLR Equipment Finance, among others, partially offset by unrealized appreciation on assets acquired in the Merger due to the accounting treatment of the purchase discount.

Net unrealized gain for the three months ended June 30, 2021 is primarily due to appreciation in the value of our investments in PhyMed Management LLC, KBH Topco, LLC and Foundation Brands, LLC, among others, partially offset by the reversal of previously recognized appreciation in our investment in Genmark Diagnostics, Inc., as well as depreciation in the value of our investment in American Teleconferencing Services, Ltd.

and SOAGG, LLC, among others.

Net unrealized gain for the six months ended June 30, 2021 was primarily due to appreciation in the value our investments in PhyMed Management LLC, Senseonics Holdings, Inc.

and KBH Topco, LLC, among others, partially offset by the reversal of previously recognized appreciation in our investment in Genmark Diagnostics, Inc., as well as depreciation in the value of our investment in American Teleconferencing Services, Ltd.

and SOAGG, LLC, among others.

For the three and nine months ended September 30, 2022, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled $30.8 million and ($17.1) million, respectively.

For the three and nine months ended September 30, 2021, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled ($1.5) million and $7.4 million, respectively.

Net unrealized gain for the three months ended September 30, 2022 is primarily due to the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC, as well as appreciation in the value of our investments in SLR Business Credit, Alimera Sciences, Inc.

and Kingsbridge Holdings, LLC, among others, partially offset by depreciation in the value of our investments in SLR Equipment Finance, PPT Management Holdings, LLC, KBH Topco, LLC, SLR Healthcare ABL and SLR Credit Solutions, among others.

Net unrealized loss for the nine months ended September 30, 2022 is primarily due to depreciation in the value of our investments in RD Holdco, Inc., American Teleconferencing Services, Ltd., SLR Credit Solutions and SLR Equipment Finance, among others, partially offset by the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC as well as appreciation on the value of our investments in SLR Business Credit and Alimera Sciences, Inc.

in addition to unrealized appreciation on assets acquired in the Merger due to the accounting treatment of the purchase discount.

Net unrealized loss for the three months ended September 30, 2021 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., PhyMed Management LLC and Rug Doctor, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC and SLR Credit Solutions, among others.

Net unrealized gain for the nine months ended September 30, 2021 was primarily due to appreciation in the value our investments in KBH Topco, LLC, SLR Credit Solutions, and Senseonics Holdings, Inc., among others, partially offset by depreciation in the value of our investments in American Teleconferencing Services, Ltd., Rug Doctor and SOAGG, LLC, among others.

Net Increase (Decrease) in Net Assets From Operations

For the three and six months ended June 30, 2022, the Company had a net decrease in net assets resulting from operations of $15.6 million and $14.2 million, respectively.

For the same periods, losses per average share were $0.29 and $0.29, respectively.

For the three and six months ended June 30, 2021, the Company had a net increase in net assets resulting from operations of $18.6 million and $40.1 million, respectively.

For the three and nine months ended September 30, 2022, the Company had a net increase (decrease) in net assets resulting from operations of $13.5 million and ($0.7) million, respectively.

For the same periods, earnings (losses) per average share were $0.25 and ($0.01), respectively.

For the three and nine months ended September 30, 2021, the Company had a net increase in net assets resulting from operations of $13.4 million and $53.4 million, respectively.

For the same periods, earnings per average share were $0.32 and $1.26, respectively.

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equity and/or debt offerings.

As of June 30, 2022, we had a total of $484.4 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

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

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The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined.

We held approximately $350 million in cash equivalents as of June 30, 2022.

We held approximately $269 million in cash equivalents as of September 30, 2022.

Unsecured Notes

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On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022.

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

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.

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The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature.

At June 30, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $128.6 million.

At September 30, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $130.2 million.

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

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

At June 30, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $312.0 million, composed of $212.0 million of revolving credit and $100.0 million of term loans.

At September 30, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $460.0 million, composed of $360.0 million of revolving credit and $100.0 million of term loans.

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

At June 30, 2022, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

At September 30, 2022, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

Contractual Obligations

A summary of our significant contractual payment obligations is as follows as of June 30, 2022:

A summary of our significant contractual payment obligations is as follows as of September 30, 2022:

Payments Due by Period (in millions)

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Unsecured senior notes

As of June 30, 2022, we had a total of $484.4 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

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

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Senior Securities

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended June 30, 2022 and each year ended December 31 for the past ten years, unless otherwise noted.

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended September 30, 2022 and each year ended December 31 for the past ten years, unless otherwise noted.

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

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Credit Facility

Fiscal 2022 (through June 30, 2022)