What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-10 · 181 added, 155 removed, 628 unchanged (35% of the section changed)

63 unchanged sentences

Recent Developments

Effective on April 3, 2023, Richard L.

Peteka resigned from his position as the Chief Financial Officer, Treasurer and Secretary of the Company.

The resignation was not the result of any disagreement between Mr.

Peteka and the Company.

On April 3, 2023, the Company’s board of directors appointed Shiraz Y.

Kajee as the Company’s Chief Financial Officer, Treasurer and Secretary effective immediately.

For more information on Mr.

Kajee’s background and experience, refer to the Company’s Form 8-K

as filed with the SEC on April 3, 2023.

On April 4, 2023, the Board declared a monthly distribution of $0.136667 per share payable on May 2, 2023 to holders of record as of April 20, 2023.

On May 9, 2023, our Board authorized an extension of a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock.

Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule 10b-18

of the Exchange Act, including certain price, market volume and timing constraints.

In addition, any repurchases will be conducted in accordance with the 1940 Act.

Unless further amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 10, 2024 or until $50 million of our outstanding shares of common stock have been repurchased.

To date, approximately $3 million of repurchases have been made by us under the repurchase program.

The timing and number of additional shares to be repurchased will depend on a number of factors, including market conditions.

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

On May 10, 2023, the Board declared a monthly distribution of $0.136667 per share payable on June 1, 2023 to holders of record as of May 24, 2023.

On July 5, 2023, the Board declared a monthly distribution of $0.136667 per share payable on August 1, 2023 to holders of record as of July 20, 2023.

On August 8, 2023, the Board declared a monthly distribution of $0.136667 per share payable on August 30, 2023 to holders of record as of August 18, 2023.

Timing of Future Distributions

Effective with the fourth quarter of 2023, SLRC’s board of directors intends to adjust the timing of declaring and paying distributions to SLRC’s shareholders from monthly to quarterly.

As a result, SLRC’s management anticipates that the last monthly distribution, if declared by SLRC’s board of directors, will be for September 2023 and the next distribution after that, if declared by SLRC’s board of directors, will be a quarterly distribution for the fourth quarter of 2023.

The amount and timing of past distributions are not a guarantee of any future distributions or the amount thereof.

The payment, timing and amount of any future distributions will be determined by SLRC’s board of directors.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

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Portfolio and Investment Activity

During the three months ended March 31, 2023, we invested approximately $156.0 million across 40 portfolio companies.

This compares to investing approximately $67.5 million in 14 portfolio companies for the three months ended March 31, 2022.

Investments sold, prepaid or repaid during the three months ended March 31, 2023 totaled approximately $144.2 million versus approximately $101.0 million for the three months ended March 31, 2022.

At March 31, 2023, our portfolio consisted of 145 portfolio companies and was invested 31.9% in cash flow senior secured loans, 29.3% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 23.3% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 15.5% in life science senior secured loans, in each case, measured at fair value, versus 101 portfolio companies invested 23.2% in cash flow senior secured loans, 28.4% in asset-based senior secured loans / SLR Credit, 14.1% in KBH, 16.0% in equipment senior secured financings / SLR Equipment, and 18.3% in life science senior secured loans, in each case, measured at fair value, at March 31, 2022.

At March 31, 2023, 77.7% or $1.61 billion of our income producing investment portfolio *

During the three months ended June 30, 2023, we invested approximately $212.9 million across 44 portfolio companies.

This compares to investing, exclusive of assets acquired through the Merger, approximately $94.7 million in 29 portfolio companies for the three months ended June 30, 2022.

Investments sold, prepaid or repaid during the three months ended June 30, 2023 totaled approximately $122.4 million versus approximately $78.5 million for the three months ended June 30, 2022.

At June 30, 2023, our portfolio consisted of 156 portfolio companies and was invested 33.7% in cash flow senior secured loans, 27.8% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 22.9% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 15.6% in life science senior secured loans, in each case, measured at fair value, versus 127 portfolio companies invested 30.0% in cash flow senior secured loans, 30.9% in asset-based senior secured loans / SLR Credit, 24.3% in equipment senior secured financings / SLR Equipment / KBH, and 14.8% in life science senior secured loans, in each case, measured at fair value, at June 30, 2022.

At June 30, 2023, 78.0% or $1.68 billion of our income producing investment portfolio *

is floating rate and 22.0% or $473.9 million is fixed rate, measured at fair value.

At March 31, 2022, 79.4% or $1.15 billion of our income producing investment portfolio *

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

is floating rate and 22.9% or $453.7 million is fixed rate, measured at fair value.

As of March 31, 2023 and 2022, we had two and two issuers, respectively, on non-accrual

As of June 30, 2023 and 2022, we had three and two 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 March 31, 2023, total commitments to the revolving credit facility are $300 million.

As of March 31, 2023, SLR Credit had 28 funded commitments to 24 different issuers with total funded loans of approximately $423.2 million on total assets of $435.3 million.

As of June 30, 2023, total commitments to the revolving credit facility are $300 million.

As of June 30, 2023, SLR Credit had 29 funded commitments to 25 different issuers with total funded loans of approximately $425.0 million on total assets of $443.0 million.

As of December 31, 2022, SLR Credit had 29 funded commitments to 25 different issuers with total funded loans of approximately $439.5 million on total assets of $460.7 million.

As of March 31, 2023 and December 31, 2022, the largest loan outstanding totaled $37.2 million and $33.4 million, respectively.

As of June 30, 2023 and December 31, 2022, the largest loan outstanding totaled $30.0 million and $33.4 million, respectively.

For the same periods, the average exposure per issuer was $17.0 million and $17.6 million, respectively.

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

to the Company, had approximately $207.8 million and $224.3 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Credit had net income (loss) of ($9.7) million and $2.8 million, respectively, on gross income of $14.6 million and $6.7 million, respectively.

to the Company, had approximately $216.9 million and $224.3 million of borrowings outstanding at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, SLR Credit had net income of $6.8 million and $1.9 million, respectively, on gross income of $14.6 million and $6.9 million, respectively.

For the six months ended June 30, 2023 and 2022, SLR Credit had net income (loss) of ($2.9) million and $4.7 million, respectively, on gross income of $28.5 million and $13.6 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 March 31, 2023, SLR Equipment had 129 funded equipment-backed leases and loans to 53 different customers with a total net investment in leases and loans of approximately $188.6 million on total assets of $236.6 million.

In June 2023, the facility was amended to extend the maturity date to January 31, 2024, with updated commitments totaling $152.1 million, effective August 1, 2023.

As of June 30, 2023, SLR Equipment had 129 funded equipment-backed leases and loans to 54 different customers with a total net investment in leases and loans of approximately $197.7 million on total assets of $246.5 million.

As of December 31, 2022, SLR Equipment had 131 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $190.8 million on total assets of $241.8 million.

As of March 31, 2023 and December 31, 2022, the largest position outstanding totaled $19.3 million and $19.3 million, respectively.

As of June 30, 2023 and December 31, 2022, the largest position outstanding totaled $18.2 million and $19.3 million, respectively.

For the same periods, the average exposure per customer was $3.7 million and $3.2 million, respectively.

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

to the Company, had approximately $113.1 million and $115.0 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Equipment had net income of $1.0 million and $0.6 million, respectively, on gross income of $6.3 million and $5.2 million, respectively.

to the Company, had approximately $124.7 million and $115.0 million of borrowings outstanding at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, SLR Equipment had net loss of $2.1 million and $1.8 million, respectively, on gross income of $4.1 million and $4.0 million, respectively.

For the six months ended June 30, 2023 and 2022, SLR Equipment had net loss of $1.0 million and $1.2 million, respectively, on gross income of $10.4 million and $9.2 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 March 31, 2023 and December 31, 2022, KBHT had total assets of $778.5 million and $777.2 million, respectively.

As of June 30, 2023 and December 31, 2022, KBHT had total assets of $797.9 million and $777.2 million, respectively.

For the same periods, debt recourse to KBHT totaled $246.3 million and $222.1 million, respectively, and non-recourse

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None of the debt is recourse to the Company.

For the three months ended March 31, 2023 and 2022, KBHT had net income of $2.6 million and $3.4 million, respectively, on gross income of $68.0 million and $66.4 million, respectively.

For the three months ended June 30, 2023 and 2022, KBHT had net income of $3.3 million and $3.7 million, respectively, on gross income of $75.5 million and $77.3 million, respectively.

For the six months ended June 30, 2023 and 2022, KBHT had net income of $5.9 million and $7.1 million, respectively, on gross income of $143.5 million and $143.7 million, respectively.

Due to timing and non-cash

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in the transaction and continues to lead SLR Healthcare.

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.

As of June 30, 2023, 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 Mergers 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 March 31, 2023, the portfolio totaled approximately $258.6 million of commitments with a total net investment in loans of $105.7 million on total assets of $113.8 million.

As of June 30, 2023, the portfolio totaled approximately $261.6 million of commitments with a total net investment in loans of $99.6 million on total assets of $106.8 million.

As of December 31, 2022, the portfolio totaled approximately $242.1 million of commitments with a total net investment in loans of $92.4 million on total assets of $108.7 million.

At March 31, 2023, the

portfolio consisted of 41 issuers with an average balance of approximately $2.6 million versus 41 issuers with an average balance of approximately $2.3 million at December 31, 2022.

At June 30, 2023, the portfolio consisted of 40 issuers with an average balance of approximately $2.5 million versus 41 issuers with an average balance of approximately $2.3 million at December 31, 2022.

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 $83.5 million and $77.0 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Healthcare had net income of $1.1 million and $0.9 million, respectively, on gross income of $3.8 million and $2.4 million, respectively.

to us, had approximately $74.9 million and $77.0 million of borrowings outstanding at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, SLR Healthcare had net income of $1.3 million and $0.8 million, respectively, on gross income of $4.4 million and $2.5 million, respectively.

For the six months ended June 30, 2023 and 2022, SLR Healthcare had net income of $2.4 million and $1.7 million, respectively, on gross income of $8.3 million and $4.9 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 March 31, 2023, the portfolio totaled approximately $597.0 million of commitments, of which $242.4 million were funded, on total assets of $287.3 million.

As of June 30, 2023, the portfolio totaled approximately $620.2 million of commitments, of which $255.2 million were funded, on total assets of $300.6 million.

As of December 31, 2022, the portfolio totaled approximately $603.4 million of commitments, of which $286.0 million were funded, on total assets of $332.2 million.

At March 31, 2023, the portfolio consisted of 100 issuers with an average balance of approximately $2.4 million versus 108 issuers with an average balance of approximately $2.6 million at December 31, 2022.

At June 30, 2023, the portfolio consisted of 101 issuers with an average balance of approximately $2.5 million versus 108 issuers with an average balance of approximately $2.6 million at December 31, 2022.

NMC has a senior credit facility with a bank lending group for $285.3 million, which expires on November 13, 2025.

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NMC’s credit facility, which is non-recourse

to us, had approximately $183.5 million and $214.4 million of borrowings outstanding at March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023 and 2022, SLR Business Credit had net income of $2.0 million and $1.9 million, respectively, on gross income of $9.3 million and $6.1 million, respectively.

to us, had approximately $198.6 million and $214.4 million of borrowings outstanding at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, SLR Business Credit had net income of $1.4 million and $1.9 million, respectively, on gross income of $8.8 million and $6.6 million, respectively.

For the six months ended June 30, 2023 and 2022, SLR Business Credit had net income of $3.4 million and $3.7 million, respectively, on gross income of $11.1 million and $12.8 million, respectively.

Due to timing and non-cash

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Stock Repurchase Program

On May 3, 2022, our Board authorized a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock.

On May 9, 2023, our Board authorized an extension of a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock.

of the 1934 Act, including certain price, market volume and timing constraints.

of the Exchange Act, including certain price, market volume and timing constraints.

In addition, any repurchases will be conducted in accordance with the 1940 Act.

Unless amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 1, 2023 or until $50 million of our outstanding shares of common stock have been repurchased.

The timing and number of shares to be repurchased will depend on a number of factors, including market conditions.

The timing and number of additional shares to be repurchased will depend on a number of factors, including market conditions.

There are no assurances that we will engage in any repurchases beyond what is reported herein.

For the three months ended March 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions.

The total dollar amount of shares repurchased for the three months ended March 31, 2023 was $0.01 million.

For the six months ended June 30, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions.

The total dollar amount of shares repurchased for the six months ended June 30, 2023 was $0.01 million.

During the fiscal year ended December 31, 2022, the Company repurchased 217,271 shares at an average price of approximately $13.98 per share, inclusive of commissions.

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

At March 31, 2023, there were $27.9 million of borrowings outstanding on the SSLP Facility.

As of March 31, 2023 the Company and the Investor had contributed combined equity capital in the amount of $19.0 million.

As of March 31, 2023, the Company and the Investor’s remaining commitments to SSLP totaled $40.5 million and $40.5 million, respectively.

At June 30, 2023, there were $38.4 million of borrowings outstanding on the SSLP Facility.

As of June 30, 2023 the Company and the Investor had contributed combined equity capital in the amount of $41.5 million.

As of June 30, 2023, the Company and the Investor’s remaining commitments to SSLP totaled $29.25 million and $29.25 million, respectively.

The Company, along with the Investor, controls the funding of SSLP, and SSLP may not call the unfunded commitments of the Company or the Investor without approval of both the Company and the Investor.

As of March 31, 2023 and December 31, 2022, SSLP had total assets of $46.0 million and $19.1 million, respectively.

As of June 30, 2023 and December 31, 2022, SSLP had total assets of $79.4 million and $19.1 million, respectively.

For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 20 and 7 different borrowers, respectively.

For the three months ended March 31, 2023, SSLP invested $29.8 million in 12 portfolio companies.

Investments prepaid totaled $3.2 million for the three months ended March 31, 2023.

For the three months ended June 30, 2023, SSLP invested $32.6 million in 9 portfolio companies.

Investments prepaid totaled $0.2 million for the three months ended June 30, 2023.

For the period December 1, 2022 (commencement of operations) through December 31, 2022, SSLP invested $18.1 million in 7 portfolio companies.

Investments prepaid totaled $0.1 million for the period December 1, 2022 (commencement of operations) through December 31, 2022.

SSLP Portfolio as of March 31, 2023 (dollar amounts in thousands)

SSLP Portfolio as of June 30, 2023 (dollar amounts in thousands)

Aegis Toxicology Sciences Corporation (4)

Health Care Providers &

Health Care Providers & Services

Atria Wealth Solutions, Inc.

Diversified Financial

Diversified Financial Services

BayMark Health Services, Inc.

Health Care Providers &

Health Care Providers & Services

ENS Holdings III Corp.

& ES Opco USA LLC (4)

Trading Companies &

Trading Companies & Distributors

Fertility (ITC) Investment Holdco, LLC (4)

Health Care Providers & Services

Foundation Consumer Brands, LLC (4)

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Kid Distro Holdings, LLC (4)

ONS MSO, LLC (4)

Health Care Providers & Services

PhyNet Dermatology LLC (4)

Health Care Providers &

Health Care Providers & Services

Pinnacle Treatment Centers, Inc.

Health Care Providers &

Health Care Providers & Services

Plastics Management, LLC (4)

Health Care Providers &

Life Sciences Tools &

Health Care Providers & Services

Life Sciences Tools & Services

RSC Acquisition, Inc.

RxSense Holdings LLC (4)

Diversified Consumer

Diversified Consumer Services

SunMed Group Holdings, LLC (4)

Equipment & Supplies

Health Care Equipment & Supplies

Tilley Distribution, Inc.

Trading Companies &

Trading Companies & Distributors

Urology Management Holdings, Inc.

Health Care Providers &

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

These instruments are typically subject to a LIBOR or SOFR floor.

Floating rate debt investments typically bear interest at a rate determined by reference to either the LIBOR (“L”) or SOFR (“S”), and which typically reset monthly, quarterly or semi-annually.

For each debt investment we have provided the current interest rate in effect as of March 31, 2023.

Health Care Providers & Services

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

These instruments are typically subject to a SOFR floor.

Floating rate debt investments typically bear interest at a rate determined by reference to the SOFR (“S”), and which typically reset monthly, quarterly or semi-annually.

For each debt investment we have provided the current interest rate in effect as of June 30, 2023.

Represents the fair value in accordance with ASC Topic 820.

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The Company also holds this security on its Consolidated Statements of Assets and Liabilities.

SSLP Portfolio as of December 31, 2022 (audited) (dollar amounts in thousands)

SSLP Portfolio as of December 31, 2022 (dollar amounts in thousands)

Atria Wealth Solutions, Inc.

Diversified Financial Services

BayMark Health Services, Inc.

Health Care Providers & Services

ENS Holdings III Corp.

& ES Opco USA LLC (4)

Trading Companies & Distributors

Foundation Consumer Brands, LLC (4)

Personal Products

High Street Buyer, Inc.

Ivy Fertility Services, LLC (4)

Health Care Providers & Services

Kid Distro Holdings, LLC (4)

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The Company also holds this security on its Consolidated Statements of Assets and Liabilities.

Below is certain summarized financial information for SSLP as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and for the period December 1, 2022 (commencement of operations) through December 31, 2022:

2022 (audited)

Below is certain summarized financial information for SSLP as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and for the period December 1, 2022 (commencement of operations) through December 31, 2022:

June 30, 2023

Selected Balance Sheet Information for SSLP (in thousands):

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For the three

months ended June

June 30, 2023

For the period

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of operations) to

2022 (audited)

Selected Income Statement Information for SSLP (in thousands):

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The new rule also defines “readily available market quotations” for purposes of the definition of “value” under the 1940 Act, and the SEC noted that this definition will apply in all contexts under the 1940 Act.

The Company will comply with Rule 2a-5’s

The Company complies with Rule 2a-5’s

valuation requirements.

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If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the reliability of a market quotation.

Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s Consolidated Financial Statements Determination of fair value involves subjective judgments and estimates.

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

Determination of fair value involves subjective judgments and estimates.

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

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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 months ended March 31, 2023 and 2022, capitalized PIK income totaled $3.2 million and $0.7 million, respectively.

For the three and six months ended June 30, 2023, capitalized PIK income totaled $3.0 million and $6.2 million, respectively.

For the three and six months ended June 30, 2022, capitalized PIK income totaled $0.7 million and $1.0 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 months ended March 31, 2023 and March 31, 2022:

Results comparisons are for the three and six months ended June 30, 2023 and June 30, 2022:

Investment Income

For the three months ended March 31, 2023 and 2022, gross investment income totaled $53.5 million and $33.0 million, respectively.

The increase in gross investment income for the year over year three month periods was primarily due to the Mergers as well as an increase in index rates.

Net expenses totaled $31.4 million and $19.5 million, respectively, for the three months ended March 31, 2023 and 2022, of which $13.2 million and $7.2 million, respectively, were base management fees and performance-based incentive fees and $15.3 million and $8.3 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $3.0 million and $4.0 million, respectively, for the three months ended March 31, 2023 and 2022.

For the three and six months ended June 30, 2023, gross investment income totaled $56.3 million and $109.9 million, respectively.

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

The increase in gross investment income for the year over year three month periods was primarily due to net growth of the income producing portfolio as well as an increase in index rates.

Net expenses totaled $33.7 million and $65.1 million, respectively, for the three and six months ended June 30, 2023, of which $13.5 million and $26.7 million, respectively, were base management fees and performance-based incentive fees and $17.8 million and $33.1 million, respectively, were interest and other credit facility expenses.

Administrative services and other general and administrative expenses totaled $2.4 million and $5.4 million, respectively, for the three and six months ended June 30, 2023.

Over the same periods, $0.1 million and $0.2 million of performance-based incentive fees were waived.

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 performance-based incentive fees and $10.4 million and $18.7 million, respectively, were interest and other credit facility expenses.

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.

Over the same periods, $1.4 million and $1.4 million of performance-based incentive fees were waived.

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 three months ended March 31, 2023 versus the three months ended March 31, 2022 was primarily due to higher management fees, incentive fees and interest expense on a larger portfolio resulting from the Mergers.

The increase in expenses for the three and six months ended June 30, 2023 versus the three and six months ended June 30, 2022 was primarily due to higher management fees, incentive fees and interest expense on a larger portfolio resulting from the Mergers.

Additionally, there was an increase in index rates on borrowings.

Net Investment Income

The Company’s net investment income totaled $22.1 million and $13.5 million, or $0.41 and $0.32, per average share, respectively, for the three months ended March 31, 2023 and 2022.

Net Realized Gain

The Company had investment sales and prepayments totaling approximately $144 million and $101 million, respectively, for the three months ended March 31, 2023 and 2022.

The Company’s net investment income totaled $22.7 million and $44.8 million, or $0.42 and $0.82, per average share, respectively, for the three and six months ended June 30, 2023.

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.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $122 million and $267 million, respectively, for the three and six months ended June 30, 2023.

Net realized gains over the same periods were $0.5 million and $1.2 million, respectively.

Net realized gain for the three months ended March 31, 2023 was primarily due to sales of selected assets.

Net realized gain for the three months ended March 31, 2022 was de minimis.

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.

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

Net realized gain for the three and six months ended June 30, 2023 was primarily due to sales of selected assets.

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

Net Change in Unrealized Loss

For the three months ended March 31, 2023 and 2022, net change in unrealized loss on the Company’s assets totaled $16.0 million and $12.0 million, respectively.

Net unrealized loss for the three months ended March 31, 2023 is primarily due to depreciation in the value of our investments in AmeriMark Intermediate Holdings, LLC and SLR Credit Solutions, among others, partially offset by appreciation in the value of our investments in Spectrum Pharmaceuticals, Inc., SLR Business Credit and Pinnacle Treatment Centers, Inc., among others.

Net unrealized loss for the three months ended March 31, 2022 is primarily due to depreciation in the value of our investments in PhyMed Management LLC and Rug Doctor LLC, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC, SOC Telemed, Inc.

and Cerapedics, Inc., among others.

Net Increase in Net Assets From Operations

For the three months ended March 31, 2023 and 2022, the Company had a net increase in net assets resulting from operations of $6.8 million and $1.5 million, respectively.

For the three and six months ended June 30, 2023, net change in unrealized loss on the Company’s assets totaled $4.2 million and $20.2 million, respectively.

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.

Net unrealized loss for the three months ended June 30, 2023 is primarily due to depreciation in the value of our investments in SLR Credit Solutions, among others, partially offset by appreciation in the value of our investments in World Insurance Associates, LLC, among others.

Net unrealized loss for the six months ended June 30, 2023 is primarily due to depreciation in the value of our investments in SLR Credit Solutions and AmeriMark Intermediate Holdings, LLC and, among others, partially offset by appreciation in the value of our investments in World Insurance Associates, LLC and SLR Business Credit, among others.

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 Mergers due to the accounting treatment of the purchase discount.

Net Increase (Decrease) in Net Assets From Operations

For the three and six months ended June 30, 2023, the Company had a net increase in net assets resulting from operations of $19.0 million and $25.8 million, respectively.

For the same periods, earnings per average share were $0.35 and $0.47, respectively.

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.

LIQUIDITY AND CAPITAL RESOURCES

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equity and/or debt offerings.

As of March 31, 2023, we had a total of $297.8 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

As of June 30, 2023, we had a total of $200.8 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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however, the commitment can also be expanded up to $600 million.

The stated interest rate on the SPV Credit Facility is LIBOR plus 2.00%-2.50%

with no LIBOR floor requirement and the current final maturity date is June 1, 2026.

The stated interest rate on the SPV Credit Facility is SOFR plus 2.00%-2.50%

with no SOFR floor requirement and the current final maturity date is June 1, 2026.

The SPV Credit Facility is secured by all of the assets held by SUNS SPV.

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

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

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

On September 14, 2021, the Company closed a private offering of $50 million of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027.

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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 $430 million in cash equivalents as of March 31, 2023.

We held approximately $335 million in cash equivalents as of June 30, 2023.

Unsecured Notes

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

At March 31, 2023, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $164.2 million.

At June 30, 2023, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $167.2 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, require the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio.

At March 31, 2023, outstanding USD equivalent borrowings under the Credit Facility totaled $488.0 million, composed of $388.0 million of revolving credit and $100.0 million of term loans.

At June 30, 2023, outstanding USD equivalent borrowings under the Credit Facility totaled $582.0 million, composed of $482.0 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 March 31, 2023, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

At June 30, 2023, 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 March 31, 2023:

A summary of our significant contractual payment obligations is as follows as of June 30, 2023:

Payments Due by Period (in millions)

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Unsecured senior notes

As of March 31, 2023, we had a total of $297.8 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

As of June 30, 2023, we had a total of $200.8 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 March 31, 2023 and each year ended December 31 for the past ten years, unless otherwise noted.

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended June 30, 2023 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 2023 (through March 31, 2023)