SLR Investment Corp. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to: • our future operating results, including our ability to achieve objectives; • our business prospects and the prospects of our portfolio companies; • the impact of investments that we expect to make; • our contractual arrangements and relationships with third parties; • the dependence of our future success on the general economy and its impact on the industries in which we invest; • the impact of any protracted decline in the liquidity of credit markets on our business; • the ability of our portfolio companies to achieve their objectives; • the valuation of our investments in portfolio companies, particularly those having no liquid trading market; • market conditions and our ability to access alternative debt markets and additional debt and equity capital; • our expected financings and investments; • the adequacy of our cash resources and working capital; • the timing of cash flows, if any, from the operations of our portfolio companies; • the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments; • the ability of the Investment Adviser to attract and retain highly talented professionals; • the ability of the Investment Adviser to adequately allocate investment opportunities among the Company and its other advisory clients; • any conflicts of interest posed by the structure of the management fee and incentive fee to be paid to the Investment Adviser; • changes in political, economic or industry conditions, relations between the United States, Russia, Ukraine and other nations, the interest rate environment or conditions affecting the financial and capital markets; • changes in the general economy, slowing economy, rising inflation, risk of recession and risks in respect of a failure to increase the U.S. debt ceiling; and • our ability to anticipate and identify evolving market expectations with respect to environmental, social and governance matters, including the environmental impacts of our portfolio companies’ supply chain and operations. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: • an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies; • a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities; • interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; • currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; • the risks, uncertainties and other factors we identify in Item 1A. — Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022, elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC. We generally use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 37 Table of Contents Overview Solar Capital LLC, a Maryland limited liability company, was formed in February 2007 and commenced operations on March 13, 2007 with initial capital of $1.2 billion of which 47.04% was funded by affiliated parties. SLR Investment Corp. (the “Company”, “SLRC”, “we” or “our”), a Maryland corporation formed in November 2007, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S federal income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). On February 9, 2010, we priced our initial public offering, selling 5.68 million shares of our common stock. Concurrent with our initial public offering, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, and Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under the Securities Act. We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives. Our investment activities are managed by SLR Capital Partners, LLC (the “Investment Adviser”) and supervised by the board of directors (the “Board)”, a majority of whom are non-interested, as such term is defined in the 1940 Act. SLR Capital Management, LLC (the “Administrator”) provides the administrative services necessary for us to operate. In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States. Recent Developments 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. Investments Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” The definition of “eligible portfolio company” includes certain public companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million. Revenue 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”), the Secured Overnight Financing Rate (“SOFR”), commercial paper rate, or the prime rate. Interest on our debt investments is generally payable monthly or quarterly but may be bi-monthly or semi-annually. In addition, our investments may provide payment-in-kind (“PIK”) income. Such amounts of accrued PIK income are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc. 38 Table of Contents Expenses 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): • the cost of our organization and public offerings; • the cost of calculating our net asset value, including the cost of any third-party valuation services; • the cost of effecting sales and repurchases of our shares and other securities; • interest payable on debt, if any, to finance our investments; • fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and advisory fees; • transfer agent and custodial fees; • fees and expenses associated with marketing efforts; • federal and state registration fees, any stock exchange listing fees; • federal, state and local taxes; • independent directors’ fees and expenses; • brokerage commissions; • fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums; • direct costs and expenses of administration, including printing, mailing, long distance telephone and staff; • fees and expenses associated with independent audits and outside legal costs; • costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and • all other expenses incurred by either SLR Capital Management or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs. We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors. 39 Table of Contents Portfolio and Investment Activity 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 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 June 30, 2023 and 2022, we had three and two issuers, respectively, on non-accrual status. * 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. SLR Credit Solutions On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275 million in cash. Crystal Financial owned approximately 98% of the outstanding ownership interest in SLR Credit Solutions (“SLR Credit”), f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $400 million at November 30, 2012 and a $275 million committed revolving credit facility. On July 28, 2016, the Company purchased Crystal Management LP’s approximately 2% equity interest in SLR Credit for approximately $5.7 million. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved. As of 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 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 $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 items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Credit will be able to maintain consistent dividend payments to us. SLR 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 are doing business as SLR Equipment Finance (“SLR Equipment”). SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S. based companies. We invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. Concurrent with the transaction, SLR Equipment refinanced its existing senior secured credit facility into a $150.0 million non-recourse facility with an accordion feature to expand up to $250.0 million. In September 2019, SLR Equipment amended the facility, increasing commitments to $214.0 million with an accordion feature to expand up to $314.0, million and extended the maturity date of the facility to July 31, 2023. 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. 40 Table of Contents 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 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 $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 items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Equipment’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Equipment will be able to maintain consistent dividend payments to us. Kingsbridge Holdings, LLC On November 3, 2020, the Company acquired 87.5% of the equity securities of Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a Delaware corporation. KBH is a residual focused independent mid-ticket lessor of equipment primarily to U.S. investment grade companies. The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and $80.0 million in KBH’s debt. The existing management team of KBH committed to continuing to lead KBH after the transaction. 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, 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 debt totaled $356.9 million and $353.1 million, respectively. None of the debt is recourse to the Company. 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 items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in KBHT’s 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. SLR Healthcare ABL SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”) on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and mid-sized companies operating in the healthcare industry. SUNS initial investment in SLR Healthcare ABL was $32.8 million. The management team of SLR Healthcare co-invested in the transaction and continues to lead SLR Healthcare. 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. Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year, non-recourse, $100 million credit facility with non-affiliates, which was expandable to $150 million under its accordion feature. Effective March 31, 2014, the credit facility was expanded to $105 million and again on June 27, 2014 to $110 million. On May 27, 2016, SLR Healthcare entered into a new $125 million credit facility which replaced the previously existing facility. The new facility has similar terms as compared to the previous facility and includes an accordion feature increase to $200 million and had a maturity date of May 27, 2020. On June 28, 2019, this $125 million facility was amended, extending the maturity date to June 28, 2023. On March 31, 2023, the facility was again amended, adjusting capacity to $100 million and extending the maturity date to March 31, 2026. SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. 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 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 loans. SLR Healthcare’s credit facility, which is non-recourse 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 items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Healthcare’s funded commitments, the timing of originations, and the repayment of financings, the Company cannot guarantee that SLR Healthcare will be able to maintain consistent dividend payments to us. 41 Table of Contents SLR Business Credit SUNS acquired 100% of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-backed financings to U.S. based small-to-medium-sized businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51.0 million to effect the transaction. Subsequently, SUNS contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and medium-sized businesses. As part of this transaction, SUNS 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15.5 million transaction was financed with borrowings on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66.7 million was financed with equity from SUNS of $19.0 million and borrowings on NMC’s credit facility of $47.7 million. SLRC acquired SLR Business Credit in connection with the Mergers on April 1, 2022. SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. 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 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. Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is non-recourse 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 items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us. Stock Repurchase Program 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. 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 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. The total dollar amount of shares repurchased for the fiscal year ended December 31, 2022 was $3.0 million. SLR Senior Lending Program LLC On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior Lending Program LLC (“SSLP”). SSLP 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. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor. 42 Table of Contents On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP as servicer and SLR Senior Lending Program SPV LLC (“SSLP SPV”), a newly formed wholly owned subsidiary of SSLP, as borrower entered into a $100 million senior secured revolving credit facility (the “SSLP Facility”) with Goldman Sachs Bank USA acting as administrative agent. The SSLP Facility is scheduled to mature on December 12, 2027. The SSLP Facility generally bears interest at a rate of SOFR plus 3.25%. SSLP and SSLP SPV, 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 SSLP Facility also includes usual and customary events of default for credit facilities of this nature. 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 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 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 June 30, 2023 (dollar amounts in thousands) Description Industry Spread Above Index (1) Floor Interest Rate (2) Maturity Date Par Amount Cost Fair Value (3) Aegis Toxicology Sciences Corporation (4) Health Care Providers & Services S+550 1.00 % 10.84 % 5/9/25 $ 2,974 $ 2,974 $ 2,974 Atria Wealth Solutions, Inc. (4) Diversified Financial Services S+650 1.00 % 12.00 % 2/29/24 2,481 2,481 2,481 BayMark Health Services, Inc. (4) Health Care Providers & Services S+500 1.00 % 10.50 % 6/11/27 4,054 4,054 4,054 ENS Holdings III Corp. & ES Opco USA LLC (4) Trading Companies & Distributors S+475 1.00 % 10.09 % 12/31/25 1,091 1,091 1,091 Fertility (ITC) Investment Holdco, LLC (4) Health Care Providers & Services S+650 1.00 % 11.63 % 1/3/29 5,985 5,809 5,985 Foundation Consumer Brands, LLC (4) Personal Products S+625 1.00 % 11.47 % 2/12/27 6,863 6,863 6,863 Higginbotham Insurance Agency, Inc. (4) Insurance S+525 0.75 % 10.45 % 11/25/26 1,293 1,293 1,293 High Street Buyer, Inc. (4) Insurance S+600 0.75 % 11.39 % 4/16/28 2,481 2,481 2,481 iCIMS, Inc. (4) Software S+725 0.75 % 12.38 % 8/18/28 3,029 2,991 3,029 Kid Distro Holdings, LLC (4) Software S+575 1.00 % 11.14 % 10/1/27 5,970 5,970 5,970 ONS MSO, LLC (4) Health Care Providers & Services S+625 1.00 % 11.32 % 7/8/25 5,951 5,774 5,773 PhyNet Dermatology LLC (4) Health Care Providers & Services S+625 1.00 % 11.45 % 8/16/24 2,481 2,481 2,481 Pinnacle Treatment Centers, Inc. (4) Health Care Providers & Services S+675 1.00 % 12.10 % 1/2/26 2,487 2,487 2,487 Plastics Management, LLC (4) Health Care Providers & Services S+500 1.00 % 10.44 % 8/18/27 5,666 5,481 5,666 RQM+ Corp. (4) Life Sciences Tools & Services S+575 1.00 % 11.51 % 8/12/26 5,985 5,985 5,985 RSC Acquisition, Inc. (4) Insurance S+550 0.75 % 10.64 % 11/1/26 5,045 5,045 5,045 RxSense Holdings LLC (4) Diversified Consumer Services S+500 1.00 % 10.15 % 3/13/26 2,985 2,985 2,985 SunMed Group Holdings, LLC (4) Health Care Equipment & Supplies S+575 0.75 % 11.09 % 6/16/28 2,487 2,487 2,487 Tilley Distribution, Inc. (4) Trading Companies & Distributors S+550 1.00 % 11.39 % 12/31/26 5,978 5,978 5,978 Urology Management Holdings, Inc. (4) Health Care Providers & Services S+625 1.00 % 11.36 % 6/15/26 2,471 2,404 2,397 $ 77,114 $ 77,505 43 Table of Contents (1) 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. (2) 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. (3) Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein. (4) The Company also holds this security on its Consolidated Statements of Assets and Liabilities. SSLP Portfolio as of December 31, 2022 (dollar amounts in thousands) Description Industry Spread Above Index (1) Floor Interest Rate (2) Maturity Date Par Amount Cost Fair Value (3) Atria Wealth Solutions, Inc. (4) Diversified Financial Services S+600 1.00 % 10.84 % 2/29/24 $ 2,494 $ 2,494 $ 2,494 BayMark Health Services, Inc. (4) Health Care Providers & Services L+500 1.00 % 9.73 % 6/11/27 2,992 2,992 2,992 ENS Holdings III Corp. & ES Opco USA LLC (4) Trading Companies & Distributors L+475 1.00 % 9.43 % 12/31/25 1,097 1,097 1,097 Foundation Consumer Brands, LLC (4) Personal Products L+550 1.00 % 10.15 % 2/12/27 2,963 2,963 2,963 High Street Buyer, Inc. (4) Insurance L+600 0.75 % 10.73 % 4/16/28 2,494 2,494 2,494 Ivy Fertility Services, LLC (4) Health Care Providers & Services L+625 1.00 % 10.39 % 2/25/26 3,000 3,000 3,030 Kid Distro Holdings, LLC (4) Software L+575 1.00 % 10.48 % 10/1/27 2,992 2,992 2,992 $ 18,032 $ 18,062 (1) 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. (2) 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 December 31, 2022. (3) Represents the fair value in accordance with ASC Topic 820. The determination of such fair value is not included in the Board’s valuation process described elsewhere herein. (4) The Company also holds this security on its Consolidated Statements of Assets and Liabilities. 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 December 31, 2022 Selected Balance Sheet Information for SSLP (in thousands): Investments at fair value (cost $77,114 and $18,032, respectively) $ 77,505 $ 18,062 Cash and other assets 1,906 1,043 Total assets $ 79,411 $ 19,105 Debt outstanding $ 36,944 $ — Interest payable and other credit facility related expenses 345 165 Accrued expenses and other payables 131 89 Total liabilities $ 37,420 $ 254 Members’ equity $ 41,991 $ 18,851 Total liabilities and members’ equity $ 79,411 $ 19,105 44 Table of Contents For the three months ended June 30, 2023 For the six months ended June 30, 2023 For the period December 1, 2022 (commencement of operations) to December 31, 2022 Selected Income Statement Information for SSLP (in thousands): Interest income $ 1,605 $ 2,614 $ 152 Service fees* 38 57 $ 4 Interest and other credit facility expenses 1,447 2,252 166 Organizational costs — — 73 Other general and administrative expenses 19 57 88 Total expenses 1,504 2,366 331 Net investment income (loss) $ 101 $ 248 $ (179 ) Realized gain on investments — 30 — Net change in unrealized gain on investments 321 361 30 Net realized and unrealized gain on investments $ 321 $ 391 30 Net income (loss) $ 422 $ 639 $ (149 ) * Service fees are included within the Company’s Consolidated Statements of Operations as other income. Critical Accounting Policies The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies. Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely events or circumstances that would result in materially different amounts being reported. Valuation of Portfolio Investments In December 2020, the SEC adopted new Rule 2a-5 under the 1940 Act addressing fair valuation of fund investments. The new rule sets forth requirements for good faith determinations of fair value, as well as for the performance of fair value determinations, including related oversight and reporting obligations. 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 complies with Rule 2a-5’s valuation requirements. We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940 Act. The Board will (1) periodically assess and manage valuation risks; (2) establish and apply fair value methodologies; (3) test fair value methodologies; (4) oversee and evaluate third-party pricing services, as applicable; (5) oversee the reporting required by Rule 2a-5 under the 1940 Act; and (6) maintain recordkeeping requirements under Rule 2a-5. It is anticipated that in respect of many of the Company’s assets, readily available market quotations will not be obtainable and that such assets will be valued at fair value. A market quotation is readily available for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. 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. 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. 45 Table of Contents Revenue Recognition The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on investments may be recognized as income or applied to principal depending upon management’s judgment. Some of our investments may have contractual PIK income. PIK income computed at the contractual rate, as applicable, is accrued and reflected as a receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK income. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company again believes that PIK is expected to be realized. Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring fees are recorded as other income when earned. The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment deferral and increased credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans. PIK securities may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. PIK income has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK income also increases the loan-to-value ratio at a compounding rate. PIK securities create the risk that incentive fees will be paid to the Investment Adviser based on non-cash accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees. For the 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 We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties. The net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized. Gains or losses on investments are calculated by using the specific identification method. Income Taxes SLRC, a U.S. corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. In order to qualify for U.S. federal income taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. Depending on the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income. Recent Accounting Pronouncements None. 46 Table of Contents RESULTS OF OPERATIONS Results comparisons are for the three and six months ended June 30, 2023 and June 30, 2022: Investment Income 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. Expenses 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 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 $22.7 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. 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 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. 47 Table of Contents 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 The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility (as defined below), the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes, through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic follow-on equity and/or debt offerings. As of 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. The issuance of such securities will depend on future market conditions, funding needs and other factors and there can be no assurance that any such issuance will occur or be successful. The primary uses of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, or for other general corporate purposes. On April 1, 2022, we entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to our assumption of the Revolving Credit Facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, the commitment under the SPV Credit Facility is $225 million; however, the commitment can also be expanded up to $600 million. 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. Under the terms of the SPV Credit Facility and related transaction documents, we as successor to SUNS, and SUNS SPV, 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 SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. On April 1, 2022, we entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85 million in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase Agreement”), among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS. On January 6, 2022, the Company closed a private offering of $135 million of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers. On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment and a November 2022 upsizing, the Credit Facility is composed of $625 million of revolving credit and $100 million of term loans. Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate base rate plus 0.75%-1.00%. The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year. 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. 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 million of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024. Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers. On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers. 48 Table of Contents On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73.8 million. Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018. The 2023 Unsecured Notes were repaid in full at maturity on January 20, 2023. Cash Equivalents We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. The Company makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act. From time to time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies for our business. One strategy includes taking proactive steps by utilizing cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act. More specifically, from time to time we may purchase U.S. Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to quarter end. We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on the Credit Facility, as deemed appropriate. The amount of these transactions or such drawn cash 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 $335 million in cash equivalents as of June 30, 2023. Debt Unsecured Notes On April 1, 2022, we entered into the Note Assumption Agreement, effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85 million of the 2025 Unsecured Notes and other obligations of SUNS under the Note Purchase Agreement, among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS. On January 6, 2022, the Company closed a private offering of $135 million of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers. On 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. 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 million of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024. Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers. On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers. On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73.8 million. Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018. The 2023 Unsecured Notes were repaid in full at maturity on January 20, 2023. Revolving & Term Loan Facilities On April 1, 2022, we entered into the CF Assumption Agreement, effective as of the closing of the Mergers. The CF Assumption Agreement relates to our assumption of the SPV Credit Facility, by and among SUNS SPV, a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, the commitment under the SPV Credit Facility is $225 million; 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 SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, we as successor to SUNS, and SUNS SPV, 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 SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. 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. 1 to the Credit Facility. Following the amendment and a November 2022 upsizing, the Credit Facility is composed of $625 million of revolving credit and $100 million of term loans. Table of Contents Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of 1.75%-2.00% or the alternate base rate plus 0.75%-1.00%. The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year. The Credit Facility may be increased up to $800 million with additional new lenders or an increase in commitments from current lenders. The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that among other things, require the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio. 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 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 June 30, 2023: Payments Due by Period (in millions) Total Less than 1 Year 1-3 Years 3-5 Years More Than 5 Years Revolving credit facilities (1) $ 649.2 $ — $ — $ 649.2 $ — Unsecured senior notes 470.0 — 210.0 260.0 — Term loans 100.0 — — 100.0 — (1) 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. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss. We have also entered into two contracts under which we have future commitments: the Advisory Agreement, pursuant to which the Investment Adviser has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance. Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial officer and chief compliance officer and their respective staffs. Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days written notice to the other. See note 3 to our Consolidated Financial Statements. On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement. NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans and capital leases held by NEFPASS LLC. NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC. On October 7, 2022, the Company committed $50 million to SSLP and entered into a servicing agreement. SSLP engaged and retained the Company to provide certain administrative services relating to the facilities, supplies and necessary ongoing overhead support services for the operation of SSLP’s ongoing business affairs in exchange for a fee. 50 Table of Contents Senior Securities 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. Class and Year Total Amount Outstanding(1) Asset Coverage Per Unit(2) Involuntary Liquidating Preference Per Unit(3) Average Market Value Per Unit(4) Credit Facility Fiscal 2023 (through June 30, 2023) $ 482,000 $ 713 — N/A Fiscal 2022 293,000 513 — N/A Fiscal 2021 222,500 552 — N/A Fiscal 2020 126,000 421 — N/A Fiscal 2019 42,900 182 — N/A Fiscal 2018 96,400 593 — N/A Fiscal 2017 245,600 1,225 — N/A Fiscal 2016 115,200 990 — N/A Fiscal 2015 207,900 1,459 — N/A Fiscal 2014 — — — N/A Fiscal 2013 — — — N/A SPV Credit Facility Fiscal 2023 (through June 30, 2023) 167,200 247 — N/A Fiscal 2022 155,200 272 — N/A 2022 Unsecured Notes Fiscal 2022 — — — N/A Fiscal 2021 150,000 372 — N/A Fiscal 2020 150,000 501 — N/A Fiscal 2019 150,000 638 — N/A Fiscal 2018 150,000 923 — N/A Fiscal 2017 150,000 748 — N/A Fiscal 2016 50,000 430 — N/A 2022 Tranche C Notes Fiscal 2022 — — — N/A Fiscal 2021 21,000 52 — N/A Fiscal 2020 21,000 70 — N/A Fiscal 2019 21,000 89 — N/A Fiscal 2018 21,000 129 — N/A Fiscal 2017 21,000 105 — N/A 2023 Unsecured Notes Fiscal 2023 (through June 30, 2023) — — — N/A Fiscal 2022 75,000 131 — N/A Fiscal 2021 75,000 186 — N/A Fiscal 2020 75,000 250 — N/A Fiscal 2019 75,000 319 — N/A Fiscal 2018 75,000 461 — N/A Fiscal 2017 75,000 374 — N/A 2024 Unsecured Notes Fiscal 2023 (through June 30, 2023) 125,000 185 — N/A Fiscal 2022 125,000 219 — N/A Fiscal 2021 125,000 309 — N/A Fiscal 2020 125,000 417 — N/A Fiscal 2019 125,000 531 — N/A 2025 Unsecured Notes Fiscal 2023 (through June 30, 2023) 85,000 126 — N/A Fiscal 2022 85,000 149 — N/A 2026 Unsecured Notes 51 Table of Contents Class and Year Total Amount Outstanding(1) Asset Coverage Per Unit(2) Involuntary Liquidating Preference Per Unit(3) Average Market Value Per Unit(4) Fiscal 2023 (through June 30, 2023) 75,000 111 — N/A Fiscal 2022 75,000 131 — N/A Fiscal 2021 75,000 186 — N/A Fiscal 2020 75,000 250 — N/A Fiscal 2019 75,000 319 — N/A 2027 Unsecured Notes Fiscal 2023 (through June 30, 2023) 50,000 74 — N/A Fiscal 2022 50,000 88 — N/A Fiscal 2021 50,000 124 — N/A 2027 Series F Unsecured Notes Fiscal 2023 (through June 30, 2023) 135,000 200 — N/A Fiscal 2022 135,000 237 — N/A 2042 Unsecured Notes Fiscal 2017 — — — N/A Fiscal 2016 100,000 859 — $ 1,002 Fiscal 2015 100,000 702 — 982 Fiscal 2014 100,000 2,294 — 943 Fiscal 2013 100,000 2,411 — 934 Senior Secured Notes Fiscal 2017 — — — N/A Fiscal 2016 75,000 645 — N/A Fiscal 2015 75,000 527 — N/A Fiscal 2014 75,000 1,721 — N/A Fiscal 2013 75,000 1,808 — N/A Term Loans Fiscal 2023 (through June 30, 2023) 100,000 148 — N/A Fiscal 2022 100,000 175 — N/A Fiscal 2021 100,000 248 — N/A Fiscal 2020 75,000 250 — N/A Fiscal 2019 75,000 319 — N/A Fiscal 2018 50,000 308 — N/A Fiscal 2017 50,000 250 — N/A Fiscal 2016 50,000 430 — N/A Fiscal 2015 50,000 351 — N/A Fiscal 2014 50,000 1,147 — N/A Fiscal 2013 50,000 1,206 — N/A NEFPASS Facility Fiscal 2021 — — — N/A Fiscal 2020 30,000 100 — N/A Fiscal 2019 30,000 128 — N/A Fiscal 2018 30,000 185 — N/A SSLP Facility Fiscal 2019 — — — N/A Fiscal 2018 53,785 331 — N/A Total Senior Securities Fiscal 2023 (through June 30, 2023) $ 1,219,200 $ 1,804 — N/A Fiscal 2022 1,093,200 1,915 — N/A Fiscal 2021 818,500 2,029 — N/A Fiscal 2020 677,000 2,259 — N/A Fiscal 2019 593,900 2,525 — N/A Fiscal 2018 476,185 2,930 — N/A Fiscal 2017 541,600 2,702 — N/A Fiscal 2016 390,200 3,354 — N/A Fiscal 2015 432,900 3,039 — N/A Fiscal 2014 225,000 5,162 — N/A Fiscal 2013 225,000 5,425 — N/A (1) Total amount of each class of senior securities outstanding (in thousands) at the end of the period presented. (2) The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by all senior securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the Asset Coverage Per Unit. In order to determine the specific Asset Coverage Per Unit for each class of debt, the total Asset Coverage Per Unit is allocated based on the amount outstanding in each class of debt at the end of the period. As of June 30, 2023, asset coverage was 180.4%. (3) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. (4) Not applicable except for the 2042 Unsecured Notes which were publicly traded. The Average Market Value Per Unit is calculated by taking the daily average closing price during the period and dividing it by twenty-five dollars per share and multiplying the result by one thousand to determine a unit price per thousand consistent with Asset Coverage Per Unit. The average market value for the fiscal 2016, 2015, 2014 and 2013 periods was $100,175, $98,196, $94,301 and $93,392, respectively. 52 Table of Contents Off-Balance Sheet Arrangements From time to time and in the normal course of business, the Company may make unfunded capital commitments to current or prospective portfolio companies. Typically, the Company may agree to provide delayed-draw term loans or, to a lesser extent, revolving loan or equity commitments. These unfunded capital commitments always take into account the Company’s liquidity and cash available for investment, portfolio and issuer diversification, and other considerations. Accordingly, the Company had the following unfunded capital commitments at June 30, 2023 and December 31, 2022, respectively: June 30, 2023 December 31, 2022 (in millions) SLR Credit Solutions* $ 44.3 $ 44.3 Outset Medical, Inc 35.1 35.1 Apeel Technology, Inc 32.8 32.8 CVAUSA Management, LLC 22.9 — Human Interest, Inc 20.1 20.1 Glooko, Inc 17.9 17.9 BDG Media, Inc 11.5 3.5 ONS MSO, LLC 11.0 — iCIMS, Inc 10.8 11.4 Arcutis Biotherapeutics, Inc 8.4 8.4 Atria Wealth Solutions, Inc 8.2 8.2 Copper River Seafoods, Inc. 8.2 3.6 Ardelyx, Inc 7.8 7.8 Cerapedics, Inc 6.7 6.7 United Digestive MSO Parent, LLC 5.3 — Luxury Asset Capital, LLC 4.5 7.5 Kaseya, Inc 3.8 3.9 SPAR Marketing Force, Inc. 3.7 1.3 Urology Management Holdings, Inc 3.6 — One Touch Direct, LLC 3.6 3.1 Spectrum Pharmaceuticals, Inc. 3.5 8.8 SLR Equipment Finance 3.5 1.0 Meditrina, Inc 3.4 3.4 Vertos Medical, Inc 3.3 — Foundation Consumer Brands, LLC 3.0 3.0 Vessco Midco Holdings, LLC 2.7 3.9 Kid Distro Holdings, LLC 2.6 2.7 RSC Acquisition, Inc 2.5 7.5 Erie Construction Mid-west, LLC 2.4 1.3 Ultimate Baked Goods Midco LLC 2.4 1.6 Maurices, Incorporated 2.4 4.3 Basic Fun, Inc 2.1 2.7 SCP Eye Care, LLC 2.0 2.8 DeepIntent, Inc 1.9 3.1 SunMed Group Holdings, LLC 1.6 0.8 SLR Healthcare ABL* 1.4 1.4 American Teleconferencing Services, Ltd 1.4 1.1 Montefiore Nyack Hospital 1.3 1.0 Pinnacle Treatment Centers, Inc. 1.3 1.7 RxSense Holdings LLC 1.2 1.3 Bayside Opco, LLC 1.2 — Enverus Holdings, Inc 1.2 1.0 Tilley Distribution, Inc. 1.2 0.5 Pediatric Home Respiratory Services, LLC 1.1 1.8 GSM Acquisition Corp 0.9 0.8 Composite Technology Acquisition Corp 0.8 1.5 High Street Buyer, Inc. 0.6 0.3 CC SAG Holdings Corp. (Spectrum Automotive).. 0.5 20.7 Orthopedic Care Partners Management, LLC. 0.5 1.6 Southern Orthodontic Partners Management, LLC 0.5 1.9 ENS Holdings III Corp, LLC 0.5 0.1 World Insurance Associates, LLC 0.3 17.1 TAUC Management, LLC 0.3 0.3 AmeriMark Intermediate Holdings, LLC 0.2 — All State Ag Parts, LLC 0.0 0.1 Plastics Management, LLC — 2.4 Ivy Fertility Services, LLC — 1.6 NAC Holdings Corporation — 1.5 Peter C. Foy & Associates Insurance Services, LLC. — 1.1 BayMark Health Services, Inc. — 0.4 Total Commitments $ 325.9 $ 323.7 * The Company controls the funding of the SLR Credit Solutions and SLR Healthcare commitments and may cancel them at its discretion. 53 Table of Contents In addition to the above, please see Note 17. SLR Senior Lending Program LLC herein, which describes that the Company has an equity commitment of $29.25 million in SSLP and that the Company also controls such funding. The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the portfolio company’s achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of June 30, 2023 and December 31, 2022, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment. In the normal course of business, we invest or trade in various financial instruments and may enter into various investment activities with off-balance sheet risk, which may include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates. These financial instruments contain varying degrees of off-balance sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities. Distributions The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date: Date Declared Record Date Payment Date Amount Fiscal 2023 August 8, 2023 August 18, 2023 August 30, 2023 $ 0.136667 July 5, 2023 July 20, 2023 August 1, 2023 0.136667 June 1, 2023 June 20, 2023 June 29, 2023 0.136667 May 10, 2023 May 24, 2023 June 1, 2023 0.136667 April 4, 2023 April 20, 2023 May 2, 2023 0.136667 February 28, 2023 March 23, 2023 April 4, 2023 0.136667 February 2, 2023 February 16, 2023 March 1, 2023 0.136667 January 10, 2023 January 26, 2023 February 2, 2023 0.136667 Total 2023 $ 1.093336 Fiscal 2022 December 6, 2022 December 22, 2022 January 5, 2023 $ 0.136667 November 2, 2022 November 17, 2022 December 1, 2022 0.136667 October 5, 2022 October 20, 2022 November 2, 2022 0.136667 September 2, 2022 September 20, 2022 October 4, 2022 0.136667 August 2, 2022 August 18, 2022 September 1, 2022 0.136667 July 6, 2022 July 21, 2022 August 2, 2022 0.136667 June 3, 2022 June 23, 2022 July 5, 2022 0.136667 May 3, 2022 May 19, 2022 June 2, 2022 0.136667 April 4, 2022 April 21, 2022 May 3, 2022 0.136667 March 1, 2022 March 18, 2022 April 1, 2022 0.41 Total 2022 $ 1.64 Fiscal 2021 November 3, 2021 December 16, 2021 January 5, 2022 $ 0.41 August 3, 2021 September 23, 2021 October 5, 2021 0.41 May 5, 2021 June 23, 2021 July 2, 2021 0.41 February 24, 2021 March 18, 2021 April 2, 2021 0.41 Total 2021 $ 1.64 Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Future monthly distributions, if any, will be determined by the Board. We expect that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or non-taxable return of capital, if any, as applicable. We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains ( i.e. , net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment. 54 Table of Contents We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a business development company, we may in the future be limited in our ability to make distributions. Also, the Credit Facility may limit our ability to declare distributions if we default under certain provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a RIC. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual payment-in-kind income, which represents contractual income added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC. With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders. Related Parties We have entered into a number of business relationships with affiliated or related parties, including the following: • We have entered into the Advisory Agreement with the Investment Adviser. Mr. Gross, our Chairman, Co-Chief Executive Officer and President and Mr. Spohler, our Co-Chief Executive Officer, Chief Operating Officer and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, the Investment Adviser. In addition, Mr. Kajee, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for the Investment Adviser. • The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief compliance officer, our chief financial officer and their respective staffs. • We have entered into a license agreement with the Investment Adviser, pursuant to which the Investment Adviser has granted us a non-exclusive, royalty-free license to use the licensed marks “SOLAR” and “SLR”. The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. For example, the Investment Adviser presently serves as investment adviser to SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including non-traditional asset-based loans and first lien loans, SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry, and SLR Private Credit BDC II LLC, an unlisted BDC focused on first lien senior secured floating rate loans. In addition, Michael S. Gross, our Chairman, Co-Chief Executive Officer and President, Bruce Spohler, our Co-Chief Executive Officer and Chief Operating Officer, and Shiraz Kajee, our Chief Financial Officer, serve in similar capacities for SCP Private Credit Income BDC LLC, SLR HC BDC LLC and SLR Private Credit BDC II LLC. The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser’s allocation procedures. On June 13, 2017, the Investment Adviser received an exemptive order that permits the Company to participate in negotiated co-investment transactions with certain affiliates, in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the “Order”). If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although the Investment Adviser’s investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Investment Adviser. 55 Table of Contents Related party transactions may occur among us, SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL and SLR Equipment. These transactions may occur in the normal course of business. No administrative or other fees are paid to the Investment Adviser by SLR Senior Lending Program LLC, SLR Senior Lending Program SPV LLC, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL or SLR Equipment. In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.