What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-02-28 · 141 added, 107 removed, 778 unchanged (24% of the section changed)

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

As of December 31, 2022, our investment portfolio totaled $2.1 billion and our net asset value was $999.7 million.

Our portfolio was comprised of debt and equity investments in 139 portfolio companies.

On April 1, 2022, we completed our previously announced acquisition of SLR Senior Investment Corp., a Maryland corporation (“SUNS”).

Pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”) by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser, dated as of December 1, 2021, Merger Sub was first merged with and into SUNS, with SUNS as the surviving corporation, and, immediately following the Merger, SUNS was then merged with and into us, with us as the surviving company.

On April 1, 2022, we acquired SLR Senior Investment Corp., a Maryland corporation (“SUNS”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 1, 2021, by and among us, SUNS, Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser.

Pursuant to the Merger Agreement, Merger Sub merged with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger”) and, immediately thereafter, SUNS merged with and into us,

with us continuing as the surviving company (together with the Merger, the “Mergers”).

In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of SUNS’s common stock was converted into the right to receive 0.7796 shares of our common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of our common stock).

As a result of the Mergers, we issued an aggregate of 12,511,825 shares of our common stock to former SUNS stockholders.

The Mergers are accounted for as an asset acquisition of SLR Senior Investment Corp.

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

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

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

The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain “non-qualifying”

assets (for example cash) and does not give rise to goodwill.

The Company is the accounting survivor of the Mergers.

The Mergers were considered a tax-free

reorganization and the historical cost basis of the acquired SUNS investments are carried forward for tax purposes.

Letter Agreement

On April 1, 2022, in connection with the consummation of the Mergers, we entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by us to the Investment Adviser pursuant to the investment advisory and management agreement between us and the Investment Adviser (the “Advisory Agreement”), resulting in an annual base management fee rate payable by us to the Investment Adviser of 1.50% on gross assets up to 200% of our total net assets.

We retained the annual base management fee rate payable by us to the Investment Adviser of 1.00% on gross assets that exceed 200% of our total net assets.

As of December 31, 2023, our investment portfolio totaled $2.2 billion and our net asset value was $986.6 million.

Our portfolio was comprised of debt and equity investments in 151 portfolio companies.

SLR Capital Partners

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royalty-free license to use the name “SLR” and “SOLAR”.

Under this agreement, we have a right to use the SLR and SOLAR name for so long as the Investment Advisory and Management Agreement with our investment adviser is in effect.

Under this agreement, we have a right to use the SLR and SOLAR name for so long as the Third Amended and Restated Investment Advisory and Management Agreement (the “Advisory Agreement”) with our investment adviser is in effect.

Other than with respect to this limited license, we will have no legal right to the “SLR” or “SOLAR” name.

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The proceeds from our public offerings and the Concurrent Private Placement, the borrowing capacities under the senior secured credit facility led by Citibank, N.A.

(the “Credit Facility”) and the SUNS SPV LLC senior secured credit facility (the “SPV Credit Facility”), our $75 million of unsecured senior notes due 2023 (the “2023 Unsecured Notes”), our $125 million of unsecured notes due 2024 (the “2024 Unsecured Notes”), our $85 million of unsecured notes due 2025 (the “2025 Unsecured Notes”), our $75 million of unsecured notes due 2026 (the “2026 Unsecured Notes”), our $50 million of unsecured senior notes due 2027 (the “2027 Unsecured Notes”), our $135 million of unsecured notes due 2027 (the “2027 Series F Unsecured Notes”), the available capital at our significant subsidiaries and the expected repayments of existing portfolio company investments provide us with a substantial amount of capital available for deployment into new investment opportunities.

(the “Credit Facility”) and the SUNS SPV LLC senior secured credit facility (the “SPV Credit Facility”), our $125 million of unsecured notes due 2024 (the “2024 Unsecured Notes”), our $85 million of unsecured notes due 2025 (the “2025 Unsecured Notes”), our $75 million of unsecured notes due 2026 (the “2026 Unsecured Notes”), our $50 million of unsecured senior notes due 2027 (the “2027 Unsecured Notes”), our $135 million of unsecured notes due 2027 (the “2027 Series F Unsecured Notes”), the available capital at our significant subsidiaries and the expected repayments of existing portfolio company investments provide us with a substantial amount of capital available for deployment into new investment opportunities.

We believe we are well positioned for the current marketplace.

The Company’s Leverage

As of December 31, 2022, we had total outstanding borrowings of approximately $1,093.2 million.

As of December 31, 2023, we had total outstanding borrowings of approximately $1.2 billion.

Under the provisions of the 1940 Act, we are permitted 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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• Aerospace & Defense

• Household & Personal Products

• Air Freight & Logistics

• Industrial Conglomerates

• Asset Management

• Internet & Catalog Retail

• Automobiles

• Internet Software & Services

• Auto Components

• IT Services

• Auto Parts & Equipment

• Leisure Equipment & Products

• Biotechnology

• Life Sciences Tools & Services

• Building Products

• Capital Markets

• Metals & Mining

• Commercial Services & Supplies

• Multiline Retail

• Communications Equipment

• Multi-Sector Holdings

• Construction & Engineering

• Oil, Gas & Consumable Fuels

• Consumer Finance

• Packaged Foods & Meats

• Containers & Packaging

• Paper & Forest Products

• Distributors

• Personal Products

• Diversified Consumer Services

• Pharmaceuticals

• Diversified Financial Services

• Professional Services

• Diversified Real Estate Activities

• Research & Consulting Services

• Diversified Telecommunications Services

• Road & Rail

• Education Services

• Energy Equipment & Services

• Food Products

• Food & Staples Retailing

• Health Care Equipment & Supplies

• Health Care Facilities

• Health Care Providers & Services

• Health Care Technology

• Hotels, Restaurants & Leisure

• Household & Personal Products

• Industrial Conglomerates

• Internet & Catalog Retail

• Internet Software & Services

• IT Services

• Leisure Equipment & Products

• Life Sciences Tools & Services

• Metals & Mining

• Multiline Retail

• Multi-Sector Holdings

• Oil, Gas & Consumable Fuels

• Packaged Foods & Meats

• Paper & Forest Products

• Personal Products

• Pharmaceuticals

• Professional Services

• Research & Consulting Services

• Road & Rail

• Specialty Retail

• Food Products

• Textiles, Apparel & Luxury Goods

• Food & Staples Retailing

• Thrifts & Mortgage Finance

• Trading Companies & Distributors

• Health Care Equipment & Supplies

• Transportation Infrastructure

• Health Care Facilities

• Water Utilities

• Health Care Providers & Services

• Wireless Telecommunications Services

• Health Care Technology

• Hotels, Restaurants & Leisure

We may also invest in other industries if we are presented with attractive opportunities.

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We may also participate in negotiated co-investment

transactions with certain affiliates, each of whose investment adviser is SLR Capital Partners, or an investment adviser controlling, controlled by or under common control with SLR Capital Partners and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions of the most recent exemptive order obtained from the SEC on June 13, 2017 (the “Exemptive Order”).

Pursuant to the Exemptive Order, we are permitted to co-invest with

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including, but not limited to, that (1) the terms of the potential co-investment transaction,

including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction

is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.

including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in

respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.

At December 31, 2023, our portfolio consisted of 151 portfolio companies and was invested 32.5% 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, 23.0% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 16.7% in life science senior secured loans, in each case, measured at fair value.

We expect that our portfolio will

continue to include primarily senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.

We expect that our portfolio will continue to include primarily senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities.

In addition, we also expect to invest a portion of our portfolio in opportunistic investments, which are not our primary focus, but are intended to enhance our risk-adjusted returns to stockholders.

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Arcutis Biotherapeutics, Inc.

BridgeBio Pharma, Inc.

Foundation Consumer Brands, LLC

Enhanced Capital Group, LLC

Outset Medical, Inc.

SLR Senior Lending Program LLC*

Enhanced Capital Group, LLC

BridgeBio Pharma, Inc.

Vapotherm, Inc.

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Diversified Consumer Services

Commercial Services & Supplies

TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2022

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SLR Equipment Finance*

Rubius Therapeutics, Inc.

PhyMed Management LLC

KORE Wireless Group, Inc.

Community Brands ParentCo, LLC

SLR Business Credit*

Arcutis Biotherapeutics, Inc.

BridgeBio Pharma, Inc.

Foundation Consumer Brands, LLC

SOC Telemed, Inc.

Enhanced Capital Group, LLC

Outset Medical, Inc.

Vapotherm, Inc.

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment.

Multi-Sector Holdings

Diversified Financial Services

Multi-Sector Holdings

Health Care Providers & Services

Pharmaceuticals

Health Care Equipment & Supplies

Pharmaceuticals

Biotechnology

Wireless Telecommunication Services

Personal Products

Set forth below is a brief description of each portfolio company in which we have made an investment that represents greater than 5% of our total assets as of December 31, 2022.

Diversified Consumer Services

Set forth below is a brief description of each portfolio company in which we have made an investment that represents 5% or greater of our total assets as of December 31, 2023.

SLR Credit Solutions

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As with most finance companies, SLR Credit is exposed to interest rate risk, which it mostly mitigates by issuing loans with floating rates.

SLR Equipment Finance

On July 31, 2017, the Company completed the acquisition of NEF Holdings, 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 is an independent equipment finance company that provides senior secured loans and leases primarily to U.S.

based companies.

The Company 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.

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.

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.

On November 3, 2020, the Company acquired 87.5% of the equity securities of KBH through KBH Topco LLC (“KBHT”), a Delaware corporation.

KBH is a residual focused independent mid-ticket

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

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

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 December 31, 2023, KBHT had total assets of $857.3 million.

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Value of Assets.

The prospective value of the assets, if any, that collateralizes the loans in which we invest, is an important factor in our credit analysis.

The prospective value of the assets, if any, that collateralize the loans in which we invest, is an important factor in our credit analysis.

Our analysis emphasizes both tangible assets, such as accounts receivable, inventory, equipment and real estate, and intangible assets, such as intellectual property, customer lists, networks and databases.

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Typically, our senior secured and unsecured loans have final maturities of five to ten years.

However, we expect that our portfolio companies often may repay these loans early, generally within three to four years from the date of initial investment.

However, we expect that our portfolio companies often may repay these loans early, generally within three to four years from

the date of initial investment.

In some cases and when available, we seek to structure these loans with prepayment premiums to capture foregone interest.

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Valuation Procedures

In December 2020, the SEC adopted new Rule 2a-5

In December 2020, the SEC adopted 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 will comply with Rule 2a-5’s

The 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 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.

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generally accepted accounting principles (“GAAP”) and the 1940 Act.

Our valuation procedures are set forth in more detail below:

Under procedures established by the Board, we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value).

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.

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.

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.

Under procedures established by the Board, we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available and deemed to represent fair value under GAAP, at such market quotations (unless they are deemed not to represent fair value).

We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service).

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Accordingly, such investments go through our multi-step valuation process as described below.

In each such case, independent valuation firms, which may from time to time be engaged by the Board, consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

In each such case, independent valuation firms, that may from time to time be engaged by the Board, consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations.

Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of the Board.

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Such determination of fair values involves subjective judgments and estimates.

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, the Board has approved a multi-step valuation process each quarter, as described below:

With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value under GAAP, the Board has approved a multi-step valuation process each quarter, as described below:

our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

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the Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent valuation firm, if any, and the audit committee.

The valuation principles set forth above may be modified from time to time, in whole or in part, as determined by the Board in its sole discretion.

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

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available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors.

When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

When available, broker quotations and/or quotations provided

by pricing services are considered as an input in the valuation process.

For the fiscal year ended December 31, 2023, there has been no change to the Company’s valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

Accounting Standards Codification (“ASC”) Topic 820 classifies the inputs used to measure these fair values into the following hierarchy:

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

Unadjusted quoted prices in active markets for identical assets or liabilities, accessible by the Company at the measurement date.

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

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

Unobservable inputs for the asset or liability.

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The exercise of judgment is based in part on our knowledge of the asset class and our prior experience.

Determination of fair value involves subjective judgments and estimates.

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

Our primary competitors provide financing to middle-market companies and include other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds.

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In addition, Mr.

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

Guy Talarico, our Chief Compliance Officer, is a Managing Director of ACA Group, LLC, and performs his functions as our Chief Compliance Officer under the terms of an agreement between SLR Capital Management and ACA Group, LLC.

SLR Capital Management has retained Mr.

Talarico and ACA Group, LLC pursuant to its obligations under our Administration Agreement.

Shiraz Kajee, our Chief Financial Officer and Treasurer, serves as the Chief Financial Officer for SLR Capital Partners.

Guy Talarico, our Chief Compliance Officer and Secretary, serves as the Chief Compliance Officer and General Counsel for SLR Capital Partners.

Our day-to-day

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pursuant to Rule 13a-14

of the Securites Exchange Act of 1934 (the “1934 Act”), our co-chief

executive officers and chief financial officer must certify the accuracy of the financial statements contained in our periodic reports;

of the Securities Exchange Act of 1934, as amended (the “1934 Act”), our Co-Chief

Executive Officers and Chief Financial Officer must certify as to the accuracy of the financial statements contained in our periodic reports;

pursuant to Item 307 of Regulation S-K,

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in privately negotiated transactions with affiliated funds until we obtained an exemptive order from the SEC.

The most recent exemptive order, received on June 13, 2017 (the “Exemptive Order”), permits us to participate in negotiated co-investment

The Exemptive Order permits us to participate in negotiated co-investment

transactions with certain affiliates, each of whose investment adviser is an investment adviser that controls, is controlled by or is under common control with SLR Capital Partners and is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to the conditions to the Exemptive Order.

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government or its agencies.

A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon interest rate.

A repurchase agreement involves the purchase by an investor, such as us, of a

specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase price by an amount that reflects an agreed-upon interest rate.

There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements.

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Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to our investment adviser.

A summary of the Proxy Voting Policies and Procedures of our adviser are set forth below.

The guidelines are reviewed periodically by the adviser and our non-interested

directors, and, accordingly, are subject to change.

We have delegated our proxy voting responsibility to the Investment Adviser.

A summary of the Proxy Voting Policies and Procedures of the Investment Adviser are set forth below.

The guidelines are reviewed periodically by the Investment Adviser and our independent directors, and, accordingly, are subject to change.

As an investment adviser registered under the Advisers Act, SLR Capital Partners has a fiduciary duty to act solely in the best interests of its clients.

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basis each proposal submitted for a proxy vote to determine its impact on our investments.

Although it generally votes against proposals that may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to do so.

Although it generally votes against proposals that may have a negative

impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to do so.

The proxy voting decisions of our investment adviser are made by the senior investment professionals who are responsible for monitoring each of our investments.

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We may be required to recognize taxable income in circumstances in which we do not receive cash.

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind

For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount

(such as debt instruments with payment-in-kind

(“PIK”) income or, in certain cases, increasing interest rates or debt instruments issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.

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year, we could be subject to tax on any unrealized net built-in

gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 5 years, unless we made a special election to pay corporate-level U.S.

gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent five years, unless we made a special election to pay corporate-level U.S.

federal income tax on such built-in

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Pursuant to the Advisory Agreement, we have agreed to pay SLR Capital Partners a fee for investment advisory and management services consisting of two components — a base management fee and a performance-based incentive fee.

The base management fee is determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50% on gross assets up to 200% of the Company’s total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter end.

Following the Letter Agreement, the base management fee is now determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50% on gross assets up to 200% of the Company’s total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter end.

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

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fee net investment income.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Management Agreement, as of the termination date), and equals 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and equals 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees with respect to each of the investments in our portfolio.

Examples of Quarterly Incentive Fee Calculation

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(investment income – (management fee + other expenses)) = 2.125%

The hypothetical amount of pre-incentive

fee net investment income shown is based on a percentage of total net assets.

Incentive fee = 100% × pre-incentive

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= 0.4375% + 0.0475%

The hypothetical amount of pre-incentive

fee net investment income shown is based on a percentage of total net assets.

Represents 7% annualized hurdle rate.

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and you should not consider information contained on our website to be part of this annual report on Form 10-K.

Summary Risk Factors

Risks Relating to Our Investments

We operate in a highly competitive market for investment opportunities.

Our investments are very risky and highly speculative.

The lack of liquidity in our investments may make it difficult for us to dispose of our investments at a favorable price, which may adversely affect our ability to meet our investment objectives.

Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies performs poorly or defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.

Economic sanction laws in the United States and other jurisdictions may prohibit us and our affiliates from transacting with certain countries, individuals and companies.

If we cannot obtain additional capital because of either regulatory or market price constraints, we could be forced to curtail or cease our new lending and investment activities, our net asset value could decrease and our level of distributions and liquidity could be affected adversely.

We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.

Risks Relating to an Investment in Our Securities

Our shares may trade at a substantial discount from net asset value and may continue to do so over the long term.

Our common stock price may be volatile and may decrease substantially.

Our business and operation could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price.

If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

Due to disruptions in the economy, we may reduce or defer our dividends and choose to incur U.S.

federal excise tax in order to preserve cash and maintain flexibility.

We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S.

federal income taxes in excess of the cash distributions they receive.

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.

The net asset value per share of our common stock may be diluted if we issue or sell shares of our common stock at prices below the then current net asset value per share of our common stock or securities to subscribe for or convertible into shares of our common stock.

To the extent we use debt or preferred stock to finance our investments, changes in interest rates will affect our cost of capital and net investment income.

Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

Risks Relating to Our Business and Structure

We are dependent upon SLR Capital Partners’ key personnel for our future success.

Our business model depends to a significant extent upon strong referral relationships with financial sponsors, and the inability of the senior investment professionals of our Investment Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

Our financial condition and results of operations will depend on SLR Capital Partners’ ability to manage our future growth effectively by identifying, investing in and monitoring companies that meet our investment criteria.

We may need to raise additional capital to grow because we must distribute most of our income.

Any failure on our part to maintain our status as a BDC would reduce our operating flexibility and we may be limited in our investment choices as a BDC.

Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital.

As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

We have and will continue to borrow money, which would magnify the potential for loss on amounts invested and may increase the risk of investing in us.

It is likely that the terms of any current or future long-term or revolving credit or warehouse facility we may enter into in the future could constrain our ability to grow our business.

There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.

There are significant potential conflicts of interest, including SLR Capital Partners’ management of other investment funds such as SCP Private Credit Income BDC LLC, SLR HC BDC LLC, and SLR Private Credit BDC II LLC, which could impact our investment returns, and an investment in SLR Investment Corp.

is not an investment in SCP Private Credit Income BDC LLC, SLR HC BDC LLC, or SLR Private Credit BDC II LLC.

We may be obligated to pay our Investment Adviser incentive compensation even if we incur a loss.

Our incentive fee may induce SLR Capital Partners to pursue speculative investments.

We may become subject to corporate-level U.S.

federal income tax if we are unable to qualify and maintain our qualification for tax treatment as a regulated investment company under Subchapter M of the Code.

The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could adversely affect our business and financial results.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business