What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-27 compared with 2023-02-28 · 246 added, 231 removed, 567 unchanged (46% of the section changed)

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the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

market conditions and our ability to access different debt markets and additional debt and equity capital;

market conditions and our ability to access alternative debt markets and additional debt and equity capital;

our expected financings and investments;

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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;

changes in the political conditions and relations between the United States, Russia, Ukraine and other nations, the interest rate environment or conditions affecting the financial and capital markets;

the ability of the 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, certain regional bank failures or conditions affecting the financial and capital markets;

the escalating conflict in the Middle East;

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;

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:

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and current reports on Form 8-K.

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.

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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.

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 of 1933, as amended.

We invest primarily in privately held U.S.

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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,

Our investment activities are managed by SLR Capital Partners, LLC (the “Investment Adviser”) and supervised by our board of directors (the “Board”), a majority of whom are non-interested,

as such term is defined in the 1940 Act.

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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.

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.

In accordance with the terms of the Merger Agreement, at the effective time of the Mergers, 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 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.

Recent Developments

On January 10, 2023, the Board declared a monthly distribution of $0.136667 per share payable on February 2, 2023 to holders of record as of January 26, 2023.

On February 2, 2023, the Board declared a monthly distribution of $0.136667 per share payable on March 1, 2023 to holders of record as of February 16, 2023.

On February 28, 2023, the Board declared a monthly distribution of $0.136667 per share payable on April 4, 2023 to holders of record as of March 23, 2023.

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.

On February 27, 2024, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2024 to holders of record as of March 14, 2024.

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).

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

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

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 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

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Macroeconomic Environment

Credit markets continued to be under pressure during 2022 amid a risk-off

environment and sustained macro-economic uncertainty due to record-high inflation, tighter financial conditions and growing recession risk.

Central banks have remained focused on restoring price stability by raising interest rates and have signaled that growth may be hindered until inflation comes under control.

Credit markets showed resilience in 2023 in the face of persistent but declining inflationary pressures and higher interest rates.

economy grew during the year and central banks have postured toward lower interest rates.

The year ended with uncertainties around the economy and geopolitical issues.

Portfolio and Investment Activity

During the year ended December 31, 2022, exclusive of the assets acquired through the Mergers, we invested approximately $610 million across 77 portfolio companies.

This compares to investing approximately $596 million across 52 portfolio companies for the year ended December 31, 2021.

During the year ended December 31, 2023, we invested approximately $812 million across over 85 portfolio companies.

This compares to investing approximately $610 million across over 75 portfolio companies for the year ended December 31, 2022.

Investments sold, prepaid or repaid during the year ended December 31, 2023 totaled approximately $750 million versus approximately $532 million for the year ended December 31, 2022.

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is floating rate and 22.3% or $464.5 million is fixed rate, measured at fair value.

As of December 31, 2022 and 2021, we had two and one issuers on non-accrual

As of December 31, 2023 and 2022, we had one and two issuers on non-accrual

status, respectively.

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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.

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.

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

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

As of December 31, 2023, SLR Equipment had 150 funded equipment-backed leases and loans to 62 different customers with a total net investment in leases and loans of approximately $203.7 million on total assets of $254.7 million.

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to the Company, had approximately $137.2 million and $115.0 million of borrowings outstanding at December 31, 2023 and December 31, 2022, respectively.

For the years ended December 31, 2022 and 2021, SLR Equipment had net losses of $2.9 million and $9.7 million, respectively, on gross income of $20.4 million and $22.9 million, respectively.

For the years ended December 31, 2023 and 2022, SLR Equipment had net losses of $6.4 million and $2.9 million, respectively, on gross income of $19.6 million and $20.4 million,

respectively.

Due to timing and non-cash

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companies operating in the healthcare industry.

SUNS initial investment in SLR Healthcare ABL was $32.8 million.

SUNS initial investment in SLR Healthcare ABL was approximately $32.8 million.

The management team of SLR Healthcare co-invested

in the transaction and continues to lead SLR Healthcare.

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

As of December 31, 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.

Effective with an amendment dated August 24, 2023, SLR Healthcare has a $150 million non-recourse

credit facility, which is expandable to $200 million under its accordion facility.

The maturity date of this facility is March 31, 2026.

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

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to us, had approximately $84.7 million and $77.0 million of borrowings outstanding at December 31, 2023 and December 31, 2022, respectively.

For the years ended December 31, 2022 and 2021, SLR Healthcare had net income of $3.5 million and $0.7 million, respectively, on gross income of $11.6 million and $10.1 million, respectively.

For the years ended December 31, 2023 and 2022, SLR Healthcare had net income of $5.5 million and $3.5 million, respectively, on gross income of $17.9 million and $11.6 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 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.

SLR Healthcare’s consolidated financial statements for the fiscal years ended December 31, 2023 and December 31, 2022 are attached as an exhibit to this annual report on Form 10-K.

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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.

The transaction purchase price of approximately $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.

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to us, had approximately $222.9 million and $214.4 million of borrowings outstanding at December 31, 2023 and December 31, 2022, respectively.

For the years ended December 31, 2022 and 2021, SLR Business Credit had net income of $3.9 million and $7.3 million, respectively, on gross income of $29.4 million and $24.0 million, respectively.

For the years ended December 31, 2023, 2022 and 2021, SLR Business Credit had net income (loss) of ($9.5) million, $3.9 million, and $7.3 million, respectively, on gross income of $38.1 million, $29.4 million, and $24.0 million, respectively.

Due to timing and non-cash

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Stock Repurchase Program

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

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

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

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

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

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

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 fiscal year ended December 31, 2023, the Company repurchased 746 shares at an average price of approximately $14.02 per share, inclusive of commissions.

The total dollar amount of shares repurchased for the fiscal year ended December 31, 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 was $3.0 million.

The total dollar amount of shares repurchased for the fiscal year ended December 31, 2022 was $3.0 million.

SLR Senior Lending Program LLC

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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.

On October 20, 2023, the SSLP Facility was expanded to $150 million.

The SSLP Facility is scheduled to mature on December 12, 2027.

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

There were no borrowings during the period December 12, 2022 and December 31, 2022.

As of December 31, 2022 the Company and the Investor had contributed combined equity capital in the amount of $19.0 million.

As of December 31, 2022, the Company and the Investor’s remaining commitments to SSLP totaled $40.5 million and $40.5 million, respectively.

As of December 31, 2023 and December 31, 2022, borrowings outstanding on the SSLP Facility totaled $106.9 million and $0, respectively.

As of December 31, 2023 and December 31, 2022, the Company and the Investor had contributed combined equity capital in the amount of $85.8 million and $19.0 million, respectively.

As of December 31, 2023 and December 31, 2022, the Company and the Investor’s combined remaining commitments to SSLP totaled $14.2 million and $81.0 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 December 31, 2022, SSLP had total assets of $19.1 million.

SSLP’s portfolio consisted of floating rate senior secured loans to seven (7) different borrowers.

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

Investments prepaid totaled $0.1 million for the same period.

As of December 31, 2023 and December 31, 2022, SSLP had total assets of $195.9 million and $19.1 million, respectively.

For the same periods, SSLP’s portfolio consisted of floating rate senior secured loans to 32 and 7 different borrowers, respectively.

For the year ended December 31, 2023 and the period December 1, 2022 (commencement of operations) through December 31, 2022, SSLP invested $188.7 million in 32 portfolio companies and $18.1 million in 7 portfolio companies, respectively.

For the same periods, investments prepaid totaled $21.1 million and $0.1 million, respectively.

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

Aegis Toxicology Sciences Corporation (4)

Health Care Providers & Services

Alkeme Intermediary Holdings, LLC (4)

All States Ag Parts, LLC (4)

Trading Companies & Distributors

Apex Service Partners, LLC

Diversified Consumer Services

Atria Wealth Solutions, Inc.

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Health Care Providers & Services

CC SAG Holdings Corp.

Diversified Consumer Services

CVAUSA Management, LLC (4)

Health Care Providers & Services

ENS Holdings III Corp.

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Trading Companies & Distributors

Erie Construction Mid-west,

Building Products

Fertility (ITC) Investment Holdco, LLC (4)

Health Care Providers & Services

Foundation Consumer Brands, LLC (4)

Personal Products

GSM Acquisition Corp.

Leisure Equipment & Products

Higginbotham Insurance Agency, Inc.

High Street Buyer, Inc.

Kid Distro Holdings, LLC (4)

Maxor Acquisition, Inc.

Health Care Providers & Services

ONS MSO, LLC (4)

Health Care Providers & Services

Pinnacle Treatment Centers, Inc.

Health Care Providers & Services

Plastics Management, LLC (4)

Health Care Providers & Services

Life Sciences Tools & Services

RxSense Holdings LLC (4)

Diversified Consumer Services

SunMed Group Holdings, LLC (4)

Health Care Equipment & Supplies

The Townsend Company, LLC (4)

Commercial Services & Supplies

Tilley Distribution, Inc.

Trading Companies & Distributors

Ultimate Baked Goods Midco LLC (4)

Packaged Foods & Meats

United Digestive MSO Parent, LLC (4)

Health Care Providers & Services

Urology Management Holdings, Inc.

Health Care Providers & Services

Vessco Midco Holdings, LLC (4)

Water Utilities

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

These instruments are typically subject to a SOFR floor.

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

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

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.

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)

Atria Wealth Solutions, Inc.

Diversified Financial Services

BayMark Health Services, Inc.

Health Care Providers & Services

ENS Holdings III Corp.

& ES Opco USA LLC (4)

Trading Companies & Distributors

Foundation Consumer Brands, LLC (4)

Personal Products

High Street Buyer, Inc.

Ivy Fertility Services, LLC (4)

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

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

Selected Balance Sheet Information for SSLP (in thousands):

Investments at fair value (cost $18,032)

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

Selected Balance Sheet Information for SSLP

(in thousands):

Investments at fair value (cost $186,059 and $18,032, respectively)

Cash and other assets.

Debt outstanding

Debt outstanding ($106,900 and $0 face amounts, respectively, reported net of unamortized debt issuance costs of $1,697 and $0, respectively)

Distributions payable

Interest payable and other credit facility related expenses

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(commencement of

operations) through

December 31, 2022

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Total expenses

Net investment loss

Net investment income (loss).

Realized gain on investments

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Net realized and unrealized gain on investments

Net income (loss).

Service fees are included within the Company’s Consolidated Statements of Operations as other income.

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Valuation of Portfolio Investments

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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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.

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.

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

Determination of fair value involves subjective judgments and estimates.

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

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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.

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.

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Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update No.

“Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform.

is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has determined that the adoption of this guidance has not had a material impact on the Company’s consolidated financial statements and disclosures.

RESULTS OF OPERATIONS

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Results for the fiscal year ended December 31, 2021 can be found in Item 7 of the Company’s report on Form 10-K

filed on March 1, 2022, which is incorporated by reference herein.

filed on February 28, 2023, which is incorporated by reference herein.

Investment Income

For the fiscal years ended December 31, 2023 and 2022, gross investment income totaled $229.3 million and $177.5 million, respectively.

The increase in gross investment income for the year over year period was primarily due to a larger portfolio size as a result of the Mergers coupled with organic growth, as well as due to an increase in loan reference rates.

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

Net expenses totaled $137.2 million and $101.1 million, respectively, for the fiscal years ended December 31, 2023 and 2022, of which $54.6 million and $45.1 million, respectively, were base management fees and performance-based incentive fees and $72.5 million and $46.1 million, respectively, were interest and other credit facility expenses.

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

The increase in expenses for the year over year period was primarily due to higher interest expense associated with an increase in borrowings to fund new investments as well as the increase in reference rates.

The increase in expenses for the year over year period was primarily due to higher management fees, incentive fees and interest expense on a larger portfolio.

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

Net Investment Income

The Company’s net investment income totaled $92.1 million and $76.4 million, or $1.69 and $1.48, per average share, respectively, for the fiscal years ended December 31, 2023 and 2022.

Net Realized Gain (Loss)

Net Realized Loss

The Company had investment sales and prepayments totaling approximately $750 million and $532 million, respectively, for the fiscal years ended December 31, 2023 and 2022.

Net realized gain (loss) over the same periods were ($36.5) million and $0.03 million, respectively.

Net realized losses over the same periods were $28.0 million and $36.5 million, respectively.

Net realized losses for fiscal year 2023 were primarily related to our investment in American Teleconferencing Services, Ltd.

Net realized losses for fiscal year 2022 were primarily related to the exit of our investment in PhyMed Management, LLC.

Net realized gain for fiscal year 2021 was de minimis.

Net Change in Unrealized Loss

For the fiscal years ended December 31, 2022 and 2021, net change in unrealized loss on the Company’s assets and liabilities totaled $21.5 million and $1.4 million, respectively.

Net Change in Unrealized Gain (Loss)

For the fiscal years ended December 31, 2023 and 2022, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled $12.3 million and ($21.5) million, respectively.

Net unrealized gain for the fiscal year ended December 31, 2023 is primarily due to the reversal of previously recognized unrealized depreciation on our investment in American Teleconferencing Services, Ltd.

as well as appreciation in the value of our investments in Alimera Sciences, Inc., SLR Healthcare ABL and SLR Senior Lending Program LLC, among others, partially offset by depreciation in the value of our investments in SLR-AMI

Topco Blocker, LLC (f/k/a AmeriMark), KBH Topco, LLC and SLR Credit Solutions, among others.

Net unrealized loss for the fiscal year ended December 31, 2022 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., RD Holdco, Inc., SLR Credit Solutions and SLR Equipment Finance, among others, partially offset by the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC as well as appreciation on the value of our investments in SLR Business Credit and KBH Topco, LLC in addition to unrealized appreciation on assets acquired in the Mergers due to the accounting treatment of the purchase discount.

Net unrealized loss for the fiscal year ended December 31, 2021 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., Rug Doctor and SOAGG LLC, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC, SLR Credit Solutions and PhyMed Management LLC, among others.

Net Increase in Net Assets From Operations

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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 2023 Unsecured Notes, 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

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 (collectively the “Debt Instruments”), 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.

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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;

subsequent to an August 29, 2023 amendment, the commitment under the SPV Credit Facility is $275 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 stated interest rate on the SPV Credit Facility is SOFR plus 2.00%-2.50%

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

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

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

At December 31, 2023, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $206.3 million.

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.

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 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.

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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.

Following the amendment, a $25 million November 2022 upsizing and a $40 million August 2023 commitment expiration, the Credit Facility is composed of $585 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%

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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 stockholder’s equity and a minimum asset coverage ratio.

At December 31, 2023, outstanding USD equivalent borrowings under the Credit Facility totaled $507.0 million, composed of $407.0 million of revolving credit and $100.0 million of term loans.

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

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The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were repaid in full at maturity.

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 mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

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

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

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

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

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

The 2022 Unsecured Notes were repaid in full at maturity.

On January 11, 2013, the Company closed its most recent follow-on

public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds.

The primary uses of the funds raised were for investments in portfolio companies, reductions in revolving debt outstanding and for other general corporate purposes.

Interest on the 2023 Unsecured Notes was 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.

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 December 31, 2023, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

Cash Equivalents

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

We held approximately $420 million par amount in cash equivalents as of December 31, 2022.

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 December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022.

Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28.

The 2022 Tranche C Notes were repaid in full at maturity.

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 mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022.

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

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

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

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

The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

The 2022 Unsecured Notes were repaid in full at maturity.

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 December 31, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $155.2 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.

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 December 31, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $393.0 million, composed of $293.0 million of revolving credit and $100.0 million of term loans.

At December 31, 2022, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

We held a face amount of $335 million in cash equivalents as of December 31, 2023.

Contractual Obligations

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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.

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

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NEFPASS LLC may terminate this agreement upon 30 days written notice to NEFCORP LLC.

On October 7, 2022, the Company commitment $50 million to SSLP and entered into a servicing agreement.

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.

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2022 Unsecured Notes

2022 Tranche C Notes

Class and Year

Outstanding(1)

2022 Tranche C Notes

2023 Unsecured Notes

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Senior Secured Notes

Class and Year

Outstanding(1)

NEFPASS Facility

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SLR Credit Solutions*

Outset Medical, Inc

Apeel Technology, Inc

Orthopedic Care Partners Management, LLC

Southern Orthodontic Partners Management, LLC

Ardelyx, Inc.

CVAUSA Management, LLC

BDG Media, Inc.

Retina Midco, Inc.

Alkeme Intermediate Holdings, LLC

SPAR Marketing Force, Inc.

SLR Senior Lending Program LLC*

Copper River Seafoods, Inc.

Legacy Service Partners, LLC

Foy & Associates Insurance Services, LLC

Luxury Asset Capital, LLC

One Touch Direct, LLC

DeepIntent, Inc.

United Digestive MSO Parent, LLC

The Townsend Company, LLC

Vertos Medical, Inc.

AMF Levered II, LLC

Foundation Consumer Brands, LLC

UVP Management, LLC.

Kid Distro Holdings, LLC

Erie Construction Mid-west,

Ultimate Baked Goods Midco LLC

Basic Fun, Inc

SLR Equipment Finance*

Bayside Opco, LLC

SunMed Group Holdings, LLC

Urology Management Holdings, Inc.

SLR Healthcare ABL*

RxSense Holdings LLC

Tilley Distribution, Inc.

SCP Eye Care, LLC

GSM Acquisition Corp.

Pinnacle Treatment Centers, Inc.

High Street Buyer, Inc.

(in millions)

ENS Holdings III Corp, LLC

CC SAG Holdings Corp.

(Spectrum Automotive)

Crewline Buyer, Inc.

Exactcare Parent, Inc.

Purchaser, LLC

All States Ag Parts, LLC

Vessco Midco Holdings, LLC

TAUC Management, LLC

Outset Medical, Inc.

Apeel Technology, Inc.

Human Interest, Inc.

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Atria Wealth Solutions, Inc.

Luxury Asset Capital, LLC

RSC Acquisition, Inc

Accession Risk Management Group, Inc.

Cerapedics, Inc.

Maurices, Incorporated

Vessco Midco Holdings, LLC

Copper River Seafoods, Inc

BDG Media, Inc

Meditrina, Inc.

One Touch Direct, LLC

DeepIntent, Inc

Foundation Consumer Brands, LLC

SCP Eye Care, LLC

Basic Fun, Inc

Kid Distro Holdings, LLC

Plastics Management, LLC

Southern Orthodontic Partners Management, LLC

Pediatric Home Respiratory Services, LLC

Pinnacle Treatment Centers, Inc

Ultimate Baked Goods Midco LLC

Orthopedic Care Partners Management, LLC

Ivy Fertility Services, LLC

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NAC Holdings Corporation

SLR Healthcare ABL*

SPAR Marketing Force, Inc

RxSense Holdings LLC

Erie Construction Mid-west,

Foy & Associates Insurance Services, LLC

American Teleconferencing Services, Ltd

(in millions)

Montefiore Nyack Hospital

Enverus Holdings, Inc.

SLR Equipment Finance

SunMed Group Holdings, LLC

GSM Acquisition Corp

Tilley Distribution, Inc

American Teleconferencing Services, Ltd.

BayMark Health Services, Inc.

High Street Buyer, Inc

TAUC Management, LLC

ENS Holdings III Corp, LLC

All State Ag Parts, LLC

BridgeBio Pharma, Inc

Inszone Mid, LLC

Rezolute, Inc

SOC Telemed, Inc

MMIT Holdings, LLC

Neuronetics, Inc

Total Commitments

The Company controls the funding of the SLR Credit Solutions and SLR Healthcare commitments and may cancel them at its discretion.

In addition to the above, please see SLR Senior Lending Program LLC herein where the Company has a remaining equity commitment of $40.5 million in which 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.

The Company controls the funding of these commitments and may cancel them at its discretion

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

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March 14, 2024

March 28, 2024

November 7, 2023

December 14, 2023

December 28, 2023

September 5, 2023

September 20, 2023

September 28, 2023

August 8, 2023

August 18, 2023

August 30, 2023

July 20, 2023

August 1, 2023

June 20, 2023

June 29, 2023

April 4, 2023

April 20, 2023

February 28, 2023

March 23, 2023

April 4, 2023

February 2, 2023

February 16, 2023

March 1, 2023

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April 1, 2022

November 3, 2021

December 16, 2021

January 5, 2022

August 3, 2021

September 23, 2021

October 5, 2021

June 23, 2021

February 24, 2021

March 18, 2021

April 2, 2021

Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year.

Future distributions, if any, will be determined by the Board.

Future quarterly 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

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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.

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.

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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 regulated investment company.

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 regulated investment company.

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.

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In addition, Mr.

Richard Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for the Investment Adviser.

Kajee, our Chief Financial Officer and Treasurer, serves as the Chief Financial Officer for the Investment Adviser and Mr.

Talarico, our Chief Compliance Officer and Secretary, serves as Partner, General Counsel and Chief Compliance Officer for the Investment Adviser.

The Administrator provides us with the office facilities and administrative services necessary to conduct day-to-day

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Executive Officer and President, Bruce Spohler, our Co-Chief

Executive Officer and Chief Operating Officer, and Richard L.

Peteka, 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.

Executive Officer and Chief Operating Officer, Shiraz Kajee, our Chief Financial Officer and Treasurer, and Guy F.

Talarico, our Chief Compliance Officer and Secretary, 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

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 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 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 Adviser.

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 “Exemptive Order”).

If the Company is unable to rely on the Exemptive 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.

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.

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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 7. Management’s Discussion and Analysis