What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 1212 added, 2633 removed, 889 unchanged (81% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, 2021

September 30, 2021

December 31, 2020

11 unchanged sentences

Prepaid expenses and other receivables

Unrealized appreciation on foreign currency forward contracts

Distributions payable

14 unchanged sentences

Net asset value per share

See notes to the consolidated financial

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share

Three months ended June 30,

Six months ended June 30,

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

Investment income

30 unchanged sentences

Net change in unrealized appreciation (depreciation)

Net realized and unrealized gains (losses) on investments

Net realized and unrealized gains (losses) on investments and foreign currency transactions

Net increase in net assets resulting from operations

5 unchanged sentences

WhiteHorse Finance, Inc.

Consolidated Statements of Changes

in Net Assets (Unaudited)

(in thousands, except share and per

Undistributed

(Overdistributed)

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)

Paid-in Capital in Excess of Par

Accumulated Underdistributed/ (Overdistributed) Earnings

Total Net Assets

Balance at December 31, 2020

14 unchanged sentences

Balance at June 30, 2021

Undistributed

(Overdistributed)

Stock issued in connection with at-the-market offering

Stock issued in connection with dividend reinvestment plan

Net increase in net assets resulting from operations:

Net investment income after excise tax

Net realized gains (losses) on investments

Net change in unrealized appreciation (depreciation) on investments

Distributions declared

Balance at September 30, 2021

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)

Paid-in Capital in Excess of Par

Accumulated Underdistributed/ (Overdistributed) Earnings

Total Net Assets

Balance at December 31, 2019

11 unchanged sentences

Balance at June 30, 2020

See notes to the consolidated financial

Net increase in net assets resulting from operations:

Net investment income after excise tax

Net realized gains (losses) on investments

Net change in unrealized appreciation (depreciation) on investments

Distributions declared

Balance at September 30, 2020

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

1 unchanged sentence

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities

Net increase in net assets resulting from operations

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

Paid-in-kind income

Net realized gains on investments

Net unrealized (appreciation) depreciation on investments

Net unrealized depreciation (appreciation) on investments

Net unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies

Net unrealized depreciation on foreign currency forward contracts

Net unrealized (appreciation) depreciation on foreign currency forward contracts

Accretion of discount

2 unchanged sentences

Proceeds from principal payments and sales of portfolio investments

Proceeds for sales of portfolio investments to STRS JV

Proceeds from sales of portfolio investments to STRS JV

Net changes in operating assets and liabilities:

23 unchanged sentences

Non-cash exchanges of investments

The following table provides a reconciliation

of cash, cash equivalents and restricted cash reported within the consolidated statements of assets and liabilities that sum to the total

of the same amounts presented in the consolidated statements of cash flows:

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated statements of assets and liabilities that sum to the total of the same amounts presented in the consolidated statements of cash flows:

September 30,

Cash and cash equivalents

3 unchanged sentences

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

June 30, 2021

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Investment Type (1)

North America

Debt Investments

Secured Term Loan

Freight & Logistics

Shipping, LLC

Secured Term Loan

Atlas Purchaser, Inc.

SmartSign Holdings LLC

First Lien Secured Term Loan

Air Freight & Logistics

Access USA Shipping, LLC

First Lien Secured Term Loan

Motivational Marketing, LLC

First Lien Secured Term Loan

Motivational Marketing, LLC (7)(12)

First Lien Secured Revolving Loan

Application Software

Atlas Purchaser, Inc (dba Aspect Software)

Second Lien Secured Term Loan

Connexity, Inc.

Newscycle Solutions, Inc

First Lien Secured Term Loan

Newscycle Solutions, Inc (7)

First Lien Secured Revolving Loan

TaxSlayer LLC

First Lien Secured Term Loan

Solutions, Inc.

First Lien Secured Revolving

TaxSlayer LLC (7)

First Lien Secured Revolving Loan

Automotive Retail

Team Car Care Holdings, LLC (12)

First Lien Secured Term Loan

Secured Revolving Loan

Car Care Holdings, LLC (12)

Secured Term Loan

Base rate+ 7.99%

Building Products

Drew Foam Companies Inc

2 unchanged sentences

First Lien Secured Term Loan

Borrower, LLC (7)

Secured Revolving Loan

Midco, LLC (15)

Secured Term Loan

& Engineering

Holding, Inc.

Lien Secured Term Loan

Secured Term Loan

Claridge Products and Equipment,

LHS Borrower, LLC (7)

First Lien Secured Revolving Loan

Trimlite Buyer LLC (5)(13)

First Lien Secured Term Loan

Products and Equipment, LLC (7)

Secured Revolving Loan

Secured Term Loan

Trimlite Buyer LLC (5)(7)(13)

First Lien Secured Revolving Loan

Cable & Satellite

Bulk Midco, LLC (15)

First Lien Secured Term Loan

Construction & Engineering

First Lien Secured Term Loan

Construction Materials

Claridge Products and Equipment, LLC

First Lien Secured Term Loan

Claridge Products and Equipment, LLC (7)

First Lien Secured Revolving Loan

Commodity Chemicals

Flexitallic Group SAS

First Lien Secured Term Loan

8.50% (8.00% Cash + 0.50% PIK)

Consumer Finance

Maxitransfers Blocker Corp

First Lien Secured Term Loan

Maxitransfers

Blocker Corp (4)(7)

Secured Revolving Loan

Processing & Outsourced Services

Maxitransfers Blocker Corp (4)(7)

First Lien Secured Revolving Loan

Data Processing & Outsourced Services

Escalon Services Inc

1 unchanged sentence

14.50% (13.00% Cash + 1.50% PIK)

FPT Operating Company, LLC/ TLabs

Operating Company, LLC

First Lien Secured Term Loan

Logic Systems Ltd.

FPT Operating Company, LLC/ TLabs Operating Company, LLC

First Lien Secured Term Loan

Logic Systems Ltd.

First Lien Secured Revolving

Acquisition Co.

(dba Integreon)

Secured Term Loan

See notes to the consolidated financial

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

June 30, 2021

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Farm Group, LLC

Secured Term Loan

Brands, LLC (19)

Investment Type (1)

Department Stores

Mills Fleet Farm Group, LLC

First Lien Secured Term Loan

Crown Brands, LLC (19)

Second Lien Secured Term Loan

Brands, LLC (19)

Secured Delayed Draw Loan

Sklar Holdings,

Secured Term Loan

Support Services

NNA Services,

Secured Term Loan

EducationDynamics,

Secured Term Loan

Equipment & Instruments

LMG Holdings, Inc.

Crown Brands, LLC (19)

Second Lien Secured Delayed Draw Loan

Diversified Chemicals

Sklar Holdings, Inc

First Lien Secured Term Loan

Holdings, Inc.

Secured Revolving Loan

Care Facilities

Epiphany Dermatology

Diversified Support Services

NNA Services, LLC

First Lien Secured Term Loan

Dermatology (7)

First Lien Secured Revolving

Dermatology (7)

First Lien Secured Delayed Draw

HIMA San Pablo, Inc.

Education Services

EducationDynamics, LLC

First Lien Secured Term Loan

HIMA San Pablo, Inc.

8.00% (7.50% Cash + 0.50% PIK)

EducationDynamics, LLC (7)

First Lien Secured Delayed Draw Loan

8.00% (7.50% Cash + 0.50% PIK)

EducationDynamics, LLC (7)

First Lien Secured Revolving Loan

8.00% (7.50% Cash + 0.50% PIK)

EducationDynamics, LLC (4)

Subordinated Unsecured Term Loan

Electronic Equipment & Instruments

LMG Holdings, Inc

First Lien Secured Term Loan

HIMA San Pablo, Inc.

Secured Term Loan

LMG Holdings, Inc (7)

First Lien Secured Revolving Loan

Health Care Facilities

Epiphany Dermatology

First Lien Secured Term Loan

Epiphany Dermatology (7)

First Lien Secured Revolving Loan

Epiphany Dermatology (7)

First Lien Secured Delayed Draw Loan

Grupo HIMA San Pablo, Inc (8)

First Lien Secured Term Loan A

Grupo HIMA San Pablo, Inc (8)

First Lien Secured Term Loan B

Grupo HIMA San Pablo, Inc (8)

Second Lien Secured Term Loan

15.75% (13.75% Cash + 2.00% PIK)

Care Services

Health Care Services

CHS Therapy, LLC

First Lien Secured Term Loan

First Lien Secured Term Loan A

10.50% (10.00% Cash + 0.50% PIK)

CHS Therapy, LLC

First Lien Secured Term Loan

First Lien Secured Term Loan C

10.50% (10.00% Cash + 0.50% PIK)

DCA Investment Holding, LLC

First Lien Secured Term Loan

Investment Holding, LLC (7)

First Lien Secured Delayed Draw

Ivy Rehab Holdings LLC

DCA Investment Holding, LLC (7)

First Lien Secured Delayed Draw Loan

IvyRehab Intermediate II, LLC

First Lien Secured Term Loan

Rehab Holdings LLC (7)

First Lien Secured Revolving

Rehab Holdings LLC (7)

First Lien Secured Delayed Draw

IvyRehab Intermediate II, LLC (7)

First Lien Secured Delayed Draw Loan

IvyRehab Intermediate II, LLC (7)

First Lien Secured Revolving Loan

Lab Logistics, LLC

1 unchanged sentence

Lab Logistics, LLC

First Lien Secured Delayed Draw

PG Dental New Jersey Parent,

First Lien Secured Delayed Draw Loan

PG Dental New Jersey Parent, LLC

First Lien Secured Term Loan

Dental New Jersey Parent, LLC (7)

Secured Revolving Loan

Electrical Equipment

PPS CR Acquisition, Inc.

Power Plant Services)

10.00% (8.75% Cash + 1.25% PIK)

PG Dental New Jersey Parent, LLC (7)

First Lien Secured Revolving Loan

10.00% (8.75% Cash + 1.25% PIK)

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Investment Type (1)

Heavy Electrical Equipment

PPS CR Acquisition, Inc (dba Power Plant Services)

First Lien Secured Term Loan

CR Acquisition, Inc.

(dba Power Plant Services) (7)

Secured Revolving Loan

Fit Home Products, LLC

Secured Term Loan

The Kyjen Company, LLC (dba Outward

PPS CR Acquisition, Inc (dba Power Plant Services) (7)

First Lien Secured Revolving Loan

Home Furnishings

Sure Fit Home Products, LLC

First Lien Secured Term Loan

Kyjen Company, LLC (dba Outward Hound) (7)

Lien Secured Revolving Loan

Media & Services

Media Group, LLC

Secured Term Loan

& Direct Marketing Retail

Household Products

The Kyjen Company, LLC (dba Outward Hound)

First Lien Secured Term Loan

The Kyjen Company, LLC (dba Outward Hound) (7)

First Lien Secured Revolving Loan

Interactive Media & Services

What If Media Group, LLC

First Lien Secured Term Loan

Internet & Direct Marketing Retail

BBQ Buyer, LLC

2 unchanged sentences

First Lien Secured Term Loan

Secured Term Loan

See notes to the consolidated financial

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

June 30, 2021

(in thousands)

Banking & Brokerage

JVMC Holdings

(f/k/a RJO Holdings Corp)

Secured Term Loan

Consulting & Other Services

AST-Applications Software Technology

Marlin DTC-LS Midco 2, LLC

First Lien Secured Term Loan

(8.00% Cash + 1.00% PIK)

Holdings Limited (5)(13)

Potpourri Group, Inc

First Lien Secured Term Loan

Holdings Limited (5)(7)(12)(13)

First lien Secured Revolving

Core BTS, Inc.

Investment Banking & Brokerage

JVMC Holdings Corp (f/k/a RJO Holdings Corp)

First Lien Secured Term Loan

Secured Delayed Draw Loan

Holdings, LLC (16)

IT Consulting & Other Services

AST-Applications Software Technology LLC

First Lien Secured Term Loan

9.00% (8.00% Cash + 1.00% PIK)

Holdings, LLC (16)

First Lien Secured Delayed Draw

(8.04% Cash + 0.58% PIK)

Lift Brands, Inc.

(aka Snap Fitness

Holdings, Inc.)

Core BTS, Inc

First Lien Secured Term Loan

Lift Brands, Inc.

(aka Snap Fitness

Holdings, Inc.)

Core BTS, Inc

First Lien Secured Delayed Draw Loan

Leisure Facilities

Honors Holdings, LLC (16)

First Lien Secured Term Loan

8.81% (8.31% Cash + 0.50% PIK)

(aka Snap Fitness Holdings, Inc.) (9)

Secured Term Loan C

Honors Holdings, LLC (16)

First Lien Secured Delayed Draw Loan

8.60% (8.10% Cash + 0.50% PIK)

Lift Brands, Inc (aka Snap Fitness Holdings, Inc)

First Lien Secured Term Loan A

Lift Brands, Inc (aka Snap Fitness Holdings, Inc)

First Lien Secured Term Loan B

9.50% (0.00% Cash + 9.50% PIK)

Lift Brands, Inc (aka Snap Fitness Holdings, Inc) (9)

First Lien Secured Term Loan C

9.50% (0.00% Cash + 9.50% PIK)

Leisure Products

PlayMonster LLC

First Lien Secured Term Loan

Secured Delayed Draw Loan

Services & Supplies

American Crafts, L.C.

PlayMonster LLC (7)

First Lien Secured Delayed Draw Loan

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Investment Type (1)

Office Services & Supplies

American Crafts, LC

First Lien Secured Term Loan

Empire Office,

Secured Term Loan

Foods & Meats

& Larry's, LLC (17)

Secured Term Loan

Empire Office, Inc

First Lien Secured Term Loan

Empire Office, Inc (7)

First Lien Secured Delayed Draw Loan

Packaged Foods & Meats

Lenny & Larry's, LLC (17)

First Lien Secured Term Loan

9.40% (7.68% Cash + 1.72% PIK)

Personal Products

Inspired Beauty Brands, Inc

First Lien Secured Term Loan

Beauty Brands, Inc.

Secured Revolving Loan

& Casualty Insurance

Services Company, LLC (5)

Secured Term Loan

& Consulting Services

Inspired Beauty Brands, Inc (7)

First Lien Secured Revolving Loan

Property & Casualty Insurance

Policy Services Company, LLC (5)

First Lien Secured Term Loan

Research & Consulting Services

ALM Media, LLC

First Lien Secured Term Loan

Nelson Worldwide,

Secured Term Loan

(10.25% Cash + 1.00% PIK)

LS GFG Holdings

Secured Term Loan

Nelson Worldwide, LLC

First Lien Secured Term Loan

11.25% (10.25% Cash + 1.00% PIK)

Consumer Services

Specialized Consumer Services

HC Salon Holdings, Inc

First Lien Secured Term Loan

HC Salon Holdings, Inc (7)

First Lien Secured Revolving Loan

True Blue Car Wash, LLC

First Lien Secured Term Loan

Blue Car Wash, LLC (7)

Secured Delayed Draw Loan

Pear Funding Assetco, LLC (5)

True Blue Car Wash, LLC (7)

First Lien Secured Delayed Draw Loan

Specialized Finance

Golden Pear Funding Assetco, LLC (5)

Second Lien Secured Term Loan

STRS Ohio Senior Loan Fund LLC (4)(5)(7)(9)(14)

IDIG Parent LLC

First Lien Secured Term Loan

Parent LLC (7)

First Lien Secured Delayed Draw

Parent LLC (7)

Secured Revolving Loan

See notes to the consolidated financial

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

June 30, 2021

(in thousands)

Technology Hardware, Storage

& Peripherals

WHF STRS Ohio Senior Loan Fund LLC (4)(5)(7)(9)(14)

Subordinated Note

Systems Software

Arcstor Midco, LLC

First Lien Secured Term Loan

Technology Hardware, Storage & Peripherals

Source Code Midco, LLC

First Lien Secured Term Loan

Source Code Midco, LLC (7)

First Lien Secured Delayed Draw Loan

Telestream Holdings Corporation

2 unchanged sentences

First Lien Secured Revolving Loan

Trading Companies & Distributors

LINC Systems, LLC

First Lien Secured Term Loan

LINC Systems, LLC (7)

First Lien Secured Revolving Loan

Total Debt Investments

Equity Investments

Air Freight & Logistics

Motivational CIV, LLC (dba Motivational Marketing, LLC) (4)

Class B Units

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Investment Type (1)

Data Processing & Outsourced Services

5 unchanged sentences

Common A Units

Education Services

EducationDynamics, LLC (4)

Preferred Units

Health Care Services

1 unchanged sentence

Preferred Units

Interactive Media & Services

What If Media Group, LLC (4)

Internet & Direct Marketing Retail

9 unchanged sentences

Leisure Facilities

Lift Brands, Inc.

(aka Snap Fitness Holdings,

Lift Brands, Inc (aka Snap Fitness Holdings, Inc) (4)

Class A Common Stock

Lift Brands, Inc.

(aka Snap Fitness Holdings,

Lift Brands, Inc (aka Snap Fitness Holdings, Inc) (4)

Other Diversified Financial Services

6 unchanged sentences

Total Investments

See notes to the consolidated

financial statements

Forward Currency Contracts

Currency to be sold

Currency to be purchased

Settlement date

Morgan Stanley

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

June 30, 2021

Consolidated Schedule of Investments (Unaudited)

September 30, 2021

(in thousands)

Currency Contracts

Morgan Stanley

(1) Except as otherwise noted, all

investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940,

as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

(2) The investments bear interest at a rate that may be determined by reference

to the London Interbank Offered Rate (“LIBOR”

or “L”), which resets monthly, quarterly or semiannually, the Canadian

Dollar Offered Rate (“CDOR”

or “C”), or the U.S.

Prime Rate as published by the Wall Street Journal (“Prime”

or “P”).

The one, three and six-month USD LIBOR were 0.1%, 0.1% and 0.2%, respectively, as of June 30, 2021.

The one, three

and six-month GBP LIBOR were all 0.1% as of June 30, 2021.

The CDOR and Prime was 0.4% and 3.25%, respectively, as of June 30, 2021.

(3) The interest rate is the “all-in-rate”

including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest

rate, as the case may be.

(4) The investment or a portion of the investment does

not provide collateral for the Company’s credit facility.

(5) Not a qualifying

asset under Section 55(a) of the 1940 Act.

Under the 1940 Act, the Company may not acquire any non-qualifying

asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets.

(1) Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

(2) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Canadian Dollar Offered Rate (“CDOR” or “C”), or the U.S.

Prime Rate as published by the Wall Street Journal (“Prime” or “P”).

The one, three and six-month USD LIBOR were 0.08%, 0.13% and 0.16%, respectively, as of September 30, 2021.

The CDOR and Prime was 0.45% and 3.25%, respectively, as of September 30, 2021.

(3) The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.

(4) The investment or a portion of the investment does not provide collateral for the Company’s credit facility.

(5) Not a qualifying asset under Section 55(a) of the 1940 Act.

Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets.

Qualifying assets represented 84.5% of total assets as of the date of the consolidated schedule of investments.

(6) Investment is a non-controlled/affiliate investment

as defined by the 1940 Act.

(7) The investment has an unfunded

commitment in addition to any amounts presented in the consolidated schedule of investments as of June

(6) Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

(7) The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of September 30, 2021.

(8) The investment is on non-accrual status.

(9) Security is perpetual with no defined maturity date.

(10) Except as otherwise noted, all

of the Company’s portfolio company investments, which as of the date of the consolidated schedule

of investments represented 209.8% of the Company’s net assets or 95.8% of the Company’s total

assets, are subject to legal restrictions on sales.

(11) The fair value of each investment was determined using

significant unobservable inputs.

investment was comprised of two contracts, which were indexed to different base rates, L

and P, respectively.

The Floor, Spread Above Index and Interest Rate presented represent

the weighted average of both contracts.

(13) Principal

amount is non-USD denominated and is based in Canadian dollars or British Pounds.

(14) Investment is a controlled affiliate

investment as defined by the 1940 Act.

On January 14, 2019, the Company entered into an agreement (as

described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established

under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”),

a joint venture, which invests primarily in senior secured first and second lien term loans.

(15) In addition to

the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest in the amount of 2.75% on its “last out”

of the portfolio company’s senior term debt, which was previously syndicated into “first

and “last out”

tranches, whereby the “first out”

will have priority as to the “last out”

tranche with respect to payments of principal,

interest and any other amounts due thereunder.

(16) In addition to

the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest in the amount of 3.50% on its “last out”

of the portfolio company’s senior term debt, which was previously syndicated into “first

and “last out”

tranches, whereby the “first out”

will have priority as to the “last out”

tranche with respect to payments of principal,

interest and any other amounts due thereunder.

(17) In addition to

the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest in the amount of 3.00% on its “last out”

of the portfolio company’s senior term debt, which was previously syndicated into “first

and “last out”

tranches, whereby the “first out”

will have priority as to the “last out”

tranche with respect to payments of principal,

interest and any other amounts due thereunder.

(18) On October 1, 2020, as part of a restructuring agreement

between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured

term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

(19) At the option of the issuer, interest can be paid

in cash or cash and PIK.

(10) Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 212.3% of the Company’s net assets or 94.2% of the Company’s total assets, are subject to legal restrictions on sales.

(11) The fair value of each investment was determined using significant unobservable inputs.

(12) The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively.

The Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

(13) Principal amount is non-USD denominated and is based in Canadian dollars.

(14) Investment is a controlled affiliate investment as defined by the 1940 Act.

On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.

(15) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(16) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(17) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(18) On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

(19) At the option of the issuer, interest can be paid in cash or cash and PIK.

The issuer may elect to pay up to 2.00% PIK.

(20) Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.

See notes to the consolidated financial statements

3 unchanged sentences

(in thousands)

Investment Type (1)

North America

Debt Investments

Lien Secured Term Loan

SmartSign Holdings

Lien Secured Term Loan

& Farm Machinery

Bad Boy Mowers

Acquisition, LLC

Lien Secured Term Loan

Access USA Shipping,

Lien Secured Term Loan

First Lien Secured Term Loan

(0.50% Floor)

SmartSign Holdings LLC

First Lien Secured Term Loan

(1.00% Floor)

Agricultural & Farm Machinery

Bad Boy Mowers Acquisition, LLC

First Lien Secured Term Loan

(1.00% Floor)

Air Freight & Logistics

Access USA Shipping, LLC

First Lien Secured Term Loan

(1.50% Floor)

Application Software

Connexity, Inc.

Lien Secured Term Loan

Newscycle Solutions,

Lien Secured Term Loan

Lien Secured Revolving Loan (7)

First Lien Secured Term Loan

(1.50% Floor)

Newscycle Solutions, Inc.

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

TaxSlayer LLC

Lien Secured Term Loan

Lien Secured Revolving Loan (7)

Team Car Care

Holdings, LLC

Lien Secured Term Loan (12)

Convenience Holdings, LLC

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

Automotive Retail

Team Car Care Holdings, LLC

First Lien Secured Term Loan (12)

Base rate+ 8.00%

(1.00% Floor)

BW Gas & Convenience Holdings, LLC

First Lien Secured Term Loan

(0.00% Floor)

Alpha Media, LLC

First Lien Secured Term Loan

(2.00% Floor)

Building Products

Drew Foam Companies

Lien Secured Term Loan

Lien Secured Revolving Loan (7)

LHS Borrower,

Lien Secured Term Loan

Lien Secured Revolving Loan (7)

See notes to consolidated financial

Drew Foam Companies Inc

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

LHS Borrower, LLC

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Investment Type (1)

Cable & Satellite

Bulk Midco, LLC

Lien Secured Term Loan (15)

First Lien Secured Term Loan (15)

(1.00% Floor)

Communications Equipment

1 unchanged sentence

Company, Inc.

Lien Secured Term Loan (5)

First Lien Secured Term Loan (5)

(0.00% Floor)

Sorenson Communications, LLC

Secured Term Loan

First Lien Secured Term Loan

(0.00% Floor)

Construction & Engineering

Atlas Intermediate Holdings LLC

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Road Safety Services, Inc.

Secured Term Loan

Lien Secured Revolving Loan (7)

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Term Loan

(1.00% Floor)

Construction Materials

Claridge Products and Equipment,

Secured Term Loan

Lien Secured Revolving Loan (7)

Claridge Products and Equipment, LLC

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

Consumer Finance

Maxitransfers Blocker Corp

Secured Term Loan

Lien Secured Revolving Loan (4)

Data Processing & Outsourced

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (4)

(1.00% Floor)

Data Processing & Outsourced Services

Escalon Services Inc

Secured Term Loan

First Lien Secured Term Loan

(0.75% Floor)

FPT Operating Company, LLC/

TLabs Operating Company, LLC

Secured Term Loan

Logic Systems Ltd.

Lien Secured Term Loan (13)

Lien Secured Revolving Loan (7) (13)

See notes to consolidated financial

First Lien Secured Term Loan

(1.00% Floor)

Geo Logic Systems Ltd.

First Lien Secured Term Loan (13)

(1.00% Floor)

First Lien Secured Revolving Loan (7) (13)

(1.00% Floor)

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Investment Type (1)

Department Stores

Mills Fleet Farm Group, LLC

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Crown Brands, LLC

Lien Secured Term Loan (20)

Lien Secured Delayed Draw Loan (20)

Second Lien Secured Term Loan (20)

(1.50% Floor)

Second Lien Secured Delayed Draw Loan (20)

(1.50% Floor)

Diversified Chemicals

Sklar Holdings, Inc.

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Diversified Support Services

ImageOne Industries, LLC

Secured Term Loan

Lien Secured Revolving Loan (4)(7)

First Lien Secured Term Loan

11.00% (4.00%PIK)

(1.00% Floor)

First Lien Secured Revolving Loan (4)(7)

11.00% (4.00%PIK)

(1.00% Floor)

NNA Services, LLC

Lien Secured Term Loan

First Lien Secured Term Loan

(1.50% Floor)

Education Services

EducationDynamics, LLC

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

AG Kings Holdings, Inc.

Lien Secured Term Loan (4)(8)

Superpriority

Secured Debtor-In- Possession Term Loan (4)(18)

First Lien Secured Term Loan (4)(8)

16.25% (2.00%PIK)

(0.75% Floor)

Superpriority Secured Debtor-In- Possession Term Loan (4)(18)

(1.00% Floor)

Health Care Facilities

Epiphany Dermatology

Secured Term Loan

Lien Secured Revolving Loan (7)

Lien Secured Delayed Draw Loan (7)

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Delayed Draw Loan (7)

(1.00% Floor)

Grupo HIMA San Pablo, Inc.

Secured Term Loan A

Secured Term Loan B

Lien Secured Term Loan (8)

First Lien Secured Term Loan A

First Lien Secured Term Loan B

(1.50% Floor)

Second Lien Secured Term Loan (8)

15.75% (2.00%PIK)

Health Care Services

CHS Therapy, LLC

Secured Term Loan A

Secured Term Loan C

See notes to consolidated financial

First Lien Secured Term Loan A

(1.50% Floor)

First Lien Secured Term Loan C

(1.50% Floor)

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Investment Type (1)

Ivy Rehab Holdings LLC

First Lien Secured Term Loan

Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Delayed Draw

(1.00% Floor)

Lab Logistics, LLC

First Lien Secured Term Loan

First Lien Secured Delayed

PG Dental New Jersey Parent,

(1.00% Floor)

First Lien Secured Delayed Draw Loan

(1.00% Floor)

PG Dental New Jersey Parent, LLC

First Lien Secured Term Loan

Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

Home Furnishings

Sure Fit Home Products, LLC

Lien Secured Term Loan (8)

First Lien Secured Term Loan (8)

(1.00% Floor)

Interactive Media & Services

1 unchanged sentence

First Lien Secured Term Loan

Internet & Direct Marketing

(1.00% Floor)

Internet & Direct Marketing Retail

BBQ Buyer, LLC

First Lien Secured Term Loan

Lien Secured Revolving Loan (7)

(1.50% Floor)

First Lien Secured Revolving Loan (7)

(1.50% Floor)

Luxury Brand Holdings, Inc.

First Lien Secured Term Loan

(1.00% Floor)

Potpourri Group, Inc.

First Lien Secured Term Loan

(1.50% Floor)

Investment Banking & brokerage

JVMC Holdings Corp.

Holdings Corp)

(f/k/a RJO Holdings Corp)

First Lien Secured Term Loan

IT Consulting & Other

AST-Applications Software

Technology LLC

(1.00% Floor)

IT Consulting & Other Services

AST-Applications Software Technology LLC

First Lien Secured Term Loan

9.00% (1.00%PIK)

(1.00% Floor)

RCKC Acquisitions LLC (dba KSM Consulting LLC)

First Lien Secured Term Loan

Lien Secured Revolving Loan (7)

Lien Secured Delayed Draw Loan (7)

See notes to consolidated financial

(1.00% Floor)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

First Lien Secured Delayed Draw Loan (7)

(1.00% Floor)

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Fair Value As A

Investment Type (1)

Leisure Facilities

Honors Holdings, LLC

Lien Secured Term Loan (16)

First Lien Secured Term Loan (16)

(1.00% Floor)

First Lien Secured Delayed Draw

(1.00% Floor)

Lift Brands, Inc.

Fitness Holdings, Inc)

First Lien Secured Term Loan

Lien Secured Term Loan C (9)

(aka Snap Fitness Holdings, Inc)

First Lien Secured Term Loan A

(1.00% Floor)

First Lien Secured Term Loan B

First Lien Secured Term Loan C (9)

Office Services & Supplies

1 unchanged sentence

First Lien Secured Term Loan

(1.50% Floor)

Packaged Foods & Meats

Lenny & Larry's, LLC

Lien Secured Term Loan (17)

First Lien Secured Term Loan (17)

(1.00% Floor)

Personal Products

1 unchanged sentence

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving

(1.00% Floor)

Property & Casualty Insurance

Policy Services Company, LLC

Lien Secured Term Loan (5)

First Lien Secured Term Loan (5)

(1.00% Floor)

Research & Consulting Services

1 unchanged sentence

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Revolving

(1.00% Floor)

Nelson Worldwide, LLC

First Lien Secured Term Loan

(1.00% Floor)

ALM Media, LLC

First Lien Secured Term Loan

(1.00% Floor)

LS GFG Holdings Inc.

First Lien Secured Term Loan

(1.00% Floor)

Specialized Consumer Services

1 unchanged sentence

First Lien Secured Term Loan

(1.00% Floor)

First Lien Secured Delayed Draw

See notes to consolidated financial

(1.00% Floor)

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Investment Type (1)

Specialized Finance

Pear Funding Assetco, LLC (5)

Second Lien Secured

Legal Finance, LLC (5)

Golden Pear Funding Assetco, LLC (5)

Second Lien Secured Term Loan

WHF STRS Ohio Senior Loan Fund

Note (4)(5)(7)(9)(14)

Oasis Legal Finance, LLC (5)

Second Lien Secured Term Loan

WHF STRS Ohio Senior Loan Fund LLC

Subordinated Note (4)(5)(7)(9)(14)

Specialty Chemicals

4 unchanged sentences

First Lien Secured Term Loan

Technology Hardware, Storage

& Peripherals

Technology Hardware, Storage & Peripherals

Source Code Midco, LLC

2 unchanged sentences

First Lien Secured Term Loan

Lien Secured Revolving Loan (7)

First Lien Secured Revolving Loan (7)

Total Debt Investments

Equity Investments

Data Processing & Outsourced

Services Inc Warrants (4)

Data Processing & Outsourced Services

Escalon Services Inc Warrants (4)

Diversified Support Services

Events, LLC Preferred Units (4)

Industries, LLC Common A Units (4)

Quest Events, LLC Preferred Units (4)

ImageOne Industries, LLC Common A Units (4)

Health Care Services

Logistics Preferred Units (4)

Internet & Direct Marketing

Buyer, LLC Shares (4)

Topco, LP Preferred Units (4)

Lab Logistics Preferred Units (4)

Internet & Direct Marketing Retail

BBQ Buyer, LLC Shares (4)

Ross-Simons Topco, LP Preferred Units (4)

Investment Banking & Brokerage

Holding Corp.

Arcole Holding Corp.

Shares (4)(5)(6)(19)

IT Consulting & Other Services

Holdings, LLC Shares(dba KSM Consulting LLC) (4)

Keras Holdings, LLC Shares(dba KSM Consulting LLC) (4)

Leisure Facilities

Lift Brands, Inc.

(aka Snap Fitness Holdings, Inc.) Class A Common Stock (4)

Lift Brands, Inc.

(aka Snap Fitness Holdings, Inc.) Warrants (4)

See notes to consolidated financial

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

2 unchanged sentences

(in thousands)

Other Diversified Financial

Creditor Trust Class B Units (4)(6)

Global Holding Company Warrants (4)

Corporation Warrants (4)

Investment Type (1)

Other Diversified Financial Services

RCS Creditor Trust Class B Units (4)(6)

SFS Global Holding Company Warrants (4)

Sigue Corporation Warrants (4)

Specialized Finance

Senior Loan Program I LLC Units (4)(5)(6)

STRS Ohio Senior Loan Fund LLC Interests (4)(5)(7)(14)

NMFC Senior Loan Program I LLC Units (4)(5)(6)

WHF STRS Ohio Senior Loan Fund LLC Interests (4)(5)(7)(14)

Total Equity Investments

Total Investments

(1) Except as otherwise noted, all investments

are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as

amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

(2) The investments bear interest at a rate

that may be determined by reference to the London Interbank Offered Rate (“LIBOR”

or “L”),

which resets monthly, quarterly or semiannually, the Canadian Dollar Offered Rate (“CDOR”

or “C”) or the U.S.

Prime Rate as published by the Wall Street Journal (“Prime”

or “P”).

The one, three and six-month LIBOR were 0.1%, 0.2% and 0.3%, respectively, as

of December 31, 2020.

Prime Rate as published by the Wall Street Journal (“Prime” or “P”).

The one, three and six-month LIBOR were 0.1%, 0.2% and 0.3%, respectively, as of December 31, 2020.

The Prime was 3.25% as of December 31, 2020.

The CDOR was 0.5% as of December 31, 2020.

(3) The interest rate is the “all-in-rate”

including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”)

interest rate, as the case may be.

(4) The investment or a portion of the investment does not provide collateral

for the Company’s credit facility.

(5) Not a qualifying asset under Section

55(a) of the 1940 Act.

Under the 1940 Act, the Company may not acquire any non-qualifying asset unless,

at the time the acquisition is made, qualifying assets represent at least 70% of total assets.

assets represented 84% of total assets as of the date of the consolidated schedule of investments.

(6) Investment is a non-controlled/affiliate investment as defined by

the 1940 Act.

(7) The investment has an unfunded commitment

in addition to any amounts presented in the consolidated schedule of investments as of December 31,

(3) The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.

(4) The investment or a portion of the investment does not provide collateral for the Company’s credit facility.

(5) Not a qualifying asset under Section 55(a) of the 1940 Act.

Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets.

Qualifying assets represented 84% of total assets as of the date of the consolidated schedule of investments.

(6) Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

(7) The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of December 31, 2020.

(8) The investment is on non-accrual status.

(9) Security is perpetual with no defined maturity date.

(10) Except as otherwise noted, all of the

Company’s portfolio company investments, which as of the date of the consolidated schedule

of investments represented 221% of the Company’s net assets or 96% of the Company’s total

assets, are subject to legal restrictions on sales.

(11) The fair value of each investment was determined using significant

unobservable inputs.

(12) The investment

was comprised of two contracts, which were indexed to different base rates, L and P, respectively.

The Spread Above Index and Interest Rate presented represent the weighted average of both

(13) Principal amount is denominated in Canadian

(14) Investment

is a controlled affiliate investment as defined by the 1940 Act.

On January 14, 2019, the

Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement

System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”),

to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which

invests primarily in senior secured first and second lien term loans.

addition to the interest earned based on the stated interest rate of this security, the Company

is entitled to receive an additional interest amount of 2.75% on its “last out”

tranche of the portfolio company’s senior term debt, which was previously syndicated

into “first out”

and “last out”

tranches, whereby the “first

tranche will have priority as to the “last out”

tranche with respect

to payments of principal, interest and any other amounts due thereunder.

addition to the interest earned based on the stated interest rate of this security, the Company

is entitled to receive an additional interest amount of 3.50% on its “last out”

tranche of the portfolio company’s senior term debt, which was previously syndicated

into “first out”

and “last out”

tranches, whereby the “first

tranche will have priority as to the “last out”

tranche with respect

to payments of principal, interest and any other amounts due thereunder.

addition to the interest earned based on the stated interest rate of this security, the Company

is entitled to receive an additional interest amount of 3.00% on its “last out”

tranche of the portfolio company’s senior term debt, which was previously syndicated

into “first out”

and “last out”

tranches, whereby the “first

tranche will have priority as to the “last out”

tranche with respect

to payments of principal, interest and any other amounts due thereunder.

(18) In August

2020, in conjunction with the AG Kings Holdings, Inc.

bankruptcy, the Company converted approximately

$14.2 million of its existing first lien secured term loan into a new superpriority secured

debtor-in-possession term loan.

(19) On October 1, 2020, as part of a restructuring

agreement between the Company and Arcole Acquisition Corp, the Company’s investments

in first lien secured term loans to Arcole Acquisition Corp were converted into common shares

of Arcole Holding Corp.

(20) At the option of the issuer, interest

can be paid in cash or cash and PIK.

(10) Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 221% of the Company’s net assets or 96% of the Company’s total assets, are subject to legal restrictions on sales.

(11) The fair value of each investment was determined using significant unobservable inputs.

(12) The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively.

The Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

(13) Principal amount is denominated in Canadian dollars.

(14) Investment is a controlled affiliate investment as defined by the 1940 Act.

(15) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche

See notes to the consolidated financial statements

WHITEHORSE FINANCE, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2020

(in thousands)

will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(16) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(17) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(18) In August 2020, in conjunction with the AG Kings Holdings, Inc.

bankruptcy, the Company converted approximately $14.2 million of its existing first lien secured term loan into a new superpriority secured debtor-in-possession term loan.

(19) On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

(20) At the option of the issuer, interest can be paid in cash or cash and PIK.

The issuer may elect to pay up to 2.00% PIK .

notes to consolidated financial statements

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements

June 30, 2021

(in thousands, except share and per share

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2021

(in thousands, except share and per share data)

NOTE 1 - ORGANIZATION

WhiteHorse Finance, Inc.

(“WhiteHorse

Finance”

and, together with its subsidiaries, the “Company”) is an externally managed, non-diversified, closed-end management

investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended

(the “1940 Act”).

In addition, for tax purposes, WhiteHorse Finance elected to be treated as a regulated investment company

(“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

WhiteHorse Finance’s

common stock trades on the Nasdaq Global Select Market under the symbol “WHF.”

The Company’s investment objective is to

generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second

lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest

rate based on a risk-free index rate such as the London Interbank Offered Rate (“LIBOR”) and have a term of three to six years.

While the Company focuses principally on originating senior secured loans to lower middle market companies, it may also opportunistically

make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests and may receive

warrants to purchase common stock in connection with its debt investments.

WhiteHorse Finance’s investment activities are managed

WhiteHorse Advisers, LLC (“WhiteHorse Advisers”

or the “Investment Adviser”).

WhiteHorse Administration,

LLC (“WhiteHorse Administration”

or the “Administrator”) provides administrative services necessary for the Company

Engaging in commodity interest transactions

such as swap transactions or futures contracts for the Company may cause WhiteHorse Advisers to fall within the definition of “commodity

pool operator”

under the Commodity Exchange Act (the “CEA”) and related regulations promulgated by the U.S.

Futures Trading Commission (the “CFTC”).

On January 23, 2020, WhiteHorse Advisers claimed an exclusion from the definition

of the term “commodity pool operator”

under the CEA and the CFTC regulations in connection with its management of the Company

(the “Exclusion”) and, therefore, WhiteHorse Advisers is not subject to CFTC registration or regulation under the CEA as a

commodity pool operator with respect to its management of the Company.

WhiteHorse Advisers has affirmed the Exclusion on February 24,

2021 and intends to continue to affirm the Exclusion on an annual basis.

(“WhiteHorse Finance” and, together with its subsidiaries, the “Company”) is an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”).

In addition, for tax purposes, WhiteHorse Finance elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

WhiteHorse Finance’s common stock trades on the Nasdaq Global Select Market under the symbol “WHF.”

The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest rate based on a risk-free index rate such as LIBOR and have a term of three to six years.

While the Company focuses principally on originating senior secured loans to lower middle market companies, it may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests and may receive warrants to purchase common stock in connection with its debt investments.

WhiteHorse Finance’s investment activities are managed by H.I.G.

WhiteHorse Advisers, LLC (“WhiteHorse Advisers” or the “Investment Adviser”).

WhiteHorse Administration, LLC (“WhiteHorse Administration” or the “Administrator”) provides administrative services necessary for the Company to operate.

Engaging in commodity interest transactions such as swap transactions or futures contracts for the Company may cause WhiteHorse Advisers to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”) and related regulations promulgated by the U.S.

Commodity Futures Trading Commission (the “CFTC”).

On January 23, 2020, WhiteHorse Advisers claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of the Company (the “Exclusion”) and, therefore, WhiteHorse Advisers is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of the Company.

WhiteHorse Advisers has affirmed the Exclusion on February 24, 2021 and intends to continue to affirm the Exclusion on an annual basis.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation :

The accompanying consolidated financial statements have been prepared in conformity with accounting principles

generally accepted in the United States of America (“GAAP”) and include the accounts of WhiteHorse Finance and its wholly

owned subsidiaries, WhiteHorse Finance Credit I, LLC (“WhiteHorse Credit”), and its subsidiary WhiteHorse Finance (CA), LLC

(“WhiteHorse California”), WhiteHorse Finance Warehouse, LLC (“WhiteHorse Warehouse”), WHF PMA Holdco Blocker,

LLC, WhiteHorse RCKC Holdings, LLC and WhiteHorse Finance Holdings, LLC.

The Company meets the definition of an investment company under

Accounting Standards Codification (“ASC”) Topic 946, Financial Services - Investment Companies , and therefore applies

the accounting and reporting guidance discussed therein to its consolidated financial statements.

All significant intercompany balances

and transactions have been eliminated.

Additionally, the accompanying consolidated

financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and

Articles 6, 10 and 12 of Regulation S-X.

Accordingly, certain disclosures accompanying the annual financial statements prepared in accordance

with GAAP are omitted.

In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments,

consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim

periods included herein.

This quarterly report on Form 10-Q should be read in conjunction with the Company’s annual report on Form

10-K for the year ended December 31, 2020.

The current period’s results of operations will not necessarily be indicative of results

that ultimately may be achieved for the year ending December 31, 2021.

Basis of Presentation :

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of WhiteHorse Finance and its wholly owned subsidiaries, WhiteHorse Finance Credit I, LLC (“WhiteHorse Credit”), and its subsidiary WhiteHorse Finance (CA), LLC (“WhiteHorse California”), WhiteHorse Finance Warehouse, LLC (“WhiteHorse Warehouse”), WHF PMA Holdco Blocker, LLC, WhiteHorse RCKC Holdings, LLC and WhiteHorse Finance Holdings, LLC.

The Company meets the definition of an investment company under Accounting Standards Codification (“ASC”) Topic 946, Financial Services - Investment Companies , and therefore applies the accounting and reporting guidance discussed therein to its consolidated financial statements.

All significant intercompany balances and transactions have been eliminated.

Additionally, the accompanying consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X.

Accordingly, certain disclosures accompanying the annual financial statements prepared in accordance with GAAP are omitted.

In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein.

This quarterly report on Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2020.

The current period’s results of

operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2021.

Principles of Consolidation :

the investment company rules and regulations pursuant to ASC Topic 946, WhiteHorse Finance is precluded from consolidating any entity

other than another investment company.

As provided under ASC Topic 946, WhiteHorse Finance generally consolidates any investment company

when it owns 100% of its partners’

or members’

capital or equity units.

The Company does not consolidate its investment in

Under the investment company rules and regulations pursuant to ASC Topic 946, WhiteHorse Finance is precluded from consolidating any entity other than another investment company.

As provided under ASC Topic 946, WhiteHorse Finance generally consolidates any investment company when it owns 100% of its partners’ or members’ capital or equity units.

The Company does not consolidate its investment in STRS JV.

See further description in Note 4.

Use of Estimates :

The preparation

of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements.

Actual results could differ from those estimates.

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ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements.

In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of

the valuation technique, into a three-level fair value hierarchy.

Fair value is a market-based measure considered from the perspective

of the market participant who holds the financial instrument.

Therefore, when market assumptions are not readily available, the Company’s

own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at

the measurement date.

Investments are measured at fair value

as determined in good faith by the Investment Adviser’s investment committee (the “Investment Committee”), generally

on a quarterly basis, and such valuations are reviewed by the audit committee of the Company’s board of directors and ultimately

approved by the Company’s board of directors, based on, among other factors, consistently applied valuation procedures on each measurement

Any changes to the valuation methodology are reviewed by management and the Company’s board of directors to confirm that the

changes are justified.

In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy.

Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument.

Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Investments are measured at fair value as determined in good faith by the Investment Adviser’s investment committee (the “Investment Committee”), generally on a quarterly basis, and such valuations are reviewed by the audit committee of the Company’s board of directors and ultimately approved by the Company’s board of directors, based on, among other factors, consistently applied valuation procedures on each measurement date.

Any changes to the valuation methodology are reviewed by management and the Company’s board of directors to confirm that the changes are justified.

The Company continues to review and refine its valuation procedures in response to market changes.

The Company engages independent external

valuation firms to periodically review material investments.

These external reviews are used by the Company’s board of directors

to review the Company’s internal valuation of each investment over the year.

The Company engages independent external valuation firms to periodically review material investments.

These external reviews are used by the Company’s board of directors to review the Company’s internal valuation of each investment over the year.

Investment Transactions :

The Company records investment transactions on a trade date basis.

These transactions may settle subsequent to the trade date depending

on the transaction type.

Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent

collateral appraisals may arise when the Company makes certain investments.

These expenses are recognized in the consolidated statements

of operations as they are incurred.

These transactions may settle subsequent to the trade date depending on the transaction type.

Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral appraisals may arise when the Company makes certain investments.

These expenses are recognized in the consolidated statements of operations as they are incurred.

Foreign currency translation :

The Company’s

books and records are maintained in U.S.

The Company’s books and records are maintained in U.S.

Any foreign currency amounts are translated into U.S.

dollars on the following basis:

(1) cash and cash equivalents, restricted cash and cash equivalents, fair value of investments, interest receivable, and other assets

and liabilities —

at the spot exchange rate on the last business day of the period;

(2) purchases and sales of investments, income and expenses —

at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented

based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations

resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments

(1) cash and cash equivalents, restricted cash and cash equivalents, fair value of investments, interest receivable, and other assets and liabilities — at the spot exchange rate on the last business day of the period;

(2) purchases and sales of investments, income and expenses — at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held.

Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Fluctuations arising from the

translation of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation)

on translation of assets and liabilities in foreign currencies on the consolidated statements of operations.

Foreign security and currency transactions

may involve certain considerations and risks not typically associated with investing in U.S.

These risks include, but are not

limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments

in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S.

Fluctuations arising from the translation of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies on the consolidated statements of operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S.

These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S.

companies or U.S.

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Revenue Recognition :

The Company’s revenue recognition

policies are as follows:

Realized gains or losses on the sales of investments

are calculated by using the specific identification method.

The Company’s revenue recognition policies are as follows:

Realized gains or losses on the sales of investments are calculated by using the specific identification method.

Investment Income :

Interest income,

adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.

The Company may also receive closing,

commitment, prepayment, amendment and other fees from portfolio companies in the ordinary course of business.

Dividend income is recorded on the record date for private

portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Closing fees associated with investments

in portfolio companies are deferred and recognized as interest income over the respective terms of the applicable loans.

Upon the prepayment

of a loan or debt security, any unamortized loan closing fees are recorded as part of interest income.

Commitment fees are based upon

the undrawn portion committed by the Company and are recorded as interest income on an accrual basis.

Prepayment, amendment and other

fees are recognized when earned, generally when such fees are receivable, and are included in fee income on the consolidated statements

of operations.

The Company may invest in loans that

contain a payment-in-kind (“PIK”) interest rate provision.

PIK interest is accrued at the contractual rates and added to loan

principal on the reset dates to the extent such amounts are expected to be collected.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.

The Company may also receive closing, commitment, prepayment, amendment and other fees from portfolio companies in the ordinary course of business.

Dividend income is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Closing fees associated with investments in portfolio companies are deferred and recognized as interest income over the respective terms of the applicable loans.

Upon the prepayment of a loan or debt security, any unamortized loan closing fees are recorded as part of interest income.

Commitment fees are based upon the undrawn portion committed by the Company and are recorded as interest income on an accrual basis.

Prepayment, amendment and other fees are recognized when earned, generally when such fees are receivable, and are included in fee income on the consolidated statements of operations.

The Company may invest in loans that contain a PIK interest rate provision.

PIK interest is accrued at the contractual rates and added to loan principal on the reset dates to the extent such amounts are expected to be collected.

Non-accrual loans :

placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal

or interest will be collected.

The Company may conclude that non-accrual status is not required if the loan has sufficient collateral

value and is in the process of collection.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected.

The Company may conclude that non-accrual status is not required if the loan has sufficient collateral value and is in the process of collection.

Accrued interest is generally reversed when a loan is placed on non-accrual status.

payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment.

Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are

likely to remain current.

Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment.

Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Cash and Cash Equivalents :

and cash equivalents include cash, deposits with financial institutions, and short-term liquid investments in money market funds with

original maturities of three months or less.

Cash and cash equivalents include cash, deposits with financial institutions, and short-term liquid investments in money market funds with original maturities of three months or less.

Restricted Cash and Cash Equivalents :

Restricted cash and cash equivalents include amounts that are collected and held by the trustee appointed as custodian of the assets securing

the Credit Facility (as defined in Note 6).

Restricted cash is held by the trustee for the payment of interest expense and principal on

the outstanding borrowings or reinvestment into new assets.

Restricted cash that represents interest or fee income is transferred to unrestricted

cash accounts by the trustee generally once a quarter after the payment of operating expenses and amounts due under the Credit Facility

(as defined in Note 6).

Restricted cash and cash equivalents include amounts that are collected and held by the trustee appointed as custodian of the assets securing the Credit Facility (as defined in Note 6).

Restricted cash is held by the trustee for the payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets.

Restricted cash that represents interest or fee income is transferred to unrestricted cash accounts by the trustee generally once a quarter after the payment of operating expenses and amounts due under the Credit Facility (as defined in Note 6).

Offering Costs :

The Company may

incur legal, accounting, regulatory, investment banking and other costs in relation to equity offerings.

Offering costs are deferred and

charged against paid-in capital in excess of par on completion of the related offering.

The Company may incur legal, accounting, regulatory, investment banking and other costs in relation to equity offerings.

Offering costs are deferred and charged against paid-in capital in excess of par on completion of the related offering.

Deferred Financing Costs :

financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings.

These amounts

are amortized and are included in interest expense in the consolidated statements of operations over the estimated life of the borrowings.

Deferred financing costs are presented in the consolidated statements of assets and liabilities as a direct reduction from the carrying

amount of the related debt liability.

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings.

These amounts are amortized and are included in interest expense in the consolidated statements of operations over the estimated life of the borrowings.

Deferred financing costs are presented in the consolidated statements of assets and liabilities as a direct reduction from the carrying amount of the related debt liability.

Income Taxes :

The Company elected

to be treated as a RIC under Subchapter M of the Code.

In order to maintain its status as a RIC, among other requirements, the Company

is required to distribute dividends for U.S.

federal income tax purposes to its stockholders each taxable year generally of an amount

at least equal to 90% of the sum of 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, the Company will incur a nondeductible excise tax equal

to 4% of the amount by which (1) 98% of ordinary income for the calendar year (taking into account certain deferrals and elections), (2)

98.2% of capital gains in excess of capital losses, adjusted for certain ordinary losses, for the one-year period ending on October 31

of the calendar year and (3) any ordinary income and capital gain income for preceding years that were not distributed during such years

and on which the Company incurred no U.S.

The Company elected to be treated as a RIC under Subchapter M of the Code.

In order to maintain its status as a RIC, among other requirements, the Company is required to distribute dividends for U.S.

federal income tax purposes to its stockholders each taxable year generally of an amount at least equal to 90% of the sum of 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, the Company will incur a nondeductible excise tax equal to 4% of the amount by which (1) 98% of ordinary income for the calendar year (taking into account certain deferrals and elections), (2) 98.2% of capital gains in excess of capital losses, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gain income for preceding years that were not distributed during such years and on which the Company incurred no U.S.

federal income tax exceed distributions for the year.

The Company accrues estimated excise tax

on the amount, if any, that estimated taxable income is expected to exceed the level of stockholder distributions described above.

The Company recognizes the financial statement

benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statement is the largest

benefit or expense that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Any tax positions not deemed to satisfy the more likely than not threshold are reversed and recorded as tax benefit or tax expense, as

appropriate, in the current year.

Management has analyzed the Company’s tax positions, and the Company has concluded that the Company

did not have any unrecognized tax benefits or unrecognized tax liabilities related to uncertain tax positions as of June 30, 2021 and

December 31, 2020.

Penalties or interest that may be assessed

related to any income taxes would be classified as general and administrative expenses on the consolidated statements of operations.

Company had no amounts accrued for interest or penalties as of June 30, 2021 or December 31, 2020.

The Company does not expect the total

amount of unrecognized tax benefits to significantly change in the next twelve months.

The Company’s tax returns are subject to

examination by federal, state and local taxing authorities.

Because many types of transactions are susceptible to varying interpretations

federal and state income tax laws and regulations, the amounts reported in the accompanying consolidated financial statements

may be subject to change at a later date by the respective taxing authorities.

Tax returns for each of the federal tax years since 2017

remain subject to examination by the Internal Revenue Service.

As of June 30, 2021 and December 31,

2020, the cost of investments for federal income tax purposes was $682,367 and $701,493 resulting in net unrealized depreciation of $11,893

and $10,758, respectively.

This is comprised of gross unrealized appreciation of $10,193 and $16,954, and gross unrealized depreciation

of $22,086 and $27,712, on a tax basis, as of June 30, 2021 and December 31, 2020, respectively.

The Company accrues estimated excise tax on the amount, if any, that estimated taxable income is expected to exceed the level of stockholder distributions described above.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statement is the largest benefit or expense that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Any tax positions not deemed to satisfy the more likely than not threshold are reversed and recorded as tax benefit or tax expense, as appropriate, in the current year.

Management has analyzed the Company’s tax positions, and the Company has concluded that the Company did not have any unrecognized tax benefits or unrecognized tax liabilities related to uncertain tax positions as of September 30, 2021 and December 31, 2020.

Penalties or interest that may be assessed related to any income taxes would be classified as general and administrative expenses on the consolidated statements of operations.

The Company had no amounts accrued for interest or penalties as of September 30, 2021 or December 31, 2020.

The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months.

The Company’s tax returns are subject to examination by federal, state and local taxing authorities.

Because many types of transactions are susceptible to varying interpretations under U.S.

federal and state income tax laws and regulations, the amounts reported in the accompanying consolidated financial statements may be subject to change at a later date by the respective taxing authorities.

Tax returns for each of the federal tax years since 2018 remain subject to examination by the Internal Revenue Service.

As of September 30, 2021 and December 31, 2020, the cost of investments for federal income tax purposes was $697,591 and $701,493 resulting in net unrealized depreciation of $10,468 and $10,758, respectively.

This is comprised of gross unrealized appreciation of $10,965 and $16,954, and gross unrealized depreciation of $21,433 and $27,712, on a tax basis, as of September 30, 2021 and December 31, 2020, respectively.

Dividends and Distributions :

and distributions to common stockholders are recorded on the ex-dividend date.

Quarterly distribution payments are determined by the Company’s

board of directors and are paid from taxable earnings estimated by management and may include a return of capital and/or capital gains.

Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for

The Company maintains an “opt

dividend reinvestment plan (“DRIP”) for common stockholders.

As a result, if the Company declares a distribution

or other dividend, stockholders’

cash distributions will be automatically reinvested in additional shares of common stock, unless

they specifically “opt out”

of the DRIP so as to receive cash distributions.

Dividends and distributions to common stockholders are recorded on the ex-dividend date.

Quarterly distribution payments are determined by the Company’s board of directors and are paid from taxable earnings estimated by management and may include a return of capital and/or capital gains.

Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company maintains an “opt out” dividend reinvestment plan (“DRIP”) for common stockholders.

As a result, if the Company declares a distribution or other dividend, stockholders’ cash distributions will be automatically reinvested in additional shares of common stock, unless they specifically “opt out” of the DRIP so as to receive cash distributions.

Earnings per Share :

calculates earnings per share as earnings available to stockholders divided by the weighted average number of shares outstanding during

The Company calculates earnings per share as earnings available to stockholders divided by the weighted average number of shares outstanding during the period.

Risks and Uncertainties :

normal course of business, the Company encounters primarily two significant types of economic risks:

In the normal course of business, the Company encounters primarily two significant types of economic risks:

credit and market.

Credit risk is

the risk of default on the Company’s investments that result from an issuer’s, borrower’s or derivative counterparty’s

inability or unwillingness to make contractually required payments.

Market risk reflects changes in the value of investments due to changes

in interest rates, spreads or other market factors, including the value of the collateral underlying investments held by the Company.

Refer to “COVID-19 Developments”

section in Note 8.

Management believes that the carrying value of the Company’s investments

are fairly stated, taking into consideration these risks along with estimated collateral values, payment histories and other market information.

Credit risk is the risk of default on the Company’s investments that result from an issuer’s, borrower’s or derivative counterparty’s inability or unwillingness to make contractually required payments.

Market risk reflects changes in the value of investments due to changes in interest rates, spreads or other market factors, including the value of the collateral underlying investments held by the Company.

Refer to “COVID-19 Developments” section in Note 8.

Management believes that the carrying value of the Company’s investments are fairly stated, taking into consideration these risks along with estimated collateral values, payment histories and other market information.

Reclassifications :

Certain amounts

in the consolidated financial statements have been reclassified.

These reclassifications

had no material impact on the Company’s consolidated financial position, results of operations or cash flows as previously reported.

Accounting Pronouncements :

In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform

(Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions

for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing

the effects of) reference rate reform on financial reporting if certain criteria are met.

The guidance is effective from March 12, 2020

through December 31, 2022.

As of June 30, 2021, the guidance did not have a material impact on the consolidated financial statements.

Certain amounts in the consolidated financial statements have been reclassified.

These reclassifications had no material impact on the Company’s consolidated financial position, results of operations or cash flows as previously reported.

Recent Accounting Pronouncements :

In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met.

The guidance is effective from March 12, 2020 through December 31, 2022.

As of September 30, 2021, the guidance did not have a material impact on the Company’s consolidated financial statements.

NOTE 3 - FORWARD CURRENCY CONTRACTS

The Company may enter into foreign currency

forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and

to hedge economically the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments

denominated in foreign currencies.

A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future

date at a negotiated forward rate.

These contracts are marked-to-market by recognizing the difference between the contract forward exchange

rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation.

gains or losses are recognized when forward contracts are settled.

Risks arise as a result of the potential inability of the counterparties

to meet the terms of their contracts.

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate.

These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation.

Realized gains or losses are recognized when forward contracts are settled.

Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts.

The Company attempts to limit counterparty risk by only dealing with well-known counterparties.

The Company utilizes forward foreign

currency exchange contracts to protect itself against fluctuations in exchange rates.

The Company may choose to renew contracts quarterly

unless otherwise settled by the Company or the counterparty.

The following table provides a breakdown

of our forward currency contracts for the three and six months ended June 30, 2021 and 2020:

For the three

Risk exposure category

June 30, 2021

Realized (loss) on forward currency contracts

Unrealized appreciation on forward currency contracts

For the three

Risk exposure category

June 30, 2020

The Company utilizes forward foreign currency exchange contracts to protect itself against fluctuations in exchange rates.

The Company may choose to renew contracts quarterly unless otherwise settled by the Company or the counterparty.

The following table provides a breakdown of our forward currency contracts for the three and nine months ended September 30, 2021 and 2020:

For the three months ended

For the nine months ended

September 30, 2021

Realized gain (loss) on forward currency contracts

Unrealized appreciation (deprectiation) on forward currency contracts

Total net realized and unrealized gains (losses) on forward currency contracts

For the three months ended

For the nine months ended

September 30, 2020

Realized (loss) on forward currency contracts

Unrealized (depreciation) on forward currency contracts

The value associated with unrealized

loss on open contracts is included in unrealized appreciation/depreciation on forward currency contracts within the statement of assets

and liabilities.

Open contracts as of June 30, 2021 were as follows:

Currency to be

Unrealized appreciation (depreciation) on forward currency contracts

Total net realized and unrealized gains (losses) on forward currency contracts

The value associated with unrealized loss on open contracts is included in unrealized appreciation/depreciation on forward currency contracts within the statement of assets and liabilities.

Open contracts as of September 30, 2021 were as follows:

Currency to be sold

Currency to be purchased

Settlement date

appreciation ($)

depreciation ($)

Morgan Stanley

The foreign currency forward contracts open at the end

of the period are generally indicative of the volume of activity during the period.

The foreign currency forward contracts open at the end of the period are generally indicative of the volume of activity during the period.

Offsetting of Derivative Instruments

The Company has derivative instruments

that are subject to master netting agreements.

These agreements include provisions to offset positions with the same counterparty in the

event of default by one of the parties.

The Company’s unrealized appreciation and depreciation on derivative instruments are reported

as gross assets and liabilities, respectively, in the consolidated statements of assets and liabilities.

The following tables present

the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master

netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of June 30, 2021.

of June 30, 2021

($ in thousands)

Assets Subject to Master Netting Agreement

Liabilities Subject to Master Netting Agreement (1)

Available for Offset

Collateral Received (2 )

Collateral Pledged (2)

Collateral Received (2)

Collateral Pledged (2)

Amount of Derivative Assets (3)

Amount of Derivative Liabilities (4)

The Company has derivative instruments that are subject to master netting agreements.

These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties.

The Company’s unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated statements of assets and liabilities.

The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of September 30, 2021.

As of September 30, 2021

Counterparty ($ in thousands)

Derivative Assets

Subject to Master

Netting Agreement

Liabilities Subject

to Master Netting

Available for

Cash Collateral

Net Amount of

Liabilities (3)

Morgan Stanley

(1) Derivative liabilities subject to master netting agreement amounts

to less than one thousand.

(1) In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.

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NOTE 4 - INVESTMENTS

consisted of the following:

June 30, 2021

December 31, 2020

Investments consisted of the following:

As of September 30, 2021

As of December 31, 2020

Amortized Cost

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Second lien secured loans

Subordinated unsecured loans

Subordinated Note to STRS JV

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Equity in STRS JV

The following table shows the portfolio composition by industry

grouping at fair value:

The following table shows the portfolio composition by industry grouping at fair value:

Industry ($ in thousands)

June 30, 2021

December 31, 2020

As of September 30, 2021

As of December 31, 2020

Agricultural & Farm Machinery

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Technology Hardware, Storage & Peripherals

Trading Companies & Distributors

(1) Excludes investments in STRS JV.

As of June 30,

2021, the portfolio companies underlying the investments are all located in the United States and its territories, except for Arcole Acquisition

Corp and Geo Logic Systems Ltd., which are domiciled in Canada, and Cennox Holdings Limited, which is domiciled in the United Kingdom.

As of June 30, 2021 and December 31, 2020, the weighted average remaining term of the Company’s debt investments, excluding non-accrual

investments, were approximately 3.7 years and 3.6 years, respectively.

As of June 30, 2021 and December 31, 2020, the total fair

value of non-accrual loans were $9,667 and $11,620, respectively.

An affiliated company is generally a

portfolio company in which the Company owns 5% or more of its voting securities.

A controlled affiliated company is generally a portfolio

company in which the Company owns more than 25% of its voting securities or has the power to exercise control over its management or policies

(including through a management agreement).

The following table presents the schedule of investments in and advances to affiliated and

controlled persons (as defined by the 1940 Act) as of and for the six months ended June 30, 2021:

As of September 30, 2021, the portfolio companies underlying the investments are all located in the United States and its territories, except for Arcole Acquisition Corp and Trimlite Buyer, LLC, which are domiciled in Canada.

As of September 30, 2021 and December 31, 2020, the weighted average remaining term of the Company’s debt investments, excluding non-accrual investments, were approximately 3.7 years and 3.6 years, respectively.

As of September 30, 2021 and December 31, 2020, the total fair value of non-accrual loans were $8,683 and $11,620, respectively.

An affiliated company is generally a portfolio company in which the Company owns 5% or more of its voting securities.

A controlled affiliated company is generally a portfolio company in which the Company owns more than 25% of its voting securities or has the power to exercise control over its management or policies (including through a management agreement).

The following table presents the schedule of investments in and advances to affiliated and controlled persons (as defined by the 1940 Act) as of and for the nine months ended September 30, 2021:

dividends and

Net Change in

Fair Value at

September 30,

Affiliated Person (1)

(Depreciation)

Non-controlled affiliates

Holdings Corp Shares

Senior Loan Program I LLC Units

Non-controlled affiliates

Arcole Holding Corp Shares

NMFC Senior Loan Program I LLC Units

Total Non-controlled affiliates

dividends and

Net Change in

Fair Value at

September 30,

Affiliated Person (1)

(Depreciation)

STRS Ohio Senior Loan Fund LLC *

Controlled affiliates

The following table presents the

schedule of investments in and advances to affiliated and controlled affiliated persons (as defined by the 1940 Act) as of and for the

year ended December 31, 2020:

WHF STRS Ohio Senior Loan Fund LLC*

Subordinated Note

WHF STRS Ohio Senior Loan Fund LLC*

Total Controlled affiliates

The following table presents the schedule of investments in and advances to affiliated and controlled affiliated persons (as defined by the 1940 Act) as of and for the year ended December 31, 2020:

dividends and

Fair Value at

Beginning Fair

Net Change in

Affiliated Person (1)

(Depreciation)

Non-controlled affiliates

Arcole Holding Corp

NMFC Senior Loan

Arcole Holding Corp Shares

NMFC Senior Loan Program I LLC Units

Total Non-controlled affiliates

dividends and

Net Change in

Fair Value at

Affiliated Person (1)

(Depreciation)

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WHF STRS Ohio Senior Loan Fund LLC*

Subordinated Note

WHF STRS Ohio Senior Loan Fund LLC*

Total Controlled affiliates

Company and STRS Ohio are the members of STRS JV, a joint venture formed as a Delaware limited

liability company that is not consolidated by either member for financial reporting purposes.

The members make investments in STRS JV in the form of limited liability company (“LLC”)

equity interests and interest-bearing subordinated notes as STRS JV makes investments, and

all portfolio and other material decisions regarding STRS JV must be submitted to STRS JV’s

board of managers which is comprised of an equal number of members appointed by each of the

Company and STRS Ohio.

Because management of STRS JV is shared equally between the Company

and STRS Ohio, the Company does not believe it controls STRS JV for purposes of the 1940

Act or otherwise.

to the consolidated schedule of investments for the principal amount, industry classification

and other security detail of each portfolio company.

WHF STRS Ohio Senior Loan Fund LLC

On January 14, 2019, the Company entered

into a limited liability company operating agreement with STRS Ohio to co-manage a newly formed joint venture investment company, STRS

JV, a Delaware limited liability company.

STRS Ohio and the Company have committed to provide up to $125,000 of subordinated notes and

equity to STRS JV, with STRS Ohio providing up to $50,000 and the Company providing up to $75,000, respectively.

STRS JV will invest primarily

in lower middle market, senior secured debt facilities, to performing lower middle market companies across a broad range of industries

that typically carry a floating interest rate based on a risk-free index rate such as LIBOR and have a term of three to six years.

The Company and STRS Ohio are the members of STRS JV, a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes.

The members make investments in STRS JV in the form of limited liability company (“LLC”) equity interests and interest-bearing subordinated notes as STRS JV makes investments, and all portfolio and other material decisions regarding STRS JV must be submitted to STRS JV’s board of managers which is comprised of an equal number of members appointed by each of the Company and STRS Ohio.

Because management of STRS JV is shared equally between the Company and STRS Ohio, the Company does not believe it controls STRS JV for purposes of the 1940 Act or otherwise.

(1) Refer to the consolidated schedule of investments for the principal amount, industry classification and other security detail of each portfolio company.WHF STRS Ohio Senior Loan Fund LLC

On January 14, 2019, the Company entered into a limited liability company operating agreement with STRS Ohio to co-manage a newly formed joint venture investment company, STRS JV, a Delaware limited liability company.

STRS Ohio and the Company have committed to provide up to $125,000 of subordinated notes and equity to STRS JV, with STRS Ohio providing up to $50,000 and the Company providing up to $75,000, respectively.

STRS JV will invest primarily in lower middle market, senior secured debt facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest rate based on a risk-free index rate such as LIBOR and have a term of three to six years.

In July 2019, STRS JV formally launched operations.

As of June 30, 2021 and December 31, 2020, STRS JV had total assets of $219,200 and $181,382, respectively.

STRS JV’s portfolio

consisted of debt investments in 25 and 20 portfolio companies as of June 30, 2021 and December 31, 2020, respectively.

As of June 30,

2021 and December 31, 2020, the largest investment by aggregate principal amount (including any unfunded commitments) in a single portfolio

company in STRS JV’s portfolio was $16,931 and $14,593, respectively.

The five largest investments in portfolio companies by fair

value in STRS JV totaled $65,744 and $60,252 as of June 30, 2021 and December 31, 2020, respectively.

STRS JV invests in portfolio companies

in the same industries in which the Company may directly invest.

The Company provides capital to STRS JV in the

form of LLC equity interests and through interest-bearing subordinated notes.

As of June 30, 2021 and December 31, 2020, the Company and

STRS Ohio owned 60% and 40%, respectively, of the LLC equity interests of STRS JV.

The Company’s investment in STRS JV consisted

of equity contributions of $12,452 and $10,268 and advances of the subordinated notes of $49,809 and $41,073 as of June 30, 2021 and December

31, 2020, respectively.

As of June 30, 2021, the Company had commitments to fund equity interests and subordinated notes in STRS JV of

$15,000 and $60,000, of which $2,548 and $10,191 were unfunded, respectively.

As of December 31, 2020, the Company had commitments to

fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $4,732 and $18,927 were unfunded, respectively.

The Company and STRS Ohio each appoint

two members to STRS JV’s four-person board of managers.

All material decisions with respect to STRS JV, including those involving

its investment portfolio, require unanimous approval of a quorum of the board of managers.

Quorum is defined as (i) the presence of two

members of the board of managers;

As of September 30, 2021 and December 31, 2020, STRS JV had total assets of $246,765 and $181,382, respectively.

STRS JV’s portfolio consisted of debt investments in 27 and 20 portfolio companies as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021 and December 31, 2020, the largest investment by aggregate principal amount (including any unfunded commitments) in a single portfolio company in STRS JV’s portfolio was $19,003 and $14,593, respectively.

The five largest investments in portfolio companies by fair value in STRS JV totaled $72,488 and $60,252 as of September 30, 2021 and December 31, 2020, respectively.

STRS JV invests in portfolio companies in the same industries in which the Company may directly invest.

The Company provides capital to STRS JV in the form of LLC equity interests and through interest-bearing subordinated notes.

As of September 30, 2021 and December 31, 2020, the Company and STRS Ohio owned 60% and 40%, respectively, of the LLC equity interests of STRS JV.

The Company’s investment in STRS JV consisted of equity contributions of $14,324 and $10,268 and advances of the subordinated notes of $57,297 and $41,073 as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, the Company had commitments to fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $676 and $2,703 were unfunded, respectively.

As of December 31, 2020, the Company had commitments to fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $4,732 and $18,927 were unfunded, respectively.

The Company and STRS Ohio each appoint two members to STRS JV’s four-person board of managers.

All material decisions with respect to STRS JV, including those involving its investment portfolio, require unanimous approval of a quorum of the board of managers.

Quorum is defined as (i) the presence of two members of the board of managers;

provided that at least one individual is present that was elected, designated or appointed by each member;

(ii) the presence of three members of the board of managers;

provided that the individual that was elected, designated or appointed by

the member with only one individual present shall be entitled to cast two votes on each matter;

or (iii) the presence of four members

of the board of managers;

provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter;

or (iii) the presence of four members of the board of managers;

provided that two individuals are present that were elected, designated or appointed by each member.

On July 19, 2019, STRS JV entered into a

$125,000 credit and security agreement (the “STRS JV Credit Facility”) with JPMorgan Chase Bank, National Association

(“JPMorgan”).

On January 27, 2021, the terms of the STRS JV Credit Facility were amended to, among other things,

increase the size of the STRS JV Credit Facility from $125,000 to $175,000.

On April 28, 2021, the terms of the STRS JV Credit

Facility were amended and restated to, among other things, enable borrowings in British Pounds or Euros.

As of June 30, 2021, the

STRS JV Credit Facility had $175,000 of commitments subject to leverage and borrowing base restrictions with an interest rate based

on a risk-free index rate such as LIBOR or CDOR plus 2.55%.

On July 19, 2019, STRS JV entered into a $125,000 credit and security agreement (the “STRS JV Credit Facility”) with JPMorgan Chase Bank, National Association (“JPMorgan”).

On January 27, 2021, the terms of the STRS JV Credit Facility were amended to, among other things, increase the size of the STRS JV Credit Facility from $125,000 to $175,000.

On April 28, 2021, the terms of the STRS JV Credit Facility were amended and restated to, among other things, enable borrowings in British Pounds or Euros.

On July 15, 2021, the terms of the STRS JV Credit Facility were amended to, among other things, allow STRS JV to reduce the applicable margins for interest rates to 2.35%, extend the non-call period from January 19, 2022 to January 19, 2023, extend the end of the reinvestment period from July 19, 2022 to July 19, 2023 and extend the scheduled termination date from July 19, 2024, to July 19, 2025.

As of September 30, 2021, the STRS JV Credit Facility had $175,000 of commitments subject to leverage and borrowing base restrictions with an interest rate based on a risk-free index rate such as LIBOR, Sterling Overnight Index Average (“SONIA”) or CDOR plus 2.35%.

The final maturity date of the STRS JV Credit Facility is July 19, 2025.

As of June 30, 2021, STRS JV had $115,885 of outstanding borrowings under the STRS JV Credit Facility.

At June 30, 2021, the

effective interest rate on the STRS JV Credit Facility was 2.72% per annum.

is a listing of STRS JV’s individual investments as of June 30, 2021:

As of September 30, 2021, STRS JV had $126,189 of outstanding borrowings and an effective interest rate of 2.51% per annum under the STRS JV Credit Facility.

Below is a listing of STRS JV’s individual investments as of September 30, 2021:

Investment Type (1)

North America

Debt Investments

SmartSign Holdings

Secured Term Loan

SmartSign Holdings LLC

First Lien Secured Revolving

First Lien Secured Term Loan

SmartSign Holdings LLC

First Lien Secured Revolving Loan

Application Software

TaxSlayer, LLC

First Lien Secured Term

First Lien Secured Term Loan

TaxSlayer, LLC

First Lien Secured Revolving

First Lien Secured Revolving Loan

Building Products

Drew Foam Companies Inc

First Lien Secured Term

First Lien Secured Term Loan

LHS Borrower, LLC

First Lien Secured Term

First Lien Secured Term Loan

LHS Borrower, LLC

First Lien Secured Revolving

First Lien Secured Revolving Loan

Construction & Engineering

Road Safety Services, Inc

First Lien Secured Term

First Lien Secured Term Loan

Road Safety Services, Inc

First Lien Secured Revolving

SFP Holding, Inc.

First Lien Secured Term

SFP Holding, Inc.

First Lien Secured Delayed

SFP Holding, Inc.

First Lien Secured Revolving

First Lien Secured Term

Data Processing &

Outsourced Services

First Lien Secured Revolving Loan

First Lien Secured Term Loan

Data Processing & Outsourced Services

Geo Logic Systems Ltd (7)

First Lien Secured Term

First Lien Secured Term Loan

Geo Logic Systems Ltd (7)

First Lien Secured Revolving

First Lien Secured Revolving Loan

Diversified Support Services

Quest Events, LLC (9)

First Lien Secured Term

First Lien Secured Term Loan

7.00% (5.46% Cash + 1.54% PIK)

Quest Events, LLC (9)

First Lien Secured Revolving

Electronic Equipment

& Instruments

First Lien Secured Revolving Loan

Electronic Equipment & Instruments

LMG Holdings, Inc

First Lien Secured Term

First Lien Secured Term Loan

LMG Holdings, Inc

First Lien Secured Revolving

Environmental & Facilities

First Lien Secured Revolving Loan

Environmental & Facilities Services

WH Lessor Corp

First Lien Secured Term

First Lien Secured Term Loan

WH Lessor Corp

First Lien Secured Revolving

Human Resource &

Employment Services

Pluto Acquisition Topco,

First Lien Secured Term

First Lien Secured Revolving Loan

Human Resource & Employment Services

Pluto Acquisition Topco, LLC (8)

First Lien Secured Term Loan

Industrial Machinery

FR Flow Control CB LLC

First Lien Secured Term

Internet & Direct

Marketing Retail

First Lien Secured Term Loan B

Internet & Direct Marketing Retail

Marlin DTC-LS Midco 2, LLC

First Lien Secured Term

First Lien Secured Term Loan

Marlin DTC-LS Midco 2, LLC

First Lien Secured Revolving

Investment Banking &

TOUR Intermediate Holdings,

First Lien Secured Term

TOUR Intermediate Holdings,

First Lien Secured Delayed

IT Consulting & Other

First Lien Secured Term

First Lien Secured Delayed

First Lien Secured Revolving

First Lien Secured Revolving Loan

Investment Banking & Brokerage

TOUR Intermediate Holdings, LLC

First Lien Secured Term Loan

TOUR Intermediate Holdings, LLC

First Lien Secured Delayed Draw Loan

Investment Type (1)

IT Consulting & Other Services

First Lien Secured Term Loan

First Lien Secured Delayed Draw Loan

First Lien Secured Revolving Loan

Cennox Holdings Limited (7)

First lien Secured Term Loan

Cennox Holdings Limited (7)

First lien Secured Revolving Loan

KSM Consulting LLC

First Lien Secured Term

First Lien Secured Term Loan

KSM Consulting LLC (6)

First Lien Secured Delayed

First Lien Secured Delayed Draw Loan

KSM Consulting LLC (6)

First Lien Secured Revolving

Packaged Foods &

First Lien Secured Revolving Loan

Turnberry Solutions, Inc

First Lien Secured Term Loan

Turnberry Solutions, Inc

First Lien Secured Revolving Loan

Packaged Foods & Meats

Mikawaya Holdings, LLC

First Lien Secured Term

First Lien Secured Term Loan

Poultry Holdings, LLC

First Lien Secured Term

First Lien Secured Term Loan

8.25% (6.75% Cash + 1.50% PIK)

Stella & Chewy's

First Lien Secured Term

First Lien Secured Term Loan

Stella & Chewy's (6)

First Lien Secured Delayed

Westrock Coffee Company,

First Lien Secured Term

First Lien Secured Delayed Draw Loan

Westrock Coffee Company, LLC

First Lien Secured Term Loan

10.50% (9.75% Cash + 0.75% PIK)

Personal Products

Sunless, Inc.

First Lien Secured Term

7.50% (7.00% Cash + 0.50% PIK)

First Lien Secured Term Loan

Sunless, Inc (6)

First Lien Secured Revolving

First Lien Secured Revolving Loan

Research & Consulting Services

E-Phoenix Acquisition Co.

Inc (dba Integreon)

First Lien Secured Term Loan

Systems Software

IDIG Parent LLC

First Lien Secured Term

First Lien Secured Term Loan

IDIG Parent LLC

First Lien Secured Revolving

Technology Hardware,

Storage & Peripherals

First Lien Secured Delayed Draw Loan

IDIG Parent LLC

First Lien Secured Revolving Loan

Technology Hardware, Storage & Peripherals

PS Lightwave, Inc

First Lien Secured Term

First Lien Secured Term Loan

PS Lightwave, Inc (6)

First Lien Secured Delayed

Trading Companies &

First Lien Secured Delayed Draw Loan

Source Code Midco, LLC

First Lien Secured Term Loan

Source Code Midco, LLC (6)

First Lien Secured Delayed Draw Loan

Trading Companies & Distributors

LINC Systems, LLC

First Lien Secured Term

First Lien Secured Term Loan

LINC Systems, LLC

First Lien Secured Revolving

First Lien Secured Revolving Loan

Total Investments

(1) Except as noted, all investments provide collateral for the STRS JV Credit Facility.

(2) The investments bear interest at a rate that may be determined by reference to LIBOR, which resets monthly,

quarterly or semiannually, or CDOR.

The one, three and six-month LIBOR were 0.1%, 0.1% and 0.2%, respectively, as of June 30, 2021.

CDOR was 0.4% as of June 30, 2021.

(3) The interest rate is the “all-in-rate”

including the current index and spread, the fixed rate, and the PIK interest rate,

as the case may be.

(4) Except as otherwise noted, all of the STRS JV’s portfolio company investments, which as of the date

of the portfolio represented 1,040% of STRS JV’s net assets or 96% of STRS JV’s total assets, are subject to legal restrictions

(2) The investments bear interest at a rate that may be determined by reference to LIBOR, which resets monthly, quarterly or semiannually, CDOR or Prime.

The one, three and six-month LIBOR were 0.08%, 0.13% and 0.16%, respectively, as of September 30, 2021.

The one, three and six-month GBP LIBOR were 0.05%, 0.08% and 0.17%, respectively, as of September 30, 2021.

The CDOR and Prime were 0.45% and 3.25%, respectively, as of September 30, 2021.

(3) The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the PIK interest rate, as the case may be.

(4) Except as otherwise noted, all of the STRS JV’s portfolio company investments, which as of the date of the portfolio represented 968% of STRS JV’s net assets or 97% of STRS JV’s total assets, are subject to legal restrictions on sales.

(5) The fair value of each investment was determined using significant unobservable inputs.

(6) The investment or a portion of the investment does not provide collateral for the STRS JV Credit Facility.

(7) Principal is denominated in Canadian dollars.

(8) In addition to the interest earned based on the stated interest rate

of this security, STRS JV is entitled to receive an additional interest in the amount of 3.00% on its “last out”

the portfolio company’s senior term debt, which was previously syndicated into “first out”

and “last out”

tranches, whereby the “first out”

tranche will have priority as to the “last out”

tranche with respect to payments

of principal, interest and any other amounts due thereunder.

(7) Principal amount is non-USD denominated and is based in Canadian dollars or British Pounds.

(8) In addition to the interest earned based on the stated interest rate of this security, STRS JV is entitled to receive an additional interest in the amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(9) At the option of the issuer, interest can be paid in cash or cash and PIK.

The issuer may elect to pay up to 7.00% PIK.

Below is a listing of STRS JV’s individual investments

as of December 31, 2020:

Below is a listing of STRS JV’s individual investments as of December 31, 2020:

Investment Type (1)

North America

1 unchanged sentence

SmartSign Holdings LLC

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

Building Products

Drew Foam Companies Inc

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

LHS Borrower, LLC

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

Construction & Engineering

SFP Holding, Inc.

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Secured Delayed Draw Loan

First Lien Secured Delayed Draw Loan

(1.00% Floor)

Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

Secured Term Loan

Data Processing & Outsourced

First Lien Secured Term Loan

(1.00% Floor)

Data Processing & Outsourced Services

Geo Logic Systems Ltd.

Lien Secured Term Loan (7)

First Lien Secured Term Loan (7)

(1.00% Floor)

Lien Secured Revolving Loan (7)

First Lien Secured Revolving Loan (7)

(1.00% Floor)

Diversified Support Services

Quest Events, LLC

Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Secured Revolving Loan

Environmental & Facilities

First Lien Secured Revolving Loan

(1.00% Floor)

Environmental & Facilities Services

WH Lessor Corp.

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Lien Secured Revolving Loan

Human Resource & Employment

First Lien Secured Revolving Loan

(1.00% Floor)

Human Resource & Employment Services

Pluto Acquisition Topco, LLC

Lien Secured Term Loan (8)

First Lien Secured Term Loan (8)

(1.50% Floor)

Control CB LLC

Secured Term Loan B

Investment Type (1)

Industrial Machinery

FR Flow Control CB LLC

First Lien Secured Term Loan B

(1.00% Floor)

Secured Term Loan C

First Lien Secured Term Loan C

(1.00% Floor)

Secured Term Loan

Insurance Brokers

SelectQuote, Inc.

First Lien Secured Term Loan

(1.00% Floor)

& Direct Marketing Retail

Marlin DTC-LS

Secured Term Loan

Internet & Direct Marketing Retail

Marlin DTC-LS Midco 2, LLC

First Lien Secured Term Loan

(1.00% Floor)

Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

Banking & Brokerage

TOUR Intermediate

Holdings, LLC

Secured Term Loan

Investment Banking & Brokerage

TOUR Intermediate Holdings, LLC

First Lien Secured Term Loan

(1.00% Floor)

Secured Delayed Draw Loan

First Lien Secured Delayed Draw Loan

(1.00% Floor)

Foods & Meats

Holdings, LLC

Secured Term Loan

Packaged Foods & Meats

Mikawaya Holdings, LLC

First Lien Secured Term Loan

(1.25% Floor)

Holdings, LLC

Secured Term Loan

Poultry Holdings, LLC

First Lien Secured Term Loan

(1.00% Floor)

Stella & Chewy's

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Lien Secured Delayed Draw Loan (6)

First Lien Secured Delayed Draw Loan (6)

(1.00% Floor)

Westrock Coffee Company, LLC

Lien Secured Term Loan

First Lien Secured Term Loan

(1.50% Floor)

Personal Products

Sunless, Inc.

Lien Secured Term Loan

First Lien Secured Term Loan

(1.00% Floor)

Lien Secured Revolving Loan

First Lien Secured Revolving Loan

(1.00% Floor)

Systems Software

arcserve (USA) LLC

Lien Secured Term Loan

Hardware, Storage & Peripherals

First Lien Secured Term Loan

(1.00% Floor)

Technology Hardware, Storage & Peripherals

PS Lightwave, Inc.

Lien Secured Term Loan

First Lien Secured Term Loan

(1.50% Floor)

Lien Secured Delayed Draw Loan

First Lien Secured Delayed Draw Loan

(1.50% Floor)

Total Investments

(1) Except as noted, all investments provide collateral for the STRS JV Credit Facility.

(2) The investments bear interest at a rate that may be determined by reference to LIBOR, which resets monthly,

quarterly or semiannually, or CDOR.

(2) The investments bear interest at a rate that may be determined by reference to LIBOR, which resets monthly, quarterly or semiannually, or CDOR.

The one, three and six-month LIBOR were 0.1%, 0.2% and 0.3%, respectively, as of December 31, 2020.

The CDOR was 0.5% as of December 31, 2020.

(3) The interest rate is the “all-in-rate”

including the current index and spread, the fixed rate, and the PIK interest rate,

as the case may be.

(4) Except as otherwise noted, all of the STRS JV’s portfolio company investments, which as of the date

of the portfolio represented 1,030% of STRS JV’s net assets or 96% of STRS JV’s total assets, are subject to legal restrictions

(3) The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the PIK interest rate, as the case may be.

(4) Except as otherwise noted, all of the STRS JV’s portfolio company investments, which as of the date of the portfolio represented 1,030% of STRS JV’s net assets or 96% of STRS JV’s total assets, are subject to legal restrictions on sales.

(5) The fair value of each investment was determined using significant unobservable inputs.

1 unchanged sentence

(7) Principal is denominated in Canadian dollars.

(8) In addition to the interest earned based on the stated interest rate

of this security, STRS JV is entitled to receive an additional interest in the amount of 3.00% on its “last out”

the portfolio company’s senior term debt, which was previously syndicated into “first out”

and “last out”

tranches, whereby the “first out”

tranche will have priority as to the “last out”

tranche with respect to payments

of principal, interest and any other amounts due thereunder.

As of June 30, 2021 and 2020, STRS JV

had no investments on non-accrual status.

STRS JV had outstanding commitments to fund investments totaling $17,545, and $10,862 under

delayed draw term loan commitments and undrawn revolvers as of June 30, 2021 and December 31, 2020, respectively.

Below is certain summarized financial information

for STRS JV as of June 30, 2021 and December 31, 2020 and for the three and six month periods ended June 30, 2021 and June 30, 2020 (dollars

in thousands):

As of September 30, 2021, the portfolio companies underlying the STRS JV investments are all located in the United States and its territories except for Geo Logic Systems Ltd., which is domiciled in Canada, and Cennox Holdings Limited, which is domiciled in the United Kingdom.

As of September 30, 2021 and December 31, 2020, STRS JV had no investments on non-accrual status.

STRS JV had outstanding commitments to fund investments totaling $18,740, and $12,192 under delayed draw term loan commitments and undrawn revolvers as of September 30, 2021 and December 31, 2020, respectively.

Below is certain summarized financial information for STRS JV as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

Selected Balance Sheet Information

June 30, 2021

September 30, 2021

December 31, 2020

7 unchanged sentences

Total liabilities

Members’

Total liabilities and members’

Members’ equity

Total liabilities and members’ equity

Three Months Ended

Six Months Ended

Nine Months Ended

Selected Statement of Operations Information

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Interest and fee income

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Interest income

Total investment income

5 unchanged sentences

Net investment income

Net realized gains/(losses) on investments and foreign currency transactions

Net change in unrealized appreciation/(depreciation) on investments and foreign currency translation

Net realized gains (losses) on investments

Net change in unrealized appreciation (depreciation) on investments

Net increase (decrease) in net assets resulting from operations

NOTE 5 – FAIR VALUE MEASUREMENTS

Accounting standards establish

a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Quoted prices (unadjusted) for identical

assets or liabilities in active public markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs

other than Level 1 prices such as quoted prices for similar assets or liabilities;

Quoted prices (unadjusted) for identical assets or liabilities in active public markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect

a reporting entity’s own assumptions about what market participants would use in pricing an asset or liability.

In certain cases, the inputs used

to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, a financial instrument’s categorization

within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company’s

assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors

specific to the financial instrument.

A review of the fair value hierarchy

classifications is conducted on a quarterly basis.

Changes in the observability of valuation inputs may result in a reclassification for

certain financial assets or liabilities.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in

or out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.

During the six months ended

June 30, 2021 and year ended December 31, 2020, there were no changes in the observability of valuation inputs that would have resulted

in a reclassification of assets between any levels.

Fair value for each investment

is derived using a combination of valuation methodologies that, in the judgment of the Investment Committee are most relevant to such

investment, including, without limitation, being based on one or more of the following:

(i) market prices obtained from market makers

for which the Investment Committee has deemed there to be enough breadth (number of quotes) and depth (firm bids) to be indicative of

fair value, (ii) the price paid or realized in a completed transaction or binding offer received in an arm’s-length transaction,

(iii) a discounted cash flow analysis, (iv) the guideline public company method, (v) the similar transaction method or (vi) the option

pricing method.

The following table presents investments (as shown on the

consolidated schedule of investments) that were measured at fair value as of June 30, 2021:

or other inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect a reporting entity’s own assumptions about what market participants would use in pricing an asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, a financial instrument’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument.

A review of the fair value hierarchy classifications is conducted on a quarterly basis.

Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.

During the nine months ended September 30, 2021 and year ended December 31, 2020, there were no changes in the observability of valuation inputs that would have resulted in a reclassification of assets between any levels.

Fair value for each investment is derived using a combination of valuation methodologies that, in the judgment of the Investment Committee are most relevant to such investment, including, without limitation, being based on one or more of the following:

(i) market prices obtained from market makers for which the Investment Committee has deemed there to be enough breadth (number of quotes) and depth (firm bids) to be indicative of fair value, (ii) the price paid or realized in a completed transaction or binding offer received in an arm’s-length transaction, (iii) a discounted cash flow analysis, (iv) the guideline public company method, (v) the similar transaction method or (vi) the option pricing method.

The following table presents investments (as shown on the consolidated schedule of investments) that were measured at fair value as of September 30, 2021:

First lien secured loans

Second lien secured loans

Subordinated unsecured loans

Subordinated Note to STRS JV

2 unchanged sentences

Total investments

The Company’s investments in forward currency contracts,

which were valued at $0 as of June 30, 2021, are characterized in Level 2 of the hierarchy.

The following table presents investments (as shown on the

consolidated schedule of investments) that were measured at fair value as of December 31, 2020:

(1) The Company’s equity investment in STRS JV is measured using the net asset value per share as a practical expedient for fair value, and thus has not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

The Company’s investments in forward currency contracts, which were valued at $186 as of September 30, 2021, are characterized in Level 2 of the hierarchy.

The following table presents investments (as shown on the consolidated schedule of investments) that were measured at fair value as of December 31, 2020:

First lien secured loans

4 unchanged sentences

Total investments

(1) The Company’s equity investment in STRS JV is measured using the net asset value per share as a practical

expedient for fair value, and thus has not been classified in the fair value hierarchy.

The fair value amounts presented in this table

are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and

The following table presents the changes in investments measured

at fair value using Level 3 inputs for the three months ended June 30, 2021:

(1) The Company’s equity investment in STRS JV is measured using the net asset value per share as a practical expedient for fair value, and thus has not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

The following table presents the changes in investments measured at fair value using Level 3 inputs for the three months ended September 30, 2021:

Notes to STRS

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Realized gains (losses)

Net unrealized appreciation (depreciation)

Net unrealized (depreciation) appreciation

Fair value, end of period

Change in unrealized appreciation (depreciation) on investments still held as of June 30, 2021

following table presents the changes in investments measured at fair value using Level 3 inputs for the six months ended June 30, 2021:

Change in unrealized appreciation (depreciation) on investments still held as of September 30, 2021

The following table presents the changes in investments measured at fair value using Level 3 inputs for the nine months ended September 30, 2021:

Notes to STRS

2 unchanged sentences

Non-cash interest income

Accretion of discount

Accretion of discount (premium)

Proceeds from paydowns and sales

2 unchanged sentences

Fair value, end of period

Change in unrealized appreciation (depreciation)on investments still held as of June 30, 2021

The following table presents the changes in investments measured

at fair value using Level 3 inputs for the three months ended June 30, 2020:

Change in unrealized appreciation (depreciation) on investments still held as of September 30, 2021

The following table presents the changes in investments measured at fair value using Level 3 inputs for the the three months ended September 30, 2020:

Notes to STRS

4 unchanged sentences

Proceeds from paydowns and sales

Realized losses

Net unrealized appreciation (depreciation)

Realized gains

Net unrealized (depreciation) appreciation

Fair value, end of period

Change in unrealized appreciation (depreciation) on investments still held as of June 30, 2020

The following table presents the changes in investments measured

at fair value using Level 3 inputs for the six months ended June 30, 2020:

Change in unrealized appreciation (depreciation) on investments still held as of September 30, 2020

The following table presents the changes in investments measured at fair value using Level 3 inputs for the the nine months ended September 30, 2020:

Notes to STRS

7 unchanged sentences

Fair value, end of period

Change in unrealized appreciation (depreciation) on investments still held as of June 30, 2020

The significant unobservable inputs

used in the fair value measurement of the Company’s investments are the discount rate, market quotes and exit multiples.

or decrease in the discount rate in isolation would result in significantly lower or higher fair value measurement, respectively.

or decrease in the market quote for an investment would in isolation result in significantly higher or lower fair value measurement, respectively.

Change in unrealized appreciation (depreciation) on investments still held as of September 30, 2020

The significant unobservable inputs used in the fair value measurement of the Company’s investments are the discount rate, market quotes and exit multiples.

An increase or decrease in the discount rate in isolation would result in significantly lower or higher fair value measurement, respectively.

An increase or decrease in the market quote for an investment would in isolation result in significantly higher or lower fair value measurement, respectively.

An increase or decrease in the exit multiple would in isolation result in significantly higher or lower fair value measurement, respectively.

As the fair value of a debt investment diverges from par, which would generally be the case for non-accrual loans, the fair value measurement

of that investment is more susceptible to volatility from changes in exit multiples as a significant unobservable input.

Quantitative information about Level 3 fair value measurements

is as follows:

Investment Type

As the fair value of a debt investment diverges from par, which would generally be the case for non-accrual loans, the fair value measurement of that investment is more susceptible to volatility from changes in exit multiples as a significant unobservable input.

Quantitative information about Level 3 fair value measurements is as follows:

Fair Value as of

June 30, 2021

Investment Type

September 30, 2021

(Weighted Average)

2 unchanged sentences

Discount rate

4.4% – 19.2% (9.5%)

Exit EBITDA multiple

Guideline public companies

LTM EBITDA multiple

5.1x – 15.0x (8.2x)

Recent transaction

Transaction price

98.0 – 99.3 (98.2)

Discounted cash flows, Recent transaction, Guideline public companies and Consensus market pricing

Discount rate

5.5% – 10.5% (8.2%)

Market pricing

Transaction price

97.4 – 99.2 (98.3)

Exit EBITDA multiple

Expected repayment

6.6x – 11.0x (9.4x)

Second lien secured loans

1 unchanged sentence

Discount rate

10.4% –

10.7% – 22.0% (14.3%)

Exit EBITDA multiple

Recent transaction

Discounted cash flows and Recent transaction

Discount rate

Exit EBITDA multiple

Transaction price

Subordinated Note to STRS JV

Subordinated Notes

Enterprise value

Recent transaction

Transaction price

Preferred Equity

7 unchanged sentences

Discount for lack of marketability

Recent transaction

Transaction price

$1.00 per share

Common Equity

1 unchanged sentence

Discount rate

15.8% –

20.4% (16.1%)

Exit EBITDA Multiple

Discount for lack of marketability

10.0% –

15.0% (10.3%)

Discounted cash flows and Guideline public companies

Discounted cash flows, Guideline public companies and Expected repayment

Discount rate

14.4% – 19.4% (17.7%)

Exit EBITDA Multiple

8.2x – 11.0x (10.1x)

NFY EBITDA Multiple

Discount for lack of marketability

Similar transactions

LTM EBITDA Multiple

6.0x – 13.3x (11.6x)

Recent transaction

3 unchanged sentences

Discount rate

20.4% –

20.8% – 28.7% (28.3%)

Exit EBITDA multiple

5.5x – 8.6x (5.9x)

3.4% – 8.4% (3.5%)

Discount for lack of marketability

10.0% –

10.0% – 15.0% (11.1%)

Transaction price

$0.67 per share

Total Level 3 Investments

Fair Value at

Fair Value as of

Investment Type

Range (Weighted Average)

December 31, 2020

(Weighted Average)

First lien secured loans

1 unchanged sentence

Discount rate

7.2% – 16.6% (9.7)%

Exit EBITDA multiple

3.0x – 15.0x (7.5x)

Guideline public companies

LTM EBITDA multiple

Recent transaction

Transaction price

Discounted cash flows,

recent transaction, guideline

public companies and

consensus market pricing

97.0 – 99.0 (97.9)

Discounted cash flows, recent transaction, guideline public companies and consensus market pricing

Discount rate

7.1% – 16.5% (9.6)%

Market pricing

100.2 –

100.2 – 100.6 (100.4)

Transaction price

Other (asset coverage and

expected repayment)

Exit EBITDA multiple

7.0x – 12.0x (9.3x)

Other (asset coverage and expected repayment)

Second lien secured loans

1 unchanged sentence

Discount rate

12.1% –

12.1% – 20.9% (14.9)%

Exit EBITDA multiple

Other (expected repayment)

3 unchanged sentences

Similar transactions

LTM EBITDA multiple

Recent transaction

3 unchanged sentences

Discount rate

12.5% –

12.5% – 19.8% (13.5)%

Exit EBITDA Multiple

6.7x – 8.6x (7.1x)

Discount for lack of marketability

Discounted cash flows and

Guideline public companies

2.0% – 15.0% (3.8)%

Discounted cash flows and Guideline public companies

Discount rate

Discount for lack

of marketability

Exit EBITDA Multiple

Discount for lack of marketability

Similar transactions

Discount for lack

of marketability

Exit EBITDA Multiple

Discount for lack of marketability

Recent transaction

2 unchanged sentences

Discount rate

19.1% –

19.1% – 24.7% (24.5)%

Option-pricing method

Discount for lack

of marketability

10.0% –

Exit EBITDA multiple

5.5x – 8.6x (5.6x)

3.0% – 7.8% (3.2)%

Discount for lack of marketability

10.0% – 15.0% (10.2)%

Recent transaction

1 unchanged sentence

Total Level 3 Investments

Valuation of investments may be determined

by weighting various valuation techniques.

Significant judgment is required in selecting the assumptions used to determine the fair values

of these investments.

The valuation methods selected for a particular investment are based on the circumstances and on the sufficiency

of data available to measure fair value.

If more than one valuation method is used to measure fair value, the results are evaluated and

weighted, as appropriate, considering the reasonableness of the range indicated by those results.

A fair value measurement is the point

within that range that is most representative of fair value in the circumstances.

The availability of observable inputs

can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the nature of the

instrument, whether the instrument is traded on an active exchange or in the secondary market and the current market conditions.

extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair

value requires a greater degree of judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is

greatest for financial instruments classified as Level 3.

The determination of fair value using

the selected methodologies takes into consideration a range of factors including the price at which the investment was acquired, the nature

of the investment, local market conditions, trading values on public and private exchanges for comparable securities, current and projected

operating performance and financing transactions subsequent to the acquisition of the investment, compliance with agreed upon terms and

covenants, and assessment of credit ratings of an underlying borrower.

These valuation methodologies involve a significant degree of judgment

to be exercised.

As it relates to investments which do

not have an active public market, there is no single standard for determining the estimated fair value.

Valuations of privately held investments

are inherently uncertain, and they may fluctuate over short periods of time and may be based on estimates.

The determination of fair value

may differ materially from the values that would have been used if a ready market for these investments existed.

In some cases, fair value for such investments

is best expressed as a range of values derived utilizing different methodologies from which a single estimate may then be determined.

Consequently, fair value for each investment may be derived using a combination of valuation methodologies that, in the judgment of the

investment professionals, are most relevant to such investment.

The selected valuation methodologies for a particular investment are consistently

applied on each measurement date.

However, a change in a valuation methodology or its application from one measurement date to another

is possible if the change results in a measurement that is equally or more representative of fair value in the circumstances.

The following table presents the par

and fair value of the Company’s borrowings as of June 30, 2021 and December 31, 2020.

The fair value of the Credit Facility (as

defined in Note 6) was estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments

at the measurement date, if available.

The fair value of the Company’s 6.0% private notes due 2023 (the “2023 Private Notes”),

the 5.375% private notes due 2025 (the “2025 Private Notes”), the 5.375% private notes due 2026 (the “2026 Private Notes”)

and the 5.625% private notes due 2027 (the “2027 Private Notes”) were estimated using discounted future cash flows to the

valuation date.

The fair value of the 6.5% notes due 2025, (the “2025 Public Notes”) was estimated using the trailing 10-day

volume weighted average quoted price as of the valuation date.

June 30, 2021

December 31, 2020

Valuation of investments may be determined by weighting various valuation techniques.

Significant judgment is required in selecting the assumptions used to determine the fair values of these investments.

The valuation methods selected for a particular investment are based on the circumstances and on the sufficiency of data available to measure fair value.

If more than one valuation method is used to measure fair value, the results are evaluated and weighted, as appropriate, considering the reasonableness of the range indicated by those results.

A fair value measurement is the point within that range that is most representative of fair value in the circumstances.

The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the nature of the instrument, whether the instrument is traded on an active exchange or in the secondary market and the current market conditions.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires a greater degree of judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

The determination of fair value using the selected methodologies takes into consideration a range of factors including the price at which the investment was acquired, the nature of the investment, local market conditions, trading

values on public and private exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment, compliance with agreed upon terms and covenants, and assessment of credit ratings of an underlying borrower.

These valuation methodologies involve a significant degree of judgment to be exercised.

As it relates to investments which do not have an active public market, there is no single standard for determining the estimated fair value.

Valuations of privately held investments are inherently uncertain, and they may fluctuate over short periods of time and may be based on estimates.

The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed.

In some cases, fair value for such investments is best expressed as a range of values derived utilizing different methodologies from which a single estimate may then be determined.

Consequently, fair value for each investment may be derived using a combination of valuation methodologies that, in the judgment of the investment professionals, are most relevant to such investment.

The selected valuation methodologies for a particular investment are consistently applied on each measurement date.

However, a change in a valuation methodology or its application from one measurement date to another is possible if the change results in a measurement that is equally or more representative of fair value in the circumstances.

The following table presents the par and fair value of the Company’s borrowings as of September 30, 2021 and December 31, 2020.

The fair value of the Credit Facility (as defined in Note 6) was estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if available.

The fair value of the Company’s 6.0% private notes due 2023 (the “2023 Private Notes”), the 5.375% private notes due 2025 (the “2025 Private Notes”), the 5.375% private notes due 2026 (the “2026 Private Notes”) and the 5.625% private notes due 2027 (the “2027 Private Notes”) were estimated using discounted future cash flows to the valuation date.

The fair value of the 6.5% notes due 2025, (the “2025 Public Notes”) was estimated using the trailing 10-day volume weighted average quoted price as of the valuation date.

As of September 30, 2021

As of December 31, 2020

JPM Credit Facility

5 unchanged sentences

NOTE 6 – BORROWINGS

Historically, the 1940 Act has permitted

the Company to issue “senior securities,”

including borrowing money from banks or other financial institutions, only in amounts

such that its asset coverage, as defined in the 1940 Act, equals at least 200% after such incurrence or issuance.

In March 2018, the Small

Business Credit Availability Act (the “SBCAA”) was enacted into law.

The SBCAA, among other things, amended the 1940 Act to

reduce the asset coverage requirements applicable to business development companies from 200% to 150% so long as the business development

company meets certain disclosure requirements and obtains certain approvals.

At the Company’s annual meeting of stockholders held

on August 1, 2018, the Company’s stockholders approved the reduced asset coverage ratio from 200% to 150%, such that the Company’s

maximum debt-to-equity ratio increased from a prior maximum of 1.0x (equivalent of $1 of debt outstanding for each $1 of equity) to a

maximum of 2.0x (equivalent to $2 of debt outstanding for each $1 of equity).

As a result, the Company’s asset coverage requirements

applicable to senior securities decreased from 200% to 150%, effective August 2, 2018.

As of June 30, 2021, and December 31, 2020, the

Company’s asset coverage for borrowed amounts was 187.9% and 180.2%, respectively.

Total borrowings outstanding and available as of June 30,

2021, were as follows:

Historically, the 1940 Act has permitted the Company to issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that its asset coverage, as defined in the 1940 Act, equals at least 200% after such incurrence or issuance.

In March 2018, the Small Business Credit Availability Act (the “SBCAA”) was enacted into law.

The SBCAA, among other things, amended the 1940 Act to reduce the asset coverage requirements applicable to business development companies from 200% to 150% so long as the business development company meets certain disclosure requirements and obtains certain approvals.

At the Company’s annual meeting of stockholders held on August 1, 2018, the Company’s stockholders approved the reduced asset coverage ratio from 200% to 150%, such that the Company’s maximum debt-to-equity ratio increased from a prior maximum of 1.0x (equivalent of $1 of debt outstanding for each $1 of equity) to a maximum of 2.0x (equivalent to $2 of debt outstanding for each $1 of equity).

As a result, the Company’s asset coverage requirements applicable to senior securities decreased from 200% to 150%, effective August 2, 2018.

As of September 30, 2021 and December 31, 2020, the Company’s asset coverage for borrowed amounts was 184.2% and 180.2%, respectively.

Total borrowings outstanding and available as of September 30, 2021, were as follows:

JPM Credit Facility

6 unchanged sentences

Total debt net issuance cost

Total borrowings outstanding and available as of December

31, 2020, were as follows:

Total borrowings outstanding and available as of December 31, 2020, were as follows:

JPM Credit Facility

7 unchanged sentences

Credit Facility :

On December 23, 2015, WhiteHorse Credit entered into a $200,000 revolving credit and security agreement with JPMorgan Chase Bank, National Association (“JPMorgan”), as administrative agent and lender (the “Credit Facility”).

On June 27, 2016, the Credit Facility was amended and restated to clarify certain terms.

3 unchanged sentences

On November 22, 2019, the terms of the Credit Facility were again amended and restated to, among other things, (i) extend the maturity date from December 29, 2021 to November 22, 2024;

(iii) increase the size of the facility from $200,000 to $250,000 with an additional $100,000 accordion feature, which allows for the

expansion of the borrowing limit, exercisable in increments of at least $35,000 (the “Commitment”);

(iii) reduce the interest

rate spread applicable on outstanding borrowings from 2.75% to 2.50%;

(iv) change the minimum borrowing amount from 77.5% to 70.0% of

the Commitment;

(ii) increase the size of the facility from $200,000 to $250,000 with an additional $100,000 accordion feature, which allows for the expansion of the borrowing limit, exercisable in increments of at least $35,000 (the “Commitment”);

(iii) reduce the interest rate spread applicable on outstanding borrowings from 2.75% to 2.50%;

(iv) change the minimum borrowing amount from 77.5% to 70.0% of the Commitment;

(v) increase the advance rate from 57% to 60%;

and (vi) extend the non-call period from October 29, 2019 to November 22, 2021.

On December 21, 2020, the terms of

the Credit Facility were amended to, among other things, (i) increase the minimum funding amount from $175,000 to $200,000, (ii) increase

the size of the facility from $250,000 to $285,000 and retain an accordion feature which allows for the expansion of the borrowing limit

up to $350,000 and (iii) provide for the implementation of certain changes relating to the transition away from LIBOR in the market.

On April 28, 2021, the terms of the Credit Facility were

amended and restated to, among other things, enable WhiteHorse Credit to borrow in British Pounds or Euros.

The Credit Facility bears interest

at LIBOR plus 2.50% on outstanding USD denominated borrowings.

The Credit Facility bears interest at EURIBOR, for EUR denominated borrowings,

CDOR for CAD denominated borrowings, SONIA, for GBP denominated, plus a spread on outstanding borrowings of 2.50%, 2.55% and 2.55%, respectively.

The Company is required to pay a non-usage fee which accrues at 0.75% per annum on the average daily unused amount of the financing commitments

to the extent the aggregate principal amount available under the Credit Facility has not been borrowed.

The minimum borrowing requirement

In connection with the Credit Facility, WhiteHorse Credit pledged securities with a fair value of approximately $592,542

as of June 30, 2021 as collateral.

On December 21, 2020, the terms of the Credit Facility were amended to, among other things, (i) increase the minimum funding amount from $175,000 to $200,000, (ii) increase the size of the facility from $250,000 to $285,000 and retain an accordion feature which allows for the expansion of the borrowing limit up to $350,000 and (iii) provide for the implementation of certain changes relating to the transition away from LIBOR in the market.

On April 28, 2021, the terms of the Credit Facility were amended and restated to, among other things, enable WhiteHorse Credit to borrow in British Pounds or Euros.

On July 15, 2021, the terms of the Credit Facility were amended to, among other things, allow WhiteHorse Credit to reduce the applicable margins for interest rates to 2.35%, extend the non-call period from November 22, 2021 to

November 22, 2022, extend the end of the reinvestment period from November 22, 2023 to November 22, 2024 and extend the scheduled termination date from November 22, 2024, to November 22, 2025.

The Credit Facility bears interest at LIBOR plus 2.35% on outstanding USD denominated borrowings.

The Credit Facility bears interest at EURIBOR, for EUR denominated borrowings, CDOR for CAD denominated borrowings, SONIA, for GBP denominated, plus a spread of 2.35% on outstanding borrowings.

The Company is required to pay a non-usage fee which accrues at 0.75% per annum on the average daily unused amount of the financing commitments to the extent the aggregate principal amount available under the Credit Facility has not been borrowed.

The minimum borrowing requirement is $200,000.

In connection with the Credit Facility, WhiteHorse Credit pledged securities with a fair value of approximately $594,638 as of September 30, 2021 as collateral.

The Credit Facility has a maturity date of November 22, 2025.

Under the Credit Facility, the Company has made

certain customary representations and warranties and is required to comply with various covenants, including leverage restrictions, reporting

requirements and other customary requirements for similar credit facilities.

As of June 30, 2021, the Company had $238,470 in outstanding

borrowings and $46,530 undrawn under the Credit Facility.

Weighted average outstanding borrowings were $228,236 and $226,291 at a weighted

average interest rate of 2.68% and 2.70%, respectively, for the three and six months ended June 30, 2021.

As of June 30, 2021, the interest

rate in effect on outstanding borrowings was 2.63%.

The Company’s ability to draw down undrawn funds under the Credit Facility is

determined by collateral and portfolio quality requirements stipulated in the credit and security agreement.

As of June 30, 2021, $46,530

was available to be drawn by the Company based on these requirements.

Under the Credit Facility, the Company has made certain customary representations and warranties and is required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities.

As of September 30, 2021, the Company had $259,620 in outstanding borrowings and $25,380 undrawn under the Credit Facility.

Weighted average outstanding borrowings were $256,274 and $236,396 at a weighted average interest rate of 2.50% and 2.63%, respectively, for the three and nine months ended September 30, 2021.

As of September 30, 2021, the interest rate in effect on outstanding borrowings was 2.47%.

The Company’s ability to draw down undrawn funds under the Credit Facility is determined by collateral and portfolio quality requirements stipulated in the credit and security agreement.

As of September 30, 2021, $25,380 was available to be drawn by the Company based on these requirements.

2023 Private Notes :

On July 13, 2018,

the Company entered into an agreement (the “2023 Note Purchase Agreement”) to sell in a private offering $30,000 aggregate

principal amount of senior unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of

1933, as amended.

On July 13, 2018, the Company entered into an agreement (the “2023 Note Purchase Agreement”) to sell in a private offering $30,000 aggregate principal amount of senior unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.

Interest on the 2023 Private Notes is payable semiannually on February 7 and August 7, at a fixed, annual rate of 6.00%.

This interest rate is subject to increase (up to 6.50%) in the event that, subject to certain exceptions, the 2023 Private Notes cease

to have an investment grade rating.

The 2023 Private Notes mature on August 7, 2023, unless redeemed, purchased or prepaid prior to such

date by the Company or its affiliates in accordance with their terms.

The 2023 Private Notes are general unsecured obligations of the

Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

of the transaction occurred on August 7, 2018.

The Company used the net proceeds from this offering, together with cash on hand, to redeem

existing debt.

This interest rate is subject to increase (up to 6.50%) in the event that, subject to certain exceptions, the 2023 Private Notes cease to have an investment grade rating.

The 2023 Private Notes mature on August 7, 2023, unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

The 2023 Private Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The closing of the transaction occurred on August 7, 2018.

The Company used the net proceeds from this offering, together with cash on hand, to redeem existing debt.

2025 Private Notes :

October 20, 2020, the Company entered into a Note Purchase Agreement (the “2025 Note Purchase Agreement”) governing the

issuance of $40,000 in aggregate principal amount of unsecured notes (the “2025 Private Notes”) to qualified

institutional investors in a private placement.

The 2025 Private Notes have a fixed interest rate of 5.375% and are due on October

20, 2025, unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

On October 20, 2020, the Company entered into a Note Purchase Agreement (the “2025 Note Purchase Agreement”) governing the issuance of $40,000 in aggregate principal amount of unsecured notes (the “2025 Private Notes”) to qualified institutional investors in a private placement.

The 2025 Private Notes have a fixed interest rate of 5.375% and are due on October 20, 2025, unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

Interest on the 2025 Private Notes is due semiannually.

This interest rate is subject to increase (up to 6.375%) in the event that,

subject to certain exceptions, the 2025 Private Notes cease to have an investment grade rating.

In addition, the Company is

obligated to offer to repay the 2025 Private Notes at par if certain change in control events occur.

The 2025 Private Notes are

general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated

indebtedness issued by the Company.

This interest rate is subject to increase (up to 6.375%) in the event that, subject to certain exceptions, the 2025 Private Notes cease to have an investment grade rating.

In addition, the Company is obligated to offer to repay the 2025 Private Notes at par if certain change in control events occur.

The 2025 Private Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Company used the net proceeds from this offering to redeem existing debt.

2026 Private Notes :

On December 4, 2020, the Company

entered into a Note Purchase Agreement (the “2026 Note Purchase Agreement”) governing the issuance of $10,000 in aggregate

principal amount of unsecured notes (the “2026 Private Notes”) to qualified institutional investors in a private placement.

The 2026 Private Notes have a fixed interest rate of 5.375% and are due on December 4, 2026, unless redeemed, purchased or prepaid prior

to such date by the Company or its affiliates in accordance with their terms.

On December 4, 2020, the Company entered into a Note Purchase Agreement (the “2026 Note Purchase Agreement”) governing the issuance of $10,000 in aggregate principal amount of unsecured notes (the “2026 Private Notes”) to qualified institutional investors in a private placement.

The 2026 Private Notes have a fixed interest rate of 5.375% and are due on December 4, 2026, unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

Interest on the 2026 Private Notes is due semiannually.

This interest rate is subject to increase (up to 6.375%) in the event that, subject to certain exceptions, the 2026 Private Notes cease

to have an investment grade rating.

In addition, the Company is obligated to offer to repay the 2026 Private Notes at par if certain

change in control events occur.

The 2026 Private Notes are general unsecured obligations of the Company that rank pari passu with

all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Company used the net proceeds from this offering

to redeem existing debt.

This interest rate is subject to increase (up to 6.375%) in the event that, subject to certain exceptions, the 2026 Private Notes cease to have an investment grade rating.

In addition, the Company is obligated to offer to repay the 2026 Private Notes at par if certain change in control events occur.

The 2026 Private Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Company used the net proceeds from this offering to redeem existing debt.

2027 Private Notes :

On December 4, 2020, the Company

entered into a Note Purchase Agreement (the “2027 Note Purchase Agreement”) governing the issuance of $10,000 in aggregate

principal amount of unsecured notes (the “2027 Private Notes”) to qualified institutional investors in a private placement.

The 2027 Private Notes have a fixed interest rate of 5.625% and are due on December 4, 2027, unless redeemed, purchased or prepaid prior

to such date by the Company or its affiliates in accordance with their terms.

On December 4, 2020, the Company entered into a Note Purchase Agreement (the “2027 Note Purchase Agreement”) governing the issuance of $10,000 in aggregate principal amount of unsecured notes (the “2027 Private Notes”) to qualified institutional investors in a private placement.

The 2027 Private Notes have a fixed interest rate of 5.625% and are due on December 4, 2027, unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

Interest on the 2027 Private Notes is due semiannually.

This interest rate is subject to increase (up to 6.625%) in the event that, subject to certain exceptions, the 2027 Private Notes cease

to have an investment grade rating.

In addition, the Company is obligated to offer to repay the 2027 Private Notes at par if certain

change in control events occur.

The 2027 Private Notes are general unsecured obligations of the Company that rank pari passu with

all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Company used the net proceeds from this offering

to redeem existing debt.

This interest rate is subject to increase (up to 6.625%) in the event that, subject to certain exceptions, the 2027 Private Notes cease to have an investment grade rating.

In addition, the Company is obligated to offer to repay the 2027 Private Notes at par if certain change in control events occur.

The 2027 Private Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Company used the net proceeds from this offering to redeem existing debt.

2025 Public Notes :

13, 2018, the Company completed a public offering of $35,000 of aggregate principal amount of 2025 Public Notes, the net proceeds of which

were used to fund investments in debt and equity securities and repay outstanding indebtedness under its revolving credit facility.

on the 2025 Public Notes is paid quarterly on February 28, May 31, August 31 and November 30 each year, at an annual rate of 6.50%.

2025 Public Notes will mature on November 30, 2025 and may be redeemed in whole or in part at any time, or from time to time, at the Company’s

option on or after November 30, 2021.

The 2025 Public Notes are direct unsecured obligations and are structurally subordinate to borrowings

under the Credit Facility and will rank equally in right of payment with the Company’s other outstanding and future unsecured, unsubordinated

indebtedness, including the 2023, 2025, 2026 and 2027 Private Notes.

The 2025 Public Notes are listed on the Nasdaq Global Select Market

under the trading symbol “WHFBZ.”

On November 13, 2018, the Company completed a public offering of $35,000 of aggregate principal amount of 2025 Public Notes, the net proceeds of which were used to fund investments in debt and equity securities and repay outstanding indebtedness under its revolving credit facility.

Interest on the 2025 Public Notes is paid quarterly on February 28, May 31, August 31 and November 30 each year, at an annual rate of 6.50%.

The 2025 Public Notes will mature on November 30, 2025 and may be redeemed in whole or in part at any time, or from time to time, at the Company’s option on or after November 30, 2021.

The 2025 Public Notes are direct unsecured obligations and are structurally subordinate to borrowings under the Credit Facility and will rank equally in right of payment with the Company’s other outstanding and future unsecured, unsubordinated indebtedness, including the 2023, 2025, 2026 and 2027 Private Notes.

The 2025 Public Notes are listed on the Nasdaq Global Select Market under the trading symbol “WHFBZ.”

NOTE 7 - RELATED PARTY TRANSACTIONS

Investment Advisory Agreement :

WhiteHorse Advisers serves as the Company’s investment adviser in accordance with the terms of an investment advisory agreement

(the “Investment Advisory Agreement”).

The Company’s board of directors most recently re-approved the Investment Advisory

Agreement on August 4, 2021.

On November 1, 2018, at an in-person meeting, the Company’s board of directors approved an amended

and restated Investment Advisory Agreement.

The Investment Advisory Agreement was amended and restated to reduce the base management fee

on assets financed using leverage over 200% asset coverage (over 1.0x debt to equity) as further discussed below.

Subject to the overall

supervision of the Company’s board of directors, WhiteHorse Advisers manages the day-to-day operations of, and provides investment

management services to, the Company.

WhiteHorse Advisers serves as the Company’s investment adviser in accordance with the terms of an investment advisory agreement.

On November 1, 2018, at an in-person meeting, the Company’s board of directors approved an amended and restated investment advisory agreement (the “Investment Advisory Agreement”).

The Company’s board of directors most recently re-approved the Investment Advisory Agreement on August 4, 2021.

Subject to the overall supervision of the Company’s board of directors, WhiteHorse Advisers manages the day-to-day operations of, and provides investment management services to, the Company.

Under the terms of the Investment Advisory Agreement, WhiteHorse Advisers:

determines the composition of the investment portfolio, the nature and timing of the changes to the portfolio and the manner of implementing

such changes;

identifies, evaluates and negotiates the structure of the investments the Company makes (including performing

due diligence on the Company’s prospective portfolio companies);

● determines the composition of the investment portfolio, the nature and timing of the changes to the portfolio and the manner of implementing such changes;

● identifies, evaluates and negotiates the structure of the investments the Company makes (including performing due diligence on the Company’s prospective portfolio companies);

● closes, monitors and administers the investments the Company makes, including the exercise of any voting or consent rights.

In addition, WhiteHorse Advisers provides

the Company with access to personnel and an Investment Committee.

Under the Investment Advisory Agreement, the Company pays WhiteHorse

Advisers a fee for investment management services consisting of a base management fee and an incentive fee.

The Investment Advisory Agreement

may be terminated by either party without penalty upon 60 days’

written notice to the other party.

In addition, WhiteHorse Advisers provides the Company with access to personnel and an Investment Committee.

Under the Investment Advisory Agreement, the Company pays WhiteHorse Advisers a fee for investment management services consisting of a base management fee and an incentive fee.

The Investment Advisory Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

Base Management Fee

Prior to November 1, 2018, the base management

fee is calculated at an annual rate of 2.0% of the average carrying value of consolidated gross assets, including cash and cash equivalents

and assets purchased with borrowed funds, at the end of the two most recently completed calendar quarters.

Effective November 1, 2018,

the base management fee is calculated at an annual rate equal to 2.0% based on the Company’s consolidated gross assets (including

cash and cash equivalents and assets purchased with borrowed funds);

provided, however, the base management fee will be calculated at

an annual rate equal to 1.25% of the Company’s consolidated gross assets (including cash and cash equivalents and assets purchased

with borrowed funds), that exceed the product of (i) 200% and (ii) the value of the Company’s total net assets, at the end of the

two most recently completed calendar quarters.

Base management fees are payable quarterly in arrears and are appropriately pro-rated for

any partial month or quarter.

During the three and six months ended June 30,

2021, the Company incurred base management fees of $3,357 and $6,701, respectively.

During the three and six months ended June 30, 2020,

the Company incurred base management fees of $2,950 and $6,042, respectively.

The base management fee is calculated at an annual rate equal to 2.0% based on the Company’s consolidated gross assets (including cash and cash equivalents and assets purchased with borrowed funds);

provided, however, the base management fee will be calculated at an annual rate equal to 1.25% of the Company’s consolidated gross assets (including cash and cash equivalents and assets purchased with borrowed funds), that exceed the product of (i) 200% and (ii) the value of the Company’s total net assets, at the end of the two most recently completed calendar quarters.

Base management fees are payable quarterly in arrears and are appropriately pro-rated for any partial month or quarter.

During the three and nine months ended September 30, 2021, the Company incurred base management fees of $3,508 and $10,209, respectively.

During the three and nine months ended September 30, 2020, the Company incurred base management fees of $3,069 and $9,110, respectively.

Performance-based Incentive Fee

The performance-based incentive fee consists

of two components that are independent of each other, except as provided by the Incentive Fee Cap and Deferral Mechanism discussed below.

The calculations of these two components have

been structured to include a fee limitation such that no incentive fee will be paid to the investment adviser for any quarter if, after

such payment, the cumulative incentive fees paid to the investment adviser for the period that includes the current fiscal quarter and

the 11 full preceding fiscal quarters, referred to as the “Incentive Fee Look-back Period,”

would exceed 20.0% of the Cumulative

Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee Look-back Period.

Each quarterly incentive fee is subject

to the Incentive Fee Cap (as defined below) and a deferral mechanism through which the investment adviser may recap a portion of such

deferred incentive fees, which is referred to together as the “Incentive Fee Cap and Deferral Mechanism.”

This limitation is accomplished by subjecting

each incentive fee payable to a cap, which is referred to as the “Incentive Fee Cap.”

The Incentive Fee Cap in any quarter

is equal to (a) 20.0% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive

fees of any kind paid to the investment adviser during the Incentive Fee Look-back Period.

To the extent the Incentive Fee Cap is zero

or a negative value in any quarter, the Company will pay no incentive fee to its investment adviser in that quarter.

The Company will

only pay incentive fees to the extent allowed by the Incentive Fee Cap and Deferral Mechanism.

To the extent that the payment of incentive

fees is limited by the Incentive Fee Cap and Deferral Mechanism, the payment of such fees may be deferred and paid in subsequent quarters

up to three years after their date of deferment, subject to applicable limitations included in the Investment Advisory Agreement.

deferral component of the Incentive Fee Cap and Deferral Mechanism may cause incentive fees that accrued during one fiscal quarter to

be paid to the investment adviser at any time during the 11 full fiscal quarters following such initial full fiscal quarter.

The “Cumulative Pre-Incentive

Fee Net Return”

refers to the sum of (a) Pre-Incentive Fee Net Investment Income (as defined below) for each period during the Incentive

Fee Look-back Period and (b) the sum of cumulative realized capital gains, cumulative realized capital losses, cumulative unrealized capital

depreciation and cumulative unrealized capital appreciation during the applicable Incentive Fee Look-back Period.

The first component, which is income-based

(the “Income Incentive Fee”), is calculated and payable quarterly in arrears and is determined based on Pre-Incentive Fee

Net Investment Income for the immediately preceding calendar quarter, subject to the Incentive Fee Cap and Deferral Mechanism.

purpose, “Pre-Incentive Fee Net Investment Income”

means, in each case on a consolidated basis, interest income, distribution

income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination,

structuring, diligence and consulting fees or other fees received from portfolio companies) accrued during the calendar quarter, minus

the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement

(the “Administration Agreement”), any interest expense and any dividends paid on any issued and outstanding preferred stock,

but excluding the incentive fee).

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital

losses or unrealized capital appreciation or depreciation.

The operation of the first component of the incentive fee

for each quarter is as follows:

no incentive fee is payable to the Company’s investment adviser in any calendar quarter in which

Pre-Incentive Fee Net Investment Income does not exceed the “Hurdle Rate”

of 1.75% (7.00% annualized);

100% of Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee

Net Investment Income, if any, that exceeds the Hurdle Rate but is less than 2.1875% in any calendar quarter (8.75% annualized) is payable

to the Company’s investment adviser.

This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds

the Hurdle Rate but is less than 2.1875%) is referred to as the “catch-up.”

The effect of the catch-up is that, if such Pre-Incentive

Fee Net Investment Income exceeds 2.1875% in any calendar quarter, the investment adviser will receive 20% of such Pre-Incentive Fee Net

Investment Income as if the Hurdle Rate did not apply;

20% of the amount of such Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any

calendar quarter (8.75% annualized) is payable to the Company’s investment adviser (once the Hurdle Rate is reached and the catch-up

is achieved, 20% of all Pre-Incentive Fee Net Investment Income).

The portion of such

incentive fee that is attributable to deferred interest (such as PIK interest or original issue discount) will be paid to the investment

adviser, together with interest from the date of deferral to the date of payment, only if and to the extent that the Company actually

receives such interest in cash, and any accrual will be reversed if and to the extent such interest is reversed in connection with any

write-off or similar treatment of the investment giving rise to any deferred interest accrual.

Any reversal of such amounts would reduce

net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would

result in a reduction and possibly elimination of the incentive fees for such quarter.

There is no accumulation

of amounts on the Hurdle Rate from quarter to quarter and, accordingly, there is no clawback of amounts previously paid if subsequent

quarters are below the quarterly Hurdle Rate and there is no delay of payment if prior quarters are below the quarterly Hurdle Rate.

the Hurdle Rate is fixed, as interest rates rise, it will be easier for the investment adviser to surpass the Hurdle Rate and receive

an incentive fee based on Pre-Incentive Fee Net Investment Income.

Net investment income used to calculate

this component of the incentive fee is also included in the amount of consolidated gross assets used to calculate the base management

These calculations will be appropriately prorated for any period of less than three months and adjusted for any share issuances or

repurchases during the current quarter.

The second component, the capital gains

component of the incentive fee (the “Capital Gains Incentive Fee”), which is determined and payable in arrears as of the end

of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commenced on January 1,

2013, and equals 20% of cumulative aggregate realized capital gains from January 1 through the end of each calendar year, computed net

of aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of each year

(the “Capital Gains Incentive Fee Base”), less the aggregate amount of any previously paid capital gains incentive fees and

subject to the Incentive Fee Cap and Deferral Mechanism.

If such amount is negative, then no capital gains incentive fee will be payable

for the year.

Additionally, if the Investment Advisory Agreement is terminated as of a date that is not a calendar year end, the termination

date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

capital gains component of the incentive fee is not subject to any minimum return to stockholders.

In accordance with GAAP, the Company is also required

to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gains incentive fee on

a quarterly basis if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted

to be considered in calculating the fee actually payable under the Investment Advisory Agreement.

If the Capital Gains Incentive Fee Base,

adjusted as required by GAAP to include unrealized capital appreciation, is positive at the end of a reporting period, then GAAP requires

the Company to accrue a Capital Gains Incentive Fee equal to 20% of such amount, less the aggregate amount of any Capital Gains Incentive

Fees previously paid and Capital Gains Incentive Fees accrued under GAAP in all prior periods.

If such amount is negative, then there

is no accrual for such period.

The resulting accrual under GAAP in a given period may result in either additional expense (if such cumulative

amount is greater than in the prior period) or a reversal of previously recorded expense (if such cumulative amount is less than in the

prior period).

The performance-based incentive fee consists of two components that are independent of each other, except as provided by the Incentive Fee Cap and Deferral Mechanism discussed below.

The calculations of these two components have been structured to include a fee limitation such that no incentive fee will be paid to the investment adviser for any quarter if, after such payment, the cumulative incentive fees paid to the investment adviser for the period that includes the current fiscal quarter and the 11 full preceding fiscal quarters, referred to as the “Incentive Fee Look-back Period,” would exceed 20.0% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the Incentive Fee Look-back Period.

Each quarterly incentive fee is subject to the Incentive Fee Cap (as defined below) and a deferral mechanism through which the investment adviser may recap a portion of such deferred incentive fees, which is referred to together as the “Incentive Fee Cap and Deferral Mechanism.”

This limitation is accomplished by subjecting each incentive fee payable to a cap, which is referred to as the “Incentive Fee Cap.” The Incentive Fee Cap in any quarter is equal to (a) 20.0% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to the investment adviser during the Incentive Fee Look-back Period.

To the extent the Incentive Fee Cap is zero or a negative value in any quarter, the Company will pay no incentive fee to its investment adviser in that quarter.

The Company will only pay incentive fees to the extent allowed by the Incentive Fee Cap and Deferral Mechanism.

To the extent that the payment of incentive fees is limited by the Incentive Fee Cap and Deferral Mechanism, the payment of such fees may be deferred and paid in subsequent quarters up to three years after their date of deferment, subject to applicable limitations included in the Investment Advisory Agreement.

The deferral component of the Incentive Fee Cap and Deferral Mechanism may cause incentive fees that accrued during one fiscal quarter to be paid to the investment adviser at any time during the 11 full fiscal quarters following such initial full fiscal quarter.

The “Cumulative Pre-Incentive Fee Net Return” refers to the sum of (a) Pre-Incentive Fee Net Investment Income (as defined below) for each period during the Incentive Fee Look-back Period and (b) the sum of cumulative realized capital gains, cumulative realized capital losses, cumulative unrealized capital depreciation and cumulative unrealized capital appreciation during the applicable Incentive Fee Look-back Period.

The first component, which is income-based (the “Income Incentive Fee”), is calculated and payable quarterly in arrears and is determined based on Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter, subject to the Incentive Fee Cap and Deferral Mechanism.

For this purpose, “Pre-Incentive Fee Net Investment Income” means, in each case on a consolidated basis, interest income, distribution income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees received from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement (the “Administration Agreement”), any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

The operation of the first component of the incentive fee for each quarter is as follows:

● no incentive fee is payable to the Company’s investment adviser in any calendar quarter in which Pre-Incentive Fee Net Investment Income does not exceed the “Hurdle Rate” of 1.75% (7.00% annualized);

● 100% of Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle Rate but is less than 2.1875% in any calendar quarter

(8.75% annualized) is payable to the Company’s investment adviser.

This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle Rate but is less than 2.1875%) is referred to as the “catch-up.” The effect of the catch-up is that, if such Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter, the investment adviser will receive 20% of such Pre-Incentive Fee Net Investment Income as if the Hurdle Rate did not apply;

● 20% of the amount of such Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to the Company’s investment adviser (once the Hurdle Rate is reached and the catch-up is achieved, 20% of all Pre-Incentive Fee Net Investment Income).

The portion of such incentive fee that is attributable to deferred interest (such as PIK interest or original issue discount) will be paid to the investment adviser, together with interest from the date of deferral to the date of payment, only if and to the extent that the Company actually receives such interest in cash, and any accrual will be reversed if and to the extent such interest is reversed in connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual.

Any reversal of such amounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would result in a reduction and possibly elimination of the incentive fees for such quarter.

There is no accumulation of amounts on the Hurdle Rate from quarter to quarter and, accordingly, there is no clawback of amounts previously paid if subsequent quarters are below the quarterly Hurdle Rate and there is no delay of payment if prior quarters are below the quarterly Hurdle Rate.

Since the Hurdle Rate is fixed, as interest rates rise, it will be easier for the investment adviser to surpass the Hurdle Rate and receive an incentive fee based on Pre-Incentive Fee Net Investment Income.

Net investment income used to calculate this component of the incentive fee is also included in the amount of consolidated gross assets used to calculate the base management fee.

These calculations will be appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The second component, the capital gains component of the incentive fee (the “Capital Gains Incentive Fee”), which is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commenced on January 1, 2013, and equals 20% of cumulative aggregate realized capital gains from January 1 through the end of each calendar year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of each year (the “Capital Gains Incentive Fee Base”), less the aggregate amount of any previously paid capital gains incentive fees and subject to the Incentive Fee Cap and Deferral Mechanism.

If such amount is negative, then no capital gains incentive fee will be payable for the year.

Additionally, if the Investment Advisory Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

The capital gains component of the incentive fee is not subject to any minimum return to stockholders.

In accordance with GAAP, the Company is also required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gains incentive fee on a quarterly basis if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement.

If the Capital Gains Incentive Fee Base, adjusted as required by GAAP to include unrealized capital appreciation, is positive at the end of a reporting period, then GAAP requires the Company to accrue a Capital Gains Incentive Fee equal to 20% of such amount, less the aggregate amount of any Capital Gains Incentive Fees previously paid and Capital Gains Incentive Fees accrued under GAAP in all prior periods.

If such amount is negative, then there is no accrual for such period.

The resulting accrual under GAAP in a given period may result in either additional expense (if such cumulative amount is greater than in the prior period) or a reversal of previously recorded expense (if such cumulative amount is less than in the prior period).

There can be no assurance that such unrealized capital appreciation will be realized in the future.

For the three and six

months ended June 30, 2021, the Company accrued Capital Gains Incentive Fees of $882 and $996, respectively.

For the three and six months

ended June 30, 2020, the Company reversed previously accrued Capital Gains Incentive Fees of $0 and $626, respectively.

As of June 30,

2021 and December 31, 2020, included in incentive fees payable on the consolidated statements of assets and liabilities were $3,128 and

$2,132, respectively, for cumulative accruals of Capital Gains Incentive Fees under GAAP, including any amounts payable pursuant to the

Investment Advisory Agreement as described above.

Because of the structure of the incentive

fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss subject to the Incentive Fee Cap and

Deferral Mechanism.

For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the Hurdle Rate, it will

pay the applicable Income Incentive Fee even after incurring a loss in that quarter due to realized and unrealized capital losses.

During the three and six months ended June 30,

2021, the Company incurred total performance-based incentive fees of $2,628 and $4,670, respectively.

During the three and six months

ended June 30, 2020, the Company incurred total performance-based incentive fees of $1,311 and $1,752, respectively.

As of June 30, 2021

and December 31, 2020, incentive fees payable on the consolidated statements of assets and liabilities were $6,994 and $6,117, respectively.

For the three and nine months ended September 30, 2021, the Company accrued Capital Gains Incentive Fees of $127 and $1,123, respectively.

For the three and nine months ended September 30, 2020, the Company reversed previously accrued Capital Gains Incentive Fees of $1,870 and $1,243, respectively.

As of September 30, 2021 and December 31, 2020, incentive fees payable on the

consolidated statements of assets and liabilities were $3,255 and $2,132, respectively, for cumulative accruals of Capital Gains Incentive Fees under GAAP, including any amounts payable pursuant to the Investment Advisory Agreement as described above.

Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss subject to the Incentive Fee Cap and Deferral Mechanism.

For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the Hurdle Rate, it will pay the applicable Income Incentive Fee even after incurring a loss in that quarter due to realized and unrealized capital losses.

During the three and nine months ended September 30, 2021, the Company incurred total performance-based incentive fees of $2,069 and $6,739, respectively.

During the three and nine months ended September 30, 2020, the Company incurred total performance-based incentive fees of $3,819 and $5,571, respectively.

As of September 30, 2021 and December 31, 2020, incentive fees payable on the consolidated statements of assets and liabilities were $7,404 and $6,117, respectively.

Administration Agreement :

the Administration Agreement, WhiteHorse Administration furnishes the Company with office facilities, equipment and clerical, bookkeeping

and record keeping services to enable the Company to operate.

Under the Administration Agreement, WhiteHorse Administration performs,

or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial

records which the Company is required to maintain and preparing reports to its stockholders and reports filed with the U.S.

and Exchange Commission.

In addition, WhiteHorse Administration assists the Company in determining and publishing its net asset value,

oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders and generally

oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company

Payments under the Administration Agreement equal an amount based upon the Company’s allocable portion of WhiteHorse

Administration’s overhead in performing its obligations under the Administration Agreement, including rent and the Company’s

allocable portion of the cost of its chief financial officer and chief compliance officer along with their respective staffs.

Administration Agreement, WhiteHorse Administration also provides on the Company’s behalf managerial assistance to those portfolio

companies to which the Company is required to provide such assistance.

The Administration Agreement may be terminated by either party

without penalty upon 60 days’

written notice to the other party.

To the extent that WhiteHorse Administration outsources any of

its functions, the Company will pay the fees associated with such functions on a direct basis without any profit to WhiteHorse Administration.

Substantially all the Company’s

payments of operating expenses to third parties were made by a related party, for which such third party received reimbursement from the

During the three and six months ended June 30,

2021, the Company incurred allocated administrative service fees of $170 and $341, respectively.

During the three and six months ended

June 30, 2020, the Company incurred allocated administrative service fees of $171 and $342, respectively.

Pursuant to the Administration Agreement, WhiteHorse Administration furnishes the Company with office facilities, equipment and clerical, bookkeeping and record keeping services to enable the Company to operate.

Under the Administration Agreement, WhiteHorse Administration performs, or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial records which the Company is required to maintain and preparing reports to its stockholders and reports filed with the U.S.

Securities and Exchange Commission.

In addition, WhiteHorse Administration assists the Company in determining and publishing its net asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.

Payments under the Administration Agreement equal an amount based upon the Company’s allocable portion of WhiteHorse Administration’s overhead in performing its obligations under the Administration Agreement, including rent and the Company’s allocable portion of the cost of its chief financial officer and chief compliance officer along with their respective staffs.

Under the Administration Agreement, WhiteHorse Administration also provides on the Company’s behalf managerial assistance to those portfolio companies to which the Company is required to provide such assistance.

The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.

To the extent that WhiteHorse Administration outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without any profit to WhiteHorse Administration.

Substantially all the Company’s payments of operating expenses to third parties were made by a related party, for which such third party received reimbursement from the Company.

During both the three and nine months ended September 30, 2021 and 2020, the Company incurred allocated administrative service fees of $171 and $512, respectively.

Co-investments with Related Parties :

As of June 30, 2021 and December 31, 2020, no officers or employees affiliated with or employed by WhiteHorse Advisers and its related

entities maintained any co-investments in the Company’s investments.

As of June 30, 2021 and December 31,

2020, certain funds affiliated with WhiteHorse Advisers and its related entities maintained co-investments in the Company’s investments

of $3,341,047 and $3,191,269, respectively.

For the three and

six months ended June 30, 2021, the Company sold $31,751and $60,694 of investments to STRS JV at fair value.

For the three and six months

ended June 30, 2021, the Company recognized net realized losses of $26 and net realized gains of $157, respectively.

For the three and

six months ended June 30, 2020, the Company sold $36,604 and $65,062 of investments to STRS JV at fair value and recognized net realized

losses of $37 and $3, respectively.

As of September 30, 2021 and December 31, 2020, no officers or employees affiliated with or employed by WhiteHorse Advisers and its related entities maintained any co-investments in the Company’s investments.

As of September 30, 2021 and December 31, 2020, certain funds affiliated with WhiteHorse Advisers and its related entities maintained co-investments in the Company’s investments of $3,667,522 and $3,191,269, respectively.

For the three and nine months ended September 30, 2021, the Company sold $45,729 and $106,423 of investments to STRS JV at fair value.

For the three and nine months ended September 30, 2021, the Company recognized net realized gains of $120 and $277, respectively.

For the three and nine months ended September 30, 2020, the Company sold $1,335 and $66,397 of investments to STRS JV at fair value and recognized net realized losses of $0 and $3, respectively.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Commitments :

In the normal course

of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its borrowers.

financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit risk in excess of the amount

recognized in the consolidated statement of assets and liabilities.

The Company attempts to limit its credit risk by conducting extensive

due diligence and obtaining collateral where appropriate.

The balance of unfunded commitments to extend

credit was approximately $23,843 and $19,554 as of June 30, 2021 and December 31, 2020, respectively.

Commitments to extend credit consist

principally of the unused portions of commitments that obligate the Company to extend credit, such as revolving credit arrangements or

similar transactions.

These commitments are often subject to financial or non-financial milestones and other conditions to borrow that

must be achieved before the commitment can be drawn.

In addition, the commitments generally have fixed expiration dates or other termination

Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash

requirements.

The following table summarizes the Company’s unfunded commitments as of June 30, 2021 and December 31, 2020:

In the normal course of business, the Company is party to financial instruments with off-balance-sheet risk to meet the financing needs of its borrowers.

These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statement of assets and liabilities.

The Company attempts to limit its credit risk by conducting extensive due diligence and obtaining collateral where appropriate.

The balance of unfunded commitments to extend credit was $33,123 and $19,554 as of September 30, 2021 and December 31, 2020, respectively.

Commitments to extend credit consist principally of the unused portions of commitments that obligate the Company to extend credit, such as revolving credit arrangements or similar transactions.

These commitments are often subject to financial or non-financial milestones and other conditions to borrow that must be achieved before the commitment can be drawn.

In addition, the commitments generally have fixed expiration dates or other termination clauses.

Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The following table summarizes the Company’s unfunded commitments as of September 30, 2021 and December 31, 2020:

Unfunded Commitment ($ in thousands)

As of June 30, 2021

As of September 30, 2021

As of December 31, 2020

1 unchanged sentence

BBQ Buyer, LLC

Cennox Holdings Limited

Claridge Products and Equipment, LLC

1 unchanged sentence

Drew Foam Companies Inc

EducationDynamics, LLC

Epiphany Dermatology

Geo Logic Systems Ltd.

IDIG Parent LLC

ImageOne Industries, LLC

HC Salon Holdings, Inc.

Inspired Beauty Brands, Inc.

1 unchanged sentence

LHS Borrower, LLC

LINC Systems, LLC

LMG Holdings, Inc.

Maxitransfers Blocker Corp

Motivational Marketing, LLC

Newscycle Solutions, Inc.

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Telestream Holdings Corporation

Trimlite Buyer LLC

Total unfunded revolving loan commitments

Delayed Draw Loan Commitments:

DCA Investment Holding,LLC

EducationDynamics, LLC

Empire Office, Inc.

Epiphany Dermatology

IDIG Parent LLC

Ivy Rehab Holdings LLC

1 unchanged sentence

RCKC Acquisitions LLC (dba KSM Consulting)

Source Code Holdings, LLC

True Blue Car Wash, LLC

As of June 30, 2021,

the Company had commitments to fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $2,548 and $10,191

was unfunded, respectively.

As of December 31, 2020, the Company had commitments to fund equity interests and subordinated notes in STRS

JV of $15,000 and $60,000, of which $4,732 and $18,927 was unfunded, respectively.

The capital commitments cannot be drawn without an

affirmative vote by both the Company’s and STRS Ohio’s representatives on STRS JV’s board of managers.

Total unfunded delayed draw loan commitments

As of September 30, 2021, the Company had commitments to fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $676 and $2,703 was unfunded, respectively.

As of December 31, 2020, the Company had commitments to fund equity interests and subordinated notes in STRS JV of $15,000 and $60,000, of which $4,732 and $18,927 was unfunded, respectively.

The capital commitments cannot be drawn without an affirmative vote by both the Company’s and STRS Ohio’s representatives on STRS JV’s board of managers.

Indemnification :

In the normal

course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide

general indemnifications.

The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims

that may be made against the Company that have not occurred.

The Company expects the risk of any future obligation under these indemnifications

to be remote.

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications.

The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not occurred.

The Company expects the risk of any future obligation under these indemnifications to be remote.

Legal Proceedings :

In the normal course of business, the Company, the investment adviser and the administrator may be subject to legal and regulatory proceedings

that are generally incidental to its ongoing operations.

While there can be no assurance of the ultimate disposition of any such proceedings,

the Company does not believe any such disposition will have a material adverse effect on the Company’s consolidated financial statements.

In the normal course of business, the Company, the investment adviser and the administrator may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations.

While there can be no assurance of the ultimate disposition of any such proceedings, the Company does not believe any such disposition will have a material adverse effect on the Company’s consolidated financial statements.

COVID-19 Developments :

addition, during the three and six months ended June 30, 2021 and subsequent to June 30, 2021, the current pandemic caused by the novel

coronavirus (commonly known as “COVID-19”) has had a significant impact on the U.S.

Certain of the Company’s

portfolio companies have been adversely impacted by the effects of the COVID-19 pandemic, which had an adverse impact on the Company’s

results of operations and may continue to have an adverse impact on the Company’s future net investment income, the fair value of

its portfolio investments, its financial condition and the results of operations and financial condition of the Company’s portfolio

NOTE 9 - STOCKHOLDERS’

The following table summarizes the

total shares issued and proceeds received relating to the issuance of shares of the Company’s common stock from the DRIP and pursuant

to at-the-market offerings from time to time (the “ATM Program”) (net offering costs) for the six months ended June 30, 2021.

Six months ended June 30,

In addition, during the three and nine months ended September 30, 2021 and subsequent to September 30, 2021, the current pandemic caused by the novel coronavirus (commonly known as “COVID-19”) has had a significant impact on the U.S.

Certain of the Company’s portfolio companies were and may continue to be adversely impacted by the effects of the COVID-19 pandemic, which had an adverse impact on the Company’s results of operations and may continue to have an adverse impact on the Company’s future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of the Company’s portfolio companies.

NOTE 9 - STOCKHOLDERS’ EQUITY

On March 15, 2021, the Company launched an "at-the-market"

offering (the "ATM Program") by entering into an Equity Distribution Agreement with Raymond James & Associates, Inc.

pursuant to which the Company may offer and sell, from time to time, through Raymond James & Associates, Inc., as the sales agent, shares of its common stock having an aggregate offering amount of up to $35,000.

During the three months ended September 30, 2021, the Company sold 94,897 shares of its common stock under the ATM Program at a weighted-average price of $15.78 per share, which amounts to $1,497 in gross proceeds.

The Company received net proceeds of $1,467 after deducting commissions to the sales agent.

During the nine months ended September 30, 2021, the Company sold 256,952 shares of its common stock under the ATM Program at a weighted-average price of $15.82 per share, which amounts to $4,064 in gross proceeds.

The Company received net proceeds of $3,983 million after deducting commissions to the sales agent.

To date, the Company has sold 256,952 shares of its common stock under the ATM Program at a weighted-average price of $15.82, which amounts to $4,064 gross proceeds and received net proceeds of $3,983 after deducting commissions to the sales agent.

As of September 30, 2021, the Company had $30,936 available under the ATM Program.

The following table summarizes the total shares issued and proceeds received, net of offering costs, relating to the issuance of shares of the Company’s common stock from the DRIP and pursuant to the ATM Program for the nine months ended September 30, 2021 and September 30, 2020.

Nine months ended September 30,

($ in thousands except share and per share amounts)

3 unchanged sentences

NOTE 10 - FINANCIAL HIGHLIGHTS

following is a schedule of financial highlights:

Six months ended June 30,

The following is a schedule of financial highlights:

Nine months ended September 30,

Per share data:

Net asset value, beginning of period

Investment operations:

Net investment income

16 unchanged sentences

(1) Calculated using the average shares outstanding method.

(2) Total return is based on the change in market price per share during

the period and takes into account distributions, if any, reinvested in accordance with the DRIP.

(2) Total return is based on the change in market price per share during the period and takes into account distributions, if any, reinvested in accordance with the DRIP.

(3) With the exception of the portfolio turnover rate, ratios are reported on an annualized basis.

(4) Calculated using total expenses, including income tax provision.

(5) The issuance of common stock on a per share basis reflects the incremental

net asset value changes as a result of the issuance of shares of common stock pursuant to the ATM Program and DRIP.

The issuance of common

stock at a price, net of commissions, that is greater than the net asset value per share results in an increase in net asset value per

The impact of the Company’s issuance of common stock on net asset value was less than $0.01 per share during the six months

ended June 30, 2021.

Financial highlights are calculated

for each securities class taken as a whole.

An individual stockholder’s return and ratios may vary based on the timing of capital

transactions.

(5) The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock pursuant to the ATM Program and DRIP.

The issuance of common stock at a price, net of commissions, that is greater than the net asset value per share results in an increase in net asset value per share.

The impact of the Company’s issuance of common stock on net asset value was less than $0.01 per share during the the nine months ended September 30, 2021.

Financial highlights are calculated for each securities class taken as a whole.

An individual stockholder’s return and ratios may vary based on the timing of capital transactions.

NOTE 11 - CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE

The following information sets forth the computation of the basic and diluted per share net increase in net assets resulting from operations:

Three months ended June 30,

Six months ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

($ in thousands except share and per share amounts)

3 unchanged sentences

NOTE 12 - SUBSEQUENT EVENTS

Management has evaluated events that

have occurred after the balance sheet date but before the consolidated financial statements are issued and other than the items discussed

below, the Company has determined that there were no additional subsequent events requiring adjustment or disclosure in the consolidated

financial statements.

On July 15, 2021, the terms of the Credit Facility

were amended to, among other things, allow WhiteHorse Credit to reduce the applicable margins for interest rates to 2.35%, extend the

non-call period from November 22, 2021 to November 22, 2022, extend the end of the reinvestment period from November 22, 2023 to November

22, 2024 and extend the scheduled termination date from November 22, 2024, to November 22, 2025.

On July 15, 2021, the terms of the STRS JV Credit

Facility were amended to, among other things, allow STRS JV to reduce the applicable margins for interest rates to 2.35%, extend the non-call

period from January 19, 2022 to January 19, 2023, extend the end of the reinvestment period from July 19, 2022 to July 19, 2023 and extend

the scheduled termination date from July 19, 2024, to July 19, 2025.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

The information contained in this

section should be read in conjunction with our Consolidated Financial Statements appearing elsewhere in this quarterly report on Form

In this quarterly report on Form 10-Q, the “Company”, "we", "us", "our"

and "WhiteHorse

Finance"

refer to WhiteHorse Finance, Inc.

and its consolidated subsidiaries.

Forward-Looking Statements

Some of the statements in this quarterly

report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition.

The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as

our future operating results;

our ability to consummate new investments and the impact of such investments;

our ability to continue to effectively manage our business due to the significant disruptions caused by

the current pandemic caused by the novel coronavirus (commonly known as “COVID-19”);

our business prospects and the prospects of our prospective portfolio companies, including as a result of the current COVID-19 pandemic;

the ability of our portfolio companies to achieve their objectives;

our contractual arrangements and relationships with third parties;

changes in political, economic or industry conditions, the interest rate environment or conditions affecting

the financial and capital markets, which could result in changes to the value of our assets, including changes from the impact of the

current COVID-19 pandemic;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

the impact of increased competition;

the ability of our investment adviser to locate suitable investments for us and to monitor our investments;

our expected financings and investments and the rate at which our investments are refunded by portfolio companies;

our ability to pay dividends or make distributions;

the adequacy of our cash resources and working capital;

the timing of cash flows, if any, from the operations of our prospective portfolio companies;

the impact of future acquisitions and divestitures.

We use words such as “may,”

“might,”

“will,”

“intends,”

“should,”

“could,”

“can,”

“would,”

“expects,”

“believes,”

“estimates,”

“anticipates,”

“predicts,”

“potential,”

“plan”

and similar expressions to identify forward-looking statements.

Our actual results could differ materially from those

projected in the forward-looking statements for any reason, including the factors set forth in “Item 1A-Risk Factors”

annual report on Form 10-K and elsewhere in this quarterly report on Form 10-Q.

We have based the forward-looking statements

included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we

assume no obligation to update any such forward-looking statements.

Although we undertake no obligation to revise or update any forward-looking

statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures

that we may make directly to you or through reports that we may file with the U.S.

Securities and Exchange Commission, or the SEC, in

the future, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

You should understand that under Sections

27A(b)(2)(B) and (D) of the Securities Act of 1933, as amended, or the Securities Act, and Sections 21E(b) (2)(B) and (D) of the Securities

Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor”

provisions of the Private Securities Litigation Reform

Act of 1995, as amended, do not apply to statements made in connection with this quarterly report on Form 10-Q or any periodic reports

we file under the Exchange Act.

We are an externally managed, non-diversified,

closed-end management investment company that has elected to be treated as a business development company under the Investment Company

Act of 1940, as amended, or the 1940 Act.

In addition, for tax purposes, we elected to be treated as a regulated investment company, or

RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

We were formed on December 28, 2011 and

commenced operations on January 1, 2012.

We were originally capitalized with approximately $176.3 million of contributed assets from H.I.G.

Bayside Debt & LBO Fund II, L.P.

Bayside Loan Opportunity Fund II, L.P., each of which is an affiliate of H.I.G.

L.L.C., or H.I.G.

These assets were contributed as of January 1, 2012 in exchange for 11,752,383 units in WhiteHorse Finance,

On December 4, 2012, we converted from a Delaware limited liability company into a Delaware corporation and elected to be treated

as a business development company under the 1940 Act.

On December 4, 2012, we priced our initial

public offering, or the IPO, selling 6,666,667 shares.

Concurrent with the IPO, certain of our directors and officers, the managers of

WhiteHorse Advisers, LLC, or WhiteHorse Advisers, and their immediate family members or entities owned by, or family trusts for

the benefit of, such persons, purchased an additional 472,673 shares through a private placement exempt from registration under the Securities

Our shares are listed on the Nasdaq Global Select Market under the symbol “WHF.”

We are a direct lender targeting debt

investments in privately held, lower middle market companies located in the United States.

We define the lower middle market as those

companies with enterprise values between $50 million and $350 million.

Our investment objective is to generate attractive risk-adjusted

returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing

lower middle market companies across a broad range of industries.

Such loans typically carry a floating interest rate based on a risk-free

index rate such as the London Interbank Offered Rate, or LIBOR, plus a spread and typically have a term of three to six years.

focus principally on originating senior secured loans to lower middle market companies, we may also opportunistically make investments

at other levels of a company’s capital structure, including mezzanine loans or equity interests, and in companies outside of the

lower middle market, to the extent we believe the investment presents an opportunity to achieve an attractive risk-adjusted return.

also may receive warrants to purchase common stock in connection with our debt investments.

We expect to generate current income through

the receipt of interest payments, as well as origination and other fees, capital appreciation and dividends.

Our investment activities are managed

by WhiteHorse Advisers and are supervised by our board of directors, a majority of whom are independent of us, WhiteHorse Advisers and

its affiliates.

Under our investment advisory agreement with WhiteHorse Advisers, or the Investment Advisory Agreement, we have agreed

to pay WhiteHorse Advisers an annual base management fee based on our average consolidated gross assets as well as an incentive fee based

on our investment performance.

We have also entered into an administration agreement, or the Administration Agreement, with H.I.G.

Administration, LLC, or WhiteHorse Administration.

Under our Administration Agreement, we have agreed to reimburse WhiteHorse Administration

for our allocable portion (subject to the review and approval of our independent directors) of overhead and other expenses incurred by

WhiteHorse Administration in performing its obligations under the Administration Agreement.

COVID-19 Developments

The ongoing COVID-19 pandemic and its effects

and global economy has had adverse consequences on the business operations of some of our portfolio companies and has adversely

affected, and may continue to adversely affect, our operations and the operations of our investment adviser.

Our investment adviser is

continuing to monitor the COVID-19 pandemic and its impact on our business and the business of our portfolio companies and has been focused

on proactively engaging with our portfolio companies in order to collaborate with the management teams of certain portfolio companies

to evaluate their response to the impacts of COVID-19.

cannot predict the full impact of COVID-19, including the length of the global economic recovery and the uncertainty surrounding the efficiency

and success of the global vaccination efforts and more contagious strains of the virus that have emerged in the United States and worldwide,

including the extent to which the available vaccines prove to be ineffective against any new COVID-19 variants (particularly the "Delta"

In addition, countries around the world, including the United States, have seen significant increases in rates of COVID-19 infections,

which was a result of, among other things, the rapid spread of COVID-19 variants (including the Delta variant), more frequent social gatherings

after businesses start to re-open and a reduction in the use of masks and social distancing.

These developments, in conjunction with the

potential adverse reactions to the vaccine, the politicization of the vaccine rollout and the general public distrust of the safety and

efficacy of the vaccine may adversely affect the success and duration of business re-openings and slow down the rate of economic recovery,

further exacerbating the risk that the pandemic will continue for an extended period of time.

As such, the extent to which COVID-19

and/or other disease pandemics may continue to negatively affect our business and our portfolio companies’

operating results and

financial condition is uncertain.

Due to the ongoing business disruptions caused by COVID-19, some of our portfolio companies have experienced

financial distress and have defaulted on their financial obligations to us and their other capital providers.

Some of our portfolio companies

have curtailed their business operations, furloughed or laid off employees, terminated relationships with service providers and deferred

capital expenditures and may continue to do so for the duration of the pandemic.

Such developments could permanently impair the business

operations of our portfolio companies and may result in a decrease in the value of our investment in any such portfolio companies.

In connection with the adverse effects of the

COVID-19 pandemic, we have restructured and may need to restructure additional investments in some of our portfolio companies, which has

resulted in and could result in additional diminished interest payments or in permanent impairments on our investments.

The effects of

the COVID-19 pandemic discussed above increase the risk that more of our portfolio investments may be placed on non-accrual status in

Any decreases in our net investment income would increase the portion of our cash flows dedicated to distribution payments

to stockholders and to servicing our existing debt under our revolving credit facility, or the Credit Facility, with JPMorgan Chase Bank,

National Association, as administrative agent and lender, or the Lender.

WhiteHorse Advisers’

credit team continues

to be in close contact with the owners and management teams of each of our portfolio companies.

With the rapid onset of the crisis, these

owners and management teams have been actively assessing the impacts to their businesses and are continuing to coordinate with us to guide

their companies through the recovery.

We are operating under a philosophy that we will work hand in hand with our borrowers to support

them, allowing flexibility in our terms as appropriate, and we expect owners to support their businesses with additional equity where

As a business development company, we

are permitted under the 1940 Act to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after

such borrowing.

We are required to comply with various covenants pursuant to the Credit Facility.

If we fail to satisfy the covenants

of the Credit Facility or are unable to cure any event of default or obtain a waiver from the applicable lender, it could result in foreclosure

by the lenders under the Credit Facility, which would accelerate our repayment obligations under the Credit Facility and thereby result

in a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to

our stockholders.

As of June 30, 2021, we were in compliance with all covenants and other requirements of the Credit Facility.

We are also subject to financial risks,

including changes in market interest rates.

As of June 30, 2021, nearly all of our debt investments at fair value were at floating rates,

which are generally based on a risk-free index rate such as LIBOR, and many of which are subject to certain floors.

In connection with

the COVID-19 pandemic, the U.S.

Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased.

prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income

if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments,

a decrease in our operating expenses or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.

See “Item

Quantitative and Qualitative Disclosures About Market Risk”

for an analysis of the impact of hypothetical base rate changes in

interest rates.

Our management team has sought strategies

that will help us weather periods of economic decline.

We have attempted to avoid deeply cyclical sectors and have only made loans where

we believed a repeat of the Great Recession would allow us to recover 100% of our loans.

Additionally, we have taken a conservative position

on the Company’s liquidity, making sure we have a top-tier leverage partner and very significant cushion against default.

We will continue to monitor the rapidly evolving

situation relating to the COVID-19 pandemic, including the spread of the Delta variant, and guidance from U.S.

and international authorities,

including federal, state and local public health authorities and may take additional actions based on their recommendations.

circumstances, there may be developments outside our control requiring us to adjust our plan of operation.

As such, given the dynamic

nature of this situation, we cannot quantify the full effect of COVID-19 on our financial condition, results of operations or cash flows

in the future.

However, we do expect that it will continue to have a negative impact on cash flows earned by us during the third quarter

of 2021, which would result in a material adverse effect on our future net investment income, the fair value of our portfolio investments,

and the results of operations and financial condition of our portfolio companies.

We generate revenue in the form of interest payable

on the debt securities that we hold and capital gains and distributions, if any, on the portfolio company investments that we originate

Our debt investments, whether in the form of senior secured loans or mezzanine loans, typically have terms of three to six

years and bear interest at a fixed or floating rate based on a spread over LIBOR or an equivalent risk-free index rate.

Interest on debt

securities is generally payable monthly or quarterly, with the amortization of principal generally being deferred for several years from

the date of the initial investment.

In some cases, we may also defer payments of interest for the first few years after our investment.

The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date.

we generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and

possibly consulting fees.

We capitalize loan origination fees, original issue discount and market discount, and we then amortize such

amounts as interest income.

Upon the prepayment of a loan or debt security, we record any unamortized loan origination fees as interest

We record prepayment premiums on loans and debt securities as fee income when earned.

Dividend income is recorded on the record

date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Our primary operating expenses include (1) investment

advisory fees to WhiteHorse Advisers;

(2) the allocable portion of overhead under the Administration Agreement;

(3) the interest expense

on our outstanding debt;

and (4) other operating costs as detailed below.

Our investment advisory fees compensate our investment adviser

for its work in identifying, evaluating, negotiating, consummating and monitoring our investments.

We bear all other costs and expenses of our operations

and transactions, including:

our organization;

calculating our net asset value and net asset value per share (including the costs and expenses of independent valuation firms);

fees and expenses, including travel expenses, incurred by WhiteHorse Advisers or payable to third parties

in performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights;

the costs of all future offerings of common shares and other securities, and other incurrences of debt;

the base management fee and any incentive fee;

distributions on our shares;

transfer agent and custody fees and expenses;

amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments;

brokerage fees and commissions;

registration fees;

listing fees;

independent directors’

fees and expenses;

costs associated with our reporting and compliance obligations under the 1940 Act and applicable U.S.

federal and state securities

the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

costs of holding stockholder meetings;

our fidelity bond;

directors and officers/errors and omissions liability insurance and any other insurance premiums;

litigation, indemnification and other non-recurring or extraordinary expenses;

direct costs and expenses of administration and operation, including audit and legal costs;

fees and expenses associated with marketing efforts, including deal sourcing and marketing to financial sponsors;

dues, fees and charges of any trade association of which we are a member;

all other expenses reasonably incurred by us or WhiteHorse Administration in connection with administering

our business, including rent and our allocable portion of the costs and expenses of our chief financial officer and chief compliance officer

along with their respective staffs.

WhiteHorse Advisers or WhiteHorse Administration may pay

for certain expenses that we incur, which are subject to reimbursement by us.

Recent Developments

On July 15, 2021, the terms of the Credit Facility

were amended to, among other things, allow WhiteHorse Credit to reduce the applicable margins for interest rates to 2.35%, extend the

non-call period from November 22, 2021 to November 22, 2022, extend the end of the reinvestment period from November 22, 2023 to November

22, 2024 and extend the scheduled termination date from November 22, 2024, to November 22, 2025.

On July 15, 2021, the terms of the STRS JV Credit

Facility were amended to, among other things, allow STRS JV to reduce the applicable margins for interest rates to 2.35%, extend the non-call

period from January 19, 2022 to January 19, 2023, extend the end of the reinvestment period from July 19, 2022 to July 19, 2023 and extend

the scheduled termination date from July 19, 2024, to July 19, 2025.

For the period July 1, 2021 through August 9,

2021, we contributed an additional set of assets, which included two existing issuers of senior secured debt facilities to STRS

Consolidated Results of Operations

The consolidated results of operations described

below may not be indicative of the results we report in future periods.

Net investment income and net increase in net assets can vary

substantially from period to period due to various reasons, including the level of new investments and the recognition of realized gains

and losses and unrealized appreciation and depreciation.

As a result, quarterly comparisons of net increases in net assets resulting from

operations may not be meaningful.

Investment Income

Investment income for the three and

six months ended June 30, 2021 totaled $17.3 million and $35.3 million, respectively, and was primarily attributable to interest, dividends

and fees earned from investments in portfolio companies.

Investment income for the three and six months ended June 30, 2020 totaled $13.8

million and $28.4 million, respectively.

The increase in net investment income for the year-over-year period was primarily attributable

to higher accelerated accretion income recognized due to higher repayment activity and higher investment income generated from STRS JV.

Investment income for the three and six months ended June 30, 2021 included $0.2 million and $0.9 million of non-recurring fee income,

respectively.

Investment income for the three and six months ended June 30, 2020 included $0.4 million and $0.7 million of non-recurring

fee income, respectively.

We expect to generate some level of non-recurring fee income during most quarters from prepayments, amendments

and other sources.

Operating Expenses

Expenses, excluding excise tax, totaled $10.8 million

and $21.0 million for the three and six months ended June 30, 2021, respectively.

This compares to expenses, excluding excise tax, of

$8.4 million and $16.6 million for the three and six months ended June 30, 2020, respectively.

Interest expense totaled $3.8 million

and $7.6 million for the three and six months ended June 30, 2021, respectively.

This compares to interest expense of $3.2 million and

$6.9 million for the three and six months ended June 30, 2020, respectively.

The increase in interest expense for the three and six months

ended June 30, 2021, from the three and six months ended June 30, 2020, was primarily due to higher borrowing base, partially offset by

lower interest rates resulting from a decrease in LIBOR.

Base management fees totaled $3.4 million

and $6.7 million for the three and six months ended June 30, 2021, respectively.

Base management fees totaled $3.0 million and $6.0 million

for the three and six months ended June 30, 2020, respectively.

The increase management fees for the three and six months ended June 30,

2021, from the three and six months ended June 30, 2020, was primarily due to higher gross assets.

Performance-based incentive fees totaled

$2.6 million and $4.7 million for the three and six months ended June 30, 2021, respectively.

Performance-based incentive fees totaled

$1.3 million and $1.8 million for the three and six months ended June 30, 2020, respectively.

The increase in performance-based incentive

fees for the three and six months ended June 30, 2021, from the three and six months ended June 30, 2020, was mainly attributable to an

increase in pre-incentive fee net investment income as well as capital gains incentive fee accrual of $0.9 million and $1.0 million, respectively,

which was driven by gains recognized in the portfolio in the current period.

Administrative service fees for the three and six

months ended June 30, 2021 totaled $0.2 million and $0.3 million, respectively.

This compares to administrative service fees for the three

and six months ended June 30, 2020, which totaled $0.2 million and $0.3 million, respectively.

General and administrative expenses were $0.9 million

and $1.7 million for the three and six months ended June 30, 2021, respectively.

This compares to general and administrative expenses

of $0.7 million and $1.6 million for the three and six months ended June 30, 2020, respectively.

Excise Tax Expense

We have elected to be treated as a RIC under

Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs.

In order to be subject to

tax as a RIC, we are required to meet certain source of income and asset diversification requirements, as well as timely distribute to

our stockholders dividends for U.S.

federal income tax purposes of an amount generally at least equal to 90% of investment company taxable

income, as defined by the Code, and determined without regard to any deduction for dividends paid for each tax year.

We have made and

intend to continue to make the requisite distributions to our stockholders that will generally relieve us from U.S.

federal income taxes.

Depending on the level of taxable income earned

in a tax year, we may choose to retain taxable income in excess of current year distributions into the next tax year in an amount less

than what would trigger payments of U.S.

federal income tax under Subchapter M of the Code.

We may then be required to incur a 4% excise

tax on such income.

To the extent that we determine that our estimated current year annual taxable income may exceed estimated current

year distributions, we accrue excise tax, if any, on estimated excess taxable income as taxable income is earned.

For the three and six

months ended June 30, 2021, we accrued a net federal excise tax expense of $0.4 million and $0.6 million, respectively.

For the three

and six months ended June 30, 2020, we accrued a net federal excise tax expense of $0.2 million and $0.4 million, respectively.

in excise tax for the three and six months ended June 30, 2021, from the three and six months ended June 30, 2020, was primarily as a

result of higher net investment income and realized gains.

Net Realized and Unrealized Gains (Losses) on Investments

The following shows the breakdown of net realized gains

and losses for the three and six months ended June 30, 2021 and 2020:

Three months ended

Six months ended

($ in millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

AG Kings Holdings Inc.

BW Gas & Convenience Holdings, LLC

Drew Foam Companies Inc

Vero Parent, Inc.

Vessco Holdings, LLC

Total realized (losses)/ gains

(1) Escrow receivable amounts were recognized in connection

with realization events.

(2) Includes various investments with aggregate realized gains or losses less than $50,000.

The following shows the breakdown in the changes in unrealized

appreciation and depreciation of investments for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

($ in millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Gross unrealized appreciation on investments (1)

Gross unrealized depreciation on investments

Reversal of prior period net unrealized (appreciation) depreciation upon a realization

Includes unrealized appreciation from the AG Kings Holdings Inc.

escrow receivable of $1.0 million.

Financial Condition, Liquidity and Capital Resources

This “Liquidity and Capital Resources”

should be read in conjunction with the “COVID-19 Developments”

section above.

As a business development company,

we distribute substantially all of our net income to our stockholders.

We generate cash primarily from offerings of securities, borrowings

under the Credit Facility, and cash flows from operations, including interest earned from the temporary investment of cash in U.S.

securities and other high-quality debt investments that mature in one year or less.

We expect to fund a portion of our investments through

future borrowings.

In the future, we may obtain borrowings under other credit facilities and from issuances of senior securities to the

extent permitted by the 1940 Act.

We may also borrow funds to the extent we determine that additional capital would allow us to take advantage

of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities or

if our board of directors determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders.

board of directors may decide to issue common stock, such as through at-the-market offerings, direct placements or otherwise, to finance

our operations rather than issuing debt or other senior securities.

Any decision to sell shares below the then-current net asset value

per share of our common stock is subject to stockholder approval and a determination by our board of directors that such issuance and

sale is in our and our stockholders’

best interests.

Any sale or other issuance of shares of our common stock at a price below

net asset value per share results in immediate dilution to our stockholders’

interests in our common stock and a reduction in our

net asset value per share.

If we were to issue additional shares of our common stock during the next 12 months, we do not intend to issue

shares below the then-current net asset value per share.

Restricted cash and cash equivalents

include amounts that are collected and held by the trustee appointed as custodian of the assets securing the Credit Facility.

cash is held by the trustee for the payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets.

Restricted cash that represents interest or fee income is transferred to unrestricted cash accounts by the trustee generally once a quarter

after the payment of operating expenses and amounts due under the Credit Facility.

Our operating activities provided

cash and cash equivalents of $40.6 million during the six months ended June 30, 2021, primarily from the net proceeds received from realizations

and repayments on our investments, partially offset by acquisition of investments and cash used from the net change in working

Our financing activities used cash and cash equivalents of $38.8 million during the six months ended June 30, 2021, primarily

due to repayments on the Credit Facility and the payment of distributions to stockholders, offset by proceeds from sales of common stock.

Our operating activities provided

cash and cash equivalents of $54.5 million during the six months ended June 30, 2020, primarily from the net proceeds received from realizations

and repayments on our investments as well as cash provided from the net change in working capital.

Our financing activities used cash

and cash equivalents of $61.2 million during the six months ended June 30, 2020, primarily due to repayments on the Credit Facility and

the payment of distributions to stockholders.

30, 2021, we had cash and cash equivalent resources of $17.8 million, including $7.4 million of restricted cash.

As of June 30, 2021,

we had approximately $46.5 million undrawn and available to be drawn under the Credit Facility based on the collateral and portfolio quality

requirements stipulated in the related credit agreement.

As of December 31, 2020, we had

cash and cash equivalent resources of $15.9 million, including $7.9 million of restricted cash.

As of December 31, 2020, we had $19.8

million undrawn under the Credit Facility based on the collateral and portfolio quality requirements stipulated in the related credit

and security agreement.

In January 2019, we and STRS Ohio,

formed a joint venture, STRS JV, that invests primarily in senior secured loans, including first lien and second lien facilities, to performing

lower middle market companies across a broad range of industries that typically carry a floating interest rate based on the LIBOR or an

equivalent risk-free index rate and have a term of three to six years.

STRS JV was formed as a Delaware limited liability company and

is not consolidated by either us or STRS Ohio for financial reporting purposes.

On July 19, 2019 STRS JV formally launched operations.

As of June 30, 2021, STRS JV had total assets of $219.2 million.

STRS JV’s portfolio consisted of debt investments in 25 portfolio

companies as of June 30, 2021.

As of June 30, 2021, the five largest investments in portfolio companies in STRS JV’s portfolio totaled

$65.7 million.

STRS JV invests in portfolio companies in the same industries in which we may directly invest.

We provide capital to STRS JV in the

form of limited liability company, or LLC equity interests, and subordinated notes.

As of June 30, 2021, we and STRS Ohio owned 60% and

40%, respectively, of the LLC equity interests of STRS JV.

Our investment in STRS JV consisted of equity contributions and subordinated

note advances of $12.5 million and $49.8 million as of June 30, 2021, respectively.

As of June 30, 2021, we had commitments to fund equity

interests and subordinated notes in STRS JV of $15 million and $60 million, of which $2.5 million and $10.2 million was unfunded, respectively.

STRS JV is managed by a four-person board of managers, two of whom are selected by us and two of whom are selected by STRS Ohio.

All material decisions with respect

to STRS JV, including those involving its investment portfolio, require unanimous approval of a quorum of the board of managers.

is defined as (i) the presence of two members of the board of managers;

provided that at least one individual is present that was elected,

designated or appointed by each member;

(ii) the presence of three members of the board of managers;

provided that the individual that

was elected, designated or appointed by the member with only one individual present is entitled to cast two votes on each matter;

the presence of four members of the board of managers;

provided that two individuals are present that were elected, designated or appointed

by each member.

Below is a summary of STRS JV’s portfolio as of June 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

Total investments (1)

Weighted average effective yield on total portfolio (2)

Number of portfolio companies in STRS JV

Largest portfolio company investment (1)

Total of five largest portfolio company investments (1)

(1) At fair value.

Weighted average effective yield is computed by dividing (a) annualized interest income (including interest income resulting from the amortization of fees and discounts) by (b) the weighted average cost of investment.

Investments consisted of the following:

As of June 30, 2021

As of December 31, 2020

Amortized Cost

First lien secured loans

The following table shows the portfolio composition by

industry grouping at fair value:

Industry ($ in thousands)

As of June 30, 2021

As of December 31, 2020

Application Software

Building Products

Construction & Engineering

Data Processing & Outsourced Services

Diversified Support Services

Electronic Equipment & Instruments

Environmental & Facilities Services

Human Resource & Employment Services

Industrial Machinery

Insurance Brokers

Internet & Direct Marketing Retail

Investment Banking & Brokerage

IT Consulting & Other Services

Packaged Foods & Meats

Personal Products

Systems Software

Technology Hardware, Storage & Peripherals

Trading Companies & Distributors

See Note 4 to our consolidated financial

statements for further discussion on STRS JV’s portfolio and selected balance sheet information as of June 30, 2021 and December

31, 2020 and selected statement of operations information for the three and six months ended June 30, 2021 and June 30, 2020.

Credit Facility

On December 23, 2015, our wholly

owned subsidiary WhiteHorse Finance Credit I, LLC, or WhiteHorse Credit, entered into the $200 million Credit Facility with the Lender.

On June 27, 2016, the Credit Facility was amended and restated to clarify certain terms.

On June 29, 2017, the Credit Facility was again

amended and restated to, among other things, (i) extend the maturity date to December 29, 2021, (ii) increase the amount contained within

the accordion feature which allows for the expansion of the borrowing limit from $220 million to $235 million and (iii) reduce the interest

rate spread applicable on outstanding borrowings to 2.75%.

On May 15, 2018, the terms of the Credit Facility were again amended and restated

to, among other things, permit the financing of certain assets to be held by WhiteHorse Finance (CA), LLC, or WhiteHorse California, a

wholly owned subsidiary of WhiteHorse Credit.

On November 19, 2018, we entered into an amendment, which, among other things, allows for

an increase in the advance rate and a temporary reduction, through August 19, 2019, in the required minimum outstanding borrowings under

the Credit Facility.

On November 22, 2019, the terms of the Credit

Facility were amended to, among other things, (i) extend the maturity date from December 29, 2021 to November 22, 2024;(ii) increase the

size of the facility from $200 million to $250 million with an additional $100 million accordion feature, which allows for the expansion

of the borrowing limit, exercisable in increments of at least $35 million, or the Commitment;

(iii) reduce the interest rate spread applicable

on outstanding borrowings from 2.75% to 2.50%;

(iv) change the minimum borrowing amount from 77.5% to 70.0% of the Commitment;

the advance rate from 57% to 60%;

and (vi) extend the non-call period from October 29, 2019 to November 22, 2021.

On December 21, 2020, the terms of

the Credit Facility were amended to, among other things, (i) increases the minimum funding amount from $175 million to $200 million, (ii)

increase the size of the facility from $250 million to $285 million and retains an accordion feature which allows for the expansion of

the borrowing limit up to $350 million and (iii) provide for the implementation of certain changes relating to the transition away from

the LIBOR in the market.

On April 28, 2021, the terms of the Credit Facility were

amended and restated to, among other things, enable WhiteHorse Credit to borrow in British Pounds or Euros.

The Credit Facility provides for

borrowings in an aggregate principal amount up to $285 million with an accordion feature which allows for the expansion of the borrowing

limit up to $350 million, subject to consent from the Lender and other customary conditions.

The required minimum outstanding borrowings

under the Credit Facility are $200 million, unless the accordion feature is exercised, at which time the required minimum outstanding

borrowings will be $245 million.

Under the Credit Facility, there are

two coverage tests that WhiteHorse Credit must meet on specified compliance dates in order to permit WhiteHorse Credit to make new borrowings

and to make distributions in the ordinary course - a borrowing base test and a market value test.

The borrowing base test compares, at

any given time, the aggregate outstanding amount of all Lender advances under the Credit Facility less the amount of principal proceeds

in respect of the collateral on deposit in the accounts to the net asset value of the collateral, as set forth in the credit agreement

and related documentation.

To meet the borrowing base test, this ratio must be less than or equal to 50%, as set forth in the credit agreement

and related documentation.

To meet the market value test, the value of WhiteHorse Credit’s portfolio investments must exceed a minimum

of 165% of the aggregate outstanding amount of all Lender advances as set forth in the credit agreement and related documentation.

Advances under the Credit Facility are

based on the three-month LIBOR for USD denominated borrowings plus an annual spread of 2.50%.

The Credit Facility bears interest at EURIBOR,

for EUR denominated borrowings, CDOR for CAD denominated borrowings, SONIA, for GBP denominated, plus a spread on outstanding borrowings

of 2.50%, 2.55% and 2.55%, respectively.

Interest is payable quarterly in arrears.

WhiteHorse Credit is required to pay a non-usage fee

which accrues at 0.75% per annum on the average daily unused amount of the financing commitments, to the extent the aggregate principal

amount available under the Credit Facility has not been borrowed.

WhiteHorse Credit paid an upfront fee and incurred certain other customary

costs and expenses in connection with obtaining the Credit Facility.

Any amounts borrowed under the Credit Facility will mature, and all

accrued and unpaid interest thereunder will be due and payable, on November 22, 2024.

The Credit Facility and the related documents

require WhiteHorse Finance and WhiteHorse Credit to, among other things, agree to make certain customary representations and to comply

with customary affirmative and negative covenants.

The Credit Facility also includes customary events of default for credit facilities

of this nature, including breaches of representations, warranties or covenants by WhiteHorse Finance or WhiteHorse Credit, the occurrence

of a change in control, or failure to maintain certain required ratios.

If we fail to perform our obligations

under the credit agreement or the related agreements, an event of default may occur, which could cause the Lender to accelerate all of

the outstanding debt and other obligations under the Credit Facility or to exercise other remedies under the credit agreement.

developments could have a material adverse effect on our financial condition and results of operations.

If any of our contractual obligations

discussed above is terminated, our costs under new agreements that we enter into may increase.

In addition, we will likely incur significant

time and expense in locating alternative parties to provide the services we expect to receive under our Investment Advisory Agreement

and our Administration Agreement.

Any new investment management agreement would also be subject to approval by our stockholders.

As of June 30, 2021, there was $238.5

million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit

Facility agreement, approximately $46.5 million was available to be drawn on such date.

The Credit Facility is secured by all of the assets

of WhiteHorse Credit, which included loans with a fair value of $592.5 million as of June 30, 2021.

As of December 31, 2020, there was

$265.2 million in outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the

Credit Facility agreement, approximately $19.8 million was available to be drawn on such date.

The Credit Facility is secured by all of

the assets of WhiteHorse Credit, which included loans with a fair value of $601.1 million as of December 31, 2020.

2023 Private Notes

On July 13, 2018, we entered into the 2023 Note

Purchase Agreement, to sell in a private offering $30 million of aggregate principal amount of unsecured notes to qualified institutional

investors in reliance on Section 4(a)(2) of the Securities Act.

Interest on the 2023 Private Notes is payable semiannually on February

7 and August 7, at a fixed, annual rate of 6.00%.

This interest rate is subject to increase (up to 6.50%) in the event that, subject to

certain exceptions, the 2023 Private Notes cease to have an investment grade rating.

The 2023 Private Notes mature on August 7, 2023,

unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms.

The 2023 Private Notes

are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may

The closing of the transaction occurred on August 7, 2018.

We used the net proceeds from this offering, together with cash on hand,

to redeem existing debt.

2025 Private Notes

On October 20, 2020, we entered into

the 2025 Note Purchase Agreement, to sell in a private offering $40 million of aggregate principal amount of unsecured notes to qualified

institutional investors in reliance on Section 4(a)(2) of the Securities Act.

Interest on the 2025 Private Notes is payable semiannually

on April 20 and October 20, at a fixed, annual rate of 5.375%.

This interest rate is subject to increase (up to 6.375%) in the event that,

subject to certain exceptions, the 2025 Private Notes cease to have an investment grade rating.

The 2025 Private Notes mature on October

20, 2025, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms.

The 2025 Private

Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that

we may issue.

The closing of the transaction occurred on October 20, 2020.

We used the net proceeds from this offering to redeem existing

2026 Private Notes

On December 4, 2020, we entered into

the 2026 Note Purchase Agreement, to sell in a private offering $10 million of aggregate principal amount of unsecured notes to qualified

institutional investors in reliance on Section 4(a)(2) of the Securities Act.

Interest on the 2026 Private Notes is payable semiannually

on June 4 and December 4, at a fixed, annual rate of 5.375%.

This interest rate is subject to increase (up to 6.375%) in the event that,

subject to certain exceptions, the 2026 Private Notes cease to have an investment grade rating.

The 2026 Private Notes mature on December

4, 2026, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms.

The 2026 Private

Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that

we may issue.

The closing of the transaction occurred on December 4, 2020.

We used the net proceeds from this offering to redeem existing

2027 Private Notes

On December 4, 2020, we entered into

the 2027 Note Purchase Agreement, to sell in a private offering $10 million of aggregate principal amount of unsecured notes to qualified

institutional investors in reliance on Section 4(a)(2) of the Securities Act.

Interest on the 2027 Private Notes is payable semiannually

on June 4 and December 4, at a fixed, annual rate of 5.625%.

This interest rate is subject to increase (up to 6.625%) in the event that,

subject to certain exceptions, the 2027 Private Notes cease to have an investment grade rating.

The 2027 Private Notes mature on December

4, 2027, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms.

The 2027 Private

Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that

we may issue.

The closing of the transaction occurred on December 4, 2020.

We used the net proceeds from this offering to redeem existing

2025 Public Notes

On November 13, 2018, we completed a

public offering of $35 million of aggregate principal amount of unsecured notes, the net proceeds of which were used to fund investments

in debt and equity securities and repay outstanding indebtedness under our revolving credit facility.

Interest on the 2025 Public Notes

is paid quarterly on February 28, May 31, August 31 and November 30 each year, at a fixed, annual rate of 6.50%.

The 2025 Public Notes

will mature on November 30, 2025 and may be redeemed in whole or in part at any time, or from time to time, at our option on or after

November 30, 2021.

The 2025 Public Notes will rank equally in right of payment with our other outstanding and future unsecured, unsubordinated

indebtedness, including the 2023 Private Notes, the 2025 Private Notes, the 2026 Private Notes and the 2027 Private Notes.

The 2025 Public

Notes will effectively rank behind all of our existing and future secured indebtedness (including indebtedness that is initially unsecured

in respect of which we subsequently grant security) in right of payment, to the extent of the value of the assets securing such indebtedness,

including our Credit Facility.

The 2025 Public Notes are listed on the Nasdaq Global Select Market under the trading symbol “WHFBZ.”

At-the-Market Offering

On March 15, 2021, we entered into an equity distribution

agreement, or the Equity Distribution Agreement, with WhiteHorse Advisers, WhiteHorse Administration and Raymond James & Associates,

Inc., as the sales agent, or the Sales Agent, in connection with the sale of shares of our common stock, par value $0.001 per share, with

an aggregate offering price of up to $35 million.

The Equity Distribution Agreement provides that we may offer and sell shares of our

common stock from time to time through the Sales Agent in amounts and at times to be determined by us, or the ATM Offering.

will depend on a variety of factors to be determined by us from time to time, including market conditions and the trading price of our

common stock.

We expect to use all or substantially all of the net proceeds from the ATM Offering to invest in portfolio companies in

accordance with our investment objective and strategies and for general corporate purposes.

Portfolio Investments and Yield

As of June 30, 2021, our investment

portfolio consisted primarily of senior secured loans across 97 positions in 67 companies with an aggregate fair value of $670.5 million.

As of June 30, 2021, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers and nearly all

of those loans were variable-rate investments (primarily indexed to LIBOR) with two fixed-rate loan investments representing 0.4% based

on fair value.

As of June 30, 2021, our portfolio had an average investment size of $6.4 million based on fair value (average debt investment

size of $7.1 million), with investment sizes ranging from zero to $24.2 million and a weighted average effective yield of 9.7% (and a

weighted average effective yield on income-producing debt investments of 9.5%).

As of December 31,

2020, our investment portfolio consisted primarily of senior secured loans across 98 positions in 67 companies with an aggregate fair

value of $690.7 million.

As of that date, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers

and nearly all of those loans were variable-rate investments (primarily indexed to LIBOR) with two fixed-rate loan investments representing

0.2% based on fair value.

As of December 31, 2020, our portfolio had an average investment size of $6.6 million (average debt investment

size of $7.3 million), with investment sizes ranging from zero to $23.5 million and a weighted average effective yield of 9.4% (and a

weighted average effective yield on income-producing debt investments of 9.9%).

For the six months ended June 30, 2021, we invested

$190.8 million in new and existing portfolio companies, offset by repayments and sales of $219.3 million.

Proceeds from sales totaled

$87.8 million while repayments included $6.0 million of scheduled repayments and $125.5 million of unscheduled repayments.

For the six months ended June 30, 2020,

we invested $66.9 million in new and existing portfolio companies, offset by repayments and sales of $101.3 million.

Proceeds from sales

totaled $51.9 million while repayments included $6.5 million of scheduled repayments and $42.9 million of unscheduled repayments.

We actively monitor and manage our portfolio

with regard to individual company performance as well as general market conditions.

Investment decisions on new originations generally

include an analysis of the impact of the new loan on our broader portfolio, including a “top-down”

assessment of portfolio

diversification and risk exposure.

This assessment includes a review of portfolio concentration by issuer, industry, geography and type

of credit as well as an evaluation of our portfolio’s exposure to macroeconomic factors and cyclical trends.

We believe that consistent, active monitoring

of individual companies and the broader market is integral to portfolio management and a critical component of our investment process.

Our investment adviser uses several methods to evaluate and monitor the performance and fair value of our investments, which may include

the following:

frequent discussions with management and sponsors, including board observation rights where possible;

comparing/analyzing financial performance to the portfolio company’s business plan, as well as our internal projections developed

at underwriting;

tracking portfolio company compliance with covenants as well as other metrics identified at initial investment

stage, such as acquisitions, divestitures, product development and specified management hires;

periodic review by the investment committee of each asset in the portfolio and more rigorous monitoring of “watch list”

As part of the monitoring process, our investment

adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale

This risk rating system is intended to identify and assess risks relative to when we initially made the investment and could

be impacted by such factors as company-specific performance, changes in collateral, changes in potential exit opportunities or macroeconomic

All investments are initially assigned

a rating of 2, as this grade represents a company that is meeting initial expectations with regard to performance and outlook.

may be improved to a 1 if, in the opinion of our investment adviser, a portfolio company’s risk of loss has been reduced relative

to initial expectations.

An investment will be assigned a rating of 3 if the risk of loss has increased relative to initial expectations

and will be assigned a rating of 4 if our investment principal is at a material risk of not being fully repaid.

A rating of 5 indicates

an investment is in payment default and has significant risk of not receiving full repayment.

The following table shows the distribution of our investments

on the 1 to 5 investment performance rating scale at fair value:

June 30, 2021

of December 31, 2020

Investment Performance

Rating ($ in millions)

Investments at

Percentage of

Total Portfolio

Investments at

Percentage of

Total Portfolio

Inflation has not had a significant effect

on our results of operations in any of the reporting periods presented in our consolidated financial statements.

However, from time to

time, inflation may impact the operating results of our portfolio companies.

Off-Balance Sheet Arrangements

We may become a party to financial instruments

with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies.

These instruments

may include commitments to extend credit and involve elements of liquidity and credit risk in excess of the amount recognized on the consolidated

statements of assets and liabilities.

As of June 30, 2021 and December 31, 2020, we had commitments to fund approximately $23.8 million

and $19.6 million, respectively, of revolving lines of credit or delayed draw facilities to our portfolio companies.

We reasonably believe

that we have sufficient assets to adequately cover and allow us to satisfy our outstanding unfunded commitments.

Distributions

In order to maintain our status as a RIC and to avoid the imposition

of corporate-level tax on income, we must distribute dividends to our stockholders each taxable year of an amount generally at least equal

to the sum of 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses

out of the assets legally available for distribution.

In order to avoid the imposition of certain excise taxes imposed on RICs, we must

distribute dividends in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our ordinary income (taking

into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital

gain net income, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary

income and capital gain net income for preceding years that were not distributed during such years on which we incurred no U.S.

During the three and six months ended June 30,

2021 we declared to stockholders distributions of $0.355 and $0.71 per share, respectively for total distributions of $7.4 million and

$14.7 million, respectively.

During the three and six months ended June 30, 2020 we declared to stockholders distributions of $0.355 and

$0.71 per share, respectively for total distributions of $7.3 million and $14.6 million, respectively.

The timing and amount of our quarterly

distributions, if any, are determined by our board of directors.

While we intend to make distributions on a quarterly basis to our stockholders

out of assets legally available for distribution, we may not be able to achieve operating results that will allow us to make distributions

at a specific level or to increase the amount of our distributions from time to time.

In addition, we may be limited in our ability to

make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act.

do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of

our ability to be subject to tax as a RIC.

We cannot assure stockholders that they will receive any distributions.

To the extent our taxable earnings fall below

the total amount of our distributions paid for that fiscal year, a portion of those distributions may be deemed a return of capital to

our stockholders for U.S.

federal income tax purposes.

Thus, the source of a distribution to our stockholders may be the original capital

invested by the stockholder rather than our income or gains.

During the six months ended June 30, 2021, we estimate that distributions

to stockholders included $14.7 million of ordinary income, for tax purposes, based on earnings for the fiscal year ended December 31,

2020 and current earnings for the six months ended June 30, 2021.

The specific tax characteristics of the distribution will be reported

to stockholders on or after the end of the calendar year 2021 and in our periodic reports with the SEC.

Stockholders should read any written

disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is only ordinary income

In addition, in order to satisfy the

annual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our common stock

instead of in cash.

As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published

guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for

federal income tax purposes.

As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the

dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend

was paid in shares of our common stock.

We have adopted an “opt out”

reinvestment plan, or the DRIP, for our common stockholders.

As a result, if we declare a distribution, then stockholders’

distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts

If a stockholder opts out, that stockholder receives cash distributions.

Although distributions paid in the form

of additional shares of our common stock will generally be subject to U.S.

federal, state and local taxes in the same manner as cash distributions,

stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes.

Contractual Obligations

A summary of our significant contractual payment obligations

as of June 30, 2021 is as follows:

Payments Due by Period

($ in millions)

Credit Facility

2023 Private Notes

2025 Private Notes

2026 Private Notes

2027 Private Notes

2025 Public Notes

Total contractual obligations

As of June 30, 2021, we had $46.5 million of unused borrowing

capacity under the Credit Facility.

We entered into the Investment Advisory

Agreement with WhiteHorse Advisers in accordance with the 1940 Act on December 4, 2012, which was most recently amended on November 1,

Under the Investment Advisory Agreement, WhiteHorse Advisers manages our day-to-day investment operations and provides us with access

to personnel and an investment committee and certain other resources so that we may fulfill our obligation to act as a portfolio manager

of WhiteHorse Credit under the Credit Facility.

Payments under the Investment Advisory Agreement in future periods will be equal to (1)

a management fee equal to 2.0% of the value of our consolidated gross assets;

provided, however, that the management fee on consolidated

gross assets financed using leverage over 200% asset coverage (in other words, over 1.0x debt to equity) will be equal to 1.25% and (2)

an incentive fee based on our performance.

See “Investment Advisory Agreement”

in Note 7 to the consolidated financial statements.

We also entered into the Administration

Agreement with WhiteHorse Administration on December 4, 2012.

Pursuant to the Administration Agreement, WhiteHorse Administration furnishes

us with office facilities and administrative services necessary to conduct our day-to-day operations.

WhiteHorse Administration also furnishes

us with resources necessary for us to act as portfolio manager to WhiteHorse Credit under the Credit Facility.

If requested to provide

managerial assistance to our portfolio companies, WhiteHorse Administration will be paid an additional amount based on the services provided,

which amount will not, in any case, exceed the amount we receive from the portfolio companies for such services.

Payments under the Administration

Agreement will be based upon our allocable portion of WhiteHorse Administration’s overhead expenses in performing its obligations

under the Administration Agreement, including rent and our allocable portion of the costs of our chief financial officer and chief compliance

officer along with their respective staffs.

Related Party Transactions

We have entered into a number of business relationships with

affiliated or related parties, including the following:

WhiteHorse Advisers manages our day-to-day operations and provides investment management services to us pursuant to the Investment

Advisory Agreement.

WhiteHorse Administration and certain of its affiliates provide us with the office facilities and administrative

services, including access to the resources necessary for us to perform our obligations towards certain portfolio companies, pursuant

to the Administration Agreement.

We have entered into a license agreement with an affiliate of H.I.G.

Capital pursuant to which we have

been granted a non-exclusive, royalty-free license to use the “WhiteHorse”

WhiteHorse Advisers,

WhiteHorse Administration or their respective affiliates may have other clients with similar, different or competing investment objectives.

In serving in these multiple capacities, WhiteHorse Advisers, WhiteHorse Administration or their respective affiliates may have obligations

to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders.

Such persons may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised

by or affiliated with WhiteHorse Advisers or WhiteHorse Administration.

WhiteHorse Advisers or its affiliates will seek to allocate investment

opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy.

we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time.

We depend on the

communications and information systems and policies of WhiteHorse Advisers and its affiliates as well as certain third-party service providers

to monitor and prevent cybersecurity incidents.

Our board of directors and management periodically review and assess the effectiveness

of such communications and information systems and policies.

Critical Accounting Policies

The preparation of our financial statements

in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions

that affect the reported amounts of assets, liabilities, revenues and expenses.

Changes in the economic environment, financial markets

and any other parameters used in determining such estimates could cause actual results to differ.

We have identified the following as

critical accounting policies.

Principles of Consolidation

Under the investment company financial accounting

guidance, as formally codified in Accounting Standards Codification, or ASC, Topic 946, Financial Services - Investment Companies, we

are precluded from consolidating any entity other than another investment company.

As provided under ASC Topic 946, we generally consolidate

any investment company when we own 100% of its partners’

or members’

capital or equity units.

We own a 100% equity interest

in each of WhiteHorse Credit and WhiteHorse Finance Warehouse, LLC, WhiteHorse Warehouse, WHF PMA Holdco Blocker, LLC, WhiteHorse RCKC

Holdings, LLC and WhiteHorse Finance Holdings, LLC, which are investment companies for accounting purposes.

As such, we have consolidated

the accounts of WhiteHorse Credit, WhiteHorse Warehouse, WHF PMA Holdco Blocker, LLC, WhiteHorse RCKC Holdings LLC and WhiteHorse Finance

Holdings, LLC into our financial statements.

As a result of this consolidation, the amount outstanding under the Credit Facility is treated

as our indebtedness.

Valuation of Portfolio Investments

We value our investments in accordance

with ASC Topic 820 - Fair Value Measurements and Disclosures .

ASC Topic 820 defines fair value, establishes a framework for measuring

fair value and expands disclosures about assets and liabilities measured at fair value.

ASC Topic 820’s definition of fair value

focuses on exit price in the principal, or most advantageous, market and prioritizes the use of market-based inputs over entity-specific

inputs within a measurement of fair value.

Our portfolio consists primarily of debt

These investments are valued at their bid quotations obtained from unaffiliated market makers or other financial institutions

that trade in similar investments or based on prices provided by independent third party pricing services.

For investments where there

are no available bid quotations, fair value is derived using proprietary models that consider the analyses of independent valuation agents

as well as credit risk, liquidity, market credit spreads and other applicable factors for similar transactions.

Due to the nature of our strategy, our

portfolio includes relatively illiquid investments that are privately held.

Valuations of privately held investments are inherently uncertain,

may fluctuate over short periods of time and may be based on estimates.

The determination of fair value may differ materially from the

values that would have been used if a ready market for these investments existed.

Our net asset value could be materially affected if

the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize

upon the disposal of such investments.

Our board of directors is ultimately

responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily

available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination.

board of directors has retained one or more independent valuation firms to review the valuation of each portfolio investment that does

not have a readily available market quotation at least once during each 12-month period.

Independent valuation firms retained by our board

of directors provide a valuation review on approximately 25% of our investments for which market quotations are not readily available

each quarter to ensure that the fair value of each investment for which a market quote is not readily available is reviewed by an independent

valuation firm at least once during each 12-month period.

However, our board of directors does not intend to have de minimis investments

of less than 1.5% of our total assets (up to an aggregate of 10% of our total assets) independently reviewed.

The valuation process is conducted at

the end of each fiscal quarter, with a portion of our valuations of portfolio companies without market quotations subject to review by

one or more independent valuation firms each quarter.

When an external event occurs with respect to one of our portfolio companies, such

as when a purchase transaction, public offering or subsequent equity sale occurs, we expect to use the pricing indicated by such external

event to corroborate our valuation.

With respect to investments for which

market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described

Our quarterly valuation process begins with each portfolio company or investment being initially valued

by investment professionals of our investment adviser responsible for credit monitoring in accordance with our valuation procedures.

Preliminary valuation conclusions are then documented and discussed with our investment committee and our investment adviser.

The audit committee of our board of directors reviews these preliminary valuations, and on a quarterly

basis, reviews the bases of the valuations by our investment adviser and the independent valuation firms.

At least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm.

Our board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith.

Fair value of publicly traded instruments

is generally based on quoted market prices.

Fair value of non-publicly traded instruments, and of publicly traded instruments for which

quoted market prices are not readily available, may be determined based on other relevant factors, including without limitation, quotations

from unaffiliated market makers or independent third party pricing services, the price activity of equivalent instruments and valuation

pricing models.

For those investments valued using quotations, the bid price is generally used unless we determine that it is not representative

of an exit price.

Fair value is the price that would be

received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.

observable prices or inputs are not available, valuation models are applied.

These valuation models involve some level of management estimation

and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’

Our fair value analysis includes an analysis of the value of any unfunded loan commitments.

Financial investments recorded at fair value

in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the

inputs used to measure their value.

The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of

the investment as of the measurement date.

The three levels are defined as follows:

Quoted prices (unadjusted) for identical assets

or liabilities in active public markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs other

than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs

that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect

a reporting entity’s own assumptions about what market participants would use in pricing an asset or liability.

Investments for which fair value is determined

using inputs defined above as Level 3 are fair valued using the income and market approaches, which may include the discounted cash flow

method, reference to performance statistics of industry comparables, relative comparable yield analysis and, in certain cases, third party

valuations performed by independent valuation firms.

The valuation methods can reference various factors and use various inputs such as

assumed growth rates, capitalization rates and discount rates, loan-to-value ratios, liquidation value, relative capital structure priority,

market comparables, compliance with applicable loan, covenant and interest coverage performance, book value, market derived multiples,

reserve valuation, assessment of credit ratings of an underlying borrower, review of ongoing performance, review of financial projections

as compared to actual performance, review of interest rate and yield risk.

Such factors may be given different weighting depending on

our assessment of the underlying investment, and we may analyze apparently comparable investments in different ways.

In certain cases,

the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, a financial instrument’s

categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers

factors specific to the financial instrument.

Fair value for each investment is derived using

a combination of valuation methodologies that, in the judgment of the investment committee of the investment adviser are most relevant

to such investment, including being based on one or more of the following:

(i) market prices obtained from market makers for which the

investment committee has deemed there to be enough breadth (number of quotes) and depth (firm bids) to be indicative of fair value, (ii)

the price paid or realized in a completed transaction or binding offer received in an arm’s-length transaction, (iii) a discounted

cash flow analysis, (iv) the guideline public company method, (v) the similar transaction method or (vi) the option pricing method.

Investment Transactions and Related Investment Income and

We record our investment transactions

on a trade date basis, which is the date when we have determined that all material terms have been defined for the transactions.

transactions could possibly settle on a subsequent date depending on the transaction type.

All related revenue and expenses attributable

to these transactions are reflected on our consolidated statements of operations commencing on the trade date unless otherwise specified

by the transaction documents.

Realized gains and losses on investment transactions are recorded on the specific identification method.

We accrue interest income if we expect that ultimately

we will be able to collect it.

Generally, when an interest payment default occurs on a loan in our portfolio, or if our management otherwise

believes that the issuer of the loan will not be able to service the loan and other obligations, we place the loan on non-accrual status

and will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring

occurs, such that the interest income is deemed to be collectible.

However, we remain contractually entitled to this interest.

make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection.

Accrued interest is written

off when it becomes probable that such interest will not be collected and the amount of uncollectible interest can be reasonably estimated.

Any original issue discount, as well as any other market purchase discount or premium on debt investments, are accreted or amortized to

interest income or expense, respectively, over the maturity periods of the investments.

Dividend income is recorded on the record date

for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Interest expense is recorded on an accrual

Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral

appraisals may arise when we make certain investments.

These expenses are recognized in the consolidated statements of operations as they

are incurred.

Loan Origination, Facility, Commitment and Amendment Fees

We may receive fees in addition to interest

income from the loans during the life of the investment.

We may receive origination fees upon the origination of an investment.

these origination fees and deduct them from the cost basis of the investment and subsequently accrete them into income over the term of

We may receive facility, commitment and amendment fees, which are paid to us on an ongoing basis.

We accrue facility fees, sometimes

referred to as asset management fees, as a percentage periodic fee on the base amount (either the funded facility amount or the committed

principal amount).

Commitment fees are based upon the undrawn portion committed by us and we record them on an accrual basis.

fees are paid in connection with loan amendments and waivers and we account for them upon completion of the amendments or waivers, generally

when such fees are receivable.

We include any such fees in fee income on the consolidated statements of operations.

Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements, which

discusses recent accounting pronouncements applicable to us, if any.

Management has evaluated events that have occurred after the balance sheet date but before the consolidated financial statements are issued and other than the items discussed below, the Company has determined that there were no additional subsequent events requiring adjustment or disclosure in the consolidated financial statements.

On October 4, 2021, the terms of the Credit Facility were amended to, among other things, establish a temporary upsize to the borrowing capacity under the Credit Facility, which allows WhiteHorse Credit to borrow up to $335,000 for a three-month period beginning on October 4, 2021.

On October 14, 2021, the Company declared a special distribution of $0.135 per share, which will be payable on December 10, 2021 to stockholders of record as of October 29, 2021.

On October 25, 2021, the Company completed an offering of 1,900,000 shares of our common stock at a public offering price of $15.81 per share, inclusive of underwriting discounts and commissions.

In connection with the offering, the Company granted the underwriters an overallotment option to purchase up to an additional 285,000 shares of the Company’s common stock.

The issuance of 1,900,000 shares resulted in net proceeds to the Company of approximately $29,374, inclusive of underwriting discounts and commissions and before offering expenses.

On November 3, 2021, the Company raised an additional $4,326 from the issuance of an additional 282,300 shares pursuant to the underwriters’ exercise of the overallotment option to purchase additional shares.

WhiteHorse Advisers agreed to bear a portion of the underwriting discounts and commissions in connection with the offering, such that the issuance of the 2,182,300 shares (which includes the additional shares issued pursuant to the overallotment option) resulted in net proceeds to the Company of approximately $33,700 before offering expenses, which was at or above the Company’s net asset value per share at the time of the offering and the overallotment option.

Subsequent to the quarter ended September 30, 2021, the Company received financial information related to its investment in Grupo Hima San Pablo, Inc.

Based on the information currently available, the Company expects to reduce the fair value mark of its first lien secured term loan investment from 50% to within a range of between approximately 35% and 45% of face value during the fourth quarter, but this conclusion is subject to change based on additional information which may become available.

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-Q

Item 1. Financial Statements