SLR Investment Corp. - Quarter Report: 2022 September (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller Reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended September 30, 2022

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number:

814-00754

SLR INVESTMENT CORP.

(Exact name of registrant as specified in its charter)


Maryland		26-1381340
(State of Incorporation)		(I.R.S. Employer Identification No.)

500 Park Avenue New York, N.Y.		10022
(Address of principal executive offices)		(Zip Code)

(212) 993-1670

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	SLRC	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $.01 par value, outstanding as of October 31, 2022 was 54,772,651.

Table of Contents

SLR INVESTMENT CORP.

FORM

10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS


		PAGE

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Assets and Liabilities as of September 30, 2022 (unaudited) and December 31, 2021		3

	Consolidated Statements of Operations for the three and nine months ended September 30, 2022 (unaudited) and the three and nine months ended September 30, 2021 (unaudited)		4

	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2022 (unaudited) and the three and nine months ended September 30, 2021 (unaudited)		5

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 (unaudited) and the nine months ended September 30, 2021 (unaudited)		6

	Consolidated Schedule of Investments as of September 30, 2022 (unaudited)		7

	Consolidated Schedule of Investments as of December 31, 2021		12

	Notes to Consolidated Financial Statements (unaudited)		17

	Report of Independent Registered Public Accounting Firm		38

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		39

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		56

Item 4.	Controls and Procedures		57

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		57

Item 1A.	Risk Factors		57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		58

Item 3.	Defaults Upon Senior Securities		58

Item 4.	Mine Safety Disclosures		58

Item 5.	Other Information		58

Item 6.	Exhibits		58

	Signatures		60

Table of Contents

PART I. FINANCIAL INFORMATION

In this Quarterly Report, “Company”, “we”, “us”, and “our” refer to SLR Investment Corp. unless the context states otherwise.

Item 1.

Financial Statements

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except share amounts)


	September 30, 2022 (unaudited)			December 31, 2021
Assets
Investments at fair value:
Companies less than 5% owned (cost: $1,386,014 and $985,088, respectively)	$	1,368,827		$	964,379
Companies more than 25% owned (cost: $812,800 and $711,865, respectively)		786,534			706,203
Cash		7,983			2,935
Cash equivalents (cost: $268,931 and $320,000, respectively)		268,931			320,000
Dividends receivable		11,542			9,028
Interest receivable		9,456			6,521
Receivable for investments sold		1,276			1,378
Prepaid expenses and other assets		886			567

Total assets	$	2,455,435		$	2,011,011

Liabilities
Debt ($1,156,200 and $818,500 face amounts, respectively, reported net of unamortized debt issuance costs/market discount of $7,909 and $6,462, respectively. See notes 6 and 7)	$	1,148,291		$	812,038
Payable for investments and cash equivalents purchased		268,952			320,041
Distributions payable		7,486			17,327
Management fee payable (see note 3)		7,890			7,435
Performance-based incentive fee payable (see note 3)		4,771			1,864
Interest payable (see note 7)		7,083			4,492
Administrative services payable (see note 3)		1,293			2,689
Other liabilities and accrued expenses		3,444			2,844

Total liabilities	$	1,449,210		$	1,168,730

Commitments and contingencies (see note 10)
Net Assets
Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 54,772,651 and 42,260,826 shares issued and outstanding, respectively	$	548		$	423
Paid-in capital in excess of par		1,163,713			936,999
Accumulated distributable net loss		(158,036	)		(95,141	)

Total net assets	$	1,006,225		$	842,281

Net Asset Value Per Share	$	18.37		$	19.93

See notes to consolidated financial statements.

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SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share amounts)


	Three months ended						Nine months ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
INVESTMENT INCOME:
Interest:
Companies less than 5% owned	$	32,933		$	19,202		$	82,450		$	62,517
Companies more than 25% owned		2,431			2,834			6,914			8,605
Dividends:
Companies less than 5% owned		—			—			—			133
Companies more than 25% owned		11,969			9,078			32,767			28,485
Other income:
Companies less than 5% owned		234			1,044			1,222			3,862
Companies more than 25% owned		—			5			—			20

Total investment income		47,567			32,163			123,353			103,622

EXPENSES:
Management fees (see note 3)	$	7,890		$	7,142		$	22,019		$	20,842
Performance-based incentive fees (see note 3)		4,965			698			9,699			8,444
Interest and other credit facility expenses (see note 7)		12,784			7,127			31,464			21,502
Administrative services expense (see note 3)		1,132			1,435			3,684			4,170
Other general and administrative expenses		935			755			4,212			2,673

Total expenses		27,706			17,157			71,078			57,631

Performance-based incentive fees waived (see note 3)		(194	)		—			(1,552	)		—

Net expenses		27,512			17,157			69,526			57,631

Net investment income	$	20,055		$	15,006		$	53,827		$	45,991

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:
Net realized gain (loss) on investments and cash equivalents (companies less than 5% owned)	$	(37,326	)	$	(127	)	$	(37,401	)	$	68

Net change in unrealized gain (loss) on investments and cash equivalents:
Companies less than 5% owned		28,783			(6,507	)		3,521			1,284
Companies more than 25% owned		2,016			4,999			(20,602	)		6,105

Net change in unrealized gain (loss) on investments and cash equivalent s		30,799			(1,508	)		(17,081	)		7,389

Net realized and unrealized gain (loss) on investments and cash equivalents		(6,527	)		(1,635	)		(54,482	)		7,457

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	13,528		$	13,371		$	(655	)	$	53,448

EARNINGS (LOSS) PER SHARE (see note 5)	$	0.25		$	0.32		$	(0.01	)	$	1.26

See notes to consolidated financial statements.

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SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

(in thousands, except share amounts)


	Three months ended						Nine months ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Increase (decrease) in net assets resulting from operations:
Net investment income	$	20,055		$	15,006		$	53,827		$	45,991
Net realized gain (loss)		(37,326	)		(127	)		(37,401	)		68
Net change in unrealized gain (loss)		30,799			(1,508	)		(17,081	)		7,389

Net increase (decrease) in net assets resulting from operations		13,528			13,371			(655	)		53,448

Distributions to stockholders:
From net investment income		(20,055	)		(17,327	)		(53,827	)		(51,981	)
From return of capital		(2,401	)		—			(8,413	)		—

Net distributions to stockholders		(22,456	)		(17,327	)		(62,240	)		(51,981	)

Capital transactions (see note 12) :
Issuance of common stock		—			—			226,839			—

Total increase (decrease) in net assets		(8,928	)		(3,956	)		163,944			1,467
Net assets at beginning of period		1,015,153			857,446			842,281			852,023

Net assets at end of period	$	1,006,225		$	853,490		$	1,006,225		$	853,490

Capital stock activity (see note 12) :
Issuance of common stock		—			—			12,511,825			—

See notes to consolidated financial statements.

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SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)


	Nine months ended
	September 30, 2022			September 30, 2021
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	(655	)	$	53,448
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Net realized (gain) loss on investments and cash equivalents		37,401			(68	)
Net change in unrealized (gain) loss on investments		17,081			(7,389	)
(Increase) decrease in operating assets:
Purchase of investments		(406,302	)		(398,349	)
Proceeds from disposition of investments		259,784			321,918
Net accretion of discount on investments		(7,760	)		(4,652	)
Capitalization of payment-in-kind income		(1,753	)		(5,000	)
Collections of payment-in-kind income		1,112			942
Receivable for investments sold		102			51
Interest receivable		(2,935	)		838
Dividends receivable		(2,514	)		(1,092	)
Prepaid expenses and other assets		(319	)		(40	)
Cash acquired in merger		2,313			—
Increase (decrease) in operating liabilities:
Payable for investments and cash equivalents purchased		(51,089	)		116,760
Management fee payable		455			607
Performance-based incentive fee payable		2,907			(94	)
Administrative services expense payable		(1,396	)		206
Interest payable		2,591			3,175
Other liabilities and accrued expenses		600			62
Deferred financing costs/market discount		1,631			1,169

Net Cash Provided by (Used in) Operating Activities		(148,746	)		82,492

Cash Flows from Financing Activities:
Cash distributions paid		(72,081	)		(51,981	)
Proceeds from unsecured borrowings		134,914			49,966
Repayment of unsecured borrowings		(150,000	)		—
Proceeds from secured borrowings		743,892			457,000
Repayment of secured borrowings		(554,000	)		(466,260	)

Net Cash Provided by (Used in) Financing Activities		102,725			(11,275	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(46,021	)		71,217
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		322,935			388,776

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	276,914		$	459,993

Supplemental disclosure of cash flow information:
Cash paid for interest	$	28,873		$	18,327
Issuance of shares in connection with the Merger (1)		226,839			—

(1)	On April 1, 2022, in connection with the Merger (as defined in Note 1 “Organization”), the Company acquired net assets of $244,691 for the total stock consideration of $226,839. For further details, refer to Note 16 “Merger with SUNS”.

See notes to consolidated financial statements.

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SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

September 30, 202

(in thousands, except share/unit amount

)


Description	Industry	Spread Above Index (7)			Floor			Interest Rate (1)			Acquisition Date		Maturity Date		Par Amount		Cost		Fair Value
Senior Secured Loans — 134.4%
First Lien Bank Debt/Senior Secured Loans
Aegis Toxicology Sciences Corporation(16)	Health Care Providers & Services		L+550			1.00	%		8.41	%		5/7/2018		5/9/2025	$	17,176	$	16,836	$	17,176
All State Ag Parts, LLC(16)	Trading Companies & Distributors		S+500			1.00	%		7.84	%		4/1/2022		9/1/2026		2,681		2,591		2,681
American Teleconferencing Services, Ltd.**	Communications Equipment		L+650			1.00	%		—			5/5/2016		9/9/2021		36,135		25,926		—
American Teleconferencing Services, Ltd.**	Communications Equipment		L+650			1.00	%		—			9/17/2021		12/16/2022		6,581		6,426		1,287
AmeriMark Intermediate Holdings, LLC(14)	Internet & Catalog Retail		L+600			1.00	%		11.09	%		7/28/2021		10/15/2026		24,633		24,225		24,141
Apex Services Partners, LLC(16)	Diversified Consumer Services		S+525			1.00	%		8.30	%		8/31/2022		7/31/2025		14,021		13,612		13,601
Atria Wealth Solutions, Inc.	Diversified Financial Services		S+600			1.00	%		8.79	%		9/14/2018		2/29/2024		10,674		10,617		10,674
Basic Fun, Inc.	Specialty Retail		L+550			1.00	%		8.59	%		10/30/2020		10/30/2023		2,687		2,675		2,687
BayMark Health Services, Inc.(16)	Health Care Providers & Services		L+500			1.00	%		8.12	%		4/1/2022		6/11/2027		12,455		11,968		12,455
BDG Media, Inc.	Media		L+900			0.25	%		11.29	%		7/18/2022		4/27/2023		9,427		9,427		9,427
CC SAG Holdings Corp. (Spectrum Automotive)(16)	Diversified Consumer Services		L+575			0.75	%		9.42	%		6/29/2021		6/29/2028		16,794		16,468		16,794
Composite Technology Acquisition Corp.(16)	Building Products		L+500			1.00	%		6.50	%		4/1/2022		2/1/2025		10,759		10,276		10,759
Copper River Seafoods, Inc.	Food Products		P+275			—			9.00	%		8/31/2022		4/23/2025		9,957		9,957		9,957
Enhanced Permanent Capital, LLC(3)	Capital Markets		L+700			1.00	%		8.72	%		12/29/2020		12/29/2025		35,205		34,444		35,205
ENS Holdings III Corp. & ES Opco USA LLC (Bluefin)(16)	Trading Companies & Distributors		L+475			1.00	%		8.42	%		4/1/2022		12/31/2025		6,232		5,997		6,232
Enverus Holdings, Inc. (fka Drilling Info Holdings)(16)	IT Services		L+450			—			7.62	%		4/1/2022		7/30/2025		11,627		11,119		11,627
Erie Construction Mid-west, LLC(16)	Building Products		L+475			1.00	%		7.56	%		4/1/2022		7/30/2027		9,029		8,674		9,029
Foundation Consumer Brands, LLC(16)	Personal Products		L+550			1.00	%		8.43	%		2/12/2021		2/12/2027		39,038		38,070		39,038
GSM Acquisition Corp.(16)	Leisure Equipment & Products		S+500			1.00	%		7.32	%		4/1/2022		11/16/2026		11,468		10,977		11,353
Higginbotham Insurance Agency, Inc.(16)	Insurance		L+525			0.75	%		8.37	%		4/1/2022		11/25/2026		6,239		5,997		6,239
High Street Buyer, Inc.(16)	Insurance		L+600			0.75	%		8.56	%		4/1/2022		4/16/2028		7,701		7,257		7,701
Human Interest Inc.	Internet Software & Services		S+785			1.00	%		10.36	%		6/30/2022		7/1/2027		20,104		19,743		19,702
iCIMS, Inc.	Software		S+675			0.75	%		9.49	%		8/18/2022		8/18/2028		32,084		31,530		31,522
Inszone Mid, LLC	Insurance		L+575			1.00	%		8.23	%		9/28/2021		6/30/2026		20,670		20,487		20,670
Ivy Fertility Services, LLC	Health Care Providers & Services		L+625			1.00	%		8.80	%		12/22/2021		2/25/2026		33,176		32,406		33,176
Kaseya, Inc.	Software		S+575			0.75	%		8.29	%		6/22/2022		6/23/2029		32,426		31,953		31,939
Kid Distro Holdings, LLC (Distro Kid)	Software		L+575			1.00	%		8.63	%		9/24/2021		10/1/2027		29,519		29,010		29,519
Kingsbridge Holdings, LLC(2)	Multi-Sector Holdings		L+700			1.00	%		9.29	%		12/21/2018		12/21/2024		80,000		79,778		80,000
KORE Wireless Group, Inc.(16)	Wireless Telecommunication Services		L+550			—			9.17	%		12/21/2018		12/21/2024		47,899		47,169		47,899
Logix Holding Company, LLC(16)	Communications Equipment		L+575			1.00	%		8.87	%		9/14/2018		12/22/2024		14,009		13,159		13,449
Luxury Asset Capital, LLC	Thrifts & Mortgage Finance		S+675			1.00	%		9.38	%		7/15/2022		7/15/2027		27,500		26,968		27,500
Maurices, Incorporated(16)	Specialty Retail		L+675			1.00	%		9.38	%		8/27/2021		6/1/2024		8,914		8,746		8,914
MMIT Holdings, LLC	IT Services		L+625			1.00	%		9.50	%		9/21/2021		9/15/2027		30,909		30,477		30,909
Montefiore Nyack Hospital	Health Care Providers & Services		L+495			—			8.05	%		8/9/2022		11/15/2024		5,000		5,000		5,000
NAC Holdings Corporation (Jaguar)(16)	Insurance		L+525			1.00	%		8.23	%		7/30/2021		9/28/2024		28,675		28,234		28,675
National Spine and Pain Centers, LLC	Health Care Providers & Services		L+500			1.00	%		7.31	%		4/1/2022		6/2/2024		2,486		2,365		2,362
OIS Management Services, LLC	Health Care Providers & Services		S+575			1.00	%		9.45	%		4/11/2022		7/9/2026		6,262		6,161		6,262
One Touch Direct, LLC	Commercial Services & Supplies		P+75			—			7.00	%		4/3/2020		3/30/2024		3,487		3,487		3,487
Orthopedic Care Partners Management, LLC	Health Care Providers & Services		S+650			1.00	%		9.36	%		8/17/2022		5/16/2024		2,843		2,823		2,822
Pediatric Home Respiratory Services, LLC	Health Care Providers & Services		S+625			1.00	%		9.43	%		8/19/2022		12/4/2024		754		744		743
Peter C. Foy & Associates Insurance Services, LLC	Insurance		S+600			0.75	%		8.96	%		4/1/2022		11/1/2028		10,006		9,860		10,006
PhyNet Dermatology LLC	Health Care Providers & Services		L+600	(15)		1.00	%		8.85	%		9/5/2018		8/16/2024		14,498		14,454		14,498
Pinnacle Treatment Centers, Inc.(16)	Health Care Providers & Services		L+575			1.00	%		8.00	%		1/22/2020		12/31/2022		16,289		16,223		16,289
Plastics Management, LLC(16)	Health Care Providers & Services		S+500			1.00	%		8.13	%		4/1/2022		8/18/2027		9,515		9,169		9,420
PPT Management Holdings, LLC(16)	Health Care Providers & Services		L+850	(11)		1.00	%		10.78	%		9/14/2018		12/16/2022		30,515		30,000		24,503
RQM+ Corp.(16)	Life Sciences Tools & Services		L+575			1.00	%		9.31	%		8/20/2021		8/12/2026		26,890		26,501		26,890
RSC Acquisition, Inc.(16)	Insurance		S+550			0.75	%		7.76	%		4/1/2022		11/1/2026		5,946		5,776		5,946
RxSense Holdings LLC(16)	Diversified Consumer Services		L+500			1.00	%		8.12	%		4/1/2022		3/13/2026		11,775		11,328		11,775
SHO Holding I Corporation (Shoes for Crews)(16)	Footwear		L+523			1.00	%		8.04	%		4/1/2022		4/27/2024		5,719		5,315		5,434
Southern Orthodontic Partners Management, LLC	Health Care Providers & Services		S+575			1.00	%		9.19	%		6/3/2022		1/27/2026		1,028		1,019		1,028
SPAR Marketing Force, Inc.	Media		P+95			—			7.20	%		7/18/2022		10/10/2024		9,787		9,787		9,787
Stryten Resources LLC	Auto Parts & Equipment		S+800			1.00	%		11.15	%		8/11/2021		10/12/2026		25,988		25,548		25,988
SunMed Group Holdings, LLC(16)	Health Care Equipment & Supplies		L+575			0.75	%		8.82	%		6/16/2021		6/16/2028		25,014		24,487		25,014
TAUC Management, LLC(16)	Health Care Providers & Services		L+525			1.00	%		8.16	%		4/1/2022		2/12/2027		6,908		6,578		6,874
Tilley Distribution, Inc.(16)	Trading Companies & Distributors		L+600			1.00	%		8.78	%		4/1/2022		12/31/2026		10,253		9,758		10,253
Ultimate Baked Goods Midco LLC (Rise Baking)(16)	Packaged Foods & Meats		L+650			1.00	%		10.17	%		8/12/2021		8/13/2027		26,136		25,322		25,874
Vessco Midco Holdings, LLC(16)	Water Utilities		L+450			1.00	%		7.34	%		4/1/2022		11/2/2026		1,523		1,461		1,508
World Insurance Associates, LLC(16)	Insurance		L+575			1.00	%		8.33	%		4/1/2022		4/1/2026		23,188		22,463		23,188

Total First Lien Bank Debt/Senior Secured Loans																	$	958,828	$	936,888

Second Lien Asset-Based Senior Secured Loans
ACRES Commercial Mortgage, LLC	Diversified Financial Services		S+705			1.00	%		9.82	%		12/24/2021		8/21/2028		29,925	$	29,380	$	29,925
Varilease Finance, Inc.	Multi-Sector Holdings		L+750			1.00	%		9.79	%		8/22/2014		11/15/2025		29,563		29,483		29,563

Total Second Lien Asset-Based Senior Secured Loans																	$	58,863	$	59,488

Second Lien Bank Debt/Senior Secured Loans
RD Holdco, Inc.** (2)	Diversified Consumer Services		S+975	(11)		1.50	%		—			12/23/2013		5/16/2023		12,900	$	11,791	$	6,450

Total Second Lien Bank Debt/Senior Secured Loans																	$	11,791	$	6,450

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 2022

(in thousands, except share/unit amount

)


Description	Industry	Spread Above Index (7)		Floor			Interest Rate (1)			Acquisition Date		Maturity Date		Par Amount		Cost		Fair Value
Senior Secured Loans (continued) —
First Lien Life Science Senior Secured Loans
Alimera Sciences, Inc.(16)	Pharmaceuticals		L+765		1.78	%		10.28	%		12/31/2019		7/1/2024	$	23,159	$	23,823	$	26,280
Apeel Technology, Inc.	Biotechnology		S+625		1.00	%		8.75	%		6/29/2022		6/1/2027		3,643		3,613		3,606
Arcutis Biotherapeutics, Inc.(3)	Pharamceuticals		L+745		0.10	%		10.08	%		12/22/2021		1/1/2027		66,849		66,803		67,518
Ardelyx, Inc.	Pharmaceuticals		L+795		0.10	%		10.58	%		2/23/2022		3/1/2027		9,475		9,407		9,475
Axcella Health Inc.	Pharmaceuticals		L+860		0.10	%		11.23	%		9/2/2021		9/1/2026		7,137		7,236		7,262
BridgeBio Pharma, Inc.(3)	Biotechnology		—		—			9.00	%		11/17/2021		11/17/2026		39,530		38,954		39,184
Centrexion Therapeutics, Inc.	Pharmaceuticals		L+725		2.45	%		9.88	%		6/28/2019		1/1/2024		14,578		15,043		15,015
Cerapedics, Inc.(16)	Health Care Equipment & Supplies		L+695		2.50	%		9.58	%		3/22/2019		3/1/2025		30,982		32,059		33,151
Glooko, Inc.(16)	Health Care Technology		L+790		0.10	%		10.53	%		9/30/2021		10/1/2026		15,883		15,830		15,903
Neuronetics, Inc.(16)	Health Care Equipment & Supplies		L+765		1.66	%		10.28	%		3/2/2020		2/28/2025		18,012		18,387		18,463
OmniGuide Holdings, Inc. (13)	Health Care Equipment & Supplies		L+1405		0.10	%		16.68	%		7/30/2018		7/1/2023		18,879		18,413		19,314
Rubius Therapeutics, Inc.(16)	Pharmaceuticals		L+550		2.10	%		8.13	%		12/21/2018		6/1/2026		46,473		47,552		46,783
scPharmaceuticals, Inc.(16)	Pharmaceuticals		L+795		2.23	%		10.58	%		9/17/2019		9/17/2023		2,701		2,787		2,848
Spectrum Pharmaceuticals, Inc.(16)	Biotechnology		S+570		2.30	%		8.72	%		9/21/2022		9/1/2027		10,525		10,373		10,420
Vapotherm, Inc.	Health Care Equipment & Supplies		S+830		1.00	%		10.93	%		2/18/2022		2/1/2027		34,455		34,104		34,455

Total First Lien Life Science Senior Secured Loans																$	344,384	$	349,677

Total Senior Secured Loans																$	1,373,866	$	1,352,503


Description	Industry	Interest Rate (1)		Acquisition Date		Maturity Date		Par Amount		Cost		Fair Value
Equipment Financing — 23.7%
Aero Operating LLC (10)	Commercial Services & Supplies		8.47-9.64%		2/12/2021		3/1/2025-12/1/2026	$	2,392	$	2,389	$	2,389
AFG Dallas III, LLC (10)	Diversified Consumer Services		10.00%		8/11/2022		8/11/2026-8/26/2026		1,093		1,093		1,093
Air Methods Corporation (10)	Airlines		7.08-7.13%		11/3/2021		11/3/2026-11/23/2026		3,719		3,784		3,719
AmeraMex International, Inc. (10)	Commercial Services & Supplies		10.00%		3/29/2019		4/15/2025		1,551		1,551		1,566
Blackhawk Mining, LLC (10)	Oil, Gas & Consumable Fuels		11.17%		2/16/2018		11/1/2022		409		409		409
Boart Longyear Company (10)	Metals & Mining		9.06-10.44%		5/28/2020		7/1/2024-1/1/2026		4,231		4,231		4,231
Bowman Energy Solutions, LLC (10)	Commercial Services & Supplies		7.42%		7/1/2022		8/1/2026		162		162		162
Capital City Jet Center, Inc. (10)	Airlines		10.00%		4/4/2018		10/4/2023-6/22/26		2,464		2,464		2,432
Champion Air, LLC (10)	Airlines		10.00%		3/19/2018		1/1/2023		1,219		1,219		1,219
CKD Holdings, Inc. (10)	Road & Rail		8.10-8.60%		9/22/2022		6/22/26-9/22/27		3,887		3,887		3,887
Clubcorp Holdings, Inc. (10)	Hotels, Restaurants & Leisure		9.36-13.01%		5/27/2021		4/1/2025-10/1/2027		6,027		6,027		6,027
Dongwon Autopart Technology Inc. (10)	Auto Components		7.96%		2/2/2021		1/1/2026		1,962		1,986		1,962
EasyPak, LLC (10)	Containers & Packaging		9.01%		1/6/2021		1/1/2024		364		364		364
Energy Drilling Services, LLC (10)	Diversified Consumer Services		6.58%		8/26/2022		9/1/2027		1,192		1,192		1,192
Environmental Protection & Improvement Company, LLC (10)	Road & Rail		8.25%		9/30/2020		10/1/2027		5,438		5,469		5,438
Equipment Operating Leases, LLC (2)(12)	Multi-Sector Holdings		8.37%		4/27/2018		4/27/2025		3,946		3,946		3,847
First American Commercial Bancorp, Inc. (10)	Diversified Financial Services		7.50-9.02%		10/28/2021		11/1/2026-4/1/2027		3,094		3,098		3,094
First National Capital, LLC (10)	Diversified Financial Services		9.00%		11/5/2021		8/1/2026		7,533		7,533		7,533
Freightsol LLC (10)	Road & Rail		12.51-12.89%		4/9/2019		11/1/2023		932		940		932
Garda CL Technical Services, Inc. (10)	Commercial Services & Supplies		8.30-8.77%		3/22/2018		6/5/2023-10/5/2023		669		669		667
Georgia Jet, Inc. (10)	Airlines		8.00%		12/4/2017		1/4/2024		520		520		520
GMT Corporation (10)	Machinery		10.71%		10/23/2018		1/1/2026		5,032		5,038		5,032
Hawkeye Contracting Company, LLC (10)	Construction & Engineering		10.50%		10/8/2021		11/1/2025		1,069		1,069		1,069
HTI Logistics Corporation (10)	Commercial Services & Supplies		9.69-9.94%		11/15/2018		5/1/2024-9/1/2025		322		322		314
International Automotive Components Group, North America, Inc. (10)	Auto Components		7.95%		6/23/2021		6/23/2025		6,616		6,659		6,484
Kool Pak, LLC (10)	Road & Rail		8.58%		2/5/2018		3/1/2024		233		233		233
Loyer Capital LLC (2)(12)	Multi-Sector Holdings		8.73-11.52%		5/16/2019		5/16/24-9/25/24		7,500		7,500		7,361
Lux Credit Consultants, LLC (10)	Road & Rail		8.28-11.12%		6/17/2021		12/1/2024-10/1/2026		15,930		15,930		15,930
Lux Vending, LLC (10)	Consumer Finance		12.46-13.26%		8/20/2021		8/20/2024-10/1/2024		1,870		1,902		1,870
Mountain Air Helicopters, Inc. (10)	Commercial Services & Supplies		10.00%		7/31/2017		2/28/2025		398		396		398
Rane Light Metal Castings Inc. (10)	Machinery		10.00%		6/1/2020		7/1/2024		184		184		184
Rango, Inc. (10)	Commercial Services & Supplies		9.33-9.79%		9/24/2019		4/1/2023-11/1/2024		2,374		2,399		2,329
Royal Coach Lines, Inc.(10)	Road & Rail		9.56%		11/21/2019		8/1/2025		913		913		833
Royal Express Inc. (10)	Road & Rail		9.53%		1/17/2019		2/1/2024		494		497		494
Sidelines Tree Service LLC (10)	Diversified Consumer Services		10.25%		7/31/2017		10/1/2022		19		19		19
SLR Equipment Finance(2)	Multi-Sector Holdings		8.50%		1/24/2022		1/24/2023		5,000		5,000		5,000
Smiley Lifting Solutions, LLC(10)	Commercial Services & Supplies		7.82-7.95%		6/30/2022		9/15/2026-7/1/2029		2,006		2,006		2,006
ST Coaches, LLC (10)	Road & Rail		8.22-8.58%		7/31/2017		10/1/2022-1/25/2025		1,810		1,810		1,729
Star Coaches Inc. (10)	Road & Rail		8.42%		3/9/2018		4/1/2025		3,019		3,019		2,710
Superior Transportation, Inc. (10)	Road & Rail		10.22-10.63%		7/31/2017		1/1/2026		3,814		3,814		3,814
The Smedley Company & Smedley Services, Inc. (10)	Commercial Services & Supplies		4.07%		7/31/2017		1/1/2028		2,706		2,706		2,706
Trinity Equipment Rentals, Inc. (10)	Commercial Services & Supplies		7.94-8.75%		10/8/2021		11/1/2024-12/1/2026		628		628		628
Up Trucking Services, LLC (10)	Road & Rail		11.21%		3/23/2018		8/1/2024		510		515		510
Warrior Crane Services, LLC (10)	Commercial Services & Supplies		8.95%		7/11/2019		8/1/2024-8/1/2026		2,144		2,144		2,104
Wind River Environmental, LLC (10)	Diversified Consumer Services		8.43-10.00%		7/31/2019		8/1/2024-10/5/25		673		675		673
Womble Company, Inc. (10)	Energy Equipment & Services		9.11%		12/27/2019		1/1/2025		428		428		411
Worldwide Flight Services, Inc. (10)	Transportation Infrastructure		8.32%		9/23/2022		9/23/2027		209		211		209

								Shares/Units
SLR Equipment Finance Equity Interests (2)(9)(17)*	Multi-Sector Holdings				7/31/2017				200		145,000		120,820

Total Equipment Financing										$	263,950	$	238,553

Preferred Equity – 0.4%
SOINT, LLC (2)(3)(4)	Aerospace & Defense		5.00% (11)		6/8/2012		6/30/2023		52,536	$	5,254	$	4,176

Total Preferred Equity										$	5,254	$	4,176

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 202

(in thousands, except share/unit amounts)


Description	Industry	Acquisition Date		Shares/ Units		Cost		Fair Value
Common Equity/Equity Interests/Warrants—55.7%
aTyr Pharma, Inc. Warrants *	Pharmaceuticals		11/18/2016		6,347	$	106	$	—
CardioFocus, Inc. Warrants *	Health Care Equipment & Supplies		3/31/2017		90		51		—
Centrexion Therapeutics, Inc. Warrants *	Pharmaceuticals		6/28/2019		289,102		136		92
Conventus Orthopaedics, Inc. Warrants *	Health Care Equipment & Supplies		6/15/2016		157,500		65		—
Delphinus Medical Technologies, Inc. Warrants *	Health Care Equipment & Supplies		8/18/2017		444,388		74		108
Essence Group Holdings Corporation (Lumeris) Warrants *	Health Care Technology		3/22/2017		260,000		129		377
KBH Topco LLC (Kingsbridge) (2)(5)(18)	Multi-Sector Holdings		11/3/2020		73,500,000		136,596		147,000
RD Holdco, Inc. (Rug Doctor) (2)*	Diversified Consumer Services		12/23/2013		231,177		15,683		—
RD Holdco, Inc. (Rug Doctor) Class B (2)*	Diversified Consumer Services		12/23/2013		522		5,216		—
RD Holdco, Inc. (Rug Doctor) Warrants (2)*	Diversified Consumer Services		12/23/2013		30,370		381		—
Senseonics Holdings, Inc. (3)(8)*	Health Care Equipment & Supplies		7/25/2019		469,353		235		620
SLR Business Credit (2)(3)(19)	Diversified Financial Services		4/1/2022		100		81,583		89,370
SLR Credit Solutions (2)(3)(20)	Diversified Financial Services		12/28/2012		280,303		280,737		288,760
SLR Healthcare ABL (2)(3)(21)	Diversified Financial Services		4/1/2022		32,839		34,335		33,750
Spectrum Pharmaceuticals, Inc. Warrants *	Biotechnology		9/21/2022		159,470		50		22
TwentyEighty Investors, LLC*	Professional Services		4/1/2022		17,214		5		5
Vapotherm, Inc. Warrants(3)*	Health Care Equipment & Supplies		2/18/2022		36,996		210		25
Venus Concept Ltd. Warrants* (f/k/a Restoration Robotics)	Health Care Equipment & Supplies		5/10/2018		33,430		152		—

Total Common Equity/Equity Interests/Warrants						$	555,744	$	560,129

Total Investments (6) — 214.2%						$	2,198,814	$	2,155,361


Description	Industry	Acquisition Date		Maturity Date		Par Amount
Cash Equivalents — 26.7% U.S. Treasury Bill	Government		9/30/2022		11/22/2022	$	270,000	$	268,931	$	268,931

Total Investments & Cash Equivalents —240.9%								$	2,467,745	$	2,424,292
Liabilities in Excess of Other Assets — (140.9%)											(1,418,067	)

Net Assets — 100.0%										$	1,006,225

(1)

Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), the Secured Overnight Financing Rate (“SOFR” or “S”) or the prime index rate (“PRIME” or “P”), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of September 30, 2022.

(2)

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (“1940 Act”), due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the nine months ended September 30, 2022 in these controlled investments are as follows:


Name of Issuer	Fair Value at December 31, 2021		Gross Additions		Gross Reductions		Realized Gain (Loss)		Change in Unrealized Gain (Loss)			Interest/Dividend Income			Fair Value at September 30, 2022
Equipment Operating Leases, LLC	$	18,939	$	—	$	15,725	$	—	$	633		$	668		$	3,847
Kingsbridge Holdings, LLC		80,000		—		—		—		(64	)		5,182			80,000
KBH Topco, LLC (Kingsbridge)		145,996		—		—		—		1,004			11,288			147,000
Loyer Capital LLC		10,725		—		3,500		—		136			812			7,361
RD Holdco, Inc. (Rug Doctor, common equity)		—		—		—		—		—			—			—
RD Holdco, Inc. (Rug Doctor, class B)		5,216		—		—		—		(5,216	)		—			—
RD Holdco, Inc. (Rug Doctor, warrants)		—		—		—		—		—			—			—
RD Holdco, Inc. (debt)		11,829		685		—		—		(5,351	)		(18	)		6,450
SLR Business Credi t		—		81,583		—		—		7,787			3,400			89,370
SLR Credit Solutions		298,766		—		—		—		(10,006	)		15,500			288,760
SLR Equipment Finance (equity)		129,102		—		—		—		(8,282	)		—			120,820
SLR Equipment Finance (debt)		—		5,000		—		—		—			270			5,000
SLR Healthcare ABL		—		34,335		—		—		(585	)		1,730			33,750
SOAGG LLC		1,121		—		447		—		(674	)		647			—
SOINT, LLC		4,509		203		552		—		16			202			4,176

	$	706,203	$	121,806	$	20,224	$	—	$	(20,602	)	$	39,681		$	786,534

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 2022

(in thousands)

(3)

Indicates assets that the Company believes may not represent “qualifying assets” under Section 55(a) of the 1940 Act. If we fail to invest a sufficient portion of our assets in qualifying assets, we could be prevented from making

follow-on

investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of September 30, 2022, on a fair value basis,

non-qualifying

assets in the portfolio represented 22.7% of the total assets of the Company.

(4)	The Company’s investment in SOINT, LLC include a one dollar investment in common shares.

(5)	Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.

(6)

Aggregate net unrealized appreciation for U.S. federal income tax purposes is $13,274; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $159,987 and $146,713, respectively, based on a tax cost of $2,142,087. Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the senior secured credit facility. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.

(7)	Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR, SOFR or PRIME rate. These instruments are often subject to a LIBOR, SOFR or PRIME rate floor.

(8)	Denotes a Level 1 investment.

(9)	SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.

(10)	Indicates an investment that is wholly held by the Company through NEFPASS LLC.

(11)	Interest is paid in kind (“PIK”).

(12)	Denotes a subsidiary of SLR Equipment Finance.

(13)	OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.

(14)	AmeriMark Interactive, LLC, AmeriMark Direct LLC, AmeriMark Intermediate Sub, Inc., L.T.D. Commodities LLC, Dr. Leonard’s Healthcare Corp. and Amerimark Intermediate Holdings, LLC are each co-Borrowers.

(15)	Spread is 5.50% Cash / 0.50% PIK.

(16)

Indicates an investment that is wholly or partially held by the Company through its wholly-owned financing subsidiary SUNS SPV LLC (the “SUNS SPV”). Such investments are pledged as collateral under the Senior Secured Revolving SPV Credit Facility (the “SPV Credit Facility”) (see Note 7 to the consolidated financial statements) and are not generally available to creditors, if any, of the Company.

(17)	See note 11 to the consolidated financial statements.

(18)	See note 13 to the consolidated financial statements.

(19)	See note 15 to the consolidated financial statements.

(20)	See note 9 to the consolidated financial statements.

(21)	See note 14 to the consolidated financial statements.

*	Non-income producing security.

**	Investment is on non-accrual status.

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 2022

(in thousands)


Industry Classification	Percentage of Total Investments (at fair value) as of September 30, 2022
Diversified Financial Services (includes SLR Credit Solutions, SLR Business Credit and SLR Healthcare ABL)		21.5	%
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, LLC and Loyer Capital LLC)		18.3	%
Pharmaceuticals		8.1	%
Health Care Providers & Services		7.1	%
Health Care Equipment & Supplies		6.1	%
Insurance		4.8	%
Software		4.3	%
Biotechnology		2.5	%
Diversified Consumer Services		2.4	%
Wireless Telecommunication Services		2.2	%
IT Services		2.0	%
Personal Products		1.8	%
Road & Rail		1.7	%
Capital Markets		1.6	%
Thrifts & Mortgage Finance		1.3	%
Life Sciences Tools & Services		1.2	%
Auto Parts & Equipment		1.2	%
Packaged Foods & Meats		1.2	%
Internet & Catalog Retail		1.1	%
Building Products		0.9	%
Internet Software & Services		0.9	%
Media		0.9	%
Trading Companies & Distributors		0.9	%
Commercial Services & Supplies		0.9	%
Health Care Technology		0.8	%
Communications Equipment		0.7	%
Specialty Retail		0.5	%
Leisure Equipment & Products		0.5	%
Food Products		0.5	%
Auto Components		0.4	%
Airlines		0.4	%
Hotels, Restaurants & Leisure		0.3	%
Footwear		0.2	%
Machinery		0.2	%
Metals & Mining		0.2	%
Aerospace & Defense		0.2	%
Consumer Finance		0.1	%
Water Utilities		0.1	%
Construction & Engineering		0.0	%
Energy Equipment & Services		0.0	%
Oil, Gas & Consumable Fuels		0.0	%
Containers & Packaging		0.0	%
Transportation Infrastructure		0.0	%
Professional Services		0.0	%

Total Investments		100.0	%

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2021

(in thousands, except share/unit amounts)


Description	Industry	Spread Above Index (7)			LIBOR Floor			Interest Rate (1)			Acquisition Date		Maturity Date		Par Amount		Cost		Fair Value
Senior Secured Loans — 111.5%
First Lien Bank Debt/Senior Secured Loans
Aegis Toxicology Sciences Corporation	Health Care Providers & Services		L+550			1.00	%		6.50	%		5/7/2018		5/9/2025	$	12,402	$	12,283	$	12,402
Alteon Health, LLC	Health Care Providers & Services		L+650			1.00	%		7.50	%		9/14/2018		9/1/2023		14,117		14,079		14,117
American Teleconferencing Services, Ltd.**	Communications Equipment		L+650			1.00	%		7.50	%		5/5/2016		9/9/2021		24,822		24,453		3,345
American Teleconferencing Services, Ltd.**	Communications Equipment		L+650			1.00	%		7.50	%		9/17/2021		3/31/2022		4,576		4,508		4,576
AmeriMark Intermediate Holdings, LLC(14)	Internet & Catalog Retail		L+600			1.00	%		7.00	%		7/28/2021		10/15/2026		25,226		24,739		24,721
Atria Wealth Solutions, Inc	Diversified Financial Services		L+600			1.00	%		7.00	%		9/14/2018		11/30/2022		6,345		6,329		6,345
Basic Fun, Inc	Specialty Retail		L+550			1.00	%		6.50	%		10/30/2020		10/30/2023		2,902		2,871		2,902
CC SAG Holdings Corp. (Spectrum Automotive)	Diversified Consumer Services		L+575			0.75	%		6.50	%		6/29/2021		6/29/2028		12,168		11,995		12,168
Community Brands ParentCo, LLC (f/k/a Ministry Brands)	Software		L+400			1.00	%		5.00	%		7/30/2021		12/2/2022		34,901		34,538		34,901
Enhanced Permanent Capital, LLC(3)	Capital Markets		L+700			1.00	%		8.00	%		12/29/2020		12/29/2025		26,061		25,418		26,061
Foundation Consumer Brands, LLC	Personal Products		L+638			1.00	%		7.38	%		2/12/2021		2/12/2027		33,367		32,633		33,367
iCIMS, Inc.	Software		L+650			1.00	%		7.50	%		9/7/2018		9/12/2024		19,341		19,120		19,341
Inszone Mid, LLC.	Insurance		L+575			1.00	%		6.75	%		9/28/2021		6/30/2026		11,141		11,035		11,086
Ivy Fertility Services, LLC	Health Care Providers & Services		L+625			1.00	%		7.25	%		12/22/2021		2/25/2026		21,677		21,299		21,298
Kid Distro Holdings, LLC (Distro Kid)	Software		L+600			1.00	%		7.00	%		9/24/2021		10/1/2027		29,743		29,168		29,148
Kingsbridge Holdings, LLC(2) .	Multi-Sector Holdings		L+700			1.00	%		8.00	%		12/21/2018		12/21/2024		80,000		79,713		80,000
KORE Wireless Group, Inc.(3)	Wireless Telecommunication Services		L+550			—			5.72	%		12/21/2018		12/21/2024		36,470		36,062		36,470
Logix Holding Company, LLC	Communications Equipment		L+575			1.00	%		6.75	%		9/14/2018		12/22/2024		7,400		7,359		7,178
Maurices, Incorporated	Specialty Retail		L+675			1.00	%		7.75	%		8/27/2021		6/1/2024		5,135		5,044		5,135
MMIT Holdings, LLC	IT Services		L+625			1.00	%		7.25	%		9/21/2021		9/15/2027		31,026		30,541		31,026
NAC Holdings Corporation (Jaguar)	Insurance		L+525			1.00	%		6.25	%		7/30/2021		9/28/2024		15,924		15,730		15,844
One Touch Direct, LLC	Commercial Services & Supplies		P+75			—			4.00	%		4/3/2020		9/30/2022		274		274		274
PhyNet Dermatology LLC	Health Care Providers & Services		L+600	(17)		1.00	%		7.00	%		9/5/2018		8/16/2024		14,589		14,529		14,589
Pinnacle Treatment Centers, Inc.	Health Care Providers & Services		L+575			1.00	%		6.75	%		1/22/2020		12/31/2022		11,996		11,953		11,996
PPT Management Holdings, LLC	Health Care Providers & Services		L+800	(15)		1.00	%		9.00	%		9/14/2018		12/16/2022		21,120		21,086		18,374
RQM+ Corp	Life Sciences Tools & Services		L+575			1.00	%		6.75	%		8/20/2021		8/12/2026		16,504		16,349		16,462
Stryten Energy LLC	Auto Parts & Equipment		L+800			1.00	%		9.00	%		8/11/2021		10/12/2026		26,184		25,676		25,923
SunMed Group Holdings, LLC	Health Care Equipment & Supplies		L+575			0.75	%		6.50	%		6/16/2021		6/16/2028		18,536		18,232		18,351
Ultimate Baked Goods Midco LLC (Rise Baking)	Packaged Foods & Meats		L+625			1.00	%		7.25	%		8/12/2021		8/13/2027		19,381		18,920		18,896
USR Parent, Inc. (Staples)	Specialty Retail		L+884			1.00	%		9.84	%		6/3/2020		9/12/2022		3,275		3,275		3,275

Total First Lien Bank Debt/Senior Secured Loans																	$	579,211	$	559,571

Second Lien Asset-Based Senior Secured Loans
ACRES Commercial Mortgage, LLC	Diversified Financial Services		L+705			1.00	%		8.05	%		12/24/2021		8/21/2028		29,925	$	29,328	$	29,326
Varilease Finance, Inc.	Multi-Sector Holdings		L+750			1.00	%		8.50	%		8/22/2014		11/15/2025		29,563		29,467		29,563

Total Second Lien Asset-Based Senior Secured Loans																	$	58,795	$	58,889

Second Lien Bank Debt/Senior Secured Loans
PhyMed Management LLC	Health Care Providers & Services		L+1500	(16)		1.00	%		16.00	%		12/18/2015		9/30/2022		37,819	$	37,757	$	36,874
Rug Doctor LLC (2)	Diversified Consumer Services		L+975	(11)		1.50	%		11.25	%		12/23/2013		5/16/2023		11,828		11,819		11,829

Total Second Lien Bank Debt/Senior Secured Loans																	$	49,576	$	48,703

First Lien Life Science Senior Secured Loans
Alimera Sciences, Inc.	Pharmaceuticals		L+765			1.78	%		9.43	%		12/31/2019		7/1/2024	$	20,074	$	20,512	$	20,475
Arcutis Biotherapeutics, Inc.(3)	Pharamceuticals		L+745			0.10	%		7.55	%		12/22/2021		1/1/2027		21,735		21,645		21,637
Ardelyx, Inc.	Pharmaceuticals		L+745			0.25	%		7.70	%		5/10/2018		11/1/2022		14,972		16,198		16,170
Axcella Health Inc.	Pharmaceuticals		L+860			0.10	%		8.70	%		9/2/2021		9/1/2026		9,278		9,318		9,302
BridgeBio Pharma, Inc.(3)	Biotechnology		—			—			9.00	%		11/17/2021		11/17/2026		34,574		34,082		34,055
Centrexion Therapeutics, Inc.	Pharmaceuticals		L+725			2.45	%		9.70	%		6/28/2019		1/1/2024		16,400		16,693		16,728
Cerapedics, Inc.	Health Care Equipment & Supplies		L+695			2.50	%		9.45	%		3/22/2019		3/1/2025		26,861		27,518		27,465
Delphinus Medical Technologies, Inc.	Health Care Equipment & Supplies		L+850			1.00	%		9.50	%		8/18/2017		6/1/2022		1,089		1,414		1,405
Glooko, Inc.	Health Care Technology		L+790			0.10	%		8.00	%		9/30/2021		10/1/2026		8,364		8,339		8,322
Neuronetics, Inc.	Health Care Equipment & Supplies		L+765			1.66	%		9.31	%		3/2/2020		2/28/2025		15,613		15,874		15,878
OmniGuide Holdings, Inc. (13).	Health Care Equipment & Supplies		L+1405			0.10	%		14.15	%		7/30/2018		7/1/2023		18,879		17,845		18,958
Rezolute, Inc	Biotechnology		L+875			0.12	%		8.87	%		4/14/2021		4/1/2026		5,675		5,663		5,661
Rubius Therapeutics, Inc. (3)	Pharmaceuticals		L+550			2.10	%		7.60	%		12/21/2018		6/1/2026		40,291		41,103		41,097
scPharmaceuticals, Inc.	Pharmaceuticals		L+795			2.23	%		10.18	%		9/17/2019		9/17/2023		4,098		4,165		4,160
SOC Telemed, Inc.	Health Care Providers & Services		L+747			0.13	%		7.60	%		3/26/2021		4/1/2026		31,137		31,211		31,214

Total First Lien Life Science Senior Secured Loans																	$	271,580	$	272,527

Total Senior Secured Loans																	$	959,162	$	939,690

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)


Description	Industry	Interest Rate (1)	Acquisition Date	Maturity Date	Par Amount		Cost		Fair Value
Equipment Financing — 32.5%
Aero Operating LLC (10)	Commercial Services & Supplies	8.47-9.64%	2/12/2021	3/1/2025-12/1/2026	$	3,103	$	3,100	$	3,100
Air Methods Corporation (10)	Airlines	7.08-7.13%	11/3/2021	11/3/2026-11/23/2026		4,063		4,145		4,063
AmeraMex International, Inc. (10)	Commercial Services & Supplies	10.00%	3/29/2019	3/28/2022		3,149		3,148		3,180
Blackhawk Mining, LLC (10)	Oil, Gas & Consumable Fuels	10.97-11.16%	2/16/2018	3/1/2022-11/1/2022		1,642		1,615		1,636
Boart Longyear Company (10)	Metals & Mining	9.06-10.44%	5/28/2020	7/1/2024-1/1/2026		5,374		5,374		5,374
Capital City Jet Center, Inc. (10)	Airlines	10.00%	4/4/2018	10/4/2023-6/22/26		3,102		3,102		3,053
Champion Air, LLC (10)	Airlines	10.00%	3/19/2018	1/1/2023		1,685		1,685		1,685
Clubcorp Holdings, Inc. (10)	Hotels, Restaurants & Leisure	8.87-9.41%	5/27/2021	6/1/2025-1/1/2027		4,326		4,326		4,326
Dongwon Autopart Technology Inc. (10)	Auto Components	7.96%	2/2/2021	1/1/2026		2,347		2,382		2,347
EasyPak, LLC (10)	Containers & Packaging	9.01%	1/6/2021	1/1/2024		616		616		616
Environmental Protection & Improvement Company, LLC (10)	Road & Rail	8.25%	9/30/2020	10/1/2027		5,921		5,959		5,921
Equipment Operating Leases, LLC (2)(12)	Multi-Sector Holdings	7.53-8.37%	4/27/2018	8/1/2022-4/27/2025		19,671		19,671		18,939
First American Commercial Bancorp, Inc. (10)	Diversified Financial Services	7.50%	10/28/2021	11/1/2026		2,487		2,492		2,487
First National Capital, LLC (10)	Diversified Financial Services	9.00%	11/5/2021	8/1/2026		8,681		8,681		8,681
Freightsol LLC (10)	Road & Rail	12.51-12.89%	4/9/2019	11/1/2023		1,364		1,381		1,364
Garda CL Technical Services, Inc. (10)	Commercial Services & Supplies	8.30-8.77%	3/22/2018	6/5/2023-10/5/2023		1,245		1,245		1,242
Georgia Jet, Inc. (10)	Airlines	8.00%	12/4/2017	1/4/2024		795		795		795
GMT Corporation (10)	Machinery	10.71%	10/23/2018	10/1/2025		5,476		5,484		5,476
Haljoe Coaches USA, LLC (10)	Road & Rail	8.53%	7/31/2017	7/1/2024		1,061		1,061		915
Hawkeye Contracting Company, LLC (10)	Construction & Engineering	10.50%	10/8/2021	11/1/2025		1,252		1,252		1,252
HTI Logistics Corporation (10)	Commercial Services & Supplies	9.69-9.94%	11/15/2018	5/1/2024-9/1/2025		414		414		404
International Automotive Components Group, North America, Inc. (10)	Auto Components	7.95%	6/23/2021	6/23/2025		8,184		8,250		8,184
Kool Pak, LLC (10)	Road & Rail	8.58%	2/5/2018	3/1/2024		345		345		345
Loyer Capital LLC (2)(12)	Multi-Sector Holdings	8.73-11.52%	5/16/2019	5/16/24-9/25/24		11,000		11,000		10,725
Lux Credit Consultants, LLC (10)	Road & Rail	8.28-9.65%	6/17/2021	12/1/2024-12/1/2025		9,343		9,343		9,343
Lux Vending, LLC (10)	Consumer Finance	12.46-13.26%	8/20/2021	8/20/2024-10/1/2024		2,526		2,583		2,526
Mountain Air Helicopters, Inc. (10)	Commercial Services & Supplies	10.00%	7/31/2017	2/28/2025		479		476		479
Rane Light Metal Castings Inc. (10)	Machinery	10.00%	6/1/2020	7/1/2024		253		253		253
Rango, Inc. (10)	Commercial Services & Supplies	9.33-9.79%	9/24/2019	4/1/2023-11/1/2024		3,615		3,656		3,547
Rossco Crane & Rigging, Inc. (10)	Commercial Services & Supplies	11.53%	8/25/2017	9/1/2022		126		126		126
Royal Coach Lines, Inc.(10)	Road & Rail	9.56%	11/21/2019	8/1/2025		1,041		1,041		950
Royal Express Inc. (10)	Road & Rail	9.53%	1/17/2019	2/1/2024		683		690		683
Sidelines Tree Service LLC (10)	Diversified Consumer Services	10.25%	7/31/2017	10/1/2022		46		46		45
South Texas Oilfield Solutions, LLC (10)	Energy Equipment & Services	12.52-13.76%	3/29/2018	9/1/2022-7/1/2023		1,363		1,363		1,338
ST Coaches, LLC (10)	Road & Rail	8.22-8.58%	7/31/2017	10/1/2022-1/25/2025		1,951		1,951		1,839
Stafford Logistics, Inc. (10)	Commercial Services & Supplies	12.62%	9/11/2019	2/15/2026		7,094		7,094		7,094
Star Coaches Inc. (10)	Road & Rail	8.42%	3/9/2018	4/1/2025		3,401		3,401		2,916
Sturgeon Services International Inc. (10)	Energy Equipment & Services	18.38%	7/31/2017	2/28/2022		132		132		125
Superior Transportation, Inc. (10)	Road & Rail	10.22-10.62%	7/31/2017	1/1/2026		4,578		4,578		4,578
Tailwinds, LLC (10)	Air Freight & Logistics	8.50-9.00%	7/26/2019	8/1/2024-10/16/2025		2,267		2,267		2,267
The Smedley Company & Smedley Services, Inc. (10)	Commercial Services & Supplies	10.21-15.36%	7/31/2017	10/29/2023-2/10/2024		3,798		3,800		3,536
Trinity Equipment Rentals, Inc. (10)	Commercial Services & Supplies	7.94-8.75%	10/8/2021	11/1/2024-12/1/2026		777		777		777
Trolleys, Inc. (10)	Road & Rail	9.99%	7/18/2018	8/1/2022		1,573		1,573		1,540
Up Trucking Services, LLC (10)	Road & Rail	11.21%	3/23/2018	8/1/2024		696		705		696
Warrior Crane Services, LLC (10)	Commercial Services & Supplies	8.95%	7/11/2019	8/1/2024-8/1/2026		2,567		2,567		2,518
Wind River Environmental, LLC (10)	Diversified Consumer Services	8.43-10.00%	7/31/2019	8/1/2024-10/5/25		870		873		870
Womble Company, Inc. (10)	Energy Equipment & Services	9.11%	12/27/2019	1/1/2025		547		547		537

					Shares/Units
SLR Equipment Finance Equity Interests (2)(9)*	Multi-Sector Holdings		7/31/2017			200		145,000		129,102

Total Equipment Financing							$	292,365	$	273,795

Preferred Equity – 0.7%
SOAGG LLC (2)(3)(4)	Aerospace & Defense	8.00%	12/14/2010	6/30/2023		446	$	446	$	1,121
SOINT, LLC (2)(3)(4)	Aerospace & Defense	5.00% (11)	6/8/2012	6/30/2023		56,030		5,603		4,509

Total Preferred Equity							$	6,049	$	5,630

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands, except share/unit amounts)


Description	Industry	Acquisition Date		Shares/Units		Cost		Fair Value
Common Equity/Equity Interests/Warrants—53.6%
aTyr Pharma, Inc. Warrants *	Pharmaceuticals		11/18/2016		6,347	$	106	$	—
CardioFocus, Inc. Warrants *	Health Care Equipment & Supplies		3/31/2017		90		51		—
Centrexion Therapeutics, Inc. Warrants *	Pharmaceuticals		6/28/2019		289,102		136		65
Conventus Orthopaedics, Inc. Warrants *	Health Care Equipment & Supplies		6/15/2016		157,500		65		—
Delphinus Medical Technologies, Inc. Warrants *	Health Care Equipment & Supplies		8/18/2017		444,388		74		80
Essence Group Holdings Corporation (Lumeris) Warrants *	Health Care Technology		3/22/2017		208,000		63		258
KBH Topco LLC (Kingsbridge) (2)(5)	Multi-Sector Holdings		11/3/2020		73,500,000		136,596		145,996
RD Holdco Inc. (Rug Doctor) (2)*	Diversified Consumer Services		12/23/2013		231,177		15,683		—
RD Holdco Inc. (Rug Doctor) Class B (2)*	Diversified Consumer Services		12/23/2013		522		5,216		5,216
RD Holdco Inc. (Rug Doctor) Warrants (2)*	Diversified Consumer Services		12/23/2013		30,370		381		—
Senseonics Holdings, Inc. (3)(8)*	Health Care Equipment & Supplies		7/25/2019		406,923		117		1,086
SLR Credit Solutions (2)(3)	Diversified Financial Services		12/28/2012		280,303		280,737		298,766
Venus Concept Ltd. Warrants* (f/k/a Restoration Robotics)	Health Care Equipment & Supplies		5/10/2018		27,352		152		—

Total Common Equity/Equity Interests/Warrants						$	439,377	$	451,467

Total Investments (6) — 198.3%						$	1,696,953	$	1,670,582


Description	Industry		Acquisition Date		Maturity Date		Par Amount
Cash Equivalents — 38.0%
U.S. Treasury Bill		Government		12/31/2021		1/25/2022	$	320,000	$	320,000	$	320,000

Total Investments & Cash Equivalents —236.3%									$	2,016,953	$	1,990,582
Liabilities in Excess of Other Assets — (136.3%)												(1,148,301	)

Net Assets — 100.0%											$	842,281

(1)

Floating rate debt investments typically bear interest at a rate determined by reference to the London Interbank Offered Rate (“LIBOR”), and which typically reset monthly, quarterly or semi-annually. For each debt investment we have provided the current rate of interest, or in the case of leases the current implied yield, in effect as of December 31, 2021.

(2)

Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the Investment Company Act of 1940, as amended (“1940 Act”), due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2021 in these controlled investments are as follows:


Name of Issuer	Fair Value at December 31, 2020		Gross Additions		Gross Reductions		Realized Gain (Loss)		Change in Unrealized Gain (Loss)			Interest/ Dividend Income		Fair Value at December 31, 2021
AviatorCap SII, LLC	$	2,941	$	—	$	2,941	$	—	$	—		$	92	$	—
Equipment Operating Leases, LLC		25,540		—		6,667		—		66			1,950		18,939
Kingsbridge Holdings, LLC		80,000		—		—		—		(79	)		6,568		80,000
KBH Topco, LLC (Kingsbridge)		136,596		—		—		—		9,400			13,250		145,996
Loyer Capital LLC		14,456		—		3,731		—		—			1,426		10,725
RD Holdco Inc. (Rug Doctor, common equity)		1,226		—		—		—		(1,226	)		—		—
RD Holdco Inc. (Rug Doctor, class B)..		5,216		—		—		—		—			—		5,216
RD Holdco Inc. (Rug Doctor, warrants)..		—		—		—		—		—			—		—
Rug Doctor LLC		10,559		1,270		—		—		(6	)		1,300		11,829
SLR Credit Solutions		296,766		—		—		—		2,000			22,500		298,766
SLR Equipment Finance (equity)		129,102		—		—		—		—			—		129,102
SLR Equipment Finance (debt)		850		—		850		—		—			42		—
SOAGG LLC		2,300		—		—		—		(1,179	)		1,543		1,121
SOINT, LLC		4,101		271		—		—		137			271		4,509

	$	709,653	$	1,541	$	14,189	$	—	$	9,113		$	48,942	$	706,203

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands)

(3)

follow-on

investments in existing portfolio companies or could be required to dispose of investments at inappropriate times in order to comply with the 1940 Act. As of December 31, 2021, on a fair value basis,

non-qualifying

assets in the portfolio represented 23.1% of the total assets of the Company.

(4)	The Company’s investments in SOAGG, LLC and SOINT, LLC include a two and one dollar investment in common shares, respectively.

(5)	Kingsbridge Holdings, LLC is held through KBH Topco LLC, a Delaware corporation.

(6)

Aggregate net unrealized appreciation for U.S. federal income tax purposes is $19,495; aggregate gross unrealized appreciation and depreciation for U.S. federal tax purposes is $82,598 and $63,103, respectively, based on a tax cost of $1,651,087. Unless otherwise noted, all of the Company’s investments are pledged as collateral against the borrowings outstanding on the senior secured credit facility. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act. All investments are Level 3 unless otherwise indicated.

(7)	Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or PRIME rate. These instruments are often subject to a LIBOR or PRIME rate floor.

(8)	Denotes a Level 1 investment.

(9)	SLR Equipment Finance is held through NEFCORP LLC, a wholly-owned consolidated taxable subsidiary and NEFPASS LLC, a wholly-owned consolidated subsidiary.

(10)	Indicates an investment that is wholly held by the Company through NEFPASS LLC.

(11)	Interest is paid in kind (“PIK”).

(12)	Denotes a subsidiary of SLR Equipment Finance.

(13)	OmniGuide Holdings, Inc., Domain Surgical, Inc. and OmniGuide, Inc. are co-borrowers.

(14)	AmeriMark Interactive, LLC, AmeriMark Direct LLC, AmeriMark Intermediate Sub, Inc., L.T.D. Commodities LLC, Dr. Leonard’s Healthcare Corp. and Amerimark Intermediate Holdings, LLC are each co-Borrowers.

(15)	Spread is 6.00% Cash / 2.00% PIK.

(16)	Spread is 2.50% Cash / 12.50% PIK.

(17)	Spread is 5.50% Cash / 0.50% PIK.

*	Non-income producing security.

**	Investment is on non-accrual status.

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2021

(in thousands)


Industry Classification	Percentage of Total Investments (at fair value) as of December 31, 2021
Multi-Sector Holdings (includes Kingsbridge Holdings, LLC, SLR Equipment Finance, Equipment Operating Leases, LLC and Loyer Capital LLC)		24.8	%
Diversified Financial Services (includes SLR Credit Solutions)		20.7	%
Health Care Providers & Services		9.6	%
Pharmaceuticals		7.8	%
Software		5.0	%
Health Care Equipment & Supplies		5.0	%
Biotechnology		2.4	%
Wireless Telecommunication Services		2.2	%
Personal Products		2.0	%
Road & Rail		1.9	%
IT Services		1.9	%
Diversified Consumer Services		1.8	%
Insurance		1.6	%
Commercial Services & Supplies		1.6	%
Capital Markets		1.6	%
Auto Parts & Equipment		1.5	%
Internet & Catalog Retail		1.5	%
Packaged Foods & Meats		1.1	%
Life Sciences Tools & Services		1.0	%
Communications Equipment		0.9	%
Specialty Retail		0.7	%
Auto Components		0.6	%
Airlines		0.6	%
Health Care Technology		0.5	%
Machinery		0.3	%
Aerospace & Defense		0.3	%
Metals & Mining		0.3	%
Hotels, Restaurants & Leisure		0.3	%
Consumer Finance		0.1	%
Air Freight & Logistics		0.1	%
Energy Equipment & Services		0.1	%
Oil, Gas & Consumable Fuels		0.1	%
Construction & Engineering		0.1	%
Containers & Packaging		0.0	%

Total Investments		100.0	%

See notes to consolidated financial statements.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2022

(in thousands, except share amounts)

Note 1. Organization

Solar Capital LLC, a Maryland limited liability company, was formed in February 2007 and commenced operations on March 13, 2007 with initial capital of $1,200,000 of which 47.04% was funded by affiliated parties.

Immediately prior to our initial public offering, through a series of transactions, SLR Investment Corp. (the “Company”, “we”, “us” or “our”), merged with Solar Capital LLC, leaving SLR Investment Corp. as the surviving entity (the

“Pre-IPO

Merger”). SLR Investment Corp. issued an aggregate of approximately 26.65 million shares of common stock and $125,000 in senior unsecured notes to the existing Solar Capital LLC unit holders in connection with the

Pre-IPO

Merger. SLR Investment Corp. had no assets or operations prior to completion of the

Pre-IPO

Merger and as a result, the historical books and records of Solar Capital LLC have become the books and records of the surviving entity. The number of shares used to calculate weighted average shares for use in computations on a per share basis have been decreased retroactively by a factor of approximately 0.4022 for all periods prior to February 9, 2010. This factor represents the effective impact of the reduction in shares resulting from the

Pre-IPO

Merger.

SLR Investment Corp., a Maryland corporation formed in November 2007, is a

closed-end,

externally managed,

non-diversified

management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in FASB Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

On February 9, 2010, the Company priced its initial public offering, selling 5.68 million shares of common stock, including the underwriters’ over-allotment, at a price of $18.50 per share. Concurrent with this offering, the Company’s senior management purchased an additional 600,000 shares through a private placement, also at $18.50 per share.

The Company’s investment objective is to maximize both current income and capital appreciation through debt and equity investments. The Company directly and indirectly invests primarily in leveraged middle market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded.

On December 1, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with SLR Senior Investment Corp., a Maryland corporation (“SUNS”), Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, SLR Capital Partners, LLC (the “Investment Adviser”). The Merger Agreement provided that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger,”) and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). The Mergers closed on April 1, 2022. See Note 16 for additional information.

Note 2. Significant Accounting Policies

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”), and include the accounts of the Company and certain wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of the operations and financial condition for the periods presented. All significant intercompany balances and transactions have been eliminated. Certain prior period amounts may have been reclassified to conform to the current period presentation.

Interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form

10-Q

and Regulation

S-X,

as appropriate. Accordingly, they may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2022.

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements, have been included.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The significant accounting policies consistently followed by the Company are:

(a)	Investment transactions are accounted for on the trade date;

(b)

Under procedures established by the board of directors (the “Board”), we value investments, including certain senior secured debt, subordinated debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). A market quotation is readily available for a security only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. If the Company anticipates using a market quotation for a security, it will also monitor for circumstances that may necessitate the use of fair value, such as significant events that may cause concern over the reliability of a market quotation]. We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). We utilize

mid-market

pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are deemed not to represent fair value, we may utilize independent third-party valuation firms to assist us in determining the fair value of material assets. Accordingly, such investments go through our multi-step valuation process as described below. In each such case, independent valuation firms, that may from time to time be engaged by the Board, consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations. Debt investments with maturities of 60 days or less shall each be valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value, unless such valuation, in the judgment of the Investment Adviser, does not represent fair value, in which case such investments shall be valued at fair value as determined in good faith by or under the direction of the Board. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board. Such determination of fair values involves subjective judgments and estimates.

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

(1)

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

(2)

preliminary valuation conclusions are then documented and discussed with senior management of the Investment Adviser;

(3)

independent valuation firms engaged by the Board conduct independent appraisals and review the Investment Adviser’s preliminary valuations and make their own independent assessment for all material assets;

(4)

the audit committee of the Board reviews the preliminary valuation of the Investment Adviser and that of the independent valuation firm and responds to the valuation recommendation of the independent valuation firm, if any, to reflect any comments; and

(5)

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

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

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

820-10,

certain investments that qualify as investment companies in accordance with ASC 946, may be valued using net asset value as a practical expedient for fair value. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation approaches to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. For the nine months ended September 30, 2022, there has been no change to the Company’s valuation approaches or techniques and the nature of the related inputs considered in the valuation process.

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

Level

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

Level

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

Level

: Unobservable inputs for the asset or liability.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined 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 each investment. The exercise of judgment is based in part on our knowledge of the asset class and our prior experience.

(c)	Gains or losses on investments are calculated by using the specific identification method.

(d)

The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Loan origination fees, original issue discount, and market discounts are capitalized and we amortize such amounts into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record call premiums received on loans repaid as interest income when we receive such amounts. Capital structuring fees, amendment fees, consent fees, and any other

non-recurring

fee income as well as management fee and other fee income for services rendered, if any, are recorded as other income when earned.

(e)

The Company intends to comply with the applicable provisions of the Code pertaining to regulated investment companies to make distributions of taxable income sufficient to relieve it of substantially all U.S. federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will accrue excise tax on such estimated excess taxable income as appropriate.

(f)

Book and tax basis differences relating to stockholder distributions and other permanent book and tax differences are typically reclassified among the Company’s capital accounts annually. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.

(g)	Distributions to common stockholders are recorded as of the record date. The amount to be paid out as a distribution is determined by the Board. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually.

(h)

In accordance with Regulation

S-X

and ASC Topic 810—

Consolidation

, the Company consolidates its interest in controlled investment company subsidiaries, financing subsidiaries and certain wholly-owned holding companies that serve to facilitate investment in portfolio companies. In addition, the Company may also consolidate any controlled operating companies substantially all of whose business consists of providing services to the Company.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

(i)

The accounting records of the Company are maintained in U.S. dollars. Any assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. The Company will 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 market prices of securities held. Such fluctuations would be included with the net unrealized gain or loss from investments. The Company’s investments in foreign securities, if any, may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments in terms of U.S. dollars and therefore the earnings of the Company.

(j)

In accordance with ASC

835-30,

the Company reports origination and other expenses related to certain debt issuances as a direct deduction from the carrying amount of the debt liability. Applicable expenses are deferred and amortized using either the effective interest method or the straight-line method over the stated life. The straight-line method may be used on revolving facilities and/or when it approximates the effective yield method.

(k)

The Company may enter into forward exchange contracts in order to hedge against foreign currency risk. These contracts are

marked-to-market

by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled.

(l)	The Company records expenses related to shelf registration statements and applicable equity offering costs as prepaid assets. These expenses are typically charged as a reduction of capital upon the sale of shares or expensed, in accordance with ASC 946-20-25.

(m)

Investments that are expected to pay regularly scheduled interest in cash are generally placed on

non-accrual

status when principal or interest cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest cash payments will be collected. Such

non-accrual

investments are restored to accrual status if past due principal and interest are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining principal and interest obligations. Cash interest payments received on such investments may be recognized as income or applied to principal depending on management’s judgment.

(n)

The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less would qualify, with limited exceptions. The Company believes that certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents.

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update

No. 2020-04,

“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU

2020-04

is effective for all entities as of March 12, 2020 through December 31, 2022. The Company has determined that the adoption of this guidance has not had a material impact on the Company’s consolidated financial statements and disclosures.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 3. Agreements

The Company has an investment advisory and management agreement (the “Advisory Agreement”) with the Investment Adviser, under which the Investment Adviser will manage the

day-to-day

operations of, and provide investment advisory services to the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and a performance-based incentive fee. The base management fee is determined by taking the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters calculated at an annual rate of 1.50% on gross assets up to 200% of the Company’s total net assets as of the immediately preceding quarter end and 1.00% on gross assets that exceed 200% of the Company’s total net assets as of the immediately preceding quarter end. For purposes of computing the base management fee, gross assets exclude temporary assets acquired at the end of each fiscal quarter for purposes of preserving investment flexibility in the next fiscal quarter. Temporary assets include, but are not limited to, U.S. treasury bills, other short-term U.S. government or government agency securities, repurchase agreements or cash borrowings.

The performance-based incentive fee has two parts, as follows: one part is calculated and payable quarterly in arrears based on the Company’s

pre-incentive

fee net investment income for the immediately preceding calendar quarter. For this purpose,

pre-incentive

fee net investment income means interest income, dividend 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 that we receive from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the performance-based incentive fee).

Pre-incentive

fee net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation.

Pre-incentive

fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7% annualized). The Company pays the Investment Adviser a performance-based incentive fee with respect to the Company’s

pre-incentive

fee net investment income in each calendar quarter as follows: (1) no performance-based incentive fee in any calendar quarter in which the Company’s

pre-incentive

fee net investment income does not exceed the hurdle rate; (2) 100% of the Company’s

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; and (3) 20% of the amount of the Company’s

pre-incentive

fee net investment income, if any, that exceeds 2.1875% in any calendar quarter. These calculations are appropriately

pro-rated

for any period of less than three months.

The second part of the performance-based incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Advisory Agreement, as of the termination date), and will equal 20% of the Company’s cumulative realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross

investment-by-investment

basis at the end of each calendar year) and all net capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the Investment Adviser. For financial statement purposes, the second part of the performance-based incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital appreciation. No accrual was required for the three and nine months ended September 30, 2022 and 2021.

For the three and nine months ended September 30, 2022, the Company recognized $7,890 and $22,019, respectively, in base management fees and $4,965 and $9,699, respectively, in gross performance-based incentive fees. For the three and nine months ended September 30, 2022, $194 and $1,552 of such performance-based incentive fees were waived. For the three and nine months ended September 30, 2021, the Company recognized $7,142 and $20,842, respectively, in base management fees and $698 and $8,444, respectively, in performance-based incentive fees. The Investment Adviser has agreed to waive incentive fees resulting from income earned due to the accretion of purchase discount allocated to investments acquired as a result of the Merger. Fees waived pursuant to the above are not subject to recoupment by the Investment Adviser.

The Company has also entered into an Administration Agreement with SLR Capital Management, LLC (the “Administrator”) under which the Administrator provides administrative services to the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent. The Administrator will also provide, on the Company’s behalf, managerial assistance to those portfolio companies to which the Company is required to provide such assistance. The Company typically reimburses the Administrator on a quarterly basis.

For the three and nine months ended September 30, 2022, the Company recognized expenses under the Administration Agreement of $1,132 and $3,684 respectively. For the three and nine months ended September 30, 2021, the Company recognized expenses under the Administration Agreement of $1,435 and $4,170 respectively. No managerial assistance fees were accrued or collected for the three and nine months ended September 30, 2022 and 2021.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 4. Net Asset Value Per Share

At September 30, 2022, the Company’s total net assets and net asset value per share were $1,006,225 and $18.37, respectively. This compares to total net assets and net asset value per share at December 31, 2021 of $842,281 and $19.93, respectively.

Note 5. Earnings Per Share

The following table sets forth the computation of basic and diluted net increase in net assets per share resulting from operations, pursuant to ASC

260-10,

for the three and nine months ended September 30, 2022 and 2021:


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022			2021
Earnings (loss) per share (basic & diluted)
Numerator - net increase (decrease) in net assets resulting from operations:	$	13,528	$	13,371	$	(655	)	$	53,448
Denominator - weighted average shares:		54,772,651		42,260,826		50,647,874			42,260,826
Earnings (loss) per share:	$	0.25	$	0.32	($	0.01	)	$	1.26

Note 6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuations used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level

Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level

Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in

non-active

markets;

Pricing models whose inputs are observable for substantially the full term of the asset or liability; and

Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level

Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party valuation firm’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).

Gains and losses for assets and liabilities categorized within the Level 3 table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

A review of 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. Such reclassifications involving Level 3 assets and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as Level 1.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of September 30, 2022 and December 31, 2021:

Fair Value Measurements

As of September 30, 2022


	Level 1		Level 2		Level 3		Total
Assets:
Senior Secured Loans	$	—	$	—	$	1,352,503	$	1,352,503
Equipment Financing		—		—		238,553		238,553
Preferred Equity		—		—		4,176		4,176
Common Equity/Equity Interests/Warrants		620		—		559,509		560,129

Total Investments$	$	620	$	—	$	2,154,741	$	2,155,361

Fair Value Measurements

As of December 31, 2021


	Level 1		Level 2		Level 3		Total
Assets:
Senior Secured Loans	$	—	$	—	$	939,690	$	939,690
Equipment Financing		—		—		273,795		273,795
Preferred Equity		—		—		5,630		5,630
Common Equity/Equity Interests/Warrants		1,086		—		450,381		451,467

Total Investments$	$	1,086	$	—	$	1,669,496	$	1,670,582

Liabilities:
2022 Unsecured Notes	$	—	$	—	$	150,000	$	150,000

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The following tables provide a summary of the changes in fair value of Level 3 assets and liabilities for the three and nine months ended September 30, 2022, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at September 30, 2022:

Fair Value Measurements Using Level 3 Inputs


	Senior Secured Loans			Equipment Financing			Preferred Equity			Common Equity/ Equity Interests/ Warrants			Total
Fair value, June 30, 2022	$	1,178,247		$	255,978		$	4,405		$	554,597		$	1,993,227
Total gains or losses included in earnings:
Net realized loss		(37,231	)		—			—			—			(37,231	)
Net change in unrealized gain (loss)		34,518			(3,849	)		59			(139	)		30,589
Purchase of investment securities		228,399			15,581			67			5,051			249,098
Proceeds from dispositions of investment securities		(51,430	)		(29,157	)		(355	)		—			(80,942	)
Transfers in/out of Level 3		—			—			—			—			—

Fair value, September 30, 2022	$	1,352,503		$	238,553		$	4,176		$	559,509		$	2,154,741

Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)	$	781		$	(3,849	)	$	59		$	(139	)	$	(3,148	)


	Senior Secured Loans			Equipment Financing			Preferred Equity			Common Equity/ Equity Interests/ Warrants			Total
Fair value, December 31, 2021	$	939,690		$	273,795		$	5,630		$	450,381		$	1,669,496
Total gains or losses included in earnings:
Net realized loss		(37,191	)		—			—			—			(37,191	)
Net change in unrealized loss		(1,890	)		(6,828	)		(658	)		(7,121	)		(16,497	)
Purchase of investment securities(1)		639,306			44,202			202			116,249			799,959
Proceeds from dispositions of investment securities		(187,412	)		(72,616	)		(998	)		—			(261,026	)
Transfers in/out of Level 3		—			—			—			—			—

Fair value, September 30, 2022	$	1,352,503		$	238,553		$	4,176		$	559,509		$	2,154,741

Unrealized losses for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized loss	$	(2,744	)	$	(6,828	)	$		(658)	$	(7,121	)	$	(17,351	)

(1)	Includes positions acquired from SUNS as a result of the Merger.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The following table shows a reconciliation of the beginning and ending balances for fair valued liabilities measured using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2022:


2022 Unsecured Notes	For the three months ended September 30, 2022
Beginning fair value	$	—
Net realized (gain) loss		—
Net change in unrealized (gain) loss		—
Borrowings		—
Repayments		—
Transfers in/out of Level 3		—

Ending fair value	$	—


2022 Unsecured Notes	For the nine months ended September 30, 2022
Beginning fair value	$	150,000
Net realized (gain) loss		—
Net change in unrealized (gain) loss		—
Borrowings		—
Repayments		(150,000	)
Transfers in/out of Level 3		—

Ending fair value	$	—

The Company made an election to apply the fair value option of accounting to the 2022 Unsecured Notes, in accordance with ASC

825-10.

On May 8, 2022, the borrowings were repaid in full.

The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2021, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2021:

Fair Value Measurements Using Level 3 Inputs


	Senior Secured Loans			Equipment Financing			Preferred Equity			Common Equity/ Equity Interests/ Warrants			Total
Fair value, December 31, 2020	$	798,052		$	284,846		$	6,401		$	440,971		$	1,530,270
Total gains or losses included in earnings:
Net realized gain (loss)		—			(8	)		—			345			337
Net change in unrealized gain (loss)		(13,567	)		1,394			(1,042	)		9,857			(3,358	)
Purchase of investment securities		533,614			76,700			271			—			610,585
Proceeds from dispositions of investment securities		(378,409	)		(89,137	)		—			(675	)		(468,221	)
Transfers in/out of Level 3 (1)		—			—			—			(117	)		(117	)

Fair value, December 31, 2021	$	939,690		$	273,795		$	5,630		$	450,381		$	1,669,496

Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)	$	(12,837	)	$	1,394		$	(1,042	)	$	9,597		$	(2,888	)

(1)	On February 17, 2021, the Company exercised its warrants in Senseonics Holdings, Inc., receiving shares in the common stock of Senseonics Holdings, Inc. The common stock of Senseonics Holdings, Inc. is publicly traded, so this position is considered to be a Level 1 asset.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The following table shows a reconciliation of the beginning and ending balances for fair valued liabilities measured using significant unobservable inputs (Level 3) for the year ended December 31, 2021:


2022 Unsecured Notes	For the year ended December 31, 2021
Beginning fair value	$	150,000
Net realized (gain) loss		—
Net change in unrealized (gain) loss		—
Borrowings		—
Repayments		—
Transfers in/out of Level 3		—

Ending fair value	$	150,000

The Company made elections to apply the fair value option of accounting to the 2022 Unsecured Notes, in accordance with ASC

825-10.

On December 31, 2021, there were borrowings of $150,000 on the 2022 Unsecured Notes.

Quantitative Information about Level 3 Fair Value Measurements

The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms and risks associated with an investment. Among other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company.

Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (“EBITDA”) multiples of similar companies, and comparable market transactions for equity securities.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of September 30, 2022 is summarized in the table below:

Asset or
Liability

Fair Value at
September 30, 2022

Principal Valuation
Technique/Methodology

Unobservable Input

Range (Weighted
Average)

Senior Secured Loans

Asset

1,320,263

32,240

Income Approach

Market Multiple

(1)

Market Yield

Comparable Multiple

7.6% – 17.8% (10.9%)

0.1x-21.4x(12.0x)

Equipment Financing

Asset

117,733

120,820

Income Approach

Market Multiple

(2)

Market Yield

Comparable Multiple

8.5% – 9.7% (9.7%)

1.0x-1.28x

(1.14x)

Preferred Equity

Asset

4,176

Income Approach

Market Yield

5.0% – 5.0% (5.0%)

Common Equity/Equity Interests/Warrants

Asset

147,629

411,880

Market Multiple

(3)

Market Approach

Comparable Multiple

Return on Equity

7.0x – 9.3x (8.1x)

6.3% – 37.7% (9.7%)

(1)	Investments are valued using a sum-of-the parts analysis, using expected revenue multiples for certain segments of the businesses and expected EBITDA multiples for certain segments of the businesses.

(2)	Includes $120,820 of investments valued using a transaction multiple.

(3)	Includes $624 of investments valued using a Black-Scholes model and $147,005 of investments valued using an EBITDA multiple.

Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2021 is summarized in the table below:

Asset or
Liability

Fair Value at
December 31, 2021

Principal Valuation
Technique/Methodology

Unobservable Input

Range (Weighted
Average)

Senior Secured Loans

Asset

931,769

7,921

Income Approach

Market Multiple

(1)

Market Yield

Comparable Multiple

4.0% – 19.6% (8.7%)

2.0x-3.0x(2.5x)/2.0x-3.0x(2.5x)

Equipment Financing

Asset

144,693

129,102

Income Approach

Market Approach

Market Yield

Return on Equity

7.1% – 20.3% (9.8%)

4.6%-4.6%

(4.6%)

Preferred Equity

Asset

5,630

Income Approach

Market Yield

3.5% – 8.0% (4.4%)

Common Equity/Equity Interests/Warrants

Asset

151,615

298,766

Market Multiple

(2)

Market Approach

Comparable Multiple

Return on Equity

5.8x – 10.5x (9.5x)

6.1% – 18.5% (8.6%)

2022 Unsecured Notes

Liability

150,000

Income Approach

Market Yield

2.2% – 4.6% (4.5%)

(1)	Investments are valued using a sum-of-the parts analysis, using expected EBITDA multiples (2x-3x) for certain segments of the business and expected revenue multiples (2x-3x) for certain segments of the business.

(2)	Includes $403 of investments valued using a Black-Scholes model and $151,212 of investments valued using an EBITDA multiple.

Significant increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs used in deriving

bid-ask

spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities. Generally, an increase in market yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 7. Debt

Our debt obligations consisted of the following as of September 30, 2022 and December 31, 2021:


	September 30, 2022					December 31, 2021
Facility	Face Amount		Carrying Value			Face Amount		Carrying Value
Credit Facility	$	460,000	$	454,868	(1)	$	322,500	$	318,015	(1)
SPV Credit Facility		130,200		129,236	(2)		—		—
2022 Unsecured Notes		—		—			150,000		150,000
2022 Tranche C Notes		21,000		20,991	(3)		21,000		20,964	(3)
2023 Unsecured Notes		75,000		74,881	(4)		75,000		74,592	(4)
2024 Unsecured Notes		125,000		124,350	(5)		125,000		124,143	(5)
2025 Unsecured Notes		85,000		84,572	(6)		—		—
2026 Unsecured Notes		75,000		74,468	(7)		75,000		74,384	(7)
2027 Unsecured Notes		50,000		49,950	(8)		50,000		49,940	(8)
2027 Series F Unsecured Notes		135,000		134,975	(9)		—		—

	$	1,156,200	$	1,148,291		$	818,500	$	812,038

(1)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $5,132 and $4,485 as of September 30, 2022 and December 31, 2021, respectively.

(2)	Carrying Value equals the Face Amount net of unamortized market discount of $964 as of September 30, 2022.

(3)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $9 and $36 as of September 30, 2022 and December 31, 2021, respectively.

(4)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $119 and $408 as of September 30, 2022 and December 31, 2021, respectively.

(5)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $650 and $857 as of September 30, 2022 and December 31, 2021, respectively.

(6)	Carrying Value equals the Face Amount net of unamortized market discount of $428 as of September 30, 2022.

(7)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $532 and $616 as of September 30, 2022 and December 31, 2021, respectively.

(8)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $50 and $60 as of September 30, 2022 and December 31, 2021, respectively.

(9)	Carrying Value equals the Face Amount net of unamortized debt issuance costs of $25 as of September 30, 2022.

Unsecured Notes

On April 1, 2022, the Company entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to the Company’s assumption of $85,000 in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase Agreement”), among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, the Company expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.

On January 6, 2022, the Company closed a private offering of $135,000 of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On September 14, 2021, the Company closed a private offering of $50,000 of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027. Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

On December 18, 2019, the Company closed a private offering of $125,000 of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024. Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 18, 2019, the Company closed a private offering of $75,000 of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21,000 of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022. Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28. The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75,000 in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73,846. Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018. The 2023 Unsecured Notes mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100,000 of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022. Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8. The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50,000 of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of

May 8, 2022

. Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8. The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers. The 2022 Unsecured Notes were repaid in full at maturity.

Revolving and Term Loan Facilities

On April 1, 2022, the Company entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to the Company’s assumption of the Revolving Credit Facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, the commitment under the SPV Credit Facility is $225,000; however, the commitment can also be expanded up to $600,000. The stated interest rate on the SPV Credit Facility is LIBOR plus

2.00%-2.50%

with no LIBOR floor requirement and the current final maturity date is June 1, 2026. The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, the Company as successor to SUNS, and SUNS SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. At September 30, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $130,200.

On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment, the Credit Facility is composed of $600,000 of revolving credit and $100,000 of term loans. Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of

1.75%-2.00%

or the alternate base rate plus

0.75%-1.00%.

The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year. The Credit Facility may be increased up to $800,000 with additional new lenders or an increase in commitments from current lenders. The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio. At September 30, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $460,000, composed of $360,000 of revolving credit and $100,000 of term loans.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The average annualized interest cost for all borrowings for the nine months ended September 30, 2022 and the year ended December 31, 2021 was 3.81% and 3.64%, respectively. These costs are exclusive of other credit facility expenses such as unused fees, agency fees and other prepaid expenses related to establishing and/or amending the Credit Facility, the SPV Credit Facility, the 2022 Unsecured Notes, the 2022 Tranche C Notes, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes (collectively the “Debt Instruments”), if any. The maximum amounts borrowed on the Debt Instruments during the nine months ended September 30, 2022 and the year ended December 31, 2021 were $1,157,100 and $902,550, respectively.

Note 8. Financial Highlights

The following is a schedule of financial highlights for the nine months ended September 30, 2022 and 2021:


	Nine months ended September 30, 2022			Nine months ended September 30, 2021
Per Share Data: (a)
Net asset value, beginning of year	$	19.93		$	20.16

Net investment income		1.06			1.09
Net realized and unrealized gain (loss)		(1.08	)*		0.18

Net increase (decrease) in net assets resulting from operations		(0.02	)		1.27
Issuance of common stock in connection with the Merger		(0.31	)		—
Distributions to stockholders:
From net investment income		(1.06	)		(1.23	)
From return of capital		(0.17	)		—

Net asset value, end of period	$	18.37		$	20.20

Per share market value, end of period	$	12.32		$	19.13
Total Return (b)(c)		(27.75	%)		16.46	%
Net assets, end of period	$	1,006,225		$	853,490
Shares outstanding, end of period		54,772,651			42,260,826
Ratios to average net assets (c):
Net investment income		5.51	%		5.38	%

Operating expenses		3.90	%**		4.23	%
Interest and other credit facility expenses		3.22	%		2.51	%

Total expenses		7.12	%**		6.74	%

Average debt outstanding	$	951,995		$	672,962
Portfolio turnover ratio		13.8	%		20.8	%

(a)	Calculated using the average shares outstanding method, except for the issuance of common stock in connection with the Merger, which reflects the actual amount per Share for the applicable period.

(b)

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 dividend reinvestment plan. The market price per share as of December 31, 2021 and December 31, 2020 was $18.43 and $17.51, respectively. Total return does not include a sales load.

(c)	Not annualized for periods less than one year.

*	The amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of the Merger.

**	The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of a permanent incentive fee waiver (see note 3).

For the nine months ended September 30, 2022, the ratios of operating expenses to average net assets and total expenses to average net assets would be 4.06% and 7.28%, respectively, without the incentive fee waiver.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 9. SLR Credit Solutions

On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275,000 in cash. Crystal Financial owned approximately 98% of the outstanding ownership interest in SLR Credit Solutions (“SLR Credit”), f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $400,000 at November 30, 2012 and a $275,000 committed revolving credit facility. On July 28, 2016, the Company purchased Crystal Management LP’s approximately 2% equity interest in SLR Credit for approximately $5,737. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved. As of September 30, 2022, total commitments to the revolving credit facility are $250,000.

As of September 30, 2022 SLR Credit had 27 funded commitments to 21 different issuers with total funded loans of approximately $354,853 on total assets of $375,603. As of December 31, 2021 SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately $287,375 on total assets of $347,821. As of September 30, 2022 and December 31, 2021, the largest loan outstanding totaled $34,178 and $35,000, respectively. For the same periods, the average exposure per issuer was $16,898 and $15,125, respectively. SLR Credit’s credit facility, which is

non-recourse

to the Company, had approximately $139,497 and $100,742 of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Credit had net income of $3,897 and $5,445, respectively, on gross income of $8,596 and $9,508, respectively. For the nine months ended September 30, 2022 and 2021, SLR Credit had net income of $8,557 and $12,497 respectively, on gross income of $22,171 and $27,239, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 10. Commitments and Contingencies

Off-Balance

Sheet Arrangements

The Company had unfunded debt and equity commitments to various revolving and delayed-draw term loans as well as to SLR Credit and SLR Healthcare. The total amount of these unfunded commitments as of September 30, 2022 and December 31, 2021 is $310,204 and $226,733, respectively, comprised of the following:


	September 30, 2022		December 31, 2021
SLR Credit Solutions*	$	44,263	$	44,263
Apeel Technology, Inc.		32,786		—
World Insurance Associates, LLC		25,554		—
CC SAG Holdings Corp. (Spectrum Automotive)		24,346		18,827
Human Interest, Inc.		20,104		—
Glooko, Inc.		17,868		25,091
Spectrum Pharmaceuticals, Inc.		12,279		—
iCIMS, Inc.		11,577		—
BridgeBio Pharma, Inc.		9,016		23,049
BDG Media, Inc.		8,573		—
RSC Acquisition, Inc.		8,553		—
Arcutis Biotherapeutics, Inc.		8,356		43,470
Atria Wealth Solutions, Inc.		8,215		3,746
Ardelyx, Inc.		7,752		—
Luxury Asset Capital, LLC		7,500		—
OIS Management Services, LLC		5,205		—
Vessco Midco Holdings, LLC		4,098		—
One Touch Direct, LLC		4,013		7,226
Kaseya, Inc.		3,936		—
Maurices, Incorporated		3,922		5,649
Foundation Consumer Brands, LLC		3,009		2,269
Inszone Mid, LLC		2,790		12,465
Kid Distro Holdings, LLC		2,650		2,650
Plastics Management, LLC		2,424		—
Pediatric Home Respiratory Services, LLC		2,380		—
Southern Orthodontic Partners Management, LLC		2,292		—
Basic Fun, Inc.		2,150		1,935
Copper River Seafoods, Inc.		2,043		—
Peter C. Foy & Associates Insurance Services, LLC		1,969		—
Orthopedic Care Partners Management, LLC		1,896		—
MMIT Holdings, LLC		1,894		2,009
SPAR Marketing Force, Inc.		1,613		—
Ivy Fertility Services, LLC		1,571		4,532
NAC Holdings Corporation		1,479		4,765
SLR Healthcare ABL*		1,400		—
RxSense Holdings LLC		1,250		—
Erie Construction Mid-west, LLC		1,247		—
Composite Technology Acquisition Corp.		1,139		—
Enverus Holdings, Inc.		1,004		—
SLR Equipment Finance		1,000		5,000
American Teleconferencing Services, Ltd.		914		573
SunMed Group Holdings, LLC		843		828
All State Ag Parts, LLC		730		—
Ultimate Baked Goods Midco LLC		551		801
BayMark Health Services, Inc.		391		—
Pinnacle Treatment Centers, Inc.		387		1,414
GSM Acquisition Corp.		365		—
High Street Buyer, Inc.		327		—
Tilley Distribution, Inc.		293		—
TAUC Management, LLC		287		—
RQM+ Corp.		—		3,818
Rezolute, Inc.		—		5,675
SOC Telemed, Inc.		—		4,448
Neuronetics, Inc.		—		2,230

Total Commitments	$	310,204	$	226,733

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

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

The credit agreements of the above loan commitments contain customary lending provisions and/or are subject to the portfolio company’s achievement of certain milestones that allow relief to the Company from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. As of September 30, 2022 and December 31, 2021, the Company had sufficient cash available and/or liquid securities available to fund its commitments and had reviewed them for any appropriate fair value adjustment.

Note 11. SLR Equipment Finance

On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies is doing business as SLR Equipment Finance (“SLR Equipment”). SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S. based companies. We invested $209,866 in cash to effect the transaction, of which $145,000 was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $64,866 was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. Concurrent with the transaction, SLR Equipment refinanced its existing senior secured credit facility into a $150,000

non-recourse

facility with an accordion feature to expand up to $250,000. In September 2019, SLR Equipment amended the facility, increasing commitments to $213,957 with an accordion feature to expand up to $313,957 and extended the maturity date of the facility to July 31, 2023.

As of September 30, 2022, SLR Equipment had 129 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $189,254 on total assets of $241,189. As of December 31, 2021, SLR Equipment had 135 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of approximately $210,986 on total assets of $264,007. As of September 30, 2022 and December 31, 2021, the largest position outstanding totaled $19,272 and $19,207, respectively. For the same periods, the average exposure per customer was $3,208 and $3,459, respectively. SLR Equipment’s credit facility, which is

non-recourse

to the Company, had approximately $110,997 and $118,002 of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and September 30, 2021, SLR Equipment had net income (loss) of $1,034 and ($306), respectively, on gross income of $6,486 and $5,809, respectively. For the nine months ended September 30, 2022 and September 30, 2021, SLR Equipment had net loss of $125 and $2,301, respectively, on gross income of $15,704 and $16,443, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 12. Capital Share Transactions

As of September 30, 2022 and September 30, 2021, 200,000,000 shares of $0.01 par value capital stock were authorized.

Transactions in capital stock were as follows:

Amount

Three months ended
September 30, 2022

Three months ended
September 30, 2021

Three months ended
September 30, 2022

Three months ended
September 30, 2021

Shares issued in connection with the Mergers

—

Net increase

—


	Shares				Amount
	Nine months ended September 30, 2022		Nine months ended September 30, 2021		Nine months ended September 30, 2022		Nine months ended September 30, 2021
Shares issued in connection with the Mergers		12,511,825		—	$	226,839	$	—

Net increase		12,511,825		—	$	226,839	$	—

Note 13. Kingsbridge Holdings, LLC

On November 3, 2020, the Company acquired an 87.5% equity interest in Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a newly formed Delaware corporation. KBH is a residual focused independent

mid-ticket

lessor of equipment primarily to U.S. investment grade companies. The Company invested $216,596 to effect the transaction, of which $136,596 was invested to acquire 87.5% of KBHT’s equity and $80,000 in KBH’s debt. The existing management team of KBH committed to continue to lead KBH after the transaction. Following the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHT’s equity.

As of September 30, 2022 and December 31, 2021, KBHT had total assets of $774,619 and $738,425, respectively. For the same periods, debt recourse to KBHT totaled $246,210 and $216,881, respectively, and

non-recourse

debt totaled $316,840 and $323,844, respectively. None of the debt is recourse to the Company. For the three months ended September 30, 2022 and 2021, KBHT had net income of $3,327 and $3,163, respectively, on gross income of $71,332 and $60,510, respectively. For the nine months ended September 30, 2022 and 2021, KBHT had net income of $10,393 and $10,314, respectively, on gross income of $215,074 and $180,079, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in KBHT’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that KBHT will be able to maintain consistent dividend payments to us.

Note 14. SLR Healthcare ABL

SUNS acquired an equity interest in SLR Healthcare ABL, f/k/a Gemino Healthcare Finance, LLC (“SLR Healthcare”) on September 30, 2013. SLR Healthcare is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small and

mid-sized

companies operating in the healthcare industry. SUNS initial investment in SLR Healthcare ABL was $32,839. The management team of SLR Healthcare

co-invested

in the transaction and continues to lead SLR Healthcare. As of September 30, 2022, SLR Healthcare’s management team and the Company own approximately 7% and 93% of the equity in SLR Healthcare, respectively. SLRC acquired SLR Healthcare in connection with the Merger on April 1, 2022.

Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year,

non-recourse,

$100,000 credit facility with

non-affiliates,

which was expandable to $150,000 under its accordion feature. Effective March 31, 2014, the credit facility was expanded to $105,000 and again on June 27, 2014 to $110,000. On May 27, 2016, SLR Healthcare entered into a new $125,000 credit facility which replaced the previously existing facility. The new facility has similar terms as compared to the previous facility and includes an accordion feature increase to $200,000 and had a maturity date of May 27, 2020. On June 28, 2019, this $125,000 facility was amended, extending the maturity date to June 28, 2023.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2022, the portfolio totaled approximat

ly $179,633

of commitments with a total net investment in loans of $81,360 on total assets of $93,010. As of December 31, 2021, the portfolio totaled approximately $183,501 of commitments with a total net investment in loans of $81,604 on total assets of $91,275. At September 30, 2022, the portfolio consisted of 37 issuers with an average balance of approximately $2,199 versus 36 issuers with an average balance of approximately $2,267 at December 31, 2021. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured,

cash-pay

loans. SLR Healthcare’s credit facility, which is

non-recourse

to us, had approximately $62,000 and $60,000 of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Healthcare had net income (loss) of $822 and ($40), respectively, on gross income of $3,020 and $2,631, respectively. For the nine months ended September 30, 2022 and 2021, SLR Healthcare had net income of $2,543 and $494, respectively, on gross income of $7,898 and $7,035, respectively. Due to timing and

non-cash

items, there

may

be material differences between GAAP net income and cash available for distributions.

Note 15. SLR Business Credit

SUNS acquired 100% of the equity interests of North Mill Capital LLC (“NMC”) on October 20, 2017. NMC is a leading asset-backed lending commercial finance company that provides senior secured asset-backed financings to U.S. based

small-to-medium-sized

businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51,000 to effect the transaction. Subsequently, SUNS contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and

medium-sized

businesses. As part of this transaction, SUNS 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15,500 transaction was financed with borrowings on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66,671 was financed with equity from SUNS of $19,000 and borrowings on NMC’s credit facility of $47,671. SLRC acquired SLR Business Credit in connection with the Merger on April 1, 2022.

SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of
September 30, 2022, the portfolio totaled approximately $554,171 of commitments, of which $295,973 were funded, on total assets of $346,278. As of
December 31, 2021, the portfolio totaled approximately $513,869 of commitments, of which $248,652 were funded, on total assets of $290,794. At
September 30, 2022, the portfolio consisted of 109 issuers with an average balance of approximately $2,715 versus 125 issuers with an average balance
of approximately $1,989 at December 31, 2021. NMC has a senior credit facility with a bank lending group for $240,000 which expires on
November 13, 2025. Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is

non-recourse

to us, had
approximately $237,510 and $183,252 of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months
ended September 30, 2022 and 2021, SLR Business Credit had net income of $1,977 and $2,577, respectively, on gross income of $7,607 and $6,857,
respectively. For the nine months ended September 30, 2022 and 2021, SLR Business Credit had net income of $5,703 and $4,737, respectively, on
gross income of $20,378 and $16,674, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income
and cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of originations, and
the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Note 16. Merger with SUNS

On December 1, 2021, we entered into the Merger Agreement, which provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS continuing as the surviving company and as our wholly-owned subsidiary and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company. Both the Board and SUNS’s board of directors, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of the independent directors of us or SUNS, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.

The Merger Agreement contains customary representations and warranties by each of us, SUNS and the Investment Adviser. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of our and SUNS’s businesses during the period prior to the closing of the Mergers.

Consummation of the Mergers, which occurred on April 1, 2022, was subject to certain closing conditions as disclosed in the Merger Agreement.

On April 1, 2022, the Company completed its previously announced acquisition of SUNS. Pursuant to the Merger Agreement, Merger Sub was first merged with and into SUNS, with SUNS as the surviving corporation, and, immediately following the Merger, SUNS was then merged with and into the Company, with the Company as the surviving company. In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of SUNS’s common stock was converted into the right to receive 0.7796 shares of the Company’s common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of the Company’s common stock). As a result of the Mergers, the Company issued an aggregate of 12,511,825 shares of its common stock to former SUNS stockholders.

The Merger is accounted for as an asset acquisition of SLR Senior Investment Corp. by the Company in accordance with the asset acquisition method of accounting as detailed in ASC

805-50,

Business Combinations – Related Issues, with the fair value of total consideration paid in conjunction with the Merger allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Merger. Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain

“non-qualifying”

assets (for example cash) and does not give rise to goodwill. The Company is the accounting survivor of the Merger. The Merger was considered a

tax-free

reorganization and the historical cost basis of the acquired SUNS investments are carried forward for tax purposes. Prior to the Merger, SUNS was also managed by the Investment Adviser.

The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed as a result of the Merger:


Common stock issued by the Company (1)	$	227,602

Assets acquired:
Investments, at fair value	$	400,105
Cash		2,313
Other assets		4,662

Total assets acquired	$	407,080

Liabilities assumed:
Debt, at fair value	$	159,816
Other liabilities		2,573

Total liabilities assumed	$	162,389

Net assets acquired	$	244,691

Total purchase discount	$	(17,089	)

(1)	Based on the market price at closing of $18.13, adjusted for transaction costs.

Table of Contents

SLR INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)

September 30, 2022

(in thousands, except share amounts)

Letter Agreement

On April 1, 2022, in connection with the consummation of the Mergers, the Company entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by the Company to the Investment Adviser pursuant to the Advisory Agreement, resulting in an annual base management fee rate payable by the Company to the Investment Adviser of 1.50% on gross assets up to 200% of the Company’s total net assets. The Company retained the annual base management fee rate payable by the Company to the Investment Adviser of 1.00% on gross assets that exceed 200% of the Company’s total net assets.

Note 17. Stock Repurchase Program

On May 3, 2022, our Board authorized a program for the purpose of repurchasing up to $50,000 of our outstanding shares of common stock. Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule

10b-18

of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act. Unless amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 1, 2023 or until $50,000 of our outstanding shares of common stock have been repurchased. The timing and number of shares to be repurchased will depend on a number of factors, including market conditions. There are no assurances that we will engage in any repurchases. As of September 30, 2022, no repurchases have taken place.

Note 18. Subsequent Events

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.

On October 5, 2022, our Board declared a monthly distribution of $0.136667 per share payable on November 2, 2022 to holders of record as of October 20, 2022.

On October 12, 2022, the Company entered into a joint venture agreement with SunStone Senior Credit L.P. (the “Investor”) to create SLR Senior Lending Program LLC (“SSLP”). The joint venture is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $50,000, resulting in a total equity commitment of $100,000. SSLP intends to seek third party financing to allow the joint venture to utilize leverage. The Company and the Investor expect to begin funding SSLP with investments prior to the end of 2022. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.

On November 2, 2022, our Board declared a monthly distribution of $0.136667 per share payable on December 1, 2022 to holders of record as of November 17, 2022.

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

SLR Investment Corp.:

Results of Review of Interim Financial Information

We have reviewed the consolidated statement of assets and liabilities of SLR Investment Corp. (and subsidiaries) (the Company), including the consolidated schedule of investments, as of September 30, 2022, the related consolidated statements of operations and changes in net assets, for the three-month and nine-month periods ended September 30, 2022 and 2021, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2022 and 2021, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2021, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

New York, New York

November 2, 2022

Table of Contents

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to:

•

our future operating results, including our ability to achieve objectives as a result of the current

COVID-19

pandemic;

•

our business prospects and the prospects of our portfolio companies;

•

the impact of investments that we expect to make;

•

our contractual arrangements and relationships with third parties;

•

the dependence of our future success on the general economy and its impact on the industries in which we invest and the impact of the

COVID-19

pandemic thereon;

•

the impact of any protracted decline in the liquidity of credit markets on our business and the impact of the

COVID-19

pandemic thereon;

•

the ability of our portfolio companies to achieve their objectives, including as a result of the current

COVID-19

pandemic;

•

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

COVID-19

pandemic thereon;

•

market conditions and our ability to access alternative debt markets and additional debt and equity capital, and the impact of the

COVID-19

pandemic thereon;

•

our expected financings and investments;

•

the adequacy of our cash resources and working capital;

•

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the

COVID-19

pandemic thereon; and

•

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments and the impacts of the

COVID-19

pandemic thereon.

•

changes in the political conditions and relations between the United States, Russia, Ukraine and other nations.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

•

an economic downturn, including as a result of the current

COVID-19

pandemic, could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit and/or an inability to access the equity markets, including as a result of the current

COVID-19

pandemic, could impair our lending and investment activities;

•

interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy;

•

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;

•

the ability to realize the anticipated benefits of the Mergers;

•

the effects of disruption on our business from the Mergers;

•

the combined company’s plans, expectations, objectives and intentions as a result of the Mergers;

•

the risks, uncertainties and other factors we identify in Item 1A. — Risk Factors contained in our Annual Report on Form

10-K

for the year ended December 31, 2021, elsewhere in this Quarterly Report on Form

10-Q

and in our other filings with the SEC.

We generally use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report.

We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including any annual reports on Form

10-K,

quarterly reports on Form

10-Q

and current reports on Form

8-K.

Table of Contents

Overview

Solar Capital LLC, a Maryland limited liability company, was formed in February 2007 and commenced operations on March 13, 2007 with initial capital of $1.2 billion of which 47.04% was funded by affiliated parties.

SLR Investment Corp. (the “Company”, “SLRC”, “we” or “our”), a Maryland corporation formed in November 2007, is a

closed-end,

externally managed,

non-diversified

management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, as the Company is an investment company, it continues to apply the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. In addition, for U.S federal income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

On February 9, 2010, we priced our initial public offering, selling 5.68 million shares of our common stock. Concurrent with our initial public offering, Michael S. Gross, our Chairman,

Co-Chief

Executive Officer and President, and Bruce Spohler, our

Co-Chief

Executive Officer and Chief Operating Officer, collectively purchased an additional 0.6 million shares of our common stock through a private placement transaction exempt from registration under the Securities Act.

We invest primarily in privately held U.S. middle-market companies, where we believe the supply of primary capital is limited and the investment opportunities are most attractive. Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in leveraged middle-market companies in the form of senior secured loans, financing leases and to a lesser extent, unsecured loans and equity securities. From time to time, we may also invest in public companies that are thinly traded. Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Our investments generally range between $5 million and $100 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives. Our investment activities are managed by SLR Capital Partners, LLC (the “Investment Adviser”) and supervised by the board of directors (the “Board)”, a majority of whom are

non-interested,

as such term is defined in the 1940 Act. SLR Capital Management, LLC (the “Administrator”) provides the administrative services necessary for us to operate.

In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns. These investments may include, but are not limited to, direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries outside of the United States.

Merger Agreement

On December 1, 2021, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with SLR Senior Investment Corp., a Maryland corporation (“SUNS”), Solstice Merger Sub, Inc., a Maryland corporation and our wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into SUNS, with SUNS continuing as the surviving company and as SUNS’s wholly-owned subsidiary (the “Merger,”) and, immediately thereafter, SUNS will merge with and into us, with us continuing as the surviving company (together with the Merger, the “Mergers”). Both the Board and SUNS’s board of directors, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of the independent directors of us and SUNS, as applicable, have approved the Merger Agreement and the transactions contemplated thereby.

Consummation of the Mergers, which occurred on April 1, 2022, was subject to certain closing conditions as disclosed in the Merger Agreement.

On April 1, 2022, we completed our previously announced acquisition of SUNS. Pursuant to the Merger Agreement, Merger Sub was first merged with and into SUNS, with SUNS as the surviving corporation, and, immediately following the Merger, SUNS was then merged with and into us, with us as the surviving company. In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of SUNS’s common stock was converted into the right to receive 0.7796 shares of our common stock (with SUNS’s stockholders receiving cash in lieu of fractional shares of our common stock). As a result of the Mergers, we issued an aggregate of 12,511,825 shares of our common stock to former SUNS stockholders.

Table of Contents

The Merger is accounted for as an asset acquisition of SLR Senior Investment Corp. by the Company in accordance with the asset acquisition method of accounting as detailed in ASC

805-50,

“non-qualifying”

assets (for example cash) and does not give rise to goodwill. The Company is the accounting survivor of the Merger. The Merger was considered a

tax-free

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

Letter Agreement

On April 1, 2022, in connection with the consummation of the Mergers, we entered into a letter agreement (the “Letter Agreement”) pursuant to which the Investment Adviser voluntarily agreed to a permanent 25 basis point reduction of the annual base management fee rate payable by us to the Investment Adviser pursuant to the Advisory Agreement, resulting in an annual base management fee rate payable by us to the Investment Adviser of 1.50% on gross assets up to 200% of our total net assets. We retained the annual base management fee rate payable by us to the Investment Adviser of 1.00% on gross assets that exceed 200% of our total net assets.

Recent Developments

On October 5, 2022, our Board declared a monthly distribution of $0.136667 per share payable on November 2, 2022 to holders of record as of October 20, 2022.

On October 12, 2022, the Company entered into a joint venture agreement with SunStone Senior Credit L.P. (the “Investor”) to create SLR Senior Lending Program LLC (“SSLP”). The joint venture is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of $50 million, resulting in a total equity commitment of $100 million. SSLP intends to seek third party financing to allow the joint venture to utilize leverage. The Company and the Investor expect to begin funding SSLP with investments prior to the end of 2022. Investment decisions and all material decisions in respect of SSLP must be approved by representatives of the Company and the Investor.

On November 2, 2022, our Board declared a monthly distribution of $0.136667 per share payable on December 1, 2022 to holders of record as of November 17, 2022.

The global outbreak of the

COVID-19

pandemic, and the related effect on the U.S. and global economies, has continued to have adverse consequences for the business operations of some of the Company’s portfolio companies and, as a result, has had adverse effects on the Company’s operations. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, including the Company, remain uncertain. The operational and financial performance of the issuers of securities in which the Company invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Company’s investments and negatively impact the Company’s performance.

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” The definition of “eligible portfolio company” includes certain public companies that do not have any securities listed on a national securities exchange and companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

Revenue

We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may sell. Our debt investments generally have a stated term of three to seven years and typically bear interest at a floating rate usually determined on the basis of a benchmark London interbank offered rate (“LIBOR”), the Secured Overnight Financing Rate (“SOFR”), commercial paper rate, or the prime rate. Interest on our debt investments is generally payable monthly or quarterly but may be

bi-monthly

or semi-annually. In addition, our investments may provide

payment-in-kind

(“PIK”) income. Such amounts of accrued PIK income are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.

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Expenses

All investment professionals of the investment adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Investment Adviser. We bear all other costs and expenses of our operations and

transactions, including (without limitation):

•

the cost of our organization and public offerings;

•

the cost of calculating our net asset value, including the cost of any third-party valuation services;

•

the cost of effecting sales and repurchases of our shares and other securities;

•

interest payable on debt, if any, to finance our investments;

•

fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and advisory fees;

•

transfer agent and custodial fees;

•

fees and expenses associated with marketing efforts;

•

federal and state registration fees, any stock exchange listing fees;

•

federal, state and local taxes;

•

independent directors’ fees and expenses;

•

brokerage commissions;

•

fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits and outside legal costs;

•

costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and

•

all other expenses incurred by either SLR Capital Management or us in connection with administering our business, including payments under the Administration Agreement that will be based upon our allocable portion of overhead and other expenses incurred by SLR Capital Management in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and their respective staffs.

We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors.

Portfolio and Investment Activity

During the three months ended September 30, 2022, we invested approximately $245.4 million across 44 portfolio companies. This compares to investing approximately $230.7 million in 23 portfolio companies for the three months ended September 30, 2021. Investments sold, prepaid or repaid during the three months ended September 30, 2022 totaled approximately $81.1 million versus approximately $105.9 million for the three months ended September 30, 2021.

At September 30, 2022, our portfolio consisted of 135 portfolio companies and was invested 30.2% in cash flow senior secured loans, 31.9% in asset-based senior secured loans / SLR Credit Solutions (“SLR Credit”) / SLR Healthcare ABL / SLR Business Credit, 21.6% in equipment senior secured financings / SLR Equipment Finance (“SLR Equipment”) / Kingsbridge Holdings, LLC (“KBH”) and 16.3% in life science senior secured loans, in each case, measured at fair value, versus 106 portfolio companies and was invested 28.4% in cash flow senior secured loans, 26.5% in asset-based senior secured loans / SLR Credit, 30.4% in equipment senior secured financings / SLR Equipment / KBH, and 14.7% in life science senior secured loans, in each case, measured at fair value, at September 30, 2021.

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At September 30, 2022, 79.7% or $1.71 billion of our income producing investment portfolio

is floating rate and 20.3% or $434.9 million is fixed rate, measured at fair value. At September 30, 2021, 74.1% or $1.20 billion of our income producing investment portfolio

is floating rate and 25.9% or $418.4 million is fixed rate, measured at fair value. As of September 30, 2022 and 2021, we had three and one issuers, respectively, on

non-accrual

status.

*	We have included SLR Credit Solutions, SLR Equipment Finance, SLR Healthcare ABL, SLR Business Credit and Kingsbridge Holdings, LLC within our income producing investment portfolio.

SLR Credit Solutions

On December 28, 2012, we acquired an equity interest in Crystal Capital Financial Holdings LLC (“Crystal Financial”) for $275 million in cash. Crystal Financial owned approximately 98% of the outstanding ownership interest in SLR Credit Solutions (“SLR Credit”), f/k/a Crystal Financial LLC. The remaining financial interest was held by various employees of SLR Credit, through their investment in Crystal Management LP. SLR Credit had a diversified portfolio of 23 loans having a total par value of approximately $400 million at November 30, 2012 and a $275 million committed revolving credit facility. On July 28, 2016, the Company purchased Crystal Management LP’s approximately 2% equity interest in SLR Credit for approximately $5.7 million. Upon the closing of this transaction, the Company holds 100% of the equity interest in SLR Credit. On September 30, 2016, Crystal Capital Financial Holdings LLC was dissolved. As of September 30, 2022, total commitments to the revolving credit facility are $250 million.

As of September 30, 2022, SLR Credit had 27 funded commitments to 21 different issuers with total funded loans of approximately $354.9 million on total assets of $375.6 million. As of December 31, 2021, SLR Credit had 22 funded commitments to 19 different issuers with total funded loans of approximately $287.4 million on total assets of $347.8 million. As of September 30, 2022 and December 31, 2021, the largest loan outstanding totaled $34.2 million and $35.0 million, respectively. For the same periods, the average exposure per issuer was $16.9 million and $15.1 million, respectively. SLR Credit’s credit facility, which is

non-recourse

to the Company, had approximately $139.5 million and $100.7 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Credit had net income of $3.9 million and $5.4 million, respectively, on gross income of $8.6 million and $9.5 million, respectively. For the nine months ended September 30, 2022 and 2021, SLR Credit had net income of $8.6 million and $12.5 million, respectively, on gross income of $22.2 million and $27.2 million, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Credit will be able to maintain consistent dividend payments to us.

SLR Equipment Finance

On July 31, 2017, we acquired a 100% equity interest in NEF Holdings, LLC, which conducts its business through its wholly-owned subsidiary Nations Equipment Finance, LLC. Effective February 25, 2021, Nations Equipment Finance, LLC and its related companies is doing business as SLR Equipment Finance (“SLR Equipment”). SLR Equipment is an independent equipment finance company that provides senior secured loans and leases primarily to U.S. based companies. We invested $209.9 million in cash to effect the transaction, of which $145.0 million was invested in the equity of SLR Equipment through our wholly-owned consolidated taxable subsidiary NEFCORP LLC and our wholly-owned consolidated subsidiary NEFPASS LLC and $64.9 million was used to purchase certain leases and loans held by SLR Equipment through NEFPASS LLC. Concurrent with the transaction, SLR Equipment refinanced its existing senior secured credit facility into a $150.0 million

non-recourse

facility with an accordion feature to expand up to $250.0 million. In September 2019, SLR Equipment amended the facility, increasing commitments to $214.0 million with an accordion feature to expand up to $314.0 million and extended the maturity date of the facility to July 31, 2023.

As of September 30, 2022, SLR Equipment had 129 funded equipment-backed leases and loans to 59 different customers with a total net investment in leases and loans of approximately $189.3 million on total assets of $241.2 million. As of December 31, 2021, SLR Equipment had 135 funded equipment-backed leases and loans to 61 different customers with a total net investment in leases and loans of approximately $211.0 million on total assets of $264.0 million. As of September 30, 2022 and December 31, 2021, the largest position outstanding totaled $19.3 million and $19.2 million, respectively. For the same periods, the average exposure per customer was $3.2 million and $3.5 million, respectively. SLR Equipment’s credit facility, which is

non-recourse

to the Company, had approximately $111.0 million and $118.0 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Equipment had net income (loss) of $1.0 million and ($0.3) million, respectively, on gross income of $6.5 million and $5.8 million, respectively. For the nine months ended September 30, 2022 and 2021, SLR Equipment had net loss of $0.1 million and $2.3 million, respectively, on gross income of $15.7 million and $16.4 million, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Equipment’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Equipment will be able to maintain consistent dividend payments to us.

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Kingsbridge Holdings, LLC

On November 3, 2020, the Company acquired 87.5% of Kingsbridge Holdings, LLC (“KBH”) through KBH Topco LLC (“KBHT”), a newly formed Delaware corporation. KBH is a residual focused independent

mid-ticket

lessor of equipment primarily to U.S. investment grade companies. The Company invested $216.6 million to effect the transaction, of which $136.6 million was invested to acquire 87.5% of KBHT’s equity and $80.0 million in KBH’s debt. The existing management team of KBH committed to continue to lead KBH after the transaction. Following the transaction, the Company owns 87.5% of KBHT equity and the KBH management team owns the remaining 12.5% of KBHT’s equity.

As of September 30, 2022 and December 31, 2021, KBHT had total assets of $774.6 million and $738.4 million, respectively. For the same periods, debt recourse to KBHT totaled $246.2 million and $216.9 million, respectively, and

non-recourse

debt totaled $316.8 million and $323.8 million, respectively. None of the debt is recourse to the Company. For the three months ended September 30, 2022 and 2021, KBHT had net income of $3.3 million and $3.2 million, respectively, on gross income of $71.3 million and $60.5 million, respectively. For the nine months ended September 30, 2022 and 2021, KBHT had net income of $10.4 million and $10.3 million, respectively, on gross income of $215.1 million and $180.1 million, respectively. Due to timing and

non-cash

SLR Healthcare ABL

mid-sized

companies operating in the healthcare industry. SUNS initial investment in SLR Healthcare ABL was $32.8 million. The management team of SLR Healthcare

co-invested

Concurrent with the closing of the transaction, SLR Healthcare entered into a new, four-year,

non-recourse,

$100 million credit facility with

non-affiliates,

which was expandable to $150 million under its accordion feature. Effective March 31, 2014, the credit facility was expanded to $105 million and again on June 27, 2014 to $110 million. On May 27, 2016, SLR Healthcare entered into a new $125 million credit facility which replaced the previously existing facility. The new facility has similar terms as compared to the previous facility and includes an accordion feature increase to $200 million and had a maturity date of May 27, 2020. On June 28, 2019, this $125 million facility was amended, extending the maturity date to June 28, 2023.

SLR Healthcare currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2022, the portfolio totaled approximately $179.6 million of commitments with a total net investment in loans of $81.4 million on total assets of $93.0 million. As of December 31, 2021, the portfolio totaled approximately $183.5 million of commitments with a total net investment in loans of $81.6 million on total assets of $91.3 million. At September 30, 2022, the portfolio consisted of 37 issuers with an average balance of approximately $2.2 million versus 36 issuers with an average balance of approximately $2.3 million at December 31, 2021. All of the commitments in SLR Healthcare’s portfolio are floating-rate, senior-secured,

cash-pay

loans. SLR Healthcare’s credit facility, which is

non-recourse

to us, had approximately $62 million and $60 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Healthcare had net income (loss) of $0.8 million and ($0.04) million, respectively, on gross income of $3.0 million and $2.6 million, respectively. For the nine months ended September 30, 2022 and 2021, SLR Healthcare had net income of $2.5 million and $0.5 million, respectively, on gross income of $7.9 million and $7.0 million, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions.

SLR Business Credit

small-to-medium-sized

businesses primarily in the manufacturing, services and distribution industries. SUNS invested approximately $51.0 million to effect the transaction. Subsequently, SUNS contributed 1% of its equity interest in NMC to ESP SSC Corporation. Immediately thereafter, SUNS and ESP SSC Corporation contributed their equity interests to NorthMill LLC (“North Mill”). On May 1, 2018, North Mill merged with and into NMC, with NMC being the surviving company. SUNS and ESP SSC Corporation then owned 99% and 1% of the equity interests of NMC, respectively. The management team of NMC continues to lead NMC. On June 28, 2019, North Mill Holdco LLC (“NM Holdco”), a newly formed entity and ESP SSC Corporation acquired 100% of Summit Financial Resources, a Salt Lake City-based provider of asset-backed financing to small and

medium-sized

businesses. As part of this transaction, SUNS 99% interest in the equity of NMC was contributed to NM Holdco. This approximately $15.5 million transaction

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was financed with borrowings on NMC’s credit facility. Effective February 25, 2021, NMC and its related companies are doing business as SLR Business Credit. On June 3, 2021, NMC acquired 100% of Fast Pay Partners LLC, a Los Angeles-based provider of asset-backed financing to digital media companies. The transaction purchase price of $66.7 million was financed with equity from SUNS of $19.0 million and borrowings on NMC’s credit facility of $47.7 million. SLRC acquired SLR Business Credit in connection with the Merger on April 1, 2022.

SLR Business Credit currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2022, the portfolio totaled approximately $554.2 million of commitments, of which $296.0 million were funded, on total assets of $346.3 million. As of December 31, 2021, the portfolio totaled approximately $513.9 million of commitments, of which $248.7 million were funded, on total assets of $290.8 million. At September 30, 2022, the portfolio consisted of 109 issuers with an average balance of approximately $2.7 million versus 125 issuers with an average balance of approximately $2.0 million at December 31, 2021. NMC has a senior credit facility with a bank lending group for $240 million which expires on November 13, 2025. Borrowings are secured by substantially all of NMC’s assets. NMC’s credit facility, which is

non-recourse

to us, had approximately $237.5 million and $183.3 million of borrowings outstanding at September 30, 2022 and December 31, 2021, respectively. For the three months ended September 30, 2022 and 2021, SLR Business Credit had net income of $2.0 million and $2.6 million, respectively, on gross income of $7.6 million and $6.9 million, respectively. For the nine months ended September 30, 2022 and 2021, SLR Business Credit had net income of $5.7 million and $4.7 million, respectively, on gross income of $20.4 million and $16.7 million, respectively. Due to timing and

non-cash

items, there may be material differences between GAAP net income and cash available for distributions. As such, and subject to fluctuations in SLR Business Credit’s funded commitments, the timing of originations, and the repayments of financings, the Company cannot guarantee that SLR Business Credit will be able to maintain consistent dividend payments to us.

Stock Repurchase Program

On May 3, 2022, our Board authorized a program for the purpose of repurchasing up to $50 million of our outstanding shares of common stock. Under the repurchase program, we may, but are not obligated to, repurchase shares of our outstanding common stock in the open market from time to time provided that we comply with our code of ethics and the guidelines specified in Rule

10b-18

of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases will be conducted in accordance with the 1940 Act. Unless amended or extended by our Board, we expect the repurchase program to be in place until the earlier of May 1, 2023 or until $50 million of our outstanding shares of common stock have been repurchased. The timing and number of shares to be repurchased will depend on a number of factors, including market conditions. There are no assurances that we will engage in any repurchases. As of September 30, 2022, no repurchases have taken place.

Critical Accounting Policies

The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies. Within the context of these critical accounting policies and disclosed subsequent events herein, we are not currently aware of any other reasonably likely events or circumstances that would result in materially different amounts being reported.

Valuation of Portfolio Investments

We conduct the valuation of our assets, pursuant to which our net asset value is determined, at all times consistent with GAAP, and the 1940 Act. Our valuation procedures are set forth in more detail in Note 2(b) to the Company’s Consolidated Financial Statements.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.

Revenue Recognition

The Company records dividend income and interest, adjusted for amortization of premium and accretion of discount, on an accrual basis. Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on

non-accrual

status when principal or interest/dividend cash payments are past due 30 days or more (90 days or more for equipment financing) and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such

non-accrual

investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management’s judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on investments may be recognized as income or applied to principal depending upon management’s judgment. Some of our investments may have contractual PIK income. PIK income computed at the contractual rate, as applicable, is accrued and reflected as

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a receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at the maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on

non-accrual

status. When a PIK investment is placed on

non-accrual

status, the accrued, uncapitalized interest or dividends is reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK income. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on

non-accrual

status are restored to accrual status if the Company again believes that PIK is expected to be realized. Loan origination fees, original issue discount, and market discounts are capitalized and amortized into income using the effective interest method. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as interest income. We record prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring fees are recorded as other income when earned.

The typically higher yields and interest rates on PIK securities, to the extent we invested, reflects the payment deferral and increased credit risk associated with such instruments and that such investments may represent a significantly higher credit risk than coupon loans. PIK securities may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. PIK income has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK income also increases the

loan-to-value

ratio at a compounding rate. PIK securities create the risk that incentive fees will be paid to the Investment Adviser based on

non-cash

accruals that ultimately may not be realized, but the Investment Adviser will be under no obligation to reimburse the Company for these fees. For the three and nine months ended September 30, 2022, capitalized PIK income totaled $0.7 million and $1.7 million, respectively. For the three and nine months ended September 30, 2021, capitalized PIK income totaled $1.7 million and $5.0 million, respectively.

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties. The net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gain or loss, when gains or losses are realized. Gains or losses on investments are calculated by using the specific identification method.

Income Taxes

SLRC, a U.S. corporation, has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. In order to qualify for U.S. federal income taxation as a RIC, the Company is required, among other things, to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. Depending on the level of taxable income earned in a given tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues an estimated excise tax, if any, on estimated excess taxable income.

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update

No. 2020-04,

2020-04

RESULTS OF OPERATIONS

Results comparisons are for the three and nine months ended September 30, 2022 and September 30, 2021:

Investment Income

For the three and nine months ended September 30, 2022, gross investment income totaled $47.6 million and $123.4 million, respectively. For the three and nine months ended September 30, 2021, gross investment income totaled $32.2 million and $103.6 million, respectively. The increase in gross investment income for the year over year three and nine month periods was primarily due to a larger portfolio size as a result of the Merger coupled with organic growth, as well as due to an increase in LIBOR and SOFR.

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Expenses

Net expenses totaled $27.5 million and $69.5 million, respectively, for the three and nine months ended September 30, 2022, of which $12.9 million and $31.7 million, respectively, were base management fees and gross performance-based incentive fees and $12.8 million and $31.5 million, respectively, were interest and other credit facility expenses. Over the same periods, $0.2 million and $1.6 million, respectively, of performance-based incentive fees were waived. Administrative services and other general and administrative expenses totaled $2.1 million and $7.9 million, respectively, for the three and nine months ended September 30, 2022. Expenses totaled $17.2 million and $57.6 million, respectively, for the three and nine months ended September 30, 2021, of which $7.8 million and $29.3 million, respectively, were base management fees and performance-based incentive fees and $7.1 million and $21.5 million, respectively, were interest and other credit facility expenses. Administrative services and other general and administrative expenses totaled $2.2 million and $6.8 million, respectively, for the three and nine months ended September 30, 2021. Expenses generally consist of management and performance-based incentive fees, interest and other credit facility expenses, administrative services fees, insurance expenses, legal fees, directors’ fees, transfer agency fees, printing and proxy expenses, audit and tax services expenses, and other general and administrative expenses. Interest and other credit facility expenses generally consist of interest, unused fees, agency fees and loan origination fees, if any, among others. The increase in expenses for the year over year three and nine month periods was primarily due to higher interest expense associated with an increase in borrowings to fund new investments as well as the increase in LIBOR and SOFR.

Net Investment Income

The Company’s net investment income totaled $20.1 million and $53.8 million, or $0.37 and $1.06, per average share, respectively, for the three and nine months ended September 30, 2022. The Company’s net investment income totaled $15.0 million and $46.0 million, or $0.36 and $1.09, per average share, respectively, for the three and nine months ended September 30, 2021.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately $81 million and $261 million, respectively, for the three and nine months ended September 30, 2022. Net realized losses over the same periods were $37.3 million and $37.4 million, respectively. Net realized losses for the three and nine months ended September 30, 2022 were primarily related to the exit of our investment in PhyMed Management, LLC. The Company had investment sales and prepayments totaling approximately $106 million and $320 million, respectively, for the three and nine months ended September 30, 2021. Net realized gains (losses) over the same periods were ($0.1) million and $0.1 million, respectively. Net realized losses for the three months ended September 30, 2021 were generally related to the exit of our warrant position in Scynexis, Inc. Net realized gains for the nine months ended September 30, 2021 were generally related to the exit of our warrant position in PQ Bypass, Inc., partially offset by losses from the sale of our legacy investment in B. Riley Financial, Inc and exit of our warrant position in Scynexis, Inc.

Net Change in Unrealized Gain (Loss)

For the three and nine months ended September 30, 2022, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled $30.8 million and ($17.1) million, respectively. For the three and nine months ended September 30, 2021, net change in unrealized gain (loss) on the Company’s assets and liabilities totaled ($1.5) million and $7.4 million, respectively. Net unrealized gain for the three months ended September 30, 2022 is primarily due to the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC, as well as appreciation in the value of our investments in SLR Business Credit, Alimera Sciences, Inc. and Kingsbridge Holdings, LLC, among others, partially offset by depreciation in the value of our investments in SLR Equipment Finance, PPT Management Holdings, LLC, KBH Topco, LLC, SLR Healthcare ABL and SLR Credit Solutions, among others. Net unrealized loss for the nine months ended September 30, 2022 is primarily due to depreciation in the value of our investments in RD Holdco, Inc., American Teleconferencing Services, Ltd., SLR Credit Solutions and SLR Equipment Finance, among others, partially offset by the reversal of previously recognized unrealized depreciation on our investment in PhyMed Management LLC as well as appreciation on the value of our investments in SLR Business Credit and Alimera Sciences, Inc. in addition to unrealized appreciation on assets acquired in the Merger due to the accounting treatment of the purchase discount. Net unrealized loss for the three months ended September 30, 2021 is primarily due to depreciation in the value of our investments in American Teleconferencing Services, Ltd., PhyMed Management LLC and Rug Doctor, among others, partially offset by appreciation in the value of our investments in KBH Topco, LLC and SLR Credit Solutions, among others. Net unrealized gain for the nine months ended September 30, 2021 was primarily due to appreciation in the value our investments in KBH Topco, LLC, SLR Credit Solutions, and Senseonics Holdings, Inc., among others, partially offset by depreciation in the value of our investments in American Teleconferencing Services, Ltd., Rug Doctor and SOAGG, LLC, among others.

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Net Increase (Decrease) in Net Assets From Operations

For the three and nine months ended September 30, 2022, the Company had a net increase (decrease) in net assets resulting from operations of $13.5 million and ($0.7) million, respectively. For the same periods, earnings (losses) per average share were $0.25 and ($0.01), respectively. For the three and nine months ended September 30, 2021, the Company had a net increase in net assets resulting from operations of $13.4 million and $53.4 million, respectively. For the same periods, earnings per average share were $0.32 and $1.26, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity and capital resources are generated and generally available through its Credit Facility and SPV Credit Facility (as defined below), the 2022 Tranche C Notes, the 2023 Unsecured Notes, the 2024 Unsecured Notes, the 2025 Unsecured Notes, the 2026 Unsecured Notes, the 2027 Unsecured Notes and the 2027 Series F Unsecured Notes, through cash flows from operations, investment sales, prepayments of senior and subordinated loans, income earned on investments and cash equivalents, and periodic

follow-on

equity and/or debt offerings. As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under the Credit Facility and SPV Credit Facility, subject to borrowing base limits.

We may from time to time issue equity and/or debt securities in either public or private offerings. The issuance of such securities will depend on future market conditions, funding needs and other factors and there can be no assurance that any such issuance will occur or be successful. The primary uses of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, or for other general corporate purposes.

On April 1, 2022, we entered into an assumption agreement (the “CF Assumption Agreement”), effective as of the closing of the Mergers. The CF Assumption Agreement relates to our assumption of the Revolving Credit Facility, originally entered into on August 26, 2011 (as amended from time to time, the “SPV Credit Facility”), by and among SUNS SPV LLC (the “SUNS SPV”), a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, the commitment under the SPV Credit Facility is $225 million; however, the commitment can also be expanded up to $600 million. The stated interest rate on the SPV Credit Facility is LIBOR plus

2.00%-2.50%

with no LIBOR floor requirement and the current final maturity date is June 1, 2026. The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, we as successor to SUNS, and SUNS SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature.

On April 1, 2022, we entered into an assumption agreement (the “Note Assumption Agreement”), effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85 million in aggregate principal amount of five-year, 3.90% senior unsecured notes, due March 31, 2025 (the “2025 Unsecured Notes”) and other obligations of SUNS under the Note Purchase Agreement, dated as of March 31, 2020 (the “Note Purchase Agreement”), among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.

On January 6, 2022, the Company closed a private offering of $135 million of the 2027 Series F Unsecured Notes with a fixed interest rate of 3.33% and a maturity date of January 6, 2027. Interest on the 2027 Series F Unsecured Notes is due semi-annually on January 6 and July 6. The 2027 Series F Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2021, the Company closed on Amendment No. 1 to its August 28, 2019 senior secured credit agreement (the “Credit Facility”). Following the amendment, the Credit Facility is composed of $600 million of revolving credit and $100 million of term loans. Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of

1.75%-2.00%

or the alternate base rate plus

0.75%-1.00%.

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

On September 14, 2021, the Company closed a private offering of $50 million of the 2027 Unsecured Notes with a fixed interest rate of 2.95% and a maturity date of March 14, 2027. Interest on the 2027 Unsecured Notes is due semi-annually on March 14 and September 14. The 2027 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 18, 2019, the Company closed a private offering of $125 million of the 2024 Unsecured Notes with a fixed interest rate of 4.20% and a maturity date of December 15, 2024. Interest on the 2024 Unsecured Notes is due semi-annually on June 15 and December 15. The 2024 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

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On December 18, 2019, the Company closed a private offering of $75 million of the 2026 Unsecured Notes with a fixed interest rate of 4.375% and a maturity date of December 15, 2026. Interest on the 2026 Unsecured Notes is due semi-annually on June 15 and December 15. The 2026 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On December 28, 2017, the Company closed a private offering of $21 million of the 2022 Tranche C Notes with a fixed interest rate of 4.50% and a maturity date of December 28, 2022. Interest on the 2022 Tranche C Notes is due semi-annually on June 28 and December 28. The 2022 Tranche C Notes were issued in a private placement only to qualified institutional buyers.

On November 22, 2017, we issued $75 million in aggregate principal amount of publicly registered 2023 Unsecured Notes for net proceeds of $73.8 million. Interest on the 2023 Unsecured Notes is paid semi-annually on January 20 and July 20, at a fixed rate of 4.50% per year, commencing on January 20, 2018. The 2023 Unsecured Notes mature on January 20, 2023.

On February 15, 2017, the Company closed a private offering of $100 million of the 2022 Unsecured Notes with a fixed interest rate of 4.60% and a maturity date of May 8, 2022. Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8. The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers.

On November 8, 2016, the Company closed a private offering of $50 million of the 2022 Unsecured Notes with a fixed interest rate of 4.40% and a maturity date of May 8, 2022. Interest on the 2022 Unsecured Notes is due semi-annually on May 8 and November 8. The 2022 Unsecured Notes were issued in a private placement only to qualified institutional buyers. The 2022 Unsecured Notes were repaid in full at maturity.

On January 11, 2013, the Company closed its most recent

follow-on

public equity offering of 6.3 million shares of common stock raising approximately $146.9 million in net proceeds. The primary uses of the funds raised were for investments in portfolio companies, reductions in revolving debt outstanding and for other general corporate purposes.

Cash Equivalents

We deem certain U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities as cash equivalents. The Company makes purchases that are consistent with its purpose of making investments in securities described in paragraphs 1 through 3 of Section 55(a) of the 1940 Act. From time to time, including at or near the end of each fiscal quarter, we consider using various temporary investment strategies for our business. One strategy includes taking proactive steps by utilizing cash equivalents as temporary assets with the objective of enhancing our investment flexibility pursuant to Section 55 of the 1940 Act. More specifically, from

time-to-time

we may purchase U.S. Treasury bills or other high-quality, short-term debt securities at or near the end of the quarter and typically close out the position on a net cash basis subsequent to quarter end. We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on the Credit Facility, as deemed appropriate. The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined. We held approximately $269 million in cash equivalents as of September 30, 2022.

Debt

Unsecured Notes

On April 1, 2022, we entered into the Note Assumption Agreement, effective as of the closing of the Mergers. The Note Assumption Agreement relates to our assumption of $85 million of the 2025 Unsecured Notes and other obligations of SUNS under the Note Purchase Agreement, among SUNS and certain institutional investors. Interest on the 2025 Unsecured Notes is due semi-annually on March 31 and September 30. Pursuant to the Note Assumption Agreement, we expressly assumed on behalf of SUNS the due and punctual payment of the principal of (and premium, if any) and interest on all the 2025 Unsecured Notes outstanding, and the due and punctual performance and observance of every covenant and every condition of the Note Purchase Agreement, to be performed or observed by SUNS.

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Revolving & Term Loan Facilities

On April 1, 2022, we entered into the CF Assumption Agreement, effective as of the closing of the Mergers. The CF Assumption Agreement relates to our assumption of the SPV Credit Facility, by and among SUNS SPV, a wholly-owned subsidiary of SUNS, acting as borrower, Citibank, N.A., acting as administrative agent and collateral agent, and the other parties thereto. Currently, the commitment under the SPV Credit Facility is $225 million; however, the commitment can also be expanded up to $600 million. The stated interest rate on the SPV Credit Facility is LIBOR plus

2.00%-2.50%

with no LIBOR floor requirement and the current final maturity date is June 1, 2026. The SPV Credit Facility is secured by all of the assets held by SUNS SPV. Under the terms of the SPV Credit Facility and related transaction documents, we as successor to SUNS, and SUNS SPV, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The SPV Credit Facility also includes usual and customary events of default for credit facilities of this nature. At September 30, 2022, outstanding USD equivalent borrowings under the SPV Credit Facility totaled $130.2 million.

On December 28, 2021, the Company closed on Amendment No. 1 to the Credit Facility. Following the amendment, the Credit Facility is composed of $600 million of revolving credit and $100 million of term loans. Borrowings generally bear interest at a rate per annum equal to the base rate plus a range of

1.75%-2.00%

or the alternate base rate plus

0.75%-1.00%.

The Credit Facility has a 0% floor and matures in December 2026 and includes ratable amortization in the final year. The Credit Facility may be increased up to $800 million with additional new lenders or an increase in commitments from current lenders. The Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Credit Facility contains certain financial covenants that among other things, requires the Company to maintain a minimum shareholder’s equity and a minimum asset coverage ratio. At September 30, 2022, outstanding USD equivalent borrowings under the Credit Facility totaled $460.0 million, composed of $360.0 million of revolving credit and $100.0 million of term loans.

Certain covenants on our issued debt may restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC under Subchapter M of the Code. At September 30, 2022, the Company was in compliance with all financial and operational covenants required by the Debt Instruments.

Contractual Obligations

A summary of our significant contractual payment obligations is as follows as of September 30, 2022:

Payments Due by Period (in millions)


	Total		Less than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Revolving credit facilities (1)	$	490.2	$	—	$	—	$	490.2	$	—
Unsecured senior notes		566.0		96.0		210.0		260.0		—
Term loans		100.0		—		—		100.0		—

(1)	As of September 30, 2022, we had a total of $334.8 million of unused borrowing capacity under our revolving credit facilities, subject to borrowing base limits.

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Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss.

We have also entered into two contracts under which we have future commitments: the Advisory Agreement, pursuant to which the Investment Adviser has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which the Administrator has agreed to furnish us with the facilities and administrative services necessary to conduct our

day-to-day

operations and provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance. Payments under the Advisory Agreement are equal to (1) a percentage of the value of our average gross assets and (2) a

two-part

incentive fee. Payments under the Administration Agreement are equal to an amount based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent, technology systems, insurance and our allocable portion of the costs of our chief financial officer and chief compliance officer and their respective staffs. Either party may terminate each of the Advisory Agreement and administration agreement without penalty upon 60 days’ written notice to the other. See note 3 to our Consolidated Financial Statements.

On July 31, 2017, the Company, NEFPASS LLC and NEFCORP LLC entered into a servicing agreement. NEFCORP LLC was engaged to provide NEFPASS LLC with administrative services related to the loans and capital leases held by NEFPASS LLC. NEFPASS LLC may terminate this agreement upon 30 days’ written notice to NEFCORP LLC.

Senior Securities

Information about our senior securities is shown in the following table (in thousands) as of the quarter ended September 30, 2022 and each year ended December 31 for the past ten years, unless otherwise noted. The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.


Class and Year	Total Amount Outstanding(1)		Asset Coverage Per Unit(2)		Involuntary Liquidating Preference Per Unit(3)		Average Market Value Per Unit(4)
Credit Facility
Fiscal 2022 (through September 30, 2022)	$	360,000	$	583		—		N/A
Fiscal 2021		222,500		552		—		N/A
Fiscal 2020		126,000		421		—		N/A
Fiscal 2019		42,900		182		—		N/A
Fiscal 2018		96,400		593		—		N/A
Fiscal 2017		245,600		1,225		—		N/A
Fiscal 2016		115,200		990		—		N/A
Fiscal 2015		207,900		1,459		—		N/A
Fiscal 2014		—		—		—		N/A
Fiscal 2013		—		—		—		N/A
Fiscal 2012		264,452		1,510		—		N/A
SPV Credit Facility
Fiscal 2022 (through September 30, 2022)		130,200		211		—		N/A
2022 Unsecured Notes
Fiscal 2022 (through September 30, 2022)		—		—		—		N/A
Fiscal 2021		150,000		372		—		N/A
Fiscal 2020		150,000		501		—		N/A
Fiscal 2019		150,000		638		—		N/A
Fiscal 2018		150,000		923		—		N/A
Fiscal 2017		150,000		748		—		N/A
Fiscal 2016		50,000		430		—		N/A
2022 Tranche C Notes
Fiscal 2022 (through September 30, 2022)		21,000		34		—		N/A
Fiscal 2021		21,000		52		—		N/A
Fiscal 2020		21,000		70		—		N/A
Fiscal 2019		21,000		89		—		N/A
Fiscal 2018		21,000		129		—		N/A
Fiscal 2017		21,000		105		—		N/A
2023 Unsecured Notes

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Class and Year	Total Amount Outstanding(1)		Asset Coverage Per Unit(2)		Involuntary Liquidating Preference Per Unit(3)		Average Market Value Per Unit(4)
Fiscal 2022 (through September 30, 2022)		75,000		121		—		N/A
Fiscal 2021		75,000		186		—		N/A
Fiscal 2020		75,000		250		—		N/A
Fiscal 2019		75,000		319		—		N/A
Fiscal 2018		75,000		461		—		N/A
Fiscal 2017		75,000		374		—		N/A
2024 Unsecured Notes
Fiscal 2022 (through September 30, 2022)		125,000		202		—		N/A
Fiscal 2021		125,000		309		—		N/A
Fiscal 2020		125,000		417		—		N/A
Fiscal 2019		125,000		531		—		N/A
2025 Unsecured Notes
Fiscal 2022 (through September 30, 2022)		85,000		137		—		N/A
2026 Unsecured Notes
Fiscal 2022 (through September 30, 2022)		75,000		121		—		N/A
Fiscal 2021		75,000		186		—		N/A
Fiscal 2020		75,000		250		—		N/A
Fiscal 2019		75,000		319		—		N/A
2027 Unsecured Notes
Fiscal 2022 (through September 30, 2022)		50,000		81		—		N/A
Fiscal 2021		50,000		124		—		N/A
2027 Series F Unsecured Notes
Fiscal 2022 (through September 30, 2022)		135,000		218		—		N/A
2042 Unsecured Notes
Fiscal 2017		—		—		—		N/A
Fiscal 2016		100,000		859		—	$	1,002
Fiscal 2015		100,000		702		—		982
Fiscal 2014		100,000		2,294		—		943
Fiscal 2013		100,000		2,411		—		934
Fiscal 2012		100,000		571		—		923
Senior Secured Notes
Fiscal 2017		—		—		—		N/A
Fiscal 2016		75,000		645		—		N/A
Fiscal 2015		75,000		527		—		N/A
Fiscal 2014		75,000		1,721		—		N/A
Fiscal 2013		75,000		1,808		—		N/A
Fiscal 2012		75,000		428		—		N/A
Term Loans
Fiscal 2022 (through September 30, 2022)		100,000		162		—		N/A
Fiscal 2021		100,000		248		—		N/A
Fiscal 2020		75,000		250		—		N/A
Fiscal 2019		75,000		319		—		N/A
Fiscal 2018		50,000		308		—		N/A
Fiscal 2017		50,000		250		—		N/A
Fiscal 2016		50,000		430		—		N/A
Fiscal 2015		50,000		351		—		N/A
Fiscal 2014		50,000		1,147		—		N/A
Fiscal 2013		50,000		1,206		—		N/A
Fiscal 2012		50,000		285		—		N/A
NEFPASS Facility
Fiscal 2021		—		—		—		N/A
Fiscal 2020		30,000		100		—		N/A
Fiscal 2019		30,000		128		—		N/A
Fiscal 2018		30,000		185		—		N/A
SSLP Facility
Fiscal 2019		—		—		—		N/A
Fiscal 2018		53,785		331		—		N/A

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Total Senior Securities
Fiscal 2022 (through September 30, 2022)	$	1,156,200	$	1,870	—	N/A
Fiscal 2021		818,500		2,029	—	N/A
Fiscal 2020		677,000		2,259	—	N/A
Fiscal 2019		593,900		2,525	—	N/A
Fiscal 2018		476,185		2,930	—	N/A
Fiscal 2017		541,600		2,702	—	N/A
Fiscal 2016		390,200		3,354	—	N/A
Fiscal 2015		432,900		3,039	—	N/A
Fiscal 2014		225,000		5,162	—	N/A
Fiscal 2013		225,000		5,425	—	N/A
Fiscal 2012		489,452		2,794	—	N/A

(1)	Total amount of each class of senior securities outstanding (in thousands) at the end of the period presented.

(2)

The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by all senior securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the Asset Coverage Per Unit. In order to determine the specific Asset Coverage Per Unit for each class of debt, the total Asset Coverage Per Unit is allocated based on the amount outstanding in each class of debt at the end of the period. As of September 30, 2022, asset coverage was 187.0%.

(3)	The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.

(4)

Not applicable except for the 2042 Unsecured Notes which were publicly traded. The Average Market Value Per Unit is calculated by taking the daily average closing price during the period and dividing it by twenty-five dollars per share and multiplying the result by one thousand to determine a unit price per thousand consistent with Asset Coverage Per Unit. The average market value for the fiscal 2016, 2015, 2014, 2013 and 2012 periods was $100,175, $98,196, $94,301, $93,392, and $92,302, respectively.

Off-Balance

Sheet Arrangements

From

time-to-time

and in the normal course of business, the Company may make unfunded capital commitments to current or prospective portfolio companies. Typically, the Company may agree to provide delayed-draw term loans or, to a lesser extent, revolving loan or equity commitments. These unfunded capital commitments always take into account the Company’s liquidity and cash available for investment, portfolio and issuer diversification, and other considerations. Accordingly, the Company had the following unfunded capital commitments at September 30, 2022 and December 31, 2021, respectively:


	September 30, 2022		December 31, 2021
(in millions)
SLR Credit Solutions*	$	44.3	$	44.3
Apeel Technology, Inc.		32.8		—
World Insurance Associates, LLC		25.5		—
CC SAG Holdings Corp. (Spectrum Automotive)		24.3		18.8
Human Interest, Inc.		20.1		—
Glooko, Inc.		17.9		25.1
Spectrum Pharmaceuticals, Inc.		12.3		—
iCIMS, Inc.		11.6		—
BridgeBio Pharma, Inc.		9.0		23.0
BDG Media, Inc.		8.6		—
RSC Acquisition, Inc.		8.5		—
Arcutis Biotherapeutics, Inc.		8.4		43.5
Atria Wealth Solutions, Inc.		8.2		3.7
Ardelyx, Inc.		7.8		—
Luxury Asset Capital, LLC		7.5		—
OIS Management Services, LLC		5.2		—
Vessco Midco Holdings, LLC		4.1		—
One Touch Direct, LLC		4.0		7.2
Kaseya, Inc.		3.9		—
Maurices, Incorporated		3.9		5.7
Foundation Consumer Brands, LLC		3.0		2.3
Inszone Mid, LLC		2.8		12.5
Kid Distro Holdings, LLC		2.7		2.7
Plastics Management, LLC		2.4		—
Pediatric Home Respiratory Services, LLC		2.4		—
Southern Orthodontic Partners Management, LLC		2.3		—
Basic Fun, Inc.		2.2		1.9

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	September 30, 2022		December 31, 2021
(in millions)
Copper River Seafoods, Inc.		2.0		—
Peter C. Foy & Associates Insurance Services, LLC		2.0		—
Orthopedic Care Partners Management, LLC		1.9		—
MMIT Holdings, LLC		1.9		2.0
SPAR Marketing Force, Inc.		1.6		—
Ivy Fertility Services, LLC		1.6		4.5
NAC Holdings Corporation		1.5		4.8
SLR Healthcare ABL*		1.4		—
RxSense Holdings LLC		1.3		—
Erie Construction Mid-west, LLC		1.2		—
Composite Technology Acquisition Corp.		1.1		—
Enverus Holdings, Inc.		1.0		—
SLR Equipment Finance		1.0		5.0
American Teleconferencing Services, Ltd.		0.9		0.6
SunMed Group Holdings, LLC		0.8		0.8
All State Ag Parts, LLC		0.7		—
Ultimate Baked Goods Midco LLC		0.5		0.8
BayMark Health Services, Inc.		0.4		—
Pinnacle Treatment Centers, Inc.		0.4		1.4
GSM Acquisition Corp.		0.4		—
High Street Buyer, Inc.		0.3		—
Tilley Distribution, Inc.		0.3		—
TAUC Management, LLC		0.3		—
RQM+ Corp.		—		3.8
Rezolute, Inc.		—		5.7
SOC Telemed, Inc.		—		4.4
Neuronetics, Inc.		—		2.2

Total Commitments	$	310.2	$	226.7

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

In the normal course of its business, we invest or trade in various financial instruments and may enter into various investment activities with

off-balance

sheet risk, which may include forward foreign currency contracts. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at future dates. These financial instruments contain varying degrees of

off-balance

sheet risk whereby changes in the market value or our satisfaction of the obligations may exceed the amount recognized in our Consolidated Statements of Assets and Liabilities.

Distributions

The following table reflects the cash distributions per share on our common stock for the two most recent fiscal years and the current fiscal year to date:


Date Declared	Record Date	Payment Date	Amount
Fiscal 2022
November 2, 2022	November 17, 2022	December 1, 2022	$	0.136667
October 5, 2022	October 20, 2022	November 2, 2022		0.136667
September 2, 2022	September 20, 2022	October 4, 2022		0.136667
August 2, 2022	August 18, 2022	September 1, 2022		0.136667
July 6, 2022	July 21, 2022	August 2, 2022		0.136667
June 3, 2022	June 23, 2022	July 5, 2022		0.136667
May 3, 2022	May 19, 2022	June 2, 2022		0.136667
April 4, 2022	April 21, 2022	May 3, 2022		0.136667

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March 1, 2022

March 18, 2022

April 1, 2022

0.41

Total 2022

1.503336

Fiscal 2021

November 3, 2021

December 16, 2021

January 5, 2022

0.41

August 3, 2021

September 23, 2021

October 5, 2021

0.41

May 5, 2021

June 23, 2021

July 2, 2021

0.41

February 24, 2021

March 18, 2021

April 2, 2021

0.41

Total 2021

1.64

Fiscal 2020

November 5, 2020

December 17, 2020

January 5, 2021

0.41

August 4, 2020

September 17, 2020

October 2, 2020

0.41

May 7, 2020

June 18, 2020

July 2, 2020

0.41

February 20, 2020

March 19, 2020

April 3, 2020

0.41

Total 2020

1.64

Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Future quarterly distributions, if any, will be determined by the Board. We expect that our distributions to stockholders will generally be from accumulated net investment income, from net realized capital gains or

non-taxable

return of capital, if any, as applicable.

We have elected to be taxed as a RIC under Subchapter M of the Code. To maintain our RIC tax treatment, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, although we currently intend to distribute realized net capital gains (

i.e.

, net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a business development company, we may in the future be limited in our ability to make distributions. Also, the Credit Facility may limit our ability to declare distributions if we default under certain provisions. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of the tax benefits available to us as a regulated investment company. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual

payment-in-kind

income, which represents contractual income added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a regulated investment company.

With respect to the distributions to stockholders, income from origination, structuring, closing and certain other upfront fees associated with investments in portfolio companies are treated as taxable income and accordingly, distributed to stockholders.

Related Parties

We have entered into a number of business relationships with affiliated or related parties, including the following:

•

We have entered into the Advisory Agreement with the Investment Adviser. Mr. Gross, our Chairman,

Co-Chief

Executive Officer and President and Mr. Spohler, our

Co-Chief

Executive Officer, Chief Operating Officer and board member, are managing members and senior investment professionals of, and have financial and controlling interests in, the Investment Adviser. In addition, Mr. Peteka, our Chief Financial Officer, Treasurer and Secretary serves as the Chief Financial Officer for the Investment Adviser.

•

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

day-to-day

operations pursuant to our Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief compliance officer, our chief financial officer and their respective staffs.

•

We have entered into a license agreement with the Investment Adviser, pursuant to which the Investment Adviser has granted us a

non-exclusive,

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

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The Investment Adviser may also manage other funds in the future that may have investment mandates that are similar, in whole and in part, with ours. For example, the Investment Adviser presently serves as investment adviser to SCP Private Credit Income BDC LLC, an unlisted BDC that focuses on investing primarily in senior secured loans, including

non-traditional

asset-based loans and first lien loans and SLR HC BDC LLC, an unlisted BDC whose principal focus is to invest directly and indirectly in senior secured loans and other debt instruments typically to middle market companies within the healthcare industry. In addition, Michael S. Gross, our Chairman,

Co-Chief

Executive Officer and President, Bruce Spohler, our

Co-Chief

Executive Officer and Chief Operating Officer, and Richard L. Peteka, our Chief Financial Officer, serve in similar capacities for SCP Private Credit Income BDC LLC and SLR HC BDC LLC. The Investment Adviser and certain investment advisory affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest

side-by-side

with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser’s allocation procedures. On June 13, 2017, the Adviser received an exemptive order that permits the Company to participate in

negotiated co-investment transactions

with certain affiliates, in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, and pursuant to various conditions (the “Order”). If the Company is unable to rely on the Order for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although the Adviser’s investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, the Company and its stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of the Adviser.

Related party transactions may occur among us, SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL and SLR Equipment. These transactions may occur in the normal course of business. No administrative or other fees are paid to the Investment Adviser by SLR Credit, Equipment Operating Leases LLC, KBH, Loyer Capital LLC, SLR Business Credit, SLR Healthcare ABL or SLR Equipment.

In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global

COVID-19

pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities that we hold. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In a low interest rate environment, including a reduction of LIBOR and SOFR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such difference could potentially increase thereby increasing our net investment income. During the nine months ended September 30, 2022, certain investments in our comprehensive investment portfolio had floating interest rates. These floating rate investments were primarily based on floating LIBOR or SOFR and typically have durations of one to three months after which they reset to current market interest rates. Additionally, some of these investments have floors. The Company also has revolving credit facilities that are generally based on floating LIBOR or SOFR. Assuming no changes to our balance sheet as of September 30, 2022 and no new defaults by portfolio companies, a hypothetical one percent decrease in LIBOR and SOFR on our comprehensive floating rate assets and liabilities would decrease our net investment income by eleven cents per average share over the next twelve months. Assuming no changes to our balance sheet as of September 30, 2022 and no new defaults by portfolio companies, a hypothetical one percent increase in LIBOR and SOFR on our comprehensive floating rate assets and liabilities would increase our net investment income by approximately twelve cents per average share over the next twelve months. However, we may hedge against interest rate fluctuations from

time-to-time

by using standard hedging instruments such as futures, options, swaps and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in any benefits of certain changes in interest rates with respect to our portfolio of investments. At September 30, 2022, we have no interest rate hedging instruments outstanding on our balance sheet.


Increase (Decrease) in LIBOR and SOFR	(1.00	%)		1.00	%
Increase (Decrease) in Net Investment Income Per Share Per Year	(0.11	)	$	0.12

We may also have exposure to foreign currencies through various investments. These investments are converted into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. In order to reduce our exposure to fluctuations in foreign exchange rates, we may borrow from

time-to-time

in such currencies under our multi-currency revolving credit facility or enter into forward currency or similar contracts.

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Item 4.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of September 30, 2022 (the end of the period covered by this report), we, including our

Co-Chief

Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule

13a-15(e)

of the 1934 Act). Based on that evaluation, our management, including the

Co-Chief

Executive Officers and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

(b) Changes in Internal Controls Over Financial Reporting

Management has not identified any change in the Company’s internal control over financial reporting that occurred during the third quarter of 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Other than as described in Part II, Item. 1 - Legal Proceedings section of our Form

10-Q

for the quarter ended March 31, 2022 (which was filed with the SEC on May 3, 2022), to which there have been no material updates as of the date of this report, we, the Administrator, and the Investment Adviser are not currently subject to any material pending legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations beyond what has been disclosed within these financial statements.

Item 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in the March 1, 2022 filing of our Annual Report on

Form 10-K, which

could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than the risk factors set forth below, there have been no material changes during the period ended September 30, 2022 to the risk factors discussed in “Risk Factors” in the March 1, 2022 filing of our Annual Report on Form

10-K.

The Russian invasion of Ukraine may have a material adverse impact on us and our portfolio companies.

On February 24, 2022, the Russian military commenced a full-scale invasion of

Russia’s pre-positioned forces

into Ukraine, which could have a negative impact on the economy and business activity globally (including in the countries in which the Company invests), and therefore could adversely affect the performance of the Company’s investments. Following such invasion, the United States and several European nations announced sanctions against Russia. Furthermore, the conflict between the two nations and the varying involvement of the United States and other NATO countries could preclude prediction as to their ultimate adverse impact on global economic and market conditions, and, as a result, presents material uncertainty and risk with respect to the Company and the performance of its investments or operations, and the ability of the Company to achieve its investment objectives. Additionally, to the extent that third parties, investors, or related customer bases have material operations or assets in Russia or Ukraine, they may have adverse consequences related to the ongoing conflict.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not engage in unregistered sales of securities during the quarter ended September 30, 2022.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:


Exhibit Number		Description

2.1		Agreement and Plan of Merger among SLR Investment Corp., SLR Senior Investment Corp., Solstice Merger Sub, Inc. and SLR Capital Partners, LLC (for the limited purposes set forth therein), dated as of December 1, 2021(7)

3.1		Articles of Amendment and Restatement(1)

3.2		Second Amended and Restated Bylaws(7)

4.1		Form of Common Stock Certificate(2)

4.2		Indenture, dated as of November 16, 2012, between the Registrant and U.S. Bank National Association as trustee(4)

4.3		Second Supplemental Indenture, dated November 22, 2017, relating to the 4.50% Notes due 2023, between the Registrant and U.S. Bank National Association as trustee, including the Form of 4.50% Notes due 2023(5)

10.1		Form of Contribution Agreement, dated as of August 26, 2011, by and between SUNS SPV LLC, as the contributee, and SLR Senior Investment Corp., as the contributor(3)

10.2		Form of Loan and Servicing Agreement, dated as of August 26, 2011 (as amended through the Tenth Amendment dated as of December 29, 2021), by and among SLR Senior Investment Corp., as the servicer and the transferor, SUNS SPV LLC, as the borrower, each of the conduit lenders from time to time party thereto, each of the liquidity banks from time to time party thereto, each of the lender agents from time to time party thereto, Citibank, N.A., as the administrative agent and collateral agent, and Wells Fargo Bank, N.A., as the account bank, the backup servicer and the collateral custodian(9)

10.3		Letter Agreement, dated as of April 1, 2022, between SLR Investment Corp. and SLR Capital Partners, LLC(8)

10.4		Credit Facility Assumption Agreement, dated as of April 1, 2022, by SLR Investment Corp.(8)

10.5		Assumption Agreement, dated as of April 1, 2022, made by SLR Investment Corp. for the benefit of the holders of Notes issues under the Note Purchase Agreement(8)

10.6		Note Purchase Agreement, dated as of March 31, 2020, between SLR Senior Investment Corp. and the purchasers party thereto(6)

23.1		Awareness Letter of Independent Registered Public Accounting Firm*

31.1		Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*

31.2		Certification of Co-Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*

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Exhibit Number		Description

31.3		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*

32.1		Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*

32.2		Certification of Co-Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*

32.3		Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*

101.INS		Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH		Inline XBRL Taxonomy Extension Schema Document.*

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104		Cover Page Interactive Data File — The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

(1)	Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Pre-Effective Amendment No. 7 (File No. 333-148734) filed on January 7, 2010.

(2)	Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 (File No 333-148734) filed on February 9, 2010.

(3)	Previously filed in connection with SLR Senior Investment Corp.’s report on Form 8-K (File No. 814-00849) filed on August 31, 2011.

(4)	Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Post-Effective Amendment No. 6 (File No. 333-172968) filed on November 16, 2012.

(5)	Previously filed in connection with SLR Investment Corp.’s registration statement on Form N-2 Post-Effective Amendment No. 5 (File No. 333-194870) filed on November 22, 2017.

(6)	Previously filed in connection with SLR Senior Investment Corp.’s report on Form 10-Q (File No. 814-00849) filed on May 7, 2020.

(7)	Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on December 1, 2021.

(8)	Previously filed in connection with SLR Investment Corp.’s report on Form 8-K filed on April 1, 2022.

(9)	Previously filed in connection with SLR Investment Corp.’s report on Form 10-Q filed on May 3, 2022.

*	Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 2, 2022.


SLR INVESTMENT CORP.

By:		/ S / M ICHAEL S. G ROSS
		Michael S. Gross Co-Chief Executive Officer (Principal Executive Officer)

By:		/ S / B RUCE J. S POHLER
		Bruce J. Spohler Co-Chief Executive Officer (Principal Executive Officer)

By:		/ S / R ICHARD L. P ETEKA
		Richard L. Peteka Chief Financial Officer (Principal Financial and Accounting Officer)