SLR INVESTMENT CORP. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)


The information contained in this section should be read in conjunction with the
Selected Financial and Other Data and 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 the companies in our portfolio to achieve their objectives,

             including as a result of the current COVID-19 pandemic;


• the valuation of our holdings in portfolio companies, in particular

             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 advisor to locate suitable investments

             for us and to monitor and administer our investments and the impacts
             of the COVID-19 pandemic thereon.


• changes in political conditions and relations between the United States

             States, Russia, Ukraine and other nations.



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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-19pandemic, 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 in 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 of the parties to complete the Mergers within the expected timeframes

             timeline, or at all;



  •   the ability to realize the anticipated benefits of the Mergers;



  •   the effects of disruption on our business from the proposed Mergers;



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



  •   any potential termination of the Merger Agreement;



        •    the actions of our stockholders or the stockholders of SLRC with
             respect to the proposals submitted for their approval in

connection

             with the Mergers; and


• the risks, uncertainties and other factors that we identify in Item 1A. –

             Risk Factors contained in this Annual Report on Form 10-K for 

the year

             ended December 31, 2021 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.

Overview

Solar Capital LLCa Maryland limited liability company, was incorporated in February 2007 and started operations on March 13, 2007 to the initial capital of
$1.2 billion of which 47.04% was financed by affiliated parties.

SLR Investment Corp. (the "Company", "SLRC", "we" or "our") f/k/a Solar Capital,
Ltd., 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").

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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, 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.

As of December 31, 2021, the Investment Adviser has directly invested
approximately $12.5 billion in more than 450 different portfolio companies since
2006. Over the same period, the Investment Adviser completed transactions with
over 200 different financial sponsors.

Merger Agreement

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 and SUNS, as applicable, have approved
the Merger Agreement and the transactions contemplated thereby.

At the effective time of the Merger ("Effective Time"), each share of our common
stock issued and outstanding immediately prior to the Effective Time (other than
shares owned by us or any of our controlled subsidiaries (the "Cancelled
Shares")) will be converted into the right to receive a number of shares of our
common stock equal to the Exchange Ratio (as defined below) (cash may be paid in
lieu of fractional shares).

As of a mutually agreed date no earlier than 48 hours (excluding Sundays and
holidays) prior to the Effective Time (such date, the "Determination Date"),
each of us and SUNS will deliver to the other a calculation of its NAV as of
such date, in each case using a pre-agreedset of assumptions, methodologies and
adjustments. We refer to such calculation with respect to us as the "Closing
SLRC Net Asset Value" and with respect to SUNS as the "Closing SUNS Net Asset
Value". Based on such calculations, the parties will calculate the "SLRC Per
Share NAV", which will be equal to (i) the Closing SLRC Net Asset Value divided
by (ii) the number of shares of our common stock issued and outstanding as of
the Determination Date (excluding any Cancelled Shares), and the "SUNS Per Share
NAV", which will be equal to (A) the Closing SUNS Net Asset Value divided by
(B) the number of shares of SUNS Common Stock issued and outstanding as of the
Determination Date. The "Exchange Ratio" will be equal to the quotient (rounded
to four decimal places) of (i) the SUNS Per Share NAV divided by (ii) the SLRC
Per Share NAV.

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We and SUNS will update and redeliver the Closing SLRC Net Asset Value or the
Closing SUNS Net Asset Value, respectively, in the event of a material change to
such calculation between the Determination Date and the closing of the Mergers
and if needed to ensure that the calculation is determined within 48 hours
(excluding Sundays and holidays) prior to the Effective Time.

The Merger Agreement contains customary representations and warranties by each
of us, SUNS and SLR Capital Partners. 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 is currently anticipated to occur during the
first half of calendar year 2022, is subject to certain closing conditions,
including requisite approvals of our and SUNS's stockholders and certain other
closing conditions.

The Merger Agreement also contains certain termination rights in favor of us and
SUNS, including if the Mergers are not completed on or before December 1, 2022
or if the requisite approvals of our or SUNS's stockholders are not obtained.
The Merger Agreement provides that, upon the termination of the Merger Agreement
under certain circumstances, a third party acquiring SUNS may be required to pay
us a termination fee of approximately $7.6 million. The Merger Agreement
provides that, upon the termination of the Merger Agreement under certain
circumstances, a third party acquiring us may be required to pay to SUNS a
termination fee of approximately $25.6 million.

Effective upon the closing of the Mergers, SLR Capital Partners has voluntarily
agreed to a permanent reduction of the annual base management fee rate by 25
basis points, resulting in an annual base management fee rate payable by us to
SLR Capital Partners of 1.50% on gross assets up to 200% of our total net assets
as of the immediately preceding quarter end. We will retain the contractual
annual base management fee rate payable by us to SLR Capital Partners of 1.00%
on gross assets that exceed 200% of our total net assets as of the immediately
preceding quarter end.

The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Merger Agreement, which is incorporated by reference as Exhibit 2.1 to this
Annual Report on Form 10-K and incorporated by reference herein. The
representations, warranties, covenants and agreements contained in the Merger
Agreement were made only for purposes of the Merger Agreement and as of specific
dates; were solely for the benefit of the parties to the Merger Agreement
(except as may be expressly set forth in the Merger Agreement); may be subject
to limitations agreed upon by the parties, including being qualified by
confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these
matters as facts; and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors.
Investors and security holders should not rely on such representations,
warranties, covenants or agreements, or any descriptions thereof, as
characterizations of the actual state of facts or condition of any of the
parties to the Merger Agreement or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter of the
representations, warranties, covenants and agreements may change after the date
of the Merger Agreement, which subsequent information may or may not be fully
reflected in public disclosures by the parties to the Merger Agreement.

RECENT DEVELOPMENTS

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.

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At March 1, 2022the Board declared a quarterly distribution of $0.41 per share payable on April 1, 2022 to file holders from March 18, 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.

Income

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"), 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.

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 SLR Capital
Partners. 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 the execution

          diligence reviews of prospective investments and advisory fees;



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  •   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, liability in the event of errors and omissions of directors and managers

          insurance and other insurance premiums;


• direct administration costs and expenses, including printing, mailing,

          long distance telephone and staff;


• fees and expenses associated with independent audits and external legal services

          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

in connection with the administration of our business, including payments under the

administration agreement which will be based on our attributable share of

overhead and other costs incurred by SLR Capital Management in

perform its obligations under the Administration Agreement, including

rent, fees and expenses associated with compliance

duties, and our attributable share of compensation costs and

related expenses of our Chief Compliance Officer and Chief Financial Officer

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 year ended December 31, 2021, we invested approximately $596 million
across 52 portfolio companies. This compares to investing approximately
$427 million in 40 portfolio companies for the year ended December 31, 2020.
Investments sold, prepaid or repaid during the year ended December 31, 2021
totaled approximately $468 million versus approximately $363 million for the
year ended December 31, 2020.

At December 31, 2021, our portfolio consisted of 106 portfolio companies and was
invested 26.7% in cash flow senior secured loans, 27.0% in asset-based senior
secured loans / SLR Credit Solutions ("SLR Credit"), 13.5% in Kingsbridge
Holdings LLC ("KBH"), 16.4% in equipment senior secured financings / SLR
Equipment Finance ("SLR Equipment"), and 16.4% in life science senior secured
loans, in each case, measured at fair value, versus 105 portfolio companies
invested 18.8% in cash flow senior secured loans, 27.0% in asset-based senior
secured loans / SLR Credit, 14.2% in KBH, 18.6% in equipment senior secured
financings / SLR Equipment, and 21.4% in life science senior secured loans, in
each case, measured at fair value, at December 31, 2020.

At December 31, 2021, 79.4% or $1.20 billion of our income producing investment
portfolio* is floating rate and 20.6% or $313.4 million is fixed rate, measured
at fair value. At December 31, 2020, 72.1% or $1.10 billion of our income
producing investment portfolio* is floating rate and 27.9% or $425.4 million is
fixed rate, measured at fair value. As of December 31, 2021 and 2020, we had one
and zero issuers on non-accrual status, respectively.

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Since inception through December 31, 2021, SLRC and its predecessor companies
have invested approximately $7.3 billion in more than 320 portfolio companies.
Over the same period, SLRC has completed transactions with more than 150
different financial sponsors.

* We have included SLR Credit Solutions, SLR Equipment Financing and Kingsbridge Holdings, LLC in 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
December 31, 2021, total commitments to the revolving credit facility are
$200 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 December 31, 2020, SLR Credit had 30 funded commitments
to 24 different issuers with total funded loans of approximately $404.1 million
on total assets of $433.9 million. As of December 31, 2021 and December 31,
2020, the largest loan outstanding totaled $35.0 million and $45.0 million,
respectively. For the same periods, the average exposure per issuer was
$15.1 million and $16.8 million, respectively. SLR Credit's credit facility,
which is non-recourse to the Company, had approximately $100.7 million and
$183.9 million of borrowings outstanding at December 31, 2021 and December 31,
2020, respectively. For the years ended December 31, 2021 and 2020, SLR Credit
had net income of $14.2 million and $23.3 million, respectively, on gross income
of $34.0 million and $45.3 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 Credit's consolidated financial
statements for the fiscal years ended December 31, 2021 and December 31, 2020
are attached as an exhibit to this annual report on Form 10-K.

SLR Equipment Financing

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 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

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of $264.0 million. As of December 31, 2020, SLR Equipment had 138 funded
equipment-backed leases and loans to 61 different customers with a total net
investment in leases and loans of approximately $188.4 million on total assets
of $263.4 million. As of December 31, 2021 and December 31, 2020, the largest
position outstanding totaled $19.2 million and $25.1 million, respectively. For
the same periods, the average exposure per customer was $3.5 million and
$3.1 million, respectively. SLR Equipment's credit facility, which is
non-recourse to the Company, had approximately $118.0 million and $100.6 million
of borrowings outstanding at December 31, 2021 and December 31, 2020,
respectively. For the years ended December 31, 2021 and 2020, SLR Equipment had
net losses of $9.7 million and $8.9 million, respectively, on gross income of
$22.9 million and $24.5 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. SLR Equipment's consolidated financial statements for
the fiscal years ended December 31, 2021 and December 31, 2020 are attached as
an exhibit to this annual report on Form 10-K.

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

As of December 31, 2021 and 2020, KBHT had total assets of $738.4 million and
$744.7 million, respectively. For the same periods, debt recourse to KBHT
totaled $216.9 million and $219.0 million, respectively, and non-recourse debt
totaled $323.8 million and $335.9 million, respectively. For the year ended
December 31, 2021 and the period November 3, 2020 through December 31, 2020,
KBHT had net income of $12.2 million and $2.2 million, respectively, on gross
income of $245.9 million and $43.6 million, respectively. Due to timing and
non-cash items, there may be material differences between GAAP net income and
cash available for distributions. As such, and subject to fluctuations in 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. KBHT's consolidated financial statements for
the year ended December 31, 2021 and the period November 3, 2020 to December 31,
2020 are attached as an exhibit to this annual report on Form 10-K.

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.

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The determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express uncertainty as to the possible effect of such assessments, and any changes in such assessments, on our consolidated financial statements.

2022 Unsecured Notes Valuation

The Company has made an election to apply the fair value option of accounting to
the 2022 Unsecured Notes, in accordance with ASC 825-10. We believe accounting
for the 2022 Unsecured Notes at fair value better aligns the measurement
methodologies of assets and liabilities, which may mitigate certain earnings
volatility.

Revenue Recognition

The Company records dividend income and interest, adjusted for amortization of
premium and accretion of discount, on an accrual basis. Investments that are
expected to pay regularly scheduled interest and/or dividends in cash are
generally placed on non-accrual status when principal or interest/dividend cash
payments are past due 30 days or more (90 days or more for equipment financing)
and/or when it is no longer probable that principal or interest/dividend cash
payments will be collected. Such non-accrual investments are restored to accrual
status if past due principal and interest or dividends are paid in cash, and in
management's judgment, are likely to continue timely payment of their remaining
interest or dividend obligations. Interest or dividend cash payments received on
investments may be recognized as income or applied to principal depending upon
management's judgment. Some of our investments may have contractual PIK income.
PIK income computed at the contractual rate, as applicable, is accrued and
reflected as a receivable up to the capitalization date. PIK investments offer
issuers the option at each payment date of making payments in cash or in
additional securities. When additional securities are received, they typically
have the same terms, including maturity dates and interest rates as the original
securities issued. On these payment dates, the Company capitalizes the accrued
interest or dividends receivable (reflecting such amounts as the basis in the
additional securities received). PIK generally becomes due at the maturity of
the investment or upon the investment being called by the issuer. At the point
the Company believes PIK is not expected to be realized, the PIK investment will
be placed on non-accrual status. When a PIK investment is placed on non-accrual
status, the accrued, uncapitalized interest or dividends is reversed from the
related receivable through interest or dividend income, respectively. The
Company does not reverse previously capitalized PIK income. Upon capitalization,
PIK is subject to the fair value estimates associated with their related
investments. PIK investments on non-accrual status are restored to accrual
status if the Company again believes that PIK is expected to be realized. Loan
origination fees, original issue discount, and market discounts are capitalized
and amortized into income using the effective interest method. Upon the
prepayment of a loan, any unamortized loan origination fees are recorded as
interest income. We record prepayment premiums on loans and other investments as
interest income when we receive such amounts. Capital structuring fees are
recorded as other income when earned.

The typically higher yields and interest rates on PIK securities, to the extent
we invested, reflects the payment deferral and increased credit risk associated
with such instruments and that such investments may represent a significantly
higher credit risk than coupon loans. PIK securities may have unreliable
valuations because their continuing accruals require continuing judgments about
the collectability of the deferred payments and the value of any associated
collateral. PIK income has the effect of generating investment income and
increasing the incentive fees payable at a compounding rate. In addition, the
deferral of PIK income also increases the loan-to-value ratio at a compounding
rate. PIK securities create the risk that incentive fees will be paid to the
Investment Adviser based on non-cash accruals that ultimately may not be
realized, but the Investment Adviser will be under no obligation to reimburse
the Company for these fees. For the fiscal years ended December 31, 2021 and
2020, capitalized PIK income totaled $7.6 million and $5.4 million,
respectively.

Net realized gain or loss and net change in unrealized gain or loss

We generally measure the realized gain or loss as the difference between the net redemption or sale proceeds and the amortized cost of the investment, excluding any unrealized appreciation or depreciation.

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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,
"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 is evaluating the
potential impact that the adoption of this guidance will have on the Company's
financial statements.

RESULTS OF OPERATIONS

Results comparisons are for the fiscal years ended December 31, 2021
and December 31, 2020. Results for the fiscal year ended December 31, 2019 can
be found in Item 7 of the Company's report on Form 10-K filed on February 24,
2021, which is incorporated by reference herein.

investment income

For the fiscal years ended December 31, 2021 and 2020, gross investment income
totaled $139.4 million and $121.7 million, respectively. The increase in gross
investment income for the year over year periods was primarily due to growth in
the size of the income producing portfolio.

Expenses

Expenses totaled $78.4 million and $62.5 million, respectively, for the fiscal
years ended December 31, 2021 and 2020, of which $38.6 million and
$27.2 million, respectively, were base management fees and performance-based
incentive fees and $29.9 million and $27.2 million, respectively, were interest
and other credit facility expenses. Administrative services and other general
and administrative expenses totaled $9.9 million and $8.2 million, respectively,
for the fiscal years ended December 31, 2021 and 2020. 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 from 2020 to 2021 was primarily driven by a larger income
producing investment portfolio, which resulted in higher management and
incentive fees as well as higher interest costs. Additionally, higher general
and administrative expenses resulted from expenses related to the potential
merger with SLR Senior Investment Corp.

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Net investment income

The Company's net investment income totaled $60.9 million and $59.2 million, or
$1.44 and $1.40, per average share, respectively, for the fiscal years ended
December 31, 2021 and 2020.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling approximately
$468 million and $363 million, respectively, for the fiscal years ended
December 31, 2021 and 2020. Net realized gain (loss) over the same periods were
$0.03 million and ($26.6) million, respectively. Net realized gain for fiscal
year 2021 was de minimis. Net realized loss for fiscal year 2020 was primarily
related to the exit of our investment in IHS Intermediate, Inc.

Net change in unrealized loss

For the fiscal years ended December 31, 2021 and 2020, net change in unrealized
loss on the Company's assets and liabilities totaled $1.4 million and
$17.1 million, respectively. Net unrealized loss for the fiscal year ended
December 31, 2021 is primarily due to depreciation in the value of our
investments in American Teleconferencing Services, Ltd., Rug Doctor and SOAGG
LLC, among others, partially offset by appreciation in the value of our
investments in KBH Topco, LLC, SLR Credit Solutions and PhyMed Management LLC,
among others. Net unrealized loss for the fiscal year ended December 31, 2020 is
primarily due to depreciation in the value of our investments in NEF Holdings
LLC, Rug Doctor, PhyMed Management LLC, SOINT, LLC and SOAGG LLC, among others,
partially offset by the reversal of previously recognized unrealized
depreciation in the value of our investment in IHS Intermediate, Inc. and
unrealized appreciation in the value of our investments in Crystal Financial LLC
and B. Riley Financial Inc., among others.

Net increase in net operating assets

For the fiscal years ended December 31, 2021 and 2020, the Company had a net
increase in net assets resulting from operations of $59.6 million and
$15.5 million, respectively. For the fiscal years ended December 31, 2021 and
2020, earnings per average share were $1.41 and $0.37, respectively.

CASH AND CAPITAL RESOURCES

The Company's liquidity and capital resources are generated and generally
available through its Credit Facility (as defined below), the 2022 Unsecured
Notes, the 2022 Tranche C Notes, the 2023 Unsecured Notes, the 2024 Unsecured
Notes, the 2026 Unsecured Notes and the 2027 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 December 31, 2021, we had a total of $377.5 million
of unused borrowing capacity under the 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 December 28, 2021, the Company closed on Amendment No. 1 to its August 28,
2019 senior secured credit agreement (the "Credit Facility"). Post 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.

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At December 28, 2021the Company has prepaid and terminated the NEFPASS SPV SARL
credit facility, dated September 26, 2018.

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.

On February 12, 2020, a new lender to the Company executed a commitment increase
to the Credit Facility providing for an additional $75.0 million of revolving
credit, bringing the Credit Facility's total revolving credit capacity to
$545.0 million.

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

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

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

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

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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 $320 million
in cash equivalents as of December 31, 2021.

Debt

Unsecured tickets

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.

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

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

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

Revolving and term loan facilities

On December 28, 2021, the Company closed on Amendment No. 1 to its August 28,
2019 senior secured credit agreement. Post amendment, the Credit Facility is
composed of $600 million of revolving credit and

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$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 December 31, 2021, outstanding USD
equivalent borrowings under the Credit Facility totaled $322.5 million, composed
of $222.5 million of revolving credit and $100.0 million of term loans.

At December 28, 2021the Company has prepaid and terminated the NEFPASS SPV SARL
credit facility, dated September 26, 2018.

Certain covenants on our issued debt may restrict our business activities,
including limitations that could hinder our ability to finance additional loans
and investments or to make the distributions required to maintain our status as
a RIC under Subchapter M of the Code. At December 31, 2021, the Company was in
compliance with all financial and operational covenants required by our credit
facilities.

Contractual Obligations

A summary of our significant contractual payment obligations is as follows as of
December 31, 2021:

                      Payments Due by Period (in millions)

                                       Less than                                       More Than
                           Total        1 Year         1-3 Years       3-5 Years        5 Years
 Credit Facility (1)      $ 222.5     $        -      $        -      $     222.5     $        -
 Unsecured senior notes     496.0           171.0           200.0            75.0            50.0
 Term Loans                 100.0              -               -            100.0              -



(1) From December 31, 2021we had a total of $377.5 million unused loans

capacity under the credit facility, subject to borrowing base limits.


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

We have also entered into two contracts under which we have future commitments:
the Advisory Agreement, pursuant to which SLR Capital Partners, LLC 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.

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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 presented in the following table (in thousands) for each financial year ended the 31st of December over the past ten years, unless otherwise stated. The “-” indicates information that the SECOND expressly does not require disclosure for certain types of senior securities.

                                                                                Involuntary
                                                             Asset              Liquidating             Average
                                  Total Amount             Coverage             Preference           Market Value
Class and Year                   Outstanding(1)           Per Unit(2)           Per Unit(3)           Per Unit(4)
Revolving Credit Facility
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
2022 Unsecured Notes
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 2021                               21,000                    52                    -                    N/A
Fiscal 2020                               21,000                    70                    -                    N/A
Fiscal 2019                               21,000                    89                    -                    N/A
Fiscal 2018                               21,000                   129                    -                    N/A
Fiscal 2017                               21,000                   105                    -                    N/A
2023 Unsecured Notes
Fiscal 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 2021                              125,000                   309                    -                    N/A
Fiscal 2020                              125,000                   417                    -                    N/A
Fiscal 2019                              125,000                   531                    -                    N/A
2026 Unsecured Notes
Fiscal 2021                               75,000                   186                    -                    N/A
Fiscal 2020                               75,000                   250                    -                    N/A
Fiscal 2019                               75,000                   319                    -                    N/A



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                                                                               Involuntary
                                                             Asset             Liquidating            Average
                                   Total Amount            Coverage            Preference          Market Value
Class and Year                    Outstanding(1)          Per Unit(2)          Per Unit(3)          Per Unit(4)
2027 Unsecured Notes
Fiscal 2021                      $         50,000        $         124                   -                   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 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
Total Senior Securities

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.



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(2) The asset coverage ratio for a class of senior securities representing

Indebtedness is our total consolidated assets less any

liabilities and debts not represented by senior securities, divided by

all senior debt securities. 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 category of debt, the

total asset coverage per unit is assigned based on the amount outstanding

each category of debt at the end of the period. From December 31, 2021active

coverage was 202.9%.

(3) The amount to which such class of Senior Securities would be entitled to

involuntary liquidation of the issuer in preference to any security below

this.

(4) Not applicable except for 2042 Unsecured Notes which have been publicly

negotiated. The average market value per unit is calculated by taking the

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

the market value for the financial years 2016, 2015, 2014, 2013 and 2012 was

$100,175, $98,196, $94,301, $93,392and $92,302respectively.


The following is a schedule of financial highlights for the respective years:

                               Year ended           Year ended            Year ended            Year ended           Year ended
                              December 31,         December 31,         

the 31st of December, the 31st of December, the 31st of December,

                                  2016                 2015                  2014                  2013                 2012
Per Share Data: (a)
Net asset value,
beginning of year             $       20.79        $       22.05         $       22.50         $       22.70        $       22.02

Net investment income                  1.68                 1.52                  1.56                  1.91                 2.20
Net realized and
unrealized gain (loss)                 0.84                (1.18 )               (0.43 )               (0.22 )               0.91

Net increase in net
assets resulting from
operations                             2.52                 0.34                  1.13                  1.69                 3.11
Distributions to
stockholders (see note
8a):
From net investment
income                                (1.60 )              (1.60 )               (1.55 )               (1.55 )              (2.27 )
From net realized gains                  -                    -                     -                  (0.46 )              (0.16 )
From return of capital                   -                    -                  (0.05 )                  -                    -
Anti-dilution                          0.03                   -                   0.02                  0.12                   -

Net asset value, end of
year                          $       21.74        $       20.79         $       22.05         $       22.50        $       22.70

Per share market value,
end of year                   $       20.82        $       16.43         $       18.01         $       22.55        $       23.91
Total Return(b)                       37.49 %              (0.29 )%             (13.58 )%               2.82 %              20.03 %
Net assets, end of year       $     918,507        $     882,698         $     936,568         $     995,637        $     878,273
Shares outstanding, end
of year                          42,248,525           42,464,762            42,465,162            44,244,195           38,694,060
Ratios to average net
assets:
Net investment income                  7.91 %               6.94 %                6.93 %                8.43 %               9.79 %

Operating expenses                     6.25 %               3.84 %*               4.24 %                5.82 %               6.25 %
Interest and other credit
facility expenses**                    2.73 %               1.68 %                1.50 %                1.99 %               2.28 %

Total expenses                         8.98 %               5.52 %*               5.74 %                7.81 %               8.53 %

Average debt outstanding      $     495,795        $     262,341         $     225,000         $     318,186        $     237,859
Portfolio turnover ratio               31.0 %               13.0 %                53.7 %                25.6 %               54.7 %



(a) Calculated using the average number of shares outstanding method.

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(b) Total return is based on the change in the market price per share during the year

and takes into account distributions, if any, reinvested in accordance with

the dividend reinvestment plan. The total return does not include a selling charge.

* The ratio of operating expenses to average net assets and the ratio of total

expenses in relation to average net assets are presented net of a voluntary incentive fee

derogation (see note 3).

For the year ended December 31, 2015the ratios of operating expenses to

average net assets and total expenses to average net assets would be 4.02%

and 5.70%, respectively, without the voluntary incentive fee waiver.

** Ratios presented without non-recurring costs associated with modifications

    and establishment of the Credit Facility and 2022 Unsecured Notes would be
    2.39%, 1.68%, 1.50%, 1.74% and 1.41%, respectively for the years shown.

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
December 31, 2021 and December 31, 2020, respectively:

                                                  December 31,       December 31,
                                                      2021               2020
   (in millions)
   SLR Credit Solutions*                         $         44.3     $         44.3
   Arcutis Biotherapeutics, Inc.                           43.5                 -
   Glooko, Inc.                                            25.1                 -
   BridgeBio Pharma, Inc.                                  23.0                 -
   CC SAG Holdings Corp. (Spectrum Automotive)             18.8                 -
   Inszone Mid, LLC                                        12.5                 -
   One Touch Direct, LLC                                    7.2                5.0
   Rezolute, Inc.                                           5.7                 -
   Maurices, Incorporated                                   5.7                 -
   SLR Equipment Finance                                    5.0                4.2
   NAC Holdings Corporation                                 4.8                 -
   Ivy Fertility Services, LLC                              4.5                 -
   SOC Telemed, Inc.                                        4.4                 -
   RQM+ Corp.                                               3.8                 -
   Atria Wealth Solutions, Inc.                             3.7                3.5
   Kid Distro Holdings, LLC                                 2.7                 -
   Foundation Consumer Brands, LLC                          2.3                 -
   Neuronetics, Inc.                                        2.2                6.7
   MMIT Holdings, LLC                                       2.0                 -
   Basic Fun, Inc.                                          1.9                1.1
   Pinnacle Treatment Centers, Inc.                         1.4                1.4
   SunMed Group Holdings, LLC                               0.8                 -
   Ultimate Baked Goods Midco LLC                           0.8                 -
   American Teleconferencing Services, Ltd.                 0.6                 -
   Smile Doctors LLC                                         -                26.7
   Soleo Health Holdings, Inc.                               -                 7.4



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                                               December 31,      December 31,
                                                   2021              2020
        (in millions)
        Cardiva Medical, Inc.                  $          -      $         7.3
        Kindred Biosciences, Inc.                         -                6.9
        PQ Bypass, Inc.                                   -                5.0

        Centrexion Therapeutics, Inc.                     -                3.8
        Sentry Data Systems, Inc.                         -                1.6
        Delphinus Medical Technologies, Inc.              -                1.3

        Total Commitments                      $       226.7     $      
126.2



* The Company controls the financing of the SLR Credit Solutions commitment and may

cancel it at its discretion.


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 December 31, 2021
and December 31, 2020, the Company had sufficient cash available and/or liquid
securities available to fund its commitments and had reviewed them for any
appropriate fair value adjustment.

In the normal course of 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
        March 1, 2022             March 18, 2022         April 1, 2022     $  0.41

        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





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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 our 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 distributions to shareholders, income from origination, structuring, closing and certain other up-front costs associated with holding company investments is treated as taxable income and therefore distributed to shareholders.

Related parties

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

• We have concluded the consulting contract with SLR Capital Partners.

Mr Grossour Chairman, Co-Chief Executive Officer and President and

Mr. Spohlerour Co-Chief Executive Officer, Chief Operating Officer and

member of the Board of Directors, are senior management and investment professionals

of, and hold financial and controlling interests in, the investment

To advise. Besides, Mr Petekaour financial director, treasurer

and the secretary serves as the chief financial officer for Capital SLR

          Partners.



     •    The Administrator provides us with the office facilities and

the administrative services necessary for the conduct of day-to-day operations

in accordance with 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 compliance officer

          officer, our chief financial officer and their respective staffs.




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• We have entered into a license agreement with the Investment Adviser,

under which the Investment Advisor has granted us a non-exclusive right,

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


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 SLR
Senior Investment Corp., a publicly traded BDC, which focuses on investing in
senior secured loans, including first lien and second lien debt instruments, as
well as 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 SLR Senior Investment Corp., 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.

Transactions with related parties may take place between SLR Investment Corp.SLR Credit Solutions, Equipment Operating Rentals LLC, Kingsbridge Holdings, LLC, Rent Capital LLC, SLR Business Credit, SLR Healthcare ABL and SLR Equipment Finance. These transactions may take place in the normal course of business. No administrative or other fees are paid to SLR Capital Partners by SLR Credit Solutions, Equipment Operating Rentals LLC, Kingsbridge Holdings, LLC, Rent Capital LLCSLR Business Credit, SLR Healthcare ABL or SLR Equipment Finance.

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.

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