##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

FOR THE TRANSITION PERIOD
FROM             TO

COMMISSION FILE NUMBER: 814-00849





SOLAR SENIOR
CAPITAL LTD.

(Exact name of registrant as specified in its charter)







|                                         |  |                                        
|---------------------------------------- |  | ---------------------------------------
|Maryland                                 |  | 27-4288022                             
|(State of Incorporation)                 |  | (I.R.S. Employer Identification Number)
|                                         | 
|500 Park Avenue New York, N.Y.           |  | 10022                                  
|(Address of principal executive offices) |  | (Zip Code)                             

Registrants telephone number, including area code: (212) 993-1670

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



|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of Each Class                     |  | Name of Each Exchange on Which Registered
|Common Stock, par value $0.01 per share |  | The NASDAQ Global Select Market          

Securities registered pursuant to Section 12(g) of the Act: None





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act.    Yes   ̈    No    x

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  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  | x
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller Reporting Company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Act)    Yes   ̈    No  x

The aggregate market value of common stock held by non-affiliates of the Registrant on June 30, 2014 based on the
closing price on that date of $16.88 on the NASDAQ Global Select Market was approximately $181.8 million. For the purposes of calculating this amount only, all directors and executive officers of the Registrant have been treated as affiliates. There
were 11,533,315 shares of the Registrants common stock outstanding as of February 24, 2015.

Portions of the registrants Proxy Statement for its 2015 Annual Meeting of Stockholders to be filed not later than
120 days after the end of the fiscal year covered by this Annual Report on Form 10-K are incorporated by reference into Part III of this Form 10-K.









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SOLAR SENIOR CAPITAL LTD.

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS



|         |  |                                                                                                              |  |      |     | 
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|         |  |                                                                                                              |  | Page |    
|         |  | PART I                                                                                                       |  |      |     | 
|Item 1.  |  | Business                                                                                                     |  |      | 1   | 
|Item 1A. |  | Risk Factors                                                                                                 |  |      | 24  | 
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  |      | 49  | 
|Item 2.  |  | Properties                                                                                                   |  |      | 49  | 
|Item 3.  |  | Legal Proceedings                                                                                            |  |      | 50  | 
|Item 4.  |  | Mine Safety Disclosures                                                                                      |  |      | 50  | 
|         |  |                                                                                                             
|         |  | PART II                                                                                                      |  |      |     | 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  |      | 51  | 
|Item 6.  |  | Selected Financial Data                                                                                      |  |      | 55  | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                        |  |      | 56  | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  |      | 70  | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  |      | 71  | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                         |  |      | 101 | 
|Item 9A. |  | Controls and Procedures                                                                                      |  |      | 101 | 
|Item 9B. |  | Other Information                                                                                            |  |      | 101 | 
|         |  |                                                                                                             
|         |  | PART III                                                                                                     |  |      |     | 
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                       |  |      | 102 | 
|Item 11. |  | Executive Compensation                                                                                       |  |      | 102 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters               |  |      | 102 | 
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                    |  |      | 102 | 
|Item 14. |  | Principal Accounting Fees and Services                                                                       |  |      | 102 | 
|         |  |                                                                                                             
|         |  | PART IV                                                                                                      |  |      |     | 
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                      |  |      | 103 | 
|         |  | Signatures                                                                                                   |  |      | 105 | 



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PART I



|Item 1. | Business
|------- | --------

Solar Senior Capital Ltd. (Solar Senior, the Company, SUNS, we, us or our), a Maryland corporation formed in December 2010, is a
closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company (or 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 tax purposes we 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 24, 2011, we priced our initial public offering (the IPO), selling 9.0 million shares,
including the underwriters over-allotment, at a price of $20.00 per share. Concurrent with this offering, management purchased an additional 500,000 shares through a private placement transaction exempt from registration under the Securities
Act of 1933, as amended, or the Securities Act (the Concurrent Private Placement), also at $20.00 per share.

On August 26, 2011, the Company established SUNS SPV, LLC (SUNS SPV) which entered into a $200 million senior secured revolving credit facility (the Credit Facility) with
Citigroup Global Markets Inc. acting as administrative agent. The Credit Facility was scheduled to mature on August 26, 2016 and generally bore interest at the London Interbank Offered Rate (LIBOR) plus 2.25%. The Credit Facility
has $150 million immediately available with an additional $50 million available under a delayed draw feature. The Credit Facility can also be expanded up to $600 million and is secured by all of the assets held by the SUNS SPV. Under the terms of
the Credit Facility, Solar Senior and the 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 Credit Facility also includes usual and customary events of default for credit facilities of this nature.

On November 7, 2012, we amended the Credit Facility. As a result of the amendment, the stated interest rate on the
Credit Facility was reduced to LIBOR plus 2.00% from LIBOR plus 2.25%, and the Credit Facility continues to have no LIBOR floor requirement. In addition, the amendment reduced certain non-usage fees. The amendment also provided us greater
flexibility and extended the final maturity date to November 6, 2017.

On June 30, 2014, the Company
again amended the Credit Facility. As a result of this amendment, commitments under the Credit Facility were reduced by $25 million to $175 million and may be expanded up to $600 million under its accordion feature. This amendment to the Credit
Facility also added greater investment flexibility and extends the final maturity date to June 28, 2019. The stated interest rate remains LIBOR plus 2.00% with no LIBOR floor requirement.

We invest primarily in 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 seek to maximize current income consistent with the preservation of capital. We seek to achieve our investment objective by investing primarily in senior loans, including
first lien and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which we refer to collectively as senior loans. We may also invest in debt of public companies that are
thinly traded. Under normal market conditions, at least 80% of the value of our net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. Senior loans typically pay interest at rates which are
determined periodically on the basis of a floating base lending rate, primarily LIBOR, plus a premium. Senior loans in which we expect to invest are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other
business entities which operate in various industries and geographical regions. Senior loans typically are rated below investment grade. Securities rated below investment grade are often referred to as leveraged loans or high
yield securities, and may be considered high risk compared to debt instruments that are rated investment grade.



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We invest in senior loans made primarily to private leveraged middle-market
companies with approximately $20 million to $100 million of EBITDA. Our business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally
range between $5 million and $30 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or strategic initiatives. 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 opportunistic 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. We may invest up to 30% of our total assets in such opportunistic investments, including senior loans issued by
non-U.S. issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act. We are managed by Solar Capital Partners, LLC (Solar Capital Partners). Solar Capital Management, LLC (Solar Capital
Management) provides the administrative services necessary for us to operate.

As of December 31,
2014, our investments totaled $340.5 million and our net asset value was $203.5 million. Our portfolio was comprised of debt and equity investments in 43 portfolio companies with our portfolio of income producing investments having a weighted
average annualized yield on a fair value basis of approximately 7.0%.

During our fiscal year ended
December 31, 2014, we invested $216.1 million across 35 portfolio companies through a combination of primary and secondary market purchases. Investments sold or prepaid during the fiscal year ended December 31, 2014 totaled $143.1 million.

Solar Capital Partners

Solar Capital Partners, our investment adviser, is controlled and led by Michael S. Gross, our chairman and chief executive officer, and Bruce Spohler, our chief operating officer. They are supported
by a team of dedicated investment professionals. Solar Capital Partners investment team has extensive experience in leveraged lending and private equity, as well as significant contacts with financial sponsors.

In addition, Solar Capital Partners serves as the investment adviser for Solar Capital Ltd. (or Solar
Capital), a publicly traded business development company with approximately $1.7 billion of investable capital that invests in the senior debt securities, mezzanine loans and equity securities of leveraged middle market companies similar to
those we intend to target for investment. Through December 31, 2014, the investment team led by Messrs. Gross and Spohler has invested approximately $4.7 billion in more than 180 different portfolio companies for Solar Capital and Solar
Senior, involving an aggregate of more than 110 different financial sponsors. As of February 24, 2015, Mr. Gross and Mr. Spohler beneficially owned, either directly or indirectly, approximately 6.7% and 4.1%, respectively, of our
outstanding common stock.

Solar Capital Management

Pursuant to an administration agreement (the Administration Agreement), Solar Capital Management furnishes us
with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the Administration Agreement, Solar Capital Management also performs, or oversees the performance of, our required administrative
services, which include, among other things, being responsible for the financial records which we are required to maintain and preparing reports to our stockholders. In addition, Solar Capital Management assists us in determining and publishing our
net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional
services rendered to us by others. Solar Capital Management also provides managerial assistance, if any, on our behalf to those portfolio companies that request such assistance.



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Operating and Regulatory Structure

A BDC is regulated by the 1940 Act. A BDC must be organized in the United States for the purpose of investing in or
lending to primarily private companies and making significant managerial assistance available to them. A BDC may use capital provided by public stockholders and from other sources to make long-term, private investments in businesses. A BDC provides
stockholders the ability to retain the liquidity of a publicly traded stock while sharing in the possible benefits, if any, of investing in primarily privately owned companies.

We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized
by vote of a majority of our outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such companys voting
securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b) more than 50% of the outstanding voting securities of such company. We do not anticipate any
substantial change in the nature of our business.

As with other companies regulated by the 1940 Act, a BDC
must adhere to certain substantive regulatory requirements. A majority of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are required to provide and maintain a bond issued by a
reputable fidelity insurance company to protect the BDC. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such persons office.

As a BDC, we are
required to meet an asset coverage ratio, reflecting the value of our total assets to our total senior securities, which include all of our borrowings and any preferred stock we may issue in the future, of at least 200%. We may also be prohibited
under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, prior approval by the Securities and Exchange Commission
(SEC).

We are generally not able to issue and sell our common stock at a price below net asset
value per share without annual shareholder approval. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our board of directors
determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale. In addition, we may generally issue new shares of our common stock at a price below net asset value in rights
offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

As a
BDC, we are generally limited in our ability to invest in any portfolio company in which our investment adviser or any of its affiliates currently have an investment or to make any co-investments with our investment adviser or its affiliates without
an exemptive order from the SEC, subject to certain exceptions.

We will be periodically examined by the SEC
for compliance with the 1940 Act.

Qualifying Assets

Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940
Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDCs total assets. The principal categories of qualifying assets relevant to our business are the
following:



| | (1) | Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited
exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(a) is organized under the laws of, and has its principal place of business
in, the United States;

(b) is not an investment company (other than a small business
investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and

(c) satisfies any of the following:

i.) does not
have any class of securities that is traded on a national securities exchange;

ii.) has a
class of securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;

iii.) is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person
who is a director of the eligible portfolio company; or

iv.) is a small and solvent company
having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million.



| | (2) | Securities of any eligible portfolio company which we control.
| | --- | --------------------------------------------------------------



| | (3) | Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in
transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they came due without material assistance other
than conventional lending or financing arrangements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and
we already own 60% of the outstanding equity of the eligible portfolio company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the
exercise of warrants or rights relating to such securities.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained to conduct the business operations of
the business development company, deferred organization and operating expenses, and other noninvestment assets necessary and appropriate to its operations as a business development company, including notes of indebtedness of directors, officers,
employees, and general partners held by a business development company as payment for securities of such company issued in connection with an executive compensation plan described in Section 57(j) of the 1940 Act.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under Section 55(b) of the 1940 Act, the value of a BDCs assets shall be determined as of the date of the most
recent financial statements filed by such company with the SEC pursuant to Section 13 of the Securities Exchange Act of 1934 (the 1934 Act), and shall be determined no less frequently than annually.

Managerial Assistance to Portfolio Companies

As a BDC, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could
involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial
guidance. We may also receive fees for these services. Solar Capital Management provides such managerial assistance, if any, on our behalf to portfolio companies that request this assistance.



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Temporary Investments

Pending investment in other types of qualifying assets, as described above, our investments may consist of
cash, cash equivalents, U.S. government securities or high-quality investment grade debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that 70% of our assets are
qualifying assets. Typically, we will invest in U.S. Treasury bills, repurchase agreements, provided that such repurchase agreements are fully collateralized by cash or securities issued by the U.S. government or its agencies, or other high-quality,
short-term debt securities. A repurchase agreement involves the purchase by an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater
than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25% of our total assets
constitute repurchase agreements from a single counterparty, we would not meet the diversification tests in order to qualify as a RIC for U.S federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single
counterparty in excess of this limit. Our investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

Senior Securities

We are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least
equal to 200% immediately after each such issuance. In addition, while any senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet
the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. We may borrow money, which
would magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.

Code of
Ethics

We and Solar Capital Partners have each adopted a code of ethics pursuant to Rule 17j-1 under
the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the Advisers Act), respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our codes of ethics
generally do not permit investments by our employees in securities that may be purchased or held by us. You may read and copy these codes of ethics at the SECs Public Reference Room in Washington, D.C. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330. In addition, each code of ethics is available on the EDGAR Database on the SECs Internet site at http://www.sec.gov. You may also obtain copies of the codes of
ethics, after paying a duplicating fee, by electronic request at the following Email address: publicinfo@sec.gov, or by writing the SECs Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

Compliance Policies and Procedures

We and our investment adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws. We are required to review
these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and to designate a chief compliance officer to be responsible for their administration. Guy Talarico currently serves as our chief
compliance officer.

Proxy Voting Policies and Procedures

We have delegated our proxy voting responsibility to our investment adviser. A summary of the Proxy Voting Policies and
Procedures of our adviser are set forth below. The guidelines are reviewed periodically by the adviser and our non-interested directors, and, accordingly, are subject to change.



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As an investment adviser registered under the Investment Advisers Act of
1940, Solar Capital Partners has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes that it must vote securities held by its clients in a timely manner free of conflicts of interest. These
policies and procedures for voting proxies for investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Our investment adviser votes proxies relating to our portfolio securities in the best interest of our stockholders. Solar
Capital Partners reviews on a case-by-case basis each proposal submitted for a proxy vote to determine its impact on our investments. Although it generally votes against proposals that may have a negative impact on our investments, it may vote for
such a proposal if there exists compelling long-term reasons to do so. The proxy voting decisions of our investment adviser are made by the senior investment professionals who are responsible for monitoring each of our investments. To ensure that
our vote is not the product of a conflict of interest, it requires that: (i) anyone involved in the decision making process disclose to a managing member of Solar Capital Partners any potential conflict that he or she is aware of and any
contact that he or she has had with any interested party regarding a proxy vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to
reduce any attempted influence from interested parties.

You may obtain information about how we voted proxies
by making a written request for proxy voting information to: Solar Capital Partners, LLC, 500 Park Avenue, New York, NY 10022.

Privacy
Principles

We are committed to maintaining the privacy of our stockholders and to safeguarding their
non-public personal information. The following information is provided to help you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information with select other parties.

Generally, we do not receive any non-public personal information relating to our stockholders, although
certain non-public personal information of our stockholders may become available to us. We do not disclose any non-public personal information about our stockholders (or former stockholders) to anyone, except as permitted by law or as is necessary
in order to service stockholder accounts (for example, to a transfer agent or third party administrator).

We
restrict access to non-public personal information about our stockholders to employees of our investment adviser and its affiliates with a legitimate business need for the information. We maintain physical, electronic and procedural safeguards
designed to protect the non-public personal information of our stockholders.

Taxation as a Regulated Investment Company

As a BDC, we elected to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. As
a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To continue to qualify as a RIC, we must, among other things, meet
certain source-of-income and asset diversification requirements (as described below). In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of our investment company taxable
income, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the Annual Distribution Requirement). If we qualify as a RIC and satisfy
the Annual Distribution Requirement, then we will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term
capital losses) we distribute to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gain not distributed (or deemed not distributed) to our stockholders.



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We will be subject to a 4% nondeductible U.S. federal excise tax on certain
undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending
October 31 in that calendar year and (3) any income realized, but not distributed, and on which we paid no U.S. federal income tax, in preceding years (the Excise Tax Avoidance Requirement).

In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:



| |  |  | at all times during each taxable year, have in effect an election to be treated as a BDC under the 1940 Act;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | derive in each taxable year at least 90% of our gross income from (a) dividends, interest, payments with respect to certain securities loans,
gains from the sale of stock or other securities or currencies, or other income derived with respect to our business of investing in such stock, securities or currencies and (b) net income derived from an interest in a qualified publicly
traded partnership; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | diversify our holdings so that at the end of each quarter of the taxable year:
| | - |  | ------------------------------------------------------------------------------



| |  |  | at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other
securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | no more than 25% of the value of our assets is invested in (i) the securities, other than U.S. government securities or securities of other
RICs, of one issuer, (ii) the securities of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) the securities of one
or more qualified publicly traded partnerships.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Regulated Investment
Company Modernization Act of 2010, which was generally effective for 2011 and subsequent tax years, provides some relief from RIC disqualification due to failures of the income and asset diversification requirements, although there may be
additional taxes due in such cases.

We may be required to recognize taxable income in circumstances in which
we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with payment-in-kind (PIK) interest or, in certain cases, increasing
interest rates or debt instruments issued with warrants), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by
us in the same taxable year. Because any original issue discount accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual
Distribution Requirement, even though we will not have received any corresponding cash amount.

Because we may
use debt financing, we will be subject to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary
to satisfy the Annual Distribution Requirement. If we are unable to obtain cash from other sources or are otherwise limited in our ability to make distributions, we could fail to qualify for RIC tax treatment and thus become subject to
corporate-level U.S. federal income tax.

Certain of our investment practices may be subject to special and
complex U.S. federal income tax provisions that may, among other things: (i) disallow, suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into higher taxed short-term
capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash;
(v) adversely affect



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the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization of certain complex financial transactions; and (vii) produce income
that will not be qualifying income for purposes of the 90% gross income test described above. We will monitor our transactions and may make certain tax elections in order to mitigate the potential adverse effect of these provisions.

Gain or loss realized by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the
lapse of such warrants generally will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend on how long we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax
basis in the stock purchased under the warrant will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant. Except as set forth in Failure to Qualify as a Regulated Investment Company,
the remainder of this discussion assumes we will qualify as a RIC for each taxable year.

Failure to Qualify as a Regulated Investment
Company

If we were unable to qualify for treatment as a RIC, we would be subject to tax on all of our
taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. Such distributions would be taxable to our stockholders as dividends and, provided certain holding
period and other requirements were met, could qualify for treatment as qualified dividend income in the hands of non-corporate stockholders (and thus eligible for the same lower maximum tax rate applicable to long-term capital gains) to
the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate shareholders would be eligible for the dividends received deduction. Distributions in excess of our current and accumulated
earnings and profits would be treated first as a return of capital to the extent of the stockholders tax basis, and any remaining distributions would be treated as a capital gain. To re-qualify as a RIC in a subsequent taxable year, we would
be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under
Subchapter M of the Code for at least one year prior to disqualification and that re-qualify as a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held
by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 10 years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our
requalification as a RIC.

Investment Advisory Fees

Pursuant to an investment advisory and management agreement (the Investment Advisory and Management
Agreement), we have agreed to pay Solar Capital Partners a fee for investment advisory and management services consisting of two components  a base management fee and an incentive fee.

The base management fee is calculated at an annual rate of 1.00% of our gross assets. For services rendered under the
Investment Advisory and Management Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar
quarters. Base management fees for any partial month or quarter will be appropriately pro-rated.

The
incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on our 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 our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement to Solar Capital Management, and any interest
expense and



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distributions paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred
interest feature (such as original issue discount, debt instruments with pay in kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized
capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately
preceding calendar quarter, is compared to a hurdle of 1.75% per quarter (7.00% annualized). Our net investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the
1.00% base management fee. We pay Solar Capital Partners an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:



| |  |  | no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle of 1.75%;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | 50% of our 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 but is less than 2.9167% in any calendar quarter (11.67% annualized). We refer to this portion of our pre-incentive fee net investment income (which exceeds the hurdle but is less than 2.9167%) as the catch-up. The
catch-up is meant to provide our investment adviser with 20% of our pre-incentive fee net investment income as if a hurdle did not apply if this net investment income exceeds 2.9167% in any calendar quarter; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.9167% in any calendar quarter (11.67% annualized) is
payable to Solar Capital Partners (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive fee investment income thereafter is allocated to Solar Capital Partners).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following is a graphical representation of the calculation of the income-related portion of the incentive fee:

Quarterly Incentive Fee Based on Net Investment Income

Pre-incentive fee net investment income

(expressed as a percentage of the value of net assets)



LOGO

Percentage of pre-incentive fee net investment income

allocated to Solar Capital Partners

These calculations are appropriately pro-rated for any period of less than three months. You should be aware that a rise in the general level of interest rates can be expected to lead to higher interest
rates applicable to our debt investments. Accordingly, an increase in interest rates would make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our
investment adviser with respect to pre-incentive fee net investment income.

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



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Examples of Quarterly Incentive Fee Calculation

Example 1: Income Related Portion of Incentive Fee (*):

Alternative 1:

Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.25%

Hurdle rate (1) = 1.75%

Management fee (2) = 0.25%

Other expenses (legal,
accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-incentive fee net investment income

(investment income  (management fee + other expenses)) = 0.80%

Pre-incentive net investment income does not exceed hurdle rate, therefore there is no incentive fee.

Alternative 2:

Assumptions

Investment income (including interest,
dividends, fees, etc.) = 2.70%

Hurdle rate (1) = 1.75%

Management fee (2) = 0.50%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-incentive fee net investment income

(investment income
 (management fee + other expenses)) = 2.25%

Incentive fee = 50% × pre-incentive fee net
investment income, subject to the catch-up (4)

= 50% × (2.25%  1.75%)

= 0.25%



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Alternative 3:

Assumptions

Investment income (including interest, dividends, fees, etc.) = 4.00%

Hurdle rate (1) = 1.75%

Management fee (2) = 0.25%

Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.20%

Pre-incentive fee net investment income

(investment income  (management fee + other expenses)) = 3.55%

Incentive fee = 20% × pre-incentive fee net investment income, subject to catch-up (4)

Incentive fee = 50% × catch-up + (20% × (pre-incentive fee net investment income  2.9167%))

Catch-up = 2.9167%  1.75%

= 1.1667%

Incentive fee = (50% × 1.1667%) + (20% × (3.55%  2.9167%))

= 0.58334% + (20% × 0.6333%)

= 0.58334% + 0.12667%

= 0.71001%



|(*) | The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(1) | Represents 7% annualized hurdle rate.
|--- | -------------------------------------

|(2) | Represents 1% annualized management fee.
|--- | ----------------------------------------

|(3) | Excludes organizational and offering expenses.
|--- | ----------------------------------------------

|(4) | The catch-up provision is intended to provide our investment adviser with an incentive fee of approximately 20% on all of our
pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.9167% in any calendar quarter.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Example 2: Capital Gains Portion of Incentive Fee:

Alternative 1:

Assumptions



| |  |  | Year 1: $20 million investment made in Company A (Investment A), and $30 million investment made in Company B (Investment B)
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Year 2: Investment A sold for $50 million and fair market value (FMV) of Investment B determined to be $32 million
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Year 3: FMV of Investment B determined to be $25 million
| | - |  | --------------------------------------------------------



| |  |  | Year 4: Investment B sold for $31 million
| | - |  | -----------------------------------------



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The capital gains portion of the incentive fee would be:



| |  |  | Year 1: None
| | - |  | ------------



| |  |  | Year 2: Capital gains incentive fee of $6 million ($30 million realized capital gains on sale of Investment A multiplied by 20%)
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Year 3: None
| | - |  | ------------

$5 million cumulative fee (20% multiplied by $25 million ($30 million cumulative capital gains less $5 million cumulative capital depreciation)) less $6 million (previous capital gains fee paid in
Year 2)



| |  |  | Year 4: Capital gains incentive fee of $200,000
| | - |  | -----------------------------------------------

$6.2 million cumulative fee ($31 million cumulative realized capital gains multiplied by 20%) less $6 million
(previous capital gains fee paid in Year 2)

Alternative 2:

Assumptions



| |  |  | Year 1: $20 million investment made in Company A (Investment A), $30 million investment made in Company B (Investment B) and
$25 million investment made in Company C (Investment C)
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | Year 4: FMV of Investment B determined to be $24 million
| | - |  | --------------------------------------------------------



| |  |  | Year 5: Investment B sold for $20 million
| | - |  | -----------------------------------------

The capital gains incentive fee, if any, would be:



| |  |  | Year 1: None
| | - |  | ------------



| |  |  | Year 2: $5 million capital gains incentive fee
| | - |  | ----------------------------------------------

20% multiplied by $25 million ($30 million realized capital gains on sale of Investment A less $5 million unrealized
capital depreciation on Investment B)



| |  |  | Year 3: $1.4 million capital gains incentive fee(1)
| | - |  | ---------------------------------------------------

$6.4 million cumulative fee (20% multiplied by $32 million ($35 million cumulative realized capital gains less $3 million unrealized capital depreciation)) less $5 million (previous capital gains fee
paid in Year 2)



| |  |  | Year 4: None
| | - |  | ------------



| |  |  | Year 5: None
| | - |  | ------------

$5 million cumulative fee (20% multiplied by $25 million (cumulative realized capital gains of $35 million less realized capital losses of $10 million)) less $6.4 million (previous cumulative capital
gains fee paid in Year 2 and Year 3)



| | (1) | As illustrated in Year 3 of Alternative 1 above, if Solar Senior Capital were to be wound up on a date other than December 31 of any year,
Solar Senior Capital may have paid aggregate capital gain incentive fees that are more than the amount of such fees that would be payable if Solar Senior Capital had been wound up on December 31 of such year.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Payment of Our 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 Solar 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 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 Solar 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 Solar 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 any administrative support staff.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investments

Solar Senior seeks to create a diverse portfolio of senior loans by investing approximately $5 million to $30 million of capital, on average, in the securities of leveraged companies, including
middle-market companies. We expect that this investment size will vary proportionately with the size of our capital base and/or for strategic initiatives. We may also invest in debt of public companies that are thinly traded. Under normal market
conditions, at least 80% of the value of our net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans.

Senior loans typically pay interest at rates which are determined periodically on the basis of a floating base lending rate, primarily LIBOR, plus a premium. Senior loans in which we invest are typically
made to U.S. and,



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to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions. Senior loans typically are rated below
investment grade. Securities rated below investment grade are often referred to as leveraged loans, high yield or junk securities, and may be considered high risk compared to debt instruments that are
rated investment grade. Senior secured loans, however are generally less risky than subordinated debt, bearing lower leverage and higher recovery statistics. In addition, many of our debt investments are not scheduled to fully amortize over their
stated terms, which could cause us to suffer losses if the respective issuer of such debt investment is unable to refinance or repay their remaining indebtedness at maturity.

In addition to senior secured loans, we may invest a portion of our portfolio in opportunistic investments, which are not
our primary focus, but are intended to enhance our returns to stockholders. These investments may include similar direct investments in public companies that are not thinly traded and securities of leveraged companies located in select countries
outside of the United States. We may invest up to 30% of our total assets in such opportunistic investments, including senior loans issued by non-U.S. issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act.

We currently borrow funds under the Credit Facility and may borrow additional funds to make investments. As a
result, we are exposed to the risks of leverage, which may be considered a speculative investment technique. The use of leverage magnifies the potential for loss on amounts invested and therefore increases the risks associated with investing in our
securities. In addition, the costs associated with our borrowings, including any increase in management fees payable to our investment adviser, Solar Capital Partners, will be borne by our common stockholders.

Additionally, we may in the future seek to securitize our loans to generate cash for funding new investments. To
securitize loans, we may create a wholly or partially owned subsidiary and contribute a pool of loans to the subsidiary. This could include the sale of interests in the subsidiary on a non-recourse basis to purchasers who we would expect to be
willing to accept a lower interest rate to invest in investment grade loan pools, and we would retain a portion of the equity in the securitized pool of loans.

Moreover, we may acquire investments in the secondary market and, in analyzing such investments, we expect to employ the same or similar analytical process as we use for our primary investments.

We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars
and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the values of our portfolio positions does not
eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby
offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be possible to hedge against an
exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation
between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly
against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.

Our principal focus is to provide senior secured loans, including first lien and second lien loans, to private
middle-market companies in a variety of industries. We generally seek to target companies that generate positive



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cash flows. We generally seek to invest in companies from the broad variety of industries in which our investment adviser has direct expertise. The following is a representative list of the
industries in which we may invest.



|                                             |  |                                      
|-------------------------------------------- |  | -------------------------------------
|    Aerospace & Defense                     |  |     Health Care Facilities          
|    Air Freight & Logistics                 |  |     Health Care Services            
|    Automobiles                             |  |     Health Care Technology          
|    Asset Management & Custody Banks        |  |     Hotels, Restaurants & Leisure   
|    Building Products                       |  |     Industrial Conglomerates        
|    Chemicals                               |  |     Insurance                       
|    Commercial Services & Supplies          |  |     Internet Software & Services    
|    Communications Equipment                |  |     IT Services                     
|    Construction & Engineering              |  |     Leisure Equipment & Products    
|    Consumer Finance                        |  |     Machinery                       
|    Containers & Packaging                  |  |     Media                           
|    Distributors                            |  |     Multiline Retail                
|    Diversified Consumer Services           |  |     Paper & Forest Products         
|    Diversified Financial Services          |  |     Personal Products               
|    Diversified Real Estate Activities      |  |     Professional Services           
|    Diversified Telecommunications Services |  |     Research & Consulting Services  
|    Education Services                      |  |     Software                        
|    Food Products                           |  |     Specialty Retail                
|    Footwear                                |  |     Textiles, Apparel & Luxury Goods
|    Health Care Equipment & Supplies        |  |     Utilities                       

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

We may invest, to the extent permitted by law, in the securities and instruments of other investment
companies, including private funds. We may also co-invest on a concurrent basis with affiliates of ours, subject to compliance with applicable regulations, any exemptive order received and our allocation procedures. Certain other types of negotiated
co-investments may be made only if we receive an order from the SEC permitting us to do so. There can be no assurance that any other such order will be obtained.

At December 31, 2014, our portfolio consisted of 43 portfolio companies and was invested 88.5% in senior secured
loans, 1.1% in unsecured loans and 10.4% in common equity, in each case, measured at fair value. We expect that our portfolio will continue to include primarily senior secured loans.

While our primary investment objective is to generate current income through investments in U.S. senior secured loans,
and we may also invest a portion of the portfolio in opportunistic investments, including foreign securities.

Listed below are our top ten portfolio companies and industries based on their fair value and represented as a percentage
of total assets as of December 31, 2014 and 2013:



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TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2014



|                                                        |  |                  |     |  
|------------------------------------------------------- |  | ---------------- | --- | -
|Portfolio Company                                       |  | % of TotalAssets |    
|Gemino Healthcare Finance LLC                           |  |                  | 8.9 | %
|Fulton Holdings Corp.                                   |  |                  | 3.9 | %
|Athletico Management, LLC and Accelerated Holdings, LLC |  |                  | 3.9 | %
|Metamorph US 3, LLC (Metalogix)                         |  |                  | 3.8 | %
|Confie Seguros Holding II Co.                           |  |                  | 3.4 | %
|Capstone Logistics Acquisition, Inc.                    |  |                  | 3.3 | %
|Castle Management Borrower LLC (Highgate Hotels)        |  |                  | 3.1 | %
|AmeriQual Group, LLC                                    |  |                  | 2.8 | %
|IPC Systems, Inc.                                       |  |                  | 2.6 | %
|QBS Holding Company, Inc. (Quorum)                      |  |                  | 2.6 | %



|                               |  |                  |     |  
|------------------------------ |  | ---------------- | --- | -
|Industry                       |  | % of TotalAssets |    
|Diversified Financial Services |  |                  | 9.9 | %
|Communications Equipment       |  |                  | 7.7 | %
|Professional Services          |  |                  | 7.3 | %
|Software                       |  |                  | 7.2 | %
|Health Care Services           |  |                  | 7.1 | %
|Insurance                      |  |                  | 7.0 | %
|Food Products                  |  |                  | 5.9 | %
|Specialty Retail               |  |                  | 3.9 | %
|Health Care Facilities         |  |                  | 3.9 | %
|Internet Software & Services   |  |                  | 3.7 | %

TOP TEN PORTFOLIO COMPANIES AND INDUSTRIES AS OF DECEMBER 31, 2013



|                                                   |  |                  |      |  
|-------------------------------------------------- |  | ---------------- | ---- | -
|Portfolio Company                                  |  | % of TotalAssets |     
|Gemino Healthcare Finance LLC                      |  |                  | 12.7 | %
|Fulton Holdings Corp.                              |  |                  | 5.5  | %
|AmeriQual Group, LLC                               |  |                  | 4.4  | %
|Confie Seguros Holding II Co.                      |  |                  | 4.3  | %
|Attachmate Corporation                             |  |                  | 3.9  | %
|Trident USA Health Services                        |  |                  | 3.7  | %
|ABG Intermediate Holdings 2 LLC (Authentic Brands) |  |                  | 3.7  | %
|Securus Technologies, Inc.                         |  |                  | 3.6  | %
|Hearthside Food Solutions                          |  |                  | 3.6  | %
|Shield Finance Co. SARL                            |  |                  | 3.6  | %



|                                 |  |                  |      |  
|-------------------------------- |  | ---------------- | ---- | -
|Industry                         |  | % of TotalAssets |     
|Diversified Financial Services   |  |                  | 14.1 | %
|Specialty Retail                 |  |                  | 10.7 | %
|Food Products                    |  |                  | 8.0  | %
|Software                         |  |                  | 7.6  | %
|Professional Services            |  |                  | 7.5  | %
|Insurance                        |  |                  | 6.9  | %
|Health Care Services             |  |                  | 6.2  | %
|Communications Equipment         |  |                  | 4.7  | %
|Textiles, Apparel & Luxury Goods |  |                  | 3.7  | %
|IT Services                      |  |                  | 3.6  | %



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Listed below is the geographic breakdown of the portfolio based on fair
value as of December 31, 2014, 2013 and 2012:



|                  |  |                                    |       |   |                                    |  |       |                                    |  |  |       |  
|----------------- |  | ---------------------------------- | ----- | - | ---------------------------------- |  | ----- | ---------------------------------- |  |  | ----- | -
|Geographic Region |  | % of Portfolioat December 31, 2014 |       |   | % of Portfolioat December 31, 2013 |  |       | % of Portfolioat December 31, 2012 | 
|United States     |  |                                    | 100.0 | % |                                    |  | 96.3  | %                                  |  |  | 95.3  | %
|Western Europe    |  |                                    |      |   |                                    |  | 3.7   | %                                  |  |  | 4.7   | %
|                  |  |                                    |       |   |                                    |  |       |                                    |  |  |       |  
|                  |  |                                    | 100.0 | % |                                    |  | 100.0 | %                                  |  |  | 100.0 | %
|                  |  |                                    |       |   |                                    |  |       |                                    |  |  |       |  

Investment Selection Process

Solar Capital Partners is committed to and utilizes a value-oriented investment philosophy with a focus on the
preservation of capital and a commitment to managing downside exposure.

Portfolio Company Characteristics

We have identified several criteria that we believe are important in identifying and investing in
prospective portfolio companies. These criteria provide general guidelines for our investment decisions; however, not all of these criteria will be met by each prospective portfolio company in which we choose to invest.

Stable Earnings and Strong Free Cash Flow. We seek to invest in companies who have demonstrated stable
earnings through economic cycles. We target companies that can de-lever through consistent generation of cash flows rather than relying solely on growth to service and repay our loans.

Value Orientation. Our investment philosophy places a premium on fundamental analysis from an
investors perspective and has a distinct value orientation. We intend to focus on companies in which we can invest at relatively low multiples of operating cash flow and that are profitable at the time of investment on an operating cash flow
basis.

Value of Assets. The prospective value of the assets, if any, that collateralizes
the loans in which we invest, will be an important factor in our credit analysis. Our analysis emphasizes both tangible assets, such as accounts receivable, inventory, equipment and real estate, and intangible assets, such as intellectual property,
customer lists, networks and databases. In some of our senior loan transactions, the portfolio companys fundings may be derived from a borrowing base determined by the value of such companys assets.

Strong Competitive Position in Industry. We seek to invest in target companies that have developed
leading market positions within their respective markets and are well positioned to capitalize on growth opportunities. We seek companies that demonstrate significant competitive advantages versus their competitors, which we believe should help to
protect their market position and profitability.

Diversified Customer and Supplier
Base. We seek to invest in businesses that have a diversified customer and supplier base. We believe that companies with a diversified customer and supplier base are generally better able to endure economic downturns, industry
consolidation, changing business preferences and other factors that may negatively impact their customers, suppliers and competitors.

Exit Strategy. We seek to predominantly invest in companies which provide multiple alternatives for an eventual exit. We look for opportunities that provide an exit typically within
three years of the initial capital commitment.



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We generally seek companies that we believe will provide a steady stream of
cash flow to repay our loans and reinvest in their respective businesses. We believe that such internally generated cash flow, leading to the payment of interest on, and the repayment of the principal of, our investments in portfolio companies
represents a key means by which we will be able to exit from our investments over time.

In addition, we also
seek to invest in companies whose business models or expected future cash flows offer attractive exit possibilities. These companies include candidates for strategic acquisition by other industry participants and companies that may repay our
investments through an initial public offering of common stock or another capital market transaction. We generally underwrite our investments on a hold-to-maturity basis, but expensive capital is often repaid prior to stated maturity.

Experienced and Committed Management. We generally require that portfolio companies have an
experienced management team. We plan to also require portfolio companies have in place proper incentives to induce management to succeed and to act in concert with our interests as investors, including having significant equity interests.

Strong Sponsorship. We generally aim to invest alongside other sophisticated investors. We
typically seek to partner with successful financial sponsors who have historically generated high returns. We believe that investing in these sponsors portfolio companies enables us to benefit from their direct involvement and due diligence.

Solar Senior Capitals senior investment team works in concert with sponsors to proactively manage
investment opportunities by acting as a partner throughout the investment process. We actively focus on the middle-market financial sponsor community, with a particular focus on the upper-end of the middle-market (sponsors with equity funds of $800
million to $3 billion). We favor such sponsors because they typically:



| |  |  | buy larger companies with strong business franchises;
| | - |  | -----------------------------------------------------



| |  |  | invest significant amounts of equity in their portfolio companies;
| | - |  | ------------------------------------------------------------------



| |  |  | value flexibility and creativity in structuring their transactions;
| | - |  | -------------------------------------------------------------------



| |  |  | possess longer track records over multiple investment funds;
| | - |  | ------------------------------------------------------------



| |  |  | have deep management experience and resources;
| | - |  | ----------------------------------------------



| |  |  | have better ability to withstand downturns; and
| | - |  | -----------------------------------------------



| |  |  | possess the ability to support portfolio companies with additional capital.
| | - |  | ---------------------------------------------------------------------------

We divide our coverage of these sponsors among our more senior investment professionals, who are responsible for
day-to-day interaction with financial sponsors. We take a proactive approach, provide quick feedback, deliver on commitments, and are constructive throughout the life cycle of an investment.

Due Diligence

Our private equity approach to credit investing typically incorporates extensive in-depth due diligence often alongside the private equity sponsor. In conducting due diligence, we will use
publicly available information as well as information from relationships with former and current management teams, consultants, competitors and investment bankers. We believe that our due diligence methodology allows us to screen a high volume of
potential investment opportunities on a consistent and thorough basis.

Our due diligence typically includes:



| |  |  | review of historical and prospective financial information;
| | - |  | -----------------------------------------------------------



| |  |  | review and valuation of assets;
| | - |  | -------------------------------



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| |  |  | research relating to the companys management, industry, markets, products and services and competitors;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | on-site visits;
| | - |  | ---------------



| |  |  | discussions with management, employees, customers or vendors of the potential portfolio company;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | review of senior loan documents; and
| | - |  | ------------------------------------



| |  |  | background investigations.
| | - |  | --------------------------

We also expect to evaluate the private equity sponsor making the investment. Further, due to Solar Capital Partners considerable repeat business with sponsors, we have direct experience with the
management teams of many sponsors. A private equity sponsor is typically the controlling shareholder upon completion of an investment and as such is considered critical to the success of the investment. The equity sponsor is evaluated along several
key criteria, including:



| |  |  | investment track record;
| | - |  | ------------------------



| |  |  | industry experience;
| | - |  | --------------------



| |  |  | capacity and willingness to provide additional financial support to the company through additional capital contributions, if necessary; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reference checks.
| | - |  | -----------------

Throughout the due diligence process, a deal team is in constant dialogue with the management team of the company in which we are considering to invest to ensure that any concerns are addressed as early
as possible through the process and that unsuitable investments are filtered out before considerable time has been invested.

Upon the completion of due diligence and a decision to proceed with an investment in a company, the investment professionals leading the investment present the investment opportunity to Solar Capital
Partners investment committee, which then determine whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys and independent accountants prior to the
closing of the investment, as well as other outside advisers, as appropriate.

The Investment Committee

All new investments are required to be approved by a consensus of the investment committee of Solar
Capital Partners, which is led by Messrs. Gross and Spohler. The members of Solar Capital Partners investment committee receive no compensation from us. Such members may be employees or partners of Solar Capital Partners and may receive
compensation or profit distributions from Solar Capital Partners.

Investment Structure

Once we determine that a prospective portfolio company is suitable for investment, we will work with the management of
that company and its other capital providers, including senior, junior and equity capital providers, to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in
the portfolio companys capital structure.

We seek to invest in portfolio companies primarily in the
form of senior loans. These senior loans typically have current cash pay interest with some amortization of principal. Interest is typically paid on a floating rate basis, often with a floor on the LIBOR rate. We generally seek to obtain security
interests in the assets of our portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first or second priority liens on the assets of a portfolio company.



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Typically, we expect that our senior loans will have final maturities of
four to seven years. However, we also expect that our portfolio companies often may repay these loans early, generally within three years from the date of initial investment.

We seek to tailor the terms of the investment to the facts and circumstances of the transaction and the prospective
portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability. We seek to limit the downside potential of our
investments by negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility in managing their businesses as possible, consistent with preservation of our capital. Such restrictions may include
affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation rights.

We typically seek to hold most of our investments to maturity or repayment, but believe we have the ability to sell our
investments earlier.

Managerial Assistance

As a business development company, we offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could involve, among other things, monitoring the operations
of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. We may receive fees for these services.

Ongoing Relationships with Portfolio Companies

Solar Capital Partners monitors our portfolio companies on an ongoing basis. Solar Capital Partners monitors the financial
trends of each portfolio company to determine if it is meeting its business plan and to assess the appropriate course of action for each company.

Solar Capital Partners has several methods of evaluating and monitoring the performance and fair value of our investments, which include the following:



| |  |  | Assessment of success in adhering to each portfolio companys business plan and compliance with covenants;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | Periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial
position, requirements and accomplishments;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Comparisons to other Solar Capital and Solar Senior Capital portfolio companies in the industry, if any; and
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Review of monthly and quarterly financial statements, asset valuations, and financial projections for portfolio companies.
| | - |  | --------------------------------------------------------------------------------------------------------------------------

In addition to various risk management and monitoring tools, Solar Capital Partners also
uses an investment rating system to characterize and monitor our expected level of returns on each investment in our portfolio.



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We use an investment rating scale of 1 to 4. The following is a description
of the conditions associated with each investment rating:



|                  |  |                                                                                                                                                                                                                     
|----------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Investment
Rating |  | Summary Description                                                                                                                                                                                                 
|1                 |  | Involves the least amount of risk in our portfolio, the portfolio company is performing above expectations, and the trends and risk factors are generally favorable (including a
potential exit)                    
|                  | 
|2                 |  | Risk that is similar to the risk at the time of origination, the portfolio company is performing as expected, and the risk factors are neutral to favorable; all new investments
are initially assessed a grade of 2
|                  | 
|3                 |  | The portfolio company is performing below expectations, may be out of compliance with debt covenants, and requires procedures for closer monitoring                                                                 
|                  | 
|4                 |  | The investment is performing well below expectations and is not anticipated to be repaid in full                                                                                                                    

Solar Capital Partners monitors and, when appropriate, changes the investment ratings
assigned to each investment in our portfolio. As of December 31, 2014, 2013 and 2012, the weighted average investment rating on the fair market value of our portfolio was 2. In connection with our valuation process, Solar Capital Partners
reviews these investment ratings on a quarterly basis.

Valuation Procedures

We conduct the valuation of our assets, pursuant to which our net asset value shall be determined, at all times consistent
with U.S. generally accepted accounting principles (GAAP) and the 1940 Act and generally value our assets on a quarterly basis, or more frequently if required. Our valuation procedures are summarized in more detail below:

Securities for which market quotations are readily available on an exchange shall be valued at the closing price on the
day of valuation. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is sufficient according to GAAP to
determine the fair value of the security. If determined adequate, we use the quote obtained. 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 our board.

Securities for which reliable market quotations are not readily available or for which the pricing source
does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of our investment adviser or board of directors, does not represent fair value, shall each be valued as follows: (i) each portfolio company
or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; (iii) independent third-party
valuation firms engaged by, or on behalf of, the board of directors will conduct independent appraisals and review managements preliminary valuations and make their own assessment for (a) each portfolio investment that, when taken
together with all other investments in the same portfolio company, exceeds 10% of our total assets, plus available borrowings, as of the end of the most recently completed fiscal quarter, and (b) each portfolio investment that is presently in
default; (iv) the board of directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the investment adviser and, where appropriate, the respective third-party
valuation firms.

The recommendation of fair value will generally consider the following factors among others,
as relevant:



| |  |  | the nature and realizable value of any collateral;
| | - |  | --------------------------------------------------



| |  |  | the portfolio companys ability to make payments;
| | - |  | -------------------------------------------------



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| |  |  | the portfolio companys earnings and discounted cash flow;
| | - |  | ----------------------------------------------------------



| |  |  | the markets in which the issuer does business; and
| | - |  | --------------------------------------------------



| |  |  | comparisons to publicly traded securities.
| | - |  | ------------------------------------------

Securities for which market quotations are not readily available or for which a pricing source is not sufficient may
include, but are not limited to, the following:



| |  |  | private placements and restricted securities that do not have an active trading market;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | securities whose trading has been suspended or for which market quotes are no longer available;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | debt securities that have recently gone into default and for which there is no current market;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | securities whose prices are stale;
| | - |  | ----------------------------------



| |  |  | securities affected by significant events; and
| | - |  | ----------------------------------------------



| |  |  | securities that the investment adviser believes were priced incorrectly.
| | - |  | ------------------------------------------------------------------------

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.

Competition

Our primary competitors provide financing to
middle-market companies and include other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Additionally,
alternative investment vehicles, such as hedge funds, frequently invest in middle-market companies. As a result, competition for investment opportunities at middle-market companies can be intense. However, we continue to believe that there has been
an overall reduction in the amount of debt capital available on average since the downturn in the credit markets, which began in mid-2007, and that this has resulted in a somewhat less competitive environment for making new investments. While many
middle-market companies were previously able to raise senior debt financing through traditional large financial institutions, we believe this approach to financing is more difficult as implementation of U.S. and international financial reforms, such
as Basel 3, limits the capacity of large financial institutions to hold non-investment grade leveraged loans on their balance sheets. We believe that many of these financial institutions have de-emphasized their service and product offerings to
middle-market companies in particular.

Many of our competitors are substantially larger and have considerably
greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk
tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940
Act imposes on us as a business development company. We use the industry information available to Messrs. Gross and Spohler and the other investment professionals of Solar Capital Partners to assess investment risks and determine appropriate
pricing for our investments in portfolio companies. In addition, we believe that the relationships of Messrs. Gross and Spohler and the other senior investment professionals of our investment adviser enable us to learn about, and compete
effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest.

Staffing

We do not currently have any employees. Mr. Gross, our chairman and chief executive officer, and
Mr. Spohler, our chief operating officer, currently serve as the managing member and partner, respectively, of



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our investment adviser, Solar Capital Partners. Richard Peteka, our chief financial officer and corporate secretary, is an employee of Solar Capital Management, and performs his functions as
chief financial officer under the terms of our Administration Agreement. Guy Talarico, our chief compliance officer, is the chief executive officer of Alaric Compliance Services, LLC, and performs his functions as our chief compliance officer under
the terms of an agreement between Solar Capital Management and Alaric Compliance Services, LLC. Solar Capital Management has retained Mr. Talarico and Alaric Compliance Services, LLC pursuant to its obligations under our Administration
Agreement.

Our day-to-day investment operations are managed by Solar Capital Partners. Based upon its needs,
Solar Capital Partners may hire additional investment professionals. In addition, we will reimburse Solar Capital Management 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 financial officer and any administrative support staff.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements affect us. For example:



| |  |  | Pursuant to Rule 13a-14 of the 1934 Act, our Chief Executive Officer and Chief Financial Officer must certify the accuracy of the consolidated
financial statements contained in our periodic reports;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursuant to Item 307 of Regulation S-K, our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls
and procedures;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursuant to Rule 13a-15 of the 1934 Act, our management must prepare an annual report regarding its assessment of the effectiveness of internal
controls over financial reporting and obtain an audit of the effectiveness of internal controls over financial reporting performed by our independent registered public accounting firm; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant
changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Sarbanes-Oxley Act of 2002 requires us to review our current policies and procedures to
determine whether we comply with the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the Sarbanes-Oxley Act of 2002 and will take actions
necessary to ensure that we are in compliance therewith.

Available Information

You may read and copy any materials we file with the SEC at the SECs Public Reference Room at
100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 am to 3:00 pm. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is(http://www.sec.gov).

Our internet address is www.solarseniorcap.com. We make available free of charge on our website our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information
contained on our website is not incorporated by reference into this annual report on Form 10-K, and you should not consider information contained on our website to be part of this annual report on Form 10-K.



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|Item 1A. | Risk Factors
|-------- | ------------

An investment in our securities involves certain risks relating to our structure and investment objectives. The risks set forth below are not the only risks we face, and we face other risks which we
have not yet identified, which we do not currently deem material or which are not yet predictable. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such
case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Investments

We operate in a highly competitive market for investment opportunities.

A number of entities compete with us to make the types of investments that we target in leveraged companies. We compete with other BDCs, public and private funds, commercial and investment banks,
commercial financing companies and, to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than
we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we do, which
could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our potential competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us. If we are unable to
source attractive investments, we may hold a greater percentage of our assets in cash than anticipated, which could impact potential returns on our portfolio. We cannot assure you that the competitive pressures we face will not have a material
adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that
we will be able to identify and make investments that are consistent with our investment objective.

We do not
seek to compete primarily based on the interest rates we offer, and we believe that some of our competitors may make loans with interest rates that may be comparable to or lower than the rates we may offer. We may lose investment opportunities if we
do not match our competitors pricing, terms and structure. However, if we match our competitors pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss.

Our investments are very risky and highly speculative.

We invest primarily in senior secured loans, including first lien and second lien debt instruments, made to middle-market
companies whose debt is rated below investment grade. Securities rated below investment grade are often referred to as leveraged loans, high yield or junk securities, and may be considered high risk
compared to debt instruments that are rated investment grade.

When we make a senior secured term loan
investment in a portfolio company, we generally take a security interest in the available assets of the portfolio company, including the equity interests of its subsidiaries, which we expect to help mitigate the risk that we will not be repaid.
However, there is a risk that the collateral securing our loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market
conditions, including as a result of the inability of the portfolio company to raise additional capital, and, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in a portfolio
companys financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee
that we will receive principal and interest payments according to the loans terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.



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In addition, investing in middle-market companies involves a number of
significant risks, including:



| |  |  | these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may
be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them
more vulnerable to competitors actions and market conditions, as well as general economic downturns;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or
termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing
businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers,
directors and our investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their
outstanding indebtedness upon maturity.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The lack of liquidity in our investments may adversely affect
our business.

We generally make investments in private companies. We invest and expect to continue
investing in companies whose securities have no established trading market and whose securities are and will be subject to legal and other restrictions on resale or whose securities are and will be less liquid than are publicly-traded securities.
The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at
which we have previously recorded our investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. However, to maintain our qualification as a business development company and as a RIC, we may have to dispose
of investments if we do not satisfy one or more of the applicable criteria under the respective regulatory frameworks. In addition, we may face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we
have material non-public information regarding such portfolio company.

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

Our portfolio may be concentrated in a limited number of portfolio companies and industries.
Beyond the asset diversification requirements associated with our qualification as a RIC under Subchapter M of the Code, we do not have fixed guidelines for diversification, and while we are not targeting any specific industries, our investments may
be concentrated in relatively few industries or portfolio companies. As a result, the aggregate returns we realize may be significantly adversely affected if a small number of investments perform poorly or if we need to write down the value of any
one investment. Additionally, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.



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Our investments in securities rated below investment grade are speculative in nature
and are subject to additional risk factors such as increased possibility of default, illiquidity of the security, and changes in value based on changes in interest rates.

The securities that we invest in are typically rated below investment grade. Securities rated below investment grade are
often referred to as leveraged loans, high yield or junk securities, and may be considered high risk compared to debt instruments that are rated investment grade. High yield securities are regarded as
having predominantly speculative characteristics with respect to the issuers capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. In addition, high
yield securities generally offer a higher current yield than that available from higher grade issues, but typically involve greater risk. These securities are especially sensitive to adverse changes in general economic conditions, to changes in the
financial condition of their issuers and to price fluctuation in response to changes in interest rates. During periods of economic downturn or rising interest rates, issuers of below investment grade instruments may experience financial stress that
could adversely affect their ability to make payments of principal and interest and increase the possibility of default. The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities. In
addition, many of our debt investments are not scheduled to fully amortize over their stated terms, which could cause us to suffer losses if the respective issuer of such debt investment is unable to refinance or repay their remaining indebtedness
at maturity.

Price declines and illiquidity in the corporate debt markets may adversely affect, and may continue to
adversely affect, the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation. Any unrealized depreciation that we experience on our loan portfolio may be an indication of future realized
losses, which could reduce our income available for distribution and could adversely affect our ability to service our outstanding borrowings.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of our board of directors.
Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. Any unrealized depreciation in our loan portfolio could be an indication of a portfolio companys inability to meet its repayment
obligations to us with respect to the affected loans. This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods and could materially adversely affect our ability to
service our outstanding borrowings. The unprecedented declines in prices and liquidity in the corporate debt markets from 2008 through mid-2010 resulted in significant declines in the fair value of loans and other debt investments. Depending on
market conditions, we could incur substantial losses in future periods, which could further reduce our net asset value and have a material adverse impact on our business, financial condition and results of operations.

Capital markets have recently been in a period of disruption and instability. These market conditions have materially and adversely
affected the global debt and equity capital markets, which may in the future have a negative impact on our business and operations.

The global capital markets have recently been in a period of disruption as evidenced by a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the
re-pricing of credit risk in the broadly syndicated credit market and the failure of certain major financial institutions. Despite actions of the United States federal government and foreign governments, these events contributed to worsening general
economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.

These conditions could continue for a prolonged period of time or worsen in the future. While these conditions persist,
we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some



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limited exceptions which apply to us, as a BDC we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for
such issuance from our stockholders and our independent directors. At our 2014 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common
stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement
pertaining thereto, during a period beginning on May 6, 2014 and expiring on the earlier of the one-year anniversary of the date of the 2014 Annual Stockholders Meeting and the date of our 2015 Annual Stockholders Meeting, which is expected to
be held in June 2015. However, notwithstanding such stockholder approval, since our initial public offering on February 24, 2011, we have not sold any shares of our common stock at a price below our then current net asset value per share. Any
offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by
applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 200% immediately after each time we incur indebtedness. The debt capital that will be available, if at all, may be at a higher cost and on less
favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.

The illiquidity of our investments may make it difficult for us to sell such investments if required. As a result, we may
realize significantly less than the value at which we have recorded our investments. In addition, significant changes in the capital markets, including the recent extreme volatility and disruption, have had, and may in the future have, a negative
effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material adverse impact on
our business, financial condition or results of operations.

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

Our ability to secure additional financing and satisfy our financial obligations under indebtedness
outstanding from time to time will depend upon our future operating performance, which is subject to the prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and
financial, business and other factors, many of which are beyond our control. The prolonged continuation or worsening of current economic and capital market conditions could have a material adverse effect on our ability to secure financing on
favorable terms, if at all.

If we are unable to obtain debt capital, then our equity investors will not
benefit from the potential for increased returns on equity resulting from leverage to the extent that our investment strategy is successful and we may be limited in our ability to make new commitments or fundings to our portfolio companies.

Uncertainty about the financial stability of the United States and of several countries in the European Union (EU)
could have a significant adverse effect on our business, results of operations and financial condition.

Due to federal budget deficit concerns, S&P downgraded the federal governments credit rating from AAA to AA+ for
the first time in history on August 5, 2011. Further, Moodys and Fitch have warned that they may downgrade the federal governments credit rating. Further downgrades or warnings by S&P or other rating agencies, and the
governments credit and deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt portfolio and our ability to access the debt
markets on favorable terms. In addition, a decreased credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the value of our common stock.



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In 2010, a financial crisis emerged in Europe, triggered by high budget
deficits and rising direct and contingent sovereign debt in Greece, Ireland, Italy, Portugal and Spain, which created concerns about the ability of these nations to continue to service their sovereign debt obligations. Risks and ongoing concerns
resulting from the debt crisis in Europe could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in these countries and the financial condition of European financial institutions. Market and economic
disruptions have affected, and may continue to affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that the market
disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not spread, and we cannot assure you that future assistance packages will be available, or if available, sufficient to stabilize
the affected countries and markets in Europe or elsewhere. To the extent uncertainty regarding any economic recovery in Europe continues to negatively impact consumer confidence and consumer credit factors, our business and results of operations
could be significantly and adversely affected.

In October 2014, the U.S. Federal Reserve announced that it
has terminated its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserves holdings of long-term securities until key economic indicators, such as the unemployment rate, showed
signs of improvement. It is unclear what effect, if any, the Federal Reserves termination of quantitative easing will have on the value of our investments. However, it is possible that without quantitative easing by the Federal Reserve, these
developments, along with the European sovereign debt crisis, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

Uncertainty relating to the LIBOR calculation process may adversely affect the value of our portfolio of the LIBOR-indexed,
floating-rate debt securities.

Concerns have been publicized that some of the member banks surveyed by
the British Bankers Association (BBA) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in
order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted.
A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are
ongoing.

Actions by the BBA, regulators or law enforcement agencies may result in changes to the manner in
which LIBOR is determined. Uncertainty as to the nature of such potential changes may adversely affect the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes
or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our portfolio of
LIBOR-indexed, floating-rate debt securities.

Economic recessions or downturns could impair our
portfolio companies and harm our operating results.

Many of our potential portfolio companies may be
susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets may increase and the value of our portfolio may decrease during these periods as we are required to
record the values of our investments. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments at fair value. Economic slowdowns or recessions could lead to financial
losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.
These events could prevent us from increasing investments and harm our operating results.



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A portfolio companys failure to satisfy financial or operating
covenants imposed by us or other lenders could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize the
portfolio companys ability to meet its obligations under the debt that we hold. We may incur additional expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition,
if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided significant managerial assistance to that portfolio company, a bankruptcy court might re-characterize
our debt holding and subordinate all or a portion of our claim to that of other creditors.

These portfolio
companies may face intense competition, including competition from companies with greater financial resources, more extensive research and development, manufacturing, marketing and service capabilities and greater number of qualified and experienced
managerial and technical personnel. They may need additional financing which they are unable to secure and which we are unable or unwilling to provide, or they may be subject to adverse developments unrelated to the technologies they acquire.

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

In the event of a default by a portfolio company on a secured loan, we will only have recourse to the
assets collateralizing the loan. If the underlying collateral value is less than the loan amount, we will suffer a loss. In addition, we sometimes make loans that are unsecured, which are subject to the risk that other lenders may be directly
secured by the assets of the portfolio company. In the event of a default, those collateralized lenders would have priority over us with respect to the proceeds of a sale of the underlying assets. In cases described above, we may lack control over
the underlying asset collateralizing our loan or the underlying assets of the portfolio company prior to a default, and as a result the value of the collateral may be reduced by acts or omissions by owners or managers of the assets.

In the event of bankruptcy of a portfolio company, we may not have full recourse to its assets in order to satisfy our
loan, or our loan may be subject to equitable subordination. In addition, certain of our loans are subordinate to other debt of the portfolio company. If a portfolio company defaults on our loan or on debt senior to our loan, or in the event of a
portfolio company bankruptcy, our loan will be satisfied only after the senior debt receives payment. Where debt senior to our loan exists, the presence of inter-creditor arrangements may limit our ability to amend our loan documents, assign our
loans, accept prepayments, exercise our remedies (through standstill periods) and control decisions made in bankruptcy proceedings relating to the portfolio company. Bankruptcy and portfolio company litigation can significantly increase
collection losses and the time needed for us to acquire the underlying collateral in the event of a default, during which time the collateral may decline in value, causing us to suffer further losses.

If the value of collateral underlying our loan declines or interest rates increase during the term of our loan, a
portfolio company may not be able to obtain the necessary funds to repay our loan at maturity through refinancing. Decreasing collateral value and/or increasing interest rates may hinder a portfolio companys ability to refinance our loan
because the underlying collateral cannot satisfy the debt service coverage requirements necessary to obtain new financing. If a borrower is unable to repay our loan at maturity, we could suffer a loss which may adversely impact our financial
performance.

The business, financial condition and results of operations of our portfolio companies could be adversely
affected by worldwide economic conditions, as well as political and economic conditions in the countries in which they conduct business.

The business and operating results of our portfolio companies may be impacted by worldwide economic conditions. Although the U.S. economy has in recent quarters shown signs of recovery from the
20082009



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global recession, the strength and duration of any economic recovery will be impacted by worldwide economic growth. For instance, a number of recent reports indicate that growth in China and
other emerging markets may be slowing relative to historical growth rates. The significant debt in U.S. and European countries is expected to hinder growth in those countries for the foreseeable future. Multiple factors relating to the international
operations of some of our portfolio companies and to particular countries in which they operate could negatively impact their business, financial condition and results of operations.

Some of the products of our portfolio companies are developed, manufactured, assembled, tested or marketed outside the
U.S. Any conflict or uncertainty in these countries, including due to natural disasters, public health concerns, political unrest or safety concerns, could harm their business, financial condition and results of operations. In addition, if the
government of any country in which their products are developed, manufactured or sold sets technical or regulatory standards for products developed or manufactured in or imported into their country that are not widely shared, it may lead some of
their customers to suspend imports of their products into that country, require manufacturers or developers in that country to manufacture or develop products with different technical or regulatory standards and disrupt cross-border manufacturing,
marketing or business relationships which, in each case, could harm their businesses.

The effect of global climate
change may impact the operations of our portfolio companies.

There may be evidence of global climate
change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature
and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of
operations of our portfolio companies if the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some of our portfolio companies financial condition, through decreased
revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as
follow-on investments, in order to: (i) increase or maintain in whole or in part our ownership percentage; (ii) exercise warrants, options or convertible securities that were acquired in the original or subsequent financing; or
(iii) attempt to preserve or enhance the value of our investment. We may elect not to make follow-on investments or otherwise lack sufficient funds to make those investments. We will have the discretion to make any follow-on investments,
subject to the availability of capital resources. The failure to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for
us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our concentration of risk,
either because we prefer other opportunities or because we are subject to BDC requirements that would prevent such follow-on investments, or the desire to maintain our RIC tax status.

Where we do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over
our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.

Although we hold controlling equity positions in some of our portfolio companies, we do not currently hold controlling equity positions in the majority of our portfolio companies. As a result, we are
subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/or



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stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the investments that we typically hold in our
portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.

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

We are subject to the risk that the investments we make in our portfolio companies
may be repaid prior to maturity. When this occurs, we may reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than
the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations could
be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common
stock.

We may choose to waive or defer enforcement of covenants in the debt securities held in our portfolio, which may
cause us to lose all or part of our investment in these companies.

We structure the debt investments
in our portfolio companies to include business and financial covenants placing affirmative and negative obligations on the operation of the companys business and its financial condition. However, from time to time we may elect to waive
breaches of these covenants, including our right to payment, or waive or defer enforcement of remedies, such as acceleration of obligations or foreclosure on collateral, depending upon the financial condition and prospects of the particular
portfolio company. These actions may reduce the likelihood of our receiving the full amount of future payments of interest or principal and be accompanied by a deterioration in the value of the underlying collateral as many of these companies may
have limited financial resources, may be unable to meet future obligations and may go bankrupt. This could negatively impact our ability to pay distributions, could adversely affect our results of operation and financial condition and cause the loss
of all or part of your investment.

Our loans could be subject to equitable subordination by a court which would
increase our risk of loss with respect to such loans.

Courts may apply the doctrine of equitable
subordination to subordinate the claim or lien of a lender against a borrower to claims or liens of other creditors of the borrower, when the lender or its affiliates is found to have engaged in unfair, inequitable or fraudulent conduct. The courts
have also applied the doctrine of equitable subordination when a lender or its affiliates is found to have exerted inappropriate control over a client, including control resulting from the ownership of equity interests in a client. Payments on one
or more of our loans, particularly a loan to a client in which we may also hold an equity interest, may be subject to claims of equitable subordination. If we were deemed to have the ability to control or otherwise exercise influence over the
business and affairs of one or more of our portfolio companies resulting in economic hardship to other creditors of that company, this control or influence may constitute grounds for equitable subordination and a court may treat one or more of our
loans as if it were unsecured or common equity in the portfolio company. In that case, if the portfolio company were to liquidate, we would be entitled to repayment of our loan on a pro-rata basis with other unsecured debt or, if the effect of
subordination was to place us at the level of common equity, then on an equal basis with other holders of the portfolio companys common equity only after all of its obligations relating to its debt and preferred securities had been satisfied.



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An investment strategy focused primarily on privately held companies presents certain
challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.

We invest primarily in privately held companies. Generally, little public information exists about these companies, and we
are required to rely on the ability of Solar Capital Partners investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we will be unable to uncover all material information
about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Also, privately held companies frequently have less diverse product lines and smaller market presence than larger competitors.
These factors could adversely affect our investment returns as compared to companies investing primarily in the securities of public companies.

Our portfolio companies may incur debt that ranks equally with, or senior to, some of our investments in such companies.

We invest primarily in senior secured loans, including second lien, as well as unsecured debt instruments issued by our
portfolio companies. If we invest in second lien, or unsecured debt instruments, our portfolio companies typically may be permitted to incur other debt that ranks equally with, or senior to, such debt instruments. By their terms, such debt
instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we will invest. Also, in the event of
insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we
receive any distribution in respect of our investment. In such cases, after repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with
debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio
company. Any such limitations on the ability of our portfolio companies to make principal or interest payments to us, if at all, may reduce our net asset value and have a negative material adverse impact to our business, financial condition and
results of operation.

Our investments in foreign securities may involve significant risks in addition to the risks
inherent in U.S. investments.

Our investment strategy contemplates potential investments in debt
securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social
instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers,
less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

Although most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign currency will
be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in
relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we can offer no assurance that we
will, in fact, hedge currency risk, or that if we do, such strategies will be effective.

We may expose
ourselves to risks if we engage in hedging transactions.

If we engage in hedging transactions, we may
expose ourselves to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and



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floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the
values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from
those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be
possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

The success of our hedging transactions will depend on our ability to correctly predict movements in currencies and
interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment
performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may
vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge
and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to
fluctuate as a result of factors not related to currency fluctuations. To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may expose us to unexpected
losses from positions where we believed that our risk had been appropriately hedged.

Our investment adviser may not be
able to achieve the same or similar returns as those achieved by our senior investment professionals while they were employed at prior positions.

Although in the past our senior investment professionals held senior positions at a number of investment firms, their track record and achievements are not necessarily indicative of future results that
will be achieved by our investment adviser. In their roles at such other firms, our senior investment professionals were part of investment teams, and they were not solely responsible for generating investment ideas. In addition, such investment
teams arrived at investment decisions by consensus.

Risks Relating to an Investment in Our Securities

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

Shares of closed-end investment companies have frequently traded at a market price that is less than
the net asset value that is attributable to those shares. The possibility that our shares of common stock will trade at a substantial discount from net asset value over the long term is separate and distinct from the risk that our net asset value
will decrease. We cannot predict whether shares of our common stock will trade above, at or below our net asset value. If our common stock trades below its net asset value, we will generally not be able to issue additional shares or sell our common
stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. At our 2014 Annual
Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then
current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on May 6, 2014 and expiring on
the earlier of the one-year anniversary of the date of the 2014 Annual Stockholders Meeting and the date of our 2015 Annual Stockholders Meeting, which is expected to be held in June 2015. However, notwithstanding such stockholder approval, since
our initial public offering on February 24, 2011, we have not sold any shares of our common stock at a price below our then current net asset value per share. Any offering of our common stock that requires stockholder approval must



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occur, if at all, within one year after receiving such stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment
activities, and our net asset value could decrease and our level of distributions could be impacted.

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

The trading price of our common stock may
fluctuate substantially. The price of our common stock that will prevail in the market may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our operating
performance. These factors include, but are not limited to, the following:



| |  |  | price and volume fluctuations in the overall stock market from time to time;
| | - |  | ----------------------------------------------------------------------------



| |  |  | investor demand for our shares;
| | - |  | -------------------------------



| |  |  | significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which are not necessarily
related to the operating performance of these companies;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | exclusion of our common stock from certain market indices, such as the Russell 2000 Financial Services Index, which could reduce the ability of
certain investment funds to own our common stock and put short-term selling pressure on our common stock;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in regulatory policies or tax guidelines with respect to RICs or BDCs;
| | - |  | ------------------------------------------------------------------------------



| |  |  | failure to qualify as a RIC, or the loss of RIC status;
| | - |  | -------------------------------------------------------



| |  |  | any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | changes, or perceived changes, in the value of our portfolio investments;
| | - |  | -------------------------------------------------------------------------



| |  |  | departures of Solar Capital Partners key personnel;
| | - |  | ----------------------------------------------------



| |  |  | operating performance of companies comparable to us; or
| | - |  | -------------------------------------------------------



| |  |  | general economic conditions and trends and other external factors.
| | - |  | ------------------------------------------------------------------

In the past, following periods of volatility in the market price of a companys securities, securities class action
litigation has often been brought against that company. Due to the potential volatility of our stock price once a market for our stock is established, we may become the target of securities litigation in the future. Securities litigation could
result in substantial costs and divert managements attention and resources from our business.

There is a risk
that our stockholders may not receive distributions or that our distributions may not grow over time.

We intend to make distributions on a monthly basis to our stockholders out of assets legally available for distribution.
We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. In addition, due to the asset coverage test applicable to us as a BDC,
we may be limited in our ability to make distributions. As a RIC, if we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including failure to obtain, or possible loss of, the U.S. federal income
tax benefits allowable to RICs. We cannot assure you that you will receive distributions at a particular level or at all.

We may choose to pay distributions in our own common stock, in which case our stockholders may be required to pay U.S. federal
income taxes in excess of the cash distributions they receive.

We may distribute taxable distributions
that are payable in cash or shares of our common stock at the election of each stockholder. Under certain applicable provisions of the Code and the Treasury regulations,



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distributions payable in cash or in shares of stock at the election of stockholders are treated as taxable distributions. The Internal Revenue Service has issued private rulings indicating that
this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under these rulings, if too many stockholders elect to receive their distributions in cash, each such
stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. If we decide to make any distributions consistent with these rulings that are payable in part in
our stock, taxable stockholders receiving such distributions will be required to include the full amount of the distribution (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the
extent such distribution is properly reported as a capital gain distribution) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with
respect to such distributions in excess of any cash received. If a U.S. stockholder sells the stock it receives as a distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the
distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distributions, including in respect of all or a
portion of such distribution that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on distributions, it may put downward pressure on the trading price of
our stock.

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

The 500,000 shares that were originally issued to Solar Senior
Capital Investors LLC in the Concurrent Private Placement pursuant to the exemption from registration provided by Section 4(2) under the Securities Act were subject to a 180 day lock-up period. Upon expiration of this lock-up period, such
shares became generally freely tradable in the public market, subject to the provisions of Rule 144 promulgated under the Securities Act. Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could
adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.

We have also committed to file a registration statement to register the resale of the shares of common stock that were
issued in the Concurrent Private Placement to Solar Senior Capital Investors LLC within 60 days of receiving a request from Solar Senior Capital Investors LLC to do so. We have committed to use our commercially reasonable efforts to obtain
effectiveness of such registration statement as soon as reasonably practicable after the filing of such registration statement. Assuming effectiveness of such registration statement, Solar Senior Capital Investors LLC will generally be able to
resell its shares of common stock without restriction.

The net asset value per share of our common stock may be diluted
if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock.

At our 2014 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our common stock, not exceeding 25% of our then outstanding common stock immediately
prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and compliance with the conditions set forth in the proxy statement pertaining
thereto, during a period beginning on May 6, 2014 and expiring on the earlier of the one-year anniversary of the date of the 2014 Annual Stockholders Meeting and the date of our 2015 Annual Stockholders Meeting, which is expected to be held in
June 2015. However, notwithstanding such stockholder approval, since our initial public offering on February 24, 2011, we have not sold any shares of our common stock at a price below our then current net asset value per share. Any offering of
our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

We may also use newly issued shares to implement our dividend reinvestment plan, whether our shares are trading at a premium or at a discount to our then current net asset value per share. To the extent
we receive the



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necessary approval, any decision to sell shares of our common stock below its then current net asset value per share would be subject to the determination by our board of directors that such
issuance or sale is in our and our stockholders best interests.

If we were to sell shares of our common
stock below its then current net asset value per share, such sales would result in an immediate dilution to the net asset value per share of our common stock. This dilution would occur as a result of the sale of shares at a price below the then
current net asset value per share of our common stock and a proportionately greater decrease in the stockholders interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such sale.
Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted.

Further, if our current stockholders do not purchase any shares to maintain their percentage interest, regardless of
whether such offering is above or below the then current net asset value per share, their voting power will be diluted. For example, if we sell an additional 10% of our common shares at a 5% discount from net asset value, a stockholder who does not
participate in that offering for its proportionate interest will suffer net asset value dilution of up to 0.5% or $5 per $1000 of net asset value.

Similarly, all distributions declared in cash payable to stockholders that are participants in our distribution reinvestment plan are generally automatically reinvested in shares of our common stock. As a
result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in shares of common stock may experience accretion to the net asset value of
their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in the plan,
the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.

Risks
Relating to Our Business and Structure

We are dependent upon Solar Capital Partners key personnel for our
future success.

We depend on the diligence, skill and network of business contacts of Messrs. Gross
and Spohler, who serve as the managing member and partner of Solar Capital Partners, respectively, and who lead Solar Capital Partners investment team. Messrs. Gross and Spohler, together with the other dedicated investment professionals
available to Solar Capital Partners, evaluate, negotiate, structure, close and monitor our investments. Our future success will depend on the continued service of Messrs. Gross and Spohler and the other investment professionals available to Solar
Capital Partners. We cannot assure you that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his relationship with us. The loss of Mr. Gross or Mr. Spohler, or any of the other
senior investment professionals who serve on Solar Capital Partners investment team, could have a material adverse effect on our ability to achieve our investment objective as well as on our financial condition and results of operations. In
addition, we can offer no assurance that Solar Capital Partners will remain our investment adviser.

The
senior investment professionals of Solar Capital Partners are and may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us, and may have conflicts of interest in allocating
their time. We expect that Messrs. Gross and Spohler will dedicate a significant portion of their time to the activities of Solar Senior Capital; however, they may be engaged in other business activities which could divert their time and attention
in the future. Specifically, each of Messrs. Gross and Spohler serve as chief executive officer and chief operating officer, respectively, of Solar Capital Ltd.



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

We expect that the principals of our investment adviser will maintain and develop
their relationships with financial sponsors, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If the senior investment professionals of our investment adviser fail to maintain
their existing relationships or to develop new relationships with other sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the senior investment professionals of
our investment adviser have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us. If our investment adviser is unable
to source investment opportunities, we may hold a greater percentage of our assets in cash than anticipated, which could impact potential returns on our portfolio.

A disruption in the capital markets and the credit markets could negatively affect our business.

As a BDC, we have to maintain our ability to raise additional capital for investment purposes. Without sufficient access to the capital markets or credit markets, we may be forced to curtail our business
operations or we may not be able to pursue new business opportunities. Disruptive conditions in the financial industry and the impact of new legislation in response to those conditions could restrict our business operations and could adversely
impact our results of operations and financial condition.

If the fair value of our assets declines
substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act and the Credit Facility. Any such failure could result in an event of default and all of our debt being declared immediately due and payable and would
affect our ability to issue senior securities, including borrowings, and pay distributions, which could materially impair our business operations. Our liquidity could be impaired further by an inability to access the capital markets or to draw on
the Credit Facility. For example, we cannot be certain that we will be able to renew the Credit Facility as it matures or to consummate new borrowing facilities to provide capital for normal operations, including new originations. Reflecting concern
about the stability of the financial markets, many lenders and institutional investors have reduced or ceased providing funding to borrowers. This market turmoil and tightening of credit have led to increased market volatility and widespread
reduction of business activity generally.

If we are unable to renew or replace the Credit Facility and
consummate new facilities on commercially reasonable terms, our liquidity will be reduced significantly. If we consummate new facilities but are then unable to repay amounts outstanding under such facilities, and are declared in default or are
unable to renew or refinance these facilities, we would not be able to initiate significant originations or to operate our business in the normal course. These situations may arise due to circumstances that we may be unable to control, such as
inaccessibility to the credit markets, a severe decline in the value of the U.S. dollar, a further economic downturn or an operational problem that affects third parties or us, and could materially damage our business. Moreover, we are unable to
predict when economic and market conditions may become more favorable. Even if such conditions improve broadly and significantly over the long term, adverse conditions in particular sectors of the financial markets could adversely impact our
business.

Our financial condition and results of operations will depend on our ability to manage future growth
effectively.

Our ability to achieve our investment objective and to grow depends on Solar Capital
Partners ability to identify, invest in and monitor companies that meet our investment criteria.

Accomplishing this result on a cost-effective basis is largely a function of Solar Capital Partners structuring of
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access financing for us on acceptable terms. The investment team of Solar Capital Partners has substantial responsibilities under the Investment Advisory and Management Agreement, and they may
also be called upon to provide managerial assistance to our portfolio companies as the principals of our administrator. In addition, the members of Solar Capital Partners investment team have similar responsibilities with respect to the
management of Solar Capitals investment portfolio. Such demands on their time may distract them or slow our rate of investment. In order to grow, we and Solar Capital Partners will need to retain, train, supervise and manage new investment
professionals. However, we can offer no assurance that any such investment professionals will contribute effectively to the work of the investment adviser. Any failure to manage our future growth effectively could have a material adverse effect on
our business, financial condition and results of operations.

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

We may need additional capital to fund growth in our investments.
We expect to issue equity securities and expect to borrow from financial institutions in the future. A reduction in the availability of new capital could limit our ability to grow. We must distribute at least 90% of our investment company taxable
income to our stockholders to maintain our regulated investment company status. As a result, any such cash earnings may not be available to fund investment originations. We expect to borrow from financial institutions and issue additional debt and
equity securities. If we fail to obtain funds from such sources or from other sources to fund our investments, it could limit our ability to grow, which may have an adverse effect on the value of our securities. In addition, as a BDC, our ability to
borrow or issue preferred stock may be restricted if our total assets are less than 200% of our total borrowings and preferred stock.

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

The 1940 Act imposes numerous constraints on the operations of BDCs. For example, BDCs are required to invest at least 70%
of their total assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or
less. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants. In addition, upon approval of a majority of
our stockholders, we may elect to withdraw our status as a BDC. If we decide to withdraw our election, or if we otherwise fail to qualify, or maintain our qualification, as a BDC, we may be subject to the substantially greater regulation under the
1940 Act as a closed-end investment company. Compliance with such regulations would significantly decrease our operating flexibility, and could significantly increase our costs of doing business.

Regulations governing our operation as a BDC affect our ability to raise, and the way in which we raise additional capital. As a
BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

In order to satisfy the tax requirements applicable to a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, we intend to distribute to our stockholders substantially
all of our ordinary income and realized net capital gains except for certain realized net long-term capital gains, which we may retain, pay applicable income taxes with respect thereto and elect to treat as deemed distributions to our stockholders.
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities, up to the maximum amount permitted by the 1940 Act. 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 200% 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 this 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



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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.

As of December 31, 2014, we had $143.2 million outstanding under the Credit
Facility. If we issue preferred stock, the preferred stock would rank senior to common stock in our capital structure, preferred stockholders would generally vote together with common stockholders but would have separate voting rights on
certain matters and might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of
control that might involve a premium price for holders of our common stock or otherwise be in your best interest.

We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock,
at a price below the then-current net asset value per share of our common stock if our board of directors determines that such sale is in the best interests of Solar Senior Capital and its stockholders, and our stockholders approve such sale. In any
such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or
discount). If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience
dilution. This dilution would occur as a result of a proportionately greater decrease in a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Because the
number of future shares of common stock that may be issued below our net asset value per share and the price and timing of such issuances are not currently known, we cannot predict the actual dilutive effect of any such issuance. We cannot determine
the resulting reduction in our net asset value per share of any such issuance. We also cannot predict whether shares of our common stock will trade above, at or below our net asset value.

At our 2014 Annual Stockholders Meeting, our stockholders approved our ability to sell or otherwise issue shares of our
common stock, not exceeding 25% of our then outstanding common stock immediately prior to each such offering, at a price or prices below the then current net asset value per share, in each case subject to the approval of our board of directors and
compliance with the conditions set forth in the proxy statement pertaining thereto, during a period beginning on May 6, 2014 and expiring on the earlier of the one-year anniversary of the date of the 2014 Annual Stockholders Meeting and the
date of our 2015 Annual Stockholders Meeting, which is expected to be held in June 2015. However, notwithstanding such stockholder approval, since our initial public offering on February 24, 2011, we have not sold any shares of our common stock
at a price below our then current net asset value per share. Any offering of our common stock that requires stockholder approval must occur, if at all, within one year after receiving such stockholder approval.

Our stockholders may experience dilution in their ownership percentage if they do not participate in our dividend reinvestment
plan.

All distributions declared in cash payable to stockholders that are participants in our dividend
reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive
distributions in shares of common stock may experience accretion to the net asset value of their shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on
various factors, including the proportion of our stockholders who participate in the plan, the level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.



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

The use of leverage magnifies the potential for loss on
amounts invested and, therefore, increases the risks associated with investing in our securities. As of December 31, 2014, we had $143.2 million outstanding under the Credit Facility. We may borrow from and/or issue senior debt securities to
banks, insurance companies and other lenders in the future. Lenders of these senior securities, including the Credit Facility, will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would
expect such lenders to seek recovery against our assets in the event of a default. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any
decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could also negatively affect our ability to make distribution payments on our common stock. Leverage is generally considered
a speculative investment technique. Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee
payable to our investment adviser, Solar Capital Partners, will be payable based on our gross assets, including those assets acquired through the use of leverage, Solar Capital Partners will have a financial incentive to incur leverage which may not
be consistent with our stockholders interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to Solar Capital Partners.

As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other
senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. Additionally, the Credit Facility requires us to comply with certain financial and other restriction covenants,
including maintaining an asset coverage ratio of at least 200% at any time. Failure to maintain compliance with these covenants could result in an event of default and all of our debt being declared immediately due and payable. If this ratio
declines below 200%, we may not be able to incur additional debt and could be required by law to sell a portion of our investments to repay some debt when it is disadvantageous to do so, which could have a material adverse effect on our operations,
and we may not be able to make distributions. The amount of leverage that we employ will depend on our investment advisers and our board of directors assessment of market and other factors at the time of any proposed borrowing. We cannot
assure you that we will be able to obtain credit at all or on terms acceptable to us.

In addition, the Credit
Facility imposes, and any other debt facility into which we may enter would likely impose financial and operating covenants that 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.

The debt securities that we may issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We, and indirectly our stockholders, bear the cost of
issuing and servicing such debt securities. Any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock.

Illustration. The following table illustrates the effect of leverage on returns from an investment in our Company
assuming various annual returns on our total assets, net of interest expense. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.



|                                       |  |                                               |       |    |  |  |       |    |  |  |      |    |  |  |     |   |  |  |      |  
|-------------------------------------- |  | --------------------------------------------- | ----- | -- |  |  | ----- | -- |  |  | ---- | -- |  |  | --- | - |  |  | ---- | -
|                                       |  | Assumed total return(net of interest
expense) |      
|                                       |  |                                               | (10   | )% |  |  | (5    | )% |  |  | 0    | %  |  |  | 5   | % |  |  | 10   | %
|Corresponding return to stockholder(1) |  |                                               | (20.4 | )% |  |  | (11.0 | )% |  |  | (1.5 | )% |  |  | 7.9 | % |  |  | 17.4 | %



|(1) | Assumes $384.8 million in total assets and $143.2 million in total debt outstanding, which reflects our total assets and total debt outstanding as
of December 31, 2014, and a cost of funds of 2.18%. Excludes non-leverage related expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Under our borrowings and the Credit Facility, current lenders have, and any future lender or lenders may have, fixed
dollar claims on our assets that are senior to the claims of our stockholders and, thus, will have a preference over our stockholders with respect to our assets in the collateral pool. The Credit Facility and borrowings also subject us to various
financial and operating covenants, including, but not limited to, maintaining certain financial ratios and minimum tangible net worth amounts. Future credit facilities and borrowings will likely subject us to similar or additional covenants. In
addition, we may grant a securities interest in our assets in connection with any such credit facilities and borrowings.

The Credit Facility contains customary default provisions such as a minimum net worth amount, a profitability test, and a restriction on changing our business and loan quality standards. In addition, the
Credit Facility requires the repayment of all outstanding debt on the maturity which may disrupt our business and potentially the business of our portfolio companies that are financed through the credit facility. An event of default under the Credit
Facility would likely result, among other things, in termination of the availability of further funds under the Credit Facility and accelerated maturity dates for all amounts outstanding under the Credit Facility, which would likely disrupt our
business and, potentially, the business of the portfolio companies whose loans we finance through the Credit Facility. This could reduce our revenues and, by delaying any cash payment allowed to us under our the Credit Facility until the lender has
been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain our status as a RIC.

The terms of future available financing may place limits on our financial and operation flexibility. If we are unable to obtain sufficient capital in the future, we may be forced to reduce or discontinue
our operations, not be able to make new investments, or otherwise respond to changing business conditions or competitive pressures.

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

To the extent we borrow money, or issue preferred stock, to make investments, our net investment income will depend, in
part, upon the difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will
not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods of rising interest rates, our cost of funds would increase, except to the extent we issue fixed rate debt or preferred
stock, which could reduce our net investment income. We expect that our long-term fixed-rate investments will be financed primarily with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our
exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.

You should also be aware that a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates
may make it easier for us to meet or exceed the incentive fee hurdle rate and may result in a substantial increase of the amount of incentive fees payable to our investment adviser with respect to our pre-incentive fee net investment income.

We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the
potential for loss and the risks of investing in us in the same way as our borrowings.

Preferred
stock, which is another form of leverage, has the same risks to our common stockholders as borrowings because the distributions on any preferred stock we issue must be cumulative. Payment of such distributions and repayment of the liquidation
preference of such preferred stock must take preference over any distributions or other payments to our common stockholders, and preferred stockholders are not subject to any of our expenses or losses and are not entitled to participate in any
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If we issue preferred stock, the holders of our common stock may pay higher fees to
the extent the proceeds are not used to repay outstanding indebtedness and the common stockholders will have less voting power.

In the event that we decide to issue preferred stock, the holders of our common stock may pay higher fees to the extent the proceeds are not used to repay outstanding indebtedness because they will bear
all costs and expenses relating to the issuance and ongoing maintenance of the preferred stock, including higher investment advisory fees if our total return exceeds the distribution rate on the preferred stock. The common stockholders will have
less voting power if we issue preferred stock because such stock could convey special rights and privileges to its owners. For example, the 1940 Act provides that certain matters require the separate vote of the holders of any issued and outstanding
preferred stock and that preferred stockholders are entitled to vote separately from holders of common stock to elect two preferred stock directors.

Pending legislation may allow us to incur additional leverage.

As a business development company, under the 1940 Act generally we are not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at
least 200% (i.e., the amount of debt may not exceed 50% of the value of our total assets). Recent legislation introduced in Congress, if passed, would modify this section of the 1940 Act and increase the amount of debt that business development
companies may incur by modifying the percentage from 200% to 150%. As a result, we may be able to incur additional indebtedness in the future and therefore your risk of an investment in us may increase.

Our quarterly and annual operating results are subject to fluctuation as a result of the nature of our business, and if we fail to
achieve our investment objective, the net asset value of our common stock may decline.

We could
experience fluctuations in our quarterly and annual operating results due to a number of factors, some of which are beyond our control, including, but not limited to, the interest rate payable on the debt securities that we acquire, the default rate
on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, changes in our portfolio composition, the degree to which we encounter competition in our markets, market
volatility in our publicly traded securities and the securities of our portfolio companies, and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future
periods. In addition, any of these factors could negatively impact our ability to achieve our investment objectives, which may cause our net asset value of our common stock to decline.

Our investments may be in portfolio companies which may have limited operating histories and financial resources.

Our portfolio companies compete with larger, more established companies with greater access to, and
resources for, further development in new technologies. We also expect that our portfolio will continue to consist of investments that may have relatively limited operating histories. These companies may be particularly vulnerable to U.S. and
foreign economic downturns such as the current recession and European financial crisis, may have more limited access to capital and higher funding costs, may have a weaker financial position and may need more capital to expand or compete. These
businesses also may experience substantial variations in operating results. They may face intense competition, including from companies with greater financial, technical and marketing resources. Furthermore, some of these companies do business in
regulated industries and could be affected by changes in government regulation. Accordingly, these factors could impair their cash flow or result in other events, such as bankruptcy, which could limit their ability to repay their obligations to us,
and may adversely affect the return on, or the recovery of, our investment in these companies. We cannot assure you that any of our investments in our portfolio companies will be successful. Therefore, we may lose our entire investment in any or all
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There will be uncertainty as to the value of our portfolio investments.

A large percentage of our portfolio investments are in the form of securities that are not publicly
traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these securities and the Credit Facility on a quarterly basis in accordance with our valuation policy, which is at all
times consistent with GAAP. Our board of directors utilizes the services of third-party valuation firms to aid it in determining the fair value of these securities and the Credit Facility. The board of directors discusses valuations and determines
the fair value in good faith based on the input of our investment adviser and the respective third-party valuation firms. The factors that may be considered in fair value pricing our investments include the nature and realizable value of any
collateral, the portfolio companys ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors. Because such
valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the
values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we
ultimately realize upon the disposal of such securities.

Our equity ownership in a portfolio company may represent a
control investment. Our ability to exit an investment in a timely manner because we are in a control position or have access to inside information in the portfolio company could result in a realized loss on the investment.

If we obtain a control investment in a portfolio company our ability to divest ourselves from a debt or equity investment
could be restricted due to illiquidity in a private stock, limited trading volume on a public companys stock, inside information on a companys performance, insider blackout periods, or other factors that could prohibit us from disposing
of the investment as we would if it were not a control investment. Additionally, we may choose not to take certain actions to protect a debt investment in a control investment portfolio company. As a result, we could experience a decrease in the
value of our portfolio company holdings and potentially incur a realized loss on the investment.

There are significant
potential conflicts of interest, including Solar Capital Partners management of Solar Capital, which could impact our investment returns; you will not be purchasing an investment in Solar Capital.

Our executive officers and directors, as well as the current and future partners of our investment adviser, Solar Capital
Partners, may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do. Currently, the executive officers and directors, as well as the current partners of our investment adviser, Solar
Capital Partners, serve as officers and directors of Solar Capital, a publicly-traded BDC. Accordingly, they may have obligations to investors in those entities, including to investors of Solar Capital, the fulfillment of which obligations might not
be in the best interests of us or our stockholders. In addition, we note that any affiliate currently existing, or formed in the future, and managed by our investment adviser or any of its affiliates may, notwithstanding different stated investment
objectives, have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. As a result, Solar Capital Partners may face conflicts in allocating investment opportunities between us
and such other entities. Although Solar Capital Partners will endeavor to allocate investment opportunities in a fair and equitable manner, it is possible that, in the future, we may not be given the opportunity to participate in investments made by
investment funds managed by our investment adviser or an investment manager affiliated with our investment adviser. In any such case, when Solar Capital Partners identifies an investment, it will be forced to choose which investment fund should make
the investment.

We may co-invest on a concurrent basis with Solar Capital, and any other affiliates that our
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received and our allocation procedures. In certain circumstances, negotiated co-investments may be made only if we receive an order from the SEC permitting us to do so. There can be no assurance
that any other such order will be obtained.

In the course of our investing activities, we pay management and
incentive fees to Solar Capital Partners and reimburse Solar Capital Partners for certain expenses it incurs. As a result, investors in our common stock will invest on a gross basis and receive distributions on a net basis
after expenses, resulting in a lower rate of return than an investor might achieve through direct investments. Accordingly, there may be times when the management team of Solar Capital Partners has interests that differ from those of our
stockholders, giving rise to a conflict.

We have entered into a royalty-free license agreement with our
investment adviser, pursuant to which our investment adviser has granted us a non-exclusive license to use the name Solar Senior Capital. Under the License Agreement, we have the right to use the Solar Senior Capital name for
so long as Solar Capital Partners or one of its affiliates remains our investment adviser. In addition, we pay Solar Capital Management, an affiliate of Solar Capital Partners, our allocable portion of overhead and other expenses incurred by Solar
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 compensation of our chief financial officer
and any administrative support staff. These arrangements create conflicts of interest that our board of directors must monitor.

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

Our investment adviser will be entitled to incentive compensation for each fiscal quarter in an amount equal to a
percentage of the excess of our pre-incentive fee net investment income for that quarter (before deducting incentive compensation) above a performance threshold for that quarter. Accordingly, since the performance threshold is based on a percentage
of our net asset value, decreases in our net asset value make it easier to achieve the performance threshold. Our pre-incentive fee net investment income for incentive compensation purposes excludes realized and unrealized capital losses or
depreciation that we may incur in the fiscal quarter, even if such capital losses or depreciation result in a net loss on our statement of operations for that quarter. Thus, we may be required to pay Solar Capital Partners incentive compensation for
a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

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

The incentive fee
payable by us to Solar Capital Partners may create an incentive for Solar Capital Partners to pursue investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The incentive
fee payable to our investment adviser is calculated based on a percentage of our return on invested capital. This may encourage our investment adviser to use leverage to increase the return on our investments. Under certain circumstances, the use of
leverage may increase the likelihood of default, which would impair the value of our common stock. In addition, our investment adviser receives the incentive fee based, in part, upon net capital gains realized on our investments. Unlike that portion
of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, our investment adviser may have a tendency to invest more capital in investments that are likely to
result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during
economic downturns.

The incentive fee payable by us to our investment adviser also may induce Solar Capital
Partners to invest on our behalf in instruments that have a deferred interest feature, even if such deferred payments would not provide cash necessary to enable us to pay current distributions to our shareholders. Under these investments, we would
accrue interest over the life of the investment but would not receive the cash income from the investment



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until the end of the term. Our net investment income used to calculate the income portion of our investment fee, however, includes accrued interest. Thus, a portion of this incentive fee would be
based on income that we have not received in cash. In addition, the catch-up portion of the incentive fee may encourage Solar Capital Partners to accelerate or defer interest payable by portfolio companies from one calendar quarter to
another, potentially resulting in fluctuations in timing and distribution amounts.

We may invest, to the
extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest, will bear our ratable share of any such investment companys expenses, including management and
performance fees. We will also remain obligated to pay management and incentive fees to Solar Capital Partners with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these
investments, each of our stockholders will bear his or her share of the management and incentive fee of Solar Capital Partners as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which
we invest.

We may become subject to corporate-level U.S. federal income tax if we are unable to qualify and maintain
our qualification as a regulated investment company under Subchapter M of the Code.

Although we have
elected to be treated as a RIC under Subchapter M of the Code, no assurance can be given that we will continue to be able to qualify for and maintain RIC status. To obtain and maintain RIC tax treatment under the Code, we must meet the following
annual distribution, income source and asset diversification requirements.



| |  |  | The annual distribution requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net
ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Because we may use debt financing, we will be subject to certain asset coverage ratio requirements under the 1940 Act and financial
covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify
for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The income source requirement will be satisfied if we obtain at least 90% of our income for each year from distributions, interest, gains from the
sale of stock or securities or similar sources.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our
taxable year. Failure to meet those requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be
relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If we fail to qualify for RIC tax treatment for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of
income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us, the net asset value of our common stock and the total return, if any, obtainable from your investment in our common
stock. Any net operating losses that we incur in periods during which we qualify as a RIC will not offset net capital gains (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) that we are otherwise
required to distribute, and we cannot pass such net operating losses through to our stockholders. In addition, net operating losses that we carry over to a taxable year in which we qualify as a RIC normally cannot offset ordinary income or capital
gains.



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We may have difficulty satisfying the annual distribution requirement in order to
qualify and maintain RIC status if we recognize income before or without receiving cash representing such income.

In accordance with generally accepted accounting principles and tax requirements, we include in income certain amounts that we have not received in cash, such as contractual PIK interest, which represents
contractual interest added to a loan balance and due at the end of such loans term. In addition to the cash yields received on our loans, in some instances, certain loans may also include any of the following: end-of-term payments, exit fees,
balloon payment fees or prepayment fees. The increases in loan balances as a result of contractual PIK arrangements are included in income for the period in which such payment-in-kind interest was accrued, which is often in advance of receiving cash
payment, and are separately identified on our statements of cash flows. We also may be required to include in income certain other amounts prior to receiving the related cash.

Any warrants that we receive in connection with our debt investments will generally be valued as part of the negotiation
process with the particular portfolio company. As a result, a portion of the aggregate purchase price for the debt investments and warrants will be allocated to the warrants that we receive. This will generally result in original issue
discount for tax purposes, which we must recognize as ordinary income, increasing the amount that we are required to distribute to qualify for the U.S. federal income tax benefits applicable to RICs. Because these warrants generally will not
produce distributable cash for us at the same time as we are required to make distributions in respect of the related original issue discount, we would need to obtain cash from other sources or to pay a portion of our distributions using shares of
newly issued common stock, consistent with Internal Revenue Service requirements, to satisfy such distribution requirements.

Other features of the debt instruments that we hold may also cause such instruments to generate an original issue discount, resulting in a distribution requirement in excess of current cash interest
received. Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the RIC tax requirement to distribute at least 90% of our net ordinary income and realized net
short-term capital gains in excess of realized net long-term capital losses, if any. Under such circumstances, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce
new investment originations to meet these distribution requirements. If we are unable to obtain cash from other sources and are otherwise unable to satisfy such distribution requirements, we may fail to qualify for the U.S. federal income tax
benefits allowable to RICs and, thus, become subject to a corporate-level U.S. federal income tax on all our income.

The higher yields and interest rates on PIK securities 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
interest has the effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK interest also increases the loan-to-value ratio at a compounding rate. PIK securities create
the risk that incentive fees will be paid to the Adviser based on non-cash accruals that ultimately may not be realized, but the Adviser will be under no obligation to reimburse the Company for these fees.

Our board of directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock,
which could convey special rights and privileges to its owners.

Under the Maryland General Corporation
Law and our charter, our board of directors is authorized to classify and reclassify any authorized but unissued shares of stock into one or more classes of stock, including preferred stock. Prior to issuance of shares of each class or series, the
board of directors is required by Maryland law and our charter to set the preferences, conversion or other rights, voting powers, restrictions, limitations as to other distributions, qualifications and terms or conditions of redemption for each
class or series. Thus, the board



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of directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in
control that might involve a premium price for holders of our common stock or otherwise be in their best interest. The cost of any such reclassification would be borne by our existing common stockholders. Certain matters under the 1940 Act require
the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act
provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. The issuance of shares of preferred stock convertible into shares of common stock might also reduce the net
income and net asset value per share of our common stock upon conversion, provided, that we will only be permitted to issue such convertible preferred stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including
obtaining common stockholder approval. These effects, among others, could have an adverse effect on your investment in our common stock.

Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more
difficult a change in control of Solar Senior Capital or the removal of our directors. We are subject to the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. Our board of directors has adopted a resolution
exempting from the Maryland Business Combination Act any business combination between us and any other person, subject to prior approval of such business combination by our board, including approval by a majority of our disinterested directors. If
the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and increase the
difficulty of consummating such an offer. Our bylaws exempt from the Maryland Control Share Acquisition Act acquisitions of our stock by any person. If we amend our bylaws to repeal the exemption from the Maryland Control Share Acquisition Act, the
Maryland Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such a transaction. However, we will amend our bylaws to be subject to the Maryland Control
Share Act only if our board of directors determines that it would be in our best interests and if the SEC staff does not object to our determination that our being subject to the Maryland Control Share Act does not conflict with the 1940 Act. The
SEC staff has issued informal guidance setting forth its position that certain provisions of the Maryland Control Share Act would, if implemented, violate Section 18(i) of the 1940 Act.

We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions
of our charter classifying our board of directors in three classes serving staggered three-year terms, and authorizing our board of directors to classify or reclassify shares of our stock in one or more classes or series, to cause the issuance of
additional shares of our stock and , to amend our charter without stockholder approval to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws,
may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

The foregoing provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our
board of directors. However, these provisions may deprive a shareholder of the opportunity to sell such shareholders shares at a premium to a potential acquirer. We believe that the benefits of these provisions outweigh the potential
disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms. Our board of directors has considered both the positive and negative effects of the foregoing
provisions and determined that they are in the best interest of our shareholders.



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

The occurrence of a disaster such as a cyber attack, a natural catastrophe, an industrial accident, a terrorist attack or
war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those
events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our business
could be severely compromised.

We depend heavily upon computer systems to perform necessary business
functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other global
companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the
confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation,
financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

We can be
highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay distributions.

Our business is highly dependent on our and third parties communications and information systems. Any failure or
interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other
operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:



| |  |  | sudden electrical or telecommunications outages;
| | - |  | ------------------------------------------------



| |  |  | natural disasters such as earthquakes, tornadoes and hurricanes;
| | - |  | ----------------------------------------------------------------



| |  |  | disease pandemics;
| | - |  | ------------------



| |  |  | events arising from local or larger scale political or social matters, including terrorist acts; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | cyber attacks.
| | - |  | --------------

These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay distributions to our stockholders.

Our board of directors may change our investment objective, operating policies and strategies without prior notice or
stockholder approval.

Our board of directors has the authority to modify or waive certain of our
operating policies and strategies without prior notice (except as required by the 1940 Act) and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our
election as, a BDC. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and value of our stock. Nevertheless, the effects may adversely affect our business and
impact our ability to make distributions.



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

We are subject to changing rules and regulations of federal and state government as well as the stock exchange on which
our common stock is listed. These entities, including the Public Company Accounting Oversight Board, the SEC and the NASDAQ Stock Market, have issued a significant number of new and increasingly complex requirements and regulations over the course
of the last several years and continue to develop additional regulations and requirements in response to laws enacted by Congress. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was
enacted. There are significant corporate governance-related provisions in the Dodd-Frank Act, and the SEC has adopted additional rules and regulations that may impact us. Our efforts to comply with these requirements have resulted in, and are likely
to continue to result in, an increase in expenses and a diversion of managements time from other business activities.

Changes in laws or regulations governing our operations may adversely affect our business.

Changes in the laws or regulations, or the interpretations of the laws and regulations, which govern business development
companies, RICs or non-depository commercial lenders could significantly affect our operations and our cost of doing business. We are subject to federal, state and local laws and regulations and are subject to judicial and administrative decisions
that affect our operations, including our loan originations, maximum interest rates, fees and other charges, disclosures to portfolio companies, the terms of secured transactions, collection and foreclosure procedures, and other trade practices. If
these laws, regulations or decisions change, or if we expand our business into jurisdictions that have adopted more stringent requirements than those in which we currently conduct business, then we may have to incur significant expenses in order to
comply or we may have to restrict our operations. In addition, if we do not comply with applicable laws, regulations and decisions, then we may lose licenses needed for the conduct of our business and be subject to civil fines and criminal
penalties, any of which could have a material adverse effect upon our business results of operations or financial condition.

Our investment adviser can resign on 60 days notice, and we may not be able to find a suitable replacement within that time,
resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

Our investment adviser has the right, under the Investment Advisory and Management Agreement, to resign at any time on 60 days written notice, whether we have found a replacement or not. If our
investment adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable
to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares
may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed
by our investment adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional
costs and time delays that may adversely affect our financial condition, business and results of operations.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 2. | Properties
|------- | ----------

Our executive offices are located at 500 Park Avenue, New York, New York 10022, and are provided by Solar Capital
Management in accordance with the terms of the Administration Agreement. We believe that our office facilities are suitable and adequate for our business as it is presently conducted.



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|Item 3. | Legal Proceedings
|------- | -----------------

We and our subsidiaries are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or our subsidiaries. From time to time,
we and our subsidiaries may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to 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 financial condition or results of operations.



|Item 4. | Mine Safety Disclosures
|------- | -----------------------

Not applicable.



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PART II



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

Price Range of Common Stock

Our common stock is traded on the NASDAQ Global Select Market under the symbol SUNS. The following table sets forth, for each fiscal quarter during the last two fiscal years, the net asset
value (NAV) per share of our common stock, the high and low closing sale prices for our common stock, such sale prices as a percentage of NAV per share and quarterly distributions per share.



|               |        |   |       |      |             |   |       |                                                         |  |   |                                                        |  |  |                      |       |    |  |  |       |    |  |   |        | 
|-------------- | ------ | - | ----- | ---- | ----------- | - | ----- | ------------------------------------------------------- |  | - | ------------------------------------------------------ |  |  | -------------------- | ----- | -- |  |  | ----- | -- |  | - | ------ | 
|Fiscal 2014    |        |   |       |      | Price Range |   |       | Premium or(Discount) of HighClosing Sale
Priceto NAV(2) |  |   | Premium 
or(Discount) ofLow ClosingSale
Price toNAV(2) |  |  | DeclaredDividends(3) |      
|               | NAV(1) |   |       | High |             |   | Low   |                                                         |  |   |                                                       
|Fourth Quarter |        | $ | 17.65 |      |             | $ | 15.68 |                                                         |  | $ | 14.63                                                  |  |  |                      | (11.2 | )% |  |  | (17.1 | )% |  | $ | 0.3525 | 
|Third Quarter  |        |   | 17.65 |      |             |   | 17.10 |                                                         |  |   | 15.39                                                  |  |  |                      | (3.1  | )  |  |  | (12.8 | )  |  |   | 0.3525 | 
|Second Quarter |        |   | 17.85 |      |             |   | 17.65 |                                                         |  |   | 16.29                                                  |  |  |                      | (1.1  | )  |  |  | (8.7  | )  |  |   | 0.3525 | 
|First Quarter  |        |   | 18.04 |      |             |   | 18.63 |                                                         |  |   | 17.11                                                  |  |  |                      | 3.3   |    |  |  | (5.2  | )  |  |   | 0.3525 | 
|               |        |   |       |     
|Fiscal 2013    |        |   |       |      |             |   |       |                                                         |  |   |                                                        | 
|Fourth Quarter |        | $ | 18.04 |      |             | $ | 18.87 |                                                         |  | $ | 17.73                                                  |  |  |                      | 4.6   | %  |  |  | (1.7  | )% |  | $ | 0.3525 | 
|Third Quarter  |        |   | 17.91 |      |             |   | 19.30 |                                                         |  |   | 17.68                                                  |  |  |                      | 7.8   |    |  |  | (1.3  | )  |  |   | 0.3525 | 
|Second Quarter |        |   | 18.03 |      |             |   | 19.37 |                                                         |  |   | 17.98                                                  |  |  |                      | 7.4   |    |  |  | (0.3  | )  |  |   | 0.3525 | 
|First Quarter  |        |   | 18.25 |      |             |   | 19.45 |                                                         |  |   | 18.55                                                  |  |  |                      | 6.6   |    |  |  | 1.6   |    |  |   | 0.3525 | 



|(1) | Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on
the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Calculated as the respective high or low closing sales price divided by NAV and subtracting 1.
|--- | ----------------------------------------------------------------------------------------------

|(3) | Represents the cash dividends and distributions declared for the specified quarter.
|--- | -----------------------------------------------------------------------------------

Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares.
The possibility that our shares of common stock will trade at a discount from net asset value or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value will decrease. Since our initial
public offering on February 24, 2011, our shares of common stock have traded at both a discount and a premium to the net assets attributable to those shares.

The last reported closing market price of our common stock on February 20, 2015 was $15.73 per share. As of
February 20, 2015, we had 4 shareholders of record.

DISTRIBUTIONS

Tax characteristics of all distributions will be reported to shareholders 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
status, 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.



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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, our revolving 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 U.S. generally accepted accounting principles and tax regulations, we include in income certain amounts that
we have not yet received in cash, such as contractual payment-in-kind interest, which represents contractual interest 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.

We cannot assure stockholders that they will receive any distributions at a particular level.

All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result,
stockholders that do not participate in the dividend reinvestment plan may experience dilution over time. Stockholders who do not elect to receive distributions in shares of common stock may experience accretion to the net asset value of their
shares if our shares are trading at a premium and dilution if our shares are trading at a discount. The level of accretion or discount would depend on various factors, including the proportion of our stockholders who participate in the plan, the
level of premium or discount at which our shares are trading and the amount of the distribution payable to a stockholder.



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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 2015       |  |                    |  |                   |  |        |        | 
|February 25, 2015 |  | March 19, 2015     |  | April 2, 2015     |  | $      | 0.1175 | 
|February 3, 2015  |  | February 19, 2015  |  | February 27, 2015 |  |        | 0.1175 | 
|January 8, 2015   |  | January 22, 2015   |  | January 30, 2015  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|YTD Total (2015)  |  |                    |  |                   |  | $      | 0.3525 | 
|                  |  |                    |  |                   |  |        |        | 
|Fiscal 2014       |  |                    |  |                   |  |        |        | 
|December 4, 2014  |  | December 18, 2014  |  | January 5, 2015   |  | $      | 0.1175 | 
|November 4, 2014  |  | November 20, 2014  |  | December 2, 2014  |  |        | 0.1175 | 
|October 8, 2014   |  | October 23, 2014   |  | October 31, 2014  |  |        | 0.1175 | 
|September 9, 2014 |  | September 25, 2014 |  | October 2, 2014   |  |        | 0.1175 | 
|August 4, 2014    |  | August 21, 2014    |  | September 3, 2014 |  |        | 0.1175 | 
|July 9, 2014      |  | July 24, 2014      |  | August 1, 2014    |  |        | 0.1175 | 
|June 6, 2014      |  | June 19, 2014      |  | July 1, 2014      |  |        | 0.1175 | 
|May 5, 2014       |  | May 22, 2014       |  | May 30, 2014      |  |        | 0.1175 | 
|April 8, 2014     |  | April 24, 2014     |  | May 1, 2014       |  |        | 0.1175 | 
|February 25, 2014 |  | March 20, 2014     |  | April 1, 2014     |  |        | 0.1175 | 
|February 6, 2014  |  | February 20, 2014  |  | February 28, 2014 |  |        | 0.1175 | 
|January 9, 2014   |  | January 23, 2014   |  | January 31, 2014  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|Total (2014)      |  |                    |  |                   |  | $      | 1.41   | 
|                  |  |                    |  |                   |  |        |        | 
|Fiscal 2013       |  |                    |  |                   |  |        |        | 
|December 5, 2013  |  | December 19, 2013  |  | January 3, 2014   |  | $      | 0.1175 | 
|October 30, 2013  |  | November 21, 2013  |  | December 3, 2013  |  |        | 0.1175 | 
|October 8, 2013   |  | October 24, 2013   |  | November 1, 2013  |  |        | 0.1175 | 
|September 5, 2013 |  | September 19, 2013 |  | October 2, 2013   |  |        | 0.1175 | 
|July 31, 2013     |  | August 22, 2013    |  | September 4, 2013 |  |        | 0.1175 | 
|July 9, 2013      |  | July 25, 2013      |  | August 1, 2013    |  |        | 0.1175 | 
|June 5, 2013      |  | June 20, 2013      |  | July 2, 2013      |  |        | 0.1175 | 
|May 7, 2013       |  | May 23, 2013       |  | June 3, 2013      |  |        | 0.1175 | 
|April 8, 2013     |  | April 25, 2013     |  | May 1, 2013       |  |        | 0.1175 | 
|February 25, 2013 |  | March 21, 2013     |  | April 2, 2013     |  |        | 0.1175 | 
|February 5, 2013  |  | February 21, 2013  |  | March 1, 2013     |  |        | 0.1175 | 
|January 8, 2013   |  | January 24, 2013   |  | February 1, 2013  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|Total (2013)      |  |                    |  |                   |  | $      | 1.41   | 
|                  |  |                    |  |                   |  |        |        | 

Recent Sales of Unregistered Securities

There have been no sales of unregistered securities during the past three fiscal years.



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STOCK PERFORMANCE GRAPH

This graph compares the return on our common stock with that of the Standard & Poors BDC Index,
Standard & Poors 500 Stock Index and the Russell 2000 Financial Services Index, for the period from February 24, 2011 (the date that shares of our common stock began trading on the NASDAQ Global Select Market) through
December 31, 2014. The graph assumes that a person invested $10,000 in each of the following: our common stock (SUNS), the S&P BDC Index, the S&P 500 Index, and the Russell 2000 Financial Services Index. The graph measures total
stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.



LOGO

The graph and other information furnished under this Part II Item 5 of this Form
10-K shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the 1934 Act. The stock price performance included in the above
graph is not necessarily indicative of future stock price performance.



54



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|Item 6. | Selected Financial Data
|------- | -----------------------

The selected financial and other data below should be read in conjunction with our Managements Discussion and Analysis of Financial Condition and Results of Operations and the
consolidated financial statements and notes thereto. Financial information is presented for the fiscal years ended December 31, 2014, 2013 and 2012 as well as for the period from January 28, 2011 (commencement of operations) through
December 31, 2011. Financial information has been derived from our consolidated financial statements that were audited by KPMG LLP (KPMG), an independent registered public accounting firm.



|                                                                   |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|------------------------------------------------------------------ |  | -------------------------- | ------- | - | -------------------------- | - | ------- | -------------------------- |  | - | ------------------------------------------------- | - |  | - | ------- | -
|($ in thousands, except per share data)                            |  | Year endedDecember 31,2014 |         |   | Year endedDecember 31,2013 |   |         | Year endedDecember 31,2012 |  |   | Period
fromJanuary 28, 2011(1)toDecember 31, 2011 |  
|Income statement data:                                             |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|Total investment income                                            |  | $                          | 22,104  |   |                            | $ | 19,765  |                            |  | $ | 20,539                                            |   |  | $ | 7,890   |  
|Net expenses                                                       |  | $                          | 8,290   |   |                            | $ | 6,378   |                            |  | $ | 8,046                                             |   |  | $ | 5,290   |  
|Net investment income                                              |  | $                          | 13,814  |   |                            | $ | 13,387  |                            |  | $ | 12,493                                            |   |  | $ | 2,600   |  
|Net realized gain (loss)                                           |  | $                          | (638    | ) |                            | $ | (4,978  | )                          |  | $ | 618                                               |   |  | $ | (576    | )
|Net change in unrealized gain (loss).                              |  | $                          | (1,486  | ) |                            | $ | 4,209   |                            |  | $ | 801                                               |   |  | $ | (2,274  | )
|Net increase (decrease) in net assets resulting from operations    |  | $                          | 11,690  |   |                            | $ | 12,618  |                            |  | $ | 13,912                                            |   |  | $ | (250    | )
|Per share data:                                                    |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|Net investment income(4)                                           |  | $                          | 1.20    |   |                            | $ | 1.17    |                            |  | $ | 1.32                                              |   |  | $ | 0.30    |  
|Net realized and unrealized gain (loss)(4)                         |  | $                          | (0.18   | ) |                            | $ | (0.07   | )                          |  | $ | 0.15                                              |   |  | $ | (0.33   | )
|Dividends and distributions declared                               |  | $                          | 1.41    |   |                            | $ | 1.41    |                            |  | $ | 1.29                                              |   |  | $ | 0.55    |  
|                                                                   |  |                            |         |  
|                                                                   |  | As ofDecember 31,2014      |         |   | As ofDecember 31,2013      |   |         | As ofDecember 31,2012      |  |   | As ofDecember 31,2011                             |  
|Balance sheet data:                                                |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|Total investment portfolio                                         |  | $                          | 340,466 |   |                            | $ | 267,852 |                            |  | $ | 212,602                                           |   |  | $ | 177,749 |  
|Cash and cash equivalents                                          |  | $                          | 42,471  |   |                            | $ | 2,774   |                            |  | $ | 2,647                                             |   |  | $ | 2,934   |  
|Total assets                                                       |  | $                          | 384,797 |   |                            | $ | 272,561 |                            |  | $ | 217,029                                           |   |  | $ | 187,395 |  
|Debt                                                               |  | $                          | 143,200 |   |                            | $ | 61,400  |                            |  | $ | 39,100                                            |   |  | $ | 8,600   |  
|Net assets                                                         |  | $                          | 203,519 |   |                            | $ | 208,017 |                            |  | $ | 174,103                                           |   |  | $ | 172,435 |  
|Per share data:                                                    |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|Net asset value per share                                          |  | $                          | 17.65   |   |                            | $ | 18.04   |                            |  | $ | 18.33                                             |   |  | $ | 18.15   |  
|Other data (unaudited):                                            |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|Weighted average annualized yield on income producing investments: |  |                            |         |   |                            |   |         |                            |  |   |                                                   |   |  |   |         |  
|On fair value(2)                                                   |  |                            | 7.0     | % |                            |   | 7.5     | %                          |  |   | 7.8                                               | % |  |   | 8.5     | %
|On cost(3)                                                         |  |                            | 7.1     | % |                            |   | 7.8     | %                          |  |   | 7.7                                               | % |  |   | 8.4     | %
|Number of portfolio companies at period end                        |  |                            | 43      |   |                            |   | 36      |                            |  |   | 31                                                |   |  |   | 21      |  



|(1) | Commencement of operations
|--- | --------------------------

|(2) | Throughout this document, the weighted average yield on income producing investments is computed as the (a) annual stated interest on accruing
loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities divided by (b) total income producing investments at fair value. The weighted
average yield is computed as of the balance sheet date and excludes assets on non-accrual status or on a cost recovery basis as of such date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For this calculation, the weighted average yield on income producing investments is computed as the (a) annual stated interest on accruing
loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities divided by (b) total income producing investments at cost. The weighted average
yield is computed as of the balance sheet date and excludes assets on non-accrual status or on a cost recovery basis as of such date.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The per-share calculations are based on weighted average shares of 11,532,985, 11,423,958, 9,500,100 and 8,627,696 for the years ended
December 31, 2014, 2013, 2012 and 2011, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

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;
| | - |  | -----------------------------



| |  |  | 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | the ability of our portfolio companies to achieve their objectives;
| | - |  | -------------------------------------------------------------------



| |  |  | our expected financings and investments;
| | - |  | ----------------------------------------



| |  |  | the adequacy of our cash resources and working capital; and
| | - |  | -----------------------------------------------------------



| |  |  | the timing of cash flows, if any, from the operations of our portfolio companies.
| | - |  | ---------------------------------------------------------------------------------

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 Senior Capital Ltd. (Solar Senior, the Company, or we), a Maryland corporation
formed in December 2010, is a closed-end, externally managed, non-diversified management investment company that has elected to be treated 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 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 24, 2011, we priced our initial public offering, selling 9.0 million shares, including the underwriters over-allotment, at a price of $20.00 per share. Concurrent with this
offering, management purchased an additional 500,000 shares through a concurrent private placement, also at $20.00 per share.



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On August 26, 2011, the Company established SUNS SPV, LLC (SUNS
SPV) which entered into a $200 million senior secured revolving credit facility (the Credit Facility) with Citigroup Global Markets Inc. acting as administrative agent. The Credit Facility was scheduled to mature on August 26,
2016 and generally bore interest at the London Interbank Offered Rate (LIBOR) plus 2.25%. The Credit Facility had $150 million immediately available with an additional $50 million available under a delayed draw feature. The Credit
Facility can also be expanded up to $600 million and is secured by all of the assets held by the SUNS SPV. Under the terms of the Credit Facility, Solar Senior and the 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 Credit Facility also includes usual and customary events of
default for credit facilities of this nature.

On November 7, 2012, we amended our Credit Facility. As a
result of the amendment, the stated interest rate on the Credit Facility was reduced to LIBOR plus 2.00% from LIBOR plus 2.25%, and the Credit Facility continues to have no LIBOR floor requirement. The amendment also provided us greater investment
flexibility and extended the final maturity date to November 6, 2017.

On June 30, 2014, the Company
again amended the Credit Facility. As a result of this amendment, commitments under the Credit Facility were reduced by $25 million to $175 million and may be expanded up to $600 million under its accordion feature. This amendment to the Credit
Facility also added greater investment flexibility and extends the final maturity date to June 28, 2019. The stated interest rate remains LIBOR plus 2.00% with no LIBOR floor requirement.

We invest primarily in 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 seek to maximize current income consistent with the preservation of capital. We seek to achieve our investment objective by directly and indirectly investing primarily in
senior loans, including first lien and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which we refer to collectively as senior loans. We may also invest in debt of public
companies that are thinly traded. Under normal market conditions, at least 80% of the value of our net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. Senior loans typically pay interest at
rates which are determined periodically on the basis of a floating base lending rate, primarily LIBOR, plus a premium. Senior loans in which we expect to invest are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships
and other business entities which operate in various industries and geographical regions. Senior loans typically are rated below investment grade. Securities rated below investment grade are often referred to as leveraged loans or
high yield securities, and may be considered high risk compared to debt instruments that are rated investment grade.

We expect to invest in senior loans made primarily to private, leveraged middle-market companies with approximately $20 million to $100 million of earnings before income taxes, depreciation and
amortization (EBITDA). Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our direct investments will generally range between $5
million and $30 million each, although we expect that this investment size will vary proportionately with the size of our capital base and/or with strategic initiatives. 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 opportunistic 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. We may invest up to 30% of our total assets in such opportunistic investments, including senior loans issued by non-U.S.
issuers, subject to compliance with our regulatory obligations as a BDC under the 1940 Act.

As of
December 31, 2014, our adviser, Solar Capital Partners, LLC (the Investment Adviser), has invested approximately $4.7 billion in more than 180 different portfolio companies since it was founded in 2006. Over the same period, the
Investment Adviser completed transactions with more than 110 different financial sponsors.



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Recent Developments

On January 8, 2015, our board of directors declared a monthly dividend of $0.1175 per share payable on
January 30, 2015 to holders of record as of January 22, 2015.

On February 3, 2015, our board
of directors declared a monthly dividend of $0.1175 per share payable on February 27, 2015 to holders of record as of February 19, 2015.

On February 25, 2015, our board of directors declared a monthly dividend of $0.1175 per share payable on April 2, 2015 to holders of record as of March 19, 2015.

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), commercial paper rate, or the prime rate. Interest on our debt investments is generally payable quarterly but may be monthly or semi-annually. In addition, our investments may provide payment-in-kind (PIK) interest.
Such amounts of accrued PIK interest 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 its staff, when and to the extent engaged in providing investment advisory and management services to us, and the compensation and routine overhead expenses of that personnel which is allocable to those services are provided
and paid for by the Investment Adviser. We bear all other costs and expenses of our operations and transactions, including those relating to:



| |  |  | investment advisory and management fees;
| | - |  | ----------------------------------------



| |  |  | expenses incurred by the Investment Adviser payable to third parties, including agents, consultants or other advisors, in monitoring our financial
and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | calculation of our net asset value (including the cost and expenses of any independent valuation firm utilized);
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | direct costs and expenses of administration, including independent registered public accounting and legal costs;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | costs of preparing and filing reports or other documents with the SEC;
| | - |  | ----------------------------------------------------------------------



| |  |  | interest payable on debt, if any, incurred to finance our investments;
| | - |  | ----------------------------------------------------------------------



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##### Table of Contents

| |  |  | offerings of our common stock and other securities;
| | - |  | ---------------------------------------------------



| |  |  | registration and listing fees;
| | - |  | ------------------------------



| |  |  | fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | transfer agent and custodial fees;
| | - |  | ----------------------------------



| |  |  | taxes;
| | - |  | ------



| |  |  | independent directors fees and expenses;
| | - |  | -----------------------------------------



| |  |  | marketing and distribution-related expenses;
| | - |  | --------------------------------------------



| |  |  | the costs of any reports, proxy statements or other notices to stockholders, including printing and postage costs;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | organizational costs; and
| | - |  | -------------------------



| |  |  | all other expenses incurred by us or the Administrator in connection with administering our business, such as our allocable portion of overhead
under the administration agreement, including rent and our allocable portion of the cost of our chief financial officer and chief compliance 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 our fiscal year ended December 31, 2014, we invested $216.1 million across 35 portfolio companies through a
combination of primary and secondary market purchases. This compares to investing $202.1 million in 26 portfolio companies for the previous fiscal year ended December 31, 2013. Investments sold or prepaid during the fiscal year ended
December 31, 2014 totaled $143.1 million versus $147.9 million for the fiscal year ended December 31, 2013.

At December 31, 2014, our portfolio consisted of 43 portfolio companies and was invested 88.5% in senior secured loans, 1.1% in unsecured loans and 10.4% in common equity measured at fair value
versus 36 portfolio companies invested 84.0% in senior secured loans, 2.6% in unsecured loans and 13.4% in common equity at December 31, 2013.

The weighted average yields on our income producing portfolio of investments were 7.0% and 7.5%, respectively, at December 31, 2014 and December 31, 2013 measured at fair value.

At December 31, 2014, 94.4% or $320.6 million of our income producing investment portfolio* is floating rate and
5.6% or $18.9 million is fixed rate, measured at fair value. At December 31, 2013, 92.8% or $244.1 million of our income producing investment portfolio* is floating rate and 7.2% or $19.0 million is fixed rate, measured at fair value.

Since the initial public offering of Solar Senior on February 24, 2011 and through December 31,
2014, invested capital totaled approximately $827 million in 85 portfolio companies. Over the same period, Solar Senior completed transactions with more than 55 different financial sponsors.



|* | We have included Gemino Healthcare Finance, LLC as 100% floating rate within our income producing investment portfolio.
|- | -----------------------------------------------------------------------------------------------------------------------



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Gemino Healthcare Finance, LLC

Pursuant to a definitive agreement, dated September 30, 2013, we acquired Gemino Healthcare Finance, LLC (d/b/a
Gemino Senior Secured Healthcare Finance) (Gemino) from affiliates of EDG Partners, D. E. Shaw AQ-SP Series 5-01, L.L.C. and other members of Gemino. Gemino 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. Our initial investment in Gemino of $32.8 million was funded from our existing Credit Facility. We have an additional $5.0 million
commitment to Gemino (which may be structured as debt or equity), conditional upon approval of the Gemino board of managers, among other conditions. The management team of Gemino committed to lead Gemino and co-invested in the transaction.

Concurrent with the closing of the transaction, Gemino entered into a new, four-year, non-recourse, $100.0
million credit facility with non-affiliates, which is expandable to $150.0 million under its accordion feature. Effective March 31, 2014, the credit facility was expanded to $105.0 million and again on June 27, 2014 to $110.0 million.

On December 31, 2013, we contributed our 32,839 units in Gemino to Gemino Senior Secured Healthcare LLC
(Gemino Senior Secured Healthcare). In exchange for this contribution, we received 19,839 units of common equity and $13.0 million in floating rate secured notes of Gemino Senior Secured Healthcare bearing interest at LIBOR plus 7.50%,
maturing on December 31, 2018. However, our financial statements, including our schedule of investments, reflect our investments in Gemino Senior Secured Healthcare on a consolidated basis. Geminos management team currently owns
approximately 5% of the equity in Gemino. Gemino Senior Secured Healthcare owns approximately 95% of the equity in Gemino and Solar Senior owns 100% of the equity in Gemino Senior Secured Healthcare. Gemino and Gemino Senior Secured Healthcare are
treated as pass-through entities for tax purposes.

Gemino currently manages a highly diverse portfolio of
directly-originated and underwritten senior-secured commitments. As of December 31, 2014, the portfolio totaled approximately $204.9 million of commitments, of which $122.9 million were funded, on total assets of $129.0 million. As of
December 31, 2013, the portfolio totaled approximately $170.6 million of commitments, of which $108.6 million were funded, on total assets of $117.1 million. At December 31, 2014, the portfolio consisted of 38 issuers with an average
balance of approximately $3.2 million versus 34 issuers with an average balance of approximately $3.2 million at December 31, 2013. All of the commitments in Geminos portfolio are floating-rate, senior-secured, cash-pay loans.
Geminos credit facility, which is non-recourse to us, had approximately $95.0 million and $83.0 million of borrowings outstanding at December 31, 2014 and December 31, 2013, respectively. For the years ended December 31, 2014
and December 31, 2013, Gemino had net income of $3.0 million and $0.2 million, respectively, on gross income of $10.9 million and $12.2 million, respectively. Results for the year ended December 31, 2013 include $3.2 million of
non-recurring costs related to the acquisition. Due to timing and non-cash items, there may be material differences between GAAP net income and cash available for distributions.

First Lien Loan Program LLC

On September 10, 2014,
the Company entered into a joint venture agreement to create a First Lien Loan Program (FLLP) with Voya Investment Management (Voya). Voya acts as the investment advisor for several wholly-owned insurance subsidiaries of Voya
Financial, Inc. (NYSE: VOYA). The joint venture vehicle, structured as an unconsolidated Delaware limited liability company, is expected to invest primarily in senior secured term loans to middle market companies predominantly owned by private
equity sponsors or entrepreneurs. Solar Senior and Voya have committed to provide $50 million and $7.25 million, respectively, of capital to the joint venture. All portfolio decisions and generally all other decisions in respect of the FLLP must be
approved by an investment committee of the FLLP consisting of representatives of the Company and Voya (with approval from a representative of each required). As of December 31, 2014, FLLP had not commenced operations. On February 13, 2015, FLLP
commenced operations. On February 13, 2015 FFLP as transferor and FLLP 2015-1, LLC, a newly formed wholly owned subsidiary of FLLP, as borrower entered into a $75 million



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senior secured revolving credit facility (the FLLP Facility) with Wells Fargo Securities, LLC acting as administrative agent. Solar Senior Capital Ltd. acts as servicer under the
FLLP Facility. The FLLP Facility reinvestment period is scheduled to end on February 13, 2018 and the FLLP Facility is scheduled to mature on February 13, 2020. The FLLP Facility generally bears interest at a rate of LIBOR plus
2.25-2.50%. FLLP and FLLP 2015-1, LLC, 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 FLLP Facility also includes usual and customary events of default for credit facilities of this nature.

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
below:

The Company conducts the valuation of its assets in accordance with GAAP and the 1940 Act. The Company
generally values its assets on a quarterly basis, or more frequently if required. Investments for which market quotations are readily available on an exchange are valued at the closing price on the date of valuation. The Company may also obtain
quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, management determines whether the quote obtained is sufficient according to GAAP to determine the fair value of
the investment. If determined adequate, the Company uses the quote obtained. 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 Companys board of
directors (the Board).

Investments for which reliable market quotations are not readily available
or for which the pricing sources do not provide a valuation or methodology or provide a valuation or methodology that, in the judgment of the Investment Adviser or the Board does not represent fair value, each shall be valued as follows:
(i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuations are discussed with senior management of the Investment Adviser;
(iii) independent valuation firms engaged by, or on behalf of, the Board will conduct independent appraisals and review the Investment Advisers preliminary valuations and make their own independent assessment for (a) each portfolio
investment that, when taken together with all other investments in the same portfolio company, exceeds 10% of estimated total assets, plus available borrowings, as of the end of the most recently completed fiscal quarter, and (b) each portfolio
investment that is presently in payment default; (iv) the Board will discuss the valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser and, where appropriate, the
respective independent valuation firm.

The recommendation of fair value generally considers the following
factors among others, as relevant: applicable market yields; the nature and realizable value of any collateral; the portfolio companys ability to make payments; the portfolio companys earnings and discounted cash flow; the markets in
which the issuer does business; and comparisons to publicly traded securities, among others.



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When an external event such as a purchase transaction, public offering or
subsequent equity sale occurs, the Company will consider the pricing indicated by the external event to corroborate the valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available
market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Investments are valued utilizing a market approach, an income approach, or both approaches, as appropriate. 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 techniques 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, 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 fiscal year ended December 31, 2014, there has been no change to the Companys valuation techniques and the nature of the related inputs considered in the valuation process.

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

Level 1: Quoted prices in active markets for identical assets or
liabilities, accessible by the Company at the measurement date.

Level 2: 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 3: 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.

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.

Valuation of Credit Facility

The Company has made an irrevocable election to apply the fair value option of accounting to the
Credit Facility, in accordance with ASC 825-10. We believe accounting for the Credit Facility 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



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in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more 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 interest or dividends. PIK interest and dividends computed at the contractual rate is accrued into income and reflected as 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 interest or dividends. 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 interest method or straight-line, as applicable. 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 interest has the
effect of generating investment income and increasing the incentive fees payable at a compounding rate. In addition, the deferral of PIK interest 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 year ended
December 31, 2014, capitalized PIK income totaled $0.1 million.

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.

Income Taxes

Solar Senior Capital, a U.S. corporation, has elected to be treated as a RIC under Subchapter M of the Code, as amended. In order to qualify as a RIC, among other things, the Company is required 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 4% 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. As of December 31, 2014, the accrual for excise tax was $0.



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RESULTS OF OPERATIONS

Results comparisons are for the fiscal years ended December 31, 2014, December 31, 2013 and
December 31, 2012.

Investment Income

For the fiscal years ended December 31, 2014, 2013 and 2012, gross investment income totaled $22.1 million, $19.8
million and $20.5 million, respectively. The increase in gross investment income from fiscal year 2013 to fiscal year 2014 was primarily due to net growth of the income producing portfolio, including from Gemino Healthcare Finance, LLC. The modest
decrease in gross investment income in fiscal year 2013 as compared to fiscal year 2012 was primarily due to portfolio yield compression, partially offset by net portfolio growth.

Expenses

Expenses totaled $8.3 million, $6.4 million and $8.0 million, respectively, for the fiscal years ended December 31, 2014, 2013 and 2012, of which $3.1 million, $2.7 million and $2.8 million,
respectively, were management fees and net performance-based incentive fees and $3.1 million, $1.3 million and $2.4 million, respectively, were interest and other credit facility expenses. For the fiscal year ended December 31, 2014, $0.2
million of performance-based incentive fees were waived. No fees were waived in 2013 or 2012. Administrative services, insurance and other general and administrative expenses totaled $2.1 million, $2.4 million and $2.8 million, respectively, for the
fiscal years ended December 31, 2014, 2013 and 2012. Expenses generally consist of management fees, performance-based incentive fees, administrative services expenses, insurance, legal expenses, directors expenses, audit and tax expenses,
transfer agent fees and expenses, and other general and administrative expenses. The increase in total expenses for the year ended December 31, 2014 was primarily due to the Credit Facility amendment in June 2014, which accounted for
approximately $1.0 million in expenses as well as higher management, performance-based incentive fees and interest expense on a comparatively larger average portfolio. The decrease in expenses from fiscal 2012 to fiscal 2013 was primarily due to
recognizing approximately $1.0 million in interest costs related to our Credit Facilitys amendment in November 2012 as well as from the full fiscal year 2013 benefit of the rate reduction. Additionally, insurance expenses were significantly
reduced in 2013 from 2012.

Net Investment Income

The Companys net investment income totaled $13.8 million or $1.20 per average share, $13.4 million or $1.17 per
average share and $12.5 million or $1.32 per average share, for the fiscal years ended December 31, 2014, 2013 and 2012, respectively.

Net Realized Gain (Loss)

The Company had investment
sales and prepayments totaling approximately $143.1 million, $147.9 million and $162.6 million, respectively, for the fiscal years ended December 31, 2014, 2013 and 2012. Net realized gain (loss) for the fiscal years ended December 31,
2014, 2013 and 2012 totaled ($0.6) million, ($5.0) million and $0.6 million, respectively. Net realized loss for the fiscal year ended December 31, 2014 was primarily related to the sale of our investment in SLT Environmental. Net realized
losses for fiscal 2013 were primarily related to the restructuring of our investment in Engineering Solutions & Products. Net realized gains for the fiscal year ended 2012 were primarily related to selected sales of assets such as Genesys
Telecommunications, KIK Custom Products, and STHI Holdings.

Net Change in Unrealized Gain (Loss)

For the fiscal years ended December 31, 2014, 2013 and 2012, the net change in unrealized gain (loss) on the
Companys assets and liabilities totaled ($1.5) million, $4.2 million and $0.8 million, respectively. Net



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unrealized depreciation for fiscal 2014 was primarily due to a slight decline in market and fundamental conditions of certain investments. Net unrealized appreciation for fiscal 2013 was
primarily attributable to the reversal of unrealized depreciation on our investment in Engineering Solutions & Products, as well as market improvements on our equity investment in Gemino Healthcare Finance LLC. Net unrealized appreciation
for fiscal 2012 was primarily attributable to general market improvements, modest yield tightening and overall positive net changes in general portfolio company fundamentals.

Net Increase in Net Assets From Operations

For the
fiscal years ended December 31, 2014, 2013 and 2012, the Company had a net increase in net assets resulting from operations of $11.7 million, $12.6 million and $13.9 million, respectively. For the fiscal years ended December 31, 2014, 2013
and 2012, earnings per average share were $1.01, $1.10 and $1.46, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Companys liquidity and capital resources are generally available through its Credit Facility, through periodic
follow-on equity offerings, as well as from cash flows from operations, investment sales and pre-payments of investments. At December 31, 2014, the Company had $143.2 million in borrowings outstanding on its Credit Facility and $31.8 million of
unused capacity, subject to borrowing base limits.

On January 18, 2013, the Company closed a follow-on
public equity offering of 2.0 million shares of common stock at $18.85 per share raising approximately $37.2 million in net proceeds. In the future, the Company may raise additional equity or debt capital, among other considerations. The
primary uses of funds will be investments in portfolio companies, reductions in debt outstanding and other general corporate purposes. The issuance of debt or equity 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.

We currently expect that
our liquidity needs will be met with cash flows from operations, borrowings under our Credit Facility, including its accordion feature as well as from other available financing activities.

Cash Equivalents

We deem certain U.S. Treasury bills,
repurchase agreements and other high-quality, short-term debt securities as cash equivalents. 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 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 our credit facilities, 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 $35 million in cash equivalents as of December 31, 2014.

Debt

Senior Secured Revolving Credit Facility  On August 26, 2011, the Company established the SUNS SPV which
entered into the Credit Facility with Citigroup Global Markets Inc. acting as administrative agent. The Credit Facility was scheduled to mature on August 26, 2016 and generally bore interest at a rate of LIBOR plus 2.25%. The Credit Facility
can also be expanded up to $600 million and is secured by all of the assets held by the SUNS SPV. Under the terms of the Credit Facility, Solar Senior and the SUNS SPV, as applicable, have made certain customary representations and warranties, and
are required to comply with various covenants, including



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leverage restrictions, reporting requirements and other customary requirements for similar credit facilities. The Credit Facility also includes usual and customary events of default for credit
facilities of this nature.

On November 7, 2012, we amended our Credit Facility. As a result of the
amendment, the stated interest rate on the Credit Facility was reduced to LIBOR plus 2.00% from LIBOR plus 2.25%, and the Credit Facility continues to have no LIBOR floor requirement. The amendment also provided us greater investment flexibility and
extended the final maturity date to November 6, 2017. On February 26, 2014, the Company utilized the Credit Facilitys delayed draw feature, expanding immediately available capital from $150.0 million to $200.0 million, subject to
borrowing base limitations.

On June 30, 2014, the Company again amended the Credit Facility. As a result
of this amendment, commitments under the Credit Facility were reduced by $25.0 million to $175.0 million and may be expanded up to $600.0 million under its accordion feature. This amendment to the Credit Facility also added greater investment
flexibility and extends the final maturity date to June 28, 2019. The stated interest rate remains LIBOR plus 2.00% with no LIBOR floor requirement. At December 31, 2014, the Company was in compliance with all financial and operational
covenants required by the Credit Facility.

Contractual Obligations



|                                             |  |                                                                     |       |  |                 |   |   |           |  |   |           |  |  |                  |       |  |  |   |   | 
|-------------------------------------------- |  | ------------------------------------------------------------------- | ----- |  | --------------- | - | - | --------- |  | - | --------- |  |  | ---------------- | ----- |  |  | - | - | 
|                                             |  | Payments due by Period as of December 31,
2014(dollars in millions) |      
|                                             |  | Total                                                               |       |  | Less than1 year |   |   | 1-3 years |  |   | 3-5 years |  |  | More than5 years |      
|Senior Secured Revolving Credit Facility (1) |  | $                                                                   | 143.2 |  |                 | $ |  |           |  | $ |          |  |  | $                | 143.2 |  |  | $ |  | 



|(1) | At December 31, 2014, $31.8 million remained unused.
|--- | ----------------------------------------------------

Information about our senior securities is shown in the following table as of each year ended December 31 since the
Company commenced operations, 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 AmountOutstanding (dollarsin thousands) (1) |         |  | AssetCoveragePer Unit (2) |   |        | InvoluntaryLiquidatingPreferencePer Unit (3) |  |   | AverageMarket ValuePer Unit (4) | 
|Revolving Credit Facility |  |                                                   |         |  |                           |   |        |                                              |  |   |                                 |  |  |  |     | 
|Fiscal 2014               |  | $                                                 | 143,200 |  |                           | $ | 2,421  |                                              |  | $ |                                |  |  |  | N/A | 
|Fiscal 2013               |  |                                                   | 61,400  |  |                           |   | 4,388  |                                              |  |   |                                |  |  |  | N/A | 
|Fiscal 2012               |  |                                                   | 39,100  |  |                           |   | 5,453  |                                              |  |   |                                |  |  |  | N/A | 
|Fiscal 2011               |  |                                                   | 8,600   |  |                           |   | 21,051 |                                              |  |   |                                |  |  |  | N/A | 



|(1) | Total amount of each class of senior securities outstanding 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 senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 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 was divided based on the amount outstanding at the end of the period for each.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(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, we do not have senior securities that are registered for public trading.
|--- | ----------------------------------------------------------------------------------------

We have also entered into two contracts under which we have future commitments: the Investment Advisory and Management
Agreement, pursuant to which Solar Capital Partners, LLC has agreed to serve as our



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investment adviser, and the Administration Agreement, pursuant to which Solar Capital Management, LLC (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 Investment Advisory and
Management 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 investment advisory and management agreement and administration agreement without penalty upon 60 days written notice to the other. See note 3 to our Consolidated Financial
Statements.

Off-Balance Sheet Arrangements

The Company had unfunded equity and debt commitments to various revolving and delayed draw loans, as well as to Gemino.
The total amount of these unfunded commitments as of December 31, 2014 and December 31, 2013 is $6.7 million and $6.7 million, respectively.

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 Statement of Assets and Liabilities.



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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 2015       |  |                    |  |                   |  |        |        | 
|February 25, 2015 |  | March 19, 2015     |  | April 2, 2015     |  | $      | 0.1175 | 
|February 3, 2015  |  | February 19, 2015  |  | February 27, 2015 |  |        | 0.1175 | 
|January 8, 2015   |  | January 22, 2015   |  | January 30, 2015  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|YTD Total (2015)  |  |                    |  |                   |  | $      | 0.3525 | 
|                  |  |                    |  |                   |  |        |        | 
|Fiscal 2014       |  |                    |  |                   |  |        |        | 
|December 4, 2014  |  | December 18, 2014  |  | January 5, 2015   |  | $      | 0.1175 | 
|November 4, 2014  |  | November 20, 2014  |  | December 2, 2014  |  |        | 0.1175 | 
|October 8, 2014   |  | October 23, 2014   |  | October 31, 2014  |  |        | 0.1175 | 
|September 9, 2014 |  | September 25, 2014 |  | October 2, 2014   |  |        | 0.1175 | 
|August 4, 2014    |  | August 21, 2014    |  | September 3, 2014 |  |        | 0.1175 | 
|July 9, 2014      |  | July 24, 2014      |  | August 1, 2014    |  |        | 0.1175 | 
|June 6, 2014      |  | June 19, 2014      |  | July 1, 2014      |  |        | 0.1175 | 
|May 5, 2014       |  | May 22, 2014       |  | May 30, 2014      |  |        | 0.1175 | 
|April 8, 2014     |  | April 24, 2014     |  | May 1, 2014       |  |        | 0.1175 | 
|February 25, 2014 |  | March 20, 2014     |  | April 1, 2014     |  |        | 0.1175 | 
|February 6, 2014  |  | February 20, 2014  |  | February 28, 2014 |  |        | 0.1175 | 
|January 9, 2014   |  | January 23, 2014   |  | January 31, 2014  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|Total (2014)      |  |                    |  |                   |  | $      | 1.41   | 
|                  |  |                    |  |                   |  |        |        | 
|Fiscal 2013       |  |                    |  |                   |  |        |        | 
|December 5, 2013  |  | December 19, 2013  |  | January 3, 2014   |  | $      | 0.1175 | 
|October 30, 2013  |  | November 21, 2013  |  | December 3, 2013  |  |        | 0.1175 | 
|October 8, 2013   |  | October 24, 2013   |  | November 1, 2013  |  |        | 0.1175 | 
|September 5, 2013 |  | September 19, 2013 |  | October 2, 2013   |  |        | 0.1175 | 
|July 31, 2013     |  | August 22, 2013    |  | September 4, 2013 |  |        | 0.1175 | 
|July 9, 2013      |  | July 25, 2013      |  | August 1, 2013    |  |        | 0.1175 | 
|June 5, 2013      |  | June 20, 2013      |  | July 2, 2013      |  |        | 0.1175 | 
|May 7, 2013       |  | May 23, 2013       |  | June 3, 2013      |  |        | 0.1175 | 
|April 8, 2013     |  | April 25, 2013     |  | May 1, 2013       |  |        | 0.1175 | 
|February 25, 2013 |  | March 21, 2013     |  | April 2, 2013     |  |        | 0.1175 | 
|February 5, 2013  |  | February 21, 2013  |  | March 1, 2013     |  |        | 0.1175 | 
|January 8, 2013   |  | January 24, 2013   |  | February 1, 2013  |  |        | 0.1175 | 
|                  |  |                    |  |                   |  |        |        | 
|Total (2013)      |  |                    |  |                   |  | $      | 1.41   | 
|                  |  |                    |  |                   |  |        |        | 

Tax characteristics of all distributions will be reported to shareholders on Form 1099
after the end of the calendar year. Future 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 status, 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



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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, our
revolving 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 interest,
which represents contractual interest 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 an Investment Advisory and Management Agreement with the Investment Adviser. Mr. Gross, our chairman and chief executive
officer, is a managing member and a senior investment professional of, and has financial and controlling interests in, the Investment Adviser. In addition, Mr. Spohler, our chief operating officer is a partner and a senior investment
professional of, and has financial interests in, 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 any administrative support staff.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 name Solar Capital.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Investment Adviser and
its affiliates 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 Solar Capital Ltd., a
publicly traded BDC, which to focuses on investing primarily in senior secured loans, mezzanine loans and equity securities. In addition, Michael S. Gross, our chairman and chief executive officer, Bruce Spohler, our chief operating officer, and
Richard L. Peteka, our chief financial officer, serve in similar capacities for Solar Capital Ltd. The Investment Adviser and certain



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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.

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 7A. | Quantitative and Qualitative Disclosure about Market Risk
|-------- | ---------------------------------------------------------

We are subject to financial market risks, including changes in interest rates. During the fiscal year ended December 31, 2014, all but two of the loans in our portfolio had floating interest rates.
Our loans are primarily based on floating LIBOR and typically have durations of one to three months after which they reset to current market interest rates. Most of our loans to portfolio companies have LIBOR floors. The Company also has a revolving
credit facility that is based on floating LIBOR and commercial paper rates. Assuming no changes to our balance sheet as of December 31, 2014, a hypothetical one-quarter of one percent decrease in LIBOR on our floating rate assets and
liabilities would increase our earnings by approximately two cents per average share over the next twelve months. Assuming no changes to our balance sheet as of December 31, 2014, a hypothetical one percent increase in LIBOR on our floating
rate assets and liabilities would decrease our earnings by approximately five 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 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 the benefits of certain
changes in interest rates with respect to our portfolio of investments.



|                                                                |  |  |  |   |       |    |  |   |       |  
|--------------------------------------------------------------- |  |  |  | - | ----- | -- |  | - | ----- | -
|Increase (Decrease) in LIBOR                                    |  |  |  |   | (0.25 | %) |  |   | 1.00  | %
|Increase
(Decrease) in Net Investment Income Per Share Per Year |  |  |  | $ | 0.02  |    |  | $ | (0.05 | )



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|Item 8. | Consolidated Financial Statements and Supplementary Data
|------- | --------------------------------------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                       |  |  |    | 
|------------------------------------------------------------------------------------------------------ |  |  | -- | 
|Managements Report on Internal Control over Financial Reporting                                       |  |  | 72 | 
|Report of Independent Registered Public Accounting Firm                                                |  |  | 73 | 
|Report of Independent Registered Public Accounting Firm On Internal Control Over Financial
Reporting   |  |  | 74 | 
|Consolidated Statements of Assets & Liabilities as of December 31, 2014 and December 
31, 2013         |  |  | 75 | 
|Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and
2012             |  |  | 76 | 
|Consolidated Statements of Changes in Net Assets for the years ended December 31, 2014, 2013 and 
2012 |  |  | 77 | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and
2012             |  |  | 78 | 
|Consolidated Schedule of Investments as of December 31, 2014 and December 31,
2013                     |  |  | 79 | 
|Notes to Consolidated Financial Statements                                                             |  |  | 85 | 



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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING

Management is responsible for establishing and maintaining adequate internal control over
financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2014. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys internal control over financial reporting includes
those policies and procedures that (i) pertain to assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Management performed an assessment of the effectiveness of the Companys internal control over financial reporting as of December 31, 2014 based upon criteria in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management determined that the Companys internal control over financial reporting was effective as
of December 31, 2014 based on the criteria on Internal Control  Integrated Framework issued by COSO.

The effectiveness of the Companys internal control over financial reporting as of December 31, 2014 has been
audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which appears herein.



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Solar Senior Capital Ltd.:

We have audited the accompanying
consolidated statements of assets and liabilities, including the consolidated schedule of investments, of Solar Senior Capital Ltd. (and subsidiaries) (the Company) as of December 31, 2014 and 2013, and the related consolidated statements
of operations, changes in net assets, and cash flows for each of the years in the three-year period ended December 31, 2014. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Our procedures included
confirmation of securities owned as of December 31, 2014, by correspondence with the custodian, portfolio companies or agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solar Senior Capital Ltd. (and subsidiaries) as of
December 31, 2014 and 2013, and the results of their operations, the changes in their net assets and cash flows for each of the years in the three-year period ended December 31, 2014, in conformity
with U.S. generally accepted accounting principles.

We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), Solar Senior Capital Ltd.s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control 
Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 25, 2015 expressed an unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.

/s/ KPMG LLP

New York, New York

February 25, 2015



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Report of Independent Registered Public Accounting Firm

On Internal Control Over Financial Reporting

The Board of Directors and Shareholders

Solar Senior Capital Ltd.:

We have audited Solar Senior Capital Ltd.s (the Company) internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Solar Senior Capital Ltd.s
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying managements annual report on
internal control over financial reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Solar Senior Capital Ltd. maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated statements of assets and liabilities, including the consolidated schedule of investments of Solar Senior Capital Ltd. (and subsidiaries) as of December 31, 2014 and 2013, and the related consolidated statements of operations,
changes in net assets and cash flows for each of the years in the three-year period ended December 31, 2014, and our report dated February 25, 2015 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

New York, New York

February 25, 2015



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except share amounts)



|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                |  | December 31, 2014 |         |   | December 31, 2013 |  
|Assets                                                                                                                                                                          |  |                   |         |   |                   |   |         |  
|Investments at fair value:                                                                                                                                                      |  |                   |         |   |                   |   |         |  
|Companies less than 5% owned (cost: $302,343 and $227,868, respectively)                                                                                                        |  | $                 | 302,422 |   |                   | $ | 228,943 |  
|Companies 5% to 25% owned (cost: $4,034 and $4,409, respectively)                                                                                                               |  |                   | 3,623   |   |                   |   | 4,409   |  
|Companies more than 25% owned (cost: $32,839 and $32,839, respectively)                                                                                                         |  |                   | 34,421  |   |                   |   | 34,500  |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Total investments (cost: $339,216 and $265,116, respectively)                                                                                                                   |  |                   | 340,466 |   |                   |   | 267,852 |  
|Cash and cash equivalents                                                                                                                                                       |  |                   | 42,471  |   |                   |   | 2,774   |  
|Interest receivable                                                                                                                                                             |  |                   | 1,029   |   |                   |   | 1,336   |  
|Dividends receivable                                                                                                                                                            |  |                   | 442     |   |                   |   | 398     |  
|Prepaid expenses and other assets                                                                                                                                               |  |                   | 389     |   |                   |   | 201     |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Total assets                                                                                                                                                                    |  | $                 | 384,797 |   |                   | $ | 272,561 |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Liabilities                                                                                                                                                                     |  |                   |         |   |                   |   |         |  
|Credit facility payable (see note 6 and 7)                                                                                                                                      |  | $                 | 143,200 |   |                   | $ | 61,400  |  
|Payable for cash equivalents purchased                                                                                                                                          |  |                   | 35,000  |   |                   |   |        |  
|Distributions payable                                                                                                                                                           |  |                   | 1,355   |   |                   |   | 1,355   |  
|Management fee payable (see note 3)                                                                                                                                             |  |                   | 798     |   |                   |   | 703     |  
|Performance-based incentive fees payable (see note 3)                                                                                                                           |  |                   |        |   |                   |   | 33      |  
|Interest payable                                                                                                                                                                |  |                   | 277     |   |                   |   | 139     |  
|Administrative services expense payable (see note 3)                                                                                                                            |  |                   | 444     |   |                   |   | 630     |  
|Other liabilities and accrued expenses                                                                                                                                          |  |                   | 204     |   |                   |   | 284     |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Total liabilities                                                                                                                                                               |  | $                 | 181,278 |   |                   | $ | 64,544  |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Commitments and contingencies (see note 12 and 13)                                                                                                                              |  |                   |         |   |                   |   |         |  
|Net Assets                                                                                                                                                                      |  |                   |         |   |                   |   |         |  
|Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 11,533,315 and
11,529,303 issued and outstanding, respectively |  | $                 | 115     |   |                   | $ | 115     |  
|Paid-in capital in excess of par (see note 2f)                                                                                                                                  |  |                   | 211,449 |   |                   |   | 212,663 |  
|Distributions in excess of net investment income (see note 2f)                                                                                                                  |  |                   | (3,529  | ) |                   |   | (2,750  | )
|Accumulated net realized loss (see note 2f)                                                                                                                                     |  |                   | (5,766  | ) |                   |   | (4,747  | )
|Net unrealized appreciation                                                                                                                                                     |  |                   | 1,250   |   |                   |   | 2,736   |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Total net assets                                                                                                                                                                |  | $                 | 203,519 |   |                   | $ | 208,017 |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  
|Net Asset Value Per Share                                                                                                                                                       |  | $                 | 17.65   |   |                   | $ | 18.04   |  
|                                                                                                                                                                                |  |                   |         |   |                   |   |         |  

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)



|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | -------------------------- | - | ------ | -------------------------- |  | - | ------ | 
|                                                                                            |  | Year endedDecember 31,2014 |        |   | Year endedDecember 31,2013 |   |        | Year endedDecember 31,2012 | 
|INVESTMENT INCOME:                                                                          |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Interest:                                                                                   |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Companies less than 5% owned                                                                |  | $                          | 18,606 |   |                            | $ | 18,941 |                            |  | $ | 20,539 | 
|Companies 5% to 25% owned                                                                   |  |                            | 221    |   |                            |   | 41     |                            |  |   |       | 
|Dividends:                                                                                  |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Companies more than 25% owned                                                               |  |                            | 3,277  |   |                            |   | 783    |                            |  |   |       | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Total investment income                                                                     |  |                            | 22,104 |   |                            |   | 19,765 |                            |  |   | 20,539 | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|EXPENSES:                                                                                   |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Management fees (see note 3)                                                                |  | $                          | 2,875  |   |                            | $ | 2,575  |                            |  | $ | 2,216  | 
|Performance-based incentive fees (see note 3)                                               |  |                            | 440    |   |                            |   | 113    |                            |  |   | 580    | 
|Interest and other credit facility expenses (see note 7)                                    |  |                            | 3,140  |   |                            |   | 1,276  |                            |  |   | 2,446  | 
|Administrative services expense (see note 3)                                                |  |                            | 1,069  |   |                            |   | 1,174  |                            |  |   | 983    | 
|Insurance expense                                                                           |  |                            | 122    |   |                            |   | 161    |                            |  |   | 403    | 
|Other general and administrative expenses                                                   |  |                            | 871    |   |                            |   | 1,079  |                            |  |   | 1,418  | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Total expenses                                                                              |  |                            | 8,517  |   |                            |   | 6,378  |                            |  |   | 8,046  | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Performance-based incentive fees waived (see note 3)                                        |  |                            | (227   | ) |                            |   |       |                            |  |   |       | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Net expenses                                                                                |  |                            | 8,290  |   |                            |   | 6,378  |                            |  |   | 8,046  | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Net investment income                                                                       |  | $                          | 13,814 |   |                            | $ | 13,387 |                            |  | $ | 12,493 | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:                    |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Net realized gain (loss) on investments and cash equivalents (companies less than 5% owned) |  | $                          | (638   | ) |                            | $ | (4,978 | )                          |  | $ | 618    | 
|Net change in unrealized gain (loss) on investments and cash equivalents                    |  |                            | (1,486 | ) |                            |   | 4,209  |                            |  |   | 801    | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|Net realized and unrealized gain (loss) on investments and cash equivalents                 |  |                            | (2,124 | ) |                            |   | (769   | )                          |  |   | 1,419  | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                        |  | $                          | 11,690 |   |                            | $ | 12,618 |                            |  | $ | 13,912 | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 
|EARNINGS PER SHARE (see note 5)                                                             |  | $                          | 1.01   |   |                            | $ | 1.10   |                            |  | $ | 1.46   | 
|                                                                                            |  |                            |        |   |                            |   |        |                            |  |   |        | 

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(in thousands, except shares)



|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|-------------------------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | --------- | -------------------------- |  | - | ------- | -
|                                                               |  | Year endedDecember 31,2014 |         |   | Year endedDecember 31,2013 |   |           | Year endedDecember 31,2012 | 
|Increase in net assets resulting from operations:              |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net investment income                                          |  | $                          | 13,814  |   |                            | $ | 13,387    |                            |  | $ | 12,493  |  
|Net realized gain (loss)                                       |  |                            | (638    | ) |                            |   | (4,978    | )                          |  |   | 618     |  
|Net change in unrealized gain (loss)                           |  |                            | (1,486  | ) |                            |   | 4,209     |                            |  |   | 801     |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net increase in net assets resulting from operations           |  |                            | 11,690  |   |                            |   | 12,618    |                            |  |   | 13,912  |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Distributions to stockholders (see note 9a):                   |  |                            |         |   |                            |   |           |                            |  |   |         |  
|From net investment income                                     |  |                            | (14,842 | ) |                            |   | (13,674   | )                          |  |   | (11,830 | )
|From net realized gains                                        |  |                            |        |   |                            |   |          |                            |  |   | (425    | )
|From other sources                                             |  |                            | (1,419  | ) |                            |   | (2,565    | )                          |  |   |        |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net distributions to stockholders                              |  |                            | (16,261 | ) |                            |   | (16,239   | )                          |  |   | (12,255 | )
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Capital transactions:                                          |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net proceeds from shares sold                                  |  |                            |        |   |                            |   | 37,200    |                            |  |   |        |  
|Less offering costs                                            |  |                            |        |   |                            |   | (206      | )                          |  |   | 11      |  
|Reinvestment of distributions                                  |  |                            | 73      |   |                            |   | 541       |                            |  |   |        |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net increase in net assets resulting from capital transactions |  |                            | 73      |   |                            |   | 37,535    |                            |  |   | 11      |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Total increase (decrease) in net assets                        |  |                            | (4,498  | ) |                            |   | 33,914    |                            |  |   | 1,668   |  
|Net assets at beginning of year                                |  |                            | 208,017 |   |                            |   | 174,103   |                            |  |   | 172,435 |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net assets at end of year(1)                                   |  | $                          | 203,519 |   |                            | $ | 208,017   |                            |  | $ | 174,103 |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Capital share activity:                                        |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Common stock sold                                              |  |                            |        |   |                            |   | 2,000,000 |                            |  |   |        |  
|Common stock issued from reinvestment of distributions         |  |                            | 4,012   |   |                            |   | 29,203    |                            |  |   |        |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  
|Net increase from capital share activity                       |  |                            | 4,012   |   |                            |   | 2,029,203 |                            |  |   |        |  
|                                                               |  |                            |         |   |                            |   |           |                            |  |   |         |  



|(1) | Includes undistributed (overdistributed) net investment income of ($3,529), ($2,750) and ($2,247), respectively.
|--- | ----------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|------------------------------------------------------------------------ |  | -------------------------- | -------- | - | -------------------------- | - | -------- | -------------------------- |  | - | -------- | -
|                                                                         |  | Year endedDecember 31,2014 |          |   | Year endedDecember 31,2013 |   |          | Year endedDecember 31,2012 | 
|Cash Flows from Operating Activities:                                    |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Net increase in net assets from operations                               |  | $                          | 11,690   |   |                            | $ | 12,618   |                            |  | $ | 13,912   |  
|Adjustments to reconcile net increase in net assets from operations:     |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Net realized (gain) loss on investments and cash equivalents             |  |                            | 638      |   |                            |   | 4,978    |                            |  |   | (618     | )
|Net change in unrealized (gain) loss on investments and cash equivalents |  |                            | 1,486    |   |                            |   | (4,209   | )                          |  |   | (801     | )
|(Increase) decrease in operating assets:                                 |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Purchase of investments                                                  |  |                            | (216,729 | ) |                            |   | (202,722 | )                          |  |   | (194,447 | )
|Proceeds from disposition of investments                                 |  |                            | 142,106  |   |                            |   | 146,703  |                            |  |   | 161,013  |  
|Capitalization of payment-in-kind interest                               |  |                            | (115     | ) |                            |   |         |                            |  |   |         |  
|Deferred offering costs                                                  |  |                            |         |   |                            |   |         |                            |  |   | (148     | )
|Receivable for investments sold                                          |  |                            |         |   |                            |   | 282      |                            |  |   | 4,649    |  
|Interest receivable                                                      |  |                            | 307      |   |                            |   | (42      | )                          |  |   | 393      |  
|Dividends receivable                                                     |  |                            | (44      | ) |                            |   | (398     | )                          |  |   |         |  
|Prepaid expenses and other assets                                        |  |                            | (188     | ) |                            |   | 3        |                            |  |   | 38       |  
|Increase (decrease) in operating liabilities:                            |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Payable for investments and cash equivalents purchased                   |  |                            | 35,000   |   |                            |   | (995     | )                          |  |   | (3,917   | )
|Management fee payable                                                   |  |                            | 95       |   |                            |   | 122      |                            |  |   | (363     | )
|Performance-based incentive fees payable                                 |  |                            | (33      | ) |                            |   | (51      | )                          |  |   | 84       |  
|Administrative services expense payable                                  |  |                            | (186     | ) |                            |   | 199      |                            |  |   | 290      |  
|Interest payable                                                         |  |                            | 138      |   |                            |   | 18       |                            |  |   | 68       |  
|Other liabilities and accrued expenses                                   |  |                            | (80      | ) |                            |   | (214     | )                          |  |   | 188      |  
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Net Cash Used In Operating Activities                                    |  |                            | (25,915  | ) |                            |   | (43,708  | )                          |  |   | (19,659  | )
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Cash Flows from Financing Activities:                                    |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Net proceeds from shares sold                                            |  |                            |         |   |                            |   | 37,200   |                            |  |   |         |  
|Common stock offering costs                                              |  |                            |         |   |                            |   | (206     | )                          |  |   | 11       |  
|Cash distributions paid                                                  |  |                            | (16,188  | ) |                            |   | (15,459  | )                          |  |   | (11,139  | )
|Proceeds from borrowings                                                 |  |                            | 206,100  |   |                            |   | 194,000  |                            |  |   | 130,383  |  
|Repayments of borrowings                                                 |  |                            | (124,300 | ) |                            |   | (171,700 | )                          |  |   | (99,883  | )
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Net Cash Provided by Financing Activities                                |  |                            | 65,612   |   |                            |   | 43,835   |                            |  |   | 19,372   |  
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     |  |                            | 39,697   |   |                            |   | 127      |                            |  |   | (287     | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                           |  |                            | 2,774    |   |                            |   | 2,647    |                            |  |   | 2,934    |  
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                 |  | $                          | 42,471   |   |                            | $ | 2,774    |                            |  | $ | 2,647    |  
|                                                                         |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Supplemental disclosure of cash flow information:                        |  |                            |          |   |                            |   |          |                            |  |   |          |  
|Cash paid for interest                                                   |  | $                          | 3,002    |   |                            | $ | 1,258    |                            |  | $ | 1,417    |  
|Cash paid for income taxes                                               |  | $                          |         |   |                            | $ | 16       |                            |  | $ | 99       |  

Non-cash financing activities consist of the reinvestment of dividends of $73, $541 and $0 for the fiscal
years ended December 31, 2014, 2013 and 2012, respectively.

See notes to consolidated financial statements.



78



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(in thousands, except share/unit amounts)



|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|------------------------------------------------------------------------ |  | ------------------------------------------ | - | ----------- | ------------------------ | -- | ------------------------------ | ------- | ---------- | -------- |  |  | ------------------ |  |  | ------------ | ------------------ |  | ---- | - | ---------- | --------- |  | - | ---------- |  |  | - | ---------- | 
|Description                                                              |  | Industry                                   |   | Interest(1) |                          |    | Basis PointSpreadAboveIndex(3) |         |            | Maturity |  |  | AcquisitionDate    |  |  | ParAmount    |                    |  | Cost |   |            | FairValue | 
|Bank Debt/Senior Secured Loans148.1%                                    |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Advantage Sales and Marketing, Inc
Aegis Toxicology Sciences Corporation |  | Professional Services
Health Care Services |   |             | 7.509.50                 | %% |                                |         | L+650L+850 |          |  |  | 7/21/20228/24/2021 |  |  |              | 2/14/20132/20/2014 |  |      | $ | 8,0004,000 |           |  | $ | 7,9423,945 |  |  | $ | 7,9364,000 | 
|ALG B.V. (Apple Leisure)(2)(4)                                           |  | Hotels, Restaurants & Leisure              |   |             | 7.00                     | %  |                                |         | L+575      |          |  |  | 2/28/2019          |  |  |              | 2/28/2013          |  |      |   | 2,776      |           |  |   | 2,755      |  |  |   | 2,776      | 
|ALG USA Holdings, LLC (AppleLeisure)(2)                                  |  | Hotels, Restaurants & Leisure              |   |             | 7.00                     | %  |                                |         | L+575      |          |  |  | 2/28/2019          |  |  |              | 2/28/2013          |  |      |   | 3,679      |           |  |   | 3,652      |  |  |   | 3,679      | 
|AmeriQual Group, LLC(2)                                                  |  | Food Products                              |   |             | 7.50% (6.5%Cash /1% PIK) |    |                                |         | L+500      |          |  |  | 3/28/2016          |  |  |              | 3/28/2011          |  |      |   | 11,159     |           |  |   | 11,112     |  |  |   | 10,964     | 
|Asurion, LLC                                                             |  | Insurance                                  |   |             | 8.50                     | %  |                                |         | L+750      |          |  |  | 3/3/2021           |  |  |              | 2/27/2014          |  |      |   | 2,500      |           |  |   | 2,466      |  |  |   | 2,492      | 
|Athletico Management, LLC and Accelerated Holdings, LLC(2)               |  | Health Care Facilities                     |   |             | 6.25                     | %  |                                |         | L+550      |          |  |  | 12/2/2020          |  |  |              | 12/1/2014          |  |      |   | 15,000     |           |  |   | 14,852     |  |  |   | 14,850     | 
|Blue Coat Systems, Inc                                                   |  | Internet Software & Services               |   |             | 9.50                     | %  |                                |         | L+850      |          |  |  | 6/28/2020          |  |  |              | 6/28/2013          |  |      |   | 4,500      |           |  |   | 4,462      |  |  |   | 4,433      | 
|Blue Ribbon, LLC (Pabst)(2)                                              |  | Beverages                                  |   |             | 5.75                     | %  |                                |         | L+475      |          |  |  | 11/13/2021         |  |  |              | 11/5/2014          |  |      |   | 1,500      |           |  |   | 1,485      |  |  |   | 1,495      | 
|Capstone Logistics Acqusition, Inc.(2)                                   |  | Professional Services                      |   |             | 5.50                     | %  |                                |         | L+450      |          |  |  | 10/7/2021          |  |  |              | 10/3/2014          |  |      |   | 12,968     |           |  |   | 12,841     |  |  |   | 12,838     | 
|Castle Management Borrower LLC (Highgate Hotels)(2)                      |  | Real Estate Management & Development       |   |             | 5.50                     | %  |                                |         | L+450      |          |  |  | 9/18/2020          |  |  |              | 10/10/2014         |  |      |   | 11,970     |           |  |   | 11,854     |  |  |   | 11,850     | 
|CGSC of Delaware Holdings Corp (Cooper Gay).                             |  | Insurance                                  |   |             | 8.25                     | %  |                                |         | L+700      |          |  |  | 10/16/2020         |  |  |              | 4/5/2013           |  |      |   | 4,000      |           |  |   | 3,954      |  |  |   | 3,600      | 
|Confie Seguros Holding II Co.(2)                                         |  | Insurance                                  |   |             | 5.75                     | %  |                                |         | L+450      |          |  |  | 11/9/2018          |  |  |              | 11/9/2012          |  |      |   | 13,164     |           |  |   | 13,049     |  |  |   | 13,123     | 
|ConvergeOne Holdings Corp.(2)                                            |  | Communications Equipment                   |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 6/17/2020          |  |  |              | 6/16/2014          |  |      |   | 6,965      |           |  |   | 6,900      |  |  |   | 6,965      | 
|CT Technologies Intermediate Holdings(2)                                 |  | Health Care Technology                     |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 12/1/2021          |  |  |              | 12/1/2014          |  |      |   | 5,000      |           |  |   | 4,950      |  |  |   | 4,950      | 
|Engineering Solutions & Products, LLC(6)                                 |  | Aerospace & Defense                        |   |             | 8.00                     | %  |                                |         | L+600      |          |  |  | 5/4/2018           |  |  |              | 11/5/2013          |  |      |   | 324        |           |  |   | 324        |  |  |   | 324        | 
|Engineering Solutions & Products, LLC(6)                                 |  | Aerospace & Defense                        |   |             | 8.00                     | %  |                                |         | L+600      |          |  |  | 11/5/2018          |  |  |              | 11/5/2013          |  |      |   | 2,343      |           |  |   | 2,343      |  |  |   | 2,343      | 
|Epic Health Services, Inc.(2)                                            |  | Health Care Services                       |   |             | 6.50                     | %  |                                |         | L+525      |          |  |  | 10/18/2018         |  |  |              | 10/21/2013         |  |      |   | 6,650      |           |  |   | 6,599      |  |  |   | 6,650      | 
|Filtration Group Corp                                                    |  | Industrial Conglomerates                   |   |             | 8.25                     | %  |                                |         | L+725      |          |  |  | 11/21/2021         |  |  |              | 11/15/2013         |  |      |   | 2,000      |           |  |   | 1,982      |  |  |   | 2,002      | 
|Fulton Holding Corp.(2)                                                  |  | Specialty Retail                           |   |             | 8.50                     | %  |                                |         |           |          |  |  | 5/28/2018          |  |  |              | 5/10/2013          |  |      |   | 15,000     |           |  |   | 15,081     |  |  |   | 15,150     | 
|Global Tel*Link Corp                                                     |  | Communications Equipment                   |   |             | 9.00                     | %  |                                |         | L+775      |          |  |  | 11/23/2020         |  |  |              | 5/21/2013          |  |      |   | 3,000      |           |  |   | 2,950      |  |  |   | 2,945      | 
|Hostway Corporation(2)                                                   |  | Internet Software & Services               |   |             | 6.00                     | %  |                                |         | L+475      |          |  |  | 12/13/2019         |  |  |              | 6/27/2014          |  |      |   | 9,750      |           |  |   | 9,709      |  |  |   | 9,750      | 
|Ikaria, Inc                                                              |  | Health Care Technology                     |   |             | 8.75                     | %  |                                |         | L+775      |          |  |  | 2/12/2022          |  |  |              | 2/4/2014           |  |      |   | 4,000      |           |  |   | 3,972      |  |  |   | 3,950      | 
|Innovative Xcessories & Services, LLC(2)                                 |  | Automotive Retail                          |   |             | 5.25                     | %  |                                |         | L+425      |          |  |  | 2/21/2020          |  |  |              | 8/21/2014          |  |      |   | 7,289      |           |  |   | 7,220      |  |  |   | 7,289      | 
|IPC Systems, Inc.(2)                                                     |  | Communications Equipment                   |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 11/8/2020          |  |  |              | 5/02/2014          |  |      |   | 9,950      |           |  |   | 9,858      |  |  |   | 9,950      | 
|Kellermeyer Bergensons Services, LLC (KBS)(2)                            |  | Commercial Services & Supplies             |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 10/29/2021         |  |  |              | 10/31/2014         |  |      |   | 7,500      |           |  |   | 7,426      |  |  |   | 7,425      | 
|KODA Distribution Group, Inc.(2)                                         |  | Distributors                               |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 4/9/2018           |  |  |              | 9/30/2013          |  |      |   | 9,712      |           |  |   | 9,684      |  |  |   | 9,664      | 
|Landslide Holdings, Inc                                                  |  | Software                                   |   |             | 8.25                     | %  |                                |         | L+725      |          |  |  | 2/25/2021          |  |  |              | 2/25/2014          |  |      |   | 3,310      |           |  |   | 3,306      |  |  |   | 3,260      | 
|Material Handling Services, LLC (TFS)(2)                                 |  | Air Freight & Logistics                    |   |             | 5.75                     | %  |                                |         | L+475      |          |  |  | 3/26/2020          |  |  |              | 3/3/2014           |  |      |   | 9,775      |           |  |   | 9,688      |  |  |   | 9,677      | 
|Metamorph US 3, LLC (Metalogix)(2)                                       |  | Software                                   |   |             | 6.50                     | %  |                                |         | L+550      |          |  |  | 12/1/2020          |  |  |              | 12/1/2014          |  |      |   | 15,000     |           |  |   | 14,629     |  |  |   | 14,625     | 
|Miller Heiman, Inc.(2)                                                   |  | Professional Services                      |   |             | 6.75                     | %  |                                |         | L+575      |          |  |  | 9/30/2019          |  |  |              | 9/30/2013          |  |      |   | 7,319      |           |  |   | 7,254      |  |  |   | 7,172      | 
|MYI Acquiror Corp. (McLarens Young)(2)                                   |  | Insurance                                  |   |             | 5.75                     | %  |                                |         | L+450      |          |  |  | 5/28/2019          |  |  |              | 5/21/2014          |  |      |   | 3,491      |           |  |   | 3,460      |  |  |   | 3,456      | 
|MYI Acquiror Ltd. (McLarens Young)(2)(4)                                 |  | Insurance                                  |   |             | 5.75                     | %  |                                |         | L+450      |          |  |  | 5/28/2019          |  |  |              | 5/21/2014          |  |      |   | 4,489      |           |  |   | 4,449      |  |  |   | 4,444      | 
|OH Acquisition, LLC (Trade Monster)(2)                                   |  | Capital Markets                            |   |             | 7.25                     | %  |                                |         | L+625      |          |  |  | 8/29/2019          |  |  |              | 9/2/2014           |  |      |   | 3,990      |           |  |   | 3,971      |  |  |   | 3,990      | 
|PM Holdings III Corp. (Pro Mach Group, Inc.)(2)                          |  | Machinery                                  |   |             | 5.50                     | %  |                                |         | L+450      |          |  |  | 10/22/2021         |  |  |              | 10/17/2014         |  |      |   | 9,000      |           |  |   | 8,912      |  |  |   | 8,910      | 
|QBS Holding Company, Inc. (Quorum).(2)                                   |  | Software                                   |   |             | 5.75                     | %  |                                |         | L+475      |          |  |  | 8/7/2021           |  |  |              | 8/1/2014           |  |      |   | 10,000     |           |  |   | 9,904      |  |  |   | 9,900      | 
|QoL Meds, LLC(2)                                                         |  | Health Care Services                       |   |             | 5.50                     | %  |                                |         | L+450      |          |  |  | 7/15/2020          |  |  |              | 7/14/2014          |  |      |   | 7,980      |           |  |   | 7,942      |  |  |   | 7,920      | 
|Richelieu Foods, Inc.(2)                                                 |  | Food Products                              |   |             | 5.75                     | %  |                                |         | L+475      |          |  |  | 5/21/2020          |  |  |              | 11/21/2014         |  |      |   | 7,000      |           |  |   | 6,897      |  |  |   | 6,895      | 
|Securus Technologies, Inc                                                |  | Communications Equipment                   |   |             | 9.00                     | %  |                                |         | L+775      |          |  |  | 4/30/2021          |  |  |              | 4/17/2013          |  |      |   | 10,000     |           |  |   | 9,921      |  |  |   | 9,850      | 
|Shoes for Crews, Inc.(2)                                                 |  | Footwear                                   |   |             | 5.50                     | %  |                                |         | L+425      |          |  |  | 3/27/2017          |  |  |              | 3/27/2012          |  |      |   | 3,526      |           |  |   | 3,523      |  |  |   | 3,526      | 
|Skinnypop Popcorn, LLC(2)                                                |  | Food Products                              |   |             | 5.50                     | %  |                                |         | L+450      |          |  |  | 7/17/2019          |  |  |              | 7/17/2014          |  |      |   | 5,000      |           |  |   | 4,954      |  |  |   | 4,950      | 
|Trident USA Health Services (2)                                          |  | Health Care Services                       |   |             | 6.50                     | %  |                                |         | L+525      |          |  |  | 7/31/2019          |  |  |              | 7/29/2013          |  |      |   | 8,993      |           |  |   | 8,924      |  |  |   | 8,858      | 
|Varsity Brands Holdings Co., Inc.(2)                                     |  | Diversified Consumer Services              |   |             | 6.00                     | %  |                                |         | L+500      |          |  |  | 12/11/2021         |  |  |              | 12/10/2014         |  |      |   | 6,500      |           |  |   | 6,435      |  |  |   | 6,504      | 
|WNA Holdings, Inc. (Waddington)                                          |  | Containers & Packaging                     |   |             | 8.50                     | %  |                                |         | L+725      |          |  |  | 12/7/2020          |  |  |              | 5/24/2013          |  |      |   | 4,000      |           |  |   | 3,969      |  |  |   | 4,020      | 
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Total Bank Debt/Senior Secured Loans                                     |  |                                            | $ | 301,505     |                          |    | $                              | 301,350 |           
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Unsecured Notes1.8%                                                     |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Apollo Investment Corporation(4)                                         |  | Diversified Financial Services             |   |             | 5.75                     | %  |                                |         |           |          |  |  | 1/15/2016          |  |  |              | 11/10/2011         |  |      | $ | 3,650      |           |  | $ | 3,505      |  |  | $ | 3,739      | 
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Common Equity17.4%                                                      |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  | Shares/Units |                    |  |      |   |            |           | 
|Engineering Solutions & Products, LLC(6)(7)                             |  | Aerospace & Defense                        |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              | 11/5/2013          |  |      |   | 133,668    |           |  | $ | 1,367      |  |  | $ | 956        | 
|Gemino Healthcare Finance, LLC(4)(5)(8)                                  |  | Diversified Financial Services             |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              | 9/30/2013          |  |      |   | 32,839     |           |  |   | 32,839     |  |  |   | 34,421     | 
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Total Common Equity                                                      |  |                                            | $ | 34,206      |                          |    | $                              | 35,377  |           
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Total Investments(9)167.3%                                              |  |                                            | $ | 339,216     |                          |    | $                              | 340,466 |           
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Cash Equivalents17.2%                                                   |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   | Par Amount |           |  |   |            |  |  |   |            | 
|U.S. Treasury Bill                                                       |  | Government                                 |   |             | 0.000                    | %  |                                |         |           |          |  |  | 1/29/2015          |  |  |              | 12/29/2014         |  |      |   | 35,000     |           |  | $ | 35,000     |  |  | $ | 35,000     | 
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Total Investments & Cash Equivalents184.5%                              |  |                                            | $ | 374,216     |                          |    | $                              | 375,466 |           
|Liabilities in Excess of Other Assets(84.5%)                            |  |                                            |   | (171,947)   |                         
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 
|Net Assets100.0%                                                        |  |                                            |   | $203,519    |                         
|                                                                         |  |                                            |   |             |                          |    |                                |         |            |          |  |  |                    |  |  |              |                    |  |      |   |            |           |  |   |            |  |  |   |            | 

See notes to consolidated financial statements.



79



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2014



(in thousands)



|(1) | Floating rate debt investments typically bear interest at a rate determined by reference to either the London Interbank Offered Rate
(LIBOR or L) index rate 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 interest rate in effect as of
December 31, 2014.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Indicates an investment that is wholly or partially held by Solar Senior Capital Ltd. through its wholly-owned financing subsidiary SUNS SPV LLC.
Such investments are pledged as collateral under the Senior Secured Revolving Credit Facility (see Note 7 to the consolidated financial statements) and are not generally available to the creditors, if any, of Solar Senior Capital Ltd. The respective
par amounts for investments that are partially held through SUNS SPV LLC are: AmeriQual Group, LLC $4,722; Athletico Management, LLC and Accelerated Holdings, LLC $10,000; Capstone Logistics Acquisition, Inc. $8,479; Castle Management Borrower LLC
$7,980; Kellermeyer Bergensons Services, LLC $5,000; and Metamorph US 3, LLC $10,000. Par balances in excess of these stated amounts are held directly by Solar Senior Capital Ltd. All other investments not listed above are wholly held through SUNS
SPV LLC.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or PRIME rate. These instruments are
typically subject to a LIBOR or PRIME rate floor.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Indicates assets that the Company believes may not represent qualifying assets under Section 55(a) of the Investment Company Act of
1940 (1940 Act), as amended.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940
Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2014 in these controlled
investments are as follows:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                               |  |                               |        |  |                |   |   |                 |  |   |                    |  |  |                |   |  |                               |   |       |  |  |   |        | 
|------------------------------ |  | ----------------------------- | ------ |  | -------------- | - | - | --------------- |  | - | ------------------ |  |  | -------------- | - |  | ----------------------------- | - | ----- |  |  | - | ------ | 
|Name of Issuer                 |  | Fair Value atDecember 31,2013 |        |  | GrossAdditions |   |   | GrossReductions |  |   | RealizedGain(Loss) |  |  | DividendIncome |   |  | Fair Value atDecember 31,2014 |  
|Gemino Healthcare Finance, LLC |  | $                             | 34,500 |  |                | $ |  |                 |  | $ |                   |  |  | $              |  |  |                               | $ | 3,277 |  |  | $ | 34,421 | 
|                               |  |                               |        |  |                |   |   |                 |  |   |                    |  |  |                |   |  |                               |   |       |  |  |   |        | 



|(6) | Denotes investments in which we are an Affiliated Person but not exercising a controlling influence, as defined in the 1940 Act, due to
beneficially owning, either directly or through one or more controlled companies, more than 5% but less than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2014 in these affiliated
investments are as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                       |  |                               |       |  |                |   |     |                 |  |   |                     |  |  |                |   |  |                               |   |     |  |  |   |       | 
|------------------------------------------------------ |  | ----------------------------- | ----- |  | -------------- | - | --- | --------------- |  | - | ------------------- |  |  | -------------- | - |  | ----------------------------- | - | --- |  |  | - | ----- | 
|Name of Issuer                                         |  | Fair Value atDecember 31,2013 |       |  | GrossAdditions |   |     | GrossReductions |  |   | Realized Gain(Loss) |  |  | InterestIncome |   |  | Fair Value atDecember 31,2014 |  
|Engineering Solutions & Products, LLC (revolving loan) |  | $                             |      |  |                | $ | 231 |                 |  | $ | 231                 |  |  | $              |  |  |                               | $ | 2   |  |  | $ |      | 
|Engineering Solutions & Products, LLC (1st
lien)       |  |                               | 405   |  |                |   |    |                 |  |   | 81                  |  |  |                |  |  |                               |   | 27  |  |  |   | 324   | 
|Engineering Solutions & Products, LLC (2nd
lien)       |  |                               | 2,637 |  |                |   |    |                 |  |   | 294                 |  |  |                |  |  |                               |   | 192 |  |  |   | 2,343 | 
|Engineering Solutions & Products, LLC (common equity)  |  |                               | 1,367 |  |                |   |    |                 |  |   |                    |  |  |                |  |  |                               |   |    |  |  |   | 956   | 
|                                                       |  |                               |       |  |                |   |     |                 |  |   |                     |  |  |                |   |  |                               |   |     |  |  |   |       | 
|                                                       |  | $                             | 4,409 |  |                | $ | 231 |                 |  | $ | 606                 |  |  | $              |  |  |                               | $ | 221 |  |  | $ | 3,623 | 
|                                                       |  |                               |       |  |                |   |     |                 |  |   |                     |  |  |                |   |  |                               |   |     |  |  |   |       | 



|(7) | Our equity investment in Engineering Solutions & Products, LLC is held through ESP SSC Corporation, a taxable subsidiary.
|--- | -------------------------------------------------------------------------------------------------------------------------

|(8) | Investment represents the operating company after consolidation of the holding company Gemino Senior Secured Healthcare LLC.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(9) | Aggregate net unrealized depreciation for U.S. federal income tax purposes is $1,496; aggregate gross unrealized appreciation and depreciation for
federal tax purposes is $1,822 and $3,318, respectively, based on a tax cost of $341,962.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Non-income producing security.
|- | ------------------------------

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2014



|                                     |  |                                                                      |       |  
|------------------------------------ |  | -------------------------------------------------------------------- | ----- | -
|Industry Classification              |  | Percentage of TotalInvestments (atfair value) as
ofDecember 31, 2014 |      
|Diversified Financial Services       |  |                                                                      | 11.2  | %
|Communications Equipment             |  |                                                                      | 8.7   | %
|Professional Services                |  |                                                                      | 8.2   | %
|Software                             |  |                                                                      | 8.2   | %
|Health Care Services                 |  |                                                                      | 8.1   | %
|Insurance                            |  |                                                                      | 8.0   | %
|Food Products                        |  |                                                                      | 6.7   | %
|Specialty Retail                     |  |                                                                      | 4.4   | %
|Health Care Facilities               |  |                                                                      | 4.4   | %
|Internet Software & Services         |  |                                                                      | 4.2   | %
|Real Estate Management & Development |  |                                                                      | 3.5   | %
|Air Freight & Logistics              |  |                                                                      | 2.8   | %
|Distributors                         |  |                                                                      | 2.8   | %
|Health Care Technology               |  |                                                                      | 2.6   | %
|Machinery                            |  |                                                                      | 2.6   | %
|Commercial Services & Supplies       |  |                                                                      | 2.2   | %
|Automotive Retail                    |  |                                                                      | 2.1   | %
|Hotels, Restaurants & Leisure        |  |                                                                      | 1.9   | %
|Diversified Consumer Services        |  |                                                                      | 1.9   | %
|Containers & Packaging               |  |                                                                      | 1.2   | %
|Capital Markets                      |  |                                                                      | 1.2   | %
|Aerospace & Defense                  |  |                                                                      | 1.1   | %
|Footwear                             |  |                                                                      | 1.0   | %
|Industrial Conglomerates             |  |                                                                      | 0.6   | %
|Beverages                            |  |                                                                      | 0.4   | %
|                                     |  |                                                                      |       |  
|Total Investments                    |  |                                                                      | 100.0 | %
|                                     |  |                                                                      |       |  

See notes to consolidated financial statements.



81



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2013



(in thousands, except share/unit amounts)



|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|--------------------------------------------- |  | -------------------------------- | - | ----------- | ----- | - | ------------------------------ | ------- | ----- | -------- |  |  | --------------- |  |  | --------- | ---------- |  | ---- | - | ------------ | --------- |  | - | ------ |  |  | - | ------ | 
|Description(1)                                |  | Industry                         |   | Interest(2) |       |   | Basis PointSpreadAboveIndex(5) |         |       | Maturity |  |  | AcquisitionDate |  |  | ParAmount |            |  | Cost |   |              | FairValue | 
|Bank Debt/Senior Secured Loans108.2%         |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|ABG Intermediate Holdings 2 LLC(4).           |  | Textiles, Apparel & Luxury Goods |   |             | 6.00  | % |                                |         | L+500 |          |  |  | 6/28/2019       |  |  |           | 12/16/2013 |  |      | $ | 10,000       |           |  | $ | 9,950  |  |  | $ | 9,950  | 
|Aderant North America, Inc.(4).               |  | Software                         |   |             | 6.25  | % |                                |         | L+500 |          |  |  | 12/20/2018      |  |  |           | 12/20/2012 |  |      |   | 4,963        |           |  |   | 4,921  |  |  |   | 4,963  | 
|Advantage Sales and Marketing, Inc.           |  | Professional Services            |   |             | 8.25  | % |                                |         | L+725 |          |  |  | 6/17/2018       |  |  |           | 2/14/2013  |  |      |   | 8,250        |           |  |   | 8,250  |  |  |   | 8,332  | 
|ALG B.V(4)(6).                                |  | Hotels, Restaurants & Leisure    |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 2/28/2019       |  |  |           | 2/28/2013  |  |      |   | 3,201        |           |  |   | 3,173  |  |  |   | 3,201  | 
|ALG USA Holdings, LLC(4)                      |  | Hotels, Restaurants & Leisure    |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 2/28/2019       |  |  |           | 2/28/2013  |  |      |   | 4,243        |           |  |   | 4,205  |  |  |   | 4,243  | 
|AmeriQual Group, LLC                          |  | Food Products                    |   |             | 7.25  | % |                                |         | L+500 |          |  |  | 3/28/2016       |  |  |           | 3/28/2011  |  |      |   | 12,193       |           |  |   | 12,102 |  |  |   | 11,950 | 
|Attachmate Corporation(4)                     |  | Software                         |   |             | 7.25  | % |                                |         | L+575 |          |  |  | 11/22/2017      |  |  |           | 5/15/2012  |  |      |   | 10,427       |           |  |   | 10,273 |  |  |   | 10,642 | 
|Blue Coat Systems, Inc.                       |  | Internet Software & Services     |   |             | 9.50  | % |                                |         | L+850 |          |  |  | 6/28/2020       |  |  |           | 6/28/2013  |  |      |   | 4,500        |           |  |   | 4,457  |  |  |   | 4,590  | 
|Catapult Learning LLC(4)                      |  | Education Services               |   |             | 7.50  | % |                                |         | L+600 |          |  |  | 4/5/2017        |  |  |           | 4/4/2012   |  |      |   | 3,547        |           |  |   | 3,504  |  |  |   | 3,547  | 
|Confie Seguros Holding II Co.(4)              |  | Insurance                        |   |             | 5.75  | % |                                |         | L+450 |          |  |  | 11/9/2018       |  |  |           | 11/9/2012  |  |      |   | 11,791       |           |  |   | 11,658 |  |  |   | 11,791 | 
|CGSC of Delaware Holdings Corp.               |  | Insurance                        |   |             | 8.25  | % |                                |         | L+700 |          |  |  | 10/16/2020      |  |  |           | 4/5/2013   |  |      |   | 4,000        |           |  |   | 3,946  |  |  |   | 3,960  | 
|CT Technologies Intermediate Holdings         |  | Health Care Technology           |   |             | 9.25  | % |                                |         | L+800 |          |  |  | 10/5/2020       |  |  |           | 10/2/2013  |  |      |   | 2,500        |           |  |   | 2,464  |  |  |   | 2,500  | 
|Engineering Solutions & Products, LLC(8).     |  | Aerospace & Defense              |   |             | 8.00  | % |                                |         | L+600 |          |  |  | 5/4/2018        |  |  |           | 11/5/2013  |  |      |   | 405          |           |  |   | 405    |  |  |   | 405    | 
|Engineering Solutions & Products, LLC(8)      |  | Aerospace & Defense              |   |             | 8.00  | % |                                |         | L+600 |          |  |  | 11/5/2018       |  |  |           | 11/5/2013  |  |      |   | 2,637        |           |  |   | 2,637  |  |  |   | 2,637  | 
|Epic Health Services, Inc(4)                  |  | Health Care Services             |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 10/18/2018      |  |  |           | 10/21/2013 |  |      |   | 7,000        |           |  |   | 6,933  |  |  |   | 6,930  | 
|Filtration Group Corp                         |  | Industrial Conglomerates         |   |             | 8.25  | % |                                |         | L+725 |          |  |  | 11/21/2021      |  |  |           | 11/15/2013 |  |      |   | 2,000        |           |  |   | 1,980  |  |  |   | 2,050  | 
|Fulton Holding Corp.(4)                       |  | Specialty Retail                 |   |             | 8.50  | % |                                |         |      |          |  |  | 5/28/2018       |  |  |           | 5/10/2013  |  |      |   | 15,000       |           |  |   | 15,101 |  |  |   | 15,112 | 
|Global Tel*Link Corp                          |  | Communications Equipment         |   |             | 9.00  | % |                                |         | L+775 |          |  |  | 11/23/2020      |  |  |           | 5/21/2013  |  |      |   | 3,000        |           |  |   | 2,944  |  |  |   | 2,872  | 
|Hearthside Food SolutionsLLC(4)               |  | Food Products                    |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 6/7/2018        |  |  |           | 12/14/2012 |  |      |   | 9,922        |           |  |   | 9,881  |  |  |   | 9,922  | 
|Hoffmaster Group, Inc.(4)                     |  | Paper & Forest Products          |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 1/3/2018        |  |  |           | 12/23/2011 |  |      |   | 6,263        |           |  |   | 6,224  |  |  |   | 6,263  | 
|Hoffmaster Group, Inc.                        |  | Paper & Forest Products          |   |             | 10.25 | % |                                |         | L+900 |          |  |  | 1/3/2019        |  |  |           | 5/8/2012   |  |      |   | 3,000        |           |  |   | 2,976  |  |  |   | 2,985  | 
|Insight Pharmaceuticals LLC(4)                |  | Personal Products                |   |             | 6.25  | % |                                |         | L+500 |          |  |  | 8/25/2016       |  |  |           | 10/17/2012 |  |      |   | 7,535        |           |  |   | 7,535  |  |  |   | 7,535  | 
|JHCI Acquisition, Inc.(4)                     |  | Air Freight & Logistics          |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 7/12/2019       |  |  |           | 7/9/2013   |  |      |   | 8,791        |           |  |   | 8,670  |  |  |   | 8,791  | 
|KODA Distribution Group Inc.(4)               |  | Distributors                     |   |             | 6.00  | % |                                |         | L+500 |          |  |  | 4/9/2018        |  |  |           | 9/30/2013  |  |      |   | 4,969        |           |  |   | 4,957  |  |  |   | 4,969  | 
|Landslide Holdings, Inc.(4)                   |  | Software                         |   |             | 5.25  | % |                                |         | L+425 |          |  |  | 8/9/2019        |  |  |           | 8/7/2013   |  |      |   | 4,975        |           |  |   | 4,929  |  |  |   | 4,975  | 
|Marshall Retail Group, LLC(4)                 |  | Specialty Retail                 |   |             | 8.00  | % |                                |         | L+650 |          |  |  | 10/19/2016      |  |  |           | 10/17/2011 |  |      |   | 4,327        |           |  |   | 4,288  |  |  |   | 4,327  | 
|Miller Heiman, Inc(4)                         |  | Professional Services            |   |             | 6.75  | % |                                |         | L+575 |          |  |  | 9/30/2019       |  |  |           | 9/30/2013  |  |      |   | 7,000        |           |  |   | 6,932  |  |  |   | 7,000  | 
|National Vision, Inc.(4)                      |  | Specialty Retail                 |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 8/2/2018        |  |  |           | 8/2/2012   |  |      |   | 9,733        |           |  |   | 9,623  |  |  |   | 9,733  | 
|Renaissance Learning, Inc.                    |  | Education Services               |   |             | 8.75  | % |                                |         | L+775 |          |  |  | 5/14/2021       |  |  |           | 10/16/2013 |  |      |   | 2,000        |           |  |   | 1,970  |  |  |   | 2,024  | 
|Securus Technologies, Inc                     |  | Communications Equipment         |   |             | 9.00  | % |                                |         | L+775 |          |  |  | 4/30/2021       |  |  |           | 4/17/2013  |  |      |   | 10,000       |           |  |   | 9,909  |  |  |   | 9,947  | 
|Shield Finance Co.SARL(3)(4)(6)               |  | IT Services                      |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 5/10/2019       |  |  |           | 5/4/2012   |  |      |   | 9,850        |           |  |   | 9,754  |  |  |   | 9,850  | 
|Shoes for Crews, Inc.(4)                      |  | Footwear                         |   |             | 5.50  | % |                                |         | L+425 |          |  |  | 3/27/2017       |  |  |           | 3/27/2012  |  |      |   | 4,571        |           |  |   | 4,564  |  |  |   | 4,571  | 
|SLT Environmental, Inc.(4)                    |  | Chemicals                        |   |             | 9.50  | % |                                |         | L+800 |          |  |  | 5/27/2016       |  |  |           | 3/30/2012  |  |      |   | 4,874        |           |  |   | 4,741  |  |  |   | 3,412  | 
|Trident USA Health Services(4)                |  | Health Care Services             |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 7/31/2019       |  |  |           | 7/29/2013  |  |      |   | 9,975        |           |  |   | 9,882  |  |  |   | 9,975  | 
|TriNet HR Corp.                               |  | Professional Services            |   |             | 8.75  | % |                                |         | L+775 |          |  |  | 2/20/2021       |  |  |           | 8/14/2013  |  |      |   | 5,000        |           |  |   | 4,903  |  |  |   | 5,050  | 
|WNA Holdings, Inc                             |  | Containers & Packaging           |   |             | 8.50  | % |                                |         | L+725 |          |  |  | 12/7/2020       |  |  |           | 5/25/2013  |  |      |   | 4,000        |           |  |   | 3,963  |  |  |   | 4,000  | 
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Total Bank Debt/Senior Secured Loans          |  |                                  | $ | 224,604     |       |   | $                              | 225,004 |      
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Unsecured Notes3.4%                          |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Apollo Investment Corporation(6)              |  | Diversified Financial Services   |   |             | 5.75  | % |                                |         |      |          |  |  | 1/15/2016       |  |  |           | 11/10/2011 |  |      | $ | 3,650        |           |  | $ | 3,378  |  |  | $ | 3,883  | 
|Asurion Holdco                                |  | Insurance                        |   |             | 11.00 | % |                                |         | L+950 |          |  |  | 3/2/2019        |  |  |           |            |  |      |   | 3,000        |           |  |   | 2,928  |  |  |   | 3,098  | 
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Total Unsecured Notes                         |  |                                  | $ | 6,306       |       |   | $                              | 6,981   |      
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Common Equity17.2%                           |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   | Shares/Units |           |  |   |        |  |  |   |        | 
|Engineering Solutions & Products, LLC(9).     |  | Aerospace & Defense              |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           | 11/5/2013  |  |      |   | 133,668      |           |  | $ | 1,367  |  |  | $ | 1,367  | 
|Gemino Healthcare Finance, LLC(6)(7)(8)       |  | Diversified Financial Services   |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           | 9/30/2013  |  |      |   | 32,839       |           |  |   | 32,839 |  |  |   | 34,500 | 
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Total Common Equity                           |  |                                  | $ | 34,206      |       |   | $                              | 35,867  |      
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Total Investments(10)128.8%                  |  |                                  | $ | 265,116     |       |   | $                              | 267,852 |      
|Liabilities in Excess of Other Assets(28.8%) |  |                                  |   |             |       |   |                                | (59,835 | )    
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 
|Net Assets100.0%                             |  |                                  |   |             |       |   | $                              | 208,017 |      
|                                              |  |                                  |   |             |       |   |                                |         |       |          |  |  |                 |  |  |           |            |  |      |   |              |           |  |   |        |  |  |   |        | 

See notes to consolidated financial statements.



82



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2013



(in thousands)



|(1) | We generally acquire our investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the
Securities Act). Our investments are therefore generally subject to certain limitations on resale, and may be deemed to be restricted securities under the Securities Act.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Floating rate debt investments typically bear interest at a rate determined by reference to either the London Interbank Offered Rate
(LIBOR or L) index rate 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 interest rate in effect as of
December 31, 2013.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Shield Finance Co. SARL is domiciled in Luxembourg and is denominated in U.S. dollars.
|--- | --------------------------------------------------------------------------------------

|(4) | Indicates an investment that is wholly held by Solar Senior Capital Ltd. through its wholly-owned financing subsidiary SUNS SPV LLC. Such
investments are pledged as collateral under the Senior Secured Revolving Credit Facility (see Note 7 to the consolidated financial statements) and are not generally available to the creditors, if any, of Solar Senior Capital Ltd.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Floating rate instruments accrue interest at a predetermined spread relative to an index, typically the LIBOR or PRIME rate. These instruments are
typically subject to a LIBOR or PRIME rate floor.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Indicates assets that the Company believes may not represent qualifying assets under Section 55(a) of the Investment Company Act of
1940 (1940 Act), as amended.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940
Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Transactions during the fiscal year ended December 31, 2013 in these controlled
investments are as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                               |  |                               |   |  |                |   |        |                 |  |   |                     |  |  |                |   |  |                               |   |     |  |  |   |        | 
|------------------------------ |  | ----------------------------- | - |  | -------------- | - | ------ | --------------- |  | - | ------------------- |  |  | -------------- | - |  | ----------------------------- | - | --- |  |  | - | ------ | 
|Name of Issuer                 |  | Fair Value atDecember 31,2012 |   |  | GrossAdditions |   |        | GrossReductions |  |   | Realized Gain(Loss) |  |  | DividendIncome |   |  | Fair Value atDecember 31,2013 |  
|Gemino Healthcare Finance, LLC |  | $                             |  |  |                | $ | 32,839 |                 |  | $ |                    |  |  | $              |  |  |                               | $ | 783 |  |  | $ | 34,500 | 
|                               |  |                               |   |  |                |   |        |                 |  |   |                     |  |  |                |   |  |                               |   |     |  |  |   |        | 



|(8) | Investment represents the operating company after consolidation of the holding company Gemino Senior Secured Healthcare LLC.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(9) | Denotes investments in which we are an Affiliated Person but not exercising a controlling influence, as defined in the 1940 Act, due to
beneficially owning, either directly or through one or more controlled companies, more than 5% but less than 25% of the outstanding voting securities of the investment. Transactions during the year ended December 31, 2013 in these affiliated
investments are as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                      |  |                               |   |  |                |   |       |                 |  |   |                     |  |  |                |   |  |                               |   |    |  |  |   |       | 
|----------------------------------------------------- |  | ----------------------------- | - |  | -------------- | - | ----- | --------------- |  | - | ------------------- |  |  | -------------- | - |  | ----------------------------- | - | -- |  |  | - | ----- | 
|Name of Issuer                                        |  | Fair Value atDecember 31,2012 |   |  | GrossAdditions |   |       | GrossReductions |  |   | Realized Gain(Loss) |  |  | InterestIncome |   |  | Fair Value atDecember 31,2013 |  
|Engineering Solutions & Products, LLC                 |  | $                             |  |  |                | $ | 468   |                 |  | $ | 63                  |  |  | $              |  |  |                               | $ | 6  |  |  | $ | 405   | 
|Engineering Solutions & Products, LLC 2nd
lien        |  |                               |  |  |                |   | 3,542 |                 |  |   | 905                 |  |  |                |  |  |                               |   | 35 |  |  |   | 2,637 | 
|Engineering Solutions & Products, LLC (common equity) |  |                               |  |  |                |   | 1,367 |                 |  |   |                    |  |  |                |  |  |                               |   |   |  |  |   | 1,367 | 
|                                                      |  |                               |   |  |                |   |       |                 |  |   |                     |  |  |                |   |  |                               |   |    |  |  |   |       | 
|                                                      |  | $                             |  |  |                | $ | 5,377 |                 |  | $ | 968                 |  |  | $              |  |  |                               | $ | 41 |  |  | $ | 4,409 | 
|                                                      |  |                               |   |  |                |   |       |                 |  |   |                     |  |  |                |   |  |                               |   |    |  |  |   |       | 



|(10) | Aggregate net unrealized appreciation for U.S. federal income tax purposes is $826; aggregate gross unrealized appreciation and depreciation for
federal tax purposes is $2,888 and $2,062, respectively, based on a tax cost of $267,026.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See notes to
consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2013



|                                 |  |                                                                      |       |  
|-------------------------------- |  | -------------------------------------------------------------------- | ----- | -
|Industry Classification          |  | Percentage of TotalInvestments (at fairvalue) as
ofDecember 31, 2013 |      
|Diversified Financial Services   |  |                                                                      | 14.3  | %
|Specialty Retail                 |  |                                                                      | 10.9  | %
|Food Products                    |  |                                                                      | 8.2   | %
|Software                         |  |                                                                      | 7.7   | %
|Professional Services            |  |                                                                      | 7.6   | %
|Insurance                        |  |                                                                      | 7.0   | %
|Health Care Services             |  |                                                                      | 6.3   | %
|Communications Equipment         |  |                                                                      | 4.8   | %
|Textiles, Apparel & Luxury Goods |  |                                                                      | 3.7   | %
|IT Services                      |  |                                                                      | 3.7   | %
|Paper & Forest Products          |  |                                                                      | 3.4   | %
|Air Freight & Logistics          |  |                                                                      | 3.3   | %
|Personal Products                |  |                                                                      | 2.8   | %
|Hotels, Restaurants & Leisure    |  |                                                                      | 2.8   | %
|Education Services               |  |                                                                      | 2.1   | %
|Distributors                     |  |                                                                      | 1.9   | %
|Internet Software & Services     |  |                                                                      | 1.7   | %
|Footwear                         |  |                                                                      | 1.7   | %
|Aerospace & Defense              |  |                                                                      | 1.6   | %
|Containers & Packaging           |  |                                                                      | 1.5   | %
|Chemicals                        |  |                                                                      | 1.3   | %
|Health Care Technology           |  |                                                                      | 0.9   | %
|Industrial Conglomerates         |  |                                                                      | 0.8   | %
|                                 |  |                                                                      |       |  
|Total Investments                |  |                                                                      | 100.0 | %
|                                 |  |                                                                      |       |  



See notes to consolidated
financial statements.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014

(in thousands, except share amounts)

Note 1. Organization

Solar Senior Capital Ltd. (Solar Senior, the Company, SUNS, we, us, or our), a Maryland corporation formed on December 16,
2010, is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (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 tax purposes, we have elected to be treated as a regulated investment
company (RIC), under the Internal Revenue Code of 1986, as amended (the Code).

On
January 28, 2011, Solar Senior was capitalized with initial equity of $2 and commenced operations. On February 24, 2011, Solar Senior priced its initial public offering, selling 9.0 million shares, including the underwriters
over-allotment, at a price of $20.00 per share. Concurrent with this offering, management purchased an additional 500,000 shares through a private placement, also at $20.00 per share.

The Companys investment objective is to seek to maximize current income consistent with the preservation of
capital. We seek to achieve our investment objective by directly or indirectly investing primarily in senior secured loans, including first lien and second lien debt instruments, made primarily to leveraged private middle-market companies whose debt
is rated below investment grade, which the Company refers to collectively as senior loans. From time to time, we may also invest in public companies that are thinly traded. Under normal market conditions, at least 80% of the value of the
Companys net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans.

Note 2.
Significant Accounting Policies

The accompanying consolidated financial statements have been prepared on
the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (GAAP), and include the accounts of the Company and its 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 current period presentation.

The preparation of consolidated financial statements in conformity with GAAP and pursuant to the requirements for reporting on Form 10-K and Regulation S-X, as appropriate, also 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.

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.

The significant accounting policies consistently followed by the Company are:



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



| | (b) | The Company conducts the valuation of its assets in accordance with GAAP and the 1940 Act. The Company generally values its assets on a quarterly
basis, or more frequently if required. Investments for which market quotations are readily available on an exchange are valued at the closing price on the
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



| | date of valuation. The Company may also obtain quotes with respect to certain of its investments from pricing services or brokers or dealers in order to value assets. When doing so, management
determines whether the quote obtained is sufficient according to GAAP to determine the fair value of the investment. If determined adequate, the Company uses the quote obtained. 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 Solar Capital Partners, LLC (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 Companys board of directors (the Board).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investments for which reliable market quotations are not readily available or for which the pricing sources do not
provide a valuation or methodology or provide a valuation or methodology that, in the judgment of the Investment Adviser or the Board does not represent fair value, shall be valued as follows: (i) each portfolio company or investment is
initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuations are discussed with senior management of the Investment Adviser; (iii) independent valuation firms engaged by, or on
behalf of, the Board will conduct independent appraisals and review the Investment Advisers preliminary valuations and make their own independent assessment for (a) each portfolio investment that, when taken together with all other
investments in the same portfolio company, exceeds 10% of estimated total assets, plus available borrowings, as of the end of the most recently completed fiscal quarter, and (b) each portfolio investment that is presently in payment default;
(iv) the Board will discuss the valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser and, where appropriate, the respective independent valuation firm.

The recommendation of fair value generally considers the following factors among others, as relevant:
applicable market yields; the nature and realizable value of any collateral; the portfolio companys ability to make payments; the portfolio companys earnings and discounted cash flow; the markets in which the issuer does business; and
comparisons to publicly traded securities, among others.

When an external event such as a purchase
transaction, public offering or subsequent equity sale occurs, the Company will consider the pricing indicated by the external event to corroborate the valuation. Due to the inherent uncertainty of determining the fair value of investments that do
not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Investments are valued utilizing a market approach, an income approach, or both approaches, as appropriate.
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 techniques 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



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



financial ratios of peer companies that are public, M&A comparables, 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 fiscal year ended December 31, 2014, there has been no change to the Companys valuation 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 1: Quoted prices in active markets for identical assets or liabilities, accessible by the
Company at the measurement date.

Level 2: 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 3: 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 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 interest method or on a straight-line basis, as applicable. Upon the prepayment of a loan, any unamortized loan origination fees are recorded as
interest income. We typically record prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring and certain other fees for services rendered are recorded as income when earned.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | The Company intends to comply with the applicable provisions of the Internal Revenue 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. As of December 31, 2014 the accrual for excise tax was $0.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are typically
reclassified among the Companys capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP; accordingly at December 31, 2014, $1,287
was reclassified on our balance sheet between distributions in excess of net investment income and paid-in capital in excess of par; and $381 was reclassified on our balance sheet between accumulated net realized loss and distributions in excess of
net investment income. Total earnings and net asset value are not affected.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



| | (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 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (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 the U.S. dollar 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) | The Company has made an irrevocable election to apply the fair value option of accounting to its senior secured revolving credit facility (the
Credit Facility), in accordance with ASC 825-10 and uses an independent third-party valuation firm to assist in measuring its fair value.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (k) | The Company may record origination and other expenses related to certain debt issuances as prepaid assets. These 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 when it approximates the effective yield method.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (l) | The Company records expenses related to shelf filings and applicable equity offering costs as prepaid assets. These expenses are charged as a
reduction of capital upon utilization, 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 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 from the date of issue 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.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Note 3. Agreements

Solar Senior has an Investment Advisory and Management Agreement with the Investment Adviser, under which the Investment
Adviser manages the day-to-day operations of, and provides investment advisory services to, Solar Senior. For providing these services, the Investment Adviser receives a fee from Solar Senior, consisting of two components  a base
management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.00% of gross assets. For services rendered under the Investment Advisory and Management Agreement, the base management fee is payable quarterly in
arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters. Base management fees for any partial month or quarter will be appropriately pro-rated. 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. 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 our credit facilities, 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.

The incentive fee has two parts, as follows: one is calculated and payable quarterly in arrears based on our
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 (other than fees for providing managerial
assistance) accrued during the calendar quarter, minus our operating expenses for the quarter (excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments, if any, with a deferred interest feature (such
as original issue discount, debt instruments with pay-in-kind interest and zero-coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, computed
net of all realized capital losses or unrealized capital depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a
hurdle of 1.75% per quarter (7.00% annualized). The Company pays the Investment Adviser an incentive fee with respect to pre-incentive fee net investment income for each calendar quarter as follows:



| |  |  | no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle of 1.75%;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | 50% of pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds
the hurdle but is less than 2.9167% in any calendar quarter (11.67% annualized);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

and



| |  |  | 20% of the amount of pre-incentive fee net investment income, if any, that exceeds 2.9167% in any calendar quarter (11.67% annualized) will be
payable to the Investment Adviser.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the fiscal years ended December 31, 2014, 2013
and 2012, the Company recognized $2,875, $2,575 and $2,216, respectively, in management fees and $440, $113 and $580, respectively, in performance-based incentive fees. For the fiscal years ended December 31, 2014, 2013 and 2012, $227, $0 and
$0, respectively, of such performance-based incentive fees were waived.

The second part of the incentive fee
is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory 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



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



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 incentive fee is accrued based upon 20% of cumulative net realized gains and net unrealized capital appreciation. No
accrual was required for the years ended December 31, 2014, 2013 and 2012.

Solar Senior has also entered
into an Administration Agreement with Solar Capital Management, LLC (the Administrator) under which the Administrator provides administrative services for Solar Senior. For providing these services, facilities and personnel, Solar Senior
reimburses the Administrator for Solar Senior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 Solar Seniors behalf, managerial assistance to those portfolio companies to which Solar Senior is required to provide such assistance.

For the fiscal years ended December 31, 2014, 2013 and 2012, the Company recognized expenses under the Administration Agreement of $1,069, $1,174 and $983, respectively. No managerial assistance fees
were accrued or collected for the fiscal years ended December 31, 2014, 2013 and 2012.

Note 4. Net Asset Value Per Share

At December 31, 2014, the Companys total net assets and net asset value per share were $203,519
and $17.65, respectively. This compares to total net assets and net asset value per share at December 31, 2013 of $208,017 and $18.04, 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 years ended December 31, 2014, 2013 and 2012:



|                                                                  |  |                            |            |  |                            |   |            |                            |  |   |           | 
|----------------------------------------------------------------- |  | -------------------------- | ---------- |  | -------------------------- | - | ---------- | -------------------------- |  | - | --------- | 
|                                                                  |  | Year endedDecember 31,2014 |            |  | Year endedDecember 31,2013 |   |            | Year endedDecember 31,2012 | 
|Earnings per share (basic & diluted)                              |  |                            |            |  |                            |   |            |                            |  |   |           | 
|Numerator  net increase in net assets resulting from operations: |  | $                          | 11,690     |  |                            | $ | 12,618     |                            |  | $ | 13,912    | 
|Denominator  weighted average shares:                            |  |                            | 11,532,985 |  |                            |   | 11,423,958 |                            |  |   | 9,500,100 | 
|Earnings per share:                                               |  | $                          | 1.01       |  |                            | $ | 1.10       |                            |  | $ | 1.46      | 

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 valuation techniques 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 1. 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.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Level 2. 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:



| | a) | Quoted prices for similar assets or liabilities in active markets;
| | -- | ------------------------------------------------------------------



| | b) | Quoted prices for identical or similar assets or liabilities in non-active markets;
| | -- | -----------------------------------------------------------------------------------



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



| | d) | 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 3.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 are reported as transfers in/out of the appropriate category as of the end of the quarter in which the reclassifications occur.

The following tables present the balances of assets and liabilities measured at fair value as of December 31, 2014
and 2013:

Fair Value Measurements

As of December 31, 2014



|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|------------------------------ |  | ------- | - |  | ------- | - | ------ | ------- |  | - | ------- |  |  | - | ------- | 
|                               |  | Level 1 |   |  | Level 2 |   |        | Level 3 |  |   | Total   | 
|Assets:                        |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Bank Debt/Senior Secured Loans |  | $       |  |  |         | $ | 49,527 |         |  | $ | 251,823 |  |  | $ | 301,350 | 
|Unsecured Notes                |  |         |  |  |         |   | 3,739  |         |  |   |        |  |  |   | 3,739   | 
|Common Equity                  |  |         |  |  |         |   |       |         |  |   | 35,377  |  |  |   | 35,377  | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Total Investments              |  | $       |  |  |         | $ | 53,266 |         |  | $ | 287,200 |  |  | $ | 340,466 | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Liabilities:                   |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Credit Facility                |  | $       |  |  |         | $ |       |         |  | $ | 143,200 |  |  | $ | 143,200 | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Fair Value Measurements

As of December 31, 2013



|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|------------------------------ |  | ------- | - |  | ------- | - | ------ | ------- |  | - | ------- |  |  | - | ------- | 
|                               |  | Level 1 |   |  | Level 2 |   |        | Level 3 |  |   | Total   | 
|Assets:                        |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Bank Debt/Senior Secured Loans |  | $       |  |  |         | $ | 39,674 |         |  | $ | 185,330 |  |  | $ | 225,004 | 
|Unsecured Notes                |  |         |  |  |         |   | 6,981  |         |  |   |        |  |  |   | 6,981   | 
|Common Equity                  |  |         |  |  |         |   |       |         |  |   | 35,867  |  |  |   | 35,867  | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Total Investments              |  | $       |  |  |         | $ | 46,655 |         |  | $ | 221,197 |  |  | $ | 267,852 | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Liabilities:                   |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Credit Facility                |  | $       |  |  |         | $ |       |         |  | $ | 61,400  |  |  | $ | 61,400  | 
|                               |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 

The following table provides a summary of the changes in fair value of Level 3 assets and
liabilities for the year ended December 31, 2014, 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 December 31, 2014:

Fair Value Measurements Using Level 3 Inputs



|                                                                                                                                        |  |                               |          |   |               |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ------------- | - | ------ | -
|                                                                                                                                        |  | Bank Debt/SeniorSecured Loans |          |   | Common Equity |  
|Fair value, December 31, 2013                                                                                                           |  | $                             | 185,330  |   |               | $ | 35,867 |  
|Total gains or losses included in earnings:                                                                                             |  |                               |          |   |               |   |        |  
|Net realized gain (loss)                                                                                                                |  |                               | (644     | ) |               |   |       |  
|Net change in unrealized gain (loss)                                                                                                    |  |                               | 146      |   |               |   | (490   | )
|Purchase of investment securities                                                                                                       |  |                               | 184,392  |   |               |   |       |  
|Proceeds from dispositions of investment securities                                                                                     |  |                               | (121,941 | ) |               |   |       |  
|Transfers in/out of Level 3                                                                                                             |  |                               | 4,540    |   |               |   |       |  
|                                                                                                                                        |  |                               |          |   |               |   |        |  
|Fair value, December 31, 2014                                                                                                           |  | $                             | 251,823  |   |               | $ | 35,377 |  
|                                                                                                                                        |  |                               |          |   |               |   |        |  
|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):                                                                                                   |  | $                             | (465     | ) |               | $ | (490   | )
|                                                                                                                                        |  |                               |          |   |               |   |        |  

During the fiscal year ended December 31, 2014, investments with a fair value of
$4,540 were transferred from Level 2 to Level 3. These transfers were a result of changes in the quantity and quality of information used as valuation inputs by the Investment Adviser. There were no other transfers between levels.

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, 2014:



|                                          |  |   |          |  
|----------------------------------------- |  | - | -------- | -
|Beginning fair value at December 31, 2013 |  | $ | 61,400   |  
|Borrowings                                |  |   | 206,100  |  
|Repayments                                |  |   | (124,300 | )
|Transfers in/out of Level 3               |  |   |         |  
|                                          |  |   |          |  
|Ending fair value at December 31, 2014    |  | $ | 143,200  |  
|                                          |  |   |          |  



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



The Company has made an irrevocable election to apply the fair value
option of accounting to the Credit Facility, in accordance with ASC 825-10. On December 31, 2014, there were borrowings of $143,200 on the Credit Facility. For the year ended December 31, 2014, the Credit Facility had no net change in
unrealized (appreciation) depreciation. The Company uses an independent third-party valuation firm to assist in measuring the fair value of our Credit Facility.

The following table provides a summary of the changes in fair value of Level 3 assets and liabilities for the year ended
December 31, 2013, 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 December 31, 2013:

Fair Value Measurements Using Level 3 Inputs



|                                                                                                                                        |  |                               |          |   |               |   |        | 
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ------------- | - | ------ | 
|                                                                                                                                        |  | Bank Debt/SeniorSecured Loans |          |   | Common Equity |  
|Fair value, December 31, 2012                                                                                                           |  | $                             | 183,850  |   |               | $ |       | 
|Total gains or losses included in earnings:                                                                                             |  |                               |          |   |               |   |        | 
|Net realized gain (loss)                                                                                                                |  |                               | (5,034   | ) |               |   |       | 
|Net change in unrealized gain                                                                                                           |  |                               | 2,615    |   |               |   | 1,661  | 
|Purchase of investment securities                                                                                                       |  |                               | 134,865  |   |               |   | 34,206 | 
|Proceeds from dispositions of investment securities                                                                                     |  |                               | (121,066 | ) |               |   |       | 
|Transfers in/out of Level 3                                                                                                             |  |                               | (9,900   | ) |               |   |       | 
|                                                                                                                                        |  |                               |          |   |               |   |        | 
|Fair value, December 31, 2013                                                                                                           |  | $                             | 185,330  |   |               | $ | 35,867 | 
|                                                                                                                                        |  |                               |          |   |               |   |        | 
|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):                                                                                                   |  | $                             | (814     | ) |               | $ | 1,661  | 
|                                                                                                                                        |  |                               |          |   |               |   |        | 

During the fiscal year ended December 31, 2013, our investment in Securus
Technologies, Inc. was transferred from Level 3 to Level 2 as a quoted price deemed representative of fair value became available.

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,
2013:



|                                          |  |   |          |  
|----------------------------------------- |  | - | -------- | -
|Beginning fair value at December 31, 2012 |  | $ | 39,100   |  
|Borrowings                                |  |   | 194,000  |  
|Repayments                                |  |   | (171,700 | )
|Transfers in/out of Level 3               |  |   |         |  
|                                          |  |   |          |  
|Ending fair value at December 31, 2013    |  | $ | 61,400   |  
|                                          |  |   |          |  

The Company has made an irrevocable election to apply the fair value option of accounting
to the Credit Facility, in accordance with ASC 825-10. On December 31, 2013, there were borrowings of $61,400 on the Credit Facility. For the year ended December 31, 2013, the Credit Facility had no net change in unrealized (appreciation)
depreciation. The Company uses an independent third-party valuation firm to assist in measuring the fair value of our Credit Facility.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



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 and earnings before income taxes, depreciation and amortization (EBITDA) multiples of similar companies, and comparable market transactions for equity securities.

Quantitative information about the Companys Level 3 asset and liability fair value measurements as of
December 31, 2014 is summarized in the table below:



|                                 |  |                   |  |                               |           |  |                                           |                                   |                    |                                  |                         |                                       
|-------------------------------- |  | ----------------- |  | ----------------------------- | --------- |  | ----------------------------------------- | --------------------------------- | ------------------ | -------------------------------- | ----------------------- | --------------------------------------
|                                 |  | Asset orLiability |  | Fair Value atDecember31, 2014 |           |  | Principal Valuation
Technique/Methodology |                                   | Unobservable Input |                                  | Range (WeightedAverage)
|Bank Debt / Senior Secured Loans |  | Asset             |  | $                             | 251,823   |  |                                           | Yield Analysis                    |                    | Market Yield                     |                         | 5.3%  10.7%(6.7%)                    
|                                 |  |                   |  |                               |           |  |                                           |                                   |                    |                                  |                         |                                       
|Common Equity                    |  | Asset             |  | $$                            | 95634,421 |  |                                           | Enterprise Value Enterprise Value |                    | EBITDA Multiple Return on Equity |                         | 7.9x  10.3x (6.9x)7.1%  20.9%(11.3%)
|                                 |  |                   |  |                               |           |  |                                           |                                   |                    |                                  |                         |                                       
|Credit Facility                  |  | Liability         |  | $                             | 143,200   |  |                                           | Yield Analysis                    |                    | Market Yield                     |                         | L+0.5%   L+4.75%(L+2.0%)             
|                                 |  |                   |  |                               |           |  |                                           |                                   |                    |                                  |                         |                                       

Significant increases or decreases in any of the above unobservable inputs in isolation,
including unobservable inputs used in deriving bid-ask spreads, if applicable, would result in a significantly lower or higher fair value measurement for such assets and liabilities.

Quantitative information about the Companys Level 3 asset and liability fair value measurements as of
December 31, 2013 is summarized in the table below:



|                                 |  |                   |  |                               |              |  |                                           |                                   |                    |                                  |                         |                                        
|-------------------------------- |  | ----------------- |  | ----------------------------- | ------------ |  | ----------------------------------------- | --------------------------------- | ------------------ | -------------------------------- | ----------------------- | ---------------------------------------
|                                 |  | Asset orLiability |  | Fair Value atDecember 31,2013 |              |  | Principal Valuation
Technique/Methodology |                                   | Unobservable Input |                                  | Range (WeightedAverage)
|Bank Debt / Senior Secured Loans |  | Asset             |  | $$                            | 181,9183,412 |  |                                           | Yield Analysis Enterprise value   |                    | Market Yield EBITDA Multiple     |                         | 5.3%  10.5%(7.2%) 6.3x 21.5x (10.7x) 
|                                 |  |                   |  |                               |              |  |                                           |                                   |                    |                                  |                         |                                        
|Common Equity                    |  | Asset             |  | $$                            | 1,36734,500  |  |                                           | Enterprise Value Enterprise Value |                    | EBITDA Multiple Return on Equity |                         | 6.8x  10.1x (8.8x)5.1%  15.4% (11.6%)
|                                 |  |                   |  |                               |              |  |                                           |                                   |                    |                                  |                         |                                        
|Credit Facility                  |  | Liability         |  | $                             | 61,400       |  |                                           | Yield Analysis                    |                    | Market Yield                     |                         | L+0.5%  L+5.5%(L+2.6%)                
|                                 |  |                   |  |                               |              |  |                                           |                                   |                    |                                  |                         |                                        



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Significant increases or decreases in any of the above unobservable
inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, would result in significantly lower or higher fair value measurements for such assets and liabilities.

Note 7. Debt

Senior Secured Revolving Credit Facility  On August 26, 2011, the Company
established SUNS SPV, LLC (SUNS SPV) which entered into the $200 million Credit Facility with Citigroup Global Markets Inc. acting as administrative agent. The Credit Facility was scheduled to mature on August 26, 2016 and generally
bore interest at a rate of LIBOR plus 2.25%. The Credit Facility can also be expanded up to $600,000 and is secured by all of the assets held by the SUNS SPV. Under the terms of the Credit Facility, Solar Senior and the 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 Credit Facility
also includes usual and customary events of default for credit facilities of this nature.

On November 7,
2012, the Company amended the Credit Facility. As a result of the amendment, the stated interest rate on the Credit Facility was reduced to LIBOR plus 2.00% from LIBOR plus 2.25%, and the Credit Facility continues to have no LIBOR floor requirement.
The amendment also provided us greater investment flexibility and extended the final maturity date to November 6, 2017. On February 26, 2014, the Company utilized the Credit Facilitys delayed draw feature, expanding immediately
available capital from $150,000 to $200,000, subject to borrowing base limitations.

On June 30, 2014,
the Company again amended the Credit Facility. As a result of this amendment, commitments under the Credit Facility were reduced by $25,000 to $175,000 and may be expanded up to $600,000 under its accordion feature. This amendment to the Credit
Facility also added greater investment flexibility and extends the final maturity date to June 28, 2019. The stated interest rate remains LIBOR plus 2.00% with no LIBOR floor requirement.

The Company has made an irrevocable election to apply the fair value option of accounting to the Credit Facility, in
accordance with ASC 825-10. Accounting for the Credit Facility at fair value better aligns the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. ASC 825-10 requires entities to display the fair
value of the selected assets and liabilities on the face of the Consolidated Statement of Assets and Liabilities and changes in fair value of the Credit Facility are reported in the Consolidated Statement of Operations.

The average annualized interest cost for all borrowings for the year ended December 31, 2014 and the year ended
December 31, 2013 was 2.18% and 2.20%, respectively. These costs are exclusive of other credit facility expenses such as unused fees and fees paid to the back-up servicer, if any. During the year ended December 31, 2014, the Company
expensed $972 in conjunction with the June 30, 2014 amendment of the Credit Facility. The maximum amount borrowed on the Credit Facility during the year ended December 31, 2014 and the year ended December 31, 2013, was $143,200 and
$84,600, respectively.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Note 8. Financial Highlights and Senior Securities Table

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



|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|--------------------------------------------------------------- |  | -------------------------- | ---------- | -- | -------------------------- | - | ---------- | -------------------------- |  | - | --------------------------------------------------- | - |  | - | --------- | --
|                                                                |  | Year endedDecember 31,2014 |            |    | Year endedDecember 31,2013 |   |            | Year endedDecember 31,2012 |  |   | For the periodJanuary 28,2011(a) toDecember 31,2011 |  
|Per Share Data:(b)                                              |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Net asset value, beginning of year                              |  | $                          | 18.04      |    |                            | $ | 18.33      |                            |  | $ | 18.15                                               |   |  | $ |          |   
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Net investment income                                           |  |                            | 1.20       |    |                            |   | 1.17       |                            |  |   | 1.31                                                |   |  |   | 0.30      |   
|Net realized and unrealized gain (loss)                         |  |                            | (0.18      | )  |                            |   | (0.07      | )                          |  |   | 0.15                                                |   |  |   | (0.33     | ) 
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Net increase (decrease) in net assets resulting from operations |  |                            | 1.02       |    |                            |   | 1.10       |                            |  |   | 1.46                                                |   |  |   | (0.03     | ) 
|Issuance of common stock                                        |  |                            |           |    |                            |   |           |                            |  |   |                                                    |   |  |   | 20.00     |   
|Distributions to stockholders (see note 9a):                    |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|From net investment income                                      |  |                            | (1.29      | )  |                            |   | (1.20      | )                          |  |   | (1.24                                               | ) |  |   | (0.55     | ) 
|From net realized gains                                         |  |                            |           |    |                            |   |           |                            |  |   | (0.05                                               | ) |  |   |          |   
|From other sources                                              |  |                            | (0.12      | )  |                            |   | (0.22      | )                          |  |   |                                                    |   |  |   |          |   
|Anti-dilution                                                   |  |                            |           |    |                            |   | 0.05       |                            |  |   |                                                    |   |  |   |          |   
|Offering costs and other                                        |  |                            |           |    |                            |   | (0.02      | )                          |  |   | 0.01                                                |   |  |   | (1.27     | ) 
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Net asset value, end of period                                  |  | $                          | 17.65      |    |                            | $ | 18.04      |                            |  | $ | 18.33                                               |   |  | $ | 18.15     |   
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Per share market value, end of period                           |  | $                          | 14.97      |    |                            | $ | 18.22      |                            |  | $ | 18.66                                               |   |  | $ | 15.75     |   
|Total Return(c)(d)                                              |  |                            | (10.47     | %) |                            |   | 5.39       | %                          |  |   | 27.65                                               | % |  |   | (18.49    | )%
|Net assets, end of period                                       |  | $                          | 203,519    |    |                            | $ | 208,017    |                            |  | $ | 174,103                                             |   |  | $ | 172,435   |   
|Shares outstanding, end of period                               |  |                            | 11,533,315 |    |                            |   | 11,529,303 |                            |  |   | 9,500,100                                           |   |  |   | 9,500,100 |   
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Ratios to average net assets:                                   |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Net investment income                                           |  |                            | 6.69       | %  |                            |   | 6.46       | %                          |  |   | 7.14                                                | % |  |   | 1.51      | % 
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Operating expenses(d)                                           |  |                            | 2.50       | %* |                            |   | 2.46       | %                          |  |   | 3.20                                                | % |  |   | 1.31      | % 
|Interest and other credit facility expenses(d)                  |  |                            | 1.52       | %  |                            |   | 0.62       | %                          |  |   | 1.40                                                | % |  |   | 1.77      | % 
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Total expenses(d)                                               |  |                            | 4.02       | %* |                            |   | 3.08       | %                          |  |   | 4.60                                                | % |  |   | 3.08      | % 
|                                                                |  |                            |            |    |                            |   |            |                            |  |   |                                                     |   |  |   |           |   
|Average debt outstanding                                        |  | $                          | 72,132     |    |                            | $ | 41,261     |                            |  | $ | 41,439                                              |   |  | $ | 7,123     |   
|Portfolio turnover ratio                                        |  |                            | 47.5       | %  |                            |   | 56.8       | %                          |  |   | 74.5                                                | % |  |   | 37.0      | % 



|(a) | Commencement of operations
|--- | --------------------------

|(b) | Calculated using the average shares outstanding method.
|--- | -------------------------------------------------------

|(c) | Total return is based on the change in market price per share during the period and takes into account any dividends, if any, reinvested in
accordance with the dividend reinvestment plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Not annualized for periods less than one year.
|--- | ----------------------------------------------

|* | The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets is shown net of a voluntary incentive
fee waiver (see note 3). The ratios of operating expenses to average net assets and total expenses to average net assets would be 2.61% and 4.13%, respectively, without the voluntary incentive fee waiver.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Information about our senior securities is shown in the following table
as of each year ended December 31 since the Company commenced operations, 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 AmountOutstanding(1) |         |  | AssetCoveragePer Unit(2) |   |        | InvoluntaryLiquidatingPreferencePer Unit(3) |  |   | AverageMarket ValuePer Unit(4) | 
|Revolving Credit Facility |  |                            |         |  |                          |   |        |                                             |  |   |                                |  |  |  |     | 
|Fiscal 2014               |  | $                          | 143,200 |  |                          | $ | 2,421  |                                             |  | $ |                               |  |  |  | N/A | 
|Fiscal 2013               |  |                            | 61,400  |  |                          |   | 4,388  |                                             |  |   |                               |  |  |  | N/A | 
|Fiscal 2012               |  |                            | 39,100  |  |                          |   | 5,453  |                                             |  |   |                               |  |  |  | N/A | 
|Fiscal 2011               |  |                            | 8,600   |  |                          |   | 21,051 |                                             |  |   |                               |  |  |  | N/A | 



|(1) | Total amount of each class of senior securities outstanding 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 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 was divided based on the amount outstanding at the end of the period for each.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(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, we do not have senior securities that are registered for public trading.
|--- | ----------------------------------------------------------------------------------------

Note 9(a). Income Tax Information and Distributions to Stockholders

The tax character of distributions for the fiscal years ended December 31, 2014, 2013 and 2012 were as follows:



|                    |  |      |        |  |      |  |       |      |  |   |        |  |  |  |       |   |  |   |        |  |  |  |       |  
|------------------- |  | ---- | ------ |  | ---- |  | ----- | ---- |  | - | ------ |  |  |  | ----- | - |  | - | ------ |  |  |  | ----- | -
|                    |  | 2014 |        |  | 2013 |  |       | 2012 | 
|Ordinary income     |  | $    | 14,842 |  |      |  | 91.3  | %    |  | $ | 13,674 |  |  |  | 84.2  | % |  | $ | 11,830 |  |  |  | 96.5  | %
|Capital gains       |  |      |       |  |      |  | 0.0   | %    |  |   |       |  |  |  | 0.0   | % |  |   | 425    |  |  |  | 3.5   | %
|Return of capital   |  |      | 1,419  |  |      |  | 8.7   | %    |  |   | 2,565  |  |  |  | 15.8  | % |  |   |       |  |  |  | 0.0   | %
|                    |  |      |        |  |      |  |       |      |  |   |        |  |  |  |       |   |  |   |        |  |  |  |       |  
|Total distributions |  | $    | 16,261 |  |      |  | 100.0 | %    |  | $ | 16,239 |  |  |  | 100.0 | % |  | $ | 12,255 |  |  |  | 100.0 | %
|                    |  |      |        |  |      |  |       |      |  |   |        |  |  |  |       |   |  |   |        |  |  |  |       |  



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



As of December 31, 2014, 2013 and 2012 the components of
accumulated gain and losses on a tax basis were as follows (1):



|                                                       |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                       |  | 2014 |        |   | 2013 |   |        | 2012 | 
|Undistributed ordinary income                          |  | $    |       |   |      | $ |       |      |  | $ | 1,014  |  
|Undistributed long-term net capital gains              |  |      |       |   |      |   |       |      |  |   |       |  
|                                                       |  |      |        |   |      |   |        |      |  |   |        |  
|Total undistributed net earnings                       |  |      |       |   |      |   |       |      |  |   | 1,014  |  
|Other book/tax temporary differences                   |  |      | (781   | ) |      |   | (406   | )    |  |   | 867    |  
|Post-October capital losses(2)                         |  |      |       |   |      |   | (4,747 | )    |  |   |       |  
|Capital loss carryforward                              |  |      | (5,766 | ) |      |   |       |      |  |   |       |  
|Net unrealized appreciation (depreciation) investments |  |      | (1,497 | ) |      |   | 826    |      |  |   | (3,918 | )
|                                                       |  |      |        |   |      |   |        |      |  |   |        |  
|Total taxable income (loss)                            |  | $    | (8,044 | ) |      | $ | (4,327 | )    |  | $ | (2,037 | )
|                                                       |  |      |        |   |      |   |        |      |  |   |        |  



|(1) | Tax information for the fiscal years ended December 31, 2014, 2013 and 2012 are/were estimates and are not final until the Company files its
tax returns, typically in September each year.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As of December 31, 2013 we had a post-October capital loss deferral of $4,747.
|--- | ------------------------------------------------------------------------------

The Company recognizes in its consolidated financial statements the tax effect of a tax position when it is more likely than not, based
on the technical merits, that the position will be sustained upon examination. To the best of our knowledge, we did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25 nor did we have any
unrecognized tax benefits as of the periods presented herein. Although we file federal and state tax returns, our major tax jurisdiction is federal. Our tax returns for each of our federal tax years since 2011 remain subject to examination by the
Internal Revenue Service and the state department of revenue.

Note 9(b). Other Tax Information (unaudited)

No distributions paid during the fiscal years ended December 31, 2014, 2013 or 2012 were eligible for qualified
dividend income treatment or were eligible for the 70% dividends received deduction for corporate stockholders.

Note 10. Gemino Healthcare
Finance, LLC

Pursuant to a definitive agreement, dated September 30, 2013, we acquired Gemino
Healthcare Finance, LLC (d/b/a Gemino Senior Secured Healthcare Finance) (Gemino) from affiliates of EDG Partners, D. E. Shaw AQ-SP Series 5-01, L.L.C. and other members of Gemino. Gemino 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. Our initial investment in Gemino of $32,839 was funded from our existing Credit Facility. We have an additional
$5,000 commitment to Gemino (which may be structured as debt or equity), conditional upon approval of the Gemino board of managers, among other conditions. The management team of Gemino committed to lead Gemino and co-invested in the transaction.

Concurrent with the closing of the transaction, Gemino entered into a new, four-year, non-recourse, $100,000
credit facility with non-affiliates, which is 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.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



On December 31, 2013, we contributed our 32,839 units in Gemino to
Gemino Senior Secured Healthcare LLC (Gemino Senior Secured Healthcare). In exchange for this contribution, we received 19,839 units of common equity and $13,000 in floating rate secured notes of Gemino Senior Secured Healthcare bearing
interest at LIBOR plus 7.50%, maturing on December 31, 2018. However, our financial statements, including our schedule of investments, reflect our investments in Gemino Senior Secured Healthcare on a consolidated basis. Geminos management
team currently owns approximately 5% of the equity in Gemino. Gemino Senior Secured Healthcare owns approximately 95% of the equity in Gemino and Solar Senior owns 100% of the equity in Gemino Senior Secured Healthcare. Gemino and Gemino Senior
Secured Healthcare are treated as pass-through entities for tax purposes.

Gemino currently manages a highly
diverse portfolio of directly-originated and underwritten senior-secured commitments. As of December 31, 2014, the portfolio totaled approximately $204,926 of commitments, of which $122,909 were funded, on total assets of $129,024. As of
December 31, 2013, the portfolio totaled approximately $170,559 of commitments, of which $108,559 were funded, on total assets of $117,083. At December 31, 2014, the portfolio consisted of 38 issuers with an average balance of
approximately $3,234 versus 34 issuers with an average balance of approximately $3,193 at December 31, 2013. All of the commitments in Geminos portfolio are floating-rate, senior-secured, cash-pay loans. Geminos credit facility,
which is non-recourse to us, had approximately $95,000 and $83,000 of borrowings outstanding at December 31, 2014 and December 31, 2013, respectively. For the years ended December 31, 2014 and December 31, 2013, Gemino had net
income of $2,990 and $202, respectively, on gross income of $10,906 and $12,232, respectively. The results for the year ended December 31, 2013 include non-recurring costs of $3,222 related to the acquisition. Due to timing and non-cash items,
there may be material differences between GAAP net income and cash available for distributions.

Note 11. Selected Quarterly Financial Data
(unaudited)



|                   |  |                  |       |  |                      |   |      |                                                 |  |   |                                         |  |  |       |      |  |          |   |        |       |  |   |          |   |  |   |       |  |  |   |      | 
|------------------ |  | ---------------- | ----- |  | -------------------- | - | ---- | ----------------------------------------------- |  | - | --------------------------------------- |  |  | ----- | ---- |  | -------- | - | ------ | ----- |  | - | -------- | - |  | - | ----- |  |  | - | ---- | 
|Quarter Ended      |  | InvestmentIncome |       |  | Net InvestmentIncome |   |      | Net Realized AndUnrealized Gain(Loss) on Assets |  |   | Net IncreaseInNet Assets FromOperations | 
|                   |  | Total            |       |  | PerShare             |   |      | Total                                           |  |   | PerShare                                |  |  | Total |      |  | PerShare |   |        | Total |  |   | PerShare |  
|December 31, 2014  |  | $                | 5,912 |  |                      | $ | 0.51 |                                                 |  | $ | 4,018                                   |  |  | $     | 0.35 |  |          | $ | (1     | )     |  | $ | (0.00    | ) |  | $ | 4,017 |  |  | $ | 0.35 | 
|September 30, 2014 |  |                  | 5,322 |  |                      |   | 0.46 |                                                 |  |   | 3,528                                   |  |  |       | 0.31 |  |          |   | (1,782 | )     |  |   | (0.15    | ) |  |   | 1,746 |  |  |   | 0.15 | 
|June 30, 2014      |  |                  | 5,134 |  |                      |   | 0.45 |                                                 |  |   | 2,415                                   |  |  |       | 0.21 |  |          |   | (475   | )     |  |   | (0.04    | ) |  |   | 1,940 |  |  |   | 0.17 | 
|March 31, 2014     |  |                  | 5,736 |  |                      |   | 0.50 |                                                 |  |   | 3,853                                   |  |  |       | 0.33 |  |          |   | 135    |       |  |   | 0.02     |   |  |   | 3,988 |  |  |   | 0.35 | 
|                   |  |                  |       |  |                      |   |      |                                                
|December 31, 2013  |  | $                | 5,654 |  |                      | $ | 0.49 |                                                 |  | $ | 3,644                                   |  |  | $     | 0.32 |  |          | $ | 1,981  |       |  | $ | 0.17     |   |  | $ | 5,624 |  |  | $ | 0.49 | 
|September 30, 2013 |  |                  | 4,915 |  |                      |   | 0.43 |                                                 |  |   | 3,288                                   |  |  |       | 0.29 |  |          |   | (684   | )     |  |   | (0.06    | ) |  |   | 2,604 |  |  |   | 0.23 | 
|June 30, 2013      |  |                  | 4,735 |  |                      |   | 0.41 |                                                 |  |   | 3,328                                   |  |  |       | 0.29 |  |          |   | (1,843 | )     |  |   | (0.16    | ) |  |   | 1,485 |  |  |   | 0.13 | 
|March 31, 2013     |  |                  | 4,461 |  |                      |   | 0.40 |                                                 |  |   | 3,127                                   |  |  |       | 0.28 |  |          |   | (223   | )     |  |   | (0.02    | ) |  |   | 2,904 |  |  |   | 0.26 | 

Note 12. Commitments and Contingencies

The Company had unfunded equity and debt commitments to various revolving and delayed draw loans, as well as to Gemino.
The total amount of these unfunded commitments as of December 31, 2014 and December 31, 2013 is $6,736 and $6,736, respectively.



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2014

(in thousands, except share amounts)



Note 13. First Lien Loan Program LLC

On September 10, 2014, the Company entered into a joint venture agreement to create a First Lien Loan Program
(FLLP) with Voya Investment Management (Voya). Voya acts as the investment advisor for several wholly-owned insurance subsidiaries of Voya Financial, Inc. (NYSE: VOYA). The joint venture vehicle, structured as an
unconsolidated Delaware limited liability company, is expected to invest primarily in senior secured term loans to middle market companies predominantly owned by private equity sponsors or entrepreneurs. Solar Senior and Voya have committed to
provide $50,000 and $7,250, respectively, of capital to the joint venture. All portfolio decisions and generally all other decisions in respect of the FLLP must be approved by an investment committee of the FLLP consisting of representatives of the
Company and Voya (with approval from a representative of each required). As of December 31, 2014, FLLP had not commenced operations. On February 13, 2015, FLLP commenced operations. On February 13, 2015 FFLP as transferor and FLLP 2015-1, LLC,
a newly formed wholly owned subsidiary of FLLP, as borrower entered into a $75,000 senior secured revolving credit facility (the FLLP Facility) with Wells Fargo Securities, LLC acting as administrative agent. Solar Senior Capital
Ltd. acts as servicer under the FLLP Facility. The FLLP Facility reinvestment period is scheduled to end on February 13, 2018 and the FLLP Facility is scheduled to mature on February 13, 2020. The FLLP Facility generally bears interest at
a rate of LIBOR plus 2.25-2.50%. FLLP and FLLP 2015-1, LLC, 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 FLLP Facility also includes usual and customary events of default for credit facilities of this nature.

Note 14. 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 January 8, 2015, our board of directors declared a monthly dividend of $0.1175 per share payable on January 30, 2015 to holders of record as of January 22, 2015.

On February 3, 2015, our board of directors declared a monthly dividend of $0.1175 per share payable on
February 27, 2015 to holders of record as of February 19, 2015.

On February 25, 2015, our
board of directors declared a monthly dividend of $0.1175 per share payable on April 2, 2015 to holders of record as of March 19, 2015.



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|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

(a) Evaluation of Disclosure Controls and Procedures

As of December 31, 2014 (the end of the period covered by this report), we, including our Chief Executive Officer 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 Chief Executive
Officer 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) Managements Report on Internal Control Over Financial Reporting

Managements Report on Internal Control Over Financial Reporting, which appears on page 72 of this Form 10-K, is
incorporated by reference herein.

(c) Attestation Report of the Independent Registered Public Accounting Firm

Our independent registered public accounting firm, KPMG LLP, has issued an attestation report on the
Companys internal control over financial reporting, which is set forth above under the heading Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting in Item 8.

(d) 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 fourth fiscal quarter of 2014 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 9B. | Other Information
|-------- | -----------------

None.



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PART III

We will file a definitive Proxy Statement for our 2015 Annual Meeting of Stockholders with the SEC, pursuant to
Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of our definitive Proxy Statement
that specifically address the items set forth herein are incorporated by reference.



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2015 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission within 120 days following the end of our fiscal year.



|Item 11. | Executive Compensation
|-------- | ----------------------

The information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2015 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission within 120 days following the end of our fiscal year.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating
to our 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of our fiscal year.



|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating
to our 2015 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of our fiscal year.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2015 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission within 120 days following the end of our fiscal year.



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PART IV



|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------

a. Documents Filed as Part of this Report

The
following reports and consolidated financial statements are set forth in Item 8:



|                                                                                                       |  |  |    | 
|------------------------------------------------------------------------------------------------------ |  |  | -- | 
|Managements Report on Internal Control over Financial Reporting                                       |  |  | 72 | 
|Report of Independent Registered Public Accounting Firm                                                |  |  | 73 | 
|Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting   |  |  | 74 | 
|Consolidated Statements of Assets & Liabilities as of December 31, 2014 and December 
31, 2013         |  |  | 75 | 
|Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and
2012             |  |  | 76 | 
|Consolidated Statements of Changes in Net Assets for the years ended December 
31, 2014, 2013 and 2012 |  |  | 77 | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and
2012             |  |  | 78 | 
|Consolidated Schedules of Investments as of December 31, 2014 and December 31,
2013                    |  |  | 79 | 
|Notes to Consolidated Financial Statements                                                             |  |  | 85 | 

b. 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|               | 
|3.1            |  | Articles of Amendment and Restatement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|3.2            |  | Amended and Restated Bylaws(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|               | 
|4.1            |  | Form of Common Stock Certificate(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 
|10.1           |  | Dividend Reinvestment Plan(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|               | 
|10.2           |  | Investment Advisory and Management Agreement by and between Registrant and Solar Capital Partners, LLC(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|               | 
|10.3           |  | Form of Custody Agreement(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|               | 
|10.4           |  | Amended and Restated Administration Agreement by and between Registrant and Solar Capital Management, LLC(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|               | 
|10.5           |  | Form of Indemnification Agreement by and between Registrant and each of its directors(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|10.6           |  | Trademark License Agreement by and between Registrant and Solar Capital Partners, LLC(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|10.7           |  | Form of Share Purchase Agreement by and between Registrant and Solar Senior Capital Investors, LLC(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               | 
|10.8           |  | Amendment No. 1 to Share Purchase Agreement by and between Registrant and Solar Senior Capital Investors, LLC(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|               | 
|10.9           |  | Form of Contribution Agreement, dated as of August 26, 2011, by and between SUNS SPV LLC, as the contributee, and Solar Senior Capital Ltd., as the
contributor.(3)                                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 
|10.10          |  | Third Amendment to the Loan and Servicing Agreement, dated as of June 30, 2014 by and among the Registrant, as the transferor and the servicer, SUNS SPV LLC, as the borrower,
Citibank, N.A., as the administrative agent and collateral agent, each of the conduit lenders from time to time party thereto, each of the lender agents from time to time party thereto, each of the liquidity banks from time to time party thereto,
each of the institutional lenders from time to time party thereto, and Wells Fargo Bank, N.A., as the account bank, the collateral custodian and the backup servicer(6)



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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.11 |  | Form of Loan and Servicing Agreement, dated as of August 26, 2011 (as amended through June 30, 2014), by and among the Registrant, 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(6)
|      | 
|10.12 |  | Form of Limited Liability Company Agreement, dated as of September 10, 2014, by and among the Registrant, Voya Retirement Insurance and Annuity Company, ReliaStar Life
Insurance Company, and Voya Insurance and Annuity Company, by and through Voya Investment Management LLC, as agent and investment manager(7)                                                                                                                                                                                                                                             
|      | 
|11.1  |  | Computation of Per Share Earnings*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      | 
|14.1  |  | Code of Ethics(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      | 
|14.2  |  | Code of Business Conduct(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|      | 
|21.1  |  | Subsidiaries of Solar Senior Capital Ltd.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | 
|31.1  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      | 
|31.2  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      | 
|32.1  |  | Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | 
|32.2  |  | Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      | 
|99.1  |  | Gemino Healthcare Finance, LLC and Subsidiary Consolidated Financial Statements year ended December 31, 2014*                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|      | 
|99.2  |  | Gemino Senior Secured Healthcare, LLC and Subsidiaries Consolidated Financial Statements for the period September 30, 2013 (inception) through December 31, 2013*                                                                                                                                                                                                                                                                                                                                                                                                



|(1) | Previously filed in connection with Solar Senior Capital Ltd.s registration statement on Form N-2 (File No. 333-171330) filed on
February 14, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Previously filed in connection with Solar Senior Capital Ltd.s report on Form 10-K filed on February 22, 2012.
|--- | ---------------------------------------------------------------------------------------------------------------

|(3) | Previously filed in connection with Solar Senior Capital Ltd.s report on Form 8-K filed on August 31, 2011.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Previously filed in connection with Post-Effective Amendment No. 1 to Solar Senior Capital Ltd.s Registration Statement on Form N-2 (File
No. 333-179433) on January 16, 2013.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Previously filed in connection with Solar Senior Capital Ltd.s report on Form 10-K filed on February 25, 2014.
|--- | ---------------------------------------------------------------------------------------------------------------

|(6) | Previously filed in connection with Solar Senior Capital Ltd.s report on Form 10-Q filed on August 4, 2014.
|--- | ------------------------------------------------------------------------------------------------------------

|(7) | Previously filed in connection with Solar Senior Capital Ltd.s report on Form 10-Q filed on November 4, 2014.
|--- | --------------------------------------------------------------------------------------------------------------

|* | Filed herewith.
|- | ---------------

c. Consolidated Financial Statement Schedules

Separate Financial Statements of Subsidiaries Not Consolidated:

Consolidated Financial Statements for Gemino Healthcare Finance, LLC and Subsidiary year ended December 31, 2014 and
December 31, 2013 are attached as Exhibit 99.1 to our Form 10-K. Consolidated Financial Statements for Gemino Senior Secured Healthcare, LLC and Subsidiaries for the period September 30, 2013 (inception) through December 31, 2013 are
attached as Exhibit 99.2 to our Form 10-K.



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SIGNATURES

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



|                          |  |                                                                                        
|------------------------- |  | ---------------------------------------------------------------------------------------
|SOLAR SENIOR CAPITAL LTD.
|                          | 
|By:                       |  | /S/    MICHAEL S.
GROSS                                                                
|                          |  | Michael S. Gross Chief Executive Officer, President, Chairman of the Board and Director
|                         
|Date: February 25, 2015  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.



|                  |  |                                            |  |                                                                                                     
|----------------- |  | ------------------------------------------ |  | ----------------------------------------------------------------------------------------------------
|Date              |  | Signature                                  |  | Title                                                                                               
|                  |  |                                           
|February 25, 2015 |  | /S/    MICHAEL S.
GROSS Michael S. Gross   |  | Chief Executive Officer, President, Chairman of the Board and Director (Principal Executive Officer)
|                  |  |                                           
|February 25, 2015 |  | /S/    STEVEN
HOCHBERG Steven Hochberg     |  | Director                                                                                            
|                  |  |                                           
|February 25, 2015 |  | /S/    DAVID S.
WACHTER David S. Wachter   |  | Director                                                                                            
|                  |  |                                           
|February 25, 2015 |  | /S/    LEONARD A.
POTTER Leonard A. Potter |  | Director                                                                                            
|                  |  |                                           
|February 25, 2015 |  | /S/    BRUCE
SPOHLER Bruce Spohler         |  | Chief Operating Officer and Director                                                                
|                  |  |                                           
|February 25, 2015 |  | /S/    RICHARD L.
PETEKA Richard L. Peteka |  | Chief Financial Officer (Principal Financial Officer) and Secretary                                 



105